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Outside Process

Hope this is the right forum spot!

I was looking at the Outside Process feature in xTuple and I would like to share an enhancement we would like to see.

My manufacturing experience tells me there is two type of outside processes.

  1. You put many parts in the basket and send it to vendor for Chroming as an example. Price is per bound (in this example) and it includes many WO.

  2. Each PO is specific to a WO material.

So option 1 work fine in xTuple. You can create PO or POs to track and process vouchers. You could also attach an item costing to increase the WO WIP. A+

Option 2 does not work with the actual approach, because each PO Line related to a specific WO have its own price/fee. In this situation upon PO Receipt the WO cost needs to be increase by the PO price + other fees and GL transaction should be, debit WIP @ credit PO accrual.

Actually, the only way option 2 can work now, it to have CHROMING inventoried with average cost and make sure there is zero inventory when performing the PO Receipt and the Materail Issue rigth away!

Please Comment.

Thanks,

Robert Charbonneau

Are you asking about how to use an outside process item or the costing ramifications of average cost on an outside item?

Hi,

I’m not asking about the how-to.

Right now the Outside Process function increase WIP when your issue the outside process part into the job. The problem with that it brings the Standard or Average cost of the part. In some case that process is OK.

But, in many case each outside process is specific for each WO Material. What you want from that process is, upon PO Receipt you would increase WO WIP by Qty Received * PO Price. It should also debit WIP and credit PO Clearing. There is no need to go thru stock. AP process doesn’t change. Along with this we would require a shipping function to send material to vendor and be able to track it.

So, I was wondering if any other partner / customer would require such fonctionality enhancement?

Thanks,

Robert Charbonneau

I know I have discussed this notion of “Purchase to Order” functionality on a couple occasions where you would link a Purchase Order line item to a Work Order and have the item automatically issued, costs and all, on receipt. That would dovetail very nicely with the job costing mechanism we already have, and it could have usefulness that transcends outside process items. So far no serious takers, but we are definitely receptive to the idea if one appears.

I’m new into this.

How do you know you have a taker?
What is the process to initiate a taker or takers?
As a partner, how can I interest my customers to get in?
When do you make an estimate in the process?

Thanks,

Just give us a call. We’ll usually talk through the requirements and a ballpark estimate and timeline. If the ballpark sounds good we will provide a formal quote. Usually all of this assumes there is a customer on the other end willing to sponsor an enhancement.

There is, of course, nothing to stop you or anyone else from doing their own code work as well. It’s common for us to take privately written code into the core for folks who don’t want to maintain it, so long as it’s feature that has general applicability for PostBooks or one of the commercial editions.

of course, in the case of someone contributing code, we still like to have a discussion first - and often a spec as well. See the current conversation about Fixed Assets as an excellent example.

I find the later scenario prevalent in most job shops, the first situation is fine for repetitive item shops.

I think this would be a great feature that should be part of the core. It would make selling xTuple easier in the job shop environment.

John and I and a few others have been discussing reusing exisitng functionality on another topic. I believe perhaps most of the logic already exists for posting PO reciepts directly to a work order. First let me say that I believe what we really want is to get the materials/cost to the Work Order and WIP without the USER having to receive to stock and issue to the Work Order. However, the application could perform both these steps behind the scenes and everybody should be happy. We certainly receive to inventory with PO receipts now. If we do a direct inventory receipt transaction(no purchase order) the user can already issue directly to a work order.Now I haven’t tried to trace what is happening behind the scenes during that receipt transaction, but it should be relatively simple to apply that logic to a PO line item receipt. Add a Work Order number field to the PO Line table and if the user populates that with a valid work order, process with the inventory/debit with same logic we are using presently during the direct receipt transaction, while continueing to create the PO liability as we do now.

Hopefully we already doing whatever is necessary for historical and usage statistics for the direct receipt transaction.

I suggest not worrying about purchases that are partially for a work order and partially for stock. If that is the case the user should just create two line items for the same item, passing one line to the work order and the other line to stock.

If each outside process is specific to a work order, then you can create a “job-specific” outside process for each order (if there is going to be a substantial variance in cost). It sounds like you may be using one outside process item for multi-scale jobs. And yes, if you’re doing that, then you will always have standard variance and average cost will be suspect too.

Hi M. cartee,

To mimic the process to go thru the inventory process IS NOT GOOD from my point of view. What you received will be recorded with Standard or Average cost. This will give you Price Variance you don’t have and we will have to define too many outside process items to get the right cost in the WO. You would also have to issue it to the WO

If we want to mimic something will have to define an item with average cost, them will have to perform the following transactions at once (this also assume you always have zero quantity on-hand);

  • Received the Outside Process item into stock
  • Issue material to WO

What we want is the ((PO Price * currency rate) + other fees) * Qty Received into WIP

Hope this is clear!

Regards,

Robert Charbonneau

What J White says is absolutely correct, but if you passed everyhing through to a work order you could just pass the entire PO line cost and not re average. Actually if otside processes were being posted to the work order from the PO line htere would never be any qtys on hand, therefore no value, and there would be no re-averaging issues.

A much broader and costly and probably not simple solution would change the entire concept for outside processing from an item to a secial operation type that never gets time posted, just costs from the PO line. This could actually could also give some visibility to when otside processing was taking place and when it was complete according to completed operations, etc. Would be partcularly helpful for work orders lasting several days or more and even multiple outside processes. Again, probably a major task if this was perceived by everyone to be a better process. If this were considerd then the PO line reference would have to be Work Order Number and Operation number. $$$$$.

Average costing on these items is almost impossible because the whole premise is for the item to be used at the time it’s needed (non stock). This will almost always give an average cost of 0. But, if the method for receiving Outside Process POs changed to insert the quantity of items ordered with the PO price without an inventory valuation, that would be helpful. But if it will be handled that way, you would always need a WO to “receive” the PO item to. I know I could certainly benefit from that.

Robert Charbonneau:

I beleive it is clear to me as to what you need. Perhaps I did not make my suggestion clear enough. What I am suggesting is that the PO Line receipt process handle the PO receipt AND the issue to to the Work Order all in one step at time of receipt if a new data base field for PO Line Items “Work Order Number” is populated with a valid Work Order number when the PO is created or edited to add before the receving takes place. If that is done 100% of the time, there will never be any qtys on hand of the outside process item and the value field in the item/site record will always be zero. The entire cost of the PO line item will be in the Work Order just as if it had been done in two steps by the operator with NO ohter transactions taking place.

If that is not what you require, I apologize for mis understanding.

Exact.

I have carefully read through this conversation string. At our company we are struggling with the current Outside Process method. We assumed (incorrectly) that the service being performed was summed back into the work order.

In our case the outside process (service) is galvanizing. The cost of the finished item should include the actual cost of the galvanizing. It does not. We don’t know (can’t see) the actual cost of our product, although we can see the standard cost.

What can we do to facilitate the enhancement of the Outside Processing? We have some programming resources but would like to partner up with others.

For the coders out there I’ll reiterate that we like the notion of Purchase-To-Order described above and in 3.5 we implemented similar functionality to support drop shipments and end-to-end serial tracing for job cost item sites. These are both cases where the receipt automatically results in automatic follow-on transactions. In the case of drop shipment a receipt results in an automatic issue to shipping and shipment, in the case of job costing you can receive a job costed item as a “Service” line item to a Return Authorization and it gets automatically issued to the service work order. In both cases the serial history is carried along to the second transaction. Also with job costed item sites, a shipment against a sales order for a job cost item site results in an automatic receipt against the associated work order, and in that case the costs on the work order are tracked directly as COGS to the shipment. A Purchase-To-Order scenario would be the flip side of this behavior.

So, we have lots of working examples of similar behavior to study to get an idea how to handle this problem.

Hi j2m:

As you can see I have a couple of posts in this thread already. I operate in a market, Houston, TX, where a large percentage of the small and medium size manufacturing companies have similar issues. Outside processing for galvanizing, speciality welding, inspections, etc are quite common. I have some ideas about some work arounds and some complete solutions that could require multiple folks to co operate.

I would love to discuss in more detail your particluar situation and setup.

You may contact me at:

larry_cartee@msn.com

Larry Cartee

Okay, I like the idea. How can we at U-Haul help?

I would like to repeat my suggestion that consideration be given to this much broader solution.

A much broader and costly and probably not simple solution would change the entire concept for outside processing from an item to a secial operation type that never gets time posted, just costs from the PO line. This could actually could also give some visibility to when otside processing was taking place and when it was complete according to completed operations, etc. Would be partcularly helpful for work orders lasting several days or more and even multiple outside processes. Again, probably a major task if this was perceived by everyone to be a better process. If this were considerd then the PO line reference would have to be Work Order Number and Operation number. $$$$$.

The concept that an outside process is in fact an operation step int the manufacturing process seems to make much more logical sense than some special type of inventory item. It really is just a labor step performed by an outside company. The purchase order is issued to confirm the cost and allow AP to process payment.

This, in my opinion, is one of things that while expensive, it will pay dividends in the long run to just do it right. Of course, I am lobbying that the “right” way is the special operation. Just my opinion and may not be shared by others.

I still believe that the ability to purchase actual items and receive directly to a Work Order is also needed. I just believe that the two things are different enough to have their own distinct processes.