Tuesday, July 21, 2015

Complex Jobs, Inventory, Costing, and Profitability in Realtrac 10


This white paper will discuss inventory and costing, specifically within Complex Jobs, in the Realtrac ERP system. While there are many unique scenarios our customers will encounter, we will present a simple model to let the user consider their options and adopt a plan that works best for their business.
Our goal in this paper is to demonstrate how to accurately track the costs associated with all the jobs within a complex job, properly maintain the inventory for the parts and final assembly, and produce the reports we need to run our business.

Let’s Build a Wagon!

Let’s discuss a relatively simple example of a Complex Job in Realtrac. Our final product is a toy wagon, with our root job being the assembly and finish of the wagon (Job 14J1167). This root job will have 2x child jobs, one of which will be the production of the wagon wheels (Job 14J1165) and the other the production of the wagon body (14J1166).

In the screen capture below, I’ve created the three independent jobs and the complex job structure. Each of my jobs has a router, and I’ve captured the costs associated with my material and subcontracts on the bill page. (I’m not going to bother scheduling this job for discussion, hence the blank Start and Due dates.)

Figure 1. Active Job list showing my complex job, two Child Jobs, and our one Root assembly job.

The Child Jobs

In this next step, we are going to complete the work on the two child jobs.

Let’s look at the router of the Wagon Wheel job, 14J1165.

Figure 2. The Router for Job 14J1165 (Wagon Wheels) and the Shop Floor Status screen showing an employee currently logged in to OP 30

In Figure 2, note that OP 10 and OP 20 are closed. They were estimated to take 30 minutes each, and we have registered 30 minutes against these jobs.

OP 30 is still open, and when we pull open the Shop Floor Status screen, we see that our employee “Sam Lindhorst” is currently working on this operation.

This operation is important, since it is the operation that will transfer finished pieces to inventory. In the Realtrac 10 ERP system, there is always a special router line that, when a piece count is recorded, will trigger an automatic transfer of the goods to inventory. If the router has one or more router lines with the Code of Count, then the last Count operation will trigger the movement of the finished pieces to inventory. Absent a Count operation (and our router here only has Other and Run operations), then the transfer to inventory is triggered off in the final router operation. In this case, that is OP 30.

Our employee has logged off this operation, registering a piece count of 20 units.

Figure 3. Employee logs off OP 30.

In Figure 3 above, our employee is logging off Operation 30 for 14J1165. They are registering twenty pieces complete but are leaving the operation open—not checking the “Operation Completed” checkbox—since we have not completed our full run of forty pieces.

When the employee clicks or scans the Accept button, the Realtrac ERP system will automatically transfer twenty completed units to inventory. If we look for inventory from Job 14J1165, we will see twenty units in our Realtrac ERP inventory.

Figure 4. Twenty units in inventory after part of the work for OP 30 has been completed.

I am now going to complete both of my child jobs: 14J1165, producing 40x wheels, and 14J1166, producing 10x bodies. After completing the work sessions, my inventory will show the following:

Figure 5. Inventory in place for our Two Child Jobs

The Root (Assembly) Job

At this point, our inventory has all the goods we need to start our root job (14J1167), our assembly, and the finish of the wagon. But before we kick off 14J1167, let’s review the current status of the costs for my complex job (aka “Job Tree”—note the Tree nomenclature on this report).

Figure 6. Job Tree Profit Analysis report for 14J1167 and associated jobs

Our root assembly job, 14J1167, has incurred $18.90 in costs thus far. This money is from the Buyout for the job (in this case, the paint required to finish the wagon, once assembled). As we begin the process of assembling and finishing the wagon, we will also incur some labor and overhead costs. But, once complete, we expect to make a profit on the job as a whole. We will return to this report during production (for a long run job) as well as after production, to make sure we’re still going to make a profit.

Before we begin assembly, we need to get our finished wagon wheels and bodies out of our inventory and into our assembly job (14J1167).

Highlight the FCP in Inventory and click the “Move to Job” button along the bottom of the interface. This will bring up the following window:

Figure 7. Move inventory to Job interface

A critical decision to make here is what dollar value should be charged to the assembly job. In Figure 7 above I chose the Other Price, which is currently set to $0.00. I do this because I’ve already captured the costs for the wagon wheels in Job 14J1165 (see the costs columns in Figure 6 above).

Note: Realtrac has also intelligently captured and saved a Cost Each and Price Each value for this item, as it transfers the goods from the job to inventory. The Cost Each is based on the true cost per unit of the item at the time it was transferred to inventory. The Price Each value comes from the value set on the main Job screen for the job that originally produced the part. Since the child job 14J1165 ran at a deficit, we see our costs were higher than the price of the part itself. All three values: Cost Each, Price Each, and Other Price, can be changed within the Realtrac Inventory module.

By completing this action, I am removing the child goods from inventory, transferring them to the assembly job, and maintaining all the information about the costs associated with all the jobs in my complex assembly.

After moving the 10x wagon bodies and 40x wagon wheels to my assembly job—when we check the Material Usage tab for job—it is now clear to the end user that the child jobs have been completed, and that the material is ready for the assembly job.

Figure 8. Material usage for our Assembly Job 14J1167

Please note, since we transferred the parts from inventory at $0.00 costing, the Buyouts for my assembly job have not changed.

Figure 9. Costing for our job has not changed.

Here, our employee begins work on the assembly of the wagon, logging in and out of the various router operations for the job. Once again, as workers complete pieces on the “trigger” line (last Count operation or last line of the router) for our assembly job, the finished wagons will be transferred to inventory.

Finishing Assembly and Analysis

With all of our operations complete, we should have a clean inventory (only our 10x finished wagons)—and our Tree Profit report should be nice and tidy. Let’s see if that’s the case:

Figure 10. Final profit report, and our Inventory status

In the lower portion of Figure 10, we see the status of our inventory. We have no inventory from jobs 14J1165 and 14J1166. The final output from those jobs was consumed by our assembly job 14J1167. We’ve yet to invoice and ship our final product, so all 10x units of our finished wagon are sitting in inventory.

In the upper portion of Figure 10, we see that we did make a profit on this job. Job 14J1167 was not charged for the costs associated with the production of 14J1165 and 14J1166, since we already captured those costs in their own jobs. But overall, the building of the wagons netted us a profit, and we can go home and enjoy the day!

Many of the variables in this scenario will change depending on your needs. You may not want to set any prices for the child jobs. You may build complex jobs with many more levels to them. It’s possible to have complex jobs many levels deep, where another “child” job will consume the output, producing yet another part that is consumed by the final root job.

We hope this has provided a nice starting point as you consider using the Realtrac Complex Job module or expanding its use in your facility. Please reach out to your Account Manager for additional ideas on using the Complex Job module as well as ways Realtrac can help your business grow.

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