By-Products from Work Orders

Overview

This feature allows manufacturing users to produce multiple products, including by-products, when completing a work order. It improves inventory tracking by recording all produced items in a single work order. In addition, by-product costs can be calculated using either the fixed cost method or the allocation method.

Example

The instructions below outline these items as an example:

Finished Good - Sold to Retail Stores
- Peeled Apple Snack Box
Formula/BOM
- 1 Apple
- 1 Box
- 1 Plastic Wrap
By-Product - Sold to an Apple Cider Vinegar Company
- 1/4 Ounce Apple Peels
- 1 Apple Core

By-Product Configuration

Create Items for both the Finished Good and the By-Product(s)

See here for a reminder of how Finished Goods are configured with a Formula (BOM): Creating Item Formulas (BOM)

Define By-Product(s) for a Finished Good

Open the Item for the Finished Good
- Navigate to the By-Products (Parent Item) Related List
- Click the New Button

In the Item field, enter the By-product
In the Qty Per field, enter how much of the By-product is created when you create one of the Finished Goods.
In the Unit of Measure field, enter the corresponding UOM for that quantity
Click Save
- Or Save & New if you have another By-product to add

Also, By-product(s) must be lot-tracked
- Click the pencil icon next to Lot Tracked

The edit window will be displayed
Check Lot Tracked
Click Save

Note that the by-Product (s) are added to the related list for the finished goods.

(Optional) Assign Costs to By-Products

To Assign a Fixed Cost to a by-product:
- Open the Item Details Page for a the finished good associated with the by-product.
- Navigate to the By-Products (Parent Item) Related List
- Click on the By-Product record

The By-Product details page will be displayed
Click the pencil icon next to Fixed Unit Cost
Enter the cost
Click Save

Note: If you do not see the Fixed Unit Cost field on this page, reach out to your company’s salesforce administrator to add it.

Create Work order for Finished Good and By-product(s)

Creating a work order for a finished good will include any by-products and quantities associated with that finished good.
See Creating a Work Order for instructions how to create work orders.

Process Work Order with By-Product(s)

Process the Work Order for the Finished Good
- See instructions here: Process Work Orders
Navigate to the Output By-Products Related List to review the By-Products.
Lot No. for By-Product will automatically be created.
- Lot No. Format = YYYYMMDD
- You can edit the lot if needed

You can edit the lot if needed
- Navigate to the Output By-Products Related List
- Click on the “OBP” number for the lot you need to change
- On the Output By-Product detail page, edit Item Lot
  - Select a lot or create a new lot
    - See here for Item Lot specifics
  - Click Save

(Optional) Allocate Total Costs to Both the Output Item and the By-Product

Before posting the item journal, click Edit.

The Item Journal Details Page is displayed
Click the checkbox next to the Auto Allocate By-Product Cost
Click Save.

Finish Production

Post the Item Journal

The Finished Good and By-Product(s) are now in the Output bin.
Ledger Entries for By-Products, together with the Output Item, have been created
- The Is By-Product field will be checked for By-Product output.
- If the Auto Allocate By-Product Cost field on the Production Journal is not checked, the Fixed By-Product Cost field will be checked on the Item Ledger Entries.

If you do not see these columns in the list, please reach out to your salesforce administrator to add them.

Finish Work Order

When finishing the Work Order, GoldFinch will calculate the By-Product Finished Cost according to the following logic:

Default Option: Fixed By-Product Cost

GoldFinch will use the Fixed Unit Cost entered on the Output By-Product to cost By-Product items.
The remaining Finished Cost will be allocated to the Output Item using this formula:
- Cost of Output Item = Finished Cost - By-Product Finished Cost

See example below:

Work Order
- Finished Cost: 201.60

By-Products:
- Apple Core
  - Qty = 144
  - Cost = 2.88
- Apple Peels
  - Qty = 36
  - Cost = 0.36
- Total By-Product Cost = 3.24

Output Item: Peeled Apple Snack Box
- Qty = 144
- Finished Good Cost = 201.60 - 3.24 = 198.36

Alternate Option: Allocate Total Costs to Both the Output Item and the By-Product

If the Auto Allocate By-Product Cost is checked on the Production Journal, the Fixed By-Product Cost field will not be checked on the Item Ledger Entries
- GoldFinch will allocate Finished Cost based on the total base quantities of both the Output Item and the By-Product items using this formula:
  - Cost of By-Product1 = Finished Cost * (Base Quantity of By-Product1 / (Base Quantity of Output Item + Base Quantity of By-Product1 + Base Quantity of By-Product2)