How To Handle Production / Subcontract Lead Times In Your Cloud Scheduling System

Cetec ERP is very flexible based on how your company operates; this tutorial attempts to outline an example company’s scheduling framework.

First, understand that there a three date types in Cetec for orders: Dock Date, Ship Date, and Work Start Date.

Imagine you have end-customer custom make-to-order (MTO) work orders. Let’s call these the “parent orders”.

Parent order line items will have:

• Dock Date (this is the customer delivery/due date);
• Ship Date (this is the day you need to ship it out in order to make good on your Dock Date; useful if you're shipping across the world or across the country and shipment is going to take a while);
• Work Start Date for the parent assembly, i.e. the finished saleable product (this is the date you need to start work on the final assembly work order in order to make good on your Ship Date). Note: there are a number of ways in which Cetec ERP lets you setup the automation of backing out the Work Start Date from the Ship Date, i.e. setting the production/subcontract lead time on the order. Some people just say "make it always two weeks"; some people will put labor estimates on all their BOMs and use that filtered through some basic checks and balances to keep the production lead time between the rails; some people will run it through capacity filters (I wouldn't recommend finite capacity at first for you).

Next, imagine that parent order is for a parent assembly with any number of raw components assembled together with any number of subassemblies (with their own raw components and production requirements).

• If you only built the subassemblies to order, i.e. only enough subassemblies to fulfill your parent order, Cetec does provide the ability to "nest" and link those as "sub work orders" underneath the parent order, and automatically back out their due dates from whatever the parent order's work start date was set as, i.e. so the subassembly work orders are complete in time for the work start date of the parent. Note that the sub work order may have its work start date automatically backed out from its due date (in any of the manners described above, i.e. blanket auto-set, production lead-time, finite capacity). Note: you can also skip sub work orders altogether by assigning the sub as a "phantom BOM", which will flatten out the components and bring them up to the parent level work order.
• If it's common for you to overbuild the subassemblies, however, we wouldn't recommend creating discrete sub work orders for every subassembly. Instead, simply enter the parent work order. All of the subassembly procurement (i.e. build) requirements will propagate to the MRP and planning reports in Cetec for your production planning team to disposition and schedule accordingly via the entry of separate "batch" work orders. This allows them the flexibility to make decisions on how best to optimize the scheduling of work orders based on the demands of the parent orders. These subassembly work orders may be entered and scheduled automatically from the MRP report itself.
  • Once you enter the build-for-stock work orders for the subassemblies from the MRP, you can assign them the "due dates" (and the backed out work start dates, either automatically or manually).
  • The entry and scheduling of these work orders will then subsequently drive demand for all constituent subassemblies and component requirements for purchasing to review and act upon in the planning and MRP purchasing reports.
• With the parent orders driving initial demand, production planning can schedule their build-to-stock work orders as far ahead of time as possible, in order to give Purchasing the best chance possible to procure needed material in time for the production work orders.

Note that the paperwork for every one of these work orders, whether parent orders or work orders, will contain the real due date (i.e. “ship date”) on the paperwork and also on all the digital production orders and production paperwork. (note also that, for end customer orders, all three dates are useful. For build-for-stock work orders, the dock date and ship date you’ll simply set to be the same date, as they both simply represent the due date for production).