Chapter 1: Introduction to Discrete Manufacturing Basics

CHAPTER 1: INTRODUCTION TO DISCRETE

MANUFACTURING BASICS
Objectives
The objectives are:

 Describe the Production control module's main conceptual building

blocks
 Describe the interconnectivity between the Production control module
and other modules in Microsoft Dynamics AX® 6
 Define production orders and name the status changes as it passes
through the production life cycle
 Define the main elements that are setup and used when a legal entity
works with a variety of production sites distributed over different
geographic locations
 Describe three companies in which production sites, conditions, and
processes vary by multisite functionality
 Provide a brief description of general improvements to the Production
control module, including filtering and the Gantt Chart

Introduction
Introduction to Discrete Manufacturing Basics provides a high level overview of
basic elements necessary for understanding the Microsoft Dynamics AX 2012
Production control module. The topics discussed are:

 Bill of Material (BOM)

 Resources
 Routes and Operations
 Setup and interconnectivity
 Production order life cycle
 Kanban functionality

The course also describes multisite functionality, which enables companies to run
production and master planning on multiple operational sites, as well as a brief
example of a hypothetical workflow that includes in-house production.

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Discrete Manufacturing Basics in Microsoft Dynamics ® AX 2012

Core Concepts in Production

Even though each legal entity'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 often very similar.

Overview of Core Concepts

The core concepts in the Production control module are summarized in the following
table.

Core elements Definitions

Bill of materials The BOM is one of the most important documents in a
(BOM) manufacturing legal entity. Before a legal entity can
produce a product, it has to know what components are to
be included and how many of these components are
needed to make the end product. The BOM contains all
the ingredients, components, parts, or raw materials
required to make one finished product.
Resources Resources are the legal entity's total working resources. It
is anything that is used for the creation, production or
delivery of a good/service over and beyond the materials
consumed in the process.. Resources can be of different
types including machines, tools, people, vendors or
locations.
Routes and The route determines the process steps that are needed to
operations produce a finished product. The BOM defines the
materials required, the resource defines where the item is
produced, and the route determines the sequence of events
to build the finished product. Operations are the specific
tasks or work processes that are put together in
conjunction with a route to produce a specific product.
Each task is associated with a time allotment to complete
the individual task.

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Example: Baking a Cake

The production process is illustrated by using the process of baking a cake as a
simple example.

EXAMPLE: When you make a cake, you need a recipe (a BOM) so that you know what
ingredients you need and can check to see what you have on-hand and what you need to
buy, if anything. (This includes specific quantities of sugar, flour, and eggs.) Next, you
need access to various “resources”. This includes mixers, bowls, pans, an oven, and so
on. Finally, you must follow the recipe in a specific series of steps, which is the “route”
you take to “produce” the end item, that is, the cake. The steps are:
1. Mix ingredients together in a bowl
2. Spread mixture into a cake pan
3. Load cake pan into an oven
4. Cook for 25 minutes
5. Cool for 45 minutes

The baked cake is your finished product. The ingredients and the processes you use
to bake this cake would be included in your “Production order”.

Overview of Production Process

The creation of a production order is essentially a request to start the manufacturing
of the quantity of items, specified on the order. All information associated with the
item that is to be produced is contained in the production order. Production orders
contain a list of raw materials from the BOM, the resources that will be used, the
routes, and the operations.

Each individual component of information in a production order can be modified,

copied, and used to meet the requirements of the manufacturing facility. Whether the
legal entity produces items that are made to order, made to stock, or engineered to
order, the Production control module enables the manufacturing facility to change
production orders so that they are streamlined to their specific production
requirements.

Production Order Status

The Production control module is linked to:

 Inventory and warehouse management

 General ledger
 Master planning
 Organization administration

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Discrete Manufacturing Basics in Microsoft Dynamics ® AX 2012

This integration supports the information flow that is needed to complete the
manufacturing of a finished item. The production of items follows a sequential
production life cycle. The life cycle reflects the actual steps taken to manufacture an
item. It begins with the creation of a production order and ends with a finished,
manufactured item that is ready for the customer. Each step in the life cycle requires
different kinds of information.

When a step in the life cycle is completed, the production order signals this by a
change in the production status. If one or more of the mandatory steps (or updates)
are skipped, the steps are performed automatically before the production order is
moved to the next step. The production order is assigned a status that reflects where it
is in the production life cycle. The status of the orders is as follows:

1. Create
2. Estimate
3. Schedule
4. Released
5. Start
6. Report as finished
7. End

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 Chapter 1: Introduction to Discrete Manufacturing Basics

Lean Manufacturing
The kanban feature in Lean Manufacturing for Microsoft Dynamics AX 2012
provides a comprehensive solution for the management of kanban within a
production environment.

To support the diverse production environments of users, there are several variations
of kanban available, all of which are interoperable within a single legal entity
environment. The variations are the following:

1. Fixed
2. Target and phased target
3. Black hole
4. Temporary and dynamic
5. Pull-to-order and templates
6. Generic

All types of kanbans can support purchasing, manufacturing, or internal (store-to-

store) replenishment.

Kanban defined
The word kanban is Japanese and means “visible record”. As such, kanbans have
been adopted by many industries as a method of controlling production and internal
supply.

Kanban is an essential part of a pull system of supply that is a critical element of

Lean production and supply. When a kanban has been consumed, it should be passed
(triggered) to the supplier, production, or supermarket that will replenish it.

Kanban may be cards or electronic records. Lean Manufacturing for Microsoft

Dynamics AX 2012 will support both approaches, but greater benefits can be
obtained through the use of alert capabilities that are linked to the use of electronic
kanbans. This will provide a paperless, integrated internal and external supply chain,
while providing high visibility throughout the business.

Process overview
The kanban feature is a central component of Lean Manufacturing for Microsoft
Dynamics AX 2012. The feature defines how kanbans are to be used by associating a
kanban record with its source of supply and its destination, the point of consumption.

You can also set rules for supply, trigger supply instructions, and, upon receipt of a
full kanban, update inventory through purchasing, production, or inventory transfer.

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Discrete Manufacturing Basics in Microsoft Dynamics ® AX 2012

FIGURE 1.18 HOW A KANBAN RECORD IS RELATED TO POINTS OF

CONSUMPTION AND SOURCES OF SUPPLY

A unique kanban record will be created for each location where an item is stocked
and consumed (the stock point). Stock points are represented by warehouses in
Microsoft Dynamics AX, and it is normal practice to create a warehouse record for
each work center or cell where materials are consumed. Therefore, if an item is
consumed in three cells within a production unit, there will be three kanban records
created and linked to three warehouses. For each kanban record, rules will be set to
determine how many physical kanbans are used at each stock point, the quantity of
component carried, and the method of resupply for those kanban.

Kanban replenishment forms is one of the key elements of a pull-based production

system.

Kanban tickets are used to act as the trigger for product to be delivered from one step
in the production process to another. As such, it is important to understand that a
kanban card is only presented to the point of supply when the items are required. No
material is being supplied unless there is a demand for it.

In Microsoft Dynamics AX, the kanban functionality is designed to replicate the

operation of a kanban pull system.

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FIGURE 1.19 KANBAN RELATIONSHIPS

As a minimum, the kanban feature allows material issues and replenishment to be

managed by using a simple process that can be reflected throughout Microsoft
Dynamics AX. Thus, the receipt of a kanban from production triggers a series of
processes that raise a work order, perform a goods receipt, and optionally back flush
materials as one step.

More detailed information about Lean manufacturing presents in a separate Microsoft

Dynamics course.

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Discrete Manufacturing Basics in Microsoft Dynamics ® AX 2012

Summary
Introduction to Discrete Manufacturing Basics provided a broad overview of some
of the main characteristics of the Production control module. It included the
following key points:

 The Production control module is a highly interactive module drawing

upon information from other modules.
 The Bill of material stores the quantities of raw materials used to produce
one finished product.
 Resources and resource groups are used to track equipment and resources
for the production process.
 Routes are used by Microsoft Dynamics AX 2012 to track the sequence
of events during the production process.
 Production orders have a specific life cycle and are used to schedule the
production of finished goods. The production order identifies the BOM,
resources, routes used, and schedule.
 The kanban feature is a central component of Lean Manufacturing for
Microsoft Dynamics AX 2012. The feature defines how kanbans are to
be used by associating a kanban record with its source of supply,
destination, and the point of consumption.

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Test Your Knowledge

Use the following short answer questions to test your overall understanding of the
course. It would be of added benefit to place each question into a familiar context and
relate it to a legal entity or industry with which you are familiar.

1. Name and define what has to be set up in the Production control module before it
can be used.

2. List the core concepts in the Production control module.

3. Define the production unit and state where it is setup in Microsoft Dynamics AX
2012.

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 Chapter 1: Introduction to Discrete Manufacturing Basics

Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this chapter:

1.

2.

3.

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Discrete Manufacturing Basics in Microsoft Dynamics ® AX 2012

Solutions
Test Your Knowledge
1. Name and define what has to be set up in the Production control module before it
can be used.

MODEL ANSWER - -Parameters: Set up basic production parameters to define

how the application must handle and process production orders. Define how they

are created, estimated, scheduled, and consumed. You can also select what kind

of feedback you want and how cost accounting must be conducted. -Journal

names: Identify the production journal names that you want to use to record and

post ongoing transactions.

2. List the core concepts in the Production control module.

MODEL ANSWER - -BOMs -Resources -Routes and operations

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