Production Orders


A production order provides one of the primary coordination tools for scheduling and reporting production activity. Effective use of a production order requires an understanding of product structure information such as item planning data, bills, and routings. Chapter 3 described this information for a manufactured item. Further explanation builds on this foundation.

Production Order Structure and Life Cycle

The basic structure of a production order consists of header and line item information. As a reflection of this basic structure, the production order number and line number uniquely identify a scheduled receipt. A production order and its line items can be entered manually or generated automatically, as explained more fully in the next section concerning production order types and creation methods . Each line item specifies a material item, order quantity, due date, and the manufacturing location. Each line item can have an order-dependent bill and routing that drive material and capacity requirements.

The life cycle of a production order consists of several steps represented by an order status, as explained below.

  • Planned . A planned production order is typically created from a suggested action message so that capacity requirements can be calculated. It can also be manually entered. However, planning calculations delete planned production orders and create a new set of suggested action messages.

  • Firm-Planned. A firm-planned production order is typically created to indicate scheduling decisions over the near-term time horizon. Scheduling decisions and the near- term horizon reflect several considerations, such as an item s cumulative manufacturing lead-time and constraints on material and capacity. As a result of constraints in some cases, the user may assign a different bill or routing version to the order or modify the order-dependent bill and routing.

  • Released . A released status indicates an authorization to initiate and report activities for all line items. The released status is required to initiate several related actions, such as generating a suggested purchase for each outside operation and generating a warehouse document for picking components . It can also trigger auto- deduction of forward-flushed components and work center time.

    Production activity is reported against an individual line item, such as reporting material consumption, unit completions by operation, and parent item completions. Completion quantities can exceed the order quantity. A production order may be temporarily placed on hold (blocked) to prevent further reporting, but the hold status does not affect planning calculations. The status of individual activities related to a released production order can also be identified. For example, a routing operation can be designated as finished.

  • Finished . A finished status must be assigned to indicate all production activity has been reported for all line items. The system provides a warning when it detects any activity still unreported. The finished status prevents further reporting and the order cannot be reopened. Changing to a finished status can trigger auto-deduction of backward-flushed components and work center time. The system calculates variances and retains a historical record for each finished order.

Production order status can be updated manually for a single order or automatically for a user-defined set of multiple orders. For example, the planner may update next week s schedule of firm-planned orders to a released status, or change status to finished for a group of released orders.

A numbering policy determines whether the same production order number apples to each order status (planned, firm-planned, and released) or a different order number applies to each status.

Production Order Types and Creation Methods

Modeling different types of production activities sometimes requires different types of production orders. A production order typically represents the set of production activities to build a single item, and the item defines the source of information for what needs to be done. Some types of production activities require linkage to the source of sales order demand, for example, or involve a single production process that generates multiple items reflecting a family of coproducts. These two examples involve designating the source of information for what needs to be done, such as the sales order demand or the family of coproduct items. Another example involves closely linking production activities to build a make-to-order product comprised of make-to-order components. Multiple linked production orders are required to represent this multilevel product structure. These examples argue for different types of production orders.

The types of production orders can be characterized by the source of information (termed source type ) for its line items, the method for creating the order, and the manufacturing policy for an item and its components. These three factors affect the behavior and usage of a production order, especially the automatic creation of line items. It means that header information provides more than default values. The header information provides the basis for initially creating line items and for subsequently mass-updating line items. For example, the line items can be mass updated by changes in header information about the order quantity, due date, and/or manufacturing location.

The combinations of source type, manufacturing policy, and creation method are displayed in Figure 8.1 in terms of their impact on line item creation. The source type for a production order provides an organizing focus for further explanation.

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Figure 8.1: Production Order Types and Creation Methods: Impact on

Production order header information can be manually entered, and line item information can then be manually entered or created automatically based on header information. Automatic creation of line items depends on the source type for the production order.

Manual Entry of Line Items A blank source type indicates a manually entered production order that requires manual entry of line items. After entering one or more line items, the user can manually or automatically create each item s order-dependent bill and routing. Automatic creation requires a user-initiated process termed refresh production order , using the options to regenerate just the order-dependent bill and routing information. Using the option to calculate lines (for the refresh process) would delete the manually entered lines, since a specified source does not exist.

A line item can also be manually added to any production order. The order-dependent bill and routing can then be manually entered for the additional line or created automatically using the refresh process as described above.

Parent Item as the Source of Line Item Information A manually entered production order can specify header information about a parent item. It also specifies the order quantity, due date, and manufacturing location. This is termed a source item, and the parent item can be a manufactured or purchased product. This header information can be used to automatically create the line item(s) and order-dependent bill/routing information. Automatic creation requires the refresh process using the options to also regenerate the line items.

With a manually entered production order, the refresh process creates a single-line order for a purchased or manufactured item. It creates an extra line for each make-to-order component of a make-to-order manufactured item. Each extra line item is linked to its parent line item, thereby reflecting the parent s multilevel product structure using multiple linked orders. The system uses the bill information to calculate appropriate quantities as well as start/end dates for these lower-level components. The refresh process may be repeated to reflect changes to header or bill information.

Production orders with an item source are typically generated from suggested action messages for manufactured items. When carrying out the suggested action, the system creates a production order header specifying the item, order quantity, due date, and manufacturing location. The suggested manufacturing location reflects demands. The suggested order quantity and date reflect the item s reordering policy, such as lot-for-lot or order-driven. As described above, a make-to-order manufacturing policy for an item and its components results in additional line items to represent the multilevel product structure.

Production orders with an item source can also be generated directly from a sales order, as shown in Figure 8.1. A user-initiated function generates a separate production order corresponding to each sales order line for a manufactured item. This approach reflects unrelated sales order line items for production purposes. With related line items, the user can alternatively create a multiline production order linked to the sales order. The related line items represent a single project for the sales order, and the production order is termed a project order. In this case, the production order has a source type of sales order (rather than item).

Sales Order as the Source of Line Item Information A production order can be manually created with a sales order as the source type. The refresh process creates a production order with line items that correspond to each sales order line for a manufactured item. In the case of a multiline sales order, the line items are viewed as related, and the multiline production order represents a single project for the sales order. This approach allows the user to manually assign the same order number and provides greater visibility on the linkage between the production order and sales order.

A production order with a sales order source can also be generated directly from a sales order. As described above, the order entry person must choose to create a project order.

Family of Items as a Source of Line Item Information A production order for a family of items provides one approach for handling coproducts or items produced simultaneously by a shared manufacturing process. Common examples include a molding, cutting, slitting, or sorting process, or an oven or sterilization process for a batch of different items. This approach avoids multiple production orders to model a single manufacturing process. The multiple items are defined as members of a user-defined family, with a master routing assigned to the family that identifies the common process. The production order header specifies the family, and the refresh process creates multiple line items with one line per family member. Line items can be added or deleted, and quantities changed, to reflect expected output. The order-dependent routing for each line item reflects the master routing assigned to the family (rather than each item s routing). The system supports a simplified approach to reporting production activities, with reporting of material consumption and work center time against the entire order while reporting actual output against individual line items.

Production Order Considerations

The basic production order information defines an item, quantity, due date, and manufacturing location. Additional considerations include the order-dependent bill and routing, text, reservations , and order statistics.

Order-Related Text Most of the explanatory text for a production order is defined by bill of material and routing information. For example, the routing defines operation sequences and descriptions while the bill defines each operation s required material. Additional text can be specified as comments for the order header.

Order-Dependent Bill A production order line item identifies the master bill (and bill version if applicable ) acting as the source of the order-dependent bill. It defaults from the item s planning data and can be overridden. The components initially reflect those in effect as of the order due date. Component information can be manually changed, such as indicating a material substitution. Other changes include a component s flushing method, routing link code, or scrap percentage. The order-dependent bill defines the basis for a printed pick list or components in a pick document. It can be deleted and recreated by the refresh process using the option to calculate needed components.

Order-Dependent Routing The definition of an order-dependent routing and bill are similar. A production order line item identifies the master routing (and routing version if applicable) acting as the source of the order-dependent routing. It typically defaults from the item s planning data and can be overridden. Routing operation information can be manually changed, such as indicating an alternate operation or time requirement. Other changes include the operation description, flushing method, routing link code, or scrap percentage. The order-dependent routing defines the basis for a printed shop traveler . It can be deleted and recreated by the refresh process using the option to calculate routing.

The Manufacturing Location for a Production Order and the Location for Its Components The manufacturing location for a production order is specified for each line item and normally reflects the header information. The location for component requirements is normally the same as the parent item (on the line item), although it can be overridden in the order-dependent bill. In some cases, a different location for components is explicitly identified in the SKU planning data. For example, a location representing a service parts area may build an item that requires components from the manufacturing location.

Production Order Lead-Time and Manual Scheduling

Production lead-time represents one time element in the activities for a production order line item. As shown in Figure 8.2, the other time elements include picking components and putting away output (termed outbound and inbound warehouse handling time), and possibly safety lead-time for the manufactured item.

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Figure 8.2: Critical Dates and Lead-Time Elements for a Production Order

The system calculates production lead-time for a production order line based on the order-dependent routing (if available) or the item s lead-time (if routing data is unavailable). Backward scheduling logic calculates a starting date and ending date from a due date. When the user changes one date, the system automatically updates the other date. Flagging an operation in the order-dependent routing as manually scheduled disables this automatic update.

Safety lead-time is handled slightly differently for a multiline production order with linkage between lines. This type of order represents a make-to-order manufactured item with make-to-order components. The system ignores an item s safety lead-time since it assumes make-to-order components are immediately used in the next level.

Guidelines for Refreshing a Production Order The refresh process provides one approach for manually updating production order information, with options about regenerating line items and the order-dependent bills or routings. The refresh process can only be performed prior to entering ledger entries for the order.

Line item regeneration is typically used after changing the item source, order-quantity, due date, or manufacturing location in the header. With a make-to-order product, for example, regeneration can identify different line items when changes in the master bill affect make-to-order components. With a sales order source, for example, regeneration can identify different line items after changes to the sales order.

Manual changes to the order-dependent bill and/or routing will be overridden by the refresh process unless the user de-selects these options. The refresh process also provides an option for forward or backward scheduling; this is a user preference. The replan process (described next) may be used when you only require an updated schedule.

Guidelines for Replanning a Production Order The replan process provides one approach for manually scheduling a single production order, with an option about the scheduling impact. Scheduling can impact just the single order, the order s first-level components, or all levels of components. Scheduling can be forward or backward.

Reserving Components for a Production Order A component s inventory can be reserved for a production order line item. The user can manually specify the reserved material or use automatic reservations. Reservations can be made for lot- and serial-traced material as well as non-traced material.

Reserving the Expected Output of a Production Order for a Sales Order The expected output for a production order line item can be reserved for a sales order. This approach to a reservation avoids waiting until output has been received into inventory.

Creating a Production Order via Copying an Existing Order

The copy feature can be used to create production order line items or the entire order from an existing order. When copying just the line items, the new line items are incrementally added and assigned a due date and manufacturing location based on header information. Copying an entire order with its header information replaces the header information and line items. After copying, the refresh process can create an order-dependent bill and routing for each existing line item, or completely regenerate line items based on header information.

Component Forecast Consumption by Production Orders

A production order line consumes the item s component forecast (if specified) to avoid doubled -up requirements. The line item s due date dictates forecast consumption within an implied forecast period.

Statistics for a Production Order The statistics provide a cost summary of standard, expected, and actual costs to-date for all line items on a production order. The expected costs reflect the order-dependent bill and routing for each line item. A breakdown by cost element identifies costs related to material, capacity and capacity overhead (internal operations), subcontracts (outside operations), and manufacturing overhead (reflecting indirect costs for a parent item).

Using a Simulated Production Order for a One-Time Product

A simulated production order provides one approach to define and cost a one-time product, such as an engineering prototype item or a quote for a custom item. A what-if analysis can also assess the impact of producing the simulated order. A simulated production order can be copied or converted to a normal (or regular) production order. There are several key differences between the two types of production orders

Defining and Costing a Simulated Order A one-time product can be defined using one or more line items. A line item provides the starting point for defining an order-dependent bill and routing, with an immediate calculation of expected costs. The line items can be automatically created (based

on the source type), manually added, or both. Line items can also be copied from other production orders. With manual additions, the line item often identifies a newly created item number or an existing item number for a previously defined product. A line item could also specify a generic item number that provides the basis for defining an order-dependent bill. The generic item defines the basis for a unit of measure, item tracking policies, general ledger account numbers , planner responsibility, and other item attributes

Expected costs for the simulated order reflect the order-dependent bill and routing for each line item.

Differences between a Simulated and Regular Production Order A simulated production order shares many similarities to a regular production order, such as the order structure, the creation of line items based on source type, and the maintenance of the order-dependent bill and routing for each line item. However, there are several major differences.

  • Ignored by Planning Calculations . The line items are not considered scheduled receipts, and requirements for material and capacity are ignored. This allows a simulated order to be used for cost estimating or order preparation purposes only.

  • Sales Quote as a Source Type . A sales quote (rather than a sales order) can be specified as the source type for the production order.

Once a simulated production order has been defined, further processing steps to build the one-time product(s) reflect two major variations.

  • Build the One-Time Product Without a Sales Order. The simulated production order can be converted or copied to a production order. Planning calculations can then coordinate production activities and material requirements. If a sales order is subsequently entered for the one-time product, the existing production order can be reserved for the sales order.

  • Build the One-Time Product for a Sales Order. The sales order can be generated or copied from the sales quote, or it may be manually entered. In addition, the simulated production order must be converted (or copied) to a production order, and the production order reserved for the sales order.

What-if Analysis for Building a Simulated Production Order

To perform a what-if analysis, a firm planned production order must be created (using a copy of the simulated production order) so the planning calculations recognize the material and capacity requirements. This also supports calculation of a projected completion date based on forward scheduling logic. The firm planned order can then be deleted after performing the what-if analysis.




Managing Your Supply Chain Using Microsoft Navision
Managing Your Supply Chain Using Microsoft Navision
ISBN: 0071435247
EAN: 2147483647
Year: 2003
Pages: 71

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