Some important concepts regarding Production

Production is a complex multi-level module and has some concepts which need to be explained and cleared. Ginesys has a multi-level BoM with a great many combination of processes, routes, sub-assembly items and alternate plans. Here is the explanation for some of the concepts involved in Ginesys Production module.

Please note that this article is a work in progress, with newer concepts added and existing ones modified as dictated by domain or technical requirements.

General Concepts in Production

Types of Manufacturing Processes

Made to Order

When manufacturing is done on the basis of orders received from customers and no stock is maintained by the manufacturer then the process is known as Made to Order. It may be used by manufacturers who -

Either do not have space or infrastructure to stock products.
Or produce and sell customized products.

Made to Stock

When manufacturing is done to keep a ready stock knowing that orders will come from customers, then the process is known as Made to Stock. It may be used by manufacturers who -

Have space or infrastructure to stock products.
And produce and sell non-customized every day products.

Made to Assemble

When manufacturing is done to keep a ready stock knowing that orders will come from customers but may need to be customized, then the process is known as Made to Assemble. It may be used by manufacturers who -

Have space or infrastructure to stock products.
And produce and sell customized products.

Types of Material

Raw Materials

Raw materials are basic materials or substances used in the primary production or manufacturing of finished products, energy, or intermediate materials which are feedstock for future finished products. They are often called Commodities and bought and sold on commodities exchanges globally. These have both Inventory and Finance impacts.

For example - In garment manufacturing; fabric is one of the raw materials.

Sub-categories of raw materials

There are two subcategories of raw materials, which are:

Direct materials - These are materials incorporated into the final product. For example, the wood used to manufacture a cabinet.

Indirect materials - These are materials not incorporated into the final product, but which are consumed during the production process. For example, the lubricant, oils, rags, light bulbs, and so forth consumed in a typical manufacturing facility.

Semi - Finished Goods

Semi-finished goods or Intermediate goods are products, such as partly finished items, used as inputs in the production of other goods including final goods. A company may make and then use intermediate goods, or make and then sell, or buy and then use them. They may also be called Producer Goods and have both Inventory and Finance impact. They are also called Work-In-Progress (WIP) Material. It is unavoidable inventory which will be created in almost any manufacturing business. On a balance sheet, work-in-progress is considered to be an asset because money has been spent towards a completed product but because the product has not been completed, however, WIP is valued lower.

For example - In garment manufacturing; in a set of garments each different piece may be considered as a semi-finished goods.

Finished Goods

Finished goods are goods that have been completed through the manufacturing process, or purchased in a completed form, but which have not yet been sold to customers. Goods that have been purchased in completed form are known as merchandise. These have both Inventory and Finance impacts.

For example - In garment manufacturing; a finished, packed and labelled product, ready to grace the racks of a shop, is a finished goods.

Types of Item

Assembly Item

Assembly Items are component or end items comprising of a number of parts or sub-assemblies put together as an inventory item. These may sometimes be disassembled without destruction. An assembly item at one point may be treated as a sub-assembly item at another point.

For example - In garment manufacturing, a kurta or a shirt or a skirt or a trouser etc. are assembly items.

Sub Assembly Item

Sub Assemblies are parts to be put together as a unit, in the making of a larger assembly or a final or higher item. A sub assembly in one case, may be an assembly at another. These items have inventory impact but have no Finance impact.

For example - In garment manufacturing, in case of a shirt - the cuffs, the collar, the pocket, the front , the back, the half-finished shirt are all sub assembly items.

Alternate Item

Items received in the Job Receive which are different from the items ordered through the Job Order. The alternate item must belong to the same article and route group.

For example - In garment manufacturing, suppose the Job Order has item A001 (red shirt) but while receiving through the Job Receipt its found that the jobber has produced the item T002 (red top) then it will be received as an alternate item provided A001 and T002 both belong to the same article and route group.

Types of Raw materials Issue

There are various methods of issuing raw materials in Ginesys -

Pull on Order

When raw materials are issued from Job Order and inventory out for it happens at once.

Pull on Completion

When raw materials are issued from Job Receipt but physically it is issued at the time of ordering. Alternate raw material issuing is possible in this case.

Push

When raw materials are issued from WIP Transaction and the job order is created much before.

Miscellaneous Concepts of Production as used in Ginesys

BOM (Bill Of Materials)

A bill of materials (a.k.a. product structure, may sometimes also be called BOM or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to manufacture an end product. A BOM could be a channel between manufacturing partners or limited to a single production plant. A bill of materials could be connected to a production order which may process components in the bill of materials that are in stock and create requisitions for components that are not in stock.

Plan - Planning Master / Working Plan

Production planning is the planning for manufacturing activities in a company or industry, using the allocation of resources like man-power (employees), materials and production capability, to serve different clients.

It consists of the following activities:

Determination of the required product mix and factory load to satisfy customers' needs.
Matching the required level of production to the existing resources.
Scheduling and choosing the actual work to be started in the manufacturing facility.
Setting up and delivering production orders to production facilities.

Planning Master is the main container of all plans of production while Working Plan is the individual plan involved in the production of the items for a particular site.

Job Order

A job order is an internal document extensively used by manufacturing businesses. In a manufacturing environment, a job order is used to signal the start of a manufacturing process and will most probably be linked to a bill of material.

Job Receipt

Job Receipt is raised when goods are received from production unit, either based on a Job Order or on adhoc basis.

WIP Material Transaction

This is a document recording the transaction of WIP material as it is sent to or received (unused and wasted material only) from each jobber.