Tag: by product

Improved process for generating put away work for production and batch orders in CU8

This new functionality is available with KB article 2988071 and will be included in Microsoft Dynamics AX2012 R3 CU8. To find the KB article you can use LCS Issue Search.

What’s new?

In R3 there were some issues in the support for generating put away Work when you used the reporting as finished process for batch orders (for formula items as well as for co-products and by-products). When for example reporting a formula item or a co-product or by-product as finished in production, the location directive could not find an applicable put-away location. Instead, the user was prompted to manually enter a put away location.

We made some changes to the location directives for production and batch orders to fix these issues. In R3 we had location directives with the types “Production order put away” and “Batch order put away” as shown in the picture below:

In CU8 the two types has been replaced with new ones. The first one “Finished goods put way” represents the produced item for production orders and the formula item for batch orders. The second one “Co-product and by-product put away” represents the co-products and the by-products that can be produced as output from batch orders. The two new types are shown in the picture below:

Let’s walk through a scenario that describes how to set this up.

Scenario: The company uses formulas with co-product and by-product outputs. The by-products are always stored in a location called SCRAP, and the co-products are stored in an area called FLOOR.

First we need to create work classes for finished goods put away, and co-products and by-products put away. Open the Work classes form by clicking Warehouse management > Setup > Work > Work Classes. For the work class for finished goods put-away, select the work order type Finished goods put away:

 

 For the work class for co-products and by-products put-away, select the work order type Co-products and by-products put away:

 

Next we need to set up the work templates that defines how pick and put work for finished goods, co-products and by-products is created. Open the Work templates form by clicking Warehouse management > Setup > Work > Work templates. Select Finished goods put away in the field: Work order type. Set up a pick and a put line in the lower part of the form and remember to select a work class for finish goods put away for each line:

Now select the Work template for Co-product and by-product put away. Set up the pick and put lines in the lower part of the form with an appropriate Work class for each line:

 

The last step is to set up the location directives for finished goods and co-products and by-products. Open the Location directives form by clicking Warehouse management > Setup > Location directives. Select Finished goods put away in the Work order type field:

Now select Co-products and by-products put away in the Work order type field. Create one line for co-products and one line for by-products. Go to the line for by-products and select the Edit Query button. In the Query form select the Production co-by products table and the field Production type. Select by-product as a criterion. With this setting we made the location directive specific for by-products output:

The by-products should be stored in a location called SCRAP. This location has an associated Location profile ID also called SCRAP:

Now select the Edit Query button in the Location Directive Actions section. Add a line for the field Location profile ID and use SCRAP as a criterion for that line in the Query:

With this setting the location directive will direct all by-products to the SCRAP location in warehouse 15

As the last thing we will set up the location directive for co-products. Go to the location directive we defined for co-products and select the Edit Query button in the Location Directives Actions section. As the co-products, in this example, should all be stored in an area calloed FLOOR, add a line for the field Location profile ID and add the criterion FLOOR:

 

Summary

The work order types that are used for production output have changed in AX 2012 R3 CU8 which fixed some issues in the R3 version. If you are upgrading from R3 to CU8, you will need to re-configure your work classes, work templates, and location directives as outlined in the example in this blog.

 

Support for Recycled By-products in AX 2012 R3 CU8

This new functionality is available with KB 2989470 / HF 2989470 and will be included in Microsoft Dynamics AX2012 R3 CU8. To find the HF you can use LCS Issue Search.

What’s new?
To support recycled or recurrent products in process industry, it is now possible to use the same product as both input and output on a formula. As an example, this is useful in plastic molding where consumed plastic regrind can be recovered from the manufacturing process. Other examples are processes where you put metal scrap from the stamping/forming process in a foundry.
The recurring co-product solution in Microsoft Dynamics AX2009 had some limitations on the costing side and was not ported to AX2012. This new solution use by-products with a stronger support for costing.

Feature solution
This new feature enables the consumption and reuse of the same by-products in the production of formulas and batch orders, by allowing BOM circularity for output that has the production type, By-product.
For costing purposes a new Burden type, Recycled, was added to handle the cost of the recycled by-products. Use of the Recycled Burden type deducts the joint production cost that is allocated to the formula and co-products, by using the standard cost value of the recovered by-product.
By-product output from planned and firmed batch orders is ignored during planning. This is done to ensure that demand for the recycled product isn’t pegged against by-product output from the same order, or other orders from the same process or BOM chain. This means that the recycled by-product cannot be pegged until it is on-hand (posted from the batch order).
Finally as a small additional improvement on the Explosion form, it is now indicated when a formula output is a by-product. This is done by adding ‘(By-product)’ to the line.
 
Set up recycled by-products
In order to allow BOM circularity, the recycled item must use standard cost and use the production type By-product or in special cases Co-product. On the formula the recycled product input is a normal formula line, and the output on the same or other formulas is a co-product output of the Production type, By-product, and the Burden type, Recycled.

  1. Product 
    1. The recycled functionality only supports standard cost, so ensure that you select an Item model group that uses the Inventory model, Standard cost, on the General FastTab:
    2. Ensure that the Production type is By-product on the Engineer FastTab for the product:
       
      Note: Products with production type Co-product can also be used, but then you will have to change the Production type to By-product on the formula or batch order, to use the recycled by-product functionality.

  2. Input – formula consuming the recycled product
    The recycled product is added as a normal formula line on the formula:
  3. Output – formula producing the recycled product
    On the formula (can be the input, or another formula) that produces the recycled item, the recycled item must be added as a co-product output of the production type, By-product, with the Burden type, Recycled:

    We are aware that the name Burden is not full correct with the Recycled option added. However, the nature of a hotfix release didn’t leave room for renaming.

 

Let’s try an example to see the feature in action:
 
We have the following three products:
M1 – Main ingredient, Standard cost – $10/Kg, Purchase, 100 kg On-hand
B1 – By Product, Standard cost – $5/Kg, Purchase, 15 kg On-hand
F1 – Formula item, Standard cost, Production, 0 kg On-hand
 
To produce F1 we use the following formula:
F1-FORM, Formula Size: 10 Kg

With the following lines
M1, 20 kg
B1, 10 Kg

Co/By-Product lines
B1, Production type = By-product, Burden = Recycled, 8 Kg 

In AX it looks like this:

With the B1 added as By-product under the Co-products output:


First sales order
To generate a demand for F1 let’s create a sales order for 10 kg:

Running the explosion on the sales order will generate a batch order to produce the 10 kg because we don’t have any F1 on-hand:

Notice that the first line for B1 indicates that we get an additional co-product output of the type, By-product.
 
As both M1 and B1 are on hand, we can firm the planned batch order and start the production. (Planned orders -> Firm)
 
Processing the batch order
Let’s report the batch order as finished with the expected input and output:

What happened to the cost?
I have set a material overhead of 10%, so looking at the cost perspective we get the following.

Batch cost:
     M1 20 kg = 20 * $10 = $200
     B1 10 kg = 10 * $5 = $50
     Overhead 10% = 10% * ($200+$50) = $25
     Total = 200+50+25 = $275

B1 cost share (8kg): 8 * $5 = $40 (note this is fixed to the Std. Cost – no overhead)
F1 cost share (10kg): $275 – $40 = $235 (Incl. all $25 in overhead)

For the formula product – F1:

And for the by-product – B1:
 

Second sales order
Let’s create another sales order for 20 kg F1, to see how planning handles a shortage of the recycled by-product.

Running the explosion on the sales order will generate a planned batch order to produce the 20 kg. Notice the planned order for B1.

We still have plenty of M1: 

  • We have 80 kg and we need 40 kg for the additional order.

However, we are running short of B1:

  • Initially, we had 15 kg. The first batch order consumed 10 kg and output was 8 kg, so now we have 13 kg.
  • For the new order we need 20 kg, so a planned order for 7 kg is created to cover the missing ingredient.

Summary:
With HF 2989470 that is included in Microsoft Dynamics AX 2012 R3 CU8, it is now possible to recycle and reuse by-product output from batch orders.

  • The recycled product must use standard cost and have the production type, By-product or Co-product
  • On the formula, co-product output must be of the type, By-product, and have the Burden type, Recycled
  • Planning will now consider only on-hand inventory for by-products. So potential supply from batch orders is not used for pegging until the batch order output is posted.