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Requesting Your Advice on Handling Multi-Output Production Orders in BC

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Posted on by CU28031537-0

Hi everyone,

I’m looking for some guidance on the best approach to handle a multi-output production scenario in Business Central, and I’d really appreciate your insights and experiences.

Scenario:

We have a production order that consumes multiple raw materials (RMs) and yields multiple output items. This includes one main finished good (FG) along with around 14 by-products—such as dust, shell, wastage, etc.

I’ve explored a few potential setups and would love to hear which one you think works best in terms of functionality, costing, and ease of use. Here are the three options I’m considering:

Option 1: Use a Family Item Setup
- Create a family item that includes the FG and all by-products.
- In the Released Production Order, select the family item.
- Enter the FG quantity and add all output items in the lines.
- After refreshing and scheduling, all RMs show up under the Components tab and in the Production Journal. Each line is posted individually.

Option 2: Single BOM with Routing Linked to Outputs
- Define a BOM that includes all RMs and FGs.
- Set up a Routing to connect specific process steps to the corresponding output (main FG or by-product).
- This provides a process-oriented structure and may align better with actual shop floor activities.

Option 3: Use Negative Quantities for By-Products in BOM
- Include by-products in the BOM with negative quantities.
- While this is simpler to configure, I’m concerned it could lead to complications in costing and inventory valuation.

Additional Notes:
- We’re allocating costs based on FIFO.
- Each output item has a specific percentage for cost allocation.

Would love to get your feedback on:
- Which of these options works best in practice?
- Any gotchas or tips to watch out for?
- Are there other approaches or best practices you'd recommend for this kind of setup?

Looking forward to your advice—thanks in advance!

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Dynamics 365 Business Central

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Khushbu Rajvi. 20,441 Super User 2025 Season 2 on at

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https://community.dynamics.com/forums/thread/details/?threadid=41b9b5fc-160e-f011-9989-7c1e52643bb6

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Holly Huffman 6,530 Super User 2025 Season 2 on at

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Good morning, afternoon, or evening depending on your location!

Handling multi-output production orders in Business Central can indeed be tricky, especially when dealing with by-products. Each of the options you’ve outlined has merits and challenges.

Option 1: Use a Family Item Setup

Advantages:

Simplifies production order creation by consolidating all outputs (FG and by-products) under a single family item.

Provides clear visibility of all outputs and raw materials in the Production Journal.

Allows individual posting of lines for accurate tracking and reporting.

Challenges:

Cost allocation across multiple outputs might require additional configuration to match your percentage-based cost allocation method.

May not align perfectly with shop floor processes if outputs are produced at different stages.

Tips:

Use custom fields or extensions to refine cost distribution logic for outputs within the family item.

Ensure users are trained on the family item setup to avoid confusion.

Option 2: Single BOM with Routing Linked to Outputs

Advantages:

Provides a process-oriented structure that closely aligns with actual production steps on the shop floor.

Enables allocation of resources and costs to specific outputs based on routing links.

Challenges:

Routing setup may become complex when dealing with numerous outputs.

Requires careful maintenance to ensure accuracy in costing and inventory tracking.

Tips:

Utilize detailed routing descriptions to ensure clarity in process steps.

Conduct periodic reviews of the BOM and routing setup to optimize performance.

Option 3: Use Negative Quantities for By-Products in BOM

Advantages:

Simple to configure and manage within the system.

Automatically reduces raw material costs when by-products are produced.

Challenges:

Can lead to complications in inventory valuation and cost allocation.

May not provide the detailed tracking needed for by-products with significant financial impact.

Tips:

Implement a robust costing method to minimize discrepancies in inventory valuation.

Avoid using negative quantities for high-value by-products.

Recommendation:
Option 2 seems to be the most practical approach for your scenario. It provides a structured process, aligns better with shop floor activities, and allows precise routing and cost allocation for each output. While it requires more setup effort, the benefits in terms of functionality and costing accuracy outweigh the drawbacks.

Additional Best Practices:

Cost Allocation Setup:

Configure allocation percentages for each output item in Business Central. Use item-specific costing methods where necessary.

Automation:

Explore extensions or custom scripts to streamline the setup of BOMs and routing links.

Testing and Validation:

Test each setup in a sandbox environment to identify potential issues and ensure smooth operation in production.

User Training:

Provide training to your team on the chosen approach to ensure they understand the workflows and processes.

Hope this helps!

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Mansi Soni 8,909 Super User 2025 Season 2 on at

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In Business Central, handling multi-output production effectively depends on maintaining accurate costing, tracking inventory correctly, and aligning with system capabilities. Based on Business Central's standard functionality, here’s how each option aligns:

Option 1: Family Item Setup (Best for structured multi-output tracking)
Using a Family Item allows you to define a single Released Production Order where both the main finished good (FG) and by-products are included in the output lines. This ensures proper tracking of material consumption while keeping all outputs linked. The Production Journal automatically reflects all RM consumption and output posting, making this the most standardized and scalable approach in Business Central.

Option 2: Single BOM with Routing Linked to Outputs (Best for process-based tracking)
This option aligns well if your by-products are generated at specific routing steps. You can define a BOM with all RMs and outputs while using Routing to specify where each output is produced. This method closely follows the shop floor process, but Business Central does not natively allow multiple output items at different routing steps within a single production order. It may require customization to track outputs correctly at different stages.

Option 3: Negative Quantities for By-Products in BOM (Not recommended due to costing complexities)
Adding by-products with negative quantities in the BOM is a workaround but not a best practice in Business Central. While it may work for simple cases, it can create costing and valuation challenges, as the system does not inherently allocate costs across multiple outputs. If used, manual cost adjustments might be required to ensure accurate cost distribution.

Recommended Approach:
For standard Business Central functionality, Option 1 (Family Item Setup) is the best fit. It ensures proper tracking of both main and by-product outputs, maintains inventory accuracy, and aligns with costing principles. If cost allocation is crucial and varies per output, you may need to manually adjust item charges or leverage cost shares in production orders.

Hope this answer will help you!

Regards,
Mansi Soni

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