Setting Up Production Areas

This chapter provides an overview of production areas and discusses how to define production areas.

Understanding Production Areas

Set up production areas before you begin tracking manufacturing processes on the shop floor. Define the production area’s default WIP locations, the WIP, rework and teardown accounts, items that are manufactured within each production area, and how each item will be manufactured.

You can associate multiple items with a production area, or you can associate an item with multiple production areas. For example, you can designate one production area for regular production of an item and another for rework or teardown production.

You can define how to move components to the shop floor and how to track production information. For example, do you want to use discrete orders or do you want to track production by day and shift?

When planned orders are generated, they are associated with a production area defined for an item. A production area can:

Represent a production line, production cell, or manufacturing process.
Contain all of the work centers necessary to manufacture an item.

Before defining the production area and item relationship, determine how you plan to use production areas to track production on the shop floor:

Decide whether you plan to use discrete production orders (production IDs) or use production schedules to manufacture repetitively.
Determine how you plan to issue components to production for each production area and item combination.
Define a set of WIP accounts for each production area.

Note. You cannot delete production areas.

Tracking Production

After you determine which items are going to be manufactured in each production area, decide whether you want to use discrete production IDs or production schedules to manufacture repetitively in each production area.

Use production IDs if:

Your company plans to perform completions at intermediate operations to track material and labor and machine usage.
A subcontractor will perform any operation on the item’s routing.

Selecting the Component Issue Method for Each Item

When defining production areas, determine how you want to issue components to production for each item. PeopleSoft Manufacturing provides you with these component issue methods:

Issue
Kit
Replenish
Use component's

Issue Method

With this method, use picking plans to translate requested stock into material picking instructions for stockroom processing. Once the material has been pulled and the picking plan is confirmed, the system decrements the picked quantities from the quantity available at the stockroom location and issues it to the WIP location. PeopleSoft Manufacturing supports PUSH and PULL picking methods:

PUSH picking plan

The system determines the locations from which to pick each item and creates a hard reservation for this item when you generate the pick list. A hard reservation reserves the item in a specific location. Once a hard reservation exists, the item is unavailable for other inventory transactions.

PULL picking plan

The system suggests locations from which the stockroom personnel can pull the items. The stockroom personnel then enters the actual location information. When using the PULL method, PeopleSoft Manufacturing does not make a hard reservation at the time the picking plan is generated. Also, the system does not block items from inclusion in other inventory pick lists until after the picking plan is reviewed and confirmed.

Kit Method

Use this method to issue material directly to a production ID rather than to the WIP location, thus preventing other orders from using the material. The kitted material is charged to the production order upon material release, rather than backflushed when an operation or order is completed. The Kit method is the default method for issuing end items for rework and teardown production. The system issues any additional components required for rework or teardown production using the issue method set for each item on the production area and item level. The Kit method is generated by default from the Define Business Unit Item - Manufacturing: General page; you can override it on the Production Area - Item Detail page.

Note. The Kit method is valid with production IDs only.

The Kit method relies on PUSH and PULL pick plans, as does the Issue method. If a completed end item is used on a higher-level end item and the component is issued using the Kit method, you can route the completed end item directly to the production ID.

Replenish Method

In some cases, you may want only a fixed quantity to sit on the shop floor, especially when space is a constraint. Additionally, there may be some items that don’t need to be allocated to specific orders or to a production run. In these cases, use the Replenish method. This method assumes that you are stocking components in the WIP storage areas associated with the work center where you use the components. These components are typically stocked to a defined on-hand quantity that you establish. When the quantity on hand for an item falls below its minimum stocking quantity in that location, a Kanban request (if using PeopleSoft Flow Production) or workflow notification is sent indicating that the location must be replenished.

Before you move components into the replenishment locations in the production area:

Specify the replenishment point for each component that you manage using the Replenish method.
Specify the issue multiple used to replenish the WIP location.
Define both of these parameters for each WIP location using the Prdn Replenish Locations - Prdn Replenish Detail page in PeopleSoft Inventory.

If you are using PeopleSoft Flow Production:

Define other replenishment defaults using the Prdn Replenish Locations - Prdn Replenish Detail page to define how the replenishment is triggered for each WIP location using the WIP Replenishment Mode: Backflush, Kanban Card, or Manual.
Specify how the replenishment request is communicated with the WIP Replenishment Method: Pull List, Pull Ticket, or Workflow.
Determine if the material comes from an inventory location, feeder line, or vendor using the WIP Replenishment Source.

If you are using PeopleSoft Flow Production, you can also replenish the WIP locations directly from an inventory location, feeder line, or vendor using Kanban cards or online replenishment requests.

Use Component's Method

To issue some components using one method and others using another method, select Use Component’s Method option when defining the component issue method for each production area and item.

To issue the components using any or all of the issue methods for a single end item, select Use Component’s Method. When using this method, the system looks at the component’s issue method defined at the business unit and item level to determine how to issue the component to the shop floor. Define the default by indicating the issue method for the item using the Item Attributes by Unit - Manufacturing Attributes page.

Understanding the Flow Production Process

Setting Up PeopleSoft Flow Production

Defining Items at the Business Unit Level

Setting Up WIP Accounts for Location Accounting

If you are using location accounting to provide financial visibility based on where the items reside, you must:

Indicate that location accounting is required for the business unit.
Define a set of account ChartFields for each storage area including WIP and inventory locations.
Define production area accounts for regular, rework, and teardown production.

Note. You should indicate that location accounting is required and define a set of account ChartFields when you set up the business units and inventory storage areas.

To use location accounting, define a set of account ChartFields, such as account, operating unit, department, product, and project ID for each storage area and production area. These are the accounts that the accounting line generation process debits or credits for material movement, earned conversion costs, and variance transactions. This tables lists some examples:

Transaction	System Debits	System Credits
Issue material to production	WIP storage area or location account	Inventory storage area or location from which material is issued
Backflushing of an item in the production area	Production area account for all material consumption	WIP storage area or location account
Kit item issued to production	Production area account	Material storage area account
Accounting for earned labor, machine costs, and applied overhead	Production area account	Earned labor or applied overhead accounts when you set up the account distribution
End items completed to stock	Account associated with the storage area where the completed items are sent	Production area account

The ChartField functionality provides the necessary features to write debit and credit transactions to the appropriate accounts depending on the type of production taking place.

Structuring Your Cost Management System

PeopleSoft Supply Planning Considerations

If you are using PeopleSoft Supply Planning, the system uses production area information to determine whether the item should be manufactured using production IDs or production schedules. When determining where the order should be produced, the system looks first for a production area that manufactures the item using the selected BOM and routing combination.

If there are multiple production areas defined for the BOM, routing, and item combinations, the system assigns the planned order based on the item’s primary production area. Set the primary production area on the Primary Production Area page.

If no production areas have been defined for the BOM, routing, and item combination, the default is the production area, as defined on the Define Business Unit Item - Manufacturing page.

See Also

Selecting the Primary Production Area

Prerequisites

Before you define production areas:

All WIP locations that you plan to use as production area default WIP locations must be defined as WIP locations using the Storage Areas page in PeopleSoft Inventory.

Define WIP accounts for each production type (Production, Rework, or Teardown) that you plan to perform in the production area.

Note. If you plan to use consigned items as components, define both owned and non-owned WIP locations. Consigned items are stored in non-owned WIP locations until they are consumed. Once consumed, if they are returned to stock, they’re returned to an owned location.
The items that you manufacture must be defined as approved, owned, and standard-costed manufacturing items in PeopleSoft Inventory.
All applicable transaction accounts and ChartFields must be defined.
Optionally define valid production options with the Production Option Maintenance components if you’re producing co-products and by-products.

Defining Items by SetID

Defining and Using ChartFields

Defining Production Options

Common Elements Used in This Chapter

Production Area	Area where the end item was manufactured.
WIP Location (owned and non-owned)	The default storage locations for a production area where material is issued or from where material is consumed.
Item	End item being manufactured.
Eff Date (effective date) and Obs Date (obsolete date)	Dates represent the effectivity of the BOM and routing combination set up in the Production Option Maintenance component.
Rate Qty per Shift (production rate quantity per shift)	Default for the daily shift quantity when you are maintaining production schedules.
	Click the Item Search button to access links to various other pages, such as: Item Search: To select a different item. Production Option Selection: To select a specific production option to be used to manufacture an item. Primary Production Area: To designate a primary production area where the item is typically manufactured. Component/Output Mix Inquiry: To view input and outputs by operation sequence for the item. BOM Maintenance: To modify the BOM information for an item. Routing Maintenance: To modify the routing information for an item.

Defining Production Areas

To define and maintain production areas, use the Production Area Maintenance (SF_PRDN_AREA) component.

This section discusses how to:

Define general information about the production area.
Select the primary production area.
Define production area accounts.
Define production area and item detail.
Delete production area and item combinations.

Note. The system defines production areas at the business unit level.

Pages Used to Define Production Areas

Page Name	Object Name	Navigation	Usage
Summary - Summary	SF_PRDN_AREA_SUM	Production Control, Define Production, Production IDs/Schedules, Production Area, Summary	Define and maintain general information for each production area, indicate default WIP locations, and identify items to be manufactured within a production area. Note. You receive a message if the range of items for the production area exceeds the default of 100.
Select Primary Production Area for this Item	SF_PRDNAREA_SEL_SP	Production Control, Define Production, Production IDs/Schedules, Production Area, Summary Click the Item Search button and click the Primary Production Area link.	Select the default location where the production item will typically be manufactured.
Production Text	SF_PRDN_AREA_HD_TX	Production Control, Define Production, Production IDs/Schedules, Production Area, Production Text	Associate text with any production area.
Production Area Accounts	SF_PRAREA_ACCT	Production Control, Define Production, Production IDs/Schedules, Production Area, Accounts	Define WIP accounts for production areas.
Item Detail - Detail	SF_PRDN_AREA_ITEM	Production Control, Define Production, Production IDs/Schedules, Production Area, Item Detail, Detail	Define production details for each item associated with a production area.
Area Maintenance - Item Detail - Item Text	SF_PRDN_AREA_IT_TX	Production Control, Define Production, Production IDs/Schedules, Production Area, Item Detail, Item Text	Attach production area and item text relating to specific items that are manufactured within a production area.
Production Areas for an Item (inquiry)	SF_PRDN_ITEM_INQ	Production Control, Define Production, Review Production Information, Production Areas for an Item	View all production areas in which an item is manufactured.
Production Text for Area/Item (inquiry)	SF_PRDN_ID_TX_INQ	Production Control, Define Production, Review Production Information, Production Areas for an Item, Production Text for Area/Item	View the text associated with the production area and item.

Defining Production Area Summaries

Access the Summary - Summary page.

WIP Location Owned and Non-Owned

Enter values for the production area. If you are producing items that include non-owned components, for example, you are the subcontractor and the customer is supplying the components, define a non-owned WIP location in addition to the owned WIP location. Additionally, if you receive items that are consigned to you by the suppliers, they must be stocked in a non-owned location until they are consumed in production.

Note. All consigned items are set up as non-owned. However, consigned manufactured items must be moved to owned WIP locations during the completions process.

If you are exclusively using owned components in the WIP location, you do not need to identify a non-owned WIP location. Owned inventory can only be issued from and received into an owned inventory location. Likewise, non-owned inventory can only be issued from and received into a non-owned inventory location.

Note. The transfer of consigned inventory from a non-owned location to an owned location results in the recognition of the payment liability.

The owned and non-owned WIP locations for a production area indicate the locations where material should be issued or consumed, if the component’s issue method is set to Issue or Replenish and any of these conditions exist:

No routing exists for the item.

An invalid WIP location is associated with any work center on the item’s routing.

The operation sequence on any of the item’s components is zero or nonexistent.

Storage Area

The system displays the number of storage levels in the Area, Level 1, Level 2, Level 3, and Level 4 fields that have been defined for each storage area.

Effectivity Tab

Item	Select an item. You can associate one or more items with each production area. You can specify any approved item, except floor stock, planning, and expensed items. Note. When adding an end item with an item status of Hold or Discontinue, you receive a warning message.
	Click the Detail button to access the Item Detail page.
BOM and Routing	Enter values for these fields. If you are maintaining production IDs, you can associate BOM and routing code combinations, along with their effectivity dates, with the production area and item combination. This is the default that appears when manually adding a production ID for the area and item combination. Change the BOM or routing code to manufacture the item using an alternate BOM or routing. If you’re maintaining production schedules, the BOM and routing codes that you define are the BOMs and routings used to manufacture the item in the production area and cannot be changed on the individual production schedules. If the BOM and routing combinations for the item have been defined using the Production Option Maintenance component: You can select from those predefined production options which can have effective-dated combinations. You can assign the combinations to production areas in the Production Option Maintenance component. Note. If you have not used the Production Option Maintenance component to define the combinations for the item, you can select from any valid BOM or routing combination, but you won’t be able to assign effective dates. There’s a difference between using BOM and routing combinations when maintaining production IDs and using them when maintaining production schedules. The BOM and routing area combination for production IDs is really a default combination, depending on the effective date, but it can be overridden manually. For production schedules, the BOM and routing and area combination is the combination that is actually used on that schedule. It is based on the business unit and item production area for which the schedule was created. You cannot override the BOM and routing area combination if you are using production schedules. Both production IDs and production schedules use BOM and routing area combination effective dates if they are defined. The routing indicates whether this is the primary routing (routing code 1) or alternate routing (routing codes 2 through 99). You can leave this field blank or select a predefined BOM and routing for the item. The routing that you specify should designate the routing used to manufacture the item in this production area. If a primary routing exists for this item, the system automatically provides this routing as a default. Note. Routing codes cannot be entered for expensed or planning items. When defining a routing code for the item, the system verifies the item’s planning attributes to determine whether the item is scheduled using the item’s routing or a fixed and variable lead time. When a lead time is used, the system issues a warning that the routing code specified will be ignored for planning and scheduling purposes When a routing is used for scheduling and one is not specified with the item, the system issues a warning that the item cannot be scheduled. If you have selected the Valid Production Options only check box in the Production Option Control group box on the Define Business Unit Item - Manufacturing page in PeopleSoft Inventory, you can only define BOM and routing combinations set up in the Production Option Maintenance component. Note. Associate a production area to a production option.
Eff Date (effective date)	This field is available if you have the same BOM and routing combination with multiple effective dates (such as seasonal changes for multiple years).

Note. There can be only one valid BOM and routing combination effective for an item per production area for a specific time period. However, you can create multiple combinations providing the effectivity dates do not overlap.

Other Tab

Revision	Select the revision for the item if the item is revision-controlled and you want to manufacture a specific configuration of the item. This revision becomes the default when adding production IDs or production schedules. The revision defined on the production ID or production schedule determines the BOM used when producing the item. When you leave this field blank and no revision is specified on the production ID or the production schedule, the system uses the due date of the production to determine which BOM to use to produce the item. If the item’s effectivity is not revision-controlled, this field is unavailable.
Maintain PID (maintain production ID)	Select if: You are planning to maintain production IDs for this item. Incremental backflushing or completions are going to be performed. Count points have been defined on the item's routing. A subcontractor is to perform an operation on the item’s routing.
Primary	If this production area is the item’s primary production area, this check box is selected and unavailable. Select the primary production area on the Area Maintenance - Summary: Primary Production Area page.
Rate Qty per Shift (production rate quantity per shift)	Use this field only for production schedules. It is unavailable if the Maintain PID check box is selected.

See Also

Defining Production Options

Maintaining Bills of Material

Maintaining Engineering Bills of Material

Defining Manufacturing Information for an Item

Maintaining Tasks

Establishing Configured Production Costs

Selecting the Primary Production Area

Access the Select Primary Production Area for this Item page.

The primary production option identifies the primary production area for a specific BOM and routing code combination. This occurs because PeopleSoft Supply Planning enables you to plan for multiple BOM and routing code combinations. This primary production area option enables PeopleSoft Supply Planning to determine the production area that the production ID or production schedule to be manufactured.

This example illustrates how this works:

Production Area	BOM Code	Routing Code	Primary Production Area?
AREA1	1	1	Yes
AREA2	1	1	No
AREA3	2	2	Yes
AREA4	2	2	No

Using this example, if PeopleSoft Supply Planning generates one supply record (such as a production ID) with a BOM and Routing code equal to 1 and one with a BOM and routing code equal to 2, then the system would use AREA1 for the first supply record and AREA2 for the second supply record.

Note. Because primary production areas are defined at the BOM and routing combination level and these combinations can be effective-dated, the production area is the primary production area only for the dates specified on the combination.

Primary Prdn Area (primary production area)

If you enter the page and the correct primary production area is selected, then click the Cancel button to return to the Area Maintenance - Summary page.

To change the primary production area, select the check box next to the production area that you want to designate as the primary location where this item is manufactured. When you click OK, the system accepts your changes.

Defining Production Area Accounts

Access the Production Area Accounts page.

ChartFields that you define on this page are used as the debit or credit accounts when material is received or issued from the production ID or production schedule assigned to the production area. The accounts that you assign here track in-process inventory.

Important! Before you can associate accounts to the production area, you must first define ChartFields using the Define Values page. Select Set Up Financials/Supply Chain, Common Definitions, Design ChartFields, Define Values.

Location Accounting Required	To use location accounting, select the Location Accounting option when defining options on the PeopleSoft Inventory Options page.
Production Type	Select to define ChartFields. You can define a set of accounts for production, rework, and teardown production.
Cost Element	To define production area ChartFields, enter a different ChartField for each element of an item’s cost, apply a single ChartField to all cost elements, or enter a combination of the two. For example, if item A has a material cost element of 100 and item B has a material cost element of 101, define ChartFields on this page for both cost elements. If you want to use the same ChartField, regardless of the cost element, leave the field blank.
Cost Element, Account, Alternate Account, Operating Unit, Fund Code, Department, Program Code, Class Field, Budget Reference, Product, Project, Affiliate, Fund Affiliate, and Statistics Code	Select the ChartFields appropriate for this production area. When you create accounting entries, the system debits the ChartFields specified here for any material consumption, kit issues, earned labor, applied overhead, or favorable variances, and credits the ChartFields for any end item completions to stock or to another production area, end item scrap, or unfavorable variances. Enter a value if you want the transaction quantity incorporated as part of the accounting information. Note. If you have the Combo Edit (combination edit) option set on the PeopleSoft Inventory Business Unit Options page, the system performs ChartField combination edits that you enter on this page.
Save	The system verifies that the ChartField combinations are valid. If the ChartField combinations that you enter are valid, the system accepts the entry. If the ChartField combinations that you enter are not valid, the system displays a message giving you a count of the ChartField combinations that are in error, with a check mark next to them. You can correct the combinations before you proceed.

See Also

Setting Up Location Accounting

Editing ChartField Combinations

Defining Production Area and Item Detail

Access the Item Detail - Detail page.

Owned and Non-Owned WIP Locations

You can change the values for these fields.

Area Maintenance Detail

Item	Appears for each production ID or production schedule. The item cannot be changed or deleted once a production ID or production schedule has been created for the item.
Rtg Itm (routing item)	Displays the routing used to manufacture this item. The end item may have its own routing or reference another item’s routing for its manufacturing methods. The referenced routing can be assigned directly to the end item, its item group, or its item family.
BOM and Routing codes	You can change the values for these fields.
Revision	(Optional) Select a revision to use for this item.
Rate Qty per Shift (production rate quantity per shift)	Whether you can enter a whole number or a decimal in this field depends on the item’s unit of measure and quantity precision combination defined in PeopleSoft Inventory.
Source Cd (source code)	Displays the value for the assembly item. Only items with a source code of Make or Buy can be assigned to a production area.
Prdn Opt Cntl (production option control)	Displays the value that indicates whether the item has been defined as using production options with the Item Attributes by Unit - Manufacturing page.
Maintain Production IDs	Clear this check box if there is no existing production for this item and if you want to change from maintaining production IDs to maintaining production schedules.
Primary Prdn Area (primary production area)	The check box is selected and unavailable if this is the item’s primary production area. Select the primary production area on the Primary Production Area page accessed through the Area Maintenance - Summary page.
Component Issue Method	Indicates how the end item’s components are issued for production. See Selecting the Component Issue Method for Each Item. Note. The component issue method can be different in each production area for the same item.
Status	Select Active or Inactive. If you select Inactive, then new production IDs or production schedules cannot be defined for the production area or item. However, you can maintain any production that you’ve previously defined, and track any existing production in process until it’s completed and closed.
Completion Warnings	Select a value to indicate the situations in which warnings should be sent during the completions process: Pending Component Issue Qty: Select if there are pending component issue quantities. Outstanding Comp. Issue Qty: Select if there are outstanding component issue quantities.

Defining and Viewing Master Routings

Selecting the Primary Production Area

Deleting Production Area and Item Combinations

You can delete an existing production area and item combination only if there are no production IDs or production schedules for that production area or item.

You can archive and purge production IDs and production schedules by using the Production Data Archiving process.

See Archiving and Purging Production Data.