This chapter explains the role that routings play within bills of manufacturing and how they are properly set up and used.
What is a routing?
A routing is a sequential list of the labor and subcontract service processes, along with process details, that are performed to make an item.
How are routings used?
Routings provide the foundation for product costing and shop control and distinguish DBA from light manufacturing systems that only deal with bills of material. Routings are used for the following purposes:
•Work center hourly rates are applied to process setup hours and cycle times to calculate estimated and actual labor and manufacturing overhead costs.
•Subcontract supplier prices are translated into unit costs to calculate estimated and actual subcontract service costs.
•Routings provide detailed process instructions that print on the shop traveler for production guidance out on the shop floor.
•Routings provide detailed instructions to subcontract service suppliers that print on subcontract POs.
•Routings provide the estimated hours calculations that are used to establish item Job Days settings that drive MRP job generation and the master schedule.
•BOM routing specifications are copied to jobs as jobs get generated by MRP.
•Job routings group job sequences by work center within the Work Center Schedule screen to prioritize worker assignments.
•Job routing specifications are used to calculate estimated remaining job hours for job prioritization and job status metrics.
Routings, not bills of material, determine product structures
In light manufacturing systems, the bill of material governs product structures and is often “flattened” out so that multiple levels can be represented within a single parent item. When you use routings, however, this is not possible or desirable. Each assembly has its own routing processes and therefore must be given its own BOM. The associated materials support the routing processes within which they are used. In a non-light manufacturing system, routings determine product structures, not bills of material.
Create a routing sequence for each process
Within each BOM, create a routing sequence for each labor and subcontract process.
What is considered a process?
Each routing sequence should represent an actual production process. A process can consist of several tasks. Avoid creating sequences for tasks. A process should be defined with a routing sequence when it meets these criteria:
It must be measurable
Only processes that are capable of being measured in terms of time per process should be set up as a routing sequence. Small steps that cannot easily be measured should be set up as tasks that are performed as part of a larger process. For example, in the sample company, assembling the wagon components is set up as a single routing sequence. There are many small steps involved in assembling the wagon, but it is not practical to measure how long each such minor step would take. On the other hand, the total time it takes to assemble a wagon is easily measurable and therefore can be considered a single process.
It must be schedulable
Only processes that are capable of being scheduled should be set up as a routing sequence. This means that it is appropriate for the routing sequence to be listed in the Work Center Schedule for worker assignments. Routine inspection, for example, may not be worthy of being listed on the work center schedule and is more appropriately defined as a task within a routing sequence.
Its hours must be reportable
Only processes that are capable of being tracked for setup and labor hours or completions reporting in the Job Labor screen should be set up as routing sequences. For example, you would not report labor for a minor task performed within a larger process.
It is a subcontract service
Any subcontract service (such as painting, plating, or heat-treating) performed by an outside supplier should be set up as a subcontract routing sequence.
Always enter a cycle time
Always make an entry in the Hours/Process or Processes/Hour field (each field updates the other) to establish the process cycle time. If you don’t know the cycle time, make an educated guess. Over time you can refine your cycle times based on stopwatch observations or actual labor history. For costing and scheduling purposes, it is important that you enter a reasonable cycle time estimate.
Standard processes facilitate routing creation
Routing creation can be greatly facilitated by creating a library of standard work center and subcontractor processes in advance, which enables the use of the Routing Generator and applies a consistency and thoroughness across all your routings. See chapter 8, Standard Processes, for details.
Using standard or actual hours
The Hours Type field within each routing sequence can be set for standard or actual hours. This affects the way labor is updated in the Job Labor screen. See the Shop Control guide for details on using this setting.
Standard hours are recommended for improved throughput and costing
When the Standard hours type is used against job sequences, labor can be quickly updated in just a few clicks because standard setup and labor hours are applied instead of actual hours. Using standard hours eliminates all the mechanical processes that are required to collect and report actual labor hours. Our recommendation is to use Standard hour sequences and commit to reporting completions when sequences are finished.
Use Actual hours sparingly
When the Actual hours type is used against job sequences, actual labor hours are collected manually and entered as an alternative to standard hours. Actual hours are appropriately used in these situations:
▪When a process is one-off, custom in nature and has high variance potential from the estimated cycle time.
▪Job Shop environments that typically manufacture with a Job Quantity of 1
Special Warning Regarding Actual Hours
Our experience has shown that it is very difficult to perform actual hours in most manufacturing environments. The reality of most shops are that once an item is finished it is shipped out as soon as possible regardless of whether all of the costing information has been submitted. It is very easy to make errors or omissions in labor entry that can have a very consequential effect on your cost of sales accounts and make your income statement a challenge to interpret. Since the product is likely already out the door, there is not an opportunity to fix the costs after the fact. We strongly recommend Standard hours completions for most companies.
Actual Job labor tracking requires 100% participation
Shop control is totally dependent on timely labor updating to have any meaningful use. Like any complex system, it is only as good as its weakest link. Therefore, shop control requires 100% participation among all workers and supervisors in updating their own labor as sequences are finished with no tolerance for delay.
Labor updating as the final step in any process
Never get behind on labor updating because doing so destroys the effectiveness of shop control. The best way to avoid this is to instill the notion in all production personnel that a job sequence is not considered finished until the labor gets updated. Workers can easily be trained to use the Job Labor screen and make their own entries.
Subcontract prices are maintained in the routing sequence
Keep in mind that pricing for subcontract services is maintained directly within subcontract routing sequences. You enter the supplier price that prints on the subcontract PO and a multiplier is used to translate the supplier price into a unit cost for estimated cost calculations.
NOTE: If the subcontract price includes complexities such as setup fees and lot charges, enter the breakdown of these charges either in the Traveler Notes for internal reference or in the PO Notes for reference to the supplier. Enter a supplier price that encompasses or closely approximates the total price for all these charges
