[docs] moved into folders

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Rushabh Mehta
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{
"_label": "Bill of Materials"
}
---
At the heart of the Manufacturing system is the **Bill of Materials** (BOM). The **BOM** is a list of all material (either bought or made) and operations that go into a finished product or sub-Item. In ERPNext, the component could have its own BOM hence forming a tree of Items with multiple levels.
To make accurate Purchase Requests, you must always maintain your correct BOMs. To make a new BOM:
> Manufacturing > Bill of Materials > New BOM
In the BOM form:
- Select the Item for which you want to make the BOM.
- Add the operations that you have to go through to make that particular Item in the “Operations” table. For each operation, you will be asked to enter a Workstation. You must create new Workstations as and when necessary.
- Add the list of Items you require for each operation, with its quantity. This Item could be a purchased Item or a sub-assembly with its own BOM. If the row Item is a manufactured Item and has multiple BOMs, select the appropriate BOM.You can also define if a part of the Item goes into scrap.
Workstations are defined only for product costing purposes not inventory. Inventory is tracked in Warehouses not Workstations.
> The “Full BOM” section will list all the Items of that BOM right up to the lower most child node. This table is automatically updated if any of the BOMs of the sub-Items are updated.

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{
"_label": "Manufacturing"
}
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The Manufacturing module in ERPNext helps you maintain multi-level Bill of Materials (BOMs) for your Items, help you in Product Costing, plan your production via Production Plan, create Production Orders for your manufacturing shop floor and plan your inventory by getting your material requirement via your BOMs (also called Material Requirements Planning MRP).
### Types of Production Planning
Broadly there are three types of Production Planning Systems
- Make-to-Stock: In these systems, production is planned based on a forecast and then the Items are sold to distributors or customers. All fast moving consumer goods that are sold in retail shops like soaps, packaged water etc and electronics like phones etc are Made to Stock.
- Make-to-Order: In these systems, manufacturing takes place after a firm order is placed by a Customer.
- Engineer-to-Order: In this case each sale is a separate Project and has to be designed and engineered to the requirements of the Customer. Common examples of this are any custom business like furniture, machine tools, speciality devices, metal fabrication etc.
Most small and medium sized manufacturing businesses are based on a make-to-order or engineer-to-order system and so is ERPNext.
For engineer-to-order systems, the Manufacturing module should be used along with the Projects module.
#### Manufacturing and Inventory
You can track you work-in-progress by creating work-in-progress Warehouses.
ERPNext will help you track material movement by automatically creating Stock Entries from your Production Orders by building form Bill of Materials.
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### Material Requirements Planning (MRP):
The earliest ERP systems were made for manufacturing. The earliest adopters were automobile companies who had thousands of raw materials and sub-assemblies and found it very hard to keep track of requirements and plan purchases. They started using computers to build the material requirements from forecasts and Bill of Materials.
Later these systems were expanded to include Financial, Payroll, Order Processing and Purchasing and became the more generic Enterprise Resource Systems (ERP). More recently Customer Relationship Management (CRM) was added as a function and is now an integral part of ERP systems.
These days the term ERP is used to describe systems that help manage any kind of organization like education institutes (Education ERP) or Hospitals (Hospital ERP) and so on.
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### Best Practice: Lean Manufacturing
The state of art manufacturing philosophy (the rationale behind the planning processes) comes from Japanese auto major Toyota. At the time when American manufacturers depended on MRP systems to plan their manufacturing based on their sales forecasts, they turned the problem on its head and discovered a leaner way of planning their production. They realized that:
The biggest cause of wastage in manufacturing is variation (in product and quantity).
So they standardized their products and sub-assemblies and sold fixed quantities based on what they produced or did not produce based on what they sold. This way, they had an extremely predictable and stable product mix. If they sold less than planned, they would simply stop production.
Their card signaling system kanban, would notify all their suppliers to stop production too. Hence they never used any of the complex material planning tools like MRP to play day-to-day material requirements, but a simple signaling system that said either STOP or GO.
They combined this system with neatly managed factories with well labeled racks.
Like we discussed before, small manufacturing companies are usually make-to-order or engineer-to-order and can hardly afford to have a high level of standardization. But that should be the aim. Small manufacturing businesses should aim for repeatability by innovating processes so that there is a common platform for products.

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{
"_label": "Production Planning Tool"
}
---
Production Planning Tool helps you plan production and purchase of Items for a period (usually a week or a month).
This list of Items can be generated from the open Sales Orders in the system and will generate:
- Production Orders for each Item.
- Purchase Requests for Items whose Projected Quantity is likely to fall below zero.
To use the Production Planning Tool, go to:
> Manufacturing > Production Planning Tool
The Production Planning Tool is used in two stages:
- Selection of Open Sales Orders for the period based on “Expected Delivery Date”.
- Selection of Items from those Sales Orders.
- Click on “Raise Production Orders”
The tool will update if you have already created Production Orders for this Item against this Sales Order (“Planned Quantity”).
You can always edit the Item list and increase / reduce quantities to plan your production.
> Note: How do you change a Production Plan? The output of the Production Planning Tool is the Production Order. Once your orders are created, you can change them by amending the Production Orders.

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{
"_label": "Production Order"
}
---
Production Order (also called as Work Order) is a document that is given to the manufacturing shop floor by the Production Planner as a signal to produce a certain quantity of a certain Item. Production Order also helps to generate the material requirements (Stock Entry) for the Item to be produced from its **Bill of Materials**.
The **Production Order** is generated directly from the **Production Planning Tool** based on Sales Orders. You can also create a direct Production Order by:
> Manufacturing > Production Order > New Production Order
- Select the Item to be produced (must have a Bill of Materials).
- Select the BOM
- Select Quantities
- Select Warehouses. WIP (Work-in-Progress) is where your Items will be transferred when you begin production and FG (Finished Goods) where you store finished Items before they are shipped.
- Select if you want to consider sub-assemblies (sub-Items that have their own BOM) as stock items or you want to explode the entire BOM when you make Stock Entries for this Item. What it means is that if you also maintain stock of your sub assemblies then you should set this as “No” and in your Stock Entires, it will also list the sub-assembly Item (not is sub-components).
and “Submit” the Production Order.
Once you “Submit”, you will see two more buttons:
1. Make Transfer: This will create a Stock Entry with all the Items required to complete this Production Order to be added to the WIP Warehouse. (this will add sub-Items with BOM as one Item or explode their children based on your setting above).
1. Back Flush: This will create a Stock Entry that will deduct all the sub-Items from the WIP Warehouse and add them to the Finished Goods Warehouse.
When you Back Flush your Items back to the Finished Goods Warehouse, the “Produced Quantity” will be updated in the Production Order.
> Tip: You can also partially complete a Production Order by updating the Finished Goods stock creating a Stock Entry and selecting “Back flush” as the type.