MB-300 Microsoft Dynamics 365 Topic: Supply chain management and manufacturing core concepts in D365 F&O
December 19, 2022

1. Supply chain management and manufacturing core concepts in D365 F&O

Hello, and welcome to this session. So within this session, we would like to learn a few core concepts about supply chain management and manufacturing within FNO. First, we’re going to have an overview of supply chain management and manufacturing concepts. We’re going to review the supply chain modules, and we’ll also learn about the manufacturing modules and their core processes. We then learn about product information management.

We’re going to create a new product together, release it to one legal entity, and see how it’s going to be transacted within a transaction. Then we’re going to learn about units of measure and unit conversion. There is always a question on this topic in the MB 300 exam. So I’m going to COVID this section for you. And then we’re going to discuss manufacturing within manufacturing. We’re going to learn about the unified manufacturing concept. And then we will learn some core concepts about production control. And at the end, we’ll review the production lifecycle together. Are you interested in learning about these topics? Then let’s get started.

2. Supply chain and manufacturing overview

Hello, and welcome to this session. So there are several modules in FNO that are involved in supply chain management. Let’s look at some of the most famous ones. The first one is product information management, where we define the goods and services in the system and then release them to the appropriate legal entities so that they can be transacted. Product information is the backbone of supply chain and retail applications across all industries. It refers to processes and technologies that focus on centrally managing information about products.

It’s important that shared product definitions, documentation, attributes, and identifiers be used in the various modules of a business solution. Product-specific information and configuration are required to manage the business processes that are related to specific products, product families, or product categories. A product is primarily defined by its product number, name, and description. However, other data is also required to describe a product or service.

We’re going to look into all these details in our next session. The other data that we will capture in the product definition is the product type, which can be either an item or a service. You can have Product subtype, which determines the product, is a distinct product, or is a product master definition of the product variant? Dimensions of Model products and Dimension Groups Product nomenclature product configuration represents the product’s association with one or more categories. We can have a hierarchy within the product structure, and we can associate one product with several categories. You can also have a definition of the product and category attributes. Okay. And then we can also attach the image to our product.

If we already have such a scenario, we are able to attach any extra documents to the products if we need to. We can also define the units of measure and related conversions. For example, if you have a product that can be sold or purchased in different units of measure, you can define those rules within the system. The other cool thing is that you can have it multilingual, so you can have translations for all names and descriptions in your product definition. The next module is procurement and sourcing. It covers all the steps from identifying a need for products and services through procuring them, receiving them, invoicing them, and processing their payments with vendors. Procurement processes can be configured for specific business needs by defining purchasing policies and workflows.

The next module is warehouse and inventory management. It’s used for inbound operations, quality assurance, warehouse operations, outbound operations, and inventory control. The next module is production control. The production of products, a process that is also known as the production lifecycle, follows specific steps that are required to complete the manufacturing of an item. The life cycle begins with the creation of the production order, batch order, or Camba. It ends with a finished manufactured item that is ready for either the customer or another phase of production. The next module is master planning. Master planning allows companies to determine and balance the future need for raw materials and capacity to meet company goals. Master Planning evaluates the raw materials and capacities currently available, as well as the raw materials and capacities required to complete production. For example, determining what must be manufactured, purchased, transferred, or set aside as safety stock before you can complete production Master Planning uses the above information to calculate the requirements and generate planned orders such as purchase, transfer, and production orders. So we almost covered all the famous modules within supply chain management and manufacturing.

3. Setup a new Product and release it

Hello, and welcome to this session. So within this section, we would like to create a new product together and then release it under different legal entities. So I’m going to go ahead and produce information management, and I’m still in the US MF legal entity. I’m going to go ahead and click on the Products/Products link in here, and I’m going to click on “New.” Certain options are available to you. For example, product type If you are creating a service, you can always choose service.

 If it’s not, it’s a tangible good. Then you might use this item. For now, I’m going to click on it and create Product name as a demo product, and the search name usually appears based on the definition you give to the product name, and it removes any separators that you use in your name. And the product number is the one that you will see when you’re creating a transaction. I’m going to create demo zero, one, and a product subtype. By the way, you can choose whether it’s a product or if you have any other subtype defined in the system. You can’t pick any of those. For now, I’ll leave it as a product. Click on OK. So, as you see, my product gets created. Before we proceed with the setup, we need to set up two things. We should define the dimension groups. I’m going to click on the dimension groups, and you should choose what type of storage dimension group you are using for this particular product. And this storage dimension group is enforced when you create an order line and use this product to define that specific information. For example, I have sites.

So the only enforcement or validation this transaction will face is simply defining the site or site and warehouse, both the site and warehouse and location, and so on and so forth. I’m going to leave it at Site. Tracking dimension groups is where your product is tracked. Is that using the serial number? Does it have cellular numbers in production? You can choose between owner batch and cereal. For now, I’ll leave it as “none” and then press OK. So we are almost done with our product definition. Once we’ve completed our product definition, now’s the time to release our product. Okay, so I’m going to go and click on Release Products from this Release Product button available on the action page. And there are several steps that we have to follow. It is possible to release multiple products at once to different legal entities.

For now, I have just one product. That’s why I’m going to click on “Next.” You can select any legal entity in which to release your product, and I will select the USMF. And also that I clicked on “next.” We are almost done, and we can click on Finish to complete the release of the products. Now let’s go see the products that we just created for our release products.I am still a member of the USMF. I’m going to go to Release Products, and I’ll search for our newly created item. As you can see, I’m seeing it in USMF. I’m going to switch back to that because we released it through these two legal entities. If I change the legal entities to CNMF, I can see it here as well. So I’ll search for it in this legal entity, and you’ll see that I do not see any release product in this legal entity. There are some additional setups that we should do for each released product after you release it. Okay, one of the most important pieces of information that we should also capture is about Item Motor Group, right? If you don’t know the purpose of each field, you can hover over the caption of the field and you will find an explanation of what the purpose of the field is. For example, here it says that the Item Motor Group controls how products are handled on item receipts and issues. The Item Motor Group includes settings to allow or disallow negative inventory.

All right, so you usually have this item model group defined in the system, and then you can choose your item model group from the list. For now, I’ll just pick the standard cost for this particular product. The other field that is important that we should set up when we are creating our product is item group. Item Group is going to be associated with the posting profile, right? So if I just click on the “view details,” I just wanted to show you what it means. So these are the lists of our item groups in the system. As you can see, it shows us the account types as well as the main accounts that are associated with each item group. If I click on the posting, for example, for the Audio Item Group, you will see that for the cost of units or goods delivered in the sales order, for example, this main account has been used for the cost of goods, and so on and so forth.

This information will be used while you’re posting your transactions, and the right ledger account will be hit. That’s where I’m going to choose my item group—Audio, for example—and click on Save. Now we are ready to go and start using our product within the transaction. I’m going to go ahead in sales and marketing and create a sales order. I’m going to go to every single sales order just for fun. I chose Sales and Marketing to show you that from Sales and Marketing as well, you can access the sales order and create your sales order. I already have an existing sales order that I created before, but it does not have any lines. I’m going to click on that specific order. So you see that? It’s for a Forest Wholesale customer. I’m going to go ahead and click on the “add line” button in the item number. I’m going to put “demo,” and the system filters it out based on the whole item number, starting with “demo.” And I click on my product. Now you should choose the quantity of the item. I’m going to choose a quantity of ten, and I will give a unit price of $20 to it with a discount of, for example, 10% discount.I apologise for the discount percentage. And the net amount was calculated for me. I’ll click on it, and my sales order will be processed. Okay, now it’s created. So I have used my newly created product line in my sales order.

4. Units of measure and unit conversion

Hello, and welcome to this session. In this session, we’re going to discuss units of measure and learn how we can convert different units together. Okay? So, first, define a unit of measurement. A unit of measure is a standard quantity, size, or other basis that is used for measurement or exchange. When you enter an order, you specify a quantity and the unit of measure that the quantity represents. For example, you might enter an order for a quantity of 5 volts with a unit measurement of pieces. You must define the units of measure to use for all of the products that you purchase and sell. What exactly is unit conversion?

So you can also set up conversion rules that control how units of measure are converted to different units of measure. For example, you might convert weight-measurement units from pounds to kilograms. You can set up standard or product-specific rules for converting units of measure. If a product-specific and a standard conversion rule for units of measure exist, the product-specific conversion rule is used to convert units of measure. Okay? A conversion rule is set up to, for example, convert minutes to days. also covers the conversion from days to minutes. So that means it works both ways. Each unit of measure can have multiple unit conversions associated with it. There are three types of unit conversion. Okay, while defining a conversion rule, we should also define the type of conversion rule. The conversion rule can be one of three types: standard, intraclass, or interclass. Standard conversions are rules that apply to all products. Standard conversion rules can only be set up for units of measure in the same unit class. An example for standard conversion would be car paint colours and their ingredients, which can be purchased in barrels, stocked in ounces, and sold in gallons. Intraclass conversions are rules for units of measure in the same unit class as well. For example, you can set up a conversion rule for a product that converts a box into the number of pieces in a box. Pieces and boxes are both assigned to the quantity unit class.

 An example for interclass conversion would be balls and nuts that can be purchased in pounds, stocked as individual units, or each sold in boxes. And interclass conversions are rules for converting units of measure across unit classes. For example, you can set up a conversion rule for a product that converts kilogrammes to liters. Kilograms are assigned to the mass unit class, and leaders are assigned to the liquid volume unit class. An example for interclass conversions could be steel, which can be purchased in tons, stocked in pounds, and sold in linear feet.

5. Unified manufacturing

Hello, and welcome to this session. In this session, we’re going to learn about unified manufacturing and different manufacturing types. Within FNO, different products and production topologies require the application of different order types. Supply chain management can apply the various order types in mixed mode. In other words, all order types can occur during the end-to-end process of producing one finished product. We have different order types: production order, batch order, and camping production order. This is the classic order type to produce a specific product or product variant in a given quantity on a specific date. Production orders are based on bills of materials, or bombs, and routes. Batch Orders: This order type is used for process industries and discrete processes where the manufacturing conversion is based on a formula or where core products and byproducts can be end products either in addition to or instead of the main product.

Campbell bells are used to signal repetitive lean manufacturing processes. They are based on production flows, Campbell rules, and bombs. As we saw, there are three types of manufacturing that can be selected based on the nature of the product that will be produced. They are discrete manufacturing, process manufacturing, and lean manufacturing. In the following slide, we will learn about the characteristics of each one. So, discrete Manufacturing Some characteristics are assigned to this type of manufacturing, such as the fact that raw materials are most often measured in pieces. As you can see, there is a washer, a notebook, and a truck. These are the types of products that are part of this type of manufacturing. Products are usually scaled for an output of one only has one product output.Production is order-based and based on individual production orders. Okay? Product availability changes frequently. The sequence of work centres can vary depending on complex routing status processing; we’ll see it together later. builds, assembles, and produces in low volume with high complexity or high volume with low complexity. Waste can only be accounted for on raw material lines.

Now let’s look at the characteristics of the manufacturing process. So it uses a formula or recipe. Okay? As you can see, it’s mostly for food and fuel. This type of manufacturing is required for these products. It blends products together in a batch, builds something that cannot be taken apart, and has analogue products where you can’t tell one product from another. Okay? It includes products that cannot be reversed. It involves variable ingredients, produces coproducts and byproducts, and makes products in bulk quantities such as paints, pharmaceutical beverages, and food products. In formulas, raw material ingredients are measured by weight or volume rather than by pieces. has one or more standard sizes. Batch sizes scaled for a quantity greater than one may have one or more product outputs. Let us now go over the lean manufacturing characteristic. Now let’s see the characteristics of lean manufacturing. First, waste must be reduced without sacrificing productivity. Second, consider waste created through overburden and waste created through unevenness in workloads. It also emphasises what adds value and reduces everything that does not add value.

Derived from the Toyota production system, it’s known for its focus on the original Toyota 7. In their fundamental work for lean, Walkmack and Jones defined the five lean principles. First, customer value When identifying the value of a product, you would specify what creates value. from the customer’s perspective. The customer defines the value of the product. In a lean supply chain, value-adding activities transform the product closer to what the customer wants. An activity that does not add value is considered to be waste.Second, identifying the value stream What is the value stream? The value stream is the sequence of processes from raw material to the final customer that creates value, or from product concept to market launch. The value stream can include the complete supply chain. The value stream can include the complete supply chain. Value stream mapping is an important tool to help model the lean transformation. The third one is flow.

A flow creates the value-process flow wherever possible. In the process, you can use one piece of flow by linking all the activities and processes into the most efficient combinations to maximise value-added content while minimising waste. The waiting time of work in progress between processes is eliminated, thereby adding value more quickly. The fourth principle is that whole-sale pull is a reaction to the rate of demand of the customer. So the actual customer demand that drives the supply chain—in other words, making only what is needed by the customer—results in a short-term response to the customer’s rate of demand with a pool concept based on a supply chain view from downstream to upstream activities. Nothing is produced by the upstream supplier until the downstream customer signals a need. And the last guiding principle is to strive for perfection. in striving for perfection. Lean is a journey of continuous improvement. The goal is to produce exactly what the customer wants, when the customer wants it, and in the most economical manner possible.

6. Production control core concepts

Hello, and welcome to this session. In this session, I’m going to give you a quick introduction to production control, part of manufacturing within finance and operations. Although each company’s manufacturing processes are unique depending on the nature of the production environment, the core conceptual elements that are used in the production control module are frequently similar. Some of the core concepts in the production control module are things like pieces of material or bombs. The bomb is one of the most important documents in a manufacturing company. Before a company can produce a product, it must know what components are to be included and how many of these components are needed to make the end product. The bomb contains all the ingredients, components,  parts, or raw materials that are required to make one finished product.

So, in a simple word, it defines the materials that are required to produce the finished item. Before a company can produce a product, it must know what components are to be included and how many of these components are needed to make the end product. The bomb contains all the ingredients, components,  parts, or raw materials that are required to make one finished product. So, in a simple word, it defines the materials that are required to produce the finished item. The next key concept is resources. Resources are the company’s total working resources. They can be anything that is used for the creation,  production, or delivery of a good or service over and beyond the materials consumed in the process. Resources can be of different types, including machines, tools, people, vendors, or locations. The last key concept that I wanted to talk about is routes and operations. The route determines the steps in the process that are needed to produce a finished product. Operations are the tasks or work processes that are put together with a route to produce a specific product. Each task is associated with a time allocation to complete the individual task. Let’s take a look at the finance and operations departments now.

Now let’s look at the bill of materials. If you go under the module Product Information Management Module, you will see we have beloved materials and formulas depending on the type of manufacturing in the organization. We might use either beloved materials or formulas. If you are using process manufacturing, you should define the formulas in the system, and if you are doing discrete manufacturing, a bill of materials will be required. For now, I’m going to click on the bills of materials. So we’ve arrived at the detailed page of a typical high-end speaker bill of materials. In the header, I have some information such as item group, site, name, and code that are kind of similar to what you see in the individual product as well. But you have another section, which is the bill of materials line, which contains a list of items that are involved in producing this particular pump. In this case, for example, we have a wiring harness, a Middlebrook amplifier, a speaker unit, and so on.

And the quantity is also specified, as you see. For example, all of them are one. So it means that I need just one wiring harness for one speaker, for example, a standard high-end speaker. However, I need four protective corners for the same bills of materials. So this is how you’re defining your bills of materials. The bomb can now be used in the production order to begin the manufacturing process, or it can easily be used in the sales order for any other transactions, and it can then be included as a line item in there, with the lines, the components, exploded on your document lines. The second concept was resources. Let’s go to the modules. We go to the organization’s administrative resources. I’ll click on Resources, and they are the company’s total working resources. Resources are used in production, along with the calendar, to manage the overall capacity of the company’s equipment and resources. Each resource can be associated with one or more resource groups. Okay, so if I go to the resource groupfast app for each individual resource, I’m able to see the resource groups that are associated with it.

So if we need to create a new resource here, as you see, I can give it a name, I can give it a code; let’s say I just call it 100, and I’ll just give it a name of “Demo Hundred.” And I should also define the type of this resource that I’m defining in the system. So we can have different types for each resource. As a vendor, you can use this type when an operation is performed by an outside resource or subcontractor. A vendor number can be associated with this kind of resource to help with scheduling and tracking. Okay, like human resources, we can use them to define when personnel or a group of employees conduct an operation. Machine, we can use this time to tie an individual machine or group of machines to a resource. It is the most frequently used type of the resources.A tool can be used to control and schedule the reservations of another tool. Okay, we can use this one only when capacity is limited.

The time to control and schedule reservations for a specific location is known as location. A facility is a building or fixed structure that is required to perform an activity. For our example, I’m going to choose just the machine, okay? And I click on “Save.” So the last concept was route and operations, and you needed to go under the production control module to find that information. You will see all routes in this module’s route. I’m going to click on this. These are the routes that are defined for manufacturing within the USMF legal entity. So you can choose any of them and see the route details, and it shows the steps that are required to be done for this particular route. So you would say that the first operation would be assembly, then testing, then test operation, and then packing, and then, when I’m at the bottom of the page, you can see extra information that was added to your routes to complete your setup.

7. Production life cycle

Hello, and welcome to this session. So the requirement is to automate the production of a finished product as the manufacturing process unfolds. The system handles it through the steps, and each step changes the product’s status. So, let’s go over the steps and the product status for each one. As a result, the steps we’ll see together in the production lifecycle are applicable to all order types of mixed mode manufacturing. However, not all of them are represented as having an explicit order status. So the first status is usually created. You can create a production order, batch order, or campaign manually. Or you can configure the system to generate them based on various demand signals. Master planning, for example, creates production orders, batch orders, or Cambands by confirming planned orders. Other demand signals are sales orders or pick-up signals from other production orders or CAMAS. for a fixed quantity. Campbell’s demand signals are generated when Campbells are registered as empty. The next status is estimated.

You can calculate estimates for material and resource consumption. The estimation generates inventory transactions for raw materials that have a status of “on order” and for material demand. The receipts for main products, coal products, and byproducts are generated when production orders or batch orders are estimated. If the bomb contains lines of the PegSupply type, purchase orders for materials or subcontracted operations services are generated and pegged to the production order or patch order. Items or orders are reserved according to the reservation strategy of the production order, and the price of the finished goods is calculated based on parameter settings. The next status is “scheduled.” You can schedule production based on operations, individual jobs, or both. We have three different types of scheduling. We can have operation scheduling, and this scheduling method provides a rough, long-term plan. You can use this method to assign start and end dates to production orders. If the production orders are attached to route operations, you can assign them to cost centre groups. The other type of scheduling is job scheduling.

This scheduling method provides a detailed plan. Each operation is broken down into individual jobs that have specific dates,  times, and assigned operations resources. If finite capacity is used, jobs are assigned to operations resources based on availability. You can view and change the schedule in a gun chart. And the last type of schedule is a Cambrian schedule. Camban jobs are scheduled on the Camban scheduleboard or are automatically scheduled based on the automatic planning configuration of the Camban rules. The next status is now available. You can release the production order or batch order when the schedule is finished and the material is available to be picked or prepared. The Material Availability Check assists the shopfloor supervisor in determining the availability of material for production or batch orders. We can also print the production order documents, such as the job card, route card, and route job. When the production order is released, the status of the order changes to indicate that production can begin if warehouse management is used. The release of the Production Order batch order gives warehouse management access to the production lines. However, you can decouple warehouse release from production order release by using parameters.

The right warehouse waves and warehouse work are then generated according to the step of the warehouse. The next status is “prepared” or “picked.” When all materials and resources have been staged at the production location, the production bomb lines or cambandlines are updated to a status of “picked.” However, you can configure the warehouse parameter to have the lines updated to “reserved physical” instead of “picked.” Picked-up supply orders and related warehouse work are typically completed at this age. The Camban cards or job cards that are required to report production progress should be assigned and printed so the next status can be started. When a production order, batch order, or Campbell is started, you can report material and resource consumption against the order. However, for a campaign, it always happens automatically. Therefore, there is no manual posting of batteries. For lean manufacturing, the system can be configured to automatically post the material and resource consumption that are allocated to the order when the order is started. This allocation is known as preflushing, forward flushing, or auto consumption. You can manually allocate materials to production orders or batch orders by creating additional ticking list journals. You can also manually allocate labour and other route costs to the order.

 If you’re using operations scheduling, you can allocate these costs by creating a route card journal. And if you’re using job scheduling, you can allocate costs by creating a job card journal. Production orders or batch orders can be started in batches of the requested final quantity. The next status is called. report progress or complete jobs. We can use the manufacturing execution system, terminal production journals, camband boards, or mobile scanning capabilities to report the production progress by job or resource. Material and resource consumption will be posted, as well as the status of the related campus. Production orders and batch orders might be updated to “received” or “reported as finished.” Putaway work for the warehouse might be created depending on the warehouse configuration. The next status is “report as finished” for the product receipt. When a production order or batch order is reported as finished, the quantity of the finished goods that were completed is updated in inventory.

This quantity includes the quantity of relevant core products and byproducts. The next status is quality assessment. A product receipt can trigger the creation of quality orders depending on the configuration of test processes and the quality rules that are established for specific products. After product receipt and quality assessment, optional putaway work directs the received products to the next point of consumption, to a finished goods warehouse, or to a shipment zone. If there are shipped order requirements and the last status ends before a production order ends, actual costs for the quantity produced are calculated. All estimated costs of material, labor, and overhead are reversed and replaced with actual costs. If you select the End job checkbox, when you run the cost calculation, the status of the production order changes to “End.” This status prevents any additional costs from being posted to a completed production order.

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