E9.1 Using Phantom Items

richchipper

Well Known Member
Trying to find a workaround and searching pros and cons:

We have a two (or more) step process for manufacturing items - we call one our "bulk" and the other "finished goods". Generally, with new projects, our raw materials for the finished goods have to be ordered significantly ahead of the bulk raw materials. For instance, a glass bottle from Europe may need 240 days lead time while an ingredient only need 60 days.

When completing our ECO process for the finished good, our cost accounting team doesn't want to approve because the cost of the finished good will not include the cost of the bulk (labor plus raw ingredients). So, if anyone were to use the incompleted standard costs for analysis, it would be wrong. However, without a finished good ECO, there is no demand for the raw materials needed for the finished good (cap, bottle, label, etc.).

So, we did a little research on potentially using the stocking type 0 for Phantom. This way, we can avoid rolling standard costs. However, I'm not 100% sure how it will work. Does anyone have any advice on how this works and what to watch out for?

Thanks in Advance!
 

arthart

Member
I worked in a similar situation previously with a intermediate mix created which flowed into a bulk product which flowed into a packaged product. In addition, the manufacturing group only used "their" products within the manufacturing group, i.e. "their" products were not salable by them or by the distribution group. The finished good on the packaged product would be a distribution item number. Bulk sales were repackaged from the manufactured item into a distribution item number prior to direct shipment to the distribution customer.

The manufacturing group wanted to independently plan each of the product phases: intermediate mix, bulk, and packaged. Therefore the standard three level BOM would not work as they planned and made each component "finished good" separately. To achieve their planning and manufacturing needs, MPS would need create work orders for each level in the process based on the three, independent demand plans (think production plans or forecasts). Additionally, they also wanted the cumulative product costing to roll-up to the level it was ultimately sold. To facilitate, the intermediate mix BOM created an "M" intermediate "finished good". This item was used as a "0" phantom on the bulk BOM, which created an "M" bulk "finished good". If this was shipped as bulk externally, it was reclassified into the outbound, salable product prior to shipment. If it was to be consumed by the packaged BOM, again it was a "0" phantom on that BOM, resulting in the packaged "M" finished good (which was made into the distribution item number). This allows the cost to roll-up from intermediate mix FG to bulk FG (including the intermediate FG) to packaged FG (including the bulk FG). The MPS would drive the MRP which would react to the leadtimes for each level. All this took about three months to setup for seven manufacturing sites; however once one was up and working, the rest became more cookie-cutter.

Check out: Setup and Use of Phantom BOMs in Manufacturing (Doc ID 643145.1)
 

richchipper

Well Known Member
I worked in a similar situation previously with a intermediate mix created which flowed into a bulk product which flowed into a packaged product. In addition, the manufacturing group only used "their" products within the manufacturing group, i.e. "their" products were not salable by them or by the distribution group. The finished good on the packaged product would be a distribution item number. Bulk sales were repackaged from the manufactured item into a distribution item number prior to direct shipment to the distribution customer.

The manufacturing group wanted to independently plan each of the product phases: intermediate mix, bulk, and packaged. Therefore the standard three level BOM would not work as they planned and made each component "finished good" separately. To achieve their planning and manufacturing needs, MPS would need create work orders for each level in the process based on the three, independent demand plans (think production plans or forecasts). Additionally, they also wanted the cumulative product costing to roll-up to the level it was ultimately sold. To facilitate, the intermediate mix BOM created an "M" intermediate "finished good". This item was used as a "0" phantom on the bulk BOM, which created an "M" bulk "finished good". If this was shipped as bulk externally, it was reclassified into the outbound, salable product prior to shipment. If it was to be consumed by the packaged BOM, again it was a "0" phantom on that BOM, resulting in the packaged "M" finished good (which was made into the distribution item number). This allows the cost to roll-up from intermediate mix FG to bulk FG (including the intermediate FG) to packaged FG (including the bulk FG). The MPS would drive the MRP which would react to the leadtimes for each level. All this took about three months to setup for seven manufacturing sites; however once one was up and working, the rest became more cookie-cutter.

Check out: Setup and Use of Phantom BOMs in Manufacturing (Doc ID 643145.1)
Thanks for the information. Unfortunately, we don't have Oracle support for me to look at the document - but helps me get support as to why we need it! Thanks again.
 
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