Manufacturing Settings
Manufacturing settings within ERPNext define production processes, control Bill of Materials (BOM), monitor Work Orders, and deal with inventory transactions to offer a streamlined and controlled process of manufacturing. These settings enable the manufacturer to coordinate system behavior according to their operational procedures for enhanced efficiency and visibility.
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Raw Materials Consumption
1. Allow Continuous Material Consumption
When this feature is turned on, ERPNext permits materials to be used over time without issuing immediate Work Order stock entries for finished goods. This feature is most beneficial for:
- Long-duration production cycles, where raw materials are issued to Work In Progress (WIP) over several days or weeks.
- Where production output (i.e., finished goods) is posted after a considerable delay, but material issuance occurs periodically.
Use Case Example:
If one unit of a product requires a month to manufacture, raw materials such as adhesives, packaging, or intermediate parts could be used each day. With frequent backflushing, this would be untenable since it expects materials and output at the same time.
Activating this option enables:
- Stock Entries of type Material Transfer for Manufacture or Material Consumption for Manufacture to be entered independently, without necessitating an immediate accompanying Manufacture Entry.
- Real-time monitoring of inventory consumed in source and WIP warehouses.
- Last entry for Finished Goods manufacturing to be posted at the end of the manufacturing cycle.
This feature assists in proper WIP inventory valuation, batch-wise control of production, and improved monitoring of running manufacturing operations.
2. Backflush Raw Materials Based On
This option specifies how raw materials automatically issued (backflushed) during manufacturing during posting of the Manufacture Stock Entry.
You can use either of the below two options:
Material Transferred for Manufacture: In this process, raw materials are utilized based on the actual quantities already transferred through a Material Transfer for Manufacture stock entry. It provides greater flexibility and control, particularly when material issues are done in stages or deviate slightly from the BOM.
BOM: Raw material in this strategy is directly consumed as provisioned in the Bill of Materials (BOM) of the finished goods. This is suitable in case of mass production processes where there is a strict compliance of the raw materials to the BOM.
3. Validate Components and Quantities Per BOM
If "Backflush Raw Materials Based On" is to BOM, you may verify the checkbox Validate Components and Quantities Per BOM under Manufacturing Settings so that there is strict compliance with the BOM structure in stock entry.
Having this set up, ERPNext will:
- Enforce correctness of material usage by verifying if the components and their quantities in the stock entry are same as mentioned in the corresponding BOM.
- Prevent data inconsistency and unauthorized changes in the material quantities during manufacturing.
Behavior enabled:
When a user updates the quantity of any raw material on either an entry in a Material Transfer for Manufacture or entry in a *Manufacture * stock, then the system will also alert with a validation error:
- When the user deletes one of the BOM components in the stock entries provided above, the system will interfere with such transaction by giving an error message such as:
The process of actual production therefore follows exactly the prescribed Bill of Materials and reduces the chances of mistakes, wastage and deviation in routine.
4. Get Raw Materials Cost from Consumption Entry
Get Raw Materials Cost from Consumption Entry
- ERPNext derives the value of raw material consumed in production directly from the actual Material Consumption entries made along the way of the production process.
- This way, the cost of production captures actual consumption and not theoretical consumption based on the BOM.
- It offers higher accuracy in profitability analysis, inventory valuation, and cost production, particularly for long-running or variable consumption processes.
- In case of disablement, ERPNext will fallback to computing raw material cost from the quantities and rates set in the Bill of Materials (BOM).
This option is especially useful for those industries whose material consumption varies or for which accurate tracking of costs is a necessity for financial reporting and analysis.
Capacity Planning
ERPNext Capacity Planning assists manufacturers in determining if current resources (machines, workstations, manpower) will be able to meet new or continuous production requirements.
- The system calculates resource availability from current Work Orders, Operations, and Workstation schedules.
- Takes into consideration the Operation Time, Workstation Working Hours, and Holiday Lists to predict load versus available capacity.
- Assists in detecting bottlenecks and maximizing machine or labor use by distributing workloads between multiple Workstations.
- Users can choose whether to accept new production orders, schedule existing operations, or assign more resources depending on capacity analysis.
ERPNext Capacity Planning enables manufacturers to make intelligent decisions, prevent congesting production lines, and ensure regular delivery schedules.
- The system calculates resource availability from current Work Orders, Operations, and Workstation schedules.
- Takes into consideration the Operation Time, Workstation Working Hours, and Holiday Lists to predict load versus available capacity.
- Assists in detecting bottlenecks and maximizing machine or labor use by distributing workloads between multiple Workstations.
- Users can choose whether to accept new production orders, schedule existing operations, or assign more resources depending on capacity analysis.
ERPNext Capacity Planning enables manufacturers to make intelligent decisions, prevent congesting production lines, and ensure regular delivery schedules.
1. Disable Capacity Planning
When this checkbox is checked, ERPNext will bypass capacity planning steps while creating and scheduling Work Orders.
- This option tells the system not to verify resource availability (Workstations, labor hours, etc.) when scheduling Operations.
- This is beneficial for less complex manufacturing environments or for companies that do not make use of automated scheduling and rather have manual planning.
But, disabling capacity planning can lead to over-scheduling or conflicts between production schedules if the resources are not tracked manually.
2. Permit Overtime
When this feature is enabled, ERPNext supports production-related documents such as:
- Work Orders
- Job Cards
- Operations
To be planned and executed outside the prescribed working hours of a Workstation. This offers flexible timing, especially useful when urgent orders need to be finished or where additional shifts are added for a limited time.
3. Allow Production on Holidays
When activated, ERPNext enables the scheduling and conduct of production work even on holidays, as specified within the Holiday List that is designated for the concerned Workstations or Employees.
This setting is crucial for:
- Round-the-clock manufacturing units
- Seasonal production surges
- Special or emergency production runs
When disabled, production tasks falling on a holiday will be blocked unless rescheduled manually.
4. Capacity Planning For (Days)
This field establishes the forward-looking planning window for capacity planning.
- e.g., typing "15" will tell the system to look ahead and plan for capacity use 15 days from the present date.
- This assists in production load forecasting, advance scheduling of operations, and locating bottlenecks in advance.
The value entered here directly impacts the accuracy and efficiency of ERP Next’s automated scheduling.
5. Time Between Operations (Mins)
This setting determines the minimum buffer time (in minutes) between the completion of one operation and the beginning of the subsequent operation on a Workstation.
- Assists in allowing for setup, cleanup, or transition time between sequential activities.
- Facilitates realistic scheduling while preventing overlaps or unrealistic production schedules.
This parameter is particularly relevant in situations where there is a need for machine or workspace preparation between processes or when processing varying product types.
Default Warehouses for Production
These default warehouse settings automatically fill Work Orders with the proper warehouses, making production and tracking inventory easier.
1. Default Work In Progress Warehouse
This is the warehouse in which semi-finished (in-process) goods are placed temporarily while it is being produced.
- Automatically pulled into the 'Work In Progress Warehouse' field in Work Orders.
- Materials moved in for manufacturing are shifted here prior to the production of finished goods.
- Facilitates monitoring of completed WIP inventory value in the accounting module.
2. Default Finished Goods Warehouse
The place where the finished goods are kept after production has been completed.
- Automatically populated Finished Goods Warehouse in the 'Target Warehouse' field of the Work Order.
- Keeps accurate inventory valuation and stock availability for sale or delivery.
- Finished goods transferred here via the 'Manufacture' stock entry.
3. Default Scrap Warehouse
Kept for unusable or scrap material generated during the process.
- Auto-populated in the 'Scrap Warehouse' column of Work Orders.
- Employed for cost accounting and reporting purpose for waste or defective items separately.".
- Prevents mixing of production scrap with usable inventory.
Over Production for Sales and Work Order
ERPNext provides the ability to set tolerances for overproduction, so there is flexibility to accommodate unexpected output or creation of buffer stock.
1. Overproduction Percentage For Sales Order
Defines the maximum percentage by which the actual produced quantity may be more than the committed quantity in the Sales Order.
- Of benefit when some buffer or additional quantity is required for defects, packaging faults, or customer flexibility.
- Automatically verifies during Work Order submission to prevent the overproduced amount going beyond the allowed limit.
For instance, if the Sales Order is 100 units and the value here is 10%, you would be able to produce 110 units.
2. Overproduction Percentage For Work Order
Establishes the percentage of production that may be more than what the Work Order itself specifies.
- Allows for flexible production output where slightly increased yields are achieved owing to process or batch size limitations.
- The value is verified by the system in the Manufacture stock entry to avoid unnecessary overproduction.
For instance, if a Work Order of 500 units is raised with an overproduction allowance of 5%, production will be permitted up to 525 units.
Job Card
ERPNext Job Cards are documents used to capture the progress, consumption, and output of operations undertaken during production. The following settings facilitate better Job Card handling:
1. Add Corrective Operation Cost in Finished Good Valuation
If this is turned on, the cost of corrective operations—rework, re-inspection, or repair—will be added to the total cost valuation of finished goods.
- Corrective operations are typically extra steps aside from regular workflow because of quality or process problems.
- Assists in capturing true manufacturing cost when defects cause additional effort or material consumption.
2. Allow Excess Material Transfer
On activation, the Material Transfer button is still accessible once all the initially required raw materials have been used up against a Job Card.
- Allows further transfer of material, particularly where the initially released material was damaged, expired, or not available.
- Allows production without interruption without having to alter the BOM or halt work due to stock variance.
Other Settings
These environments offer automaton and configuration flexibility within the manufacturing process, notably Work Orders and BOM management.
1. Update BOM Cost Automatically
When activated, the cost of the Bill of Materials (BOM) is automatically updated from the most current available raw material rate.
- The cost is computed using the Valuation Rate, Price List Rate, or Last Purchase Rate, whichever is available.
- Useful in keeping BOM costs in line with up-to-date material prices, enabling correct pricing and profitability analysis.
2. Set Operating Cost / Scrap Items From Sub-assemblies
This facility is applicable in multi-level BOMs with sub-assemblies:
- When checked, the operating costs (labor, machine hours, etc.) and scrap items of sub-assemblies are imported into the finished goods valuation straight away, regardless of whether Job Cards are automatically generated for all sub-assemblies.
- Beneficial in case of not having detailed Job Cards. Their costs, however, still need to be accounted for. in the parent item.
3. Generate Serial No/Batch from Work Order
When enabled, enabled ERPNext will generate Serial Numbers or Batch Numbers for the manufactured goods upon Work Order submission.
- Guarantees compliance and traceability of serialized or batch-controlled items without needing manual intervention.
- It applies only if the finished goods item is configured as "Has Serial No" or "Has Batch No" in the Item Master.