Production Order: From Customer Order to Output

A production order is an internal document that turns a customer order into a shop plan: which product to make, in what quantity, from which materials, with which operations and by what date. In Bimp it is created from a customer order with the “Create based on” button, and materials are written off from the warehouse later, when an assembly is posted.

A manager takes an order for 40 office cabinets and writes to the foreman in a messenger: “We have 60 metres of board, is that enough?”. The foreman answers within an hour, and the answer rests on memory. In a production order the answer is visible at once: need 72 m², balance 60 m², shortfall 12 m². Further on is a full sample of such a document with the arithmetic. The company is hypothetical.

How does a production order differ from a customer order?

A customer order records “what, how many and for how much”. A production order describes “how and from what”: it holds the specification, materials, operations, workshop warehouse, planned dates and a responsible person. In production paperwork it is also called a work order or manufacturing order, and the substance is the same.

The link between the documents is kept on the “Links” tab, so from the production order you can see which customer it was created for. For cascade production there is a “Create production orders” switch: it automatically creates subordinate orders for semi-finished products.

There are two operation types. “Assembling” makes a new product, and its cost price consists of materials and operations. “Repair” does not create a new product: the cost of spare parts and work is added to the cost price of the existing item. The rest of this article covers assembling.

What does a sample production order look like?

A hypothetical manufacturer makes office cabinets and has received an order from a dealer: 40 pieces at €120, €4,800 in total. Below are the document header, the products and the operations. The fields correspond to the left panel and the tabs of a production order in Bimp.

The “Operations” tab shows the work by specification stages. The system takes the time norm and the operation cost from the specification, and the total equals the quantity multiplied by the cost.

Check: 0.5 + 0.4 + 0.8 + 0.2 = 1.9 hours per product, 1.9 × 40 = 76 hours. Cost 6 + 4.80 + 9.60 + 2.40 = €22.80 per product, 22.80 × 40 = €912.

How do you calculate the materials and the order cost?

Bimp calculates materials from the specification: the norm per product is multiplied by the quantity in the order. The “Materials” tab shows the need, price, amount and warehouse balance, so the comparison with availability happens in one place.

The need for chipboard is 1.8 × 40 = 72 m², for edge banding 9 × 40 = 360 m, for runners 3 × 40 = 120 pairs. The materials total is 648 + 108 + 264 + 112 + 60 = €1,192.

The planned cost of the batch equals materials plus operations: 1,192 + 912 = €2,104. Per cabinet that is 2,104 / 40 = €52.60. In Bimp, for assembling, the unit price on the “Products” tab is calculated exactly like this, as the sum of the cost price of materials and operations. The gross profit of the order at planned cost is 4,800 - 2,104 = €2,696, or 56.2% of revenue, before shop and administrative overheads are allocated.

What should you do if materials are short?

In the example 72 m² of chipboard is needed and the warehouse has 60 m². The shortfall is 72 - 60 = 12 m². One cabinet takes 1.8 m², so the available board is enough for 60 / 1.8 = 33 cabinets (33 × 1.8 = 59.4 m²), and seven cabinets are left without board. They need 7 × 1.8 = 12.6 m², and the 0.6 m² remainder covers part of that, so 12 m² has to be bought.

Such calculations are usually made after the shop has already stopped. In a production order they are made before launch. There are three paths:

1. Buy 12 m² and put the purchase in the plan before Nov 18.
2. Replace the chipboard with an analogue if the specification allows it: the “Analogue” column opens a panel with permitted replacements, priorities and balances. For several rows at once there is the action “Other actions → Replace with analogues”.
3. Split the order into two batches: 33 cabinets start at once, 7 wait for the board.

Reservation ties materials to the order. On the “Materials” tab fill in the “Reserve” column by hand, or turn on the “Product reservation (Production order)” switch in the accounting settings, and the reserve is set automatically. A reserve is possible only within the balance and with a suitable batch, so 60 m² of chipboard is reserved, and the remaining 12 m² stays a shortfall. A reserve can also be set earlier, straight from the customer order with the “Stock reservation” document, as described in the article Reserving materials.

How do you hand materials to the shop and start output?

Save the order, click “Create based on” and choose “Stock transfer”. Bimp creates a document in which the sending warehouse is the materials warehouse, the receiving warehouse is the workshop, and the “Goods” tab is filled with the order’s materials. The quantity to transfer equals the plan minus what has already been transferred, so a repeated transfer does not duplicate the issue, and materials can be issued in parts by changing the quantity.

Then there are two ways to start. If you record output with one document, create an “Assembly” based on the order: it writes off the materials and posts the finished cabinets to stock. If you want to see which stage each product is at, create a “Production task”: before that, click “Create batches” on the “Products” tab, and the products are split into rows of one piece. Keeping track of stages is covered in detail in the article Production tasks. How to follow them daily is described in a separate guide on production order tracking.

The end date in the order is a planned date. Actual output is recorded by an assembly, and these two concepts should not be mixed in sales plans.

How do you load many products into an order at once?

When one order has dozens of lines, they are loaded from Excel. In a new order, on the “Products” tab click “Import” and choose a file based on the “Production order import template”. The file has five columns: “Product”, “Specification”, “Modification”, “Quantity” and “Unit”.

The names of products and specifications must match the names in Bimp to the last character, otherwise the row will not load. If a specification is not given in the file, the system adds only the product without components. After the import check the “Products” tab: under each product its list of materials is expanded. The columns and typical errors are described in the article Loading products into a production order from Excel.

How do you know the order has been completed?

Totals by order come from the Production Progress report. For each production order it shows how much was ordered, produced, remains to be made and shipped. In the example, after the first week the figures could be: ordered 40, produced 33, remaining 40 - 33 = 7, shipped 0. The “Produced” column is filled by posted assemblies, so until the document is posted, finished cabinets do not appear in the report.

For the customer this report gives a basis for a conversation about the date: 33 cabinets are ready to ship, 7 are waiting for board. The manager names two dates instead of one imprecise date.

What Bimp does and does not do

Bimp is a Ukrainian cloud ERP for manufacturers, and a production order in it is created in “Production → Production orders” or from a customer order. The system pulls in products, materials and operations from the specification, calculates the need and price, shows warehouse balances, sets the reserve, suggests analogues, creates a materials transfer to the shop and prepares data for an assembly or production tasks. The fields and tabs are covered in detail in the help article Production order. A customer order has a “Priority” field (High, Medium, Low), which is passed to production to set the order of work.

The limits are these. A production order does not write off materials or post the product itself: an assembly does that. Norms, operation prices and the product composition come from the specification, so an error in a norm will get into the need calculation. Material replacement works only with the analogues you listed in the specification. There is no automatic shop load schedule in the order: the start and end dates are set by a person.

In the example the order for 40 cabinets gave three answers before the first cut of board: 72 m² of chipboard needed against a balance of 60 m², a planned cost of €2,104 (€52.60 per cabinet) and 7 products without material. The more accurate the specification, the more reliable these figures.

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