Can One Work Order be used for several days and post completions everyday?

Wheeler

Active Member
I am new to JDE Enterprise and I need to know the following:
Can One Work Order be used for several days and post completions everyday?

We were told by a consultant that JDE must close the work order everyday. Is that true?
And if so why?
And can we keep track of items and costs effectively if the work order does not close everyday?
 
Yes, you can do partial completions on a work order across multiple days. Normally you would run manufacturing accounting nightly which will update your inventory and WIP accounts as transactions are completed. What costing method are you using? The only reason I can think of why you wouldn't want a work order to have partial completions across days is if you were doing something funky with costing.
 
I asked because we were advised by a JDE manufacturing expert that a Work Order needs to be closed before you can ship out an item from that Work Order. Is that true?

Or can items be shipped from an Open Work Order that has partial completions?
 
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What's your costing method? As Russell previously noted this may be the reason for the consultant's statement. If you're using something other than Standard Costing then yes, you need to close and process the WO in order for your costs applied to the item to be correct.

P.S. Why not ask the Consultick?
 
if you are doing actual costing, then the work order must be closed after all costs are in. So if you want to ship product at the same time it is being produced, you will have a problem because you cannot do a partial completion of the work order to create the inventory.

Unless you run 24x7, i prefer a work order per day. It is a little "cleaner" to understand. A lot depends on how you do shop floor reporting. A lot of companies want to compare actuals to standard for a production day. Having an order open for multiple days will make that a little more difficult.

Just my two.
 
Thank you Larry Jones for that input - I am trying to learn more about how work order behave in JDE.
 
Thank you Sean Selman for your reply - we started out doing actual costing and later changed to standard - however there was no change made to the way the work orders were to be processed after the change from actual cost to standard.
 
Thank you Russell Codlin for your reply - I had forgotten that we had originally started with actual costs and then went to standard costs. It just seems that it would be harder to keep track of work orders if we open them in JDE daily - because that is not what is being done actually on the shop floor - on the shop floor - there is one work order that remains open until all of the work is done. I don't work in accounting - I work in IT and I am just trying to get a handle on how things work.
 
Thank you Russell Codlin for your reply - I had forgotten that we had originally started with actual costs and then went to standard costs. It just seems that it would be harder to keep track of work orders if we open them in JDE daily - because that is not what is being done actually on the shop floor - on the shop floor - there is one work order that remains open until all of the work is done. I don't work in accounting - I work in IT and I am just trying to get a handle on how things work.

If you are using standard costs then there shouldn't be any reason to use daily work orders. Actual costing would have been the driver for the statement about daily work orders but obviously your business has already worked out how much pain actual costing can cause in a manufacturing environment. As I mentioned, all you need to do with standard costs is ensure that the manufacturing accounting job is picking up your partially completed work orders daily and thus keeping your WIP and inventory values up to date. We have plenty of customers that complete work orders over a number of days.

The only note I will put on this is that you like to have as few open work orders as possible when you run a frozen cost update. This helps make the WIP/Inventory revaluation as easy to reconcile as possible.
 
Thank you Russell for this information - I believe that we will go with creating the work orders and leaving them open until the work is finished - then close them.

Again as a newbie all of this input is invaluable!
 
Thank you Russel for this information - I forgot to ask this: Can completed items be shipped while the work order is open? Or does the work order have to be closed to ship completed items? (last question - I PROMISE :) )
 
You can do partial completions with standard costing and ship the inventory before the work order is closed. The completion places the items in inventory so you can do whatever you want with them. The reason why this is not possible with actual costing is that upon completion, the cost of the item is calculated. If all of the materials, labor, etc are not booked to the order yet, the cost is incorrectly booked. Whereas standard costing will post at standard cost no matter what is posted into the order at the time of partial completion.

I hope that clarifies.
 
And just to clarify Sean's clarification, which is correct...

The entire premise behind standard costing is that different business functions do not impact each other in terms of cost and profit calculations. You then manage the performance of each cost/profit centre (procurement, manufacturing or sales) through variances.

So with procurement, if they have significant purchase price variances for a period then questions need to be asked as to whether the market for raw materials has changed and prices have gone up or whether the buyer's have failed to get the volume discounts that they were expected to achieve.

With manufacturing, if there are large actual variances then has productivity been down or if there are large engineering variances then has the process been changed for the worse.

For sales there's no variances, but instead you're looking at profit margin so did the sales team make the agreed profit or did they discount too heavily to get the agreed volumes?

The idea is that you can manage each area through the financials and one does not affect the other. For example, if you used actual costing then the reported profit margin would be impacted by how much was actually paid for the raw materials and how productive the manufacturing function is. This muddies the waters and makes it far more difficult to determine whether the sales teams are meeting their KPIs. Likewise, you know that manufacturing variances are caused directly by issues in manufacturing and not on movements in your raw material prices. The true cost of doing business is the combination of the standard costs and variances combined.

The beauty with standard costing is that you can do your transactions in any order. So, if you're happy for your inventory numbers to be out of kilter for short periods, you can ship confirm inventory before you have even created the work order or purchased the raw materials. As long as all transactions are competed before the end of the reporting period everything will wash out correctly in the end. Not generally a recommended approach as it makes tracking transactions and stuff ups more difficult and can cause your inventory to be constantly out (especially if it is occurring because of poor discipline rather than a true business need) but it can make sense in some situations.

For anyone that works in this space I would strongly recommend reading up on management accounting theories. There are plenty of good textbooks on management and cost accounting available. It is amazing how many accountants we encounter during implementations that don't actually understand these concepts and have to be convinced that standard costing is far more for appropriate for their business than actual.
 
Thank you so much Russell for further clarifying! This all helps my understanding :)
 
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