Products and material in Work in Progress
The reduction of batch sizes down to the ideal state of a single piece flow in lean manufacturing can cause a significant increase of transactions if each picking process, or kanban registration, causes transactions for the consumed items.
Production flow architecture enables the transfer of material to the production flow with withdrawal kanbans in storage or transport handling unit sizes. The value of the issued material is added to the WIP account that is related to the production flow, similar to material that is issued to a production order.
The same principle can be applied for products and semi-finished products, unless they are created, transferred, or consumed in a production flow. Inventory transactions are optional. When the products are posted to inventory, the production flow's WIP account is deducted by the related standard cost.
Periodic backflush costing of the production flow allows you to calculate the production variances to standard cost for the production flow and period while creating ledger entries to account for unused and in-process quantities that are still in the production flow at end of period.
Production flow WIP value
The current value of WIP can be viewed for a particular production flow on the Current WIP balances page.
Follow these steps to view the WIP value for a production flow:
Go to Production control > Setup > Lean production flow > Production flows.
Select the Calculation > WIP balances menu button.
Calculate the production flow's net realized usage over a period
The net realized usage over the period is calculated for each item and item dimension. The net realized usage is the difference between the total quantities for each item, accumulated over the period in production flow's WIP at standard cost, minus the sum of unused quantities that are still in the production flow at the period end date, valued at those items' standard cost.
The WIP that is still in the production flow corresponds to the item and item dimension quantities on the production picking list inventory transaction in a physically updated state for the production flow.
Clear the production flow's work in progress for the period
For consumed components for the period, the net realized quantities of material that are consumed by the production flow over the period are financially updated. These transactions are processed in First in First out (FIFO) order until they reach the net realized quantities for the period. Inventory transactions are split to allow unused quantities in production flow WIP to remain physically updated.
Production flow architecture also allows net realized usage quantities to be financially updated. For completed production quantities of the period, the inventory transactions for the completed quantities for the period are financially updated. The applied conversion cost transactions that are recorded for the period are financially updated for all direct manufacturing costs and all indirect costs minus indirect costs that resulted from the unused quantities.