Introduction to Manufacturing in ERPNext
Hello friends. Today we will go through some of the features of the manufacturing module that an ERPNext software that can ease your production process from planning to execution. For understanding the process flow, let us try to prepare a cup of tea using these items, which are tea powder, water, milk, and sugar. These items with their corresponding purchase quantities and prices are listed on screen. In ERPNext, we need to feed the same information so we can also derive the cost of preparing our finished good, that is a cup of tea.
Setting Up Items in the Item Master
As we log in to the system, we can view our items and finished goods in the item master form listed in the stock module. So click on it. As you can see, I have already added the finished good, cup of tea, and other items milk, water, sugar, and tea powder in the item master. Let's have a look at it.
We add a tea product with a unit of measurement as a cup and also clicked on 'Maintain Stock Level' so we can view a small dashboard of all stocks in different warehouses. Similarly, we added other items with a valuation rate, that is their purchase price or total cost of procuring that item. One liter of milk is available for rupees sixty-five.
Creating the Bill of Materials (BOM)
Another important step is to enter the Bill of Material in the system. Our Bill of Material will look somewhat like this. Here we have listed the exact amount of each item required to produce one unit of finished good. Also, our finished product will be required to go through three stages of operation: that is heating, mixing, and serving. So we will require these items at different stages of operation. Like for the first operation of heating, we will need tea powder and water. For mixing, we will require milk, and for serving, we will need sugar.
Defining Workstations, Operations, and Routing
All this information must be fed into the system one time only. So let's have a look at it. On the main screen, click Manufacturing. Here one can see all related forms like Item, Bill of Material, Workstation, Operation.
In Workstation, we listed these three which will be required for our process. In Operation, we listed our previously discussed stages of operation. For Routing, we entered a process called 'Tea Preparation'. Here we will completely define our process by mentioning each operation, at which particular workstation it will be processed, how much time will be required, and what will be the cost of this operation.
Configuring the Detailed Bill of Materials
With all this data, we can prepare a Bill of Material where we will mention the finished good per unit quantity of production. As we will require material at different stages, we selected 'Material Transfer against job card'. Rate of material will be based on valuation rate that we entered in the item master against each item.
For each operation, we mentioned the cost that will be incurred. In each material, we mentioned the exact amount required to produce one unit of finished good, and the system will derive its cost from the valuation rate. Also, for each material, we linked at which operation it will be required to be transferred for production. All this information needs to be fed to the system one time only for each finished good.
Initiating Production with a Sales Order
Now let us start with our production process and complete one full transaction in the system. We will consider the make-to-order process, as it will also cover the make-to-stock type of manufacturing. So let us prepare one sales order and put a requirement for five cups of tea. We will mention customer name, date of delivery, P.O. number, product, quantity, rate, taxes, and payment term.
Generating a Production Plan from the Sales Order
After preparing the sales order, let us prepare a production plan. We have the option to prepare a production plan either based on a sales order for make-to-order or with material requests for make-to-stock. We have the option to populate sales orders based on item or customer, and also we can select sales orders created within a specified period by selecting from and to dates.
We will select the customer name and the system will pull all the sales orders prepared for this particular customer. As we are considering only one sales order, we will delete the rest. Click to 'Get Items for Work Order', then click on 'Get Material for Production' to explode the Bill of Material. Here the system will show required quantities of each item for production of the complete five cups of tea as in the sales order. Also, it will show quantities available in stock. If any specific item is not available in stock, then the system can provide an option to prepare a purchase request from here for that item with required quantities. Save and confirm this production plan.
Managing the Work Order and Job Cards
In the same form, one can view the work order already created in the dashboard. Click on it. As this work order is in draft format, we can change any details if required. Check the rest of the details and confirm. The system will prepare three job cards based on the operations as listed in the Bill of Material. These job cards can be accessed from the same form by clicking this link. Here we can view only related job cards like heating, mixing, and serving.
Executing Job Cards and Material Transfers
For each job card, one needs to click 'Start' to begin the particular production process. The system will automatically record the date and time when 'Start' was clicked. The raw material required in this process is also listed. So one needs to transfer this material from central store to work-in-progress to use this material for production. Click on 'Material Transfer'. Select 'Material Transfer for Manufacturing'. If inspection is required, then click on it and set parameters for quality control. In the items list, put the actual quantity that is transferred for manufacturing. Click 'Submit' and confirm this material transfer. The status will change to completed with a green color code.
In the work order, we can track the entire production. We can see the required and transferred quantity of tea powder and water. The second stage of operation is mixing, where milk will be added to the process. So let us make a material transfer for it. Stop the job. An employee can also be added to the process who will be performing a particular operation so that his cost can be apportioned on the total cost to finish good. Submit to complete this process. Similarly, we will complete the last process, that is serving.
Finalizing the Work Order and Stock Entry
Once all jobs are completed, we can complete the entire work order. Click 'Finish' and mention quantities produced during the entire process. Click on 'Create' to make a stock entry for the finished good. In our case, it is five cups of tea. One can view the entire operating cost. Click Save and submit. Let's check the Item Master for the finished good. One can view that the finished goods warehouse is updated with five. That completes the entire production process.
Reporting and Conclusion
These are all the reports available, and one can create their own report with the report builder tool. For further analysis, required charts and graphs can be plotted based on real-time data. We covered a very simple production process. In case you have any queries, then please contact us. Thank you.
