Sub Production Concept Pegged Supply BOM 1710677054

4/13/2023 PEGGED SUPPLY-BOM
Sub-Production Concept
Production Control -Discrete Manufacturing in D365
Fahad Ullah
FUNCTIONAL CONSULTANT-D365
Pegged Supply – Sub-Production - D365
1. Introduction Of Bill of Material and Formula
1.1. Bill of Material- Discrete Manufacturing
In the simplest terms, a BOM is a list of components (such as raw materials and sub-assemblies) required to produce a
finished good.
• Items created from a BOM can usually be disassembled into the original components; generally, these items are
not consumed or transformed in the production process.
• For this reason, BOMs are more common among discrete manufacturers than process manufacturers.
1.2. Formula- Process Manufacturing
In the simplest terms, a Formulas are generally used by process manufacturers. It is commonly use in in Batch order
rather than Production orders. Formulas more often combine different measurements of certain “ingredients”.
• Since these ingredients are combined, items that are created from a formula cannot easily be broken down into
the original ingredients
• A formula can be scaled up or scaled down.
• Formulas allow the use of co-products and by-products
• Formula lines can be allocated on a percentage basis vs designated quantity
• Formulas permit the utilization of catch weight items
Here we are going to Bill of material- Discrete Manufacturing,
2. Bill of Material and Bill of Material Version
2.1. Bill of Material
A bill of materials (BOM) defines the components that are required in order to produce a product. The components can
be raw materials, semi-finished products.
A BOM is an individual entity that is described by the following information:

• BOM ID.
• BOM name.
• The BOM lines that describe the components and ingredient.
2.2. Bill of Material Version
To relate a specific BOM to a product variant that can be produced, you will need to create a BOM version or formula
version.
The validity of BOM versions can be constrained by:

• Period
• Quantity
• Site
• Specific product dimensions
• Other criteria
3. Bill of Material Lines
BOM Line
Type
Pegged
Items Phantom Vendor
Supply
There are various BOM line types:
S. n BOM Line Description

Select the Item line type for materials or services that are directly consumed and that
1 Item
don't require further explosion or pegged supply.
When you want to create a sub production, a BOM line event kanban, or a direct
purchase order for any product variant that the BOM line references.
• The sub production, event kanban, or purchase order is created when you
2 Pegged supply
estimate the production order.
• The required item quantities are automatically reserved for the consuming
production order.
In general, a Phantom BOM is a non-stocked assembled item; it is a collection of
components and sub-components that can be reused to simplify the BOM creation
process for items.
3 Phantom
• In D365 when the BOM line type is set to Phantom, the line will explode during
master scheduling, planned cost calculation, or relevant to the case mentioned
above, production order estimation.
If the production process uses a subcontractor, and you want a supraduction or
4 Vendor
purchase order to be created automatically for the subcontractor.
Here we are going to consider the BOM line Pegged Supply
4. Scenario For Pegged Supply

Sony Company manufacturing unit is located in Germany. The product line is LCD of difference sizes, 40”, 60” or Standard
26” size. The total production turn-over per year 10 million and sale in a worldwide.
They are using Sub-Production approach during the production cycle.
4.1. List of Finished Goods Component
S. n Items Description
1 Finished Good LCD Standard Size 26"
2 Semi-Finished LCD Chips
3 Raw Material Main Board
4 Raw Material Power Supply Board
5 Raw Material T-Con Board
6 Raw Material power board
7 Raw Material Speaker assembly (speaker)
8 Raw Material 120Hz transfer plate
4.2. List of Semi-Finished Goods Component
S. n Items Description
1 Semi-Finished LED Chips
2 Raw Material Polarizing filter
3 Raw Material Glass plate
4 Raw Material Liquid crystal material
5 Raw Material Electrode on glass
5. PART 1: Pre-Requisite Setup for Pegged Supply
Part 1: Common Setups for Pegged Supply-Sub-

Production
There following Pre-Requisite Step for Sub-Production-Pegged Supply.
S. n Module Pre- Requisite Steps Description

1 Production Control Working time template Common
2 Production Control Working time calendar Common
3 Production Control Working days Common
4 Production Control Working time Common
5 Inventory Management Sites Common
6 Inventory Management Warehouse Common
7 Inventory Management Item model group Common
9 Inventory Management Item group Common
10 Product Information Management Storage dimension group Common
11 Product Information Management Tracking dimension group Common
12 Product Information Management Procurement category Common
13 Cost Management Calculation group Common
14 Product Information Management Release product Common
15 Production Control Cost group Common
16 Production Control Cost shared category Common
17 Production Control Cost category Common
18 Production Control Route group Common
6. Working Time Template
Create the working time template for the weekdays. In the below SS the working times of Production Shift are from
(8:00AM to 4:00PM)
Navigation: Production Control → Setup → Calendars → Working Time Template
1. On action pane, click a new button

2. Working time template, 8 hours
3. Name, 8 hours
4. Click, save button
S. N Day From To Efficiency Hour

1 Monday 8:00 AM 7:00 PM 100 8
2 Tuesday 8:00 AM 7:00 PM 100 8
3 Wednesday 8:00 AM 7:00 PM 100 8
4 Thursday 8:00 AM 7:00 PM 100 8
5 Friday 8:00 AM 7:00 PM 100 8
6 Saturday - - -
7 Sunday - - -
For Monday,
1. On Monday fast tab, click, add button

2. From 8:00 AM
3. To 4: 00 PM
For Tuesday,
1. On Monday fast tab, click copy day

2. Select, to weekday, Tuesday
3. Click, ok
(Important Note: Repeat same step of Monday to Tuesday, Wednesday, Thursday, Friday except Saturday, Sunday is
Holiday).
7. Working Time Calendar

A calendar can be assigned to an operations resource and describes the capacity (in hours) of that resource.
• The working times of the operations resource are determined by the calendar that is assigned to the resource
group that the operations resource is part of. We can set an effective date and an expiration date for the
assigned calendar.
• We can then assign more than one calendar to an operations resource. However, the dates of the assigned
calendars can't overlap, and the operations resource can be assigned only one calendar at a time.
• We can also assign a calendar to a resource group to specify the working times for both the resource group and
all the operations resources that are assigned to the resource group.
• The capacity of the resource group is calculated as the sum of the capacities of each operations resource that is
assigned to that resource group. The calendar that is assigned to a resource group can change over time.
In order to set up the Calendars for production, we need to make sure to create the working times and working time
templates.
Navigation: Production Control → Setup → Calendars → Calendars

2. Calendar, 8 to 4
3. Name, 8 Hours
5. On action pane, click working times
6. On action pane, click, compose working times
7. Select, calendar
8. From date: 4/7/2023
9. To date: 4/7/2024
10. Select, working time template 8 Hours
11. Click, ok button
8. Working Days
Navigation: Production Control → Setup → Calendars → Calendars
9. Working Times
Use the working time form to generate the working times for the calendar. The working times will be created based on
the setup times defined in the working time template.
10. Sites (Manufacturing Unit)
Site refers to the region or geographical location. Usually, warehouse resides in a site.
Navigation: Inventory → Setup → Inventory Breakdown → Site

2. Site, site-01
3. Name, Manufacturing Site 01
11. Warehouse
Warehouse refers to a physical location where the product is stocked.
S. n Warehouse Name Description

A finished goods warehouse is a space designed to store products
1 WH-01 Finished Good that have come off the production lines and are ready to be sold
or distributed.
A raw material warehouse is a facility that stores components or
2 WH-02 Raw Material materials that will subsequently be used on production lines to
manufacture products.
It also known as sub-assemblies are goods that have already
3 WH-03 Semi-Finished Good undergone some processing and are then used as inventory
inputs in the manufacture of finished goods.
The transit warehouse is a virtual warehouse where the inventory
4 Transit Transit Warehouse
sits while the product is in transit between two warehouses.
Quarantine Storage is the handling zone in each of our
warehouses, where the items that cannot be directly received
5 QW Quarantine Warehouse
due to various issues, are sent to for further processing.
• Quarantine orders let you block inventory.
11.1. Quarantine Warehouse
Navigation: Inventory → Setup → Inventory Breakdown → Warehouse
1. On action pane, click, a new button

2. Warehouse, QW
3. Name, Quarantine Warehouse
4. On general fast tab, select, site, site-01
5. Type, Quarantine
11.2. Transit Warehouse

2. Warehouse, Transit
3. Name, Transit Warehouse
5. Type, Transit
11.3. Finished Goods Warehouse

2. Warehouse, WH-01
3. Name, Finished Good
5. Type, Default
6. Select Quarantine Warehouse, QW
7. Select Transit Warehouse, Transit
11.4. Raw Material Warehouse

2. Warehouse, WH-02
3. Name, Raw Material
5. Type, Default
11.5. Semi-Finished Goods Warehouse

2. Warehouse, WH-02
3. Name, Raw Material
5. Type, Default
12. Item Model Group
Navigation: Inventory → Setup → Inventory → Item model groups

2. Item model group, FIFO
3. Name, First in-First Out
4. On costing method cost recognition fast tab, enable stocked product
5. Leger integration, enable, post physical inventory and post financial inventory
6. Recognition of cost, enable accrue liability on product receipt,
• Stocked Product:
Select this option to indicate that the product should be handled in inventory. Products that are handled in
inventory generate inventory transactions.
o These products can be included in cost calculations.
o On-hand quantities can also be maintained for these products.
o Stocked products include items and services.
o A service cannot be added to stock. However, the program requires that pro forma stock transactions be
generated for services that contribute to the inventory value of tangible goods. For example, pro forma
stock transactions must be generated if a service is used to subcontract production steps.
• Post Physical Inventory

Select this option to post physical item transactions in the ledger.
o The physical item transactions are posted as follows:
▪ Packing slips and product receipts are posted if the Post product receipt in ledger option is
selected in the Accounts payable parameters page.
▪ If the Post packing slip in ledger option is selected in the Accounts receivable parameters form;
and production orders that are reported as finished are posted.
▪ If the Post report as finished in ledger option is selected in the Production control parameters
page.
▪ If this option is cleared, packing slips, product receipts, and production orders that are reported
as finished are not posted in the ledger, regardless of the settings in the parameter setup pages.
• Post financial inventory
Select this option to post the updated financial value of items in the ledger.
o When a purchase order is invoice-updated, the value of the items is posted to the inventory receipt
account.
o When a sales order is invoice-updated, the value of the items is posted to the inventory issue and the
consumption accounts.
o The inventory value that is posted can then be reconciled with the related status accounts in General
ledger.
▪ If this option is cleared, when a purchase order is invoice-updated, the value of the items is
posted to the item consumption account, but not to the inventory receipt account.
o When a sales order is invoice-updated, no posting occurs in the item consumption account or the issue
account.
o Clear this option for service items if the item consumption should not be posted when sales orders are
invoiced. When this option is cleared, the journal lines for the items do not generate ledger postings.
• Accrue liability on product receipt

Select this option to accrue the estimated expense for packing slip updates to the general ledger.
13. Item Group

Item groups are used to manage inventory by dividing inventory items into groups. You can complete the following tasks
for the items that are included in an item group. Follow statistics for item sales, item purchases, and projected inventory
transactions and balances.
Navigation: Inventory → Setup → Inventory → Item groups

2. Item group, FG
3. Name, Finished Good
4. Click, save a button
14. Storage Dimension Group

A Storage Dimensions determine where and how a product is stored. The created storage dimensions are required to be
attached to each item.
Navigation: Procurement and sourcing → Setup → Dimension and variant group → Storage dimension groups

2. Name, SiteWH
3. Description, Site, Warehouse
5. Enable, Site → Active: Physical inventory, Financial inventory, Coverage plan by dimension, For purchase prices,
For sales prices
6. Enable, Warehouse → Active: Physical inventory, Financial inventory, Coverage plan by dimension, For purchase
prices, For sales prices
S. n Options Description
A selected option indicates that items that are assigned to this dimension group are
tracked physically at this dimension level.
• Transactions that are generated to track physical transfers are also included in
cost.
• A non-financial transfer is a transfer between two inventory dimensions that is
not financially tracked.
• If items are tracked physically, a limitation for negative inventory has to be
1 Physical inventory
observed.
• By using the Physical negative inventory option in the Item model groups page,
you can enable negative inventory for items that are associated with the item
model group.
• If negative inventory is not enabled, and an item with this dimension is tracked
physically, the item must be available physically to process transactions on the
item
A selected option indicates that items that are assigned to this dimension group are
2 Financial inventory
included in cost calculations at this dimension level.
Select this option to include the dimension when you create a coverage plan for a
Coverage plan by product.
3
dimension • To create a coverage plan for a product, select the product in the Released
product details page, and then click Item coverage on the Plan tab.
Select this option to include the dimension as a criterion for determining the purchase
price for an item. In the Journal lines, price/discount agreement page,
• You can create a trade agreement where you associate a purchase price with a
4 For purchase prices
specific dimension setup for an item.
• A dimension must be active to be available in a trade agreement setup. Select
the Active option in this page to enable a dimension.
Select this option to include the dimension as a criterion for determining the sales
price for an item. In the Journal lines, price/discount agreement page,
• You can create a trade agreement where you can associate a sales price with a
5 For sales prices
dimension setup for an item.
• A dimension must be active to be available in a trade agreement setup. Select
the Active option in this page to enable a dimension.
15. Tracking Dimension Group
Tracking dimensions as mechanisms to ensure tracking, quality assurance, and warranties. Therefore, these mechanisms
come in the form of serial, batch numbers, and ownership.
Navigation: Procurement and sourcing → Setup → Dimension and variant group → Storage dimension groups

2. Name, None
3. Description, None
S. n Options Description
Batch numbers, not only do these apply to groups of items.
• If you had a customer to which you sold a batch of products and later found
out that these products had an issue, the batch number would issue a product
1 Batch Number
recall to your customer.
• Moreover, you would be able to do so accurately; finding the specific products
could have them back with a vendor return order.
2 Serial Number Serial numbers apply on a single-item basis.
Therefore, ownership is essential within dynamics. However, as the ownership
changes, it becomes the business’ liability to settle vendor invoices and provide
3 Ownership adequate payments.
• Consigned inventory consists of items owned by a third party (a vendor),
although stored in your warehouse.
16. Procurement Category
Navigation: Product information management → Setup → Categories and attributes → Category hierarchies
17. Calculation Group

Calculation groups that are assigned to items let you specify how the cost or sales price of components, as outlined by
the calculation group, is sourced for the calculation. On the Calculation groups page, you can define a cost price model,
an alternative cost price model, a sales price model, and warnings.
https://learn.microsoft.com/en-us/dynamics365/supply-chain/cost-management/bom-calculation-groups
Navigation: Cost management → Predetermined cost policies setup → Calculation group

18. Create Released Products
18.1. Create Finished/Semi-Finished/Raw Material
Default
Item Product Procurement Production
S. n Items Description Site Warehouse Order
Number Number Category Type
Type
LCD Standard Size LCD STD- Purchase
1 FG PRO-000153 Site-01 WH-01 LCD BOM
26" 001 Order
Production
2 SF LCD Chips LCD-CH-001 PRO-000154 Site-01 WH-03 LCD Spare Parts BOM
Order
Purchase
3 RW Main Board MB-001 PRO-000155 Site-01 WH-02 LCD Spare Parts BOM
Order
Power Supply Purchase
4 RW PSB-001 PRO-000156 Site-01 WH-02 LCD Spare Parts BOM
Board Order
Purchase
5 RW T-Con Board TCB-001 PRO-000157 Site-01 WH-02 LCD Spare Parts BOM
Order
Purchase
6 RW Power Board PB-001 PRO-000158 Site-01 WH-02 LCD Spare Parts BOM
Order
Speaker Assembly Purchase
7 RW SA-001 PRO-000159 Site-01 WH-02 LCD Spare Parts BOM
(speaker) Order
120Hz transfer Purchase
8 RW TP-001 PRO-000160 Site-01 WH-02 LCD Spare Parts BOM
plate Order
*FG = Finished Goods *SF = Semi-Finished Goods * RW = Raw Material
18.1.1. LCD Standard Size 26”
Navigation: Product information management → Products → Release Products

2. Product type, item
3. Product subtype, product
4. Product number, PRO-000153
5. Product name, LCD Standard Size 26"
6. Search name, LCD Standard Size 26
7. Inventory Unit, Purchase Unit, Sales Unit, BOM Unit, is same EA (EACH)
8. Item model group, FIFO

9. Item group, FG
10. Storage dimension group, SiteWH
11. Tracking dimension group, None
12. Click, ok button
13. In Engineer fast tab, select calculation group

14. Flushing Principle, Start
15. Production type, BOM
Flushing Principle
Flushing is the process of recording the movement of inventory items from a storage location to Work-in Process (WIP).
Work-in-Process here means the production area where the material will be used.
• Flushing principles reflect different consumption strategies for raw materials that are used in production
processes.
• Consumption is the process that deducts material from the on-hand inventory and sets the value of the
consumed materials to Work in progress (WIP) for production orders and batch orders.
• Raw materials are usually consumed from a location that is configured for the process that consumes the
material. This location is known as the production input location.
Before material consumption, the materials are moved to the input location. The following illustration shows
the process.
The following elements are shown in the illustration:

• Material warehouse
• Raw material picking
• Production input location
• Raw material consumption
• Production process
Material consumption is controlled by the following four-flushing principles:

1. Manual
2. Start
3. Finish
4. Available at location
S. n Flushing Principle Description

Manual won’t be pulled automatically at any manufacturing actions, but must be
1 Manual
manually picked through a production picking list being manually posted
2 Start Pulls your items on start actions. These are: Start production or start operation.
3 Finished Pulls your items on end actions. These are: End operation or report as finished.
The Available at location flushing principle indicates that the material will be
4 Available at Location
automatically consumed when it's registered as picked for production.
https://learn.microsoft.com/en-us/dynamics365/supply-chain/production-control/flushing-principles
https://dyntips.com/2016/02/01/flushing-principles/
Production Types
There is a Production type field on the released product form that drives product behavior in production.
S. n Production Type Description
The product is not manufactured, i.e. it can be used in production as a raw
1 None
material, but you cannot create BOM or Formula version for it.
The product is manufactured as a part of producing another product and should be
2 Co-Product setup as a co-product in the formula version. Can be used in Formulas for items
with production type either Formula or Planning item.
The product is manufactured as a part of producing another product and should be
3 By-Product setup as a by-product in formula version. Can be used in Formulas for items with
production type either Formula or Planning item.
The items with this type cannot be RAF in production. These are usually used in
4 Planning Item disassembly or sorting scenarios. Only Co/By products can be RAF of the batch
order for the item with this type.
5 Formula The product is produced using Formula in process manufacturing
6 BOM The product is produced using Bill of materials in discreate manufacturing.
Main Difference Between BOM and Formula is:
1. When you manufacture BOM item you are limited to one output (i.e., you can RAF only item for which
production order is created).
2. AT the same time with Formula, you can RAF of the production order Formula item as well as Co/By product
(depends on what is setup in the formula version).
Assigning Procurement Category
1. On action pane, click product

2. Click, product category

4. Category hierarchy, Procurement - Office Supplies
5. Category, LCD
6. Click, a save button
Assigning Warehouse and Site
1. On action pane, click manage inventory

2. Click, default order settings
3. On inventory fast tab, select default warehouse, WH-01 Finished Good

4. Select default site, Site-01
5. Default order type, purchase order
(*Important Note: Repeat Same steps as 18.1.1 for remaining semi-finished goods and raw material as we have
mentioned in above table under the 18.1)
18.2. Create Semi-Finished Goods and Raw Material
Default
Type
Production
Order
Purchase
2 RW Polarizing filter PF-001 PRO-000161 Site-01 WH-02 LCD Spare Parts BOM
Order
Purchase
3 RW Glass plate GP-001 PRO-000162 Site-01 WH-02 LCD Spare Parts BOM
Order
Liquid crystal Purchase
4 RW LCM-001 PRO-000163 Site-01 WH-02 LCD Spare Parts BOM
material Order
Electrode on Purchase
5 RW EG-001 PRO-000164 Site-01 WH-02 LCD Spare Parts BOM
glass Order
(*Important Note: Repeat Same steps as 18.1.1 for semi-finished goods and raw material as we have mentioned in
above table under the 18.1)
19. On -Hand Quantities of Raw Material Only
Procurement department has been arranging the raw material from material because supply chain department has
received the monthly production plan and they have arranged material accordingly.
Default
Item Product On-Hand Production
Number Number Quantity Type
Type
Purchase
1 RW Polarizing filter PF-001 PRO-000161 Site-01 WH-02 100 BOM
Order
Purchase
2 RW Glass plate GP-001 PRO-000162 Site-01 WH-02 100 BOM
Order
3 RW LCM-001 PRO-000163 Site-01 WH-02 100 BOM
material Order
4 RW EG-001 PRO-000164 Site-01 WH-02 100 BOM
glass Order
Purchase
5 RW Main Board MB-001 PRO-000155 Site-01 WH-02 100 BOM
Order
6 RW PSB-001 PRO-000156 Site-01 WH-02 100 BOM
Board Order
Purchase
7 RW T-Con Board TCB-001 PRO-000157 Site-01 WH-02 100 BOM
Order
Purchase
8 RW Power Board PB-001 PRO-000158 Site-01 WH-02 100 BOM
Order
9 RW SA-001 PRO-000159 Site-01 WH-02 100 BOM
(speaker) Order
10 RW TP-001 PRO-000160 Site-01 WH-02 100 BOM
plate Order
About Semi-Finished Good and Finished Quantity is not available because both are not produces in a plant.
20. Cost Group
Cost groups provide the basis for segmenting and analyzing cost contributions in a manufactured item’s calculated cost,
such as the cost contributions for material, labor, and overhead. Cost group segmentation has several synonyms within
manufacturing environments, such as cost breakdown, cost decomposition, or cost classification
Purpose:
• Cost groups assigned to the item (material cost), cost categories for routing operations, and indirect cost
calculation formula.
• Note: Cost sheet format must be defined if the indirect costs will be calculated.
S. n Cost Type Description

1 Direct Material A cost group designated as direct material can be assigned to items.
2 Direct Manufacturing Restricted to cost categories for manufacturing operational resource.
3 Direct Outsourcing Restricted to service type products.
4 Indirect An indirect cost group can be assigned to indirect cost for surcharge or rates.
A cost group designated as undefined can be assigned to items, cost categories, or
5 Undefined
indirect costs.
Navigation: Production Control → Setup → Routes → Cost Groups

2. Cost group, Default
3. Name, Default
4. Cost Type, Direct Manufacturing
5. Default, enable yes
6. On profit fast tab, click add button
7. Profit setting, Standard
8. Profit percentage, 5.00
21. Cost Shared Category
The cost-shared category setup form will be used to define either this cost category will be used in the production or
not.
Navigation: Production Control → Setup → Routes → Shared Category

2. Category ID, Standard
3. Category name, Standard
4. On usage fast tab, enable can be used in production, yes
Navigation: Production Control → Setup → Routes → Shared Category

2. Category ID, Run Time Standard
3. Category name, Run Time Standard
4. On usage fast tab, enable can be used in production, yes
22. Cost Category
Cost categories apply to manufacturing environments that use routing. They are assigned to operations resources and
routing operations to define hourly costs and to segment cost contributions in a manufactured item’s calculated costs.
The cost groups that are assigned to cost categories classify manufacturing cost contributions, based on the operation
resources and the type of activity, such as setup time and run time. The specificity of cost group assignments enables
manufacturing overhead to be calculated based on routing information.
Note: In manufacturing environments, cost categories are known by several other names, such as labor rate codes or
machine rate codes.
Create the list of cost categories and define the ledger accounts for absorbed cost and WIP clearing accounts.
S. n Account Account Description A/C Code Account Code Description
1 Physical Estimated manufacturing cost absorbed 600522 Absorbed Indirect Labor Cost
2 Financial Manufacturing cost absorbed 600522 Absorbed Indirect Labor Cost
Estimated cost of manufacturing
3 Physical 150200 Production WIP-Labor
consumed, WIP
4 Financial Cost of manufacturing consumed, WIP 150200 Production WIP-Labor
Standard Cost: Standard cost is the cost of an item where you determine the standard cost before you produce the item
(item cost, labor and other direct related cost e.g., machine hour cost).
Planned Cost: Planned cost use expected costs for the different components in a production but the final cost of
producing the item might end up differently
22.1. Standard
Navigation: Production Control → Setup → Routes → Cost Category

2. Category ID, Standard
3. Category name, Standard
4. On production fast tab, category, standard
5. Select cost group
6. Select, estimated manufacturing cost absorbed, 600522
7. Select, manufacturing cost absorbed, 600522
8. Select, estimated cost of manufacturing consumed, WIP, 150200
9. Select, Cost of manufacturing consumed, WIP, 150200
10. On action pane, click, price

12. Select version, 10 – Standard Cost
13. Name, Current fiscal period
14. Select, site-01
15. Price, 10
16. Create version, click down arrow
17. Click, view details

19. Select, Standard Cost,
20. Version, 10
21. Name, Current fiscal period
22. Block, No
23. Block activation, No
25. On action pane, click activate

26. Cost Price is updated, 10
22.2. Run Time Standard
Navigation: Production Control → Setup → Routes → Cost Category

2. Category ID, Run Time Standard
3. Category name, Run Time Standard
4. On production fast tab, category, Run Time Standard
5. Select cost group
6. Select, estimated manufacturing cost absorbed, 600522
7. Select, manufacturing cost absorbed, 600522
8. Select, estimated cost of manufacturing consumed, WIP, 150200
9. Select, Cost of manufacturing consumed, WIP, 150200
10. On action pane, click, price
12. Select version, 20 – Planned Cost
13. Name, 20
14. Select, site-01
15. Price, 12
16. Create version, click down arrow

17. Click, view details

19. Select, Planned cost,
20. Version, 20
21. Name, 20
22. Block, No
23. Block activation, No
25. On action pane, click activate
26. Cost Price is updated, 12

23. Route Group
A route group is sets defaults for storing parameters on how you want to manage aspects of a route operation. A route
group can be setup on a resource which will allow it to default to an operation and then to a route.
Navigation: Production Control → Setup → Routes → Route Groups

2. Route group, Discrete M
3. Name, Discrete Manufacturing
4. On general fast tab, in estimation and costing, enable setup time, yes
5. In automatic route consumption, enable setup time, yes
6. In automatic route consumption, enable run time, yes
7. On setup fast tab, enable route/Job type on different level
a. Queue before Activation (✔)
b. Setup Activation (✔) Job Management (✔) Working Time (✔) Capacity (✔)
c. Process Activation (✔) Job Management (✔) Working Time (✔) Capacity (✔)
24. PART 2: Pre-Requisite Setup for Pegged Supply
Part 2: Setups for Finished Goods & Semi-Finished

Goods
25. Finished Goods
25.1. Resource Group
Navigation: Production Control → Setup → Resources → Resource Group

2. Resource group, 66
3. Description, Making High Quality LCD
4. Select site, Site-01
5. On operation fast tab, select run time category, Run Time Standard
6. Select, Setup category, Standard
7. Enable, finite capacity, yes
9. On general fast tab, click add button, select calendar 8 to 4

25.2. Resources - Machine
25.2.1. LCD Assembly
Navigation: Production Control → Setup → Resources → Resources

2. Resource, 6118
3. Description, LCD Assembly
4. Type, Machine
5. On operation fast tab, select route group, discrete M
6. Select, Setup category, standard
7. Select, run time category, Run time standard
10. On calendar fast tab, click add button
11. Select, calendar 8 to 4
12. On resource groups fast tab, click add button
13. Select, resource group, 66
25.2.2. LCD Fitting

2. Resource, 6119
3. Description, LCD Fitting
4. Type, Machine

25.2.3. LCD Testing QA

2. Resource, 6120
3. Description, LCD Testing QA
4. Type, Machine
25.2.4. LCD Packing and Covering

2. Resource, 6121
3. Description, LCD Packing and Covering
4. Type, Machine

25.3. Create Route
A route defines the process for producing a product or product variant. It describes each step (operation) in the
production process and the order that these steps must be performed in. For each step, the route also defines the
required operations resources, the required setup time and run time, and how the cost should be calculated.
• Route: A route defines the structure of the production process. In other words, it defines the order of
operations.
• Route Version: A route version defines the route that is used to produce a product or product variant.
Route versions enable routes to be reused across products or changed over time.
o They also enable different routes to be used to produce the same product. In this case, the route
that is used depends on factors such as the location or the quantity that must be produced.
Navigation: Product Information Management → Product → Release Product → On Action Pane Engineer → Under
view (Route)
1. On action pane, click route

3. Click, route and route version
4. Description, making high quality LCD

5. Select, site -01
6. Click, ok button
7. Note it down Route number, PGE-000006
(*Important Note): Here we are going to jump Operation because operation is mandatory for route
25.4. Define Operations and Relations
An operation is a step in the production process. Each operation has an ID and a simple description.
25.4.1. LCD Assembly
Navigation: Production Control → Setup → Routes → Operations
1. On action pane, click, new button

2. Operation, LCD Assembly
3. Name, LCD Assembly
4. On action pane, click, relation
5. On action pane, Click, new button

6. Item code, Table
7. Item relation, LCD STD-001
8. Route code, Route
9. Route relation, PGE-000006
10. Site, Site-01
12. Route type, Standard
13. Formula, Standard
14. Cost categories, setup, Standard
15. Cost categories, run, Run Time Standard
16. On resource requirement fast tab, click new button
17. Requirement type, Resource
18. Requirement, 6118
19. Description, LCS Assembly
20. Enable, operation schedule, (✔)
21. Enable, job scheduling (✔)

23. Click, no
24. Again, click save button
25.4.2. LCD Fitting

2. Operation, LCD Fitting
3. Name, LCD Fitting

6. Item code, Table
10. Site, Site-01
19. Click, no
20. Description, LCS Fitting

25.4.3. LCD Quality Assurance

2. Operation, LCD QA
3. Name, LCD Quality Assurance

6. Item code, Table
10. Site, Site-01
19. Click, no
20. Description, LCS Testing QA

25.4.4. LCD Packaging Operation

2. Operation, LCD Packop
3. Name, LCD Packaging Operation

6. Item code, Table
10. Site, Site-01
19. Click, no
20. Description, LCS Packaging and Covering

25.5. Add Operations on Route
view (Route)
2. Click a new button

3. Add all operation one by one
Oper. Process Route Item Route

Priority Operation Name Next
No. quantity group code code
10 Primary LCD Assemb LCD Assembly 1.00 20 Discrete M Table Route
20 Primary LCD Fittin LCD Fitting 1.00 30 Discrete M Table Route
LCD Quality
30 Primary LCD QA 1.00 40 Discrete M Table Route
Assurance
LCD Packaging
40 Primary LCD Packop 1.00 0 Discrete M Table Route
Operation
25.6. Create Bill of Material
BOM
1. On action pane, click BOM version

3. Click, BOM and BOM version
4. BOM number, LCD-BOM-001
5. Name, BOM: High Quality LCD
6. Select, Site-01
7. Click, ok button
25.6.1. Add Raw Material in BOM Material Line for Finished Goods
Default
Type
LCD Standard Size LCD STD- Purchase
1 FG PRO-000153 Site-01 WH-01 LCD BOM
26" 001 Order
Production
Order
Purchase
3 RW Main Board MB-001 PRO-000155 Site-01 WH-02 LCD Spare Parts BOM
Order
4 RW PSB-001 PRO-000156 Site-01 WH-02 LCD Spare Parts BOM
Board Order
Purchase
5 RW T-Con Board TCB-001 PRO-000157 Site-01 WH-02 LCD Spare Parts BOM
Order
Purchase
6 RW Power Board PB-001 PRO-000158 Site-01 WH-02 LCD Spare Parts BOM
Order
7 RW SA-001 PRO-000159 Site-01 WH-02 LCD Spare Parts BOM
(speaker) Order
8 RW TP-001 PRO-000160 Site-01 WH-02 LCD Spare Parts BOM
plate Order
1. On action pane Bill of material, click new button
2. Add all raw material for one by one
3. Add semi-finished good also in this BOM

26. Semi-Finished Goods
26.1. Resource Group
Navigation: Production Control → Setup → Resources → Resource Group

2. Resource group, 67
3. Description, Making High Quality LCD Chips
4. Select site, Site-01
5. On operation fast tab, select run time category, Run Time Standard
6. Select, Setup category, Standard
9. On general fast tab, click add button, select calendar 8 to 4

26.2. Resources- Machine
26.2.1. LCD Chip Assembly

2. Resource, 6121
3. Description, LCD Chip Assembly
4. Type, Machine

26.2.2. LCD Chip Fitting

2. Resource, 6123
3. Description, LCD Chip Fitting
4. Type, Machine
26.2.3. LCD Chip Testing QA

2. Resource, 6124
3. Description, LCD Chip Testing QA
4. Type, Machine

26.2.4. LCD Chip Plastic Packing and Covering

2. Resource, 6125
3. Description, LCD Chip Plastic Packing and Covering
4. Type, Machine

26.3. Create Route
view (Route)
2. Description, making high quality LCD chip

3. Select, site -01
4. Click, ok button
5. Note it down Route number, PGE-000006
(*Important Note): Here we are going to jump Operation because operation is mandatory for route
26.4. Define Operations and Relations
An operation is a step in the production process. Each operation has an ID and a simple description.
26.4.1. LCD Chip Assembly

2. Operation, LCD Chip Assembly
3. Name, LCD Chip Assembly

6. Item code, Table
7. Item relation, LCD-CH-001 (PRO-000154)
10. Site, Site-01
19. Click, no
20. Description, LCD Chip Assembly

26.4.2. LCD Chip Fitting

2. Operation, LCD Chip F
3. Name, LCD Chip Fitting

6. Item code, Table
7. Item relation, LCD-CH-001 (PRO-000154)
10. Site, Site-01
19. Click, no
20. Description, LCD Chip Fitting

26.4.3. LCD Chip Quality Assurance

2. Operation, LCD Chip QA
3. Name, LCD Chip Quality Assurance

6. Item code, Table
7. Item relation, LCD-CH-001(PRO-000154)
10. Site, Site-01
19. Click, no
20. Description, LCD Chip Testing QA

26.4.4. LCD Plastic Packing and Covering

2. Operation, LCD Chip PP
3. Name, LCD Chip Plastic Packing and Covering

6. Item code, Table
7. Item relation, LCD-CH-001(PRO-000154)
10. Site, Site-01
19. Click, no
20. Description, LCD Chip Plastic Packing and Covering

26.5. Add Operations on Route
view (Route)
1. Click a new button

2. Add all operation one by one
Oper. Process Route Item Route

Priority Operation Name Next
No. quantity group code code
10 Primary LCD Chip A LCD Chip Assembly 1.00 20 Discrete M Table Route
20 Primary LCD Chip F LCD Chip Fitting 1.00 30 Discrete M Table Route
LCD Chip Quality
30 Primary LCD Chip Q 1.00 40 Discrete M Table Route
Assurance
LCD Chip Plastic
40 Primary LCD Chip P 1.00 0 Discrete M Table Route
Packing and Covering
26.6. Create Bill of Material
BOM

3. Click, BOM and BOM version
4. BOM number, LCD Chip-BOM-001
5. Name, BOM: High Quality LCD Chip
6. Select, Site-01
7. Click, ok button
26.6.1. Add Raw Material in BOM Line for Semi-Finished Goods
Default
Type
Production
Order
Purchase
2 RW Polarizing filter PF-001 PRO-000161 Site-01 WH-02 LCD Spare Parts BOM
Order
Purchase
3 RW Glass plate GP-001 PRO-000162 Site-01 WH-02 LCD Spare Parts BOM
Order
4 RW LCM-001 PRO-000163 Site-01 WH-02 LCD Spare Parts BOM
material Order
5 RW EG-001 PRO-000164 Site-01 WH-02 LCD Spare Parts BOM
glass Order
1. On action pane Bill of material, click new button
2. Add all raw material for one by one
3. Click, Save button
27. Bill of Material Approval and Activate
27.1. BOM Approval and Activate for Semi-Finished Goods
27.1.1. BOM Approval Line Level
1. On action pane, click, approval
2. Click, ok button
3. Status is approved
27.1.2. BOM Approval & Active Header Level
1. Click, header
2. On BOM version fast tab, click approval button
3. Click, ok button
5. On BOM Version, Click Activate
27.2. BOM Approval and Activate for Finished Goods

27.2.1. BOM Approval Line Level
1. On action pane, click, approval
2. Click, ok button
27.2.2. BOM Approval & Activate Header Level
1. On BOM version fast tab, click, approval button

2. Click, ok
3. On BOM version fast tab, click, activate button
4. Status is activated and approved
28. Route Approval and Activate
28.1. Route Approval and Activate for Finished Good
1. Search, Lcd Standard Size 26 product

2. On action pane, click engineer
3. Under view, click route
4. On action pane, click approve button
5. Click, ok button
6. On action pane, click, activate button

7. Status is activated (✔) and approved (✔)
28.2. Route Approval and Activate for Semi-Finished Goods
1. Search, LCD Chips product

2. On action pane, click engineer
3. Under view, click route
4. On action pane, click approve button

5. Click, ok button
6. On action pane, click, activate button
7. Status is activated (✔) and approved (✔)
29. Assigned Sub-BOM in Semi-Finished Good in Finished Good BOM
BOM

2. Click, LCD-BOM-001
3. In Last item is semi-finished good

4. On line-item fast tab
a. BOM line is Pegged Supply
b. Select Semi-Finished BOM, LCD Chip-BOM-001
c. Select Sub-Route, PGE-000007
30. Production Life Cycle
Production Control
Create Production
Start Estimated Scheduled
Order
Operations Kanban
Job scheduling
scheduling schedule
Production Life Cycle
Reported as finished
Released Production Started Production
Prepared/Picked (the product
Order Order
receipt)
End
30.1. Create Production Order

In a first stage we can create production order for BOM and batch order for formula or create kanban manually. However,
we can also configure the system to generate them based on various signal.
• Master planning creates production orders, batch orders, or kanban’s by firming planned orders.
• Other demand signals are sales orders or pegged supply signals from other production orders or kanban’s.
• For fixed quantity kanban’s, demand signals are generated when kanban’s are registered as empty.
30.2. Estimate
We can calculate estimates for material and resource consumption. The estimation generates inventory transactions for
raw materials that have a status of On order and for material demand.
• The receipts for main products, co-products, and by-products are generated when production orders or batch
orders are estimated.
• If the BOM contains lines of the Pegged supply type, purchase orders for materials or subcontracted operation
services are generated and pegged to the production order or batch order.
• Items or orders are reserved according to the reservation strategy of the production order, and the price of the
finished goods is calculated based on parameter settings.
30.3. Scheduling
We can schedule production based on operations such as
1. Operation Schedule: This scheduling method provides a rough, long-term plan. By using this method, you can
assign start and end dates to production orders. If the production orders are attached to route operations, you
can assign them to cost center groups.
2. Job Scheduling: This scheduling method provides a detailed plan. Each operation is broken down into individual
jobs that have specific dates, times, and assigned operations resources.
a. If finite capacity is used, jobs are assigned to operations resources based on availability.
3. Kanban Scheduling: Kanban jobs are scheduled on the Kanban schedule board, or are automatically scheduled
based on the automatic planning configuration of the kanban rules.
30.4. Release Production Order

We can release the production order or batch order when the schedule is finished and the material is available to be
picked or prepared.
30.5. Prepared/Picked
When all materials and resources have been staged at the production location, the production BOM lines or kanban
lines are updated to a status of Picked.
30.6. Start Production Order

When a production order, batch order, or kanban is started, you can report material and resource consumption against
the order. However, for a kanban, it always happens automatically.
30.7. Reported as finished

When a production order or batch order is reported as finished, the quantity of the finished goods that were completed
is updated in inventory.
30.8. End
Before a production order is ended, actual costs are calculated for the quantity that was produced. All estimated costs of
material, labor, and overhead are reversed and replaced with actual costs.
31. Run Pegged Supply Sub-Production Process
31.1. Create Production Order (Finished Goods)
Navigation: Production Control → Production Orders → All Production Order
1. On action pane, click, new production order

2. Production number, PGE-000011
3. Item number, LCD STD-001
4. Name, LCD Standard Size 26"
5. Site, Site-01
6. Warehouse, WH-01
7. Type, Standard
8. Quantity, 15
9. Delivery 4/17/2023
10. Time, 10:00 AM
11. BOM number, LCD-BOM-001
12. Route number, PGE-000006
13. Click, create button
31.2. Estimate Production Order (Finished Goods)
1. On action pane, Click, production order

2. Click, estimate
3. Click, ok button
31.2.1. Sub- Production Line Created- Semi-Finished Good
Here new production order is created automatically for semi-finished good
Status is Estimated
1. Click open sub-production order

2. Production number, PEG-000012
3. Item number, PRO-000154
4. Name, LCD Chip
5. BOM number, LCD Chip-BOM-001

6. Route number, PGE-000007
31.2.2. Release Sub-Production Order
1. On action pane, click, release button

2. Click, ok button
3. Status, Released
4. Scheduling Status, Operation scheduled
5. Remain status, Material Consumption
31.2.3. Start Production
1. On action pane, click, start button

2. Start Production, Yes
3. Post picking list now, “No” because we will go post picking list by manually not auto.
4. Post route card now, “No” because we will go Post route card by manually not auto.
5. Click, ok button
6. Status is Started
31.2.4. Post Picking List
1. On action pane, click, view

2. Click, picking list
3. On action pane, click, validate

4. Validate is ok
5. On action pane, click post button
6. Click, ok button
7. Posting is successfully (✔)
8. Remain Status is Route consumption

31.2.5. Report As Finished
1. On action pane, Click, Report as Finished
2. Click, ok button
3. Status is report as finished
4. Remain Status, Ended
5. On hand quantity, 30
31.2.6. End Production Order
1. On action pane, click, End
2. Click, ok button
3. Status is Ended
4. Remain Status is Ended
31.3. Release Production Order (Finished Goods)
1. On action pane, click, release button

2. Click, ok button
3. Status is Released
4. Remain Status, Material Consumption
31.4. Start Production Order (Finished Goods)
1. On action pane, click, start button

2. Start Production, Yes
3. Quantity is, 15
4. Start Production, Yes enabled
5. Post picking list now, “No” because we will go post picking list by manually not auto.
6. Post route card now, “You” because we will go Post route card by auto.
7. Click, ok button
31.5. Post Picking list (Finished Good)
1. On action pane, click, view

2. Click, picking list
3. On action pane, click, validate

4. Validate is ok
5. Posting is successfully (✔)

31.6. Report As Finished (Finished Goods)
1. On action pane, Click, Report as Finished
2. Quantity, 15
3. Click, ok button
4. Status is Report as Finished
5. Click, Ended
31.7. End Production Order (Finished Goods)
1. On action pane, click, End

2. Click, ok button
38. On Hand Quantities of Finished Good

Navigation: Inventory Management → Inquiries and Report → On hand list
THE END

Sub Production Concept Pegged Supply BOM 1710677054

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4/13/2023 PEGGED SUPPLY-BOM

Production Control -Discrete Manufacturing in D365

1.1. Bill of Material- Discrete Manufacturing

1.2. Formula- Process Manufacturing

2. Bill of Material and Bill of Material Version

2.1. Bill of Material

A BOM is an individual entity that is described by the following information:

2.2. Bill of Material Version

The validity of BOM versions can be constrained by:

3. Bill of Material Lines

S. n BOM Line Description

Here we are going to consider the BOM line Pegged Supply

4. Scenario For Pegged Supply

They are using Sub-Production approach during the production cycle.

4.1. List of Finished Goods Component

Part 1: Common Setups for Pegged Supply-Sub-

S. n Module Pre- Requisite Steps Description

Navigation: Production Control → Setup → Calendars → Working Time Template

1. On action pane, click a new button

S. N Day From To Efficiency Hour

1. On Monday fast tab, click, add button

1. On Monday fast tab, click copy day

7. Working Time Calendar

Navigation: Production Control → Setup → Calendars → Calendars

1. On action pane, click a new button

Navigation: Inventory → Setup → Inventory Breakdown → Site

1. On action pane, click a new button

S. n Warehouse Name Description

Navigation: Inventory → Setup → Inventory Breakdown → Warehouse

1. On action pane, click, a new button

Navigation: Inventory → Setup → Inventory Breakdown → Warehouse

1. On action pane, click, a new button

Navigation: Inventory → Setup → Inventory Breakdown → Warehouse

1. On action pane, click, a new button

Navigation: Inventory → Setup → Inventory Breakdown → Warehouse

1. On action pane, click, a new button

Navigation: Inventory → Setup → Inventory Breakdown → Warehouse

1. On action pane, click, a new button

1. On action pane, click a new button

• Post Physical Inventory

• Accrue liability on product receipt

13. Item Group

Navigation: Inventory → Setup → Inventory → Item groups

1. On action pane, click a new button

14. Storage Dimension Group

1. On action pane, click a new button

1. On action pane, click a new button

17. Calculation Group

Navigation: Cost management → Predetermined cost policies setup → Calculation group

18.1. Create Finished/Semi-Finished/Raw Material

*FG = Finished Goods *SF = Semi-Finished Goods * RW = Raw Material

18.1.1. LCD Standard Size 26”

Navigation: Product information management → Products → Release Products

1. On action pane, click a new button

8. Item model group, FIFO

13. In Engineer fast tab, select calculation group

The following elements are shown in the illustration:

Material consumption is controlled by the following four-flushing principles:

S. n Flushing Principle Description

Main Difference Between BOM and Formula is:

FG = Finished Goods SF = Semi-Finished Goods * RW = Raw Material