Make to Stock, Make to Order and Configure to Order – Understanding Macola Manufacturing
The Macola ERP system is considered a “mixed mode” manufacturing system as it relates to how you plan replenishment for items. Many items are managed to anticipate customer demand, and are classified as make to stock, so that inventory is available on the shelf when a customer order is placed. For certain items, you may only produce them when you receive a customer order for them, in other words, you treat it as make to order.
Similar to make to order is configure to order, where there are different features and options that can be included or excluded with any given customer order. Similar to configure to order is engineer to order, where unlike configure to order, the rules for manufacturing aren’t clearly defined, and which requires engineering input (Bill of Materials, Routings, etc.) before manufacturing can happen.
Impact On Order Entry
During the order entry process for a make to stock item, once the quantity ordered is entered, the quantity to ship will automatically populate when the quantity in inventory is available. Available quantity is defined as quantity on hand less the quantity already allocated to other orders. I’ve seen many Macola users override the quantity to ship with the quantity ordered if there isn’t quantity available. This is not recommended as it short-circuits the backorder, backorder fill and pick ticket printing process, eliminating the benefit these tools provide and forcing you into a paper-driven system.
For a make to order item, during order entry the quantity to ship will default to zero, since this item is typically not on hand when the order comes in. I say typically, because it is possible to produce make to order items in advance, and then they will behave in the same way as make to stock items. But when the quantity to ship defaults to zero, then a related POP or Shop Order will be created, linked to that sales order. As quantity completions are entered on the POP or Shop Order, the related sales order quantity to ship is updated. No need to fill the backorder, as this happens automatically. Just as a warning, the manufacturing order is tightly linked to the sales order, and trying to use quantity completed from a non-linked manufacturing order (robbing Peter to pay Paul) is going to create havoc in the Macola system.
For configure to order items, which are by definition never in stock since you have no idea how the customer may ask you to build it, the order entry process will always default to zero quantity to ship. Similar to make to order, a linked POP or Shop Order will be created. Also, as quantity completions are entered, the quantity to ship on the sales order will be updated. As with any manufacturing order, as-built history is kept for the configured items.
Setting up Macola
The item master settings determine how items will be treated for manufacturing planning.
Make to Stock Settings
For make to stock items, on the Basics Tab, the item needs to be setup as Item Category “M=Mfg.”, and the Stocked Flag has to be checked “On”, as below:
On the Manufacturing Tab, you must choose a Manufacturing Method (POP or Shop Floor) and leave the Forced Demand flag blank:
Make to Order Settings
For make to order items, on the Basics Tab, the item needs to be setup as Item Category “M=Mfg.”, and the Stocked Flag has to be checked “On”, as below on the basics tab:
Notice that the item is still flagged as “stocked”, as make to order items can be manufactured without being triggered by a sales order if desired.
On the Manufacturing Tab, you must choose a Manufacturing Method (POP or Shop Floor) as before, but here you select “P=Pull” for the Forced Demand flag:
Notice also that a make to order item can be master scheduled, and a sales forecast can be used to drive demand for MRP purposes.
Configure to Order Settings
For configure to order items, on the Basics Tab, the item needs to be setup as Item Category “M=Mfg.”, and the Stocked Flag has to be checked “On”, as below on the basics tab:
On the Logistics Tab, there are a few more entries to complete on the bottom right of that screen. You must select “F” as the End Item Code. You also need to tell Macola what to do about pricing under “Price Rollup” and costing under “Cost Rollup” for the finished good (there are several options there).
The Manufacturing Tab is the same as the make to order item, but notice that the Forced Demand flag is automatically set to “P=Pull” and is greyed out for configure to order items.
Configured items also require a unique type of Bill of Materials to be setup, using “Feature/Option Configurator instead of Bill of Resource. Setting up Feature/Option BOMs will be discussed in a future issue of The Manufacturing Minute.
Engineer to Order Settings
For engineer to order items, you would setup the item master in the same manner as a make to order item. The only difference is that engineer to order items are typically one-off kinds of products, and a Bill of Resource and perhaps Product Routings (if using Shop Floor) will need to be created before manufacturing can begin.