Chapter 1: Introduction to Discrete Manufacturing Basics

CHAPTER 1: INTRODUCTION TO DISCRETE MANUFACTURING BASICS

Objectives
The objectives are: Describe the Production control module's main conceptual building blocks Describe the interconnectivity between the Production control module and other modules in Microsoft Dynamics AX 2012 Define production orders and name the status changes as it passes through the production life cycle Define the main elements that are set up and used when a legal entity works with a variety of production sites distributed over different geographic locations Describe three companies in which production sites, conditions, and processes vary by multisite functionality Provide a brief description of general improvements to the Production control module. This includes filtering and the Gantt Chart Provide a brief description of general improvements to Lean Manufacturing.

Introduction
Introduction to Discrete Manufacturing Basics provides a high level overview of basic elements necessary for understanding the Microsoft Dynamics AX 2012 Production control module. The topics discussed are as follows: Bill of Material (BOM) Resources Routes and Operations Setup and interconnectivity Production order life cycle Kanban functionality

The course also describes multisite functionality as well as a brief example of a hypothetical workflow that includes in-house production.This enables companies to run production and master planning on multiple operational sites.

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Core Concepts in Production

Even though each legal entity's manufacturing processes are unique, depending on the nature of the production environment, the core conceptual elements that are used in the Production control module are frequently very similar.

Overview of Core Concepts

The core concepts in the Production control module are summarized in the following table. Core elements Bill of materials (BOM) Definitions The BOM is one of the most important documents in a manufacturing legal entity. Before a legal entity can produce a product, it has to know what components are to be included and how many of these components are needed to make the end product. The BOM contains all the ingredients, components, parts, or raw materials required to make one finished product. Resources are the legal entity's total working resources. It is anything that is used for the creation, production or delivery of a good/service over and beyond the materials consumed in the process. Resources can be of different types including machines, tools, people, vendors or locations. The route determines the process steps that are needed to produce a finished product. The BOM defines the materials required, the resource defines where the item is produced, and the route determines the sequence of events to build the finished product. Operations are the specific tasks or work processes that are put together in conjunction with a route to produce a specific product. Each task is associated with a time allotment to complete the individual task.

Resources

Routes and operations

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Example: Baking a Cake
The production process is illustrated by using the process of baking a cake as a simple example. When you make a cake you need a recipe (a BOM) so that you know what ingredients you need and can check to see what you have on-hand and what you need to buy, if anything. (This includes specific quantities of sugar, flour, and eggs.) Next, you need access to various "resources". This includes mixers, bowls, pans, an oven, and so on. Finally, you must follow the recipe in a specific series of steps This is the "route" you take to "produce" the end item, that is, the cake. The steps are as follows: 1. 2. 3. 4. 5. Mix ingredients together in a bowl Spread mixture into a cake pan Load cake pan into an oven Cook for 25 minutes Cool for 45 minutes

The baked cake is your finished product. The ingredients and the processes you use to bake this cake would be included in your "Production order".

Bill Of Materials (BOMs)

The Bill of material (BOM) is one of the cornerstones of a manufacturing operation. Manufacturing companies use BOMs to track and plan which components are required to produce an end product. BOM setup is performed under the Inventory and warehouse management module in the Bill of Materials form where user define the specification of the BOM. It consists of all the parts and raw materials needed to make the finished item. Using the previous example of baking a cake, the BOM is the recipe, and the lines of the BOM are the sugar, flour, and eggs. The BOM line can be of four different types. It can be of the type Item, Pegged supply, Phantom, or Vendor. If the cake has frosting, the frosting is another line on the BOM. Because the frosting consists of different ingredients (or parts), it has its own sub-BOM that consists of sugar, milk, and chocolate.

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BOM Line Types
A description of the BOM line types is summarized in the following table. BOM Line Types Item Description This is the raw material used to make the finished product and is frequently a part or a sub-BOM that comes from the inventory; for example, the sugar in the cake. The Pegged Production order should be created when the production order is estimated. basing on the item's default order settings This line type is basically a placeholder for components that are not specifically tracked as long as they are in production, but are instead included and accounted for in the master BOM. Using the cake example again, if there is no need to track the production order itself, and only the components of the frosting are counted. Then the line type can be set to phantom BOM. Only when the frosting is needed during cake production are its components extracted from inventory. If some cakes are produced and sold without frosting, for example, this line type is not active. These are components purchased from an outside vendor. In this case, a purchase order is automatically generated when Master planning is run. This line type is relevant, for example, if the frosting was routinely made by another legal entity and purchased separately when the cake with frosting was produced.

Pegged supply

Phantom

Vendor

Additional BOM Features

Microsoft Dynamics AX 2012 also supports additional BOM features. These are summarized in the following table. Additional BOM features Version control Description Version control allows for the phasing out of an older or no longer used component. BOMs can be set up with multiple versions that have different effective dates. Sub-BOM control allows for sub-BOMs to be sold or planned, or planned either independently or at the same time as the parent production.

Sub-BOM control

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Additional BOM features Subsupplier support Phantom BOMs Description Use this feature to automatically generate purchase orders to outside vendors when Master planning is run. Phantom BOMs allow for the deduction from inventory to occur only when the component is actually needed in the production. Provide a visual view of the BOM tree including the components and subcomponents.

Graphical BOMs

Resource Types
Resources are created in the Organization Administration module.They are used in production along with the calendar to manage the overall capacity of a legal entity's equipment and resources. Each resource can be associated with a resource group. There can be one or multiple resources in any given resource group. The five types of resources that you can create in Microsoft Dynamics AX 2012 are summarized in the following table. Resource Types Vendor Description Use this type when an operation (or task) is performed by an outside resource or subcontractor. A vendor number can be associated with this kind of resource to help with scheduling and tracking. Use this type to define when personnel or a group of employees conduct a particular operation. Use this type to tie an individual machine or group of machines with a resource. It is the most frequently used type of resource. Use this type to control and schedule the reservations of a tool. Use this type only when capacity is limited. Use this type to control and schedule the reservations of a specific location.

Human resource Machine

Tool Location

Overview of Resource Uses

Resources are also used to track: Working times Capacity Ledger postings

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Again, using the baking example, resources include such things as the mixing bowls, mixer, and the oven. In this analogy, the mixer and oven are "machine type resources," while the mixing bowls are resource "tools". Since there can be limited capacity on the use of the oven and the mixer, working times may have to be associated with their availability and general capacity constraints. The Production control module relies heavily on resource functionality for scheduling working times and capacity planning.

Routes and Operations

Each manufacturing route must contain at least one operation. These routes and operations allow Production managers to schedule the production facility. A description of routes and operations in Microsoft Dynamics AX 2012 is shown in the following table. Routes and Operations Route Description A series of interdependent work processes (operations) designed to describe the workflow in the production of one or more items used. This includes the machinery, tools, human resources (resources), and process (operations) to be completed. Specific tasks or work processes that are put together to form a route to produce a specific product. Each task is associated with the time allotment that it takes to complete the individual task.

Operations

Although an operation is defined as a specific task, it is not limited to an individual route; use it in more than one route to build several products or include it multiple times to build the same product.

Example: Routes and Operations

The following example shows how routes and operations interact when the wheels on a toy race car are assembled. Imagine assembling the wheels of a toy race car. The routes and operations are as follows. Route number 005 - Front wheel assembly area: 1. Insert axle: 4 seconds 2. Attach wheels:9 seconds 3. Attach hubcaps: 8 seconds

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Route number 010 - Rear wheel assembly area: 1. 2. 3. 4. Attach gear: 7 seconds Insert axle: 8 seconds Attach wheels: 6 seconds Attach hubcaps: 8 seconds

In the example, Route 005 requires that the toy car move to the Front wheel assembly area. At this point the operator: Inserts the front axle Attaches the front wheels Attaches the front wheel hub caps

Route 010 requires that the toy car moves to the Rear wheel assembly area. At this point the operator: Attaches the gear Inserts the rear wheel axle Attaches the rear wheels Attaches the rear wheel hub caps

Notice that though the operations occur both in the front and the rear assembly areas, they are actually the same operation. That is, the same operation is used in two different routes. In this case, however, while the operations themselves are the same, the time that is required to perform them is different for each route. Microsoft Dynamics AX 2012 allows manufacturing companies to set up routes and operations that streamline production. The time that is required for each operation can be defined for each route. This allows users to select operations from a repository, rather than creating new operations for each route. By combining them, the Production supervisor can schedule each route work station with the correct resources that meet the manufacturing requirements. This also makes the identification of bottlenecks within the production facility simpler.

Setup and Interconnectivity

As with all modules in Microsoft Dynamics AX 2012, there is a high degree of integration and interconnectivity between the Production control module and other modules. This interconnectivity allows changes to be made to production orders and ensures that they are automatically updated in all other related processes and calculations in the application. The processes described in this lesson are listed in the order that they need to be conducted.

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Prerequisite Setup in Other Modules
Companies must set up basic information in other Microsoft Dynamics AX 2012 modules before using the Production control module. The "Production Setup" figure shows setups that are both prerequisite and optional. For example, in the Basic module, prerequisite information includes setting up: General legal entity information Working time templates Calendars Resources

In the General ledger, prerequisite information includes setting up a Chart of Accounts, and in the Inventory and warehouse management module, it includes: Setting up the inventory item table Creating items (of type BOM) Creating BOMs and BOM versions

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Optional information such as setting up operations, routes, and other advanced settings depends on whether the legal entity uses these elements in their production environment.

FIGURE 1.1 PRODUCTION SETUP

NOTE:BOMs, resources, routes, and operations are frequently used together. They are all core elements that users must understand when working with the Production control module.

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Prerequisite Setup in the Production control module
Before starting, production parameters and journal names must be set up in the Production control module. Parameters: Set up basic production parameters to define how the application must handle and process production orders. Define how they are created, estimated, scheduled, and consumed. You can also select what kind of feedback you want and how cost accounting must be conducted. Journal names: Identify the production journal names that you want to use to record and post ongoing transactions.

Setup if Operations are Used

If companies are working with operations, they must also ensure that the resource groups and resources are set up first. NOTE: You will need to know the kinds of activities that are needed to produce your item, the order and priorities of these activities, and which and how many resources are involved. The parameters assigned to the resource groups are inherited by both the resource and its operations. Operations represent the specific activities or tasks needed to produce the finished product. 1. Operations: Set up the operations to represent the tasks that must be completed to produce the finished item 2. Relations: Set up the operation relations to establish detailed properties.

Setup if Routes are Used

If companies are working with routes, operations must be defined for each production route that is set up. The route represents the path that the item takes from operation to operation, starting with the start of the production process to the end. To work with routes, set up the following: 1. Cost categories: Set up cost categories to define the cost for each hour of specified processes and setup times. 2. Cost groups: Set up cost groups to create and maintain different types of costing. 3. Route groups: Set up route groups to define parameters that pertain to groups of routes. You must set up route groups before creating production routes.

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4. Routes: Set up production routes and define default settings to control scheduling, costing, and pricing of route operations and progress reporting. 5. Route versions: Set up route versions to enable item variations in production.

Resource capabilities
Capabilities are a new concept in Microsoft Dynamics AX 2012. They describe what resources can do. When designing a route, the requirements that resources need to perform the various operations in the route can be expressed as the set of resource capabilities. This allows the allocation of resources to be deferred until production is scheduled. Capabilities are assigned to an operations resource. A resource can have more than one capability assigned to it, and a capability may be assigned to more than one resource. Capabilities can also be assigned to resources on a temporary basis by defining a start date and expiration date on the capability assignment.

Define Optional Settings

Companies can also set up optional settings that control the production process, if these are relevant to their production environments. The optional settings are as follows: Production groups: Set up production groups to establish relationships between the production order and ledger accounts. The ledger accounts will be used to post or to group orders for reporting. Production pools: Create production pools to group production orders for processing urgent production orders or for deleting and posting groups of orders. Properties: Define properties to create special attributes that you can assign to your resources for use in the scheduling process. These attributes are connected to the working time template. Resource capabilities: Create resource capabilities in case that resources need to perform the various operations in the route can be expressed as the set of resource capabilities. This allows the allocation of resources to be deferred until production is scheduled.

Overview of Production Process

The creation of a production order is essentially a request to start the manufacturing of the quantity of items, specified on the order. All information associated with the item that is to be produced is contained in the production order. Production orders contain a list of raw materials from the BOM, the resources that will be used, the routes, and the operations.

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Each individual component of information in a production order can be modified, copied, and used to meet the requirements of the manufacturing facility. Whether the legal entity produces items that are made to order, made to stock, or engineered to order, the Production control module enables the manufacturing facility to change production orders so that they are streamlined to their specific production requirements.

Production Order Status

The Production control module is linked to: Inventory and warehouse management General ledger Master planning Organization administration

This integration supports the information flow that is needed to complete the manufacturing of a finished item. The production of items follows a sequential production life cycle. The life cycle reflects the actual steps taken to manufacture an item. It begins with the creation of a production order and ends with a finished, manufactured item that is ready for the customer. Each step in the life cycle requires different kinds of information. When a step in the life cycle is completed, the production order signals this by a change in the production status. If one or more of the mandatory steps (or updates) are skipped, the steps are performed automatically before the production order is moved to the next step. The production order is assigned a status that reflects where it is in the production life cycle. The status of the orders is as follows: 1. 2. 3. 4. 5. 6. 7. Create Estimate Schedule Released Start Report as finished End

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Example of a Workflow
The "Example of Workflow" figure, illustrates a simplified view of the way in which Production fits into the overall workflow of a legal entity that runs inhouse production. It combines the work model (Sales, Planning, and Operations, shown at the top) with the roles (Order processor, Planner, Purchasing, Warehouse worker, Shop supervisor, and Operator, shown in the blue boxes) in a hypothetical legal entity work process. Each module that is affected at each point of the process is also illustrated.

FIGURE 1.2 EXAMPLE OF WORKFLOW

Read the figure from left to right. In this example, the status of the production order follows the process the order takes throughout the entire workflow. A sales order is received and entered into the system by Susan, the order processor, and a production order is created. Each affected module and some of the specific tasks that can be performed along the way are illustrated in the text boxes that run along the bottom of the figure. NOTE: The Example of Workflow figure is meant only as a study tool to gain an overview of the workflow's interconnectivity as it relates to the different modules and tasks in Microsoft Dynamics AX 2012. The figure illustrates one legal entity and one operational site.

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Production at Multiple Sites

The Production control module also includes features that support a legal entity's ability to maintain a variety of production sites distributed over different geographic locations. The production sites must be contained within a single legal entity.

Production Unit
A production unit is an operational unit that used for consolidating and filtering production related data. The production unit contains one or more resource groups within a site for the purpose of simplifying administration. It provides a means of structuring and assembling all legal entity resources and data in groupings that are relevant to each site or legal entity. Consider the following about the production unit: It reflects the physical layout of resources and data particular to each site or legal entity. It is unique for each site or for each legal entity. It simplifies BOM maintenance and identification of resources at each site or legal entity. It is used to filter information (in key forms) so the user can print documents or view analytical data for each site or legal entity. It is not stamped on any inventory transactions.

For example, when the Shop floor manager filters information based on the production unit, he or she can view the outstanding workload and make a targeted assessment of capacity available at that unit.

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The "Example of Production Units on a Site" figure, illustrates one site with two production units.

FIGURE 1.3 EXAMPLE OF PRODUCTION UNITS ON A SITE

Procedure: Create a Production Unit

Creation of a production unit involves associating all relevant resources to each site or legal entity. Perform the following steps to create a production unit: 1. Click Production control > Setup > Production > Production units. 2. On the Production units form, press CTRL+N to create a new entry. 3. Enter a unique identifier and a description for the production unit. 4. Select a site in the Site field to associate the production unit with the site. 5. Click the General fast tab. 6. To assign a picking warehouse to the production unit, click the dropdown list in the Input warehouse field and select a warehouse. The list displays only warehouses of the type Default. Site is associated with the production unit. Microsoft Dynamics AX 2012 displays the warehouses that are assigned to the same site as the production unit. 7. To assign a storage warehouse to the production unit, click the dropdown list in the Output warehouse field and select a warehouse. The list displays only warehouses of the type Default. 8. Save the record.

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On the Hierarchy tab, the resources that are associated with each site can be seen.

Procedure: Assign Resources to Production Unit

After you have created the production unit(s), use the following steps to assign resource group to each unit: 1. Click Organization administration > Common > Resources > Resource groups. 2. On the Resource groups form, select a site from the Site field. 3. On the General fast tab, select a production unit in the Production unit field. The drop-down list displays the production units that are associated with the site selected in the previous step. 4. Save the record. The "Resource Groups Form" figure shows which production unit is associated with the specific resource group in the Resource groups form.

FIGURE 1.4 RESOURCE GROUPS FORM

After you create and assign a production unit to a resource group, it is shown in the Current operations form.

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Site as Inventory Storage Dimension
In legal entity Site represents a group of business resources, such as warehouses and production facilities, that exist at a geographic location and that share the same interrelated transactions. Site is implemented as an inventory (storage) dimension to ensure that it gets stamped on all transactions, and to maximize leverage of the existing dimension framework and infrastructure. The site dimension is mandatory.

FIGURE 1.5 INVENTORY STORAGE DIMENSIONS

The site dimension and enhancements to the existing dimensions framework provide the structural foundation of the multisite functionality. It enables companies with multiple production and/or distribution sites to implement Microsoft Dynamics AX 2012 in a manner that supports their business processes. Companies establish logistic operations at multiple sites for a variety of reasons. These reasons can include setting up distribution centers that serve different geographic markets, building production facilities at a particular location because of lower overhead costs, locating a site that has proximity to raw materials, or that is convenient in terms of cost-effective transportation.

Create an Operational Site

Perform the following steps to create one or more sites: 1. Click Inventory and warehouse management > Setup > Inventory breakdown > Sites. 2. Press CTRL+N to create a new entry. 3. Enter a unique identifier and a description for the site. 4. On the General tab, select an order entry deadline group. 5. Select a time zone in the Time zone field. If a time zone is not specified, the new time zone defined in the Legal entity information form is used as the default time zone. 6. Save the entry.

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Site and Warehouse Hierarchy
A warehouse hierarchy system can be set up to associate one or more warehouses to a particular site. Though sites can have multiple warehouses, each warehouse can only be associated with one site. Once a warehouse has been assigned to a site, it cannot be reassigned to a different one. Prerequisites for associating warehouse(s) to a site include: The Logistics Configuration Key is enabled. A site is created. One or more warehouses are created.

Once the site and warehouse hierarchy is created, it can be changed by: Adding new warehouses. Moving inventory from a warehouse on one site to a warehouse on another site. Deleting old warehouses.

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The "Multisite Structure" figure, shows the multisite and warehouse hierarchy of a hypothetical legal entity, The Light Legal entity. Site 1 has a general warehouse (GW) and two additional warehouses (WH-A1 and WH-A2). Site 2 has a main warehouse (MW) and one additional warehouse (WH-B1). The last site, Site 3 contains only one warehouse (WH-C1).

FIGURE 1.6 MULTISITE STRUCTURE

Procedure: Set up Site and Warehouse Hierarchy

Perform the following steps to set up a site and warehouse hierarchy: 1. Click Inventory and warehouse management > Setup > Inventory breakdown > Warehouses. 2. Select a warehouse. On the General fast tab, in the Site column, select the site to which the warehouse is assigned. 3. Specify a quarantine warehouse for the warehouse. (The quarantine warehouse cannot be associated with a different site.) 4. To view the site and warehouse hierarchy, go to the Hierarchy tab. This tab shows the tree node that represents the selected warehouse and the associated site. When the tree node is expanded, it displays all of the warehouses associated with the site. If there is production units associated with the site, these are also displayed.

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Mandatory Inventory Dimensions
Mandatory inventory dimensions ensure that dimension values are specified on all relevant journals and inventory transactions. The main considerations for using mandatory inventory dimensions are as follows: Product dimensions such as configuration, size, and color are always mandatory. The inventory storage dimension, site, is always mandatory. Users can decide whether or not to set the warehouse storage dimension to mandatory. This enables users to track the location of inventory items. The remaining storage dimensions such as location, pallet ID, and tracking inventory dimensions, including the batch number and serial number, cannot be set to mandatory.

FIGURE 1.7 MANDATORY INVENTORY DIMENSIONS

Dimensions for Product Family and Warehouse

The following two scenarios illustrate how companies handle inventory dimensions when they want to create a new product family, or make the warehouse dimension mandatory.

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Scenario 1: Configuring Dimensions for a New Product Family
A legal entity is introducing a new product family that must be handled differently from the other product families that they produce. For this reason, the Materials manager creates a new dimension group to be used for items belonging to the new product family. As he or she sets up the product dimensions in the new dimension group, the Materials manager notices that the product dimensions are marked as required, and that it is not possible to change this setting. The manager is thereby reassured that the active product dimensions will always be specified on all inventory transactions. Next, the Materials manager sets up the storage dimensions. However, except for the warehouse dimension, he or she cannot set any of these dimensions must be mandatory.

Scenario 2: Making Warehouse a Mandatory Dimension

A legal entity is having trouble tracking the physical whereabouts of their inventory items, so they have decided to take advantage of the Microsoft Dynamics AX 2012 feature, whereby the warehouse dimension can be made mandatory on all inventory transactions. To implement this, the Materials manager selects the required check box on the warehouse dimension in all inventory dimension groups.

Dimensions for Multisite Operations and Upgrade

The following scenario illustrates how companies handle inventory dimensions when they want to configure for multisite operations, or upgrade to Microsoft Dynamics AX 2012.

Scenario 3: Upgrading to Microsoft Dynamics AX 2012

A legal entity is upgrading from Microsoft Dynamics AX 2009 to the new Microsoft Dynamics AX 2012 release. After upgrading their system, the System implementer at their partner verifies that the Product dimensions are now correctly marked as mandatory in all dimension groups, and that no other dimensions are marked as mandatory. This allows the legal entity to continue their operations without further change.

Consistent Inventory Dimensions

The inventory dimensions framework ensures that dimension values entered for size, color, configuration (and site) are consistent, not only for the source transaction, but for all subsequent inventory transactions that share the same lot ID. Consistent dimensions are configured in the dimension groups forms located by clicking Product information management > Setup > Dimension groups. There is a Product dimension group, a Storage dimension group and a Tracking dimension group forms.

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Using Consistent Inventory Dimensions
The main considerations for using consistent inventory dimensions are as follows: The site dimension is kept consistent when using multisite functionality to ensure that all related transactions are assigned to the correct site. This means, for example, that companies can attribute profit and loss figures for each site. With consistent product dimensions, dimension values cannot be changed once processing of an order line that generates inventory transactions has begun. Using consistent dimension values enables a legal entity to keep track of the original transaction and trace it through to its completion. If a user reverse-picks and order by posting a negative quantity, the status of the inventory transaction can be reversed to its previous state (before physical transactions take place). When this occurs, it is then possible to change the dimensions.

When a form is opened in the context of an inventory transaction (a lookup form on an order line, for example), the consistent dimensions are visible, and the form will only show inventory-related transactions that share the same consistent dimension values.

Site Specific Production Parameters

Site specific production parameters allow companies to define specific parameters for each geographical site that often have differences between them when it comes to the actual production. For example, each of the following legal entities needs a different parameter set up for their sites: A legal entity that produces both complex and simple products might manufacture them at different sites. This means that the manufacturing environments are different with respect to planning horizons, constraints, scheduling methods, work release considerations settings, and so on. A legal entity may allocate one site to handle the volume production of the current popular product, while another produces spare parts for older products. Since demand for spare parts occurs less frequently and in small volumes (which is different from the high and relatively even demand of the high volume products), this also calls for different approaches on the different sites, such as scheduling, follow-up and automation.

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Production parameters can either be defined based on the requirements of the individual sites or they can be defined at the legal entity level. If they are defined at the legal entity level, they will apply to all sites in the legal entity. The "Parameters Set up on Legal entity or Site Level" figure, provides an overview of the kinds of production parameters that can be defined, including those with general impact, those that impact journals and those that impact the standard and automatic update processes.

FIGURE 1.8 PARAMETERS SETUP ON LEGAL ENTITY OR SITE LEVEL

Site Specific BOMs and Routes

Site specific BOMs and routes are created to allow for the automatic selection of the correct BOM, route version, and product dimensions when working with multiple sites. The main elements of this feature are: BOM and route selection, based on the site and product dimensions, is considered in master planning. For BOM versions that are not site-specific, the user can select the resource consumption checkbox on a BOM line, as an alternative to the issuing warehouse as stated on the BOM line.

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Defining a General BOM Version
It is common industry practice for the same BOM to be used to produce an item at different sites, using different routes. To support this, the user can define a general BOM version that does not specify a site or a warehouse. The resource, through its assigned resource group, references a production unit, which further states the picking warehouse.

Site Specific Master Data Settings

Site specific master data settings enable the user to define item master data settings when creating and generating orders at the site level. The form can be accessed from the Released products form, Manage inventory tab, Site specific order settings button. The Released products form with the Site specific order settings form open is shown below.

FIGURE 1.9 SITE SPECIFIC ORDERS SETTING FORM

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Advanced Inventory On Hand
The Inventory On Hand feature can be used to gain an overview of item availability. You can view and compare the alternatives for how to supply the items that the customer requires, at the point in time when the customer wants them. To satisfy a customer's demand for an item, the item can often be sourced in a variety of ways such as: Creating a production order at the site from which the order will be shipped to the customer. Using available items in inventory or on existing production orders or purchased orders. Placing a new purchase order. Transferring from other warehouses.

Financial Dimension Link

Companies can link relevant financial data to the inventory transactions taking place at each site in a multisite production environment. This link results in: A financial dimension associated with the site inventory dimension. A financial dimension value associated with each site.

Financial dimension links assume that the revenue in question is directly attributable to the delivering site. When this is the case, this feature allows companies to trace profit and loss figures directly to the operational site.

Procedure: Link a Financial Dimension to a Site

Perform the following steps to link financial dimensions to inventory transactions associated with specific production sites. 1. Click Inventory and warehouse management > Setup > Posting > Dimension link. 2. In the Reference field, select which financial dimension to link to the site inventory dimension. 3. Click the Sites button to open the Sites form. The financial dimension selected in the previous step now appears as a column header on the Overview tab. 4. Select a site. In the Reference field, select a financial dimension from the lookup list. (The list displays the dimensions that are set up in the Dimensions form, which is located at Basic > Dimensions). 5. Repeat step number 4 for each site.

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Activate a Financial Dimension Link
After linking financial dimensions to inventory transactions at a site, the link must be activated. Perform the following steps to activate financial dimension link: 1. Click Inventory and warehouse management > Setup > Posting > Dimension link. 2. In the Current status: field group, click the Activate link button. A dialog box appears asking whether to update the value of the financial dimension that is displayed on all open transactions so that it matches the value specified for the site. 3. Click Yes. All open transactions are updated accordingly. The transactions are updated even if the resulting set of financial dimensions is not a valid combination that is set up in the Dimension sets. (This step is the same as running the Linked dimension update batch job, which can be accessed at Inventory and warehouse management > Periodic.) 4. The Account dimension validation report is generated. This is accessed by clicking Inventory and warehouse management > Reports > Base data. This report lists the accounts, if any, that are used for inventory-related postings, and that will override the value of the financial dimension selected in the Dimension link form. 5. The Current status button indicates that the financial dimension link is active, and the color of the button is yellow.

Results of Activating Financial Dimension Link

Activation of the financial dimension link results in the following conditions: When new transactions are created that carry both inventory dimensions and financial dimensions, the linked financial dimension is assigned the dimension value specified for the site. Transactions that carry both inventory dimensions and financial dimensions can be posted, even though the linked financial dimension value does not match the value specified for the site.

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The value of the linked financial dimension can be changed on open transactions that carry both inventory dimensions and financial dimensions.

FIGURE 1.10 FINANCIAL DIMENSION LINK

Lock a Financial Dimension Link

Locking the financial dimension link results in the following conditions: new inventory transactions that carry both inventory dimensions and financial dimensions are assigned a financial dimension value based on the value that is specified for the site. You can post transactions that carry both inventory dimensions and financial dimensions only when the linked financial dimension value matches the value that is specified for the site. You cannot change the value of the linked financial dimension on transactions that carry both inventory dimensions and financial dimensions. You cannot edit the financial dimension value that is associated with a site. The prerequisites for locking the financial dimension link are: A financial dimension link with the site inventory dimension must be established. To lock the Financial dimension make a following procedure: 1. Click Inventory management > Setup > Posting > Dimension link. 2. Click the Lock link button.

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3. The program generates the Account dimension validation report. This report lists any general ledger accounts that are used for inventory-related postings and that will override the value of the linked financial dimension that is selected in the Dimension link form. 4. The program displays a dialog box stating that it will update the linked financial dimension value on all open transactions so that the linked financial dimension value matches the value that is specified for the site. 5. Click OK. The program updates all open transactions accordingly. 6. The Current status: button states that the financial dimension link is locked, and the color of the button is green. NOTE: Customers typically not work during the dimension link active state but try to migrate to the locked state as quickly as possible.

Example Multisite Production Scenarios

The topics in this lesson provide examples of three production environments using Multisite functionality.

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Legal entity A Multiple Sites, Shared Distribution
Legal entity A is a medium sized legal entity with two production sites located in two different cities in the United States: one in the state of Ohio, and a distribution center located near the Cincinnati airport in Kentucky. The legal entity has five product families, of which three are being produced at their main production site (A). The smaller production site (B) has specialized in making the fourth product family, whereas the fifth product family is being produced at both sites. All finished goods are distributed to customers and resellers through the distribution center, as shown in the following diagram.

FIGURE 1.11 LEGAL ENTITY A

Legal entity A Process and Roles

Legal entity A uses the new multisite capabilities to set up their system so that: The two production sites, as well as the distribution center, are modeled as operational sites. Eduardo Local, the local production planner at each production site, is responsible for master planning for the products that are only produced at that site. Eduardo Global, the global Production planner, performs master planning for the products that are produced at both sites. Lars, the local Shop floor supervisor, is only managing production orders for the production site he is responsible for.

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The warehouse in the distribution center has a different set of inventory parameters than the production related warehouses. Each site is a separate profit center. When Susan, the Order processor, is managing orders, filters are applied to help her avoid making mistakes by creating orders directly from the production sites.

The, "Legal entity A Multisite Structure" figure shows the multisite structure implemented. The manufacturing of items at site A and site B may have different characteristics, so that the local Production planners and Shop floor supervisors at site A and B want to set up the production parameters differently.

FIGURE 1.12 LEGAL ENTITY A MULTISITE STRUCTURE

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Legal entity B Multiple Sites, One Shared Site
Legal entity B is a midsized manufacturer of bikes with five production sites located throughout the United States. Four of the production sites are generalpurpose production sites producing bikes for a number of (non-overlapping) states in their vicinity. The fifth production site manufactures highly specialized sports bikes with carbon frames that are sold nation-wide. The sales force is associated with the production site in their area and is not allowed to place orders with other sites. Orders for the carbon-framed sports bikes are placed with the local production sites that act as a distribution center for the fifth plant.

FIGURE 1.13 LEGAL ENTITY B

Legal entity B - Process and Roles

Legal entity B uses the new multisite capabilities to set up their Microsoft Dynamics AX 2012 system so that: All production sites are part of the same legal entity. Each production site is modeled as an operational site. Each production site is a separate profit center. The standard cost of items differs by site. Emil Global, the global Product designer, maintains BOMs at the corporate level for all bikes produced at sites A through D. There is only one BOM for each item, which is used by all production sites. Emil Local, the local Product designer at production site S, creates and maintains BOMs for the specialized carbon-framed sports bikes.

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Oscar, the local Process engineer, creates and maintains routes for the production site that he is responsible for. Eduardo, the local Production planner, is responsible for master planning at his production site. Lars, the Shop floor supervisor, can only manage production orders for his own site. Nancy, the Sales representative, and Susan, the Order processor, only manage orders from the sites in their region. Some users can operate on data from multiple production sites. When transferring inventory items between production sites A through D, a markup shows profit and loss for the site with the item in stock.

The manufacturing of items at sites A, B, C, D, and S have different characteristics, so local production planners and shop floor supervisors need to set production parameters differently. Global manufacturing management provides guidelines on parameters that may be modified at the local level.

FIGURE 1.14 LEGAL ENTITY B MULTISITE STRUCTURE

Legal entity C Single Production at Multiple Locations

Legal entity C is a manufacturer of farming equipment for the European market located in the Netherlands. As the legal entity has acquired some of their major suppliers, their production has become spread across three different locations in the same city. The "Legal entity C: Single Production at Multiple Sites" figure shows the setup of Company C.

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Legal entity C can only occupy approximately 50 percent of the capacity in the foundry for their production of heavy farming equipment. Hence, Production Site A also has a significant business with third party customers. Similarly, a significant portion of the parts produced at Production Site B is sold as spare parts. For this reason, and to continuously monitor the competitiveness of these production sites relative to potential outsourcing opportunities, Legal entity C has decided to treat each production site as a separate profit center.

FIGURE 1.15 LEGAL ENTITY C SINGLE PRODUCTION AT MULTIPLE SITES

The production strategy is also different across these three production sites. For instance, the assembly line at Production Site C is completely demand driven (pull), whereas the nature of the foundry calls for production in large batches.

Legal entity C Process and Roles

To bridge operational differences, Legal entity C takes advantage of the multisite features in Microsoft Dynamics AX 2012 so that: Each production site is modeled as an operational site Each production site is a separate profit center Each site can manage their inventory according to different strategies, using different parameters Parts and sub-assemblies can be moved between sites with a minimum of overhead (for example, without requiring Interlegal entity transfer orders)

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Emil, the global product designer creates and manages BOMs for products and sub-assemblies across all three production sites Oscar, the global process engineer, manages routes spanning all three production sites Eduardo, the global production planner, performs master planning across all production sites Susan, the order processor at the corporate headquarters, takes orders for both cast items, spare parts, and finished farming equipment from customers across the country, and the system automatically determines which site to fulfill based on where the item is produced

The "Legal entity C: Multisite Structure" figure illustrates the multisite structure implemented. The manufacturing of items at Sites A, B, and C have different characteristics so that the Eduardo, the global production planner needs to set up the production parameters for each site differently.

FIGURE 1.16 LEGAL ENTITY C MULTISITE STRUCTURE

Overview of Additional Production Enhancements

Other enhancements in the Production control module include: Supply Schedule form Available to promise Advanced on hand User interface improvements and more transparent job scheduling using a Gantt Chart

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Supply Schedule form The new Supply Schedule form used to monitor and simplify the process of changing and leveling the demand and supply for production area in easy and controlled way. The form helps to analyze and update supply information, in order to ensure a high on time delivery percentage and keeping inventory as low as possible. The Supply scheduled form not restricted to Lean manufacturing - it will work for all kinds of planned purpose. All information is related to a specific site and warehouse (or any other dimension that could be activated as relevant for the supply purpose (coverage planned dimensions).

FIGURE 1.17 SUPPLY SHEDULE FORM

Available to Promise (ATP)

Available-to-promise (ATP) functionality is used primarily by manufacturing/distributing companies that sell products from their own inventory. It not only takes lead times and available dates into account, but also planned receipts and issues. ATP does not replace the explosion functionality (which in practice can be seen as a capable-to-promise (CTP) calculation), or delivery date control functionality. Instead, the ATP functionality is an alternative that can be selected, when a CTP or delivery date explosion is not necessary. Persona name Susan Role Order Process or Planner Comments Enters sales order lines and consequently the primary user of the ATP feature. May use the ATP information for an item as part of investigating the demand/supply situation for the item.

Eduardo

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Example of Using ATP
The Sales and Marketing department provides forecasts for a one year period ahead, and the forecasts are updated every month. The production planner then plans production to meet this sales forecast. When the order processor, Susan, is called by a customer, she enters the order data on the sales order line. Given the date, quantity of the order, and the ATP calculation, the system evaluates whether or not the requirement can be met. When there is enough quantity to promise, the order line is saved and Susan can proceed to the next order line. If the requirement cannot be met, Susan can view the ATP data to see how much can be promised on the requested date, or when the full quantity will be available. She can use this information to reach an agreement with the customer.

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The ATP information form is available from both the sales order line and the Item form.

FIGURE 1.18 ATP FORM

Improvements to Gantt Chart

The Gantt Chart uses the latest version of the external Netronic XGantt tool. The user interface includes: Indication of late orders Progress bar Order and resource views

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User defined grouping criteria Manual rescheduling Multiple load histograms for resources

Transparent Job Scheduling in Gantt Chart

A midsized manufacturer produces bicycles of various types. Since the number of bicycle variations is low, while at the same time delivery lead time is important, the legal entity has chosen to produce based on forecast. This keeps the delivery time down, and has turned out to be a fairly successful strategy. The Gantt Chart can also be used during job scheduling. The Resource view shows jobs based on resources, and the Other view shows jobs based on orders. Companies can simulate different scheduling scenarios and test various options. This is possible since planned scheduling changes are not official until the changes have been submitted. For example, the Shop floor supervisor can move jobs around in the production schedule to see the consequences of various alternatives. When he or she is satisfied that the schedule is optimal, a decision can be made as to whether or not to finalize and commit to this new schedule.

Master Planning Across Multiple Sites

Master planning also supports the introduction of the multisite feature. The major changes include: BOM and route planning in a multisite environment: A finished product can be set up so that part of it can be made at a different production site. This is done by using the different levels in the BOM structure to assign where the components are to be produced. When multiple sites share inventory that have the same item number, the BOM and the route can be set up so that the components of these items can be produced at a different site. When this feature is used, the corresponding routes must also be defined based on site. Site specific/inventory dimension coverage and vendors: A vendor can be linked to a specific item produced at a particular site, as a part of defining item coverage settings. This is done in the Item coverage form. Microsoft Dynamics AX uses these parameters to run master scheduling to calculate net requirements. This means that all settings that apply to a vendor-defined item also apply to the associated vendor. It provides the user with better control of planning and allocation of materials by inventory dimension and across sites. Master planning across sites: Master planning can be run across all sites in a multisite production and/or distribution environment.

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Lean Manufacturing
The kanban feature in Lean Manufacturing for Microsoft Dynamics AX 2012 provides a comprehensive solution for the management of kanban within a production environment. To support the diverse production environments of users, there are several variations of kanban available, all of which are interoperable within a single legal entity environment. The variations are the following: 1. 2. 3. 4. 5. 6. Fixed Target and phased target Black hole Temporary and dynamic Pull-to-order and templates Generic

All types of kanbans can support purchasing, manufacturing, or internal (store-tostore) replenishment.

Kanban Defined
The word kanban is Japanese and means "visible record". As such, kanbans have been adopted by many industries as a method of controlling production and internal supply. Kanban is an essential part of a pull system of supply that is a critical element of Lean production and supply. When a kanban has been consumed, it should be passed (triggered) to the supplier, production, or supermarket that will replenish it. Kanban may be cards or electronic records. Lean Manufacturing for Microsoft Dynamics AX 2012 will support both approaches, but greater benefits can be obtained through the use of alert capabilities that are linked to the use of electronic kanbans. This will provide a paperless, integrated internal and external supply chain, while providing high visibility throughout the business.

Process Overview
The kanban feature is a central component of Lean Manufacturing for Microsoft Dynamics AX 2012. The feature defines how kanbans are to be used by associating a kanban record with its source of supply and its destination, the point of consumption.

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You can also set rules for supply, trigger supply instructions, and, upon receipt of a full kanban, update inventory through purchasing, production, or inventory transfer.

FIGURE 1.19 HOW A KANBAN RECORD IS RELATED TO POINTS OF CONSUMPTION AND SOURCES OF SUPPLY

A unique kanban record will be created for each location where an item is stocked and consumed (the stock point). Stock points are represented by warehouses in Microsoft Dynamics AX, and it is normal practice to create a warehouse record for each work center or cell where materials are consumed. Therefore, if an item is consumed in three cells within a production unit, there will be three kanban records created and linked to three warehouses. For each kanban record, rules will be set to determine how many physical kanbans are used at each stock point, the quantity of component carried, and the method of resupply for those kanban. Kanban replenishment form is one of the key elements of a pull-based production system. Kanban tickets are used to act as the trigger for product to be delivered from one step in the production process to another. As such, it is important to understand that a kanban card is only presented to the point of supply when the items are required. No material is being supplied unless there is a demand for it.

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In Microsoft Dynamics AX, the kanban functionality is designed to replicate the operation of a kanban pull system.

FIGURE 1.20 KANBAN RELATIONSHIPS

As a minimum, the kanban feature allows material issues and replenishment to be managed by using a simple process that can be reflected throughout Microsoft Dynamics AX. Thus, the receipt of a kanban from production triggers a series of processes that raise a work order, perform a goods receipt, and optionally back flush materials as one step. More detailed information about Lean manufacturing presents in a separate Microsoft Dynamics course.

Summary
Introduction to Discrete Manufacturing Basics provided a broad overview of some of the main characteristics of the Production control module. It included the following key points: The Production control module is a highly interactive module drawing upon information from other modules. The Bill of material stores the quantities of raw materials used to produce one finished product. Resources and resource groups are used to track equipment and resources for the production process. Routes are used by Microsoft Dynamics AX 2012 to track the sequence of events during the production process.

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Production orders have a specific life cycle and are used to schedule the production of finished goods. The production order identifies the BOM, resources, routes used, and schedule. The kanban feature is a central component of Lean Manufacturing for Microsoft Dynamics AX 2012. The feature defines how kanbans are to be used by associating a kanban record with its source of supply, destination, and the point of consumption.

This lesson also summarized the major new features implemented in the production area for Microsoft Dynamics AX 2012. A significant number of these changes are as a result of the new multisite functionality. Additional changes include Gantt Chart improvements, Master planning capability across sites, ATP and filter functions on certain forms.

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Test Your Knowledge

Use the following short answer questions to test your overall understanding of the course. It would be of added benefit to place each question into a familiar context and relate it to a company or industry with which you are familiar. 1. Name and define what has to be set up in the Production control module before it can be used. 2. List the core concepts in the Production control module. 3. Define the production unit and state where it is setup in Microsoft Dynamics AX 2012. (Select all that apply) 4. Describe the definition and results of the new financial dimension link. (Select all that apply) 5. List the general improvements to the Production control module in Microsoft Dynamics AX 2012. (Select all that apply) 6. List the changes that have been made that support master planning. (Select all that apply)

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Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this chapter 1.

2.

3.

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Solutions
Test Your Knowledge
1. .Name and define what has to be set up in the Production control module before it can be used. Parameters, Journal names 2. List the core concepts in the Production control module. BOMs, Resources and Routes and operations 3. Define the production unit and state where it is setup in Microsoft Dynamics AX 2012. (Select all that apply) A production unit is an operational unit that used for consolidating and filtering production related data. The production unit contains one or more resource groups within a site for the purpose of simplifying administration. Setup and manage Production unit in Production unit form: Production control > Setup > Production > Production units. Production unit assigned to resources via Resource groups (field Production unit on the fast tab, on the Resource groups form ) 4. Describe the definition and results of the new financial dimension link. (Select all that apply) A financial dimension associated with the site inventory dimension. A financial dimension value associated with each site. 5. List the general improvements to the Production control module in Microsoft Dynamics AX 2012. (Select all that apply) Filtering on select forms, Available to promise, Advanced on hand User interface improvements and more transparent job scheduling in Gantt Chart 6. List the changes that have been made that support master planning. (Select all that apply) BOM and route planning in a multisite environment. Site specific/inventory dimension coverage and vendors. Master planning across sites.

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