Tag: compliance

Process manufacturing Dynamics AX2012 capabilities

A lot of poeple have asked me what can process manfuacturing do in Dynamics AX2012? This post will hopefully serve the purpose.

Process manufacturers deal with resource rich industries on buy side and with aggregators & retailers on sell side, both having larger bargaining power. The constant squeeze between two powerful groups’ reduces already thin margins and this is likely to exacerbate for US & Western European manufacturers in the coming years as manufacturers in the emerging markets stake their claim for even larger share of the pie.

Process manufacturers therefore continuously need to reduce costs, improve quality & maintain security standards to be able to keep their margins in the markets that are important to them.

Process Manufacturing for Microsoft Dynamics® AX 2012 (formerly known as process industries or PI) gives process manufacturers a low cost solution that can model lean, discrete & process manufacturing in one box, is versatile & flexible to model new organizations, products or processes, supports most common multi-X scenarios and can be extended to support specific vertical requirements without the need of additional IT investments.

Process Manufacturing for Microsoft Dynamics® AX 2012 enables manufacturers and distributors of natural, industrial or consumer packaged products to control costs, increase profitability, maintain stringent quality standards and manage compliance using a familiar user interface on an advanced technology platform with cost of ownership that is significantly lower than the competition.

Process manufacturing for Microsoft Dynamics® AX2012 is available in two different SKUs. Process Manufacturing logistics is targeted at customers who would like to automate their distribution processes for products that are usually manufactured in a batch or semi-continuous processing environment. Process Manufacturing production is targeted at customers who would like to automate their batch or semi-continuous manufacturing processes. Process manufacturing logistics SKU is a pre-requisite for process manufacturing production SKU.

Both SKUs contain enough functionality that can also address some needs of customers with discrete manufacturing environment. Key functionalities enabled by process manufacturing are:

  • Maintain complex formulae
  • Manage short life products
  • Manage commodity pricing
  • Manage product compliance
  • Setup & apply complex rebates
  • Advanced lot tracking & control
  • Enhance cost management of multiple outputs
  • Procure, store & sell products in dual units of measure
  • Manage production for assembly or disassembly for single or dual units of measure

SKU 1- Process manufacturing production

Process manufacturing production for Microsoft Dynamics® AX 2012 enables manufacturers of processed goods to quickly define complex formulae, to accurately control production costs, to easily model discrete & process production scenarios and to switch between make or buy decisions with agility.

FORMULA MANAGEMENT

  • Easily model disassembly sequences or products with multiple outputs in different batch sizes or multiples
  • Effectively model batch processed products that are consumed into a discrete or lean assembly or model discrete or lean sub-assemblies consumed into multiple output products
  • Flexibly consume or produce products in dual units of measure with constant or varying consumption
  • Dynamically calculate ingredient consumption even for items consumed non-linearly in single or dual units of measure
  • Maintain with ease many formulae for producing same product by using different material combinations or for producing different products using same combinations
  • Setup, measure & improve production yields by having the flexibility to define yield for several different combinations and comparing it to the production results
  • Quickly scale some or all ingredients in the formulae based on available inputs to estimate outputs
  • Reduce inventory & purchasing costs by defining several alternate ingredients and consumption priority for each on the formula
  • Easily toggle security restrictions on formulae access by activating any of the four built-in security levels
  • Control packaging material costs by setting up configurable products as different packaged products and linking them to processed products

PRODUCTION MANAGEMENT

  • Reduce waste by using production policies to ensure right formula for production is automatically selected based on a given tank size and other factors
  • Link multiple packed productions to multiple bulk productions. Consolidate them to improve operational efficiency, minimize bulk storage and optimize packed product production
  • Quickly add, remove or alter number, type or amount of multiple outputs
  • Improve profitability for each of the multiple outputs in a production by accurate allocation of costs over them before, during or after production & revalue goods by comparing actual with estimated costs
  • Always produce to customer specifications by ensuring discretionary picking of ingredients based on certain attributes
  • Rapidly react to a change in production conditions based on results of automatically created quality orders
  • Consume ingredients and produce multiple outputs in dual units of measure and record nominal or actual values in such units all through the process
  • Achieve real time visibility on plant floor and at higher levels by re-sequencing jobs based on actual capacity on the floor and by recording production output on such jobs in dual units of measure and for multiple outputs

SKU2 – Process manufacturing logistics

Process manufacturing logistics for Microsoft Dynamics® AX 2012 enables distributors of processed goods to forecast and plan supply & demand and to manage procurement & sales in dual units of measure natural or consumer packaged products with short or long shelf life while meeting strict quality standards, complying with regulatory requirements & providing visibility into profitability for the distributor.

DUAL UNITS OF MEASURE MANAGEMENT (CATCH WEIGHT)

  • Easily create & release products with dual units of measure to multiple legal entities
  • Seamlessly manage products with dual units of measure through forecasting, planning and production and be able to define & view such products on forecasts, planned orders, demand & supply views, and on production and consolidated orders
  • Manage flexibly single and dual unit of measure products on purchase requisitions, purchase agreements and release order lines together with stocked and non-stocked products
  • Manage flexibly single and dual unit of measure products on sales quotations, sales agreements, release order lines and delivery schedules together with stocked and non-stocked products
  • Improve product yield and operational efficiency by recording actual values in both units of measure at every stage of the process

LOT MANAGEMENT

  • Enhance backward traceability and reduce time required for recall by integrating information about vendor batches for purchased lots into manufactured lots of semi-finished or finished products
  • Improve profitability by differentiating product based on specific product characteristics per lot & only shipping lots that meet certain company or customer criteria
  • Reduce costs of rework by arresting the progress at any stage for any process, of a poor quality lot through various supply chain processes
  • Enhance lot control with the ability to record and recall as needed, characteristics of an inventory lot as procured, produced or as sold
  • Measure quality of each lot with or without dual units of measure for single or multiple production outputs at any stage of processing and attach such results to the inventory lot
  • Increase customer satisfaction and reduce cost of rework by meeting all demand of a particular customer from the same lot if so desired
  • Enhance operational efficiency and order promising by having the ability to instantly search all inventory and find lots with specific characteristics
  • Improve inventory visibility by having access to all the inventory lots and associated functions in one unified view

SHELF LIFE MANAGEMENT

  • Manage plan, procure and sales processes for fresh, frozen or long shelf life products based on expiry period or best before period
  • Improve warehousing efficiency by earmarking locations based on product shelf life and issuing goods only as per process or customer requirements
  • Reduce waste by using the ability to retest shelf life products reaching the end of their shelf life
  • Improve order promising & reduce stockouts by incorporating shelf life information into planning processes and planning views
  • Differentiate service and increase profitability by incorporating residual shelf life demanded by customer at ship-to location

WAREHOUSE MANAGEMENT

  • Manage full or partial visibility dual units of measure based products through all inbound and outbound warehouse processes
  • Increase warehouse efficiency by using the ability to mix products in same shipment that are constrained by varying levels of additional requirements like ship from single lot, based on specific characteristics, shelf life and dual units of measure

REGULATORY COMPLIANCE MANAGEMENT

  • Receive, store and send product safety data sheets for hazardous products as needed
  • Keep product safety data sheets current with the company and customers
  • Comply with local regulatory agencies by restricting or regulating the sale of certain products in certain regions
  • Record necessary compliance related product data for various regulatory agencies
  • Record usage data for all products and use available third party integrated service to calculate usage of regulated substances for yearly reporting
  • Manage quality and compliance by ensuring that certain products can only be supplied by approved vendors

REBATES MANAGEMENT

  • Improve profitability by managing different rebate & trade merchandising programs for different customer segments
  • Monitor and manage rebates processed either at invoicing or accumulated by user defined periods. Rebates can be setup by different currencies, units of measure or by differing qualifying levels and can be paid to customers by several different methods

COMMODITY PRICING MANAGEMENT

  • Effectively react to changing commodity costs so the prices of sellable goods always stay current with the market
  • Manage sellable product prices such that trade agreements are always up to date and new contracts reflect the price change

You can find more detail about how to use process manufacturing capabilities in the product on technet

Setup products with process manufacturing

Introduction

Microsoft Dynamics® AX 2012 provides an easy & flexible way of creating & releasing new products. Products can be created in a central company and then released to other companies that transact them. For simpler scenarios, it is possible to create products in particular legal entity; Dynamics AX 2012 creates them in the central company in the back-end and releases them to the concerned company.

However if process manufacturing is used, different properties can be setup on these products depending on customer requirements for instance some products maybe short life products while others maybe dual unit of measure products and so on.

This blog provides an overview of properties that can be set on products to enable different functionality in process manufacturing solution. Hopefully, it will help application consultants and pre-sales consultants who need to understand the system for either preparing for a demo or for implementing at a customer site.

Overview of properties that can be defined on the product

When process manufacturing is used, several additional product properties can be specified depending on the requirements. These properties can be grouped into following buckets:

  • Production
  • Inventory unit, storage & tracking dimension
  • Vendors
  • Inventory batch attributes
  • Containerized packaging
  • Product compliance

Production related setup

Production type

After creating a new product user must setup production type for the product. This field determines behavior of the product in the system subsequently. There are several validations that depend on this setup. Therefore this is an important decision and usually not expected to change once product setup has been completed.

Production type can have following values:

  1. Co-product
  2. By-product
  3. BOM
  4. Formula
  5. Planning Item
  6. None

User must choose between the following options:

  1. Co-product: when the product is produced as part of producing another product. Usually when production type is set to co-product, the product is also setup as a co-product on one or more formula versions of other products.
  2. By-product: when the product is produced as part of producing another product. Usually when production type is set to by-product, the product is also setup as a by-product on one or more formula versions of other products.
  3. BOM: when the product is produced using a bill of material as opposed to being produced using a formula. The property can be changed later as long as there are no associated transactions.  
  4. Formula: when the product is produced using a formula as opposed to being produced using a bill of material. The property can be changed later as long as there are no associated transactions.  
  5. Planning item: when the product is produced using a formula in a disassembly scenario. The property can be changed later as long as there are no associated transactions
  6. None, if product does not belong to any of the other types

There are several validations that help the user with this setup:

  1. A co-product or a by-product cannot be changed to ‘BOM’ or ‘formula’ if the product already exists on formula version of another product
  2. If a BOM or formula is changed to ‘co-product’ or ‘by-product’ then user is prompted to accept that all formulae attached to the product will be removed
  3. Catch weight items cannot have production type ‘BOM’ because BOMs do not support dual unit of measure products. 
  4. Catch weight items cannot have production type ‘Planning item’ because planning items do not have inventory
  5. Any production type can be changed to ‘Planning item’ as long as there are no existing inventory transactions for the product, user is prompted to either keep the existing formula versions or remove them. If any approved formula and/or versions exist for the product, they are unapproved.
  6. A production type of ‘BOM’ can be changed to ‘Formula’ and vice versa but user will be prompted to delete existing BOM or formula versions.
  7. Access to buttons on the ‘released products’ list page ribbon depends on the value in this field, so for instance, lines button inside formula button group on Engineer tab is disabled for all products except those with production type of formula.
  8. Default order type in default order settings form is automatically set to production when production type for a product is set to BOM or formula since the assumption is that this product is most likely produced. Default or per site supply policy can be changed at any time and will determine whether planned purchase order, planned production order or a planned transfer order is created irrespective of production type.
  9. Creation of Kanbans is supported for common scenarios like a purchase kanban can be created for a product with production type ‘None’, if so desired.

Max. Report as finished

Using this option, user can calculate the quantity of finished product that can be produced given the amount of ingredients on-hand. The form can be used for products with single or dual units of measure (catch weight products). 

Inventory related setup

Catch weight

During product creation, user can chose if the product is a catch weight product. If a product is chosen such, then it is considered to be catch weight product in all legal entities. Usually only one unit conversion will be defined globally and the product will be traded in that unit and inventory unit with defined conversion between them for all legal entities. However, different conversions can be defined if the product is transacted with different nominal weights in different legal entities.

It is not allowed for the product to be catch weight traded in one legal entity and not catch-weight traded in another.

Product masters and service type products can be setup to be catch weight products

Catch weight products can be of two types. Type of the product and business process will determine which of the two catch weight methods is used.

Full visibility catch weight

To setup a full visibility catch weight product, serial tracking dimension have to be turned on with serial number control checked. This usually works when (1) each individual unit is important enough to be tracked like expensive hams or cheese, (2) there is variation in weight possible within a narrow range and (3) weight is entered once at a process stage after which it is not expected to change.

Partial visibility catch weight

To setup a partial visibility catch weight product, it is not necessary to have serial tracking dimension turned on. It is also not mandatory to have batch tracking dimension turned on, however that will be considered as an edge case. Partial visibility catch weight works best for products that are usually not measured and controlled as single units and for which weights vary within a narrow range and can be changed one or more times during the process for example a sack of potatoes or a box of chicken parts.

Item model group

Several critical parameters for a product can be setup here, these are defined here:

Stocked product: it is not allowed to setup a catch weight product with an item model group that has this flag unchecked

Same batch selection: sales agreements & sales order lines for a product with such setup will have same batch selection flag checked by default, it can be toggled as desired

Consolidate requirement: Requirements that fall outside one batch can be consolidated together into a larger batch if this field is setup in item model group

FEFO date controlled: the flag determines if inventory reservation for the product should follow first expiry first out principle or not. If this flag is checked, user can select whether the principle should be applied based on best before date or expiry date. If the principle is applied based on best before date and if the product is setup with batch tracking dimension turned on then it is mandatory to fill in the best before period in days in the released products details page. Similarly, if the principle selected is expiry date and if the product is setup with batch tracking dimension turned on then it is mandatory to fill in the shelf life period in days in the released products details page.

Batch disposition code: every inventory batch created for the product defaults to the batch disposition code supplied here

Purchase registration: if a product is setup with this option, users get option to record vendor batch information like vendor batch number, country of origin etc., while registration of a purchase order line

Approved vendor check method: the value in this field is defaulted to the product as soon as it is created, it can be toggled at any time

Default order settings

Define default order type that will be used by master planning to determine what kind of planned order should be created to meet the demand. Here user can also specify multiple, minimum order quantity, maximum order quantity and standard order quantity for catch weight products.

Note: when process manufacturing is used, multiple quantity specified on inventory tab for both catch weight and inventory units is only used for transfer orders. Multiple specified on formula is the one used for production.

Bulk item conversion

It is possible to setup conversion between a bulk and a pack item for any product that has a production type of formula. When such a product is selected on released products list page, bulk item conversion button becomes available.

Multi-dimension on-hand

It is possible to check on-hand in multiple dimensions for any product that has been setup with different packing configurations. When such a product is selected on released products list page, multi-dimension on-hand button becomes available for clicking. Note: it is recommended to use containerization (bulk/pack) functionality instead of containers functionality. Containers functionality will most likely be deprecated in a subsequent release.

Consolidated on-hand

It is possible to check on-hand (1) for bulk item, (2) for pack item in pack units and for (3) pack item in bulk item units for any product that has been setup as a bulk or a pack item. When such a product is selected on released products list page, consolidated on-hand button becomes available for clicking.

Inventory batch attributes

On released products list page, three options are available to (1) setup inventory batch attributes per product (2) setup inventory batch attributes per product and customer and (3) search available inventory batches based on certain batch attributes

Note: Inventory batch attributes functionality that is specific to inventory batches in Process Manufacturing is different from Product attributes functionality which is specific to products.

Product specific: When a product with batch tracking dimension active is selected on released products list page, this button becomes enabled. Using the form that opens up, user can setup a specific inventory batch attribute for the product.

Customer specific: Once a product has at least one inventory batch attribute attached, buttons customer specific and search inventory become available. Using the form that opens up, user can setup a specific inventory batch attribute for a product & customer combination. The minimum, maximum, tolerance action & increment are selected from the product specific setup done earlier. However these values can be changed on this particular record for the customer as long as the new range specified is narrower than the one specified for the product.

Search inventory: clicking this button will open a form that shows the existing inventory batches that match the criteria already setup for search. If user wishes to change the search criteria, this can be done by using the batch attribute search form.

Compliance related setup

Regulated products

Using this option, user can setup countries and regions where a particular product is (1) regulated or (2) regulated and reported. If the product is reported as well, then reporting lists need to exist in the system before this setup can be done.

Restricted products

Using this option, user can setup countries and regions where a particular product is restricted. System assumes that there is a public restriction list on which this product exists, therefore restriction lists need to exist in the system before this setup can be done.

Product Safety Data Sheet

Using this option, user can setup product safety data sheets in various languages and versions. The sheets can be activated as needed. If the records are changed, then a modification reason can be entered and log of changes can be maintained.

Note: there are several parameters in inventory module that control the display and timing of alerts specific to events that may occur related to product safety data sheets.

Reporting details

Using this option, information can be set up about allowed limits from various authorities for usage of this product. Also use this form to setup CAS numbers for the product. The form also has a function to calculate the quantity consumed, produced and on-hand currently for the product.

Purchase related setup

Approved Vendor List

If a product can only be supplied by certain vendors then this information can be set up using buttons available on purchase tab of release products list page. Users can also define the time period in which these vendors are allowed to sell products to company. Note: the time period uses date effectivity framework like in many other parts of the application, which makes it easier to setup this information.

It is also possible to query from released products list page, (1) vendors that are allowed to supply a certain product for any time period and (2) vendors that are allowed to supply the product as on a particular date.

Managing compliance with Process manufacturing in Dynamics AX2012

Companies in process industries usually manufacture products that are subject to varying degrees of regulation by regional, national or global organizations to safeguard workers and/or consumers. For instance DDT is banned in most countries but allowed in some countries or use of asbestos is completely banned but use of benzenes up to 5mg/Kg in toys is allowed in EU.

Process Manufacturing for Microsoft Dynamics® AX 2012 provides a rich toolset for food, drug and chemical manufacturers to manage products containing restricted and / or regulated substances. Process manufacturing solution has been extended further by several ISVs to meet specific requirements of chemical and pharmaceutical manufacturers.

First it is important to familiarize with key terms and definitions as used in Dynamics AX2012

Regulated product

A product is considered to be a regulated product if it is regulated by a government authority and if it requires compliance and audit reporting.

Restricted product

A product is considered to be a restricted product if its distribution is limited or constrained by a government authority.

Reported product

Reported product is a product that is regulated and company is required by regional or national authority to provide usage data on the product.

Product safety data sheet

Product safety data sheet is a brochure that contains handling, emergency and other related information about the product for example, flash point, boiling point etc. of the substance.

Now, follow these steps to setup controls on your products.

Inventory setup

Restriction lists

Restriction lists for countries and regions can be setup in Inventory management module. There are two types of lists – inclusive and exclusive. Inclusive type lists need to be setup for a country before exclusive type list can be setup for its regions.

Figure 1 – maintaining regional lists for restricted products

If number of regions in which product is allowed are more than the number in which it is not allowed, setup an inclusion list for country and an exclusion list for provinces where it is not allowed. If the product and excluded region appear together on a sales order line, system will throw a warning and prevent the sale.

Once the restriction lists are setup, products can be added to such lists. Once products are added to such lists, they are treated by system as restricted products.

Figure 2 – maintaining individual products on a specific restricted products list

Regulated and reported products

Regulated products and reporting lists for countries and regions can be setup in Inventory management module. If the product is only regulated in a country or region then it need not be marked as reported. However if usage data of a product needs to be reported then it needs to exists on a reporting list.

Figure 3 – maintaining regulated products and reporting lists

In the adjoining figure, all products that are regulated in Germany but not reported can be setup against the last record in the table. All other records are for specific reported lists and hence will contain only products that need reporting in specific regions on given reporting lists.

Product safety data sheet

Using this form, default parameters like validity interval and expiry advice interval for product safety data sheets can be setup.

Figure 4 – maintaining defaults for product safety data sheets

   

Setup on Released products list page

Figure 5 – Options available on released products list page to maintain compliance data

Once standard lists are defined in the inventory management module, individual products can be added to such lists from the released products list page.

Regulated products

A (1) regulated or (2) regulated and reported list needs to exist before it can be selected from this option. The user is only able to see the country/ region in the list if a list is already defined. Using this option is faster if a product exists on multiple lists. 

Restricted products

A restricted list needs to exist before it can be selected from this option. The user is only able to select the list ID for a given country/region if a list for that combination is already defined. Using this option is faster if a product exists on multiple lists. 

Safety data sheet

Using this option, user can setup product safety data sheets in various languages and versions. The sheets can be activated as needed. If the records are changed, then a modification reason can be entered and an update log is automatically maintained.

Note: there are several parameters in inventory module that control the display and timing of alerts specific to events that may occur related to product safety data sheets.

Reporting details

Figure 6 – maintaining compliance data as required by a specific regulating authority

Using this form the user can setup additional information as required by some US-centric regulatory authorities. This information can be printed to documents or exposed to external interfaces as maybe needed. If a substance name as defined by a regulatory body is referenced from an external system, then all the product related information attached to such a name can be retrieved. Regulatory authorities covered by this form are as below.

v  EPCRA: Emergency, Planning and Community Right-To-Know Act

v  CERCLA: Comprehensive Environmental Response, Compensation, and Liability Act

v  TSCA: Toxic Substances Control Act

v  TRI: Toxics release Inventory from United States Environmental Protection Agency

v  OSHA: Occupational Health and Safety Administration

v  EHS: Extremely Hazardous Substances

Figure 7 – viewing usage data

Using this form, the user can check the usage data for a particular product. Such information can then either be exposed to custom reports or provided to external systems electronically. CAS numbers (Chemical Abstract Registry) can be linked to the product on this form. 

Using product safety data sheets

Figure 8 – using product safety data sheets

If a product is regulated and if a product safety data sheet already exists then it automatically appears during purchase order or a sales order entry. If a new safety data sheet or a newer version of existing data sheet is received from a vendor then it can be added during purchase order entry. If a new or existing data sheet is to be sent to a customer then that can be added to the log as well. This form keeps a log of all safety data sheets sent or received on each order. Parameters can be setup in inventory management module to control the system behavior regarding safety data sheets at various points in the logistics process.

Figure 9 – setting up product compliance parameters

As shown in adjoining figure, parameters in the inventory management module can be setup to receive warnings and / or e-mail notifications during following processes

v  Purchase order entry

v  Sales order entry

v  Sales packing slip posting

v  Sales invoice posting

Figure 10 – warning received during purchase order entry

Figure 10 shows one such warning received when a product set to be regulated in Germany is received in a company with German address and if product safety data sheet for such a product is in expiry advice interval.

Figure 11 – parameters control printing and posting on sales packing slip

Figure 11 shows how sales packing slip or invoice posting can be prevented from sales packing slip. It also shows that product safety data sheets attached to the sales order can be optionally printed along with the packing slip posting if setup on parameters in inventory management module.

Hopefully with the help of above setup you will be able to utilize regulatory compliance capabilities in Process Manufacturing for Dynamics AX2012.