Rework Manufacturing Order

[DSD]

Hi List,

Can anybodt pls tell me that:
1.If I Scrap on Work Order Quantity at the time completions then How to take care of the scrapped quantity?
2.Is new Manufacturing Work Order Is required?
2.How theNew WO is then Linked to Original WO?

 

[JCJN]

Greetings Dhanu,

1. When you report Scrap at Completion, an IS transaction is written to the Cardex, and a record is written to the GL, to represent the write-off of Material and Labour costs. Nothing else needs to be done as far as the system is concerned. It is assumed that, physically, you're throwing away the scrap. Scrap is scrap, it is not a recoverable product in itself (yes, I realize this is arguable, depending on the process involved, but logically, scrap is scrap).
If you sell your scrap, then an SO of some type could be used to make the sale.

2. In this case, you seem to be talking about a recoverable product. Logically, this is not scrap, it is, as you say, rework.
Here is what we do for rework:
a. Don't Scrap the quantity at Completion, Complete it normally (populate inventory for Parent Item).
b. Create a new WO (we use a different WO Type [WK] for Rework) for the necessary quantity.
c. Issue the quantity of the Parent Item to be reworked to the WK and remove any Raw Mats that are no longer necessary (for instance, if the Bolts used in the Assembly are reusable, you don't want to Issue them again). In this way, the cost of the original Item will be added to the WK costs (you could Reclass the Parent back into its Raw Mat, but I prefer to avoid extra transactions).

3. Use either the Reference or Parent WO fields on the WK Header to reference the original WO (either is searchable in the Shop Floor Workbench, I happen to prefer the sound of "Parent WO").

Hope this helps some...

 

[DSD]

Thanks Normandaue!

But can you through some light on following :
1.If In a certain Work Order material is issued and some Hours are also booked in that case if the job or work order gets rejected whic is not in complete even..Will work order with different doc type (Wk) will help in this ?
2.How to account the cost of rejected wo and newly raised wo?

 

[DSD]

Hi !

I have tried with document type WR for rework and I Have also used the field of Parent WO as well as Reference Field But How I will get the total cost..?

 

[JCJN]

Dhanu,

1. That depends on your process. In our case the majority of the cost is driven from the beginning of the process, so we decided to "complete" the WO even if the entire process was not finished, just to get the Parent Item into inventory and reuse it on the Rework WK. A Remark on the WO and WK lets the Accountants know exactly what was done, ot not done, on the WO.

2. I'm not sure what you mean. Make sure both types of Order are included in the WIP and Manufacturing Accounting runs. If you're using Standard Costing, then everything is measured in variances against the Standard anyways. The Accountants will have the references available so they know which WO's / WK's pair up.

 

[DSD]

Thanks Narmandeau !

I would make it clear:
1.I am working in Actual Costing Environment.
2.In have raised the rework WOrk Order (WR) for the same original item with normal work order(WO)for which rework is required.I ahve attAached the BOM for the original item whatever was required for rework.
Pls tell me or correct me:
1.Weather the rework order should for the same origibnal item?
2.How will i get cumulative cost of rework and Original WO together in R31802A..?

 

[JCJN]

I have never worked in an Actual Cost environment, however, most of the process should be similar.

1. If what you are producing at the end is the same Item Number, then yes. In some industries (Textile, for instance), a Rework can produce a different sku (a Colour change, for example).

2. As in my original reply, add the completed Parent Item from the original WO back into the Rework WR. The original completed Item carries the cost of having produced it. By issuing it to the WR, and also including whatever other Materials you need to complete the rework, and then running it through the process to accumulate the additional Labour costs from the Routing, you should end up with the cumulative cost for the reworked item.

As I said above, though, I can't tell you if there is anything special involved with Actual Costing.

Hope this helps.

 

[DSD]

Thanks Normandeau!

Yes! I have tried it and its working fine with actual costing also. Pls can you add value in following :

1.Can we make use of Rework(Rwk) Bill Of material for Rework Manugfacturing WOrk Order(WR)?
2.How to use that RWk BoM & How to capture the rework cost by using Rwk BoM?

 

[Shrikanthn]

Hi Normandeau, very interesting inputs. Thanks for the same. I was also intrigued by the same questions posted by Dhanu. How do I issue these parts to a rework work order? Should I manually create a new rework WK order type and manually attach a rework BOM that has this Finished SKU as one of the components? Wouldnt this lead to the problem of having many additional rework BOMs depending upon the type of rework required? This looks like a LOT of extra work to me. Do you have an easier way or do you also maintain many rework BOMs per SKU? Same problem with rework routing. Your expertise is truly appreciated.

Best regards

 

[JCJN]

1. Certainly, see 2...

2. On the WO Header, specify 'RWK' as the "Bill Type" rather than 'M'. When you run WO Processing, it will use the RWK BOM to create the Parts List.
In Standard Costing (don't know if it is the same in Actual), there can only be one Frozen Cost per Item, so the RWK BOM is not rolled up.
What I did was to create a generic Item to represent the Parent Item in the BOM, with the same Cost as the average of the possible Parents (this may be dependant on the number of possibilities and the range of the costs). After attaching the Parts List, I replaced the generic Item with the actual Parent Item. This way the Parts List carried all the correct costs, although (according to our Costing folks), it did generate some "noise" in cetain variance buckets (Engineering, I beleive).

Hope this clarifies the idea a bit more.

 

[JCJN]

Greetings Shrikanthn,

In my case, the parts are issued the same way as the originals, through Backflush at Pay Point.

It doesn't have to be completely manual, see my last response to Dhanu for a little more detail.

"...a LOT of extra work..." is relative to what you were doing before, and the value of the data. If it is important to capture the Costing data and maintain the inventories, then this is just another process to follow. If you think about it objectively, chances are that whatever method you're using now to accomplish these ends, takes just as much or more time than what I have detailed, and at least this way, it's all in the right place.
In the end, you have to look at the "Value Add" and decide if it is worth it. In my case, we have many possibilities per Item, but only maintain one RWK BOM for the most common scenario (the 75%+ solution), the rest are handled through the Standard BOM and tweaking the Parts List, as I explained at the beginning of the thread.

Worst case scenario, hopefully this will give you some ideas as to how to handle your own situations.