Swift Technologies believes that one of the strongest trends among today's distributors and manufacturers is the move to incorporate more Value Added Processing activities within the distribution process. Some of the most important of these are the assembling, kitting, and finishing of products and product assortments prior to distribution to the end user or retail environment. The Alliance Value Added Processing application addresses the need to accomplish these activities, which go beyond the minimum distribution activities of buying, storing, selling, and shipping.

Please click the following links to jump to the information quickly or simply scroll down.

Bill of Material in Order Entry

The BOM processor has an important use in Alliance sales order entry, where orders can be taken for items designated in the item master file as kit items. Kit items are intended to represent assortments or other assemble-on-demand items that are not normally kept in stock, but are made from on-hand, in-stock components, as defined through the Bill of Material.

When a kit item is the parent for a Bill of Material, the sales order processing program will automatically "explode" the kit on the sales order screen into its component parts, and check the availability of each component; kit parents are not assumed to be in stock. The warehouse picking list will also show this explosion, guiding workers into picking the correct parts for the assortment or assemble-on-demand item. Many types of "rainbow" packs, multiple size or color assortments, sampler packs, and other types of assortments can be sold and shipped in this fashion. This type of processing is also useful for selling items that are not assembled, or finished, until ordered. This could include stock items requiring painting or other final finishing.

Alliance has several features to facilitate this type of kit processing, including:

• Handling a two-level BOM explosion for sales order kit items
• Pricing the kit either by the parent kit, or by the sum of its components
• Recording sales history and general ledger information by the parent kit or its components, following the pricing selection
• Costing the kit by its components
• Checking into kit component availability before taking the order and exploding the components into the order

Back to the Top

Bill of Material in Producing to Stock

If you decide to produce assemblies or assortments into stock, you can use the BOM processor to help make quick production receipt transactions for the parent items, while automatically relieving from stock all the required BOM component quantities . This type of stock relief is known as a "backflush" because the component quantities are relieved, or flushed, from stock after you report the receipt of the parent. This is different from a typical work order manufacturing environment where you often establish a work order, and issue the components from stock into work in process (WIP) before making and reporting the receipt of the parent item.

The Alliance production receipt with backflush transaction is well suited to short cycle time assembly work, or for outside processing operations, such as painting or plating.

In the short cycle time assembly environment, materials are often available to the assembly line without formal stockroom issue controls; the backflush transaction is an efficient method of relieving stock records for the consumed component quantities, especially when the assembly process is under control and does not generate unplanned component scrap.

For outside processing, Alliance supports logical warehouses to represent component supplies at outside value added processing locations, such as a metal plating facility. In this case, you would transfer the un-plated component item to the logical, outside warehouse. This step monitors the material location. When the processing is completed , you would use the production receipt with backflush to record the completion of the new, plated item, and to relieve the transferred components from the processing facility. By using a multi-level BOM, you can repeat this step several times, for example, for mixing and then subsequent packaging operations at different outside facilities.

Alliance supports a BOM-as feature that lets you define a single BOM, and use it for both the assemble-to-stock parent item as well as the assemble-on-demand (or kit) parent of the same set of components.

Back to the Top

Bill of Material Processor

Alliance includes a full featured, multi-level bill of material (BOM) processor that allows you to define a Bill of Material, that is a series of component items, for a parent item. For example, a build-it-yourself magazine rack kit sold by a retail store might include wooden sides, several wooden shelves, instructions, hardware items, and the packaging materials for grouping these items into a single, sellable item; a BOM relates the "parent" magazine rack kit to these components.

Building a BOM gives you several important capabilities, including:

• Using the parent kit to refer to all of the kit components: for example, when inquiring if there is sufficient component inventory to assemble a number of kits.
• Identifying all parent kits that use an individual component item.
• Noting ahead of time, by using effectivity dates, when a component item will change in a kit.
• Including a scrap allowance, by component, to allow for an ample number of component items when pulling stock to assemble a kit.
• Including references to engineering drawings for the parent kit and its components.
• To relieve- with a single reference to the parent item- all the component items from stock after a number of kits have been assembled (i.e.: back flushing).
• To enable a sales order desk to take orders for on-demand assembly or kitting of items, especially assortment packs, based upon the parent item and its Bill of Material.
• To calculate the cost of the parent item based upon the total sum of the costs of its components and their required quantities (i.e.: cost roll-up).

These are just some of the value added uses you can make of a Bill of Material.

Some specific capabilities of the Alliance Bill of Material processor include:

• Multiple levels of components for a parent item.
• Effectivity in/out dates for each component.
• A scrap percentage on each component.
• Engineering reference number on each component.
• On-line, multi-level exploded BOM inquiry.
• On-line, multi-level, where-used component inquiry.
• On-line, single level, coasted BOM inquiry for any parent quantity, at standard, current, or future cost.
• On-line, single level, extended quantity BOM inquiry to check on component availability, and substitute component availability; this inquiry is also available from the sales order entry screen.
• Engineering data base reports showing single and multi-level BOM explosions and where-used inquiries.

Back to the Top

Future Costs and Cost Changes

Each item cost record contains four sets of cost elements: a present standard cost, a current or last cost that is updated optionally by each purchase order receipt , a future cost, and a prior standard cost.

You can manually enter future cost elements at any time, and calculate what-if costs for a BOM or multi-level bill. If these costs are correct, you can copy them over the current cost elements. Then, you can perform a per-item or in-mass roll of current cost elements over the present standard cost elements, automatically updating a fourth set of costs, the prior standard costs. These separate steps provide the checkpoints necessary to control cost updates.

Inventory transaction costing occur at standard, current, average or lot for lot costing based upon a default data area and upon an item by item cost selection parameter.

Back to the Top

Routing Data Base

Alliance contains a routing data base that allow you to define the sequence of steps by which a product is made; at the present time, the purpose of this data base is to permit standard cost calculations of labor, fixed overhead, and variable overhead costs for a parent item. Companies providing value added activities will find this feature useful if those activities include significant labor or overhead costs, and has those costs defined according to a typical manufacturing cost center / work center structure.

Alliance provides a cost or work center definition that allows for a three-part definition: work center, department, and machine group. Operations, crew sizes, set -up times, and production rates are defined for each work center/department/machine group that will add value to the product during fabrication or assembly. The production rates can be expressed in time to produce a piece, or in the pieces that can be produced in a set amount of time, such as an hour. The result of this definition is that Alliance can calculate the total labor and overhead costs to make one unit of product. These costs are combined with the material costs in the BOM to make up a total product cost.

Back to the Top

Total Cost Accumulation

Alliance allows you to define eight elements of cost for each item in each warehouse.

One element of cost is the material cost, which comes from the total of the component costs on the Bill of Material. When viewing a parent item with multiple levels in its BOM, the total material cost is the sum of the material costs from the lower levels of the bill.

Another element of cost is the labor cost. These can be defined in the routing database, or can be input manually into the cost element structure of the item cost file. Labor costs are added together with the material costs to the total item costs at any level of the BOM. Variable and fixed overhead costs are handled in the same manner as labor costs.

The Final four cost elements are user defined, meaning that they are not represented within the BOM or Routing; they can be entered manually into each of four cost element fields for any item. When performing a cost roll-up function, these user defined costs are added upwards to join any user defined costs already established in the item cost file for the parent item of the BOM. This upward addition is performed for each level of a multi-level BOM.

By using this approach, Alliance can maintain separate materials, labor, overhead and user defined costs for each item cost file record, and can use the BOM and Routing data bases to automate the calculation of material, labor and overhead costs. During the roll-up function, all costs are written into the current cost element set.

Back to the Top