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Dynamics 365 Community / Forums / Supply chain | Supply Chain Management, Commerce / Sub contract productio...
Supply chain | Supply Chain Management, Commerce
Suggested Answer

Sub contract production order - reversing WIP

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Posted on by NSSriram 118

Hi all.


I run across the below scenario with one of our clients.


A production order is created with sub contract configuration.


The related sub contract PO is invoice updated. The full purchase cost (invoice amount) moves into WIP (stocked product is enabled for the sub contract service item).


The client then posts a negative picking list (picking list with minus quantity) and brings the consumed stock to inventory - this is because, it is realised that they are material rejections and have to be returned back to the customer.


But the client holds that what is paid to the vendor is paid and that cannot be reclaimed, which means it has to be passed on to P&L as an expense.


But actually the purchase cost has moved into WIP now.


The requirement is to close the production order with zero quantity and reverse the WIP booking (which will ensure the purchase cost moving out of WIP).

Is it possible to handle this in AX?

Thanks for your suggestions in advance.

Regards

Sriram

I have the same question (0)
  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 301,037 Super User 2025 Season 2 on at

    Hi Sriram,

    What version of the application are you using? The question is now in the Dynamics 365 Finance. Are you using Dynamics AX 2012 or lower or Dynamics 365 Supply Chain Management (Operations)?

  • S padhy Profile Picture
    S padhy on at

    Hello Sriram,

    It would be great if you can provide your comments which Andre had asked in his mail. Based on your comments we shall guide you better.

  • NSSriram Profile Picture
    NSSriram 118 on at

    The version used is D365 F&O, since the financial impact of reversing the WIP exists I posted it here.

  • NSSriram Profile Picture
    NSSriram 118 on at

    Hi, I gave the version details as a response to the question by Andre.

    Regards

    Sriram

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 301,037 Super User 2025 Season 2 on at

    Hi Sriram,

    Can you share a screenshot how the negative picking list was created and also tell which costing method you are using (setting on item model group). When the negative picking list was posted, was at that time also the vendor invoice posted?

  • Suggested answer
    Junaid Idrees Profile Picture
    Junaid Idrees on at

    Hi Sriram18588,

    If you want to zero out your WIP to it's original state for that Production Order then we usually reset the production status to Created or Estimated and system automatically reverse Picking list, Route card and RAF journals. Did you try Reset option?

  • NSSriram Profile Picture
    NSSriram 118 on at

    Hi Junaid Idrees,

    The situation is

    (1) Production order was created, estimated, scheduled, started

    (2)  The sub-contract PO has been fully invoiced

    (3) What ever material that was posted initially through the picking list was reversed and the same raw material has been brought back to stock (this stock is there in inventory)

    (4) The production order has been reported as finished but with zero quantity (the production order status is : report as finished ; but the RAF quantity shown in the filed is 0)

    Now the issue is - since the report as finished quantity is zero, system does not allow to end the production order.

    If we try to chnage the status of the production order to 'created' system throws - insufficient stock error message (possibly because there are two picking lists for the same material , one with positive and another with negative).

    So neither can the production order be ended nor can it be brought back to created state. There are about 100 production orders in this category.

    Should we customise AX to allow it to end a production order with zero quantity - is that the only option?

    Regards

    Sriram

  • NSSriram Profile Picture
    NSSriram 118 on at

    Hi Andre, The costing method used is weighted average. Also, I have given a detailed explanation of this scenario in the same thread.

    The crux is we are nether able to end the production order (because the report as finished quantity is zero) nor are we able to reset the production order to created status (system says 'there is insufficient stock'). So the cost of the sub-contract PO just keeps hanging in the WIP for these production orders and it becomes an issue in audit.

    Regards

    Sriram

  • André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 301,037 Super User 2025 Season 2 on at

    Hi Sriram,

    Now I understand the full scenario. You want to close with zero reporting as finished. This was not clear to me. I thought it was related to the BOM. Like you experienced, you can't close the production without a quantity reported as finished.

    Would a reset of the production order work if you didn't create the negative picking journal?

    However, you now have the scenario where you have production orders already with reversed picking journals.

    A customization would be quite risky as it would be very easy to corrupt the inventory valuation. Potentially you can reach out to Microsoft Support. It is quite annoying to get the error message that there isn't sufficient on hand to reset the production order as the total to return is zero caused by the two journals.

  • S padhy Profile Picture
    S padhy on at

    Hi Sriram,

    Please open a support ticket for us, We will check this and get back to you.

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