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JDE PROCUREMENT IMPLEMENTATION STRATEGY - MANAGEMENT TEAM MEETING
Attendees: Joel Hanish, John Freeman, Fitzroy McLeod, Genève Lewis, Louis Phillips, Tom Sherman
The following is a recap of the conference call to begin development of the JD Edwards Procurement model for implementation at ADM Milling, Jamaica .
How Commodities will be handled
The commodities (wheat, corn rice) will continue to be handled thru the Kansas City office, using CMS (Commodity Management System), including the scheduling of shipments to Jamaica. No purchase orders are created for these shipments. The majority of the corn is sold, but some is processed. The majority of the rice and wheat is processed, but some is sold. Also, upon arrival, the material is keyed into inventory in Platinum. Once JD Edwards is implemented the intent is to retire the Platinum system.
Requisitions: Creation and Approval process is manual.
Approvals: Purchase orders and receipts are entered into the Platinum system. Fitzroy indicated that they are interested in using the following JD Edwards procurement functionality: Re-Order Point Processing; Requisition creation and approval; purchase order creation; and receiving.
Procurement: Approximately 8-10 users will be needed to run with the procurement processes.
Forms/Reports: Purchase order form, receiving ticket, possibly the requisition. Reports are to be identified. A sample of the current purchase order form was previously supplied.
Stock: Items include ingredients such as sugar, shortening, salt, packaging, etc. These are purchased from approximately 20 vendors. TVP and master cake mixes are purchased from other ADM locations. A list of the ingredients and IDT items has been requested, along with ADM locations currently providing product.
Cost: Purchased items are valued at actual cost, based on invoice, freight, handling, import/tax, duty. The CIF price is paid to the supplier; duty to Customs; handling to a broker or shipping line; and, clearance to a contractor.
Non-stock: Items such as supplies, services, equipment parts, etc are also purchased thru Platinum.
1.0 - Review of JDE Caribbean Configuration efforts to date. 1.2 – Anyone remember what the “Original Plans” were? 1.2.1 – What Actually Happened….
An inventory transfer or adjustment creates TWO Journal Entries (JE) in the General Ledger (G/L).
The first journal entry decreases inventory at the original location.
The second entry increases inventory at the destination location.
The Inventory in the Closed BP’s has already been credited and debited to the G/L in a previous year (2006). Only the Item Data truly remains and not the actual physical stock. Since the transfers program increases inventory at the destination location, this method will not work.
More critically important, is that the Transfers program in the Inventory Management system does not create any sales or purchase order documents therefore, it does not provide an adequate audit trail (for Sarbanes or internal audit compliances). On Hand + Adjustments (IA) & (IT) Transfers on P.O.’s Also, Credit orders Physical inventory variances + - Issues (I7) & Transfers Sales orders Ship confirms Physical inventory variances -
1.3.1 – What to do with the Closed BP’s – (TBD ?) Streamlining Solution - Copy Cocoa Inventory Processes throughout the Caribbean Next Best Streamlining Recommendation – Copy Barbados Methods The Best Case scenario for the old and used BP’s is to fully reconcile them to zero balances. From there they can be renamed and reused or made ‘Obsolete for use’ from Top Level Branch Plant Constants. There are several opportunities at JFM to improve the inventory processes. One way would be to add a BP 3001003 that would service the Mix / Packing Plants. This would eliminate tricky inventory counting methods. Additionally, Location configurations could also accomplish this task.
2.0 – Identify Functionality Gaps or A.K.A. - What’s the Best Way to Set this up ?
2.0 - Identify Functionality Gaps. 2.1 – Configurations as of June 2007 2.2 – Last Known Costing Decisions 2.3 – Costing Detail Overview 2.4 – Historical Costing 2.5 – BOM’s / WO/ SO / - Interactions 2.6 – Advanced Pricing ( ABC Method)
INV. / SALES ORDER PROCESSES 2.1 - Configurations As Of June 2007 Function Jamaica Grenada Belize Barbados POS for Cash Sales Yes No No No Sales Entry 520 Yes Yes Yes Yes Ship Confirm 560 No No No Yes Invoicing 580 Yes Yes Yes Yes Sales Update 620 Yes Yes Yes Yes Post Yes Yes Yes Yes
Caribbean - Order Related Features (June 2007) Feature Status Jamaica Grenada Barbados Belize Order Entry 520/580 Yes Yes Yes Yes Order Maintenance 520/580 Yes Yes Yes Yes Pricing Module 520/580 Yes Yes Yes Yes Blanket Orders 520/580 Yes Yes Yes Yes Invoicing 580/620 Yes Yes Yes Yes Sales Update 620/999 Yes Yes Yes Yes
Caribbean – Features to be (?) (June 2008) Feature Priority 1- 5 Jamaica Grenada Barbados Belize Advanced Warehousing Manufacturing Fixed Assets Procurement Advanced Pricing
Advanced Stock Valuation This application functionality not being actively used when it has been identified as priority need is a perfect example of the Caribbean not being properly implemented, configured, or supported.
When Inventory is physically shipped out of a warehouse BP the following JDE Tables are updated:
F4111 – Item Ledger – SO #
F4211 – Sales Order Detail – statuses updated
F41021 – Item quantities updated – quantity on hand reduced, commitments updated
Select Items Print Sheets Count Enter Count Approve Count Update Count Use data selection to select those items that need to be counted Print out the sheets that will be filled out during the physical counting Distribute the sheets to the persons who will execute the counting process When the count has been completed, enter the results using this interactive application Having viewed the Cycle Count Variance report, amend entries where necessary and then approve the count The update carries out inventory adjustments where necessary and generates all the background financial and other transactions 10 20 30 40 50 STAGE OF PROCESS DESCRIPTION STATUS
ABC is a technique to quantitatively measure the cost and performance of activities, resources and cost objects, including when appropriate, overhead. ABC captures organizational costs for the factors of production and administrative expenses, and applies them to the defined activity structure. The application can be as rigorous as a definite mathematical distribution or as creative as a selective assignment using a surrogate indicator. Regardless of the method, ABC is a process of simplifying and clarifying decisions required by the process evaluators and senior management using activity costs rather than gross allocations.
Why should we be using it?
ABC is an essential part of the functional process improvement and reengineering effort. It captures quantified cost and time data and translates this into decision information.
ABC measures current process and activity performance, provides simulated data for determining the cost of business process outputs across various scenarios and identifies opportunities to improve process efficiency and effectiveness. Evaluation of previous effort and production output levels are a poor determination alone and totally inadequate for measuring improvement. Though quality might determine "better", it does not contribute to other meaningful decisions such as what is more “Cost-Effective" and “Improves Production Flow”. It is the integration of these two dimensions that is the critical decision support element of the total process. ABC is the mechanism to integrate these two views.
ABC is a consistent, disciplined process that is necessary to the functional process improvement effort in both an analytical and evaluation role. It is also a process that requires professional judgment and creativity when applied to a transitional business process model.
This creativity does not invalidate the basic integrity of the idea, but is rather a necessity to bridge the gap from the traditional accounting data to the new process methodology. This idea will become more evident when ABC is compared to the traditional methods of costing. When applied with sound accounting principles to translate cost data and to provide a reliable information source upon which to base managerial decisions ABC is an invaluable tool that you will thank yourself for having the wisdom to use.
3.0 - Needs vs. Wants 3 .1 – You Want What and Need to do How? 3.2 – SharePoint / Robohelp / Documentation 3.3 – General Q&A – What is ??
3.0 - Needs vs. Wants 3 .1 – You Want What and Need to do How?
Question: What does the Job Cost feature do and can we use it?
Answer: The set up of the Job Cost module is quite light and the benefits are well worth it as it offers an online, multi-year (inception to date) overview of costs associated with transactions for a Business Unit or Business Units with the a robust G/L interface.
The Job Cost module can be used rather broadly to support the accounting and reporting of Inventory and Labor related expenses for extensive multi-task manufacturing jobs. Simpler capital expenditure-type (building /construction) projects are also supported.
The Job Cost Module is a robust module that is seamlessly integrated with the general ledger, and therefore integrated with the other JDE modules including Accounts Payable, Procurement and Accounts Receivable, Billing, etc. Job Cost in general, supports the reporting of accruals, budgets, projections, and commitments. It also offers various methods to recognize costs and revenues.
But you must keep in mind that …
The Job Cost module shares the same Chart of Accounts and balance file as GL and therefore account numbers are treated in a reverse way.. Subsidiary account first, object account second…Meaning that, - You’ll need to have already set up your chart of Accounts to get the full benefit from of the module. So it is best to complete your Go-Live and then return to set up this module. I have been involved in several JDE Finance implementations in my 10 years of consulting and I always recommend to set up Job Cost in addition to the other Finance modules, whatever the business requirements are, just because it enhances the online query possibilities on financial data.
What is the distinction between the BOM and a Parts List?
What is the Current Cost vs. the Completed Cost?
Why is the Completed Cost more than the Summary Costs the Parts List?
1) The distinction between BOM and Parts List is that the BOM is defined as follows:
The “ingredient quantity of material going into the manufacture of an FG end item or batch.”
2 ) The Current Cost (F4105) is the cost as is stated in the BOM components. The Completed Cost is the valuation cost as per the parts list (x) the completed quantity. The Parts list is simply a listing of the materials (and their cost valuation) going into the manufacture of the end item or batch on a single Work Order.
The Valuation of an Item, Material, or Part is not the same as the Cost.