Long lead time part on the fly


I am trying to get some ideas for a best practice for long lead time custom one time use purchased material.

We have custom products that we sell that cover several sales lines on one sales order, so there will be several Jobs.  Upon taking the order, the entire engineering details are not fully known yet.  We do know that there is a common “one time use material” that will be used on those several lines in the Sales Order.  In using “part on the fly” (POTF), how do I get this custom material on order without having the Jobs created to drive it yet.  Is creating a part master for this one time use the best practice here versus going the POTF path?


6 replies

We often have this situation.  I don’t know all the details of our process, but the ideas is that we include a part number like “LONGLEAD” on the BOM for the parent job (we will go ahead and start one job to produce the parent part, but it won’t be Engineered yet).  That part is set as Make Direct.  Then we have a separate job to produce “LONGLEAD”.  We add any materials that need to be purchased early to that job’s BOM.  We go ahead and engineer and release that child job, and purchase all those purchase-direct materials.

As I said, I don’t know all the details, but I’d be happy to ask our team who coordinates these jobs if you have any questions about our process.

Hi Liz,

I appreciate your response it is very helpful.  I like the concept of “part on the fly” (POTF) so I am trying get our business in that direction for “one-time” designs.    I will attempt to paraphrase what I heard.

On one of your custom (POTF) sales lines (i.e. Jobs), you may have a POTF called “LONGLEAD”.  “LONGLEAD” has a Job that is linked to that Sales Line Job with several “Buy Direct” POTF materials with the projected demands to fulfill the entire Sales Order demands.

So assuming that LONGLEAD Job has BUYD01 as a Buy Direct material.

  •  if other Sales Line Jobs of that Order need BUYD01 as one of its materials, do you link that Job somehow or can you simply state it as reference on the BOM?
  • I experimented in our test environment using Job Manager to have multiple Sales Line Jobs to use a common POTF material.  That seemed to work, however, since with custom material you want to order extra just in case,, I was not sure how to consume the overage on the Sales Order.

Thanks - Terry

Yes, that’s the setup as I understand it.  The LONGLEAD job would typically have only Purchase Direct Materials on it.  I’m not sure if our team has dealt with the two scenarios you mention, but I will ask and update you.

Hi Liz,

I hope you had a great Memorial weekend.

I wanted to touch base with you to see if you were able check with others in your organization that deal with consuming Buy Direct POTF material across multiple jobs of a given Sales Order.

I think if we can get away with calling out usage as a reference, that would work, however, I am not sure how that plays out in finance.

Thanks - Terry

Hi Terry,

My apologies, I thought I responded last week, but I guess I didn’t get it submitted!

To answer your question about consuming one POTF material on more than one job: I don’t think we have that exact scenario, but I suspect you could use some variation on our process to accomplish that.  We typically have one or more generic POTF materials on the parent job, such as “LONGLEAD” or the parent job number followed by “-MAT”.   Those materials are marked Make Direct. Then we create a job with LONGLEAD or whatever that part number is as the parent part, and we add the parent job as the demand source.  You can add more than one job as the demand source, but of course that would mean that every material on that child/material job would be issued to both demand jobs, in the same ratio per parent quantity.   You could certainly have one child job per purchase direct POTF material, if that worked for you.  You could enter something like “BUYD01-LONGLEAD” as a make direct material on each parent job that requires it, then add “BUYD01” as the only material (purchase direct) on the child job.  That would allow you to add each parent job as a demand source. But it might be an unwieldy process, depending on your BOMs.

Of course, what works for you will depend on where you’ll gain the most efficiency.  For a long time, we set up every material, even if it was one-time use, and receive it to stock before issuing to the job.  We took steps to make part setup as efficient as possible, and applied average cost to the job, and it did work for us.  We moved to using POTF materials more often, and found efficiencies in some parts of the process, while making a few steps a bit less efficient.  For instance, you can eliminate the part setup with POTF, and make sure costs are directly applied with make direct/purchase direct, but there is a tradeoff with adding additional parent/child jobs that will need to be managed.

Just a little more background on what we do in our different business segments:

For jobs we fabricate in-house, We put our parent item that we are making on the sales order line as a POTF and have that marked as make direct. We then create a job to make that part (demand link as make to order), when we do not have all of our engineering details lined out but know of material we want to go ahead and get on order we add a material line to the job and mark it as make direct (this line is POTF as well). We create a job for that line and the demand link is make to job. On that child job, we house any material that we want to purchase ahead of time. Putting the due date as when you want the material here and then scheduling gives purchasing the signal and dates they need to order the material, we even have an operation called DUEDATE if we have multiple dates that we want material here by so that only one of these jobs is needed.

For jobs that will be installed at a customer site (where we ship materials to the customer site from our warehouses and direct from vendors) we always use Projects. We have different jobs set up for each project (Unreleased & Released).  Everything on the unreleased job is stuff we might need but not locked in yet.  It sits on the UNRELEASED job for estimated costing purposes only.  It is not procured by purchasing until it is moved to the released job.   We built a customization to automatically “move” material from one job to another.  It just automates deleting the line from one job and adding it to the other, but it helps manage our large installation jobs.  

Hope this helps!  

Liz

 

Thank you Liz for the detailed information.  You have given me some excellent ideas  to investigate. 

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