Xdata
White Papers
"Xdata solutions’
Rules-Based Product Configurator is designed with both ease of order
entry, accuracy in product selection and timeliness of manufacture.
From the beginning we felt Customer Order-Entry must be an
easy-to-use system. It is designed for clerical level data-entry
that is inherently coupled with intricate Engineering considerations
(rules)."
- see
White Paper #3 below:
1. Distributed Manufacturing
By
Charles L. Gaby, CPIM
2. Understanding Manufacturing Cost
Accounting
By Reid
Biberstine
3. Custom Made Furniture
By Charles L.
Gaby, CPIM
4. Understanding Rules-based
Configuration
By W.
Reid Biberstine
5. Paperless Office Automation - eDistribute
By W.
Reid Biberstine
Distributed Manufacturing
Manufacturing; Single Item, multiple ship points.
By
Charles L. Gaby, CPIM
About
the Author
Not every manufactured product leaves
the final assembly as a unit. Not every “Distributor” ships a
single
final product from the same facility. The logistics of single
item-multiple ship points are confusing enough to
Management, but toss in a compu-
ter and a difficulty may seem im-
possible. Several years ago we
encountered the problem. The end
result was a change in the system
design of our ERP solution. The
concept seems to be as unique to-
day as it was back then. Does the
following describe your company?
Profile of a Distributed Manufacturer:
A single Item (assembly) is cataloged for
sales.
Customer orders a single item.
Customer expects single line item invoice.
A Bill of Material for the assembly exists.
Costs of Component Items are “rolled” to Assembly.
Assembly Cost of Goods Sold is a unit.
Final assembly is not stocked.
Components may be shipped from separate locations
Components may be drop shipped from Vendor or vendors.
Components may be partially manufactured or assembled at one or more
plants.
Shop routings exist.
Assembly at customer site is practical.
Engineering drawings may exist.
Customer typically wants a single line invoice.
Profit Center (Plant/Warehouse) declared at line Item level.
Inventory may be backflushed or issued by Plant.
Divisional Inventory accounting is required.
There are several “opportunities” presented above that
most would consider mutually exclusive. One Bill of Material and
multiple Plants/Warehouses for instance presents a bit of a
logistics nightmare. Divisional accounting of a single “Item” is
another; the customer’s Purchase Order reflects what the
manufacturer represents as an “Item”… and the customer certainly
will want to account for this “Item” as a single unit on their
books.
The first step is to establish the “sale” item as a product.
At that time default information is entered, including the
Plant/Warehouse typically responsible. The Warehouse must control
the Profit Center.
Customer Order entry has the first opportunity to establish
control of the Item. The assembly Item is entered as the sale
item. At this point a Plant/Warehouse “Division” is established.
Warehouse information should have been assigned when the Item was
established… but may be modified through Customer Order entry.. the
80 / 20 rule should apply. This is the profit center of record
regardless of component shipments.
Manufacturing. The Plant assigned at Order entry will be the
designated manufacturing plant. Unless specific action is taken,
this will be where all the manufacturing is done, but when another
facility is called upon to perform some of the shipping, an order
split is made. The split spawns subordinate fractions of the
customer order in order to make the necessary granularity required
to assign responsibility of certain portions of the manufacturing or
assembly/shipping to another plant. This seamless complexity is
performed by the software and enables backflushing from the correct
facility.
Purchasing “Drop shipments” take on a similar roll; these
components are no longer requirements of the plant, but rather are
automatically assigned to a purchase order that is related to the
manufacturing order... which is related to the customer order.
Or for illustration:
Customer Order (spawns)…..
Manufacturing order (spawns)…..
Purchase Orders
The interrelationship of the spawned orders is a requirement
for traceability and accountability. As noted above, inventory
accountability must be divisional; separate assets for each plant
are quite common. With the Drop Shipment tagged to the P.O.,
receipts may be recorded based on vendor notification, or
automatically “received” while invoicing the Customer for the final
product.
All inventory activity is automatically linked to the customer
order, insuring orchestration and “traceability”.
Invoicing the customer for the single “assembly” is accomplished
by mating the Customer Order Line Item to the various facility
shipping/receiving documents. While this step does require some
human feedback, the inventory is automatically accounted for
seamlessly. For instance, Vendor shipments need to be “Received” in
order to trigger the vendor “shipment”. Manufacturing facility
“shipments” may be automatically recorded through the software
provided Bill of Lading or Pack/ship programs; if not triggered,
inventory is backflushed by the Invoicing procedure.
Invoicing seamlessly accounts for the Balance sheet entries and
the Income statement..by profit center. This automatic
integration greatly reduces month end accounting reconciliation
problems.
Measure the results
The end result is..
A single product sold…that may be assembled at
a customers sight.
Sales History recording an assembly sale price and cost
Inventory usage recorded by warehouse/facility
Manufacturing order “received” manually or automatically
Purchase Orders “received” manually or automatically
Inventory issues or Invoice “backflush” automatically
Arbitrary Profit Center credited for the sale
Balance sheet credited by warehouse
Customer pays for single Item Purchased
(matches to his P.O. issued)
Reduced manual steps
Reduced errors
Books balance
Profits rise
Win / Win
Xdata!
Interested?
- for more information contact: sales@xdata.com
