Engineering Bill of Materials - PDF Free Download

By Richard L Berry Editor's Note: In the first installment of Richard Berry's series on Project Costing, he gave us a broad conceptual overview of the process and analyzed where and how PeopleSoft EnterpriseOne addresses Project Costing needs. In this second installment, he begins with the details of some of the functionality. He explores the ins and outs and details of using the Project Costing module for creating Engineering Bills of Material without implementing the entire Manufacturing suite. Table of Contents Introduction... 2 Overview... 2 Setup... 4 Setup: Document Types... 4 Setup: Order Activity Rules... 5 Setup: Warehouse Branch/Plant Constants... 5 Setup: Automatic Accounting Instructions... 7 Setup: Flexible Sales Accounting...9 Setup: Address Book... 10 Setup: Templates... 11 Periodic Operations: Job Master Information... 13 Periodic Operations: Project Branch/Plant... 15 Periodic Operations: Job Codes... 16 Periodic Operations: Bill of Materials: Processing Options... 19 Periodic Operations: Bill of Materials: Order Entry... 22 Periodic Operations: Bill of Materials: Order Entry... 22 Periodic Operations: Material Management... 26 Daily Operations: Inventory Availability... 27 Daily Operations: Print Pick Slip... 27 Daily Operations: Issue Material... 29 Daily Operations: Sales Update... 32 Job Status Inquiry... 36 Job Completion... 36 Transfer Costs to Inventory... 38 Late Costs and Adjustments... 41 Lot Traceability... 41 Conclusion... 42 Copyright 2004 Klee Associates, Inc. Page 1

Introduction There are some enterprises that have businesses that are part-manufacturing and part-project costing. To implement the whole PeopleSoft EnterpriseOne manufacturing suite may be inappropriate, and yet, some manufacturing features are required, notably the Bill of Materials. Such enterprises include those that manufacture machinery on a make-to-order basis, or those that manufacture a range of different machines in small batches, for stock or to order. It is not necessary, in fact, to implement manufacturing in such situations. There is a good solution within the Job Cost module itself, with the Bill of Material being provided by the Sales Order module. This article sets out the practical steps required to implement this solution. I hope that you agree with me that the solution is simple, practical, and functionally rich. I will describe the setup required and the steps that you need to take to create an. The comments here apply equally to World and EnterpriseOne. Overview The basic approach of this solution is that a Sales Order will be created that will contain all the materials required for a particular project phase or activity. One project may have several activities, and, therefore, several Bills of Material. Copyright 2004 Klee Associates, Inc. Page 2

Diagram showing the relationship between a BOM entered in Sales Orders and the budget in Job Cost Job 010001 Budget The good thing about this approach is that many Job Cost and Sales Order concepts can apply to a Manufacturing Job: Commitments can be updated The Job Status Inquiry can be used Overheads, purchases, subcontracts, time entry and sundry material issues can be charged directly Several machines of different types may be included in the same batch, although the allocation of costs between the different types must be done manually. Stock can be reserved PO generator can be used when stocks fall low Pick slips can be printed Shipment Confirmation may be used to issue material as and when required When material is issued using shipment confirmation, job costs are immediately updated Copyright 2004 Klee Associates, Inc. Page 3

Setup First we will go through the setup required. Setup: Document Types The first step will be to create the document types you will need: Figure 1 Document Types Document Type MO will be used as the Sales Order document type. I have called it MO. This is essentially synonymous with BOM. MI will be used as the invoice document during sales update, although no actual A/R invoice will be created. Copyright 2004 Klee Associates, Inc. Page 4

Setup: Order Activity Rules Figure 2 Order Activity Rules Very simple activity rules are required since there will be no need for invoices or shipping documents. Setup: Warehouse Branch/Plant Constants Branch/Plant constants need to be set for your warehouse where the materials are actually stored. You will see later, that we also need to set Branch/Plant constants for each Job. Figure 3 Warehouse Branch/Plant Constants Copyright 2004 Klee Associates, Inc. Page 5

You will need to set these constants for each warehouse that you have, but if you are using the JDE Inventory system, you will have done this already. Comments: 1. Specific Commitment It is possible that we would not want to commit inventory at the point that we enter the Bill of Materials (MO), especially if the job is expected to last a long time. We may only commit a few days before work is due to start. I have set commitment days as 30 in the example above. When we enter the MO, the system will compare the scheduled pick date that we enter with the current date to ascertain whether inventory should be committed. If the scheduled date falls after the current date plus specific commitment days, inventory will not be committed. Instead, the future commit bucket will be updated. 2. Write Units I would like to mention the checkbox Write Units to Journal Entries. If you check this box, when sales update is done for the Bill of Materials, a record will be written to the Revenue account with units but no dollars. Copyright 2004 Klee Associates, Inc. Page 6

Setup: Automatic Accounting Instructions We will need to set up DMAAIs tables 4220, 4230 and 4240: Figure 4 Automatic Accounting Instructions Comments: 1. Cost of Sales We need to set up AAIs for cost of sales. When material is issued we will debit construction in progress (expense) and credit inventory. We will use these tables to control the accounts that will be affected. Table 4220 controls the object part of the expense leg and table 4240 controls the BU, Object and Subsidiary of the credit leg. Copyright 2004 Klee Associates, Inc. Page 7

The expense account will be constructed as follows: Business Unit: This will come from the Revenue BU in the Sales Order. One of the processing options in the Sales Update program allows us to specify this. Object: This will come from table 4220 Subsidiary: This will come from the Sales Order detail. Sales orders, unlike purchase orders, do not actually have fields for account numbers. But we are able to make use of other available fields to enter account elements. In this paper, I will propose using the End Use field to capture the value that should go into the subsidiary. Using Flexible Sales Accounting, I will be able to direct this value into the subsidiary field during sales update. Summary BU Obj Sub Job Table 4220 End Use Dr. Construction in Progress 01001. 221200. 001 Table 4240 Cr. Inventory 200. 1411. Figure 5 Summary of cost of Sales Accounts 2. Revenue I have set up table 4230 simply because the system seems to require a revenue account, even though there will be no revenue (there will be only costs). A blank transaction may be generated into the revenue account, but it can be immediately erased if you set the processing option for the General Ledger Master Business Function (P0900049) appropriately. This, however, depends on how you set up your Branch/Plant constants for your warehouse. If the Write Units to Journal Entries checkbox is checked, the system will write a journal line to the revenue accounts, with units but no dollars. Figure 6 Extract of Warehouse Branch/Plant Constants If you do not want this additional journal line, then uncheck the box. You will see that we need to set B/P constants for each job as well as for each warehouse. So it is as well to point out that this comment applies to the warehouse B/P constants only. No revenue will be actually generated because in the address book we will set the Trade Discount to 100%. Copyright 2004 Klee Associates, Inc. Page 8

Setup: Flexible Sales Accounting We have mentioned that we will put the cost code (subsidiary) into the sales order field called End Use. In order to get the system to move the End Use code into the subsidiary field when we do sales update, we must set up flexible sales accounting. The flexible sales accounting setup option is found on menu G4241 Sales Order Management Setup. Figure 7 Flexible Sales Accounting Comments: There is actually a little more setup required to implement flex accounting, but standard JDE usually comes with the setup already done. If you find that flex accounting is not working for you, please send us an email, and we may be able to provide further information. We should set up flex accounting for DMAAI table 4220 and for document type MO. This will have the effect of overriding the DMAAI accounts for the elements set up in the flex accounting table. In this example, we will override only the subsidiary. The Object will still come from table 4220 because we will not override it in flex accounting. To set up the accounting we want, we must place X in the subsidiary field and then indicate the field where the override value is held. In this case, subsidiary will be overridden from the value in the End Use (EUSE) field. We will set this table up for document type MO. These rules will not apply to any other document type. Copyright 2004 Klee Associates, Inc. Page 9

Setup: Address Book An address book record will need to be set up for a dummy supplier. Because we will be using what is really a sales order as a Bill of Materials, we will be required to enter a customer number. This can be regarded as quite useful, because the address book can be used to capture certain useful default information. Figure 8 Address Book Setup considerations: 1. Give the address an easily remembered number 2. Create a special Address Type, so that this customer can be easily distinguished from real customers. I have given it a search type MO Copyright 2004 Klee Associates, Inc. Page 10

3. No address is necessary 4. Create AR information 5. On the Billing Page 1 tab enter 100% into the Trade Discount field. This will ensure that no sales price is calculated for the items that will be included on the Bill of Materials. This will save you the job of having to click the zero price button during MO entry. 6. You may also check other boxes shown on the Billing Page 1 tab: Exempt from Credit Hold Backorders Allowed Substitutes Allowed Partial Shipments Allowed Price Pick List: uncheck the box These are things that will affect MO processing. Setup: Templates This is found on menu G4231, Sales Order Advanced and Technical Operations. Templates represent standard or model Bills of Material. For equipment that you manufacture regularly, it makes sense to set up a template, even if there are variations from time to time. Customers may request for extra features or modifications. A template may still be used, and the additional material can be manually entered. A template could represent a single whole machine or it could represent a subassembly. Several subassemblies will make a whole machine. Each subassembly could represent a cost code in your Job. You may need to collate and organize your templates before you start to set them up in the system, so that you can give them a sensible numbering system. The PeopleSoft template number is 8 digits long, alphanumeric. Once you have organized your templates, you must set them up as user defined codes in UDC table 40/OT. Copyright 2004 Klee Associates, Inc. Page 11

Figure 9 Template Setup For your Bill of Materials customer, create as many templates as you like. The steps to do this are: 1. Click Add 2. Type in the Sold To address: address 9901 in my example 3. Select an order template number, which you should already have set up in UDC table 40/OT. If the template number does not exist, click Revisions and create it. 4. Enter Item Number and usual quantity. No other information is needed. Dates will automatically default. 5. You may change the Sequence Number to organize your items. 6. Click OK and the template will be saved Having created a template, you can copy it to create others, or you may delete it. If you have a great number of templates, you can organize them by creating several customers representing different product lines or models. I have used customer 9901, but you could create as many such customers as you had need for. Copyright 2004 Klee Associates, Inc. Page 12

When the time comes to create the actual Engineering Bill of Material, you can combine as many of these models as you wish. Periodic Operations: Job Master Information Figure 10 Job Cost Master When you are about to start a new manufacturing project, you must create a new Job. This Job is equivalent to a Work Order in the JDE manufacturing module. It could represent a one-off manufacturing job for a customer, or it could represent the manufacture of one or more items for stock. It could therefore be equivalent to a batch. The items in the batch do not necessarily have Copyright 2004 Klee Associates, Inc. Page 13

to be identical, though it would make sense if they were at least the same model. The job, or batch, would really represent a set of items that the workshop were manufacturing at the same time, perhaps sharing common materials. Information to be captured in the Job Master screen: 1. Job Number. You should come up with a sensible numbering system for your jobs. It could incorporate digits representing product line or model, and some digits representing, perhaps, batch number. Bearing in mind the numbering convention I have adopted in this paper for the BOM (which is an eight digit number) I have chosen to restrict my job number to five digits. The reason for this will become clearer further on. But this restriction is not necessary; merely practical. You can still use the full 12 digits of the job number if you choose. My job numbering convention in this paper has a two-digit code for model and three digits for batch number. So I could potentially have 999 batches for each model. My job number is 01001, comprising model 01, batch 001. 2. Job Description (30 characters) 3. Company 4. Job Type. I have put JB as Job Type here, but you could put something else if you undertake normal Job Cost jobs as well as manufacturing jobs, and you wanted to distinguish between them. 5. Job Site Address. This is required when you enter purchase orders for the job. This address will default as the delivery or ship to address on the PO. If you are manufacturing in your own factory, then this address would be the address of the factory. If the job is being done elsewhere, say on a customer site, then this address would be the customer s site address. 6. Owner Address. This is optional, and may be used to record the customer number, for information. 7. Category Codes. These can be used to record information such as model, product line, customer type, customer location, production manager and other user defined information. Category Codes are optional. Copyright 2004 Klee Associates, Inc. Page 14

Periodic Operations: Project Branch/Plant We must set up the job as a valid branch/plant Figure 11 Job Branch/Plant Constants We must do this even though this job will not actually act as a warehouse. Important points: 1. Address number is the same as the address number we specified in the job master. 2. Ensure that the following boxes are checked: Backorders Allowed Interface G/L Write units to Journal Entries Copyright 2004 Klee Associates, Inc. Page 15

Periodic Operations: Job Codes This amount should agree to the BOM total. See note 6 below. Figure 12 Job Codes The project structure must be set up. In my example above, I have created two Cost Codes, representing two equipment subassemblies: Cost Codes 001 and 002. Each cost code has several cost types, for Labour and Material. Comments: 1. The cost code in my example is only 3 characters long. There are two reason for this: Sales Orders do not have a field for cost code, so we have to use an alternative field. In my example, I will use the End Use field, which is only 3 characters long. This necessarily restricts the length of the cost code. Following the numbering convention I have adopted for the Bill of Materials, I have used the job number (5 digits) and cost code (3 digits). Together, this makes a total of 8 digits. But I do not necessarily need to follow such a convention. 2. I have identified cost types for labour and for material: 221101 and 221102 represent two types of labour cost 221200 represents materials I have been quite simple in my setup, but I could afford a little more detail, if I thought that I needed it. I could have material 1 and material 2, for example, if it were important to distinguish between the two types of material. An engineering project may require steel and pipes, for example. These could be cost types 221201 and 221202. These may constitute the largest items of expenditure and I may need to have a cost analysis by material type. Copyright 2004 Klee Associates, Inc. Page 16

We have already commented that it would be inappropriate to have a separate cost type for every item in the BOM, but we do not need to go to the other extreme and have only one line for material if we really need more detail. It is a question of sensibly identifying useful management information. When we issue material from the BOM, using the confirm shipment program, the system can automatically debit the appropriate account based on AAIs. And when we issue material using the standard inventory issues program, we can manually select which materials account to debit. 3. Cost types could be entered for other items, depending on how you do your manufacturing. We have considered only materials and labour, but there could also be subcontracts, if part of the manufacturing process is subcontracted to third parties. Subassembly manufacture, special treatment or processes, or subcontracts for expert design or precision work could be examples. There could also be costs related to the use of your own equipment, or special equipment rented for the job. You may wish to charge the job an amount for equipment time. This may be done using the JDE equipment time billing, or location billing modules. There could also be direct overhead expenses which may come in through A/P. This could cover licenses, insurances, and consumables. Indirect overheads should also be considered. The company may allocate general administration or marketing expenses to the job, or there could be charges for the use of workshop facilities, gas, water, electricity, and fuel. All of these other cost types can be included. 4. I have applied levels of detail to the cost code structure. This is for reporting and inquiry purposes. The job status inquiry makes use of this level of detail. 5. Budgets have been entered for materials and time. Unit and dollar budgets have been entered for time, but only dollar budgets for materials. This is because time has a consistent unit of measure (man hours) whereas material does not. Budgets represent the expected cost of the job. They are used to monitor job progress and for purchasing. 6. Note that I have entered a budget of $1,407.50 for Materials for Cost Code 001. This figure is quite precise because it agrees exactly to the total of the BOM that I will enter later. But there is no need to be so precise. I could set the budget to be $1,500.00 and that would leave room for any additional materials that may not be on the BOM but may be issued later direct from stores. 7. One further account has been entered, at the bottom. This is account 221600, cost code 999. Using cost code 999 makes sure that the line appears at the bottom of the screen, and can be hidden if necessary. We do not normally need to see this line when doing cost inquiries. This account is used when the job is complete and we need to transfer the completed machine(s) into stock. The accounting entry will debit stock (finished goods) and credit the job (account 221600). The amount of the journal will represent the total cost of manufacture. After the journal has been entered, the total on the job will be zero and the job can be closed. Job codes can be entered by one of the following means: 1. Manual entry 2. Copy an existing or previous job. This is a good option if you have a Bill of Materials that is identical to one that you did recently. Using this option, you may also copy budgets from previous jobs. Copyright 2004 Klee Associates, Inc. Page 17

3. Copy from a standard job chart template. Standard charts may be set up for all manufacturing types. This chart is different from the template referred to above. This chart covers overall job costing and includes lines covering not just material but also labour, equipment, subcontracts and overheads, as mentioned above. 4. Import from spreadsheet. This is done very easily, either by simple cut-and-paste or by the right click-import method from the job grid. This is a good option if your spreadsheet also has budget information. You can import the chart and the budget at the same time. Once the job codes have been entered, you can modify them at any point throughout the job. You could add new lines and delete lines you do not need. You can enter budget changes when there are changes in work scope. Copyright 2004 Klee Associates, Inc. Page 18

Periodic Operations: Bill of Materials: Processing Options Our BOM will be entered using a version of the Sales Order Entry program P4210. We should firstly check the processing options. The options in grey are not relevant to Bill of Materials. Number Description Value Explanation Defaults Tab 1 Order Type (Required) MO 2 Line Type S 3 Beginning Status 520 4 Override Next Status 5 Line Number Increment 1.000 6 Reason Code 7 Override Transaction UOM 8 Default Transaction UOM 9 Address Book Revisions 10 Update Header to Detail 1 11 Header Branch/Plant 12 Default Branch/Plant We would not specify a default B/P because it will be different each time. B/P will be job number 13 Order Template 14 Customer Self Service Duplication Tab 1 Order Type MO It is highly probable that a MO may be copied. A BOM for one manufacturing job may be identical to the previous one for the same model 2 Beginning Status 520 3 Next Status 4 Copy Associated Text 2 1 = Copy Line Text 2 = Copy Line and Order Text 3 = Copy Order Text Order Hold Tab 1 to 9 Most order holds would probably not be applicable 10 Order Process Hold XX You may choose to have an administrative step where the MO is initially put on hold and then released once it has been confirmed Display Tab 1 Display/Hide Cost Fields We would want to see item costs 2 Display/Hide Price Fields 2 (Hide) Prices are not relevant here. Anyway, because we apply 100% discount, prices will be zero 3 Disable Pricing Related Fields Don t do this because the End Use field is one such pricing related field, and we will need to be able to update it 4 Disable/Hide Status Code 5 Hide Closed Detail Lines 1 You may choose to hide or display closed or completed lines (those with next status 999) 6 Hide Credit Card Information 1 7 Hide Freight and Carrier 1 Information 8 Hide Commission Information 1 9 Hide Kit Components It is not likely that we would use kits in addition to the BOM template Copyright 2004 Klee Associates, Inc. Page 19

Number Description Value Explanation Commitment Tab 1 Activate Availability Checking 1 Material should be checked against availability and any shortfall should be backordered 2 Commit to quantity 1 or quantity 2 3 Display Supply and Demand Form Currency Tab 1 Tolerance Limit As-If Currency Display 2 Currency Code 1 As Of Date Process Tab 1 Status Code Limit for changes I have not put any restriction on changes in my example here, because it is possible at the MO may be varied any time up to sales update. 2 Subsystem Processing 3 Display Header or Detail 4 Auto Order Repricing 5 Display Before Accept 1 6 Order Template Processing 1 This is important. This option activates the template feature. We are using templates to hold standard Bills of Material 7 Blanket/Quote Orders 8 Agreements 9 Customer Self Service 10 Generate Proposal 11 Cost or Base Price Markup 12 Ship and Debit Cross Reference Tab 1 Substitute Items S 2 Complementary Items A 3 Replacement Items R 4 Pricing for Substitutes Versions Tab 1 Pick Slip Print Subsystem R42520 2 Supply & Demand Inquiry P4021 3 Pick Slip Print on Demand R42520 4 Adv Order/Basket Reprice R42750 5 Online Invoice Inquiry P42230 6 Preference Profile R40400 7 Check Price & Availability P41261 8 Purchase Order Entry P4310 9 Sales Ledger Inquiry P42025 10 Bill of Material Inquiry P30200 11 Work Order Entry P48013 12 Print Invoice R42565 13 Online/Subsystem Commitment P42997 14 Configured Items P32942 15 SO Batch Translation R4210Z 16 Credit Check P42050 17 Work with Shipments P4915 18 Customer Master P03013 19 Ship and Debit Preference Tab 1 Preference Profile 2 Inv Commit Preference Copyright 2004 Klee Associates, Inc. Page 20

Number Description Value Explanation Transfers Tab 1 Activate Transfers 2 SO and PO Taxable 3 Mandatory landed Cost Order Inquiry Tab 1 Beginning Status 520 From 2 Next Status 620 To 3 Search on Last or Next Blank = Last Status 1 = Next Status 4 Date Range 5 Display Text Lines 1 6 Display Backordered 1 7 Customer Cross Ref C Warehouse Tab 1 Request Processing Mode 2 Subsystem Pick Request 3 Override Next Status Store & Forward Tab 1 Mode Workflow Tab 1 Email Work Order Planner 2 Email Buyer Multiples Tab 1 Multiple Schedule 2 Schedule Line Interbranch Tab 1 Intercompany Invoice 2 Interbranch Order Types Interop Tab 1 Transaction Type 2 Before/After Image Prepayment Tab 1 Prepayment Processing 2 Process Authorization 3 Process Settlement 4 Authorize version 5 Settle version 6 Next status override: Authorized Settled Figure 13 - Bill of Materials Processing Options 1 The Customer Service inquiry shows only orders that fall within the range specified above. Copyright 2004 Klee Associates, Inc. Page 21

Periodic Operations: Bill of Materials: Order Entry We may now enter our Order: 2 1 3 4 Figure 14 Bill of Materials Entry On the MO entry screen, click Add. Let us assume that we are entering a MO for Job 01001, cost code 001. Fill in details as follows: 1. Branch/Plant. This represents the job number. I have entered 01001. Copyright 2004 Klee Associates, Inc. Page 22

2. Order Number. The numbering convention I have followed here is to concatenate Job number 01001 with the cost code 001. This is not necessary by any means, but I have deliberately numbered the MO in this way for easy reference. 3. Sold To. This should be the dummy customer we previously set up. From this customer number the system will be able to display the available template BOMs. 4. Detail Branch/Plant. This is the warehouse from which the material will be issued. When we have completed the header information, we may move our cursor down to the first line of the grid. Note that we should be careful to make sure all header information is complete before moving down. A little care will save us effort. When you move down to the first line of the grid, the Available Order Templates window will display: Figure 15 Available Order Templates From here we can select a template appropriate to the model or product line that we are manufacturing. Copyright 2004 Klee Associates, Inc. Page 23

In this example, we will take template 01001000. The BOM detail will then display: Figure 16 Order Template You may click the Preload with Usual button. This will load the usual BOM quantity into the screen. Figure 17 Bill of Materials Comments: 1. The item cost columns now show. These are based on weighted average cost in our example. Copyright 2004 Klee Associates, Inc. Page 24

2. Prices are not shown because they are zero and are not relevant. Click OK. The Order Acceptance screen is displayed. This screen is useful because it conveniently shows the total extended cost. Figure 18 Order Acceptance Complete the MO by clicking the Place Order button. The MO has now been successfully entered. Copyright 2004 Klee Associates, Inc. Page 25

Periodic Operations: Material Management After the MO has been entered several situations may apply: 1. The material may not be required yet. It would not be advisable to reserve stock for material that may be required some time in the future. The Scheduled Pick date in the MO can be manually changed to indicate the date when the material is required. In the warehouse Branch/Plant, I have set specific commitment days of 30. This means that 30 days will be added to the order date (normally today s date) and the result compared to the scheduled pick date. If scheduled pick date falls after the commitment date, the future commit bucket will be updated on the availability inquiry. This mean that material will not be committed for MOs that are not due to commence immediately. This would work well for: Common, high-turnover, materials Materials that may have short supply lead times Expensive items But for other, less common, material, it may be advisable to reserve stock immediately. This can be done simply by putting today s date into the scheduled pick date. This would reserve stock immediately. Future committed stock may be committed by manually changing the scheduled pick date or by running the batch job R42995 Repost Active Sales Orders. 2. If stock is reserved and availability falls below re-order levels, the Purchase Order Generator may be used to top-up stock levels. The PO generator would propose a general top-up. The top-up would not be directly related to the MO. 3. If there is insufficient stock to fulfil the MO, the unavailable quantity will be backordered. It will not be possible to proceed with the MO until stock has been replenished and the backordered quantity released. Copyright 2004 Klee Associates, Inc. Page 26

Daily Operations: Inventory Availability If we were to check availability after entering the MO, it would look like this: Figure 19 Availability You can see the columns for Soft Commit and Hard Commit add up to the total Committed column. Currently, in this example, there is nothing in the Future Commit column. After the Pick Slip has been printed the quantity in Soft Commit will move to Hard Commit. Daily Operations: Print Pick Slip When the time comes to issue stock a pick slip may be printed. The processing options of the standard Pick Slip program (R42520) are as follows: Number Description Value Explanation Edits 1 Next Status From (Required) 540 2 Next Status Thru (Required) 540 3 Override Next Status 560 4 Updating Next Status Blank = Update 1 = Do not update Display 1 Global Print Message Copyright 2004 Klee Associates, Inc. Page 27

Number Description Value Explanation 2 Print Associated Text 1 3 Print Kit Components 1 4 Future Committed Lines Blank = Bypass 5 Backordered Lines Blank = Bypass 6 Print Detail Text 1 1 = Print text lines 7 Print Item Number Blank = Print our item numbers 8 Customer Cross Reference Process 1 Hard Commit Inventory 1 1 = Hard Commit 2 = Bypass commitment 2 Preference Commit 3 Create Work File 4 Ship and Debit Processing Currency 1 Domestic or Foreign Currency Versions 1 Ship and Debit (R45100) Figure 20 Pick Slip Print Processing Options The Pick Slip shows all the items waiting to be issued to the Job. Once printed, the MO status will be updated and material will be hard committed. Figure 21 Pick Slip Copyright 2004 Klee Associates, Inc. Page 28

Daily Operations: Issue Material Material issue is done using the ship confirm program P4205. The processing options of this program are as follows: Number Description Value Explanation Selection 1 Next Status From (Required) 540 You may do ship confirm without printing a pick slip 2 Next Status Thru (Required) 560 3 Sales Order Type (Required) MO Defaults 1 Line Type for New Sales Detail Lines 2 Enter a Next Status Code for: Confirmed Sales Detail Lines Additional Non-inventory Lines Remaining Backordered Quantities Authorized Lines Settled Lines Display 1 Allow Additional Line 2 Display Kit Components 3 Display Text Lines (FUTURE) 4 Item Location Hold Error 1 1 = Receive an error when the item location is on hold 5 Pre-select Detail Lines for Confirmation 1 1 = Pre-selected lines Edits 1 Check Availability 1 1 = Check availability and notify 2 Ship from Negative on-hand Qty 1 1 = Do not ship 3 Prevent Over-shipping 1 1 = Do not over-ship Process 1 Override Line Type Blank = Do not override line type 2 Override Ship To Address Blank = Do not override 3 Backorder or Cancel Unshipped Qty Blank = Do not Backorder or cancel 4 Relieve On Hand Inventory Blank = Relieve On Hand Inventory 5 Ship and Debit Processing Blank = Do not call R45100 Freight (FUTURE) Print 1 Subsystem Invoice Blank = Do not print invoices automatically Versions 1 Sales Order Entry 2 Print Invoices 3 Ship and Debit Warehouse 1 Pack Confirmation 2 Pack Confirmation Version Quality 1 Test Results Revision Version P3711 2 Certificate of Analysis 3 Certificate of Analysis Version R37900 4 Certificate of Analysis Subsystem 5 Evaluate Quality Tests Copyright 2004 Klee Associates, Inc. Page 29

Number Description Value Explanation Agreements 1 Specify Borrow Agreement Destination 2 Agreement Search Method Interop 1 Interoperability Transaction Type 2 Run the Outbound Subsystem UBE Bulk 1 Bulk Transaction Volumes Interbranch 1 Enter the version for the Create Intercompany SO 2 Call the Create Intercompany SO Prepayments 1 Prepayment Processing 2 Process Authorization 3 Process Settlement 4 Authorize Prepayment Transaction 5 Settle Prepayment Transaction 6 Authorization Hold for Prepayment 7 Settlement Hold for Prepayment Figure 22 - Ship Confirm Processing Options Copyright 2004 Klee Associates, Inc. Page 30

Figure 23 Shipment Confirmation If you pick and issue all required items at the same time, you may use the Confirm Shown Lines button on the form exit bar. This will present the Shipment Confirmation screen. Here you may select the items you want to issue. Notice that the Sel = 1 column has already been populated. If you do not wish to issue the item at this time, take away the 1 from the Sel = 1 column. If you wish to issue a lower quantity, change the Quantity Shipped amount. The remaining quantity will be left open for issue at a later date. You cannot over-issue. When you have finished, click OK. Copyright 2004 Klee Associates, Inc. Page 31

Daily Operations: Sales Update After shipment confirmation, the next step would be sales update (R42800). No invoice will be printed, of course, because nothing has been sold. Number Description Value Explanation Defaults 1 Specific Date as A/R Invoice Date 2 OR Select Date 2 1 = Sales Invoice Date 2 = Ship Date 3 = Execute Date 3 Specific Date as G/L Date 4 OR Select Date 2 1 = Sales Invoice Date 2 = Ship Date 3 = Execute Date 5 G/L Account BU Blank = AAI 1 = Order Detail Line 2 = Sold To Address Number 3 = Order Header, Sales; Order Detail, Inventory 6 Override Next Status Code 7 Billing Remark 3 Accounting will be done in conjunction with flexible accounting. The cost of sales BU will come from the BU entered into the MO header (the job number). Update 1 Proof or Final 1 2 Bypass Update to A/R 1 There should be no update to A/R 3 Bypass Update to Inventory 4 Bypass Update to Commissions 1 5 Bypass update to Sales History 6 Purge to Sales Detail History 7 Purge to Sales Header History 8 Purge Pricing Records 9 Subledger 1 1 = Order Number It would be useful to enter the MO number into the subledger. We will be able to use the Job Status Inquiry and other financial inquiries to view MO costs. 10 A/R Next Number Index 11 Document Type for Invoices MI This invoice will actually be a journal entry only, with no effect on A/R. It is helpful to remember that this is a kind of inventory issue. Accordingly, I have used a document type that identifies it as such. MI = Material Issue 12 Purge Associated Text 13 Ship and Debit 14 Ship and Debit Accrual Versions 1 A/R Master Business Function P03B0011 2 G/L Master Business Function PM0001 P0900049 I have created my own version of the G/L MBF because I wish to not create G/L records where amounts and units are blank. 3 Ship and Debit 4 Ship and Debit Accrual Print Copyright 2004 Klee Associates, Inc. Page 32

Number Description Value Explanation 1 Print Sales Journal before update 1 2 Sales Journal Version PM0001 Make sure that the sales journal update next status option is turned off Summarization 1 Summarize A/R entries by invoice Blank = do not summarize 2 Summarize G/L entries by invoice Blank = do not summarize 3 Summarize COGS and Inventory Entries Blank = do not summarize Cost Update 1 Update Costs Blank = do not update 2 Sales Price/Cost Update Version Interbranch 1 Interbranch Order Types 2 A/R and A/P Batches 3 Voucher Match Version Flex Acctg 1 Sales Flexible Accounting 1 = Use sales flexible accounting This option is important Bulk Product 1 Temperature Gain/Loss Agreements 1 Specific Destination BU 2 Selection Criterion Performance 1 Suppress Warning Messages Prepayment 1 Update Settled Prepayment Trans 2 Pre-Authorized Drafts Version Figure 24 Sales Update Processing Options Copyright 2004 Klee Associates, Inc. Page 33

Figure 25 Sales Update Report This report shows the details of the batch created by the Sales Update program: It is a batch type G Document type is MI The cost of sales entries are composed of: The BU from the order header: the Job number Object (Cost Type) from DMAAI table 4220 Subsidiary (Cost Code) from sales flexible accounting, using the value from the End Use field. Inventory is credited A line is created for Revenue, but since there is no dollar value or units, and since I have set up my G/L MBF to delete empty transactions, this line will be deleted from the journal. The total of this journal is $1,407.50, the same as the budget I created at the beginning, and the same as the total of the MO. Copyright 2004 Klee Associates, Inc. Page 34

Job Status Inquiry If we now review the costs using the Job Status Inquiry, we can check the progress of actual costs against budget: Figure 27 Job Status Inquiry The inventory issue we have just completed has updated Actual Costs. Job Completion As the job progresses, other costs will be incurred until the job is complete. In fact, there could be additional material costs, representing items that were not included in the original BOM. This could be because of errors in the BOM, maintenance materials, commissioning materials or other consumables. In our example, we will assume that at the end of the job, the costs show as follows: Copyright 2004 Klee Associates, Inc. Page 36

Figure 28 Job Status at the End of the Job This job could be for the manufacture of a single machine or for a batch of similar machines. For the sake of example, let us assume that this is for the manufacture of six similar machines. To close the job we must do the following: Ensure that there are no outstanding commitments for purchase orders or contracts. If there are any, they must be investigated and the PO closed. Make a provision for any late costs, if appropriate. This provision would not really apply to employee time entry or to open POs, which must be handled by waiting for the proper transaction to complete. Transfer costs to Inventory. This is done using the Inventory Issues Program Close the Job Copyright 2004 Klee Associates, Inc. Page 37

Transfer Costs to Inventory Use the inventory issues program to do this (P4112). Number Description Value Explanation Defaults 1 Document Type IC Use a special document type to distinguish from inventory Issues and Returns 2 Location/Lot Versions 1 Journal Entries 2 Item Ledger 3 Warehouse Request Process 1 Issue Type 3 Equipment and Subledger If you set this option, you will be allowed to enter the expense account. This account will be the account that should be credited when we transfer completed machines to inventory. 2 Account Number required or not required 3 Cost Entry Costs must be entered 4 Journal Entries 5 Issue Quantity 6 Lots on Hold 7 Item Sales History Interop 1 Transaction Type Agreement (FUTURE) Figure 29 Inventory Issues: Completed Machines Processing Options Copyright 2004 Klee Associates, Inc. Page 38

Figure 30 Inventory Issues Comments: I have numbered the document the same as the project number for easy reference The document type is IC I have created an item master for the completed machines. If there were several models manufactured in this batch, then they would have to be separately listed. The quantity represents the number of machines completed. Notice that the quantity is negative. This is important, because we are putting items into stores, not issuing items. When you re-inquire on this screen, you will see that the quantity will have become positive. This is one of the quirky things about this screen, but so long as you know it, you will be fine. I have created a Lot for this batch of machines. This would be important for Lot traceability. I have calculated the unit price for each machine. Basically, I have assumed that this job produced 6 machines at a total cost of $30,407.50. So the cost per item is $5,067.9167. I have manually entered the credit account. The journal should now be posted. After posting, the Job Status Inquiry will appear as follows: Copyright 2004 Klee Associates, Inc. Page 39

Figure 31 Job Status Inquiry After Job Completion You will see that the Actual Amount column now totals zero. The completed amount of $30,407.50 exactly offsets all actual costs. You will also see that the Job Posting Edit is N. This prevents any further transactions being posted to this Job. Copyright 2004 Klee Associates, Inc. Page 40

If further detail is required, the user may highlight a line and click the account ledger button on the Row Exit bar. This would show the transaction detail of the actual amount: Figure 32 Job Status Inquiry Detail Late Costs and Adjustments If late costs arise they may be handled in one of several ways: 1. If a late cost provision had been made, the costs would be charged to that account. This may be the case on large manufacturing jobs. 2. If no provision was made, they may simply be written off to manufacturing overhead 3. If no provision was made but it is the company s policy that stock values should reflect the actual manufacturing costs, then the Reclassifications program should be used to update the weighted average of the manufactured items. It may be too late for this if the machines have already been sold. In this case, late costs should be written off to overhead. Lot Traceability If quality problems occur with a machine, it may be necessary to recall all machines in that batch. Each machine will have a separate serial number, linked together by Lot number. In my case, I have numbered the Lots the same as the Job number. In PeopleSoft EnterpriseOne, there is a good Lot trace feature that enables the user to find all machines in the same batch. Similarly, if one machine used a particular ingredient or batch of material that later turned out to be faulty, it would be possible to identify all machines that used material from that same faulty batch. Space does not permit us to go into this in more detail. Copyright 2004 Klee Associates, Inc. Page 41

Conclusion This solution is a practical and simple solution to those companies that have requirements that straddle manufacturing and Job Cost. It is easy to set up and is surprisingly functionally rich. Richard L. Berry, Klee Associates. Richard is a qualified accountant, and for the last 14 years he has been implementing PeopleSoft EnterpriseOne and World software. Richard specializes in the Real Estate and Construction industries, Professional Services, and Financials. Richard currently does training and implementation projects as well as managing the Asia/Australia/New Zealand consulting practice of Klee Associates, Inc. Richard.Berry@ERPtips.com The use of JDE is granted to Klee Associates, Inc. by permission from J.D. Edwards World Source Company. The information on this Website and in our publications is the copyrighted work of Klee Associates, Inc. and is owned by Klee Associates, Inc. NO WARRANTY: This documentation is delivered as is, and Klee Associates, Inc. makes no warranty as to its accuracy or use. Any use of this documentation is at the risk of the user. Although we make every good faith effort to ensure accuracy, this document may include technical or other inaccuracies or typographical errors. Klee Associates, Inc. reserves the right to make changes without prior notice. NO AFFILIATION: Klee Associates, Inc. and this publication are not affiliated with or endorsed by J.D. Edwards & Company. J.D. Edwards software referenced on this site is furnished under license agreements between J.D. Edwards & Company and their customers and can be used only within the terms of such agreements. J.D. Edwards is a registered trademark of J.D. Edwards & Company. JDE and OneWorld are registered trademarks of J.D. Edwards World Source Company. WorldSoftware is a trademark of J.D. Edwards World Source Company. Klee Associates, Inc. and this publication are not affiliated with or endorsed by PeopleSoft, Inc. PeopleSoft, the PeopleSoft logo, PeopleTools, PS/nVision, PeopleCode, PeopleBooks, PeopleSoft EnterpriseOne, and PeopleSoft World are registered trademarks of PeopleSoft, Inc. All other company and product names used herein may be trademarks or registered trademarks of their respective owners. Copyright 2004 Klee Associates, Inc. Page 42