Production Rework Order for FG

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Dear Experts,

What is the best practice to create production rework order for FG works order with status "Ended"?
Example:

We completed FG works order and now they require rework due to change of various parts. Current works order is with status "Ended" so I`m not able to add additional parts,neither route operation to record rework material consumption/costs.
Do I need to create additional works order for FG rework with no BOM/Route , allocating current built FG and rework materials for consumption + rework route operation? If that's the case - how do I record correct financial costs for it? If i create Rework order its financial costs are slightly higher than the original production order due to FG being consumed for Rework order.
Any other suggestions are welcome
Regards,
V

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Guy Terry 28,924 Moderator on at

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I think essentially you have it right (and if you're using Formula items, you have the option to do a Rework Batch Order).

For the cost... you want the cost of the rework item to be higher, right? In that case, consuming the already produced item and some extra items and another route will cause the cost of the reworked item to be higher (unless you're using standard cost).

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Community Member on at

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Hi Guy,

Thanks for you reply - when we need to rework items, I normally add the additional materials/operation on the current works order if the status is started. However I can't get my head around with the one that has status "Ended".

In this case I would create additional works order with consumption of already produced FG + additional materials. I would expect to see less financial cost for Rework order as for fully built units the financial cost was recorded on the original works order.

How do i tell the system to consume my FG (as they are being used for rework order) and record only labor costs + additional materials(+cost).?

Regards,

V

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Weaveriski 23,620 Moderator on at

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Your cost will be higher, because the rework will need to consume the original finished goods and any extras, but the cost "difference" is the same as your previous method with started, it is just that you are taking fully costed in stock goods and "reworking" them. On creation of the order mark it with a production pool to distinguish it if you want, remove the standard BOM, add in your original FG as the item and any extra material. Delete the route and add in any rework steps - then RAF the rework order - this is the difference and why you must consume the original, otherwise you will have two of the same item in stock. Ended means nothing more can be done, so you have to treat it as the starting point of raw material for a new order.

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Hi Steven,

Thanks for your reply. I`ve already created Rework production order and added my FG + materials for rework and the route operation to record labor hours/costs. Thought before ill proceed I`ll seek for some advice from more experienced people.

In my opinion rework production order costs should be less as your not producing whole unit from scratch just replacing some of the parts. No?
Example:
If my works order was still with status "Started" I would just add additional parts to consume and book additional hours, therefore my costs for rework would be 10£+/- on top of works order cost 50£ lets say. However if ill create new works order from scratch and tell the system to consume my FG, there woould be 2 works orders with rough costs 50£ each.

Regards,

V

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Weaveriski 23,620 Moderator on at

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Hi V

The rework costs are less than the whole, you are consuming the FG at X and transforming it into X+1 your net change in inventory is your rework cost.

When you currently rework a production order that is started you are not creating a rework production order, you are rectifying a WIP order, it is not complete. If it is in stock you may move it back into the workshop but may not even process this on the system, you are just adding later costs and material. By creating a new production order it is literally a rework production order, it will consume and produce the same item with the rework being the difference.

In your example you are correct, there are two works orders, but your net difference is still your £10. In reality it is the same principle as a sub-assembly, you may produce something on one works order to be consumed in another later order - there is no duplication here, it is simply cost absorbtion through the transformation process.

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Community Member on at

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Thank you Steven. I was just worried if it was the right way to do it.

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Weaveriski 23,620 Moderator on at

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It will impact potentially on any reports you have, but this approach would arguably give clearer definition of rework

Ultimately costing and the end result is the same. Once production is ended you have little choice!

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