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.

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.

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:

Term

Definition

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 supplier 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 supplier 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.

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.

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.