Symptom added
Hello,
We have two methods of manufacturing for the same part number and want to know if it’s possible to list them both under the same part number? One method will be done with a casting and the other will be done from a blank plate. Both methods will manufacture the same part but will have different standard costs. Is there a way to list both methods under the same part number? Please also note, there will be two standard costs for the same part.
You can do this with Alternate Methods… or with a different Part Revision.
Alternative Methods are ignored by MRP.
Part Revisions (while both can be active) can cause confusion/headaches when the system defaults to the “most recent effective date”, etc. in various places.
So… both have some issues you need to get used to dealing with.
You can’t have the same part have 2 different standard costs. You would have to have average costing, and however the parts are made would have a cost which would contribute the inventory cost.
That being said… that two different standard costs has me stumped.
Oops… @Banderson posted while I was typing.
Is it too cheeky to say you need to have a standard in order to use standard cost?
You could make the standard match the one that happens “most often” and then just deal with the variance when you make it the “other way”.
Out of curiosity, what’s the business reason behind what’s happening here?
Often this situation arises when you make a part 95-98% of the time one way, and use the alternate when you cannot make it your regular way (much to @Chad_Smith 's point).
The majority method is what dictates the standard cost, and deviating to use the secondary method creates variances, which is what you want in order to analyze how often you cannot make the part the normal way.
We have this situation with many parts and want to ensure we implement a process that minimizes issues/lack of clarity for us and in the system.
We’d like to consider the following option. Could you please let us know how we can go about implementing it?-It should be a simple update to our internal process but please let us know if there is anything system wise to keep in mind/consider when implementing this.
We create two new part numbers, one for each method of manufacturing, example part number SKP-1 and SKP-2. These parts will be subassemblies to the final part, but we don’t link them to the final part in the system. Rather we manually link them at scheduling when we know which method of manufacturing the job will require. This would be a matter of linking the parts manually instead of automatically linking them in the system
One approach could be to add both parts on the mother-MOM… set the “default” (SKP-1?) to a qty of 1 and the “secondary” (SKP-2) as a qty of 0. So, you would only have to manually change jobs (required quantities) where you want SKP-2.
And what would be the standard cost of the final part? 
In David’s solution, it would be the part with quantity of 1. We’re back to an Alternate Method implemented in a different way.
In the unlinked scenario, it would be zero.
And to take this one step further, so the manufactured pieces would be “correctly” standard costed, both SKP-1 and SKP-2 would be manufactured to stock. The part on the sales order would then be a “sales kit” part that would optionally contain either SKP-1 or SKP-2 to be shipped from inventory.
EDIT: “Costing Method” in Epicor really mostly means “Inventory Valuation Method”.
Thanks David,
I’m not sure at this moment. I wanted to check, Is there any simple solution to handle this?
Step 1) Create two unique part numbers, one for each of the methods of manufacturing, for example part numbers SKP-1 and SKP-2. These will be like assemblies to a larger part, for example part number SKP-3.
Step 2) We will not link the part numbers to the larger part at this moment. So, we will not link SKP-1 or SKP-2 to SKP-3 now. Instead we will manually link them when we have a job order for part SKP-3 and are preparing the manufacturing schedule. The reason we will link them at this point is because at this point we will know which part the job will require, either SKP-1 or SKP-2.
As I mentioned, we face this scenario often (one part with different methods of manufacturing) and want to find a process that will minimize errors and lack of clarity for us and in the system.
Please let us know if you foresee anything system wise that might cause us any issues with this process.
Let’s take a step back and really try to understand your end goal here. What is it you need to see at the end of the day.
You mentioned “Standard costing”… but I’m not convinced that’s what you’re really looking for.
If you have 100 parts of type A at $50 and 50 parts of type B at $40. Do you need to see those separate costs in inventory for some reason? If it’s the same part, I would say you don’t average cost ((100*50) + (50*40)) /150 = $46.67 for each unit that you have.
All of the cost is accounted for when you use the parts at that cost. (This is average costing).
If for some reason, you NEED to keep those costs seperated… I would look at lot costing. You can have type A be Lot A and type B be part B and figure out some way to keep track of those lots. Then you can substitie fine in the upper levels of the assembly, and it will use the cost from the lot.
If you want “standard” as in, the job always comes out at the same price, then set up your MOM’s to report quantity only, then the labor will use a standard labor amount, and your jobs will poop out the same cost at the end.
The lot costing is going to officially “Lot Average” costing, but if the jobs that you are using are set up to not have any variability in costing, then you’ll get the same cost, so quasi standard.
Personally, I would use average costing and move on with your life and find more important problems to solve, but I get that your customer probably isn’t listening to you.
Thanks for the explanation Banderson. Do you foresee anything system wise that might cause us any issues with this below process.?
If you’ve got a test environment, since you’ve got a plan laid out, you should implement your plan there and see if it’s a viable process and see what issues arise. You’ll find systemic issues pretty quickly that way.