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We are having a transparency problem with quality on production orders.
Today we don't register scrap separately, but just increase the consumption on the order to replace the scrapped raw material with new items. That then results in a material variance, because the BOM states a consumption of 10 units for the order, but 12 was used as 2 was scrapped during the proces.
In my previous job (using SAP though) a separate order was created to handle scrap/quality in general which posted the cost to a designated quality cost center, so there was full transparency as the original order did not "suffer" from the quality costs, and the quality costs was booked separately.
What is the standard/optimal way of handling quality issues on production orders in NAV?
We also have had the same issues with Production Orders and scrap with our Quality department. As a background, we are using NAV 2017 and utilize the Production Journal to post consumption and output.
NAV doesn't differentiate between "Scrap" in a Production Order for raw components, only the finished good. So If I'm expected to use 5 widgets to produce a finished good, but one of the widgets was bad, I will end up posting 6 in the consumption line for that widget.
If you were to post "1" in the scrap column on the output line, it would be scrapping a finished good. So the correct way to handle scrap and have the cost of that scrap go back into the finished good, is to record it as extra consumption.
However, you can also use the "Scrap Code" column to note why there was extra consumption for an item. If you want to have multiple scrap codes in the production journal, then you would have to post your consumption multiple times (as there is not a way to do it all at once).
Morten,
Depending on your business process, I teach my manufacturing customers to record scrap on the Consumption Journal or Production Journal (whichever you are using). Now if the Raw Material is being scrapped, NAV does not differentiate this type of consumption. So the 12 units consumed you can enter a Reason Code that notates why the variance.
Hope this helps.
Thanks,
Steve
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