We use lot average as our costing method and all our job receipts to inventory are in lot batches.
We issue estimated material required upfront to the job and then adjust the final qty by returning or issuing more before the final receipt is brought back into stock.
We are having a major problem with mfg variances on jobs which is delaying our job closing process which is then causing issues elsewhere. The business impact on this is huge, it also means our margin reported on sales is wrong as the costs are not accurate.
From my testing, when we over produce on jobs then completed qty from the final operation is taken into consideration when the lots are receipted to stock via job receipt to inventory.
When we under produce on a job though the complete flag on the final operation is not taken into consideration and instead the system is expecting you to create the balance on the job whereas we have ticked the op as complete to say the balance is not coming. As a result of this, you end up with an MFG variance rather than the lot costs of the finished goods being increased accordingly with the amount of finished pieces produced.
Unless i am missing something this seems like a pretty big bug in the system.
I can resolve the issue by reducing the demand on the job before the final receipt to stock (final receipt is then costed higher than the others which is ok - overall job balances with no variance) but this isnt practical without doing a customisation which i am hesitant to do when i feel like there is a bug here.
Anyone else come across this? Any advice greatly appreciated.
Where do you lose pieces? I would test, but I believe that if you lose 2 on op 20, the process will adjust the production qty then. So, when you get to the last op, the job is already adjusted.
Not sure if this fits into your situation, just thought I would mention it.
The yield recalculation settings are at the operation level, and the actions the system takes are based on the production quantity reported against that operation when the op is marked complete. You also have the option of setting an acceptable variance % where the system will not adjust the jobs production quantity if the reported quantity is within range. It will only adjust the jobs prod quantity down, never up.
The jobs not auto-closing when underproduced is by design, I believe. Some companies might consider underproduction a problem, and having these jobs flagged as an issue may help in investigating root cause problems. Automatically adjusting production quantity down based on real-world results could also mask underproduction occurrences.
I have done lots of tests but where ever we under produce and even when the op quantities (including the final op) are all tagged as complete and the receipts to stock are done in line with the completed qty, the job still keeps back the value of material its expecting you to make rather than apportioning the cost across the lots that have gone into stock.
Example:
Job is to make 14000pcs
We issue material to the job totalling £1430.41
We complete each operation on the job for 12000pcs and tick the operation as complete before ending activitiy.
We do job receipt to inventory and produce 6 x lots of 2000pcs that going into stock at a cost of £204.34
I run WIP report and i am left with £204.37 as an MFG variance.
See below, based on what you have said i would expect the complete flag on the operation to drive the cost calculation but that doesn’t appear to be happening.
It certainly seems to have an impact when you over produce and it re calculates the lot cost based on the amonut you have brought into stock.
