Plan and produce

A plan says what to make; manufacturing orders say how; confirmations issue the components, post the resource cost and receive the finished goods; the month-end settlement posts the cost variance.

Phase

Daily work, with a month-end step

Who

The production planner plans and orders; the store keeper reserves and transfers; the supervisor confirms; the cost accountant settles

How often

Per batch or job; settlement monthly

Screens

Master Planning, Material Requirement Planning, Manufacturing Order, Manufacture Order Confirmation or Manufacture Operation Confirmation, Production Order Periodic Settlement

What it is for

The process turns demand into stock. Master Planning holds the demand, typed or copied from sales orders. Material Requirement Planning works out what the plan needs and raises requisitions and orders. The Manufacturing Order reserves the components and is released. The Manufacture Order Confirmation is where value moves.

The rule people get wrong: the manufacturing order posts nothing. Stock and cost move only when output is confirmed, and the finished good comes into stock only if a receive journal is set.

Before you start

• Made items released with Replenishment for manufacturing, BOM Unit, Type, Manufacturing Category and Manufacturing Unit (Release Item In Legal Entity).
• An approved Bill Of Material or Formula valid on the order dates, and a Routing if resources are costed.
• Manufacturing Unit with input and output warehouse lines.
• Journals for issuance, receipt and resource on Manufacture and Controlling Setting.
• Resources with debit and credit accounts (Resource in Company setup; the same resources are used by plant maintenance, see Resource there), and a default warehouse on every component.
• For MRP, warehouses marked Required in MRP (Warehouse).

The process at a glance

#	Screen	Who	What you do	What it creates
1	Master Planning	Planner	Type lines or copy sales order lines; Save	A plan
2	Material Requirement Planning	Planner or buyer	Run on the plan with Validate Available Stock; Save	Draft purchase requisitions and Planned manufacturing orders, as ticked
3	Master Planning	Planner	Next Action Create Manufacturing Order, for orders not raised by MRP	Planned manufacturing orders
4	Manufacturing Order	Planner	Check BOM and routing, reserve, balance batches; Release	A released order, reservations, a transfer request when the site is set to
5	Manufacture Order Confirmation	Supervisor	Confirm quantity, actual consumption and hours; Save	Component issue, resource voucher, production receipt
6	Production Order Periodic Settlement	Cost accountant	Settle up to month end; Save	A settlement voucher

Steps

1. Open Master Planning (Manufacturing › Manufacture). Give the plan date, dates and manufacturing unit, Create, and copy the Sales Order lines or type them. Save.
   • A copied line cannot be planned below its ordered quantity.
2. Open Material Requirement Planning (Master Planning). Pick the plan and the date the BOMs must be valid on, tick Validate Available Stock and what to raise, Create, check the summary, Save.
   • Requisitions are raised as drafts for the buyer to release in purchasing.
3. Raise the manufacturing orders: from the plan with Next Action Create Manufacturing Order, from MRP, or by hand on Manufacturing Order picking the plan.
4. Open each order. Check the Bom/Formula and Routing, reserve the components (Always Manual components must be fully reserved), run Batch Balancing for active ingredients, then Release.
   • From here the order no longer follows the plan, and its BOM lines are fixed once confirmed.
5. Confirm output on Manufacture Order Confirmation, or operation by operation on Manufacture Operation Confirmation. Save.
   • The order closes when the confirmed quantity reaches the order quantity.
6. At month end, run Production Order Periodic Settlement up to the last day. Save.

What posts

Document	When	Debit	Credit
Component issue, generated by the confirmation	Save, lines with flushing B	By the components' item posting	Inventory of the components
Resource voucher, generated by the confirmation	Save	Each resource's debit account	Each resource's credit account
Production receipt, generated by the confirmation	Save, Good and Reject output, when a receive journal is set	Inventory of the finished good	By the item posting
Production Order Periodic Settlement	Save	By the screen's posting keys	By the screen's posting keys

A confirmation is undone with Reverse on its toolbar: the issue, voucher and receipt are reversed and the quantity comes off the order. The details are in What posts.

What happens

• Components leave their warehouses, the finished good enters the output warehouse with its batch.
• Reservations made for the order are completed when it is fully confirmed.
• The order moves Planned, Released, Closed; the plan line shows what has been manufactured against it.
• Closed orders' confirmations wait for the month-end settlement.

How the variants differ

	Make to order	Make to stock
Plan	Copied from sales orders	Typed by the planner
Orders	Next Action on the plan, with the sales order line's BOM lines	From MRP or by hand, with the item's BOM
Process orders (formula)	Batch yield and active ingredients balanced before release	Same
Rework	Type Rework on the order, naming the batch	Same

Common mistakes

• "There is an problem in Production Unit Input/Output Warehouse" on the order. The manufacturing unit has no line matching the item category and type. Add a general line.
• "Please reserve the items" on Release. A component with reservation type Always Manual is short. Reserve it or change its reservation type.
• The finished good is not in stock after confirming. No Journal For Receive on the setting.
• "Please Define Issuance Journal in Setting". Set the issuance journal (company-wide or per site).
• The BOM is not offered. It is not approved, not valid on the date, for another site, or its usage is costing, template or subcontracting.
• The plan quantity cannot be lowered. It came from a sales order, or its order has been released.

Related screens

• Master Planning - the demand.
• Material Requirement Planning - materials and orders.
• Manufacturing Order - the order, its reservations and release.
• Manufacture Order Confirmation - output and posting.
• Manufacture Operation Confirmation - output by operation.
• Production Order Periodic Settlement - month-end cost.
• Sales Order - the make-to-order demand; see Order to cash.
• Procure to pay - the purchase requisitions raised from MRP.
• Item Receipt From Manufacture and Item Transfer Request - the receipt and transfer documents in Inventory; for subcontracting see How do I send components to a subcontractor?.
• Month-end close - where the settlement fits in the month end.
• How-to pages - one task at a time.