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Selling an Intermediate as a Finished Good

  • 1.  Selling an Intermediate as a Finished Good

    Posted Dec 16, 2020 04:50 PM

    All we are chemical company that sells the intermediate product that we also use in downstream products.

    Our issue is capturing the plant and packaging cost we apply to the Finished Good via a production order.

    This is bottlenecking our shipping department.

    Does anyone have any suggestions on how to accomplish this.



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    Maggie Dominguez
    Director of IT
    Dixie Chemical Co.
    Pasadena Tx
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    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 2.  RE: Selling an Intermediate as a Finished Good

    GOLD CONTRIBUTOR
    Posted Dec 17, 2020 09:06 AM

    Hi Maggie,

    I think your best option is to make a new item that is the packaged version of this intermediate and setup a BOM and route.  Then make production orders to consume the intermediate and packaging supplies producing the packaged intermediate.  It sounds like you may be trying to avoid having a production order, but a production order seems the best way to capture these costs.  You can probably make production order for the day for all of the packaged intermediate that was produced.

    Thanks,

    Barclay



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    Barclay Hershey
    Financial Analyst
    Sugar Creek Packing Co
    Cincinnati OH
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    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 3.  RE: Selling an Intermediate as a Finished Good

    Posted Dec 17, 2020 09:52 PM

    Thank you, yes that is how it is currently setup and works great on packaging but not on bulk.  The timing of JIT does not help shipping and all the paperwork and additional shipping info.  We were brainstorming and thinking we would allow the FG to go negative and then do one production order to cover all the sales and zero out the inventory.  Still capturing the cost and allow shipping to move.  What do you think about that?



    ------------------------------
    Maggie Dominguez
    Director of IT
    Dixie Chemical Co.
    Pasadena Tx
    ------------------------------

    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 4.  RE: Selling an Intermediate as a Finished Good

    TOP CONTRIBUTOR
    Posted Dec 17, 2020 12:15 PM

    If I can add to Barclay's recommendation, a production order will require to change the item number, so there is one item number for the intermediate product in bulk form, and a second item number for the intermediate product in packaged form. Having separate item numbers will let you plan inventory more effectively.  The packaged item will not be considered as available to use when the bulk product is needed for further production, and the bulk product will not be considered as available for shipping to customers.  



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    Kevin McLean
    Strategic Solutions NW
    Beaverton OR
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    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 5.  RE: Selling an Intermediate as a Finished Good

    Posted Dec 17, 2020 09:54 PM

    Unfortunately sell bulk as well as packaged.  Would have loved to do BOM movement but we loose costs. :-(



    ------------------------------
    Maggie Dominguez
    Director of IT
    Dixie Chemical Co.
    Pasadena Tx
    ------------------------------

    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 6.  RE: Selling an Intermediate as a Finished Good

    TOP CONTRIBUTOR
    Posted Dec 18, 2020 08:40 AM

    Don't go the route of negative inventory, it sounds nice but its not.  This can mostly all be automated so that all you do is process raw material picking work or post a picking list journal against a production order.  

    1. Create a new item "packed bulk", put it in an item model group that has a reservation policy of "Explosion" and an Item coverage group that has an automatic firming time fence.  
    2. Create a formula version for "packed bulk" that is the intermediate and all the other costs you want to add on to it. 
    3. Have customer service sell the "Packed bulk" instead of bulk.  If they can't remember, set "packed bulk" as an alternative item number on the bulk item released product sales fast tab and set "when to use" to always. 
    4. When "packed bulk" is keyed on the sales order, since the reservation policy is explosion, a directly derived planned production order will be created.  Since this item is in a coverage group that has an auto firming time fence, you will get a scheduled production order. 
    5. Have a batch job running that automatically starts these productions orders, if you're using advanced warehousing, this will create raw material picking work for the bulk product.  You'll need to figure out how you want to consume the bulk to the packed bulk order, either via a manual production picking list journal, flush at start or RAF.
    6. Have another batch job running that automatically RAF's these production orders.  If using advanced warehousing, RAF to a non LP controlled location and use a work policy to prevent FG putaway work from creating. 
    7. Have another batch job running that releases this SO to warehouse and if advanced warehousing, location directive to pick from the non-LP controlled location and have the work template set to automatically complete. 



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    Colby Gallagher
    Managed Application Services Supervisor
    RSM
    OH
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    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


  • 7.  RE: Selling an Intermediate as a Finished Good

    D365UG/AXUG ALL STAR
    Posted 28 days ago

    Hi, if you main issue is just the costing, why can't the plant and packaging costs be Overhead captured against a Costing sheet? If you have route operations taking place at Resources, the cost groups and cost categories on  those Resources can define your overhead rate as a % or flat charge to be captured when you make the item.



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    Andrew Lencsak
    Solution Delivery Manager
    Arbela Technologies
    Nashua NH
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    Digital Acceleration Binge Day.  January 28th 2021 | 11:00 AM - 2:00 PM EST


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