How to do production order opening (WIP)

kiyac

Hi Experts,

May I know the general practice for doing production order opening in NAV5.0 SP 1 or above?

We need to take care the WIP (Direct material, Direct labour, Overhead), inventory, and those GL effects.


Thanks!

Sumit

Click on Statistics /(F9).

kiyac

I am not checking the progress of the production order.

For opening, how can user do the data migration for production order?

AdamRoue

I have not yet met a site that wanted to do this in full for numerous reasons. Most run down the open works orders, close the existing ones and start afresh, basically brining across a zero position. Others financially account for a WIP figure, periodically write it down with journals, so it is purely finance, and again all works orders are run from new.

To do this properly you would need to create all works orders, then report on the position they are using output and consumption journals. This means your opening stock needs to be inflated to enable WIP consumption. Basically look at all GL entries for a part complete, part outputted order and then see what you have to do to work backwards from this. In my experience no business has wanted to go to this level, but it does not mean it cannot be justified or is necessary, it is just a lot of work and needs a lot of control!

kiyac

If not start from the beginning ie work backwards, can I assume all WIP is done during opening? I want to know the normal practice for production order opening.

E.g. Production Qty = 100, Output = 20, WIP = 10

Opening :
1. Create a Production order with qty = 70, and treats it as normal production order
2. Assume WIP is done, thus create a item journal for increase of FG
Cr WIP
Dr FG inventory
Note : 1. It may overstate inventory 2.Qty is in stock (in system point of view) but should not be available for outbound
3. When the 10 WIP is completed (physically), if there is any change in cost, use revaluation jouranl for cost adjustment.

Is it feasible?

AdamRoue

It depends upon your processing. There is no outbound WIP, there is WIP from the consumption, so in your example there will be component parts for 30 in WIP with 10 output but would be brought on for the opening item balances. Depends how you want to approach it, for example you could load the order for 100, output 10 in and consume the stock for 30, but you need to remember to reduce your opening inventory take on by 10 to counter the 10 you will book in.

I suggest you load a works order and walk through it, without knowing how it works you cannot really map it.

Sumit

Hi kiyac,
I missed your points.It would be more informative, if you would have placed this in your initial requirements.

For opening, how can user do the data migration for production order?

I hope you follow AdamRoue.

tthyagu

Create production order for 10 (WIP Quantity), dated prior to the opening date. Now take inventory for this production order into the system again prior to the opening date. Consume the inventory for this production order, again prior to the opening date. Now this value will corresond to the WIP for this production order. Further the inventory will be made to 0 as the items are consumed. So there will not be any inventory inflation.

Regards

AdamRoue

tthyagu wrote:

Create production order for 10 (WIP Quantity), dated prior to the opening date. Now take inventory for this production order into the system again prior to the opening date. Consume the inventory for this production order, again prior to the opening date. Now this value will corresond to the WIP for this production order. Further the inventory will be made to 0 as the items are consumed. So there will not be any inventory inflation.

Regards

So what do you do with all the GL entries this creates? You no longer have an opening balance date to reconcile back to and these entries will be floating somewhere - how are you controlling this if they are NOT reconcilled back as WIP?

mdraskovic

AdamRoue wrote:

I have not yet met a site that wanted to do this in full for numerous reasons. Most run down the open works orders, close the existing ones and start afresh, basically brining across a zero position. Others financially account for a WIP figure, periodically write it down with journals, so it is purely finance, and again all works orders are run from new.

To do this properly you would need to create all works orders, then report on the position they are using output and consumption journals. This means your opening stock needs to be inflated to enable WIP consumption. Basically look at all GL entries for a part complete, part outputted order and then see what you have to do to work backwards from this. In my experience no business has wanted to go to this level, but it does not mean it cannot be justified or is necessary, it is just a lot of work and needs a lot of control!

I strongly support this !
It's just better to start from zero. The main work is there for consultant, to prepare customer for migration procedure.
The best practice is, to start with NAV in the moment, where processes in factory are in stillstand
(like vacation, end of the year, summer holidays,...) and Physical inventory counting is done accordingly.

The "old" quantities are ended in old system, and only the differences are open in Nav. Including starting inventory !
For example, if Released is 100, finished 60 & 10 are in WIP, this 70 are entered and finished in old system,
and ONLY 30 are entered as a new Production order in NAV.
If old system has problem with 100, released quantity must be changed to 70 in old system too.
That's the whole story.

dimus

Follow the advice of tthyagu.

If you need to "recreate" WIP account in a new system you would basically need to recreate the same steps as you did in the previous system.
Normally you would:
1. Bring open inventory for the raw materials that has been consumed to get WIP.
2. Post Consumption for RMs.
Don’t forget about GL entries. Effectively, setup your GL accounts in the setup, so when you post open inventory and consumption it will net to zero in GL. When you complete all steps only WIP account will have an open balance (normally GL open balances are brought later).
This process has been done before and it works fine.