Make to Inventory vs Make to Job (aka Make Direct)

With Make Direct, the costing method comes into play because you don't take
anything to stock. We are FIFO and by not taking the item to stock, it does
not create a FIFO layer which then can become a problem in accounting.



Beth Rye

IT Director

CIGNYS
Email: <mailto:brye@...> brye@...



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From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf Of
that_guyy
Sent: Wednesday, July 25, 2012 9:41 PM
To: vantage@yahoogroups.com
Subject: [Vantage] Re: Make to Inventory vs Make to Job (aka Make Direct)





What is the expected benefit or problem needing solved?

Make to Inventory - No direct link between the job and the sales order. MRP
aggregates the demand across orders and then generates Job suggestions based
on the PartPlant Min/Max Lot sizes and the due date on the job is set to the
earliest date (depending on other planning parameters, it could generate
several suggestions, spreading out the load). These jobs have a demand link
to the shipping warehouse specified on the orders and need to be received
into inventory, like most jobs. When the Job is finished a Job Receipt to
Inventory (WIP to Inventory) must be ran so that it is available supply for
the Sales Orders. Once Fulfillment Workbench 'sees' the supply, it is
available for picking. Depending how Fulfillment Workbench is used the first
order on for the part usually gets fulfilled first. The problem with this is
that the supply is shared, first come first served, so for low supply parts
it can be difficult for sales to promise a ship date. When shipped the
inventory i s shipped from stock (Inventory - COGS).

Make To Order - Either when the order is put on or when MRP runs a job or
job suggestion (respectively) is created with a 1 to 1 relationship between
the job and the sales order release, at the qty on the sales order release
with a due date of the sales order release (+ any move or buffer times). The
Job has a demand link directly to the Order and says so (also, if set in
Company Maint. the Job number can be the Sales Order Number - Line -
Release, instead of the next Job number). Since sales can see the linked Job
from SO Entry, they can right click on the Job and see the current status
(released? Operations status? On Time? Mtl Issued?) so they can keep the
customer in the loop. Also Capable to Promise in SO Entry I think can be
more accurate. Once the Job is completed a 'Job Receipt to Inventory' IS NOT
done, but the finished part is left on the Job in WIP. Once the Qty is
complete in WIP, Fulfillment Workbench has visibility of the parts and it
will be available for 'pic king.' When creating the Pack and the Sales
Order/Line/Release is entered the linked Job is automatically pulled into
the Pack Line. When the Pack is marked 'Shipped' the parts are moved from
Job WIP to Shipped (WIP to COGS). The good thing with this method is that it
discourages 'stealing' since the Job/SO link is visible, so there is a
greater chance that the orders will be fulfilled in the right order. The
only problem I can think of is WIP that can sit longer than planned (some
cost accountants don't like that), like across months.

So for me the big difference is the 'guaranteed link' and it makes it harder
to 'Rob Peter to pay Paul.' So instead of throwing all the manufactured
parts in a big bucket for first come/first serve, its more like a flow of
manufactured parts that already are allocated to their sales orders... no
question who the part is for.

Hope that helps, if that doesn't answer your questions, please ask.

-Rick Bird
IT Software Administrator
Rowmark, LLC.

--- In vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com> ,
"dyoderbx" <dyoder@...> wrote:
>
> We have always been a Make to Inventory shop since we have been on Epicor.
We are now considering making at least some orders Make Direct. Our spare
parts orders are low quantities and seldom in stock.
>
> Could someone give me a brief comparison between the two methods? Or note
what we need to look for as we use Make Direct?
>
> We are on Epicor 9.05.605, soon to go to 700
>





[Non-text portions of this message have been removed]
We have always been a Make to Inventory shop since we have been on Epicor. We are now considering making at least some orders Make Direct. Our spare parts orders are low quantities and seldom in stock.

Could someone give me a brief comparison between the two methods? Or note what we need to look for as we use Make Direct?

We are on Epicor 9.05.605, soon to go to 700
The nice thing about make direct is that the order is linked to the job in
the system. The problem that I have with it is that we may have multiple
make direct items on one order that all need to ship together but they get
done at different times. The challenge is visibility within WIP. I believe
that you can tie shipping into make direct jobs as an operation but we
haven't gotten that far yet so we manually write down where we are staging
it until it is ready to be shipped. We could also probably use the staging
process within shipping but I haven't quite figured out exactly how I can
make that easy enough either.



Josh Serwe

Manager of Warehouse & Logistics

920.437.6400 Ext. 330



Safety

Professionalism

Effectiveness

Easy

Demand Results





<http://www.wisconsinconverting.com>







[Non-text portions of this message have been removed]
What is the expected benefit or problem needing solved?

Make to Inventory - No direct link between the job and the sales order. MRP aggregates the demand across orders and then generates Job suggestions based on the PartPlant Min/Max Lot sizes and the due date on the job is set to the earliest date (depending on other planning parameters, it could generate several suggestions, spreading out the load). These jobs have a demand link to the shipping warehouse specified on the orders and need to be received into inventory, like most jobs. When the Job is finished a Job Receipt to Inventory (WIP to Inventory) must be ran so that it is available supply for the Sales Orders. Once Fulfillment Workbench 'sees' the supply, it is available for picking. Depending how Fulfillment Workbench is used the first order on for the part usually gets fulfilled first. The problem with this is that the supply is shared, first come first served, so for low supply parts it can be difficult for sales to promise a ship date. When shipped the inventory is shipped from stock (Inventory - COGS).

Make To Order - Either when the order is put on or when MRP runs a job or job suggestion (respectively) is created with a 1 to 1 relationship between the job and the sales order release, at the qty on the sales order release with a due date of the sales order release (+ any move or buffer times). The Job has a demand link directly to the Order and says so (also, if set in Company Maint. the Job number can be the Sales Order Number - Line - Release, instead of the next Job number). Since sales can see the linked Job from SO Entry, they can right click on the Job and see the current status (released? Operations status? On Time? Mtl Issued?) so they can keep the customer in the loop. Also Capable to Promise in SO Entry I think can be more accurate. Once the Job is completed a 'Job Receipt to Inventory' IS NOT done, but the finished part is left on the Job in WIP. Once the Qty is complete in WIP, Fulfillment Workbench has visibility of the parts and it will be available for 'picking.' When creating the Pack and the Sales Order/Line/Release is entered the linked Job is automatically pulled into the Pack Line. When the Pack is marked 'Shipped' the parts are moved from Job WIP to Shipped (WIP to COGS). The good thing with this method is that it discourages 'stealing' since the Job/SO link is visible, so there is a greater chance that the orders will be fulfilled in the right order. The only problem I can think of is WIP that can sit longer than planned (some cost accountants don't like that), like across months.

So for me the big difference is the 'guaranteed link' and it makes it harder to 'Rob Peter to pay Paul.' So instead of throwing all the manufactured parts in a big bucket for first come/first serve, its more like a flow of manufactured parts that already are allocated to their sales orders... no question who the part is for.

Hope that helps, if that doesn't answer your questions, please ask.

-Rick Bird
IT Software Administrator
Rowmark, LLC.

--- In vantage@yahoogroups.com, "dyoderbx" <dyoder@...> wrote:
>
> We have always been a Make to Inventory shop since we have been on Epicor. We are now considering making at least some orders Make Direct. Our spare parts orders are low quantities and seldom in stock.
>
> Could someone give me a brief comparison between the two methods? Or note what we need to look for as we use Make Direct?
>
> We are on Epicor 9.05.605, soon to go to 700
>
Excellent summary.



Just one detail to add, because the OP mentioned "spare parts". You do
both for a part, and ship either from inventory or from job as required.
This can be useful for spare parts where you need to keep a couple in
stock for rush orders, but normally want to make to order.



Brian.



From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of that_guyy
Sent: Wednesday, July 25, 2012 9:41 PM
To: vantage@yahoogroups.com
Subject: [Vantage] Re: Make to Inventory vs Make to Job (aka Make
Direct)





What is the expected benefit or problem needing solved?

Make to Inventory - No direct link between the job and the sales order.
MRP aggregates the demand across orders and then generates Job
suggestions based on the PartPlant Min/Max Lot sizes and the due date on
the job is set to the earliest date (depending on other planning
parameters, it could generate several suggestions, spreading out the
load). These jobs have a demand link to the shipping warehouse specified
on the orders and need to be received into inventory, like most jobs.
When the Job is finished a Job Receipt to Inventory (WIP to Inventory)
must be ran so that it is available supply for the Sales Orders. Once
Fulfillment Workbench 'sees' the supply, it is available for picking.
Depending how Fulfillment Workbench is used the first order on for the
part usually gets fulfilled first. The problem with this is that the
supply is shared, first come first served, so for low supply parts it
can be difficult for sales to promise a ship date. When shipped the
inventory is shipped from stock (Inventory - COGS).

Make To Order - Either when the order is put on or when MRP runs a job
or job suggestion (respectively) is created with a 1 to 1 relationship
between the job and the sales order release, at the qty on the sales
order release with a due date of the sales order release (+ any move or
buffer times). The Job has a demand link directly to the Order and says
so (also, if set in Company Maint. the Job number can be the Sales Order
Number - Line - Release, instead of the next Job number). Since sales
can see the linked Job from SO Entry, they can right click on the Job
and see the current status (released? Operations status? On Time? Mtl
Issued?) so they can keep the customer in the loop. Also Capable to
Promise in SO Entry I think can be more accurate. Once the Job is
completed a 'Job Receipt to Inventory' IS NOT done, but the finished
part is left on the Job in WIP. Once the Qty is complete in WIP,
Fulfillment Workbench has visibility of the parts and it will be
available for 'picking.' When creating the Pack and the Sales
Order/Line/Release is entered the linked Job is automatically pulled
into the Pack Line. When the Pack is marked 'Shipped' the parts are
moved from Job WIP to Shipped (WIP to COGS). The good thing with this
method is that it discourages 'stealing' since the Job/SO link is
visible, so there is a greater chance that the orders will be fulfilled
in the right order. The only problem I can think of is WIP that can sit
longer than planned (some cost accountants don't like that), like across
months.

So for me the big difference is the 'guaranteed link' and it makes it
harder to 'Rob Peter to pay Paul.' So instead of throwing all the
manufactured parts in a big bucket for first come/first serve, its more
like a flow of manufactured parts that already are allocated to their
sales orders... no question who the part is for.

Hope that helps, if that doesn't answer your questions, please ask.

-Rick Bird
IT Software Administrator
Rowmark, LLC.

--- In vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com> ,
"dyoderbx" <dyoder@...> wrote:
>
> We have always been a Make to Inventory shop since we have been on
Epicor. We are now considering making at least some orders Make Direct.
Our spare parts orders are low quantities and seldom in stock.
>
> Could someone give me a brief comparison between the two methods? Or
note what we need to look for as we use Make Direct?
>
> We are on Epicor 9.05.605, soon to go to 700
>





[Non-text portions of this message have been removed]