Manufacturing in Business Central

Business Central offers solutions for manufacturing on two levels: assembly and production. Assembly consists of connecting components and selling them as a product that is really a set of components (e.g. bicycle). Manufacturing is the joining / processing of components into one complete product (bread production). The Microsoft solution provides support in both types of production and offers a modern and efficient tool for managing it. It offers a number of solutions. Some of them will work in both types of production, while others are dedicated directly to specific types. A large number of solutions allows you to choose the components that best suit your business and improve production in the company as much as possible.

Manufacturing in Business Central

Business Central supports, among others production planning and scheduling, manufacturing forecasting, warehouse management. It enables performance planning, technology management – BOM and route, production order service. System allows multidimensional registration of consumption and advanced settlement of manufacturing costs.

Manufacturing – advantages of Business Central

  • Support of the entire manufacturing process (from contact with the customer, through production to issuing the invoice),
  • Improving actual production efficiency,
  • Improving the company’s financial results,
  • Shortening the lead time and settlement of orders,
  • Company development and increase of competitiveness,
  • Easy calculation and bidding,
  • Efficient implementation of all logistics and warehouse processes,
  • Facilitated planning, management and implementation of production,
  • Registration, definition and configuration of resources used in the production process (including parts, machines, operations, personnel),
  • Easy maintenance of production structures,
  • Production planning support – goods always produced on time and in the desired quality,
  • Monitoring the costs of goods and the consumption of resources (precise valuation of the total cost),
  • Deviation support,
  • Document administration (operating instructions, product and measurement certificates).

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    Material requirements planning - MRP

    Business Central based on production plans and demand plans material requirements. Employees dealing with material requirements planning determine what quantities of components and raw materials are necessary to carry out production orders specified in the schedule. This is called Material Requirements Planning (MRP). The system supports production processes that include fully integrated planning.

    Reservations and inventory tracking

    While processing assembling order program automatically creates reservation between the sales line and the completed quantity of the associated order. Created reservation is also automatically registered in the system therefore, the order processor does not have to perform any actions.

    Assembly orders

    Defining picking components. In case the company offers the delivery of its assortment in different sets or if the customer has the option of choosing the elements of the finished product during the order, it will be necessary to carry out the assembly process, i.e. the assembly of the finished product before its release from the warehouse. ERP System allows to define picking components and reserve them for the needs of the contract.

    Assembly orders record. All assembly orders are registered and recorded. Thanks to that you can follow the process of order realization and predict the number of future assembling orders and create plans for assembly processes.

    Automatic valuation of picking orders including cost. The system enables automatic valuation of picking orders, taking into account its cost or consumption of resources during the process (working time of people and machines).

    ATO & ATS models

    Assemble to Order (ATO). Enables to lower storage costs (you don’t need to create and storage different sets and separately stock them during the production) and gives greater possibility to flexibly meet customer needs. The tool enables notification by customer of changes at the stage of registration of the sales order.

    Assemble to Stock (ATS). Refers to inventory whose assembly process is simple and which are returned to the warehouse before sale. In this case, users do not have to use the production functionality.

    Bill of Materials (BOM)

    Assembly BOMs. The function allows to create lists of components and calculate record prices. Without it configuring other functionalities of the production area wouldn’t be possible. Assembly BOM are basic data which define which elements are included in the final element, and what resources are used to make a set. After entering the item and quantity in the new order, the order lines of the set are automatically filled in according to the BOM.

    Technology – BOM and routes

    Production Bill of materials (BOM) is a list of supplies which are necessary to manufacture specific product. The effect of the manufacturing process is the subassembly or finished product. Supplies which are included in BOM are call components. Production BOM defines materials necessary to manufacturing. Business Central offers efficient and complex functionalities which supports BOM operating such as: operating multi-level BOMs (up to 50 levels down), support for BOM phantoms, support for technical changes, including version changes, function for calculating the demand for raw materials using calculation formulas (MRP II) and the ability to track BOMs and components in within the product structure. BOM versioning is also possible. You can change bill of materials by one or several elements (e.g. material or proportion) and determine the next version of the BOM. The tool also allows you to specify the duration of a given BOM.

    Basic production capacity and routes. Managing resources used in manufacturing is done with routes. The route will determine the sequence of steps (operations) necessary to produce the product (for example, the bakery includes positions where cakes are baked, fillings are prepared, as well as various types of bakery ovens). The tasks of the various positions vary, as do the assigned capacity.

    These activities can be performed through machine and work centers. Manufacturing companies use routes to visualize and manage production processes. They are the basis of planning processes including capacity planning and generation of production documents.

    Production orders

    Production orders are used to manage the processing of purchased raw materials (inventory, into manufactured inventory). Orders contains information about types, quantities of products, components, steps and routes operations which are required to process components into finished products, as well as machine and work centers in which route operations are carried out.

    There are four types of production orders (Planned, Confirmed, Released and Completed). Planned and Confirmed orders are part of process of planning and forecasting the consumption of materials, resources and the time necessary to produce a certain amount of stock in a given period of time. Released production orders are otherwise approved orders, ready for manufacturing. When the production order is released, program records the consumption of materials, resources and time, and also records the quantity produced.

    Multi-level production orders. In ERP system you can create multi-level production orders. It enables to manage all production orders levels concerning manufacturing inventory because the parent inventory and required components are order lines in the same production order. Thanks to the booking links between the order lines, the manufactured components are used to cover the demand for the components of the parent stock.

    Planning and forecasting

    Production order planning includes computer-assisted procedures which enables production planners deciding what to produce and when. The production order planning functionality includes simple planning tool. It can be use as alternative to planning sheet in case when advanced planning functions are not necessary. Advanced planning uses add-on solutions, such as Advanced Manufacturing.

    Production forecasting. Production forecasting process is based on dependent and independent demand. This kind of forecasting enables to predict the quantity of given supply in a given time for both types of demand. What is important it also includes warehouse localizations.

     (Independent demand is related to sales containing only information about inventory sold directly to customers. In a situation where inventory sold to customers is manufactured or assembled in a company, there is a demand for components used to manufacture them. This type of demand is dependent.)


    Machine and work centers are a reflection of production capacity, they are units supporting the management of production capacity of a given production resource or machine. It enables planning production capacity on many levels and managing them. On the level of work center is made detail planning and on the level of machine center is made collective planning. Information on the manufacturing process are stored in the work area.

    Machine and work centers calendars. To define basic available time for machine centers you have to define production calendar. Program enables to define many production calendars and settling them accordingly with individual machine centers. This means that it is possible to plan operations for work centers including work changes. For example, people working in the painting department of a factory may work at different times than people in the assembly department.

    Capacity planning

    Capacity Planning. Business Central allows to add capacity (machine and work centers) to manufacturing process. It enables defining resources in your company. You can indicate and calculate your manufacturing capacity in relation to time, cost, productivity. The module also has a resource availability calendar that can be important in the planning process.

    Business central also allows to limit manufacturing capacity of resources. It means that given work center in a given time can perform work planned for it (compatible with a planned manufacturing capacity). For every center you can define the maximum load and its tolerance. This solution supports the planning of possible production.



    Business Central records employee working hours, device working hours, inventory consumption, and other types of consumption that should be tracked as the order is in progresses.


    Working timecards. The functionality supports managing working time. It allows to monitor and estimate consumption and resource allocation. Users can identify problems early and prevent delays and assumed cost overruns. With working timecards consumption of time for employee or device is registered. It helps project manager to view the consumption and allocation.

    Non-productive time is a time dedicated to proceeding manufacturing order except rearming time and unit time. Non-productive time consists waiting time, travel time, queue time.

    Downtime. Downtime codes refer to the reasons for unplanned suspension of work in work centers and workstations. Causes of unplanned downtime are usually machine failure, material defects or lack of employees. Downtime codes are generally used to record periods when equipment is not being used.

    Manufactured quantity

    Microsoft Dynamics allows to register both quantity of manufactured inventory for production order and time spend on its production. Both these values are called the produced quantity. Thanks to recording produced quantity you can precisely define production costs. Manufacturing companies using standard pricing system can use those data to improve costs calculation. When processing a production order in a workshop, the quantities produced, and the time spent on the order are recorded by reports. Those data can then be entered into the system using the production journal. The quantities produced can be registered automatically or manually.

    Deficiencies in production

    In Business Central deficiencies in production can be define for production BOM components or for parent inventory for a route in several ways e.g. as a percentage of inventory, as a percentage of production BOM or as a fixed amount or percentage of a route. All deficiencies defined for inventory, production BOM or routes cause increasing the number of needed components. A percentage value of deficiencies can also be added to the item list.

    Production Journal

    Production journal combines the functions of the consumption journal and production journal, providing one interface that records the consumption and production from the production order level. Journal allows to easily register production and consumption for production order, linking component consumption to operations, combining actual operation data with standard estimates in the route line, production order BOM, and posting and printing a review of recorded operation data for the production journal.

    Different methods of registration consumption

    Business Central enables to use different methods of registration consumption: backflush, forward and manual.

    Backflush registration is back registration. It is based on reporting completed production – finished materials. After order closure system will calculate by itself consumption of components base on standards specified in BOMs.

    Forward registration. At the time of opening manufacturing order system assumes in advanced collection and consumption given quantities of materials. This method is also based on standards specified in BOMs.

    Manual registration is based on reporting by user real consumption of materials and semi-finished products. User also manually reports final quantity of products.

    Registration on mobile devices and touch screens (shopfloor module)

    The module supports process of production data registration. It can also be expanded for logistics and warehouse processes. The user gains access to a simplified panel using mobile devices (tablet, cell phone, workstation). After log in user gest access to his orders. The module gives access to reporting components and work consumption. The solution offers a set of tools and also records warehouse movements. This solution provided by Business Central partners such as IT Vision.

    Advanced accounting for manufacturing costs

    Cost group accounts. It Vision offers module supporting accounting for manufacturing cost. Unlike standard functionalities we offer a solution which enables simultaneous posting of costs to accounts of teams 4 and 5. The solution allows defining indicators and allocating costs for the finished goods. Indicators can be set freely in terms of their quantity and detail. They may concern e.g. weight, quantity of product manufactured, volume, value, cost structure on another account or manually. The solution enables precise determination of the unit cost of a given product. When defined indicators are introduced, the cost will be automatically updated and determined precisely and accurately. In the end we receive the actual cost incurred in a given period instead of the assumed norm.

    Work in progress (RWT). Thank to this function user can plan using company resources and track costs connected with consumption of this resources in a given project. Orders contains consumption of working hours of employee, working hour of devices, consumption of inventory and other types of consumption which should be tracked as the order progresses. If execution of the order is planned for a longer period during its realization, you can transfer the costs of consumption to the work in progress (RWT) account in the balance sheet. Costs and sales can then be included in the profit and loss account, if needed.

    Actual costs to the budget. One of the most important task of project manager is controlling order budget. Right report in Business Central allows to compare planned cost and consumption costs for given orders.

    Production pricing. Manufacturers sell different costs of goods which were made based on products from suppliers. Because manufacturing process includes element such as works in progress and storage of finished products. Its pricing is more complicated than pricing purchased goods. Manufacturers generate added value to purchased raw materials by changing their physical form into a finished product. This process generates additional costs. The concept of the cost of manufacturing products refers to the cost of goods whose production has ended whether the process started before or during the current accounting period.

    External processing service, entrusted and subcontractors

    Subcontracting. Subcontractor is a supplier who does one or more operational activities as part of our production process. Depending on the company, subcontracting may be an exception or a permanent feature of the production process.

    Make-to-Order (MTO). Business Central support custom manufacturing. It allows to plan and create manufacturing orders based on sales orders. The module is dedicated for companies which manufacture for customers’ orders and does not manufacture to stock.

    Assembly orders. With this module you can customize the assembly / units to customer requirements during the sales process. As with any other type of goods, you can also create general sales orders for custom assembly / units (before periodically placing actual sales orders in accordance with the general order agreement). This process involves several additional steps when comparing it to the creation of a regular sales order and uses a variation of the combined assembly order, which is a collective assembly order.