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If It Doesn’t Have Shop Floor Control, It’s Not Manufacturing Cloud ERP

There are many Cloud-based ERP alternatives available but very few of them provide the shop floor control software that manufacturers needs. That’s because most Cloud ERP software is created from either an accounting or customer relationship background. Manufacturing Cloud ERP solutions are in the great minority. Here is what to look for from a shop floor software aspect to determine if the ERP software you are reviewing is, indeed, Manufacturing Cloud ERP.

Does the Shop Floor Control manage the life cycle of the work order and the routing that is used as a basis for defining the steps or processes that are required in the assembly and/or manufacture of the item on the shop floor? Verify that the ERP also has Scheduling and Capacity Planning software contained in a separate module as it will be needed in conjunction.

Shop Floor module capabilities should include Routing Maintenance, Work Order Add and BOM Explosion, Work Order Firming, Work Order Release and Operation Extract, Work Order Pick, Work Order Operation Time Booking, Work Order Operation Quantity Recordings, Work Order Receipt and Backflush, Work Order Cost, Rework Work Orders and Refurbishment Work Orders. Here’s why.

Routing Maintenance
Before defining the Routing, the labor grades, departments, work centers, machine master files and processes must be defined by the manufacturing engineer (and cost accountant when denoting the labor grades and departmental standard labor and overhead rates). Those master files having been defined, a Routing can be established for each item.

The Routing will be comprised of a series of steps (i.e. operations). Each operation will denote the work center, machine (if appropriate), labor grade and process plus the time it takes to do a unit or a batch of work. These times can be Setup, Labor Assembly or Machine Time.

An operation can also be identified as an ‘outside operation’ where the assembly is sent to a vendor for additional processing. For those organizations that want to control the operation’s effectivity date (e.g. the ability to phase in/out certain operations) by item revision or by change order, this capability is also provided.

The Routing can be defined at an item grouping level so that one isn’t required to develop a specific routing for each item yet can still gain the benefit of shop floor operation tracking for a given work order. Routings are also used in a Standard Cost Rollup to compute the labor, direct labor overhead, fringe overhead, machine overhead and subcontract labor cost components of the standard cost of the manufactured item.

Work Order Add and BOM Explosion
Typically the work order will be added by the Material Requirements Planning software (MRP) and then firmed by the material planner. However, in a Manufacturing Cloud ERP, the capability exists to manually add the Work Order in the Work Order Work Bench at a ‘firmed’ status. The user only needs to denote the Item, the Project (if project control is active), the Due Date and the Quantity (and if this is a special type of work order termed ‘rework order’ or ‘refurb order’).

The Work Order Work Bench should then enable the user to explode the Bill of Material. This process will use the derived scheduled pick date of the components and retrieve the effective bill of material and create work order demands, one for each component. The work order demand quantity required is calculated by multiplying the bill of material quantity per by the work order supply quantity required. There should be an additional capability to get bill of material ‘override’ information that will denote which work center components should be issued to so that the work order demand will be added with work center ‘issued to’ information.

Work Order Firm
You want to assure that planned work orders generated by MRP can be firmed by the material planner. This action will indicate that the planner has taken control of this order and insure that MRP will not delete or modify this work order in the next planning run. However, MRP may make suggestions to the planner of required changes.

Work Order Release and Work Order Operation Extract
Prior to picking the material from stock, the work order is ‘released’ which is an indication that Production Control now supervises the management of the work order. As part of the work order release process, the work order operation extract will create the work order operations from the effective routing. If there are any work order component demands that designate that components are to be issued to the work center, as part of this extract, the work order component demand will be linked to a work order operation.

Work Order Pick
The next step in the process is the Pick Process of components from stores. Production Control should be able to denote that the work order is to be picked and a work order pick list for all components that are not back-flushed will be made available to the store room for picking and sending to the shop floor. Stores will also record the quantity issued.

Work Order Time Booking
Be sure that the direct laborer can record the times spent on an operation. These times are recorded in terms of hours (or fractions of hours). Machine times can also be recorded where appropriate.

Work Order Quantity Recordings
Check to see that the quantity completed and moved to the next operation can be recorded. Based on the routing operation indicators, one transaction could be used to record both a ‘complete and move’ or one transaction can be used to record the ‘complete’ and a second to record the ‘move’.

Work Order Receipt and Back-flush
The quantity that is completed at the last operation and is received into inventory is the Work Order Receipt. For those work order component demands identified as back-flush items, the appropriate ‘work order demand issue’ from inventory will automatically be done as part of the work order receipt.

Work Order Cost
The work order contains all of the costs associated with material component issues and labor and machine time recordings. In a standard cost environment, the work order close process will compute the work order variance.

Manufacturing Light Software Is Not Enough for Manufacturers

If the Shop Floor Control aspect of the Cloud ERP you are reviewing does not have the above attributes, it is not a Manufacturing Cloud ERP. If you are a manufacturer, you need to keep looking.

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