Managing steel offcuts in BC

Business Central/NAV User Forum
1

How do we best manage offcuts in BC as inventory items?
For example, we purchase steel in lengths of 6m, and consume in production by the metre. If a production order consumes 4m of the length, how do we record the additional 2m offcut/remnant?

Do we need to record it as a negative consumption in the output journal? How do we record the lengths available? Would that be best achieved using lot management? I’ve seen a few posts but nothing definitive.

2

There is no definitive answer here. There are generally two-ish ways to process this, and you listed both of them. If you are on the latest release which can make Variant a required field if Variants exist, than for Option 1 replace “Item” with “Variant”.

Option 1: Setup Items (Variants) for each length of the material. The correct Variant will need to be selected during consumption entry. If a cut is made you will need a consumption entry for the length being cut, and a negative consumption for the amount returned to stock. For example, “Item A - Variant Full” is consumed, and “Item A - Variant - 2m” is returned to inventory. This applies the cost of the 4m stick, assuming you have a cost associated with the 2m remnant.

Option 2: Setup the Item with Item Tracking (Lot Numbers). Each stick will be received as its own Lot. When I consume part of the stick, I record only what was used which leaves the rest of the material in my inventory. The Lot No. gives you visibility as to how much length is left per stick (Lot).

In both cases, you will either look at your Quantity by Variant or Quantity by Lot to see what length sticks are available in your inventory. The downside is MRP is generally based on the total quantity, regardless of if they are all 2m remnants.

For your BOM structure, it is recommended to use the actual length (i.e., variant) in the BOM so that you get the appropriate cost. You could accomplish the same by listing the full and negative remnant.

In either case, you are likely to use Manual Flushing to ensure accurate inventory is kept. The alternative is to manually adjust the component lines on the Production Orders prior to any automated flushing occurs.

Best Regards,
Ben Baxter
Accent Software

3

Thanks for that Ben - I’ll go for the variants option.

4

There are a few different ways to manage offcuts in BC as inventory items. Here are a few suggestions:

  1. Record offcuts as separate inventory items: You can create separate inventory items for each length of steel that you typically purchase (e.g. 6m, 5m, 4m, etc.), and then create additional inventory items for the offcuts that are left over after production. You can use lot management to track the length of each offcut.
  2. Record offcuts as negative consumption: You can record the additional 2m offcut as a negative consumption in the output journal. This will increase the quantity of the original item in inventory, and decrease the quantity of the offcut.
  3. Use warehouse management functionality: You can use the warehouse management functionality in BC to manage offcuts. For example, you can create a separate location in the warehouse for offcuts, and then move the offcuts to that location after production is complete. You can use lot management to track the length of each offcut.

Ultimately, the best approach will depend on your specific business requirements and the complexity of your production process. It may be helpful to consult with a BC expert to determine the best approach for your organization.

5

I haven’t had much experience, but I have read that “Product Families” can be used for this.
How to Use Item Families in Manufacturing - Dynamics NAV App | Microsoft Learn

Co production and families - Dynamics 365 Business Central Forum Community Forum

or with some customization You can look at this:
Additional Output on Production Orders in Microsoft Dynamics NAV | Olof Simren - Microsoft Dynamics NAV & 365 Business Central Blog