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When is it a good time for a formula to explode?

INSIGHT ARTICLE

An effective formula process can reduce costs related to inaccurate part information, as well as increase material consumption efficiencies when setup properly. Within Microsoft Dynamics 365 finance and supply chain management, a multitude of formulas can be created and utilized for production purposes. RSM US LLP has built upon this functionality to ensure that formulas related to food production (such as dairy) explode according to business best practices.

A formula is a list of components, ingredients and work in process (WIP) items that are needed to produce or manufacture a product. A formula is typically in a hierarchy format with the finished produced product on the formula header and the components and materials make up the formula lines. When we refer to a formula “explosion” it relates to the displaying  the formula components.. A fundamental requirement within the dairy industry is to track milk components such as butterfat, protein, other solids, and skim. RSM has leveraged Dynamics 365 functionality and expanded it so that the user only interacts with explosion item which in the dairy industry is milk. Receivers and operators on the floor can transact in milk pounds over having to manually calculate and enter in component pounds.. The system is able to identify that the product entered is linked to components and automatically “explodes” this to display and financially track the component inventory.

For a simple example, the user might enter “1% Milk” as the product to be produced. The BOM component is “raw milk;” however, the components that make up raw milk are butterfat and skim milk.

Automatically, the system knows that it will consume from inventory butterfat and skim milk components at the ratio specified within the formula and specified batch attributes in order to produce 1 percent milk. At this time, the components have “exploded” within the formula. The user doesn’t need to worry about knowing this information, all they have to do is input the amount of “raw milk” and associated batch number being consumed to produce the finished product. RSM’s key functionality completes the calculation behind the scenes for them.  

Key benefits include:

  • System calculates and displays the component explosion automatically
  • User interaction is easy to understand
  • The formula explosion can be leveraged during sales order, production order and purchase order processing
  • Inventory can be tracked at the component

ERP system solutions are not all the same. Critical functionality such as formula explosion and implosion are essential to food and beverage manufacturers. If you are researching an ERP solution for your business, look for key functionality such as production recipe, blending, grower accounting, producer payroll and execution capabilities like the one described above.

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