Let me provide some context behind the decision to introduce step consumption capability in Process Manufacturing Dynamics AX2012.
Discrete manufacturing almost always involves linear consumption of ingredients – four tires are required to put together a car. Whereas in process manufactured products consumption can be linear and it can also be non-linear. As the home brewers know 5 Kg of malt gives 12 litres of beer and 10 Kg of malt gives 24 litres of beer but the bitterness is more in smaller lot, so if you want to keep same bitterness in bigger lots you need to add some extra malt, how much extra is non-linear – based on experience. Another industrial example will be use of carbon as a catalyst in plasticizer manufacturing. You can use 1 Kg of carbon to make up to 5 kiloliters of phthalates. Then you need 2 Kg of carbon up to 8 Kilo litres of phthalate (of course, it’s a different matter that phthalates are banned in many regions for some products, so you shouldn’t really be making them).
Many such reactions have non-linear consumption across different industries but sometimes it’s not essential to capture them in an ERP and at other times it is possible but cost intensive to capture and maintain the formulae. This is where step consumption comes useful. Setting up Bills of material is fairly straightforward when compared to setting up formulae. It isn’t because formulae setup in AX is not user friendly, it’s just because the number of parameters required to setup a formulae are many more. In order to setup formulae with non-linear consumption in previous versions, the only possibility will be to setup many different formulae where every detail is same except the quantity of the ingredient that is consumed non-linearly. Since this would be extremely cumbersome in itself and furthermore because process manufacturers needed multiple set of versions – master formula, production formula, distributed formula, batch card formula and so on, we decided to introduce the concept of step consumption into AX2012.
So for the non-linear consumption of malt, you will create two lines in the formula for malt product. On one line you will setup linear consumption, 5 kg for 12 litre, 10 kg for 24 litres and so on. On the second line you can change the formula to “STEP” on the setup tab. This will make the step consumption grid available. Here you can specify that an extra 0.1 kg of malt is needed when finished beer quantity is between 12 and 24 litres and an extra 0.15 kg of malt is needed when finished beer quantity is more than 24 litres and so on. So, this gives you flexibility to setup non-linear consumption in the same formula.
During production estimation system will look at the finished quantity of beer you want to manufacture and will automatically calculate the correct quantity of malt needed. In case of carbon example above, it can be achieved by using just one line on the formula lines for carbon where you can setup step consumption of carbon of 1 kg up to 5 KL and then of 2 kg between 5 – 8 KL and so on.
Hopefully this will be useful for your scenarios. In case you have suggestions for improvement please email me.
Good piece of information, Examples are catchy !
Hi, I´m a functional consultant and in the project I´m working uses formulas. The product is gold. They look for producing always 24k gold bars. So my final product is pure gold and I can obtain it by using 8k, or 10 k, or 12k, etc… because in every kilataje you can find a certain quantity of fine gold. Do I need to create a formula for each raw material? Or there is something where I can set up only one formula ?
Brenda, Step consumption should work, you will need only one formula. Describe a bit more about your situation and I can tell you what value to use where.
Thanks for your reply. I think step consumption would not work because it needs constant consumption and in the gold process consumption is variable. In this process you receive bags of jewerly (some times of mixed kilatajes, and some times of the same kilataje). One scenario is that the vendor sends a bag of 14 k jewerly the estimation is that every gram of gold contains 0.5833 grams of pure gold, then the jewerly is melted in order to obtain a ingot,then a spectrum study is done to determine the real pure gold content, so there is a variantion with the estimation. We could obtain 0.57 grams of pure gold, in a gram of gold. To run the process in AX , I configured the raw materials as catch weight products (8k, 10k, 14 k, etc) the inventory unit is pure gold grams and the catch weight unit grams the nominal quantity is the stimated of pure gold for each kilataje. I´m looking for a formula where my final product is only pure gold and to obtain it I could use 8k, or, 10k, or 14 k, etc…In the report as finished journal we are going to develop an interface with the analisis equipment to determine the correct amount of pure gold and modify the quantity field, then based on this amount also modify the picking list journal to take out of inventory the excess of pure gold. ( we receive in inventory a stimated quantity of pure gold, when we have the analysis results we need to take off the excess) thanks for your time
Brenda
in standard formula/BOM one can specify a relationship like this: to make 1 kg of A, I need 0.5 kg of B and 0.6 Kg of C. Then system will calculate how much ingredients you need to make say, 10 Kg of A.
If step consumption is used, AX can handle a more complex relationship like this: In addition to above if there was a catalyst X and 0.1 kg of X was needed to make upto 10 Kg of A but 0.3kg of X was needed to make anywhere between 10-100 Kg of A. So, in effect modelling a non-linear consumption relationship is possible with step consumption.
for your scenario, I will suggest you look at using potency. I will also advise against using catch weight. Catch weight is a very specific implementation and is used only in protein industry – for processing poultry, beef, seafood.
Thanks Akshey for your advice, I looked at potency and I have some doubts.
It is possible to use a formula with no compensating items? There is no price agreements because gold price is variable, it is possible to use purchase orders based on potency?.
Im going to explain you a complete Scenario:
Purchase:
A price negotiation is done based on Kitco prices (an interface with this page will be done to bring the actual gold price and the exchange rate), and a line discount trade agreement is applied.
We create a PO based on the pure gold quantity (we change the functionality , so we could introduce values in the quantity field), as a catch weigth product an estimation is done and the CW quantity field is filled. Price is introduced.
Product Receipt:
We know by the nominal quantity that each gold gram contains 0.5833 P Au G, so the estimation for this order is 291.65 P G Au, we create an item arrival journal with this estimation.
Production
As a result of this batch we have an ingont of 500 g and 275 P Au G. We need to make the consumption of the raw materials, Now we know that we received in our raw material inventory an excess of pure gold so we need to take it off. (291.65-275= 16.65).
Purchase :
A product receipt of 275 PAuG is done.
Notes:
It is possible to make more than one ingot by batch order, now AX is creating me two report as finished journals making a duplication of quantities (you know where I could change this?).
Every comment or advice will be appreciated
You need compensating items with potency. But you have them. if in One gram only 0.55g is pure, the remaining is compensating item. You can see if modelling a generic compensating item (gold impurities) will be something suitable. Potency feature has the capability to change the purchase amount on purchase line after potency has been tested – that is what I think you are trying to do. So, you will get that out of the box. Also in your scenario, I don't get why you made the batch order. If it was only to test the gold purity, you may already know, but you can just use quality order at purchase receipt for the same.
There are parameters to control the RAF journal on production setup parameters. It should be possible to set RAF to manual. So it posts only when you need it. For your multiple ingots, I think you need multiple inventory batches on same batch order with one RAF only. This should again just work out of the box. Hope that helps.
Thanks for your advice i will be testing potency and manual RAF