Introduction to Business Central Assembly Orders Ing.Jaromír Skorkovský,CSc. Masaryk University Brno Faculty of Economics and Adminisration Department of Business Management The difference between Production orders and Assembly orders I. 1150 1151 1155 Bill of Material (BOM) The difference between production orders and assembly orders II. Resources are parts of the Assembly BOM Assemble to Order (AtO) •Assembly orders- Skorkovský • * Typically, AtO is used for items that you do not want to stock because you expect to customize them to the customer's requirements or because you want to minimize the accounting cost of the goods. Support features include: * * The ability to customize assembled items when using a Sales quote * An overview of the availability of the assembly item and its components * Ability to reserve assembly components immediately to ensure order fulfillment as soon as possible * Functionality to determine profitability of customized orders * Warehouse integration to make assembly and shipping easier * Ability to Assemble to Order at point of manufacture sales quotes or bulk sales order * Ability to combine quantity of goods with quantity of assemblies per order See next slide Bulk Sales order •Bulk Sales order * A bulk sales order refers to the practice of purchasing a large quantity of products in a single transaction. This approach is commonly used in wholesale and retail industries to benefit both buyers and sellers. * Bulk sales order key points: * Cost efficiency -> discounts * Increased Sales Volume -> moving large inventory quantity at once increase Cash – Flow * Logistics -> Fewer stock movements * Assembly to Stock (AtS) •Assembly orders- Skorkovský • * Typically, you use assemble to order for items you want to assemble ahead of time for sale, in preparation for campaigns, and keep them in the warehouse until they are ordered. * * These items are usually common items like packing kits that you don't offer to customize to customer requirements * * During AtS, the item is assembled with no immediate sales demand and stored in the warehouse as a stock item for later sale or consumption sub-assemblies. * 7 List of possible Assembly items •Assembly orders- Skorkovský • Assembly Bill of Material for chosen item 1992-W •Assembly orders- Skorkovský • BOM=Bill of Material Components Setup of Assembly item card •Assembly orders- Skorkovský • Items that are set up for Assemble-to-Order aren't expected to be in inventory and will be assembled when it's included on a Sales order. An item is set up for Assemble-to-Order when the Assembly Policy field on the item card contains Assemble-to-Order option. When you enter the item on a sales order line, an Assembly order is automatically created and linked to the sales order. Use the Assemble-to-Order process (option) for items that you don't want to stock. Assemble-to-Stock explanation (see slide 7) •Assembly orders basics * Assemble-to-Stock uses the assemble-to-stock process for items that you assemble and store for future sales. * Assemble-to-Stock items are standard items, such as packaged kits, that you don't customize. You can also consume these items as subassembly components. * Use the Assemble-to-Stock process for items that you assemble and store for future sales. Standard Cost is a Costing method set for our model item •Standard Cost Explanation fo Kitting : see next 2 slides Explanation of the term Kitting •Kitting * Kitting is a process commonly used in manufacturing and logistics where individual items are grouped together to create a single, ready-to-ship package. * This method is particularly useful for assembling products that require multiple components. * Reasons for use of kitting : * Efficiency: By pre-assembling kits, companies can streamline their production and shipping processes, reducing the time and labor required to handle individual parts •Cost Savings: It can lower inventory costs and improve space utilization by consolidating multiple items into a single package * •Kitting Sales Order Line -> Assemble-to-Order version •Assembly orders- Skorkovský • Created Assembly Order type Assemble-to-Order (AtO) •Assembly orders- Skorkovský • Link from AtO lines to document • Show created document (Assembly Order) – before posting •Assembly orders- Skorkovský • This model does not consider the source, but it can be added in the teaching Status change : Open -> Released •Assembly orders- Skorkovský • You need to change the status manually ! SO posting is related to Automatic posting of linked Assembly order •Assembly orders- Skorkovský • F9 Posted Sales Invoice •Assembly orders- Skorkovský • It automatically posts both the sales order and the linked Assembly order Posted Assembly order •Assembly orders- Skorkovský • Item Ledger Entries after posting Sales order •Assembly orders- Skorkovský • Assembly orders type Assemble-to-Stock •Assembly orders- Skorkovský • No document is yet listed in the ESF database Assembly setup •Assembly orders- Skorkovský • Assembly Order •Assembly orders- Skorkovský • Explanation Assemble-to- stock and Assemble-to-order •Assembly orders- Skorkovský • * If the Assembly Method field on the Assemble Item tab contains Assemble-to-Stock, then the default Sales Order process assumes that the item is already assembled and can be removed from stock if available. Therefore, no Assembly order is automatically created and linked to the Sales Order line * However, if part (or all) of the quantity is not available, you have the option to create an Assembly order for the remaining quantity by filling in the QTY to Assemble-to- Order field on the sales order line. * In this way, you can assemble the item to order, even if it is set to be Assemble-to-Stock by default Assembly order-posting •Assembly orders- Skorkovský • Posted assembly order •Assembly orders- Skorkovský • Item ledger entries •Assembly orders- Skorkovský • Roll-UP Cost • * Roll-up Cost v Business Central je celková cena hotového výrobku, která zahrnuje náklady na všechny jeho složky, včetně surovin, práce a režie. * NA následujícím snímku jsou uvedeny kroky pro výpočet Roll-up Cost v aplikaci Business Central. Roll-up-Cost •The Roll-up Cost in Business Central is the total cost of a finished product that includes the cost of all its components, including raw materials, labor, and overhead (režie). Here are the steps to calculate the Roll-up Cost in Business Central: 1.Identify the finished product: Determine which finished product you want to calculate the roll-up price for. 2.Create a Bill of Materials (BOM): Create a list of all the components required to produce the finished product. This includes raw materials, labor, and overhead costs (režie). 3.Assign costs to each component: Assign the cost of each component to the BOM. This includes the cost of raw materials, labor, and overhead costs. 4.Calculate the total cost of the BOM: Add up the cost of all the components listed in the BOM. 5.Add any additional costs: If there are any additional costs associated with producing the finished product, such as shipping or packaging costs, add them to the total cost of the BOM. 6.Determine the mark-up (přirážka, marže): Decide on the desired profit margin for the finished product and add it to the Total cost of the BOM. 7.Calculate the Roll-up Price: Add the total cost of the BOM to the desired profit margin to determine the Roll-up Price for the finished product. •Business Central has a built-in feature to calculate the Roll-up Price of items based on the cost of their BOM. This feature is called the "Calculate Roll-up Cost" function and it can be accessed through the "Item Card" page. • Cost shares on item card View ow the cost of underlying items in the BOM roll-up to the parent item. The information is organized according to the BOM structure to reflect the levels at which individual costs increase. Each item level can be collapsed or extended to obtain an overview or detailed view. SEE : In the class, try Cost share of item 1000 (to see Rolled-Up Costs related to Production ) Costs on item card (overhead and item cost) Indirect costs in absolute value Indirect costs in absolute value Costs on related resources (capacity cost) After Rounding up Adding capacity to Assembly BOM component Cost Shares Textové pole: A Standard cost – sigle level •Item Material Capacity Overhead • A 24 + 5 + 6 = 35 • B 10 + 3 + 3 = 16 • C 5 + 2 + 1 = 8 A C B =16+8 = 24 Textové pole: A Standard cost – multiple level •Item Material Capacity Overhead • A 15 + 10 + 10 = 35 • 5 6 • B 10 + 3 + 3 = 16 • C 5 + 2 + 1 = 8 A C B =16+8 = 24 Thank you for your attention