Minimum Version Required: 23.06
Pre-Conditions
Applies to all OCloud producers.
Impacts all non-Packaging type Recipes/Production Orders.
Steps
Value Statement:
Enable GAAP compliant WIP accounting visibility by creating accounting transactions throughout the production process.
Requirements:
Applies to all OCloud producers
Impacts all non-Packaging type Recipes/Production Orders
Problem Statement:
Prior to 23.06 (June 2023), Production Orders passed the value of consumed raw materials to a WIP Account at the time of completing the Production Order. This meant that the value of consumed raw materials was not passed to a WIP Account while the Production Order was in process. This resulted in an overstated Raw Materials Inventory Account and an understated WIP Account while the Production Order was in process. This was most impactful when using multi-stage Recipes/Production Orders that cover the brewing process from mash-to-bright beer, which typically takes between 2-4 weeks to fully complete.
The brewing industry standard is to break the production process into three common phases: Wort WIP -> Green Beer WIP -> Bright Beer WIP, and pass the value of all consumed raw materials to WIP Accounts for each production phase.
The Solution:
Allow defining production phases using Production Stage Groups.
Pass the value of consumed raw materials to WIP Accounts for each phase of production.
Minimize Recipe setup by auto-creating WIP Products for each Production Stage Group.
About Production Stage Groups
The purpose of Production Stage Groups is to define the phase(s) of the production process and temporarily store the value of all consumed ingredients in a WIP Account for each phase while the Production Order is in process.
Production Stage Groups define the phase(s) of the production process by associating Production Stage Types to a production phase. This is achieved by assigning Production Stage Types to a Production Stage Group.
How Production Stage Groups work with Recipes & Recipe Stages
Recipes consist of one or multiple Recipe Stages. Every Recipe Stage is assigned to a Production Stage Type and every Production Stage Type is assigned to a Production Stage Group.
The system auto-generates a WIP Product for each Recipe Stage based on the Production Stage Groups + Recipe Brand. The WIP Product is used to store the value of consumed raw materials in a WIP Account. The consumed raw material value is passed from one WIP Product to the next WIP Product as the brew moves through each production phase (e.g. Wort WIP -> Green Beer WIP).
How consumed raw material value flows through WIP accounts while a Production Order is in process
Every Recipe Stage has an assigned WIP Product, and Recipe Stages have raw materials consumed in each stage. Raw material value is passed to the WIP Account mapped to the Recipe Stage’s WIP Product when the raw material is consumed. The value of the WIP Account increases as each raw material is consumed.
WIP products map to a WIP account that stores the value of all consumed raw materials while the Production Order is in process. WIP value will pass from one WIP account to the next WIP account when the Production Order progresses through the phases of the production process (e.g. Wort WIP -> Green Beer WIP -> Bright Beer WIP).
Upon completion of the Production Order, the total value from all consumed raw materials is passed to the account assigned to the Output Product on the Production Order. This functionality has not changed with the addition of Production Stage Groups.
Fields And Definitions
Define the phases of the production process that you wish to capture WIP value while production is in process.
--As previously stated, the best practice for brewing production phases is Wort WIP -> Green Beer WIP -> Bright Beer WIP. However, a single In-Process WIP phase is also acceptable.
--This does not apply to the packaging phase, only the phases leading up to packaging.
Create one WIP Product Type for each production phase.
Product Type Fields
--Track Inventory = True
--Type Code = WIP
--Store in Equipment = True
Product Type Account Mapping
Link all WIP Product Types to an Inventory Asset Account Maps record that links to the Inventory Asset Account that will store the value of this phase.
Create one Production Stage Group for each production phase.
Production Stage Group Fields
--Product Type = set the WIP Product Type created in step 2.
--Package = set the unit of measure Package that you would want set by default on the auto-created WIP Products.
----BBLs is commonly used on beer Production Stage Groups.
----Gallons is commonly used on spirit Production Stage Groups.
Link all non-packaging Production Stage Types to the Production Stage Group that best represents the stage’s production phase.
For example, Production Stage Types: Mash, Lauter, Boil, & Whirlpool are commonly grouped under the ‘Wort’ phase, and therefore would be placed under a ‘Wort WIP’ Production Stage Group.
--Once this setup is in place, WIP Products will auto-generate for each Production Stage Group + Recipe Brand.
--These WIP Products map to a WIP Account where the value of the WIP is stored while the Production Order is in process.
--These WIP Products are automatically set on each Recipe Stage.
Best Practices
All of the examples provided in this Help Resource have been focused on the general best practice of using Production Stage Groups, WIP Products, and WIP Accounts to represent the three common phases of the brewing process: Wort WIP -> Green Beer WIP -> Bright Beer WIP. This is the general best practice because these phases best represent the major physical transformation processes and change to accumulate WIP value as a result of this transformation. While this is the general best practice, this is not the only way that Production Stage Groups, WIP Products, and WIP Accounts can be used.
The Production Stage Group solution supports a setup as simple as a single generic ‘In-Process WIP’ Production Stage Group, where all Production Stage Types share the same ‘In-Process WIP’ Production Stage Group. This simple setup stores the value of all consumed raw materials in a single WIP Account while Production Orders are in process, and then passes the final value of all consumed raw materials to the account mapped to the Output Product when the Production Order is completed.