Cut to Size Materials
Handling materials that can be cut to size is challenging from a planning and usage perspective. Below are some considerations when choosing the appropriate stocking unit of measure.
- Consider a Demand Driven stocking policy with a sufficient amount of safety built into your Potential Monthly Demand value
- Add this Item ID to a Cycle Code and regularly perform quantity counts to ensure that you have useable pieces that are included in your overall on hand quantity
- Always try to use the smallest useable pieces first and keep your bone pile of cut pieces to a minimum
Specific KB Example
- A Purchased Item = PVCPipe 10 Feet
- The PVC pipe is used in various lengths in different BOMs
Stocking UM Choice
You must make a decision on your stocking unit of measure that best matches your projected usage patterns. If you have fairly predictable usage sizes, you can choose to define your Stocking UM as Each, and handle various cut sizes with specific Item IDs for allowable lengths.
Approach One - Stocking UM in Eaches
Stocking Unit of Measure = Each
- Item ID = PVC-10
- Purchasing UM = EA Supp Price = $10.00 for a 10 Foot PVC Pipe
- Stocking UM = EA
1A - Do your best to consume full pieces in your BOMs/Jobs
- Focus your BOM to issue and consume full pieces in production
- For a BOM that needs a 1 foot piece, define the BOM usage quantity as .1 for the Item ID = PVC-10. You will issue decimal quantities of your 10 foot piece.
- MRP Settings for Parent Item
- Consider setting the Order Multiple of the parent Item to 10. This would ensure that you are issuing full pieces to the Job because the Job quantities would be in increments of 10
- If you check the Job/PO Rounding it will make sure that you are always issuing full pieces to a Job. This will round up your usage quantity to whole pieces. If you intend to track decimal pieces, you should uncheck this box.
- If you have remnant pieces of your PVC-10 item at the end of the job
- You can choose to track decimal pieces in inventory.
- The downside of this is that MRP does not know if the cut pieces are too small to be useable in Jobs. All decimal values will be assumed to be contiguous quantity.
- You can consider receipting the remnant pieces as an output to a different Item ID to track your remnant pieces.
- You potentially could make unique Item IDs for various allowable sizes and receipt to those Item IDs.
- Or you potentially create an Item ID for the pieces in linear Feet and return a remnant piece in feet. Maybe add a Lot Number and label each remnant piece by its respective length to help give a better snapshot of your available odd pieces
- NOTE: This would mean that in order to issue these pieces in other jobs you would manually need to add the item IDs to Jobs as needed to issue the remnant pieces that you have in stock.
- You can choose to track decimal pieces in inventory.
1B - Create a BOM to Cut your Purchased Part into Distinct Pieces
The challenge is how to best handle cutting the 10 foot PVC pipe to different sizes. To do this you would create Item IDs for each allowable size of the PVC Pipe. For example, we have some jobs that use a 5 foot PVC, 3 foot PVC and 1 foot PVC pieces. Refer to the Sample Company BOM for the Parent Item ID = PVC-05
Create a M Item BOM for the most used piece as the primary output
- Item ID = PVC-05 Description: PVC Pipe 5 Feet
- Create a BOM for this parent item
- MRP Tip: The primary output Item ID should be the piece length that you use the most in Jobs. MRP will only trigger Jobs based on demand for the primary output
- Secondary output demand do not create jobs
Create 2 M Item Secondary Output Items
- Item ID = PVC-03 Description: PVC Pipe 3 Feet
- Item ID = PVC-02 Description: PVC Pipe 2 Feet
- The Input Component is the purchased item 10 foot pipe (Usage Qty = 1 of PVC-10)
- This is the pipe that will be issued to the Job and then cut into a 5 foot, 3 foot, and 2 foot pieces
- The primary output is the 5 foot piece (this is the length most commonly used in other Jobs)
- The secondaries are a 3 foot piece and 2 foot piece
- Adjust the Cost Ratio to reflect their percentage of the overall 10 foot purchased pipe
BOM Output Cost Inquiry
- The $10.00 purchased 10 foot PVC pipe is allocated to each of the respective outputs
- Labor from routings are also apportioned to the outputs
- Create a Job for the PVC-05 Item
- Issue the 10 foot purchased part to the Job
- Cut into a 5 foot, 3 foot, and 2 foot pieces
- Receipt the respective output pieces into inventory. These pieces can now be used in other BOMs/Jobs
Approach Two - Set the Stocking Unit of Measure to Linear Feet
- You may choose a smaller stocking unit of measure for your PVC Pipe
- In our example, we could set our stocking UM as linear Feet and the Purchasing UM remains EA for the 10 Foot Pipe
- In our BOM we define usage quantities in Feet
Stocking Unit of Measure in linear feet
- Item ID = PVC-Feet
- Purchasing UM = EA Supp Price = $10.00 (1 10 foot Pipe)
- Stocking UM = FT
A potential downside to tracking in linear feet
- DBA will see all quantities in inventory as contiguous
- For instance, if your smallest qty usage size in your BOMs is 2 feet and you have 100 1 foot pieces in inventory, the system will see that you have 100 feet available, even though all of the pieces are are too small to use
Strategies to handle decimal quantity pieces
- Always issue and use the smallest decimal pieces to jobs first. Do your best to keep your cut pieces bone pile to a minimum
- If you are left with a piece or pieces that are too small to use, consume these in the material costs of the job and do not return to inventory
- Periodically perform cycle counts of this item and count out the un-useable pieces
- Inventory adjust out piece quantities that are too small for use