Wednesday, February 12, 2020
Ending Production Orders in D365 F&O
Posted by Harald Gangso
Most users working with production orders in Dynamics 365 for Finance and Operations (D365 F&O) are aware of the process for ending a production order in D365. Ending a production order changes the order status to Ended, and resetting the order status or posting additional transactions against the order are no longer permitted.
This post highlights the process of ending production orders and shows how to review the production order postings before ending the production order.
D365 F&O does not allow the ending of production orders until the order status is “Reported as finished,” which happens when all components have been picked using production picking lists, operations have been completed using route cards or job cards, and the finished goods have been reported as finished. To end a production order, the user selects End on the production order form.
A new dialog opens, and on this form, the user enters the date for ending the production order.
Ending the production order is a very straightforward and simple process, so why is resetting the status not allowed? While the process appears very simple, several updates happen in the background when the order is ended.
Ending a production order financially updates all related inventory transactions, posts the necessary ledger transactions to clear out WIP, and calculates and posts the production variances for finished goods using the standard costing method. The posted variances can be reviewed on the production order on the Manage Costs tab by selecting Variance.
The Production Variance form shows the calculated variances by cost group and type of variance.
My clients often ask for advice regarding who should end the production order, as the process has financial impact, especially to the product costing. Production orders should not be ended until all transactions against the order are processed because it is not possible to post any corrections against an ended order. Although D365 F&O does not allow ending production orders that have not reached the status “Reported as finished,” the system may not flag all types of data entry errors — for instance, when more than intended is picked against the production order and therefore a review of transactions is recommended.
I recommend that companies use the Calculation Details form on the production order to review the transactions before ending the order. The form is on the production order on the Manage Costs tab.
On this form, the Overview Costing tab gives a nice view of the estimated and realized cost of all cost components.
The estimated consumption and estimated cost amount are based on the bill of materials (BOM) and route on the production order, and the realized consumption and realized cost amount are based on posted transactions. It is important to note that if the production control parameter “Defer updates of cost calculation until production order reaches ended status” is selected, the realized consumption and cost amount are not updated until the production order is ended.
By using the price calculation form, it is easy to identify the BOM lines and operations with discrepancies between the estimated and realized cost amount. Any significant discrepancies should be explained, and necessary corrective actions should be taken. Once all transactions are posted correctly, the production order can be ended.
The data on the Price Calculation form is also available on the Cost Estimates and Costing report in the Production Control module.
In conclusion, production orders should be ended in conjunction with the final review of production order postings. The users responsible for the operation should understand the impact to the product costing and to the general ledger postings.