Routing

At Stock -> Items -> An item's details,  in section Routings and at Production planning -> Routings it is possible to add the routings to your products.

A routing lists the stages of production of a product and lays the foundation for

• capacity planning and production scheduling,
• assigning jobs to workers,
• estimation of costs and production lead time,
• tracking actual costs and production time.

Jump to:

1. Demo video: Setting up manufactured items, BOMs, routings, workstations.
2. What is a routing?
3. Defining a routing.
4. Setting default workers or departments.
5. Calculation of operation's duration.
6. Calculation of applied manufacturing overhead, direct labor, and materials costs.
7. Examples.
8. Subcontracted operations.
9. Update the routings of planned Manufacturing Orders.
10. Track changes to a routing (revisions).
11. Export a routing.
12. Import a routing.

Defining a product's routing in MRPeasy

A new routing can be added:

• For items, which are manufactured (This is a procured item = No).
• At Stock -> Items -> An item's details, in section Routings.
• At Production planning -> Routings it is possible to add the Routings to your products.

Each operation in a Routing has the following parameters:

Default workers and departments

By default, the following worker/department is assigned to an operation when a new Manufacturing Order is created:

1. The default worker in the workstation's details.
2. The default worker in the routing, if (1) is undefined.
3. The user creating the Manufacturing Order, if (2) and (3) are undefined.

The workers/departments can be changed anytime in the Manufacturing Order.

Calculation of operation duration:

In a Manufacturing Order:

• Operation duration = (Setup time + Cycle time x Order quantity / Operation's cycle quantity*) / Productivity of the workstation.
  * Cycle time is rounded up to the next full cycle duration if a planned quantity for the given cycle is less than the operation's cycle quantity.
  
• If Parallelize is used, then the Operation duration is also divided by (i.e. among) the number of available workstations.

Direct labor, manufacturing overhead, and direct materials cost calculations

Each product, which is produced via a Manufacturing Order, has three cost components:

1. Direct labor cost - wages for the time spent on operations.
2. Applied manufacturing overhead - or Factory overhead, or Factory burden, or just Applied overhead includes costs involved in manufacturing with the exception of the cost of raw materials and direct labor. More information about it you can find in our blog article.
3. Direct materials cost - the actual cost of the materials that were used.

Together these three cost components form the total production costs.

Calculation of labor cost

Labor cost is the wages for the time spent on operations.

For an operation in a Manufacturing Order:

• Initially, the labor cost is estimated:
  Labor cost = Operation duration x Worker hourly rate* + Piece-payment rate x Manufacturing Order quantity
• Once operations are reported finished, these are recalculated:
  Labor cost = Reported operation duration x Worker hourly rate* + Piece-payment rate x Reported quantities

*The hourly wage for any worker can be defined at Settings -> Human resources at the user's details page.

Calculation of applied manufacturing overhead cost

Applied overhead includes costs involved in manufacturing with the exception of the cost of raw materials and direct labor.

For an operation in a Manufacturing Order:

• If the workstation does not have an hourly rate set:
  • The overhead of the operation is calculated solely based on the routing:
    Manufacturing overhead = Fixed cost + Variable cost* x Order quantity + Other variable cost* x Order quantity.
• If the workstation has an hourly rate set:
  • Initially, the overhead of the operation is estimated:
    Manufacturing overhead = Operation duration x Workstation hourly rate** + Other fixed cost + Other variable cost* x Order quantity.
  • Once the MO is finalized, it is recalculated based on reported times:
    Manufacturing overhead = Reported operation duration x Workstation hourly rate** + Other fixed cost + Other variable cost* x Order quantity

* If variable costs are defined not per 1 unit, but per more units, then the variable cost is found by rounding up to the next full variable cost quantity.

**An hourly rate can be set for any workstation at Production planning -> Workstations at the specific workstation's details page.

Calculation of direct materials cost

Materials cost is the actual cost of the materials that were used.

For a Manufacturing Order:

• Initially, the cost of materials is estimated:
  The cost of materials = Cost of booked materials +  Estimated cost of not booked (unavailable) materials.
  
• Once the MO is finalized:
  The cost of materials = Cost of consumed materials

Keep in mind that the estimated BOM cost of a product may be different than the final materials cost of a product.

Updating the Routings of already scheduled Manufacturing Orders

If the Routing is updated and there are manufacturing orders (MO) that are based on this Routing, then the software shows a list of MOs that have not been started yet and gives an option to pick and choose which ones to update:

1. Change the Routing.
2. Save.
3. Proceed to update Routings.
4. Choose which MOs you wish to recalculate.
5. Confirm the new schedule for the MOs.

It is also possible to manually update MOs, in every status: How to edit operation in the Manufacturing Order?

Export a Routing to Excel

For exporting a Routing into Excel:

1. Open a Routing
2. Click the button Excel in the upper right corner of the page.

What is Routing?

Routing is a document related to a manufactured product. It lists production operations (stages), in the order in which the product is made. The goal of the Routing is primarily to provide grounds for scheduling the capacity of production resources, e.g. machines (workstations).

What a Routing is not: the technical instruction for building the product. In general, it's often a good idea to strive towards simplification and generalization when defining the Routing.

Each line of the Routing represents one production operation at one stop - a machine or a work area - with an estimated time (and costs) it takes at that stop.

Here's an example of a simple Routing:

The example above tells us that setting up the assembly area takes 30 minutes of work after which every table will be assembled with 12 minutes on average. The same logic applies to the painting process, which will take place after assembly.

Did you notice? Instead of defining the particular machine (workstation) in the Routing, the Routing points to the group of machines (workstation group) which can perform this operation.

How is the Routing used in production capacity planning?

1. The order quantity is used to calculate the total time of every operation.
   
2. For every operation, the software checks all the workstations in the workstation group to find the particular workstation with the best availability.
3. The operations are put into the production calendar in the correct order while keeping in mind the available resources.
4. If the workstation hourly rates and employee hourly wages are known, the manufacturing overhead and labor costs will be calculated.

Examples

Jump to:

1. A metal fabrication company.
2. Electronics and high-tech assembly.
3. An engineering or a pre-fab construction company.
4. A food processor.
5. Special sequences of operations, parallel converging processes.
6. An operation does not require a worker.

Example. A metal fabrication company

Let us imagine a CNC job shop.

1. The CNC machine is set up, which takes 3 hours.
2. The parts are machined, each taking 6 minutes.
3. The hourly rate for the CNC machine is $70.
4. The workers are assigned before starting the job, and their hourly wage will be used to calculate the labor cost.

The Routing could be defined as follows:

Example. Electronics and high-tech assembly

Let us imagine an electronics manufacturer:

1. The pick and place machine places the components on the PCB board. The hourly rate is $140.
2. The oven solders the parts. The hourly rate for the oven is $70.
3. The software is installed and tested. The hourly rate is $12.
4. The workers are assigned before starting the job, and their hourly wage will be used to calculate the labor cost. (Time payment for workers can be disabled for automated operations without a supervisor)

The Routing could be defined as follows:

Example. An engineering or a construction company

Let us imagine a manufacturer who builds e.g. cottages, pre-fab bathrooms, or similar.

1. Preparation for building the frame and walls is done at the Woodworks, where individual pieces are fabricated and smaller parts are assembled.
2. At the same time, the preparation for internal installable parts starts also at the Woodworks.
3. When the frame and wall parts are ready, the assembly starts on an Assembly line
4. The internal parts, as they become ready, are installed.
5. In parallel, the roof is installed.
6. When all parts are installed, the cottage is detailed and painted.
7. Lastly, the cottage is moved to a packaging station, where it is prepared and picked up for transport.
8. The hourly rate for all stations is $10.
9. The workers who are available in corresponding Departments pick the jobs, and their hourly wage will be used to calculate the labor cost.

The Routing could be defined as follows:

Example. A food processor

Let us imagine a small bakery. They bake buns, which they sell in bags of four. In stock, they count each bun individually (the product is 1 bun), even though these are stored in bags of four.

1. A mixer combines the ingredients. The dough for one batch, maximally 80 buns, is mixed at once which takes 30 minutes. The hourly rate for the mixer is $12.
2. There's an oven that can bake 40 buns simultaneously. Initial heating of the oven takes 5 minutes, thereafter baking a bun takes 15 minutes. The hourly rate for the oven is $12.
3. Lastly, there is a machine that packs buns into bags (4 buns per bag) which takes a very short amount of time. But since the machine is fully occupied, it must wait behind the previous processes, the average packing speed is 1.5 minutes per a bag of 4 buns. The hourly rate for the packaging line is $12.
4. The workers are assigned before starting the job, and their hourly wage will be used to calculate the labor cost.
   Optionally, with Piece payment functionality enabled, Time payment could be disabled, and possibly Piece payment could be enabled.

The Routing could be defined as follows:

Example. Special sequences of operations, parallel converging processes

The Sequence setting in the Routing details allows for defining parallel and converging/diverging chains of operations. While by default the sequence of operations in Routing is linear, this allows configuring a custom order of production operations. E.g. when two independent operations start in parallel and the third operation can only start after these two have finished.

For configuring a special sequence of operations:

1. The first operation's Sequence value must be chosen as 0.
2. Set the Sequence values for the operations which can start immediately as 0.
3. For every other operation, in the operations' Sequence choice, choose the number of operations that must be finished before this operation can start. (Press the Ctrl or Shift key, or click-hold left mouse button to select multiple values.)

If there are two chains of operations that converge into a final step, then the Sequence is configured as follows:

The number in the Sequence field indicates after which operations this operation can start. The id number of an operation is displayed at the beginning of the operation's line.

Example. An operation does not require a worker

In case the operation doesn’t require an employee:

1. You may create a phantom free user for such an operation who has no "Hourly wage" defined. Then you can assign this user for this operation without considering labor costs.
2. You can create a phantom department with zero hourly rate.