Advanced Planning and Proper Costing in the Same Product Structure
Posted on: August 19, 2008 | By: SuperUser Account | QAD Business Process
A recent client just converted to QAD2007 from a heavily customized AS400 system. One of the primary goals of the project was to allow for the proper planning of material, which was a constant source of pain, error, and stockouts using their legacy systems. As a part of the QAD2007 implementation, we worked with the client to re-design their BOM structure such that MRP could net out on-hand cores and used parts before recommending the purchase of new material. (Note: this involved making the core the parent of the used parts and the used parts the parent of the new material, all of them being set as phantoms to invoke the use-up logic inherent in QAD2007). This helped reduce inventory levels and thereby improve working capital usage. Equally as important from an operations perspective, the Materials group finally has actionable information from MRP to ensure that new material is purchased in the absence or lack of cores or used material.
Though the BOM structure was a major “win” for the Materials group, the Finance organization was understandably concerned that a BOM structure that includes cores, used material, and new material would lead to incorrect rolled-up costing. To eliminate this concern and to ensure proper costing, we implemented Simulation Cost Sets where standard values for the cores and used material could be stored. After completing standard roll-ups, we can then lay these costs sets over standard to ensure that cores and used materials are properly costed using an assigned value, versus being the result of a roll-up as implied by the BOM structure noted above.
This solution again shows that apparently competing interests across departments within an organization can both be satisfied with the proper level of focus on process.