Our finance team has made the decision to not include setup hours in labour hours for jobs since they have already accounted for the setup in burden rate (dont ask me how). We have marked setup costs as 0 in all resource groups for setup as per the screenshot attached (Costing burden rates for setup = 0 AND costing labour rates for setup = 0)
We do NOT want to include setup hours into costs (decision made by finance department) therefore in our jobs we do not want any hours recorded by an operator as setup to be included in the costing.
However, we observe that while this works properly in estimated labour hours (Which is Estimated production labour hours * Estimated resource rate) when the actual labour hours are recorded by an operator on a job the cost are calculated as per the formula - ((Setup hours + production hours) * labour rate).
We want this to be ONLY production hours * labour rate.
I think John is correct. Either Setup Time or Setup Rate need to be 0 if you want a zero dollar transaction here.
Estimated works because the Setup Rate is pulled from the Resource for the Estimate. Actual, however, is going to substitute the rate from the Employee that records the Setup time.
So you either need $0 rates on the Setup Employees in addition to $0 Setup Rates on the Resources, or you need to stop recording Setup. If you have different employees for setup vs production, this might not be too bad of a scenario as you can just set them to $0. If your production workers do the setup, you’re probably going to need to stop recording it.
Another less than ideal, but possible work around is to create a “dummy” employee to record you Setup that uses a $0 rate.
Another thing I just thought of would be to set up Roles that employees use for setup and production. You could set the hourly rate to $0 for setup. Not sure what modules you would need to do this.
I thought about the solutions posted here but I guess I still have some issues:
#1 Stop recording setup: Can’t do that because our operators efficiency, utilization and coverage is recorded and measured against the hours that they record in MES. It’s a manufacturing KPI and the production manager needs the hours recorded against each employee.
#2 Using a dummy employee with $0 pay rate - We cannot do this because we will lose track of which employee actually did the setup and lose traceability, which breaches what we want in #1. Not an ideal solution.
#3 Using role codes: This peeked my interested so I did some more research and found that we already have the employee roles module installed in our version of Epicor. However, I think that this is more for project management than production. That being said, this is a good place to host the setup rate and production rate and maybe do some customisation or a BPM to override Epicor’s calculations while calculating actual labour cost? I can’t imagine that this will be a simple customisation since the labour costs on the job tracker is actually a calculated field and God knows where all this data is being used.
We got the direction from corporate to create an indirect code for setup activities so that all setup hours are logged against an indirect code, which of course cannot be recorded against any job. I would then have to create a UDF to capture the job number and a chain of custom reporting to use the UDF for all the labour KPI reporting currently in place, not really keen on that solution, hoping that is really the last resort.
the other answer is to tell the accounting dept to remove the setup time from their burden rate. Then you will have more accurate setup calculations… OR… they could simply pull a report of all the setup time costs, and reverse the charges in the GL Journal at the end of the month.
those accountants!
