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.

Product

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:
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.

Input – formula consuming the recycled product
The recycled product is added as a normal formula line on the formula:
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.

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:

Co-product
By-product
BOM
Formula
Planning Item
None

User must choose between the following options:

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.
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.
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.
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.
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
None, if product does not belong to any of the other types

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

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
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
Catch weight items cannot have production type ‘BOM’ because BOMs do not support dual unit of measure products.
Catch weight items cannot have production type ‘Planning item’ because planning items do not have inventory
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.
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.
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.
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.
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.

Tag: production type

Support for Recycled By-products in AX 2012 R3 CU8

Setup products with process manufacturing