AX2012_ENUS_PMI_01

Chapter 1: Overview

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CHAPTER 1: OVERVIEW Objectives

The objectives are:

• Explain process manufacturing and create the necessary setup at the released products level.

• Explain a formula item and how it differs from a Bill of Material (BOM) item.

• Create a product at the enterprise level. • Configure released products. • Create and apply a product template.

Introduction Process Manufacturing in Microsoft Dynamics® AX 2012 provides integrated functionality for planning, managing and distributing in process manufacturing. It supports a wide range of processes, including Make to Order (MTO), Make to Stock (MTS), in the mixed mode, and hybrid environments.

Some of the key requirements of process manufacturing include:

• Formula management. • Co-product and by-product planning and management including

allocating cost for unplanned co-products and by-products. • Containerized packaging. • Batch order management, including consolidating batch orders for

packed products with similar packed products and a parent bulk item. • Full visibility and partial visibility catch weight functionality. • Batch attribute assignment, search, and reserve capability. • Inventory batch management. • First Expiry-First Out (FEFO) and shelf life inventory management

to set vendor-specific batch information. • Commodity pricing functionality. • Rebate and trade promotion capability.

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Microsoft Dynamics® AX 2012 Process Manufacturing Production and Logistics

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Microsoft Dynamics AX 2012 provides out-of-the-box functionality to cater for these requirements.

Process Manufacturing Production and Logistics in Microsoft Dynamics AX2012 can be divided into the following two topics―Process Manufacturing Logistics and Process Manufacturing Production.

Process Manufacturing Logistics can be used by customers who want to automate their distribution processes for products that are usually manufactured in a batch or semi-continuous processing environment. Features of process manufacturing logistics include the following:

• Distributors of processed goods can forecast and plan the supply and demand.

• Procurement and sales can be managed in a dual unit of measurement.

• Short and long shelf life and stringent quality standards can be maintained for inventory batches of natural and consumer packaged products, such as pasteurized milk, paint production and mixing, and so on.

Process Manufacturing Production is targeted to customers who want to automate their batch or semi-continuous manufacturing processes. Manufacturers of processed goods can quickly define complex formulas to accurately control production costs and they can more easily switch between make or buy decisions with agility.

Key features of process manufacturing production include the following:

• Retention of complex formulas • Manage shelf life products • Manage commodity pricing • Manage product compliance • Setup and apply complex rebates • Advanced lot tracking and control • Enhanced cost management of multiple outputs • Procure, store and sell products in dual units of measure • Manage production for assembly or disassembly for single or dual

units of measure



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Prerequisite Setup for Process Manufacturing In Microsoft Dynamics AX 2012, products and product variants originate at the enterprise level and are released at the company level, where they can be further maintained. If you choose to create a product at the company level, Microsoft Dynamics AX creates the product at the enterprise level and then immediately releases that product at the company level where it originated. The following are the enterprise level setups that relate to process manufacturing:

• Catch weight item must be defined at the global level when the item is created. However, product variants can only be created at the enterprise level.

• Storage and tracking dimensions can be maintained at the enterprise level and then released to the companies for enterprise-wide consistency, or they can be maintained uniquely at the company level.

Difference Between a Formula Item and a BOM Item

In Microsoft Dynamics AX 2012, the items that are produced (semi-finished or finished) in process manufacturing are called formula items. However, products that are produced in other industries, such as engineering, repetitive manufacturing, and so on, are called Bill of Material (BOM) items. There are many differences between a formula item and a BOM item.

The following table explains the main differences between a formula item and a BOM item:

Formula item BOM item

Formula items are produced from a series of mixing operations, chemical reactions, extraction or other actions that transform raw materials into a final, sellable product.

Discrete products are assembled from a fixed quantity of components in a bill of material.

The formula item is produced together with or without co-products and by-products.

No co-product or by-product is produced with a BOM item.

The formula item is produced in specific sizes called a batch size, and is always tracked with a batch number.

The BOM item is produced with or without a standard production quantity. Sometimes it might not be tracked with a batch number or serial number.

Yield will cause the ingredient quantities to differ to achieve the planned output of the formula item.

The output from a production order, which the BOM item uses, is generally equivalent to the estimated output quantity.




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Create a Catch Weight Product at the Enterprise Level

You can create an item at the enterprise level in the All products and product masters form. When you create an item at the enterprise level, Catch Weight (CW) Product setup is specific to process manufacturing.

You must activate the CW Product check box together with the product number and product name at the enterprise level for all catch weight items. Product information management > Common > Products > All products and product masters

FIGURE 1.1 NEW PRODUCT FORM

NOTE: Item master creation and maintenance is done in the module called "Product Information Management" in Microsoft Dynamics AX 2012

Process Manufacturing Related Setup at the Released Product Level

When you release an item to a specific company from the enterprises level, an item number with the product name is created in the Released product form at the respective company. At the released product level, you must setup one or many of the fields that relate to process manufacturing in the following forms or field groups.

• CW related setups • Item model group • Tracking dimension group • Shelf life related setups • Production type • Approved vendor setup



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• Packaging setup for bulk and packed items • Batch attributes • Compliance related setups

Product information management > Common > Released products

FIGURE 1.2 RELEASED PRODUCT FORM

Catch Weight Related Setup

When you enable the CW product check box at the enterprise level and release it into the individual legal entity (company), you must perform the following three steps.

1. Create the unit conversion data in the Inter-class conversion page to create a conversion factor between the base unit and the catch weight unit.

2. Assign the catch weight unit in the CW unit field in the Catch weight field group in the Manage inventory FastTab.

3. Enter relevant values in the Minimum quantity and Maximum quantity fields in the Catch weight field group in the Manage inventory FastTab.

NOTE: Enter the catch weight related fields in the Handling field group, if the catch weight item is handled by pallet transport between inventory locations.

Product information management > Common > Released products > Management inventory FastTab




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FIGURE 1.3 RELEASED PRODUCTS DETAILS FORM

Setup in the Item Model group

You can configure the following fields according to their necessity:

• FEFO date-controlled • Same batch reservation • Consolidate requirement • Vendor batch • Batch disposition code • Approved vendor list

You can define the FEFO date-controlled dimension in the Reservation field group for items that have a shelf life with the pick criteria Best before or Expiration. You define the same batch reservation and the consolidate requirement setup to create and process shipments from the same batch for some specific customers. You can enable the Purchase registration check box in the Vendor batch field group to enter a vendor batch during the purchase registration process.

You can set default values for the batch disposition code and the approved vendor check method in their respective fields in the item model group.

Inventory and warehouse management > Setup > Inventory > Item model groups



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FIGURE 1.4 ITEM MODEL GROUP FORM

NOTE: The default setting of the batch disposition code on the item model group is overridden by the disposition of the quality order, if the item is configured with the quality management setup.

NOTE: You can override the default setting of the approved vendor check method that is defined in the item model group in the Purchase FastTab at the released products level.

NOTE: You can update the vendor batch for items in the purchase order registration, even if you cannot select the vendor batch in the item model group.




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Tracking Dimension Group Setup

You must attach the tracking dimension group that has a batch number selection. Selection of the serial number in the tracking dimension group is optional.

Product information management > Released products > Product tab > Dimension groups button > Tracking dimension group

FIGURE 1.5 DIMENSION GROUPS IN RELEASED PRODUCT DETAILS FORM

Shelf Life Related Setup

Shelf life related setup can be defined under the Item data field group in the Manage inventory FastTab as follows.

• Shelf advice period in days • Shelf life period in days • Best before period in days



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The purpose of the shelf life related setups is to calculate the expiry date for the batches and the expiry date is taken into account in reservation and master planning scenarios. It is also used to report on batches about to expire.

FIGURE 1.6 CALCULATION OF SHELF LIFE DATES

Product information management > Common > Released products > Manage inventory FastTab

FIGURE 1.7 MANAGE INVENTORY IN RELEASED PRODUCT DETAILS FORM

NOTE: You must enable the FEFO date-controlled and batch number tracking dimension, to affect the shelf life setup for the items.




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Production Type Setup

You must define the relevant production types in the Production type field in the Formula planning field group in the Engineer FastTab of the Released product details form.

The list of different production types include the following:

• Formula • BOM • Co-product • By-product • Planning item • None

Product information management > Common > Released products > Engineer FastTab

FIGURE 1.8 ENGINEER ACTION TAB IN THE RELEASED PRODUCT FORM



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Co-product: The co-product identifies the item as the secondary output to the primary formula item and it is reusable in subsequent processes or sold at a profit. Except for planning items, the product is produced as part of producing another product. Usually when the production type is set to co-product, the product is also setup as a co-product on one or more formula versions of other products.

By-product: The by-product identifies the item as the secondary output to the primary formula item or planning item. Sometimes companies spend money to dispose of the by-products and the cost incurred for disposal is accounted to the respective batch order. Therefore, the by-product involves configuring the cost burden associated with the formula.

BOM: The product is produced by using a bill of material (BOM) instead of being produced by using a formula. The property can be changed from, for example, BOM to co-product even if there are transactions.

Formula: The formula identifies the item as a finished or semi-finished item in process manufacturing. This is specific to process manufacturing because it enables formula versions, co-products and by-products to be attached to the formula item.

Planning item: The product is produced by using a formula, for example, in a disassembly scenario. This is used for those formula items that generate only products.

None: The product does not belong to any of the other types.

NOTE: When you select co-product as the production type, the Planning formula field is enabled and you can select a formula item as the default planning formula.




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Approved Vendor Setup

You can set up an approved vendor for the items at the released product level.

Product information management > Common > Released products > Purchase tab

FIGURE 1.9 APPROVED VENDOR LIST FORM



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Packaging Setup for Bulk and Packed Products

To set up the consolidated batch orders functionality (containerized packaging) to link a bulk order with packed orders, you must define the bulk item conversion for all formula items.

Product information management > Common > Released products > Manage inventory tab

FIGURE 1.10 BULK ITEM CONVERSION FORM

NOTE: You can create a bulk item conversion for the items of the production type Formula only.




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Batch Attributes Setup

You can set up batch attributes for the items and customers at the released product level. This is an optional setup for the items that require batch tracking based on specific batch attributes.

Product information management > Common > Released products > Manage inventory tab > Batch attribute button > Product specific

FIGURE 1.11 PRODUCT SPECIFIC FORM



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Compliance Related Setup

You can perform the necessary setup that relates to legal, safety and regulatory requirements at the released product level.

Product information management > Common > Released products > Manage inventory tab > Compliance button > Product specific

FIGURE 1.12 COMPLIANCE SETUP IN RELEASED PRODUCTS FORM




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Create and Apply the Product Template

You can create product templates by using the Create personal template and Create shared template buttons in the Action Pane located in the ribbon area of the Released products list page. You can replicate the common setup across items by creating and applying the template.

Product information management > Common > Released product > Product tab > Template button

FIGURE 1.13 CREATE TEMPLATE IN RELEASED PRODUCTS FORM

Personal template: If you create a template by using the Create personal template field, the template is available for use only for your user ID.

Shared template: If you create a template by using the Create shared template field, the template is available for all users.

Applying Template

When you create an item in the Released product form, you can select the template from the drop-down menu in the Apply template field in the New Released product form and the related setups, such as item model group, item group, storage dimension group and tracking dimension group, get copied. You can copy the shelf life related data by using the Apply template option available at the released product level.



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For process manufacturing, certain values will not copy to the new product. They must be added to the product based on the actual setup criteria. This setup criteria includes the following:

• Catch weight item • Restricted material • Regulated material • Reportable material

If the values applied to the product change the original production type for an item, then any existing versions of that item are removed and the Planning formula field is cleared.

Summary This module describes the differences between a formula item and a BOM item, and the prerequisite setup at the enterprise level and the legal entity level required to create an item related to process manufacturing.

The module shows how process manufacturers can integrate the entire process manufacturing life cycle and increase the flow of information internally and with customers and trading partners. As a result, process manufacturers can better manage all the variables required to make and deliver high-quality products to custom specifications, gain visibility into batch orders and supply chain activities, optimize capacity, comply with regulatory requirements, and drive continuous process improvement.

With process manufacturing, Microsoft Dynamics AX 2012 can help companies increase the speed and efficiency of their manufacturing operations, communicate more effectively with their extended supply chain, and provide real-time information to gain deeper insight into their businesses.




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Test Your Knowledge 1. What are the setup options relating to process manufacturing available at the

released product level?

2. Categorize the following items with respect to Formula and BOM items

_____ 1. Items that are produced from a series of mixing operations, chemical reactions, extraction or other actions that transform raw materials into a final, sellable product _____ 2. Items that are assembled from a fixed quantity of components in a bill of material _____ 3. Tracking the production of formula items _____ 4. The attribute which is used in estimation and measurement in Batch orders _____ 5. Co-product and By-product

a. Yield b. Batch numbers c. Produced together

with formula item d. Formula items e. BOM items

3. In the context of Packaging setup for bulk and packed products, choose the correct statements. (Select all that apply)

( ) To set up consolidated batch orders (Containerized packaging) to link bulk order with packed orders, the conversion must exist, and the formula version must contain the bulk item for the packed item formula.

( ) You can create Bulk item conversion for the items of Production type Formula only

( ) You can create Bulk item conversion for the items of production type BOM only

( ) You can create bulk item conversion for the items of production types BOM and Formula.



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4. What are the different types of product templates available in Microsoft Dynamics AX2012?




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Quick Interaction: Lessons Learned Take a moment and write down three key points you have learned from this chapter

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Solutions Test Your Knowledge

1. What are the setup options relating to process manufacturing available at the released product level?

MODEL ANSWER:

• CW related setup • Item model group • Tracking Dimension group • Shelf life related setup • Production type • Approved vendor setup • Packaging setup for bulk and packed items • Batch attributes • Compliance related setup

2. Categorize the following items with respect to Formula and BOM items

d 1. Items that are produced from a series of mixing operations, chemical reactions, extraction or other actions that transform raw materials into a final, sellable product e 2. Items that are assembled from a fixed quantity of components in a bill of material b 3. Tracking the production of formula items a 4. The attribute which is used in estimation and measurement in Batch orders c 5. Co-product and By-product

a. Yield b. Batch numbers c. Produced together

with formula item d. Formula items e. BOM items

3. In the context of Packaging setup for bulk and packed products, choose the correct statements. (Select all that apply)

(√)To set up consolidated batch orders (Containerized packaging) to link bulk order with packed orders, the conversion must exist, and the formula version must contain the bulk item for the packed item formula.

(√) You can create Bulk item conversion for the items of Production type Formula only

( ) You can create Bulk item conversion for the items of production type BOM only

( ) You can create bulk item conversion for the items of production types BOM and Formula.

4. What are the different types of product templates available in Microsoft Dynamics AX2012?

MODEL ANSWER:

1. Personal template 2. Shared template




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