Covering Manufacturing Gaps with Open Source ERP

Hi Everyone,

In previous posts, I have introduced and demonstrated manufacturing in ADempiere and iDempiere, open source ERP. The purpose of this post is to introduce a simple yet effective solution to solving manufacturing gap complexities.

Here are common problems/challenges:

1. You are a plastics manufacturer and 8% of your yield is not usable, and you want to blend your loss back into a usable raw material?
2. You are a discrete manufacturer and you want to convert 2% of your newly manufactured product into a different product without completing a new manufacturing order.
3. You are a reverse logistics plant, and you want to decompose a product into its parts.

A good solution is to use ADempiere or iDempiere’s Physical Inventory window as a tool to control both the material changes and the accounting consequences. This window gives you the ability to specify a GL charge per Physical Inventory line. Therefore, you can change the quantities/value of product and write the offset to the GL account of your choice.

In the case of plastics manufacturing, you can take the value of loss to a scrap account, and re-introduce the same material as a lesser-valued raw material product. Let’s say the finish good scrap was worth $1 and the raw material is worth $0.20. The $1 would be written to an scrap expense account, and the $0.20 would be written to an absorption account to cover the processing cost to make the scrap usable as a raw material again. Because ADempiere and iDempiere are open source, you can automate this process as part of the typical manufacturing process.

In the case of the discrete manufacturer, you can take your 2% of product A to a quantity of 0, take up the same quantity of product B, and have each line write to the same manufacturing offset GL account. If the products are of the same value, the manufacturing offset GL account will act like a clearing account. If the products have a different value, the manufacturing offset GL account will act like a mfr variance account. Because ADempiere and iDempiere are open source, you can automate this process as part of the typical manufacturing process. You can explode a single product into many products using this same method.

In the case of the reverse logistics company, you can explode a computer into its parts. The quantity of a single computer goes to zero. The raw materials go from zero to the quantity found in the computer. Each raw material line writes its value to a labor and overhead absorption account to offset period close totals. You can hang inspection records off of each raw material line to determine who performed the inspection and record pictures/records of the results. Because ADempiere and iDempiere are open source, you can automate this process as part of the typical teardown process. You gain insight, accuracy and efficiency as part of your reverse logistics process.

I hope this helps!!!

Please note that ADempiere, iDempiere and Openbravo are forks or copies from Compiere. Therefore, they have similar abilities mentioned above. The biggest difference is that ADempiere and iDempiere are pure open source. There are no features held behind a commercial or paid license.