Manufacturing Process Documentation

Manufacturing Process is the mean of producing new Product based on specified

Bill of Material (BOM & Formula), Manufacturing Resources, Work-flows (how to
produce) and Distribution (where to deliver).

1. We have to tell system on how to produce products.

→ On how the product will be produced, Bill of Material tell us what
material to use, Work-flow Process tell us how to do with what Resources.
→ Product Planning Data is where the relationship between Product and
all (BOM, Process, Resources) is defined together with Setup Data, i.e.,
Order Policy, Order Period, Minimum Order Quantity, etc.

2. After the relationship of How to produce a product is defined we can start

producing things.
→ Without planning (pre-order), we can directly use Manufacturing Order
to produce things. We then use the Component Check Process to verify
and use Print and Release Order Process to print out checklist for user on
the field. Once completed, store can use Order Receipt & Issue to accept
the newly created products into warehouse (and of course reduce the
inventory of raw material.)
→ With demand forecast or pre-order, we can then use MRP to help us
determine what when where and how (much) to produce.
Business Case : Chemical industry

Fertilizer Manufacturing:
Step 01:Define Product
Menu : Material Management < Material Management Rules < Product

Product:
● In product window we have to create each and every product here. We
define Raw material type product Nitrogen, Phosphorus, Potassium, Water.
Step 02: Define BoM

Menu : Manufacturing Management < Engineering Management< Bill of Material

& Formulas<Bill of Material & Formula
Bill of Material & Formula
● Prepare BOM for Lawn fertilizer, which has the formula in percentage.
● See the summary of prepared BOM in BOM & Formula info
Step 03: Define Manufacturing

Menu : Manufacturing Management <Engineering Management <Resource

Manufacturing <Manufacturing Resource

Manufacturing Resource

● Define Plant (with Manufacturing Resource Type=Plant) that govern the

entire production process.

-> Fertilizer Plant with Planning Horizon=120

● Defines Resources' (with Manufacturing Resource Type=Work Center) that

will be used in Production Process (Manufacturing Work-Flow).

-> Mixed Area

-> Inspection Area

Set Standard cost for each area:

Menu : Performance Analysis < Costing < Product Costs

We have to define Labour and Overhead cost for Mixed, and Inspection area.
Manufacturing Workflow

Menu : Manufacturing Management <Engineering Management <Resource

Manufacturing <Manufacturing Workflow <Manufacturing Workflows

Menu : Performance Analysis < Costing < Product Costs

➢ Define Manufacturing Workflow process to produce Lawn Fertilizer.
➢ Define Workflow Activities and Resources
Step 04: Generate Demand for Manufacturing

Theoretically there are 2 kinds of demand, Indepndent and Dependent Demand.

An independent demand is a demand that is not based on the demand for another
item while a dependent demand is bassed on the demand for another item.

Now, we will be creating 1 Independent Demands.

Sales Order:

Menu : Quote-to-Invoice < Sales Orders < Sales Order

➢ Create and complete Sales Order

Forecast:

Menu : Manufacturing Management < Planning Management < Forecast

Management < Forecast

➢ Create Forecast by using Forecast window.

MRP Info:

Menu : Manufacturing Management < Planning Management < MRP < MRP Info

➢ View Material Resource Planning by MRP Info

➢ The view will display both demand from Sales Orders and from Forecast

➢ In this view we can look at both demands as gross requirement and an On-
Hand project quantity that indicates the available of material in the future. If
this is negative then the system shall generate a production plan for us to
know what materials to produce in our plant.
Product Data Planning:

Menu : Manufacturing Management < Planning Management < Product Planning

< Create Product Planning

➢ And before we run the Calculate Material Plan, we will check out the Product
Planning Date.

➢ Product Planning Data is the master data that manages the relationships
between Products and BOMs with their Manufacturing Resources,
Manufacturing Process and Distribution. It alsostores the initial data about
manufacturing process of each product, such as, Order Policy, Order Period,
Batch Quantity, etc.

➢ Verify Product quantity, time etc. From Data Planning window.

Step:05 Calculate MRP

Menu : Manufacturing Management < Planning Management < MRP < Calculate
Material Plan

Calculate Material Plan

● Set parameters and run the process

Then this process ends it shows that Manufacturing Orders or Marerial
Requisitions and Notice Messages that were generated.

Repeating MRP Info we can see how MRP create the Planned Orders and Material
Requisitions.

MRP will summarize the demand from both Sales Order and Forecast and use the
behavior of the Product (i.e., Min Order Quantity, Promised Delivery Time, Order
Pack Quantity, etc.), Bill of Material and Workflow Process to determine the next
action.

Step 06: Review and Confirm for Production

A planned manufacturing order is a manufacturing order suggested by the MRP

process and contains its quality and its relese and promise dates. When we
approve a planned manufacturing order, we convert it in a manufacturing order
with the status of In Process.

When we approve a planned order we are telling the system that the
manufacturing order is ready to start its process with the approval we change the
order status from Draft to In Process.

We can run Calculate MRP as many times as we want until satisfied with the plan.

Component Check

Menu : Manufacturing Management < Discreet Manufacturing < Component

Check

Component Check is the report that tell us whether Manufacturing Order can be
completed. This report shows the material requirement vs availability in inventory.
It is up to us to decide.

Print & Release Order

Menu : Manufacturing Management < Discreet Manufacturing < Print & Release
Order

With this option, we canget the Pick List, Pack & Tools List and work-flow
manufacturing as a preliminary, and if the information is right we can mark the
complete check box to try to relese order (Complete MO).
Manufacturing Order

Menu : Manufacturing Management < Discreet Manufacturing < Manufacturing

order

● The manufacturing order is a document or schedule identiti conveying

authority for the manufacture of specified products in specified quantities.

● User change the status of document to Complete to state that the

Production Process (Work-flow) can be started on shop floor.

● Note that, although the required material for production are not available,
we can also still relese the order. The real Finished Goods will be produced
to stock on the next step.
Order Receipt & Issue

Menu : Manufacturing Management < Discreet Manufacturing < Order Receipt &
Issue

● Use this window to receive the finished goods to stock and components
delivery to next production shop.

● This is where, in Adempiere, the newly finished goods shall increase, and
the raw materials used in production shall decrease the inventories. And as
such, it will not process if the raw components are insufficient for
production.

● The Manufacturing Order will be set to Closed.

Standard Costing Management:

Menu : Manufacturing Management < Standard Costing Management

As we setup accounting schema for Standard Costing so we follow Standard

Costing Management here.

We created lawn fertilizer work-flow for lawn fertilizer product. We have to setup a
standard cost for Labour, Overhead, Burden etc.

After running the MRP process Manufacturing Order will be created automatically.
Before going to finish the Receipt & Issue entry, we will run the following process:

i. Work-Flow Cost Roll-Up:

Menu : Manufacturing Management < Standard Costing Management< Work-

Flow Cost Roll-Up

Work-flow cost roll up updates the cost of all work-flows.

ii. Bill of Material & Formula Cost Roll-Up:

Menu : Manufacturing Management < Stndrd Costing Management < Bill of

Marerial & Formula Cost Roll-Up

Bill of Material & Formula Cost Roll-Up updates all costs of bill of material of
products.

Cost Controller:

Menu:

Manufacturing Management < Standard Costing Management < Cost Controller

Cost controller window shows cost of Raw materials, Labor, Overhead, Burden . It
also shows Variance between standard cost and actual cost.
Cost Sheet for 1 gram of Lawn Fertilizer

We produce Lawn Fertilizer which is a BOM type product. To produce 1 gram of

Lawn Fertilizer following Raw materials are required:

Nitorgen = 0.17 gram

Potassium = 0.17 gram

Phosphorus = 0.17 gram

Water = 0.49 liter

We followed Standard Costing here.

When manufacturing order is created by running MRP process, we need to

complete the manufacturing order and copy the document number of the
manufacturing order. Then open order receipt & issue window and paste the
document number in manufacturing order field. If everything is okay then press
OK button. Then we will go to Cost controller window and will find the below entry.

Cost of BOM:
Finished Raw Material Standard Cost Qty Required Cost (Tk.)
Good
Lawn Fertilizer Nitorgen 10.00/gram 0.17 gram 1.70
Potassium 12.00/gram 0.17 gram 2.04
Phosphorus 15.00/gram 0.17 gram 2.55
Water 5.00/liter 0.49 liter 2.45
Total cost of Raw Materials as per BOM 8.74

Overhead Costs:
Finished Cost Title Cost/hour Time Required for Per Cost
Good Unit (Tk.)
Lawn Fertilizer Overhead 10.00/hour 20 mints 3.33
Cost
Labor Cost 12.00/hour 25 mints 5.00
Burden Cost 15.00/hour 15 mints 3.75
Total cost of Overhead 12.08
Journal entry for the purchase of Raw material
Account Code Account Name Product Name Dr. (Tk.) Cr. (Tk.)
14120 Product Asset Nitrogen 1,000.00
14120 Product Asset Potassium 1,200.00
14120 Product Asset Phosphorus 1,500.00
14120 Product Asset Water 500.00
21190 Not Invoice Receipt 4,200.00

Journal entry for Issue of Raw Materials:

Account Code Account Name Product Name Dr. (Tk.) Cr. (Tk.)
21190 Not Invoice Receipt 8.74 0.00
14120 Product Asset Nitrogen 0.00 1.70
14120 Product Asset Potassium 0.00 2.04
14120 Product Asset Phosphorus 0.00 2.55
14120 Product Asset Water 0.00 2.45

Journal Entry for Labour, Overhead and Burden of a work center:

Account Code Account Name Dr. (Tk.) Cr. (Tk.)
14130 Work-in-Progress 3.33 0.00
83300 Overhead (Applied) 0.00 3.33
14130 Work-in-Progress 5.00 0.00
83100 Labor (Absorbed) 0.00 5.00
14130 Work-in-Progress 3.75 0.00
83200 Burden (Absorbed) 0.00 3.75
Journal Entry for Finished Goods:
Account Code Account Name Dr. (Tk.) Cr. (Tk.)
14120 Product Asset 8.74 0.00
14130 Work-in-Progress 0.00 8.74 Raw Material Cost
14120 Product Asset 3.33 0.00
14130 Work-in-Progress 0.00 3.33 Overhead Cost

14120 Product Asset 5.00 0.00

14130 Work-in-Progress 0.00 5.00 Labor

14120 Product Asset 3.75 0.00

14130 Work-in-Progress 0.00 3.75 Burden

Total 20.82 20.82

Journal Entry for Shipment of Goods:

Account Code Account Name Dr. (Tk.) Cr. (Tk.)
51100 Product CoGS 20.82 0.00
14120 Product Asset 0.00 20.82