Cost Accounting module: Cost accounting module consists of following functionalities:

1. Overhead Cost controlling.
2. Cost price calculation.
3. Hours accounting.
4. Activity based costing.

Overhead Cost controlling: Overhead cost, which is an indirect cost, can not be directly assigned to the products manufactured or services rendered. Sometime, overhead cost is a significant percentage of overall cost. This functionality helps in defining allocation relations in the form of surcharge/rate applicable to various cost centers which in turn is comparable to budgeted surcharge/ rates. The overhead cost control thus helps to monitor and allocate of indirect cost.

Cost price calculation: Under cost price calculation functionality, simulation (such as to make or subcontract), and calculation of price for standard and customized items are performed. This functionality is crucial in determining the lowest price limit for which a product is profitable. The cost price for standard item is calculated based on the following:

1. Material cost: Which may be latest procurement price or simulated purchase price.
2. Operation cost which may consist of labor and machining cost.
3. Subcontracting rate.
4. Surcharges for coverage of overhead such as management cost/inspection cost.

For calculation of cost price for customized items, project specific rates and surcharges are applicable. Cost price calculation also forms basis of calculation of valuation price (where a surcharge is added such as warehouse transfer surcharge) which in turn is used for internal financial transactions such as inventory transfer, Work in progress inventory. Sales price or suggested retail price where a sales price surcharge is added to cost price is also derived from this functionality.

A typical flow chart for calculation of cost and sales price is as follows:

Hours Accounting: This functionality is used to account for employees and machine cost and charge these costs to appropriate production orders. Hours spent can either be entered directly or the system can automatically back flush an estimated hour, on completion of an operation. When hours are posted, financial transactions are created in general ledger. Hours accounting is normally done through a working timetable and normal and overtime rates can be defined in the system. It is also possible to enter estimated/budgeted number of working hour for an employee or a work centre for a particular period (such as month/year) and compare the estimated/budgeted hours with actual hours.

Activity based costing: This is an extension of traditional system of distribution of overhead allocation, where only a few allocation bases are used. This functionality helps in controlling cost objects (which may be anything like products, services, projects, distribution channel) with their cost drivers, through a bill of activities and activity results. Thus, this functionality determines the consumption of business process by products, customers and other cost objects based on the cost drivers and helps in monitoring and controlling cross departmental business process.

What is configuration?

Configuration of an ERP system deals with handling of numerous usage controls, which can be switched off or switched on, so as to balance its functionalities to extant needs. First thing to happen is to install specific modules needed and configuring these modules, as per the scope of the project. Thousands of configuration tables are present, which define how the system should operate, how the data entry screen will look like, how the signals and massages will appear etc.

The above process is extremely complex, particularly for tier 1 vendors like SAP and Oracle. To alleviate this complexity, ERP vendors are creating pre configured modules suitable for a particular business vertical. ERP vendors are also developing automated pre configuration tools such as Orgware from BaaN. SAP has also brought out “Accelerated SAP Solution” containing industry specific templates which can be tweaked for an individual company.

General Mode of Configuration:

1. A function can be turned on or turned off or made optional.
2. XOR i.e.to chooses only one flow that fulfills the specified condition.
3. OR where a configuration supports optional activities or flow requiring all, none or some of the activities.
4. AND – indicate mandatory parallel flows.

Some configuration choices are irreversible e.g. if “negative inventory allowed” option is chosen, it can not be reversed at a latter stage. Some configurations are reversible e.g. purchase order quantity may exceed blanket order quantity or not. In some case if a specific choice is not made, configurable function can be switched on or off by default.

Setting up of basic system: Some important activities related to setting up of base system, having impact on all modules, are given below:

1. Creation of a company: This is basically to create a data base. A number of data bases can be created of which one may be for actual transactions where as the others may be for used for testing and training. A Company may different hierarchies such as single logistics/single finance, multi logistics /single finance, multi logistics/multi finance etc.

2. Setting up of currency: Currencies need to be configured as i) base currency which is the legal currency of the country where the organization is operating ii) Alternate reporting currencies, iii) transaction currencies used for transaction with vendors and customers who may be spread over a number of countries.

3. Setting up of calendar and periods: Calendars are used to record information on the availability of resources. Periods are time intervals that can be utilized for statistical, financial, planning and cost control purpose.

4. Units of Measure: Base units of length, surface area, weight, time and their conversation factors for transactional purpose.

5. Integration between finance and logistic: Setting up of inter company relations, mode of updating finance tables either in real time or in batch mode, mode of inventory valuation such as LIFO, FIFO, Standard Costing or Weighted Average, treatment of finalized and non finalized transactions on financial ledger etc.

6. Defining number group, series type and series length: To be used as ID of a unique transaction like purchase orders, sales order, production order etc.

7. Defining Countries: Customers and vendors are located in various countries for which country code need to be defined. This is very important due to necessity of tax calculation and reporting.

8. Assigning Tax codes: Needed to be defined for sales, purchase, service, project transactions.

Conclusion

Even if a pre-configured package for a specific vertical is chosen, the base configurations as mentioned above is needed to be done with extreme care, during implementation. This base configuration affects all the modules which form part of the implementation.

Change/Risk management

Implementation of ERP necessitates a broad based organizational change which is more disruptive than incremental. Change management effectively deals with the process of managing such changes, and broadly encompasses all major segment of the organization such as:

• People-Employees education and competence.
• Organization- Organizational structure, Business functions and processes
• System-Information planning, Hardware and Software.

Effective change management is interconnected with risk management which minimizes risk of failure and ensures avoidance of unpleasant surprises, both during implementation and post implementation phases.

Processes of change/risk management: Starting with project kick off, following Processes should be beneficial:

1. Engaging a change management agent: He may be a project sponsor/ project champion and well conversant with business process of the organization. For a large project, an outside consultant, specialized on change management may be engaged. The project manager is usually not given this task.

2. Risk analysis: At the outset, detailed analysis of perceived risk is drawn with active participation of change agent, project manager, consultants and key users. Perceived risks are classified into different categories. After deliberation of their likely impact, what action is to be taken by whom and when, are agreed upon. Some of such risk categories are:
   1. Risks perceived by key users and project sponsor.
   2. Risks resulting from project size, excess customization and multi location implementation.
   3. Risks resulting from organizational structures, general motivation and procedures.
   4. Risks resulting from communication structure.
   5. Risks resulting from stuffing availability.
   6. Risk arising from knowledge and expertise of users.
   7. Risks arising from knowledge and experience of project manager, consultants and project team.
   8. Risks arising from supply of hardware and software and network bottleneck.
3. Communications: One of the important function of change management process is communication of scope, purpose, progress of the ERP project all across the organization. This may be in the form of news letter (or an bulletin board if intranet is available). The news letter should include up to date news of the project, upcoming milestone, individual/group achievement and should highlight benefit of the project.

4. Dealing with the people factor: Resistance to change is usually encountered from employees with longer years of service. There may also be apprehension of redundancy. User buy in of the ERP system is a critical success factor and there is always difficulty in adapting to a new culture of computerized environment. Recognizing such behavioral issues and developing a plan to address, is one of the most important responsibility of change agent.

5. Training: For user understanding of the new system, organizing multiple and on going training is an important function of change management process. Training methodology includes classroom training, workshop, hands on practice, streaming video etc. Training manual with screenshots and user feedback at the end of any training programme, augment effectiveness of the training.

6. Monitoring of activities during go live: This period is a crucial part for change management process as some nasty surprise may emerge, needing immediate resolution. Change agent must check and ensure that all transactional data are entered into the system and any system error is resolved forthwith. If a legacy system is needed to be maintained temporarily for fall back purpose, then he needs to ensure entering of data in both the system and organize additional resources wherever required.

Conclusion

ERP implementation is a complex process as it involves both technological and functional issues. Pre defined plan for managing the associated risk and effectively changing process of the organization will go a long way to ensure success of the project.

Cash management module also allows analyzing financial transactions for a given period of time and provides information regarding sources of fund and use of fund to ensure liquidity in order to meet payment obligations of the organization.

A typical payment/receipt flow in an organization

Integration with other modules

1. Accounts payable where from processed purchase invoices are received.
2. Accounts receivable wherefrom processed sales invoices are received.
3. General Ledger where transactions processed within this module are posted.

Maintaining Master Data: Some of the master data parameters for cash management modules are

1. Maintain payment/receipt method: This will determine how payments/receipts are processed, for which following parameters are needed to be defined:
   1. Whether automatic (where invoices or receipts are selected automatically depending upon payment term) or manual payment/Receipt.
   2. Maximum Amount per Business Partner in a single payment batch.
   3. Bank Account/Bank Address for making/ receiving payments.
   4. Output option-whether paper (cheque) or file (Direct debit).
   5. Composing Options – Where receipt/payment are processed individually (remittance) or combined for a number of invoices.
2. The bank relations: Where details of currency (home currency/ foreign payment), type of bank, whether blocked for payment or receipt, default priority etc. are maintained.
3. Linking to General Ledger – Defining of several chart of accounts related to posting of various stages of transactions processing within cash management to General Ledger, such as anticipated payment, anticipated receipts, cheque issued not realized.
4. Payment authorization – Maximum amount a user can pay to a supplier or if the user is authorized to make advance payment.

Functionality of Cash Management module

1. Supplier Payment – The standard procedure for supplier’s payment is given below. However a variation of this process is followed for payment relating to standing order (where payments are made without an invoice), payment against proforma invoices, stand alone payment etc
   1. Select and compose invoices for payment
   2. Print payment advice list
   3. Modify payment advice
   4. Reconcile amount as per payment advice and invoice
   5. Assign bank
   6. Print cheque or post bank orders in an electronic file.
   7. Post cash transactions to general ledger

   A flow chart showing supplier payment procedure is given below:

   

2. Receipt of sales invoice amount:
   1. By Cheque:
      1. Cheque received from customer (anticipated receipt)
      2. Cheque sent to bank (cheque anticipated status).
      3. Cheque paid by bank (bank relation-reconciliation).
   2. Direct debit: Applicable for customers who have authorized the organization to directly debit their bank accounts.
      1. Select Invoices for Direct Debits
      2. Direct Debit Advice
      3. Compose Direct Debits
      4. Assign Banks to Direct Debits
      5. Audit Direct Debits
      6. Create Direct Debit Orders
      7. Print Remittance Letters
      8. Post Direct Debits into general ledger.
3. Cash flow Forecast: This functionality provides an insight of the projected liquidity position of the organization at a certain point in the future. While forecasting cash flow the system uses available data regarding I)purchase orders and purchase invoices, ii) sales quotation, sales order and sales invoices iii) standing orders and iv) financial budgets.

What is Business Process Re-engineering (BPR) ?

BPR means not only change but radical change within a short period. This change is achieved by complete revamp of organizational structure, business process workflow, job description, performance measurement and adoption of information technology. Some of Basic characteristics of BPR are:

• View business as a set of customer (both internal and external) oriented processes rather than a set of departmental functions.
• Processes must have clear cut ownership.
• Non value adding activities within a process should be eliminated..
• Gather information only once at the point of origin.

A successful BPR implementation brings significant improvement to productivity, customer service and bottom-line. There are pain and difficulties during implementation and instances where BPR efforts did not achieve desired result. Notwithstanding, the risk is worth taking. Otherwise, there will be grater risk of being overtaken by competitors who develop and progress rapidly through BPR.

Implementation phases

1. Project kick off: Project goal, project team and communication standards are agreed upon. A number of workshops are held where project scope, sponsors commitment, project risk, milestones and deliverables are discussed. A SWOT (strength, weakness, opportunities and threat) analysis is carried out with active participation of all.

2. Process identification and data gathering: “As is” processes are assembled through flow charts. Current practice of Interfacing with business partners is gathered. Bottlenecks, delays, complexity, internal blame games, idle assets etc. are brought forward. Use of existing technologies is comprehended. Major and strategic business processes to be reengineered, are identified. Stakeholders categorize the processes to be reengineered and agreed upon on the timeline of implementation.

3. Process Reengineering: In this phase, actual reengineering begins. A number of brain storming sessions are held with project team and other stakeholders, where current business processes are critically analyzed to determine non value adding activities and identify excess control and check, always with customer value as a focal point. Impact of new technologies on process improvement is also evaluated. New process ideas with reduced check and control and enabling technologies such as Workflow automation and ERP, are envisaged. Benchmarking is also done with best of breed industrial peers.

4. Blueprint of new system: Blueprinting involves modeling workflow and information requirement, of new business processes. “To be” processes are modeled using various modeling tools. New organization structures, human resource need, performance monitoring and compensation, technological needs, are also outlined. Normally, a first cut redesign scheme is produced which is modified after gathering actionable feedback from the stakeholders.

5. Transformation: A migration strategy and a migration plan is the first step of transformation. Migration strategy may decided as a pilot, phased or big bang implementation. The migration plan would include establishment of new organizational structure, detailed training and reallocation of workforce, and cut off dates for implementation. Change management and introduction of new technologies will form an important part and may need engagement of outside consultants for this specific purpose. There should be provision on the plan to tweak the implemented system so as to get maximum value out of it.

BPR or ERP: For successful of BPR implementation, Information Technology plays the role of a key enabler. Therefore, a question is raised whether it is logical to directly implement ERP and re-engineer business processes by adopting world class practices, contained in ERP packages. This approach would avoid embarking on BPR which is expensive, time consuming and often risky. Also reengineered process arising out of BPR exercise may not be best of class. On the other hand, there is a grave risk in this approach if a proper ERP package is not chosen. Process orientation and ownership will be lacking from employees which may lead to major implementation difficulties.

Asset Management thus helps in keeping track of fixed assets, handling fixed asset depreciation for fiscal reporting and revaluation of asset.

Budgetary control (BC) module is another important finance module which helps in planning and comparison of actual results with budgeted amount and quantity.

This module helps business units to calculate business target, budget release as well as provide extensive analytic tools for budget monitoring.

Asset Management – Some of the important functionalities are:

1. Investment and disposal method.
2. Users’ defined depreciation method.
3. Periodic revaluation of fixed assets.
4. Business and insurance information.

This module is linked to general ledger to post depreciation result as well as to accounts payable and accounts receivable for buying and disposing assets. A few important master data parameters for Asset Management are:

1. Defining of a schedule of chart of account which is needed for linking to general ledger.
2. Depreciation method.
3. Remainder value or percentage.

• Investment and disposal method: This procedure is applicable when a new asset is acquired by the organization. While payment is made through accounts payable for asset acquisition, an investment transaction is generated, and the result is posted to general ledger.

  The asset is registered in asset management and is linked to a depreciation method. The asset is then ready for periodic depreciation and revaluation.

  Similarly, when an asset is sold/discarded, a disposal transaction is created in this module which generates a sales invoice in accounts receivable and post relevant transactions in general ledger.

• Users’ defined depreciation method: This functionality provides a flexible way of maintaining depreciation cost.

  The system allows a depreciation method which determines how the system calculate depreciation such as by a fixed amount, by a percentage of purchase price/ book value or an amount on the basis of number of years in operation.

  The system also allows accounting for remainder value. The depreciation method may be applicable globally for the entire organization or specific for one or more groups of assets.

• Periodic revaluation of fixed asset: This functionality enables periodic revaluation, which is a positive correction of book value of the asset, to account for market price changes.

  Revaluation of asset is linked to some user defined indices which are integrated in the system. Revaluation amount is, normally, calculated by the system during fiscal year closing and result is posted as year end transaction in general ledger.

• Business and Insurance information: Under this functionality, additional information regarding fixed assets which are non-financial in nature, are stored in a users’ defined manner.

  Information is stored after classifying assets under various groups and sub groups. Details of insurance policies are also maintained and are linked to fixed assets.

• Budgetary Control Module: This functionality enables registering, handling and monitoring of budget amount by ledger accounts.

  This functionality also helps in preparing performance budget for reference units (such as fuel consumption for vehicles), in addition to price based financial budget.

  Budget amounts and quantities are planned over the year and broken down into period values. It is also possible to set up a flexible budget by distinguishing between fixed and variable budget.

Steps for preparation of budget

1. Setting up of master data such as defining budget codes, periods of budget.
2. Defining reference units (by amount or quantity) and budget method such as bottom up or top down approach.
3. Generation of budget distribution data and maintaining budget amounts over the year/ period.
4. Printing budget amount and trial balance.

Encumbrance budgetary control: This functionality, which enables recording of pre expenditure in the form of commitment, is important particularly for government/ public sector, where budgetary control is a statutory requirement.

The system creates encumbrances from a requisition, purchase order or a work order, where related amount is needed to be paid in near future.

The committed amount is automatically blocked and is not available for other transactions. When the payment is finally made, the encumbrance is relieved, after the account is debited with paid amount.

Sub contracting is normally planned, but sometime may be unplanned to meet exigency of a situation, such as breakdown of a plant. Normally, an ERP system treats subcontracting similar to procurement of a service.

A typical flow chart of subcontracting production order is as follows:

Procedure for subcontracting production orders: A few details of the process (in addition to normal procedure of production order control), as shown in the flow chart, is given below:

1. Define Subcontracting Data – This is a set up data for subcontracting operation and may consist of following components:
   1. Subcontracting item – which is the outsourced part of the item.
   2. Subcontractor.
   3. Subcontracting workcenter.
   4. Subcontract task.
   5. Workcenter – task relationship.
   6. Subcontracting rate factor in tasks.
   7. Subcontracting rates
2. Subcontract Operations – This procedure is used for unplanned subcontracting where operation is shifted to a subcontractor’s workstation due to emergency. This step is not needed for planned subcontracting, as the operation is already planned in a subcontractor’s work center in the routing of the item to be manufactured.
3. Generation of Subcontracting Order – Production module treats subcontracting as buying an operation. Therefore, a purchase order must be created when subcontracting is carried out. For generating a subcontracting order, the order status of the operations must be Released or Active. After generation, subcontracting orders are processed in the Purchase module and a purchase-order line is created for each subcontracted operation.

Materials Issue – When a production order is carried out, required materials from warehouses is needed to be issued. There are various ways of releasing materials for a production order, as detailed below.

1. Backflushing of Materials: Backflushing is automatic issue of materials from inventory, based on BOM measure and quantity of item manufactured.

2. Pull Note: Authorizes movement of goods to the shop floor from warehouse and movement of work in progress inventory between work centers. For pull notes to be operational, quantity of item to be moved by each pull note and number of pull note per item, should be specified.

3. Manual Issue: Normally used for non repetitive production environment such as job shops. This functionality deals with calculating estimated materials, additional materials and return of materials, whereas actual issue of materials is dealt by inventory module

ROI in the context of an ERP project

A ROI for ERP project represents metric of completed due diligence and a time phased plan that define when money will be needed and what for it will be used. ROI calculation is made by dividing monetary gain by amount spent. While it is easier to calculate the expenditure for an ERP project, it is difficult to determine the gain, as several gains from the project are intangible and not quantifiable. Typically, ROI involves a pay back period, which is the length of time taken for the cumulative expenditure equals cumulative cost of investment.

Tangible and Intangibles benefits of ERP

Some of the quantifiable and tangible benefits of ERP system are mentioned below: Implementation of ERP, however, does not lead to headcount reduction (redundancies of few lower ended positions of payroll and accounts payable gets counterbalanced by additional higher paid IT staff).

1. Reduced level of inventory, including raw material, work in progress and finished goods, through improved planning and control.
2. Reduced materials cost through improved procurement and accounts payable practices, less obsolescence and wastage.
3. Reduced labor cost through better allocation and reduction of overtime of workmen directly involved with production such as technicians and skilled workers.
4. Improved production throughput through better scheduling of critical equipment and sub contracting operations, there by minimizing shortages, interruption and rework.
5. Reduction in the cost of after sales services.

In addition to tangible benefits, following intangible benefits also occur:

1. Integration of information resulting efficiency, transparency and effective MIS.
2. Error reduction, accuracy of inventory record.
3. Improved customer service, on time shipment, shorter order to shipment cycle.
4. Establishment of standardized procedures.
5. Improved accounting control and shorter sales to cash cycle.
6. Legal and regulatory compliance.

Calculation of ROI

There is no standard method of calculation of ROI for an ERP project but a structured method of analysis is achievable. It may be too cumbersome and subjective to factor in intangible benefits. But these factors are important for creating an overall business case and in many instances, where ROI is not calculated, form a base line objective for the project.

First step is to determine cost of various components of the project such as consulting fees, license fees, modification and implementation cost, hardware cost etc. Maintenance fees for a pre determined period (say for three or five years) should be added to arrive at Total Cost of Ownership over the specified period. The estimated expenditure should be time phased over the period, used to calculate TCO.

Next step is the more difficult part which is to estimate expected benefits over a period of time. For estimating these figures, there should be wide consultation and reference to statistics emanating from various survey reports. Benefits will largely occur from the reduction of inventory level, operation cost, labor cost and improved production. Whereas the last three elements will have a direct impact on profit and loss account, the reduction in inventory will cause release of additional cash which can be assigned to a yearly value of saving, based on organization’s standard internal rate of return.

Relationship between time phased cost and benefit will project a time phased ROI, which will be negative at the outset and will turn positive over the pay back period.

Conclusion

ROI is a bit problematic particularly in term of unquantifiable figures. But it offer a measure of success or otherwise of the project. ROI measurements help in many circumstances specially buy in from project stakeholders, which enhance chances of a successful completion of the project.

After confirmation, full functional production orders, with adjustable routing and components, states what quantity of product should be manufactured and its scheduled date of production. While generating the production order, the system takes cognizance of the number of hours needed for the order and capacity of machines and work centers and availability of materials and components.

Functionalities of production module: Some of the basic functionalities are:

1. Production order control.
2. Production order planning.
3. Production order statistics.
4. Production order subcontracting (to be discussed later).
5. Production material issues (to be discussed later).

Linking to other modules: Production planning and control is a highly integrated executable module. It receives planned production orders from the planning engine. It receives details of product structure from BOM and details of operations needed for a manufactured item from Routing. It receives cost accounting data from cost accounting module. The inventory module deals with issue of goods to production orders and quality management checks the quality of goods produced.

Production order control: This functionality is used to carry out all aspects of a production order under different production environment such as repetitive manufacturing, job shop manufacturing, and assembly line sequencing. The functionality enables user to transfer planned order and create manual production order, print production order documents containing details of required components and operations, release order to shop floor for execution and record status of the order such as planned, released, active and completed. Finally, the production order is closed when final outcome of cost, material issued and hours worked are posted to the production order.

When a production order is created, the system automatically calculates estimated material (from BOM) and estimated hour (from routing) for executing the order. The system may adopt forward planning when production start date is used for calculating delivery date. The system may also adopt backward planning when production start date can be derived from the delivery date and the order lead-time of the item.

Production order planning: This functionality helps in changing or rescheduling operation of a production order, as per details indicated below:

• Changing the operations (tasks).
• Changing sequence of operations (routing) – to alter the structure of the routing.
• Changing order sequence (dates and scheduling on a work center).
• Changing the content of the order (reference dates) – for replanning the order.
• Changing material belonging to the order (estimated materials.

Production order Statistics: This functionality provides information regarding actual cost and estimated cost of production orders, both in respect of materials consumed and hours spent. This statistical information helps in better planning and execution of future production orders.

Routing is another important base of production module, which defines the method of manufacturing. Method or route to be followed for manufacturing a product is a prerequisite for setting up production module.

Bill of Materials: Any manufacturing process goes through various phases of production and at each phase, components (either work in progress or purchased) are needed. BOM details components required at various phases or levels of operations (either single level or multi level). In a multi level BOM, a parent/child relationship between successive levels is formed.

BOM is used both for production and planning purpose, as specified below:

1. Defining a production bill of materials: The end item is described at highest level of BOM. Levels of BOM are defined indicating material-routing relationship at every level of operation. Thereafter, components are added at each level. An existing BOM can be easily modified to create a newer version of BOM. An Engineering Bill of Material from Engineering Data Management module may also be copied to make a production BOM. A generic BOM may also be modified to make a customized product with the help of Configuration Management module.

2. Defining a planning bill of materials: Production of similar items (such as garments of same type but of different sizes) is linked through aggregate relationship under planning bill of material so that their long term plan of production/ subcontracting are not done separately.

Loops in BOM – While defining multi-level production bills of material, the user may mistakenly link a higher level item to its component at a lower level. This creates a data error and triggers an infinite loop for the manufactured item. This mistake is detected through utilities, which normally forms part of the module.

Routing – The objectives of Routing module are:

1. All tasks required to manufacture an item are determined.
2. The work centers related to these tasks are identified.
3. The sequence of task linked operations to be carried out on work centers or sub contracting work centers are established.

Department – An organizational unit that carries out a specific set of tasks. A department can be of various types such as work centre, service centre, sales office etc.

Work Centre – A Work Center is a place where production activities are performed. Resources (like men and/or machines) are linked to a work centre. Thus, a Work center is a group of resource units used as a functional planning unit. . Work centers may be departmental work centre or sub contracting work center.

Task – This term is used to describe any activity carried out on the shop floor. Work centers and machines (for machine tasks) are used to define tasks. Task may be of various types such as production, repair etc.

Work centre Task relationship – The task is linked to the work center if the work center is able to executing the task. Details such as set up time, production rate etc. are maintained under this relationship.

Routing Code – The routing code identifies a routing sheet. Multiple (alternative) routings are possible for each standard manufactured item. A routing selection can depend on the order quantity, which is called the Order Quantity Dependent Routing. A routing code is needed to be linked to the manufactured item.

Routing Operation – Here, series of routing steps that are carried out successively to produce an item is defined. The operations are identified by serial number, which indicates sequence of operations for the associated manufacturing process.

The main flow between business objects in Routing module is depicted below