Working with Resources in SAP Business One

In this example, we look at the company OC WoodTrend, which produces custom wooden doors and windows based on customer specifications.

To manufacture these products, OC WoodTrend has defined their employees and machinery as resources in the system. Now they can manage their availability and capacity for the production process.

The resource is defined as master data in the system. There are three types of resources:

• Machine type - This is a resource that can be linked to one or more fixed assets, taken from the fixed assets master data list.
• Labor type - This is a resource that can be linked to one or more employees, taken from the employees master data list.
• Other type- Any other resource that is not a machine or labor.

Much like items, resources can be used in bill of materials and marketing documents.

When a bill of materials is produced, a machine resource is often needed in a production process and an employee resource may be needed as well, for example, to operate this machine.

Much like items, resources can be ordered/purchased/sold or have other action performed in marketing documents. To do this, we first need to connect a non-inventory item to the resource. This item, which represents a resource, is then used in a marketing document.

Unlike items, resources are not accumulated in quantities. They are managed by capacity. In SAP Business One, we can plan and define a daily capacity for the resources. By monitoring this capacity, we can optimize the production plan and avoid bottlenecks.

This is an image of resource master data.

Here you can define important data, such as resource type and group, resource unit of measure, and resource capacity.

In this topic, we will cover these three aspects:

• Resource types
• Resource groups
• Resource unit of measure and run time calculation

Let us start with the resource type. You can select the relevant resource type (Machine/ Labor/ Other) in the Resource Type field, in the header of the Resource Master Data window.

• When you select Machine as the resource type, the Fixed Assets tab is activated in the master data record. One or more fixed assets can be selected for a machine.
• When you select Labor as the resource type, the Employees tab is activated (instead of the Fixed Assets tab) and you can associate employees with this resource.
• The Other type is used for resources that are not fixed assets or employees.

Note that to work with fixed assets and see the Fixed Assets tab, you first need to activate this feature on the Company Details window in the Administration → System initialization menu path.

Each resource type can have many resource groups. The resource groups are used to group together machines, employees or other resources that have similar types of costs.

Resource groups are defined on the Resource Groups - Setup window. Here, you can define up to 10 user-defined cost components for each group. Each cost component can be given a meaningful name for a cost related to the resource.

The amount entered in the Default Std. Cost column sets the ratio of expense amount of each cost component in a journal entry made for the resource.

In the image on the right, we can see a Crafting Machine group definition. This group has the resource type Machine. Three resource std. cost components were defined for this group: Amortization, Maintenance, , and Overhead.

The list of default std. cost in the resource master data is taken from the resource group definition. These costs can be changed manually for each resource master data.

In our business example, OC WoodTrends has five lathe machines that they use in production. Since they have similar types of costs, they have been grouped together in the Crafting Machine resource group.

It is possible to define a different G/L account for each resource std. cost, which will be used in the production journal entry.

The capacity of a resource is measured in the resource units of measure. This unit of measure have time-type units, such as hours or minutes, as well as any other type of unit, such as a cycle, turn, and so on. This resource unit is used during planning and consumption of the capacity in bills of materials and production orders, including all related transactions, such as the Issue for Production.

To translate the resource consumption time in the production process, we need to define the specific time period the unit of measure text represents. The Time per Resource Units field (15 minutes) represents the time needed for the Res. Units per Time Period (1 unit)to be consumed in production.

The run time or consumption time of a single unit of resource is equal to the Time per Resource Units divided by the Resource Units per Time Period.

Let us examine this scenario: The machine resource usually runs in 15 minute cycles. The unit of measure text for this resource is Cycle. The capacity of the resource is measured in Cycles and the quantities in the bill of materials are also in Cycles.

At OC WoodTrend, in the bill of materials of a wooden door, they need 3 Cycles of the lathe machine to produce 1 door .

To define the run time of the machine in a specific production order, we need to convert Cycle units of measure into time. The formula of the conversion between the resource unit of measure text (Cycle) and time is as follows:

• When the Time per Resource Units is 15 minutes, the Resource Units per Time Period equals 1 cycle.
• When the Time per Resource Units is 1 hour, the Resource Units per Time Period equals 4 cycles.

This setting allows us to calculate the run time of the specific resource needed to produce the required quantity of the final product. In our case, 3 cycles of the machine are needed to produce 1 door. The resource run time calculation is: bill of material quantity X (Time per Resource Units / Resource Units per Time Period). In our example, it is 45 minutes.

Now that OC WoodTrend knows how to define the run time of the resources, they can plan and manage the capacity of these resources. The way to define and manage resource capacity is described in the course topic Resource Capacity.

Because different types of resources (machine/labor/other) can be included in one production order, simplified calculation of the total production order run time is applied. The total run time of a production order is the maximum value of the production time of the resources in the production order.

This image is taken from a production order that contains two resources: a lathe machine and a machine operator.

To produce this bill of materials, three cycles of the lathe machine are needed. Since each cycle equals 15 minutes, three cycles are equal to 45 minutes. In addition, a half an hour(30 minutes) is needed from the operator. The total run time of the production order equals the maximum resource production time, which is 45 minutes.

Note that this scenario is for a non-routing production order. To learn more about production orders with routing, refer to the course Production Process.

• Here are some key points to take away from this session.
• There are three types of resources: Labor, Machine, and Other.
• The Machine resource type can be linked to a fixed asset in the system.
• The Labor resource type can be linked to an employee in the system.
• Resources can be connected to items and thus can be represented in marketing documents.
• Each resource can have up to 10 std. cost components. The default cost can be defined in the resource group.
• Run time parameters should be defined in the Resources Master Data, to plan capacity for the resource.

A significant part of the production process involves the consumption of resources. We can define available capacity, consume it in production, and manage resource capacity availability.

This functionality allows us to plan and monitor the capacity of the resources, to avoid bottlenecks and optimize production planning.

In this example, we look at the company OC WoodTrend, which produces custom wooden doors and windows based on customer specifications. They use a make-to-order production process in which deadlines are derived from the delivery date of their customers' orders.

Managing resources and their capacities is crucial for OC WoodTrend to assure timely deliveries to their customers. They need to identify whether production can go ahead as planned or whether manual scheduling adjustments need to be made to meet deadlines.

To manage the capacity of a resource, you need to generate the available capacity. You do this in two steps:

In step 1, you define a weekly plan, where you set the expected capacity of the resource for each day of the week.

In step 2, you generate the capacity for a whole period (such as a quarter) by copying the weekly plan you defined in step 1 to the whole period. Alternatively, you can set the capacity manually for each day in the period.

There are two types of daily capacities that should be defined: internal and single run capacities. A single run capacity assumes only one production order can be produced using a certain resource in a certain period. With internal capacity, this kind of limitation is not taken into account.

The result of these steps is an available capacity (internal and single run) that allows you to manage and allocate capacities in the production process.

You can plan capacities for your resources on the Planning Data tab of each Resource Master Data record. These capacities are defined on a daily basis.

Four factors are available and you can set them for each day of the week. These factors allow easier definition of capacities of a specific resource. A factor can be used, for example, to represent the number of working hours in one shift, the number of shifts in the specific day, or the number of machines (resources).

Note there are two types of capacities: Internal and Single Run. The internal capacity is a simple calculation of the factor columns multiplied with each other. In our case, 32 cycles a day is multiplied by 2 available machines, resulting in 64 cycles as the internal capacity.

The single run capacity, however, only takes factor columns that are marked as Relevant for Single Run Capacity into account . In our example, only factor 1 is relevant and therefore each day has only 32 cycles in the single run capacity.

Note that you can also enter a value in the Daily Capacity and Single Run Capacity columns directly.

The next step is to generate daily internal and single run capacities for a specific time period. This step is done on the Set Daily Internal Capacities window in the Resources menu, or from the context menu of the Resource Master Data. Here you can generate capacity values by either copying the standard daily capacities defined in the Resource Master Data or entering the capacity manually.

You can also use this window to copy single run capacities to the internal capacities and vice versa.

The generated internal and single run capacities can be then viewed on in the Resource Capacity window and also in the Capacity Data tab on the Resource Master data.

The Resource Capacity window provides a complete capacity overview of selected resources within a selected time period. A user can select different views, such as Internal, Available, and Single Run. Then, you can see the relevant amount of capacity on a specific calendar day for the specified warehouse. The meaning of the different views is discussed further on the next slide.

Note that the resource capacity can be defined for multiple warehouses. This can be relevant when warehouses are set up as production areas. Each warehouse can then have its own capacity and capacity allocations.The relevant defaults can be defined in the General Settings > Resources tab.

• The capacity of a specific resource can be also viewed in the Capacity Data tab on the Resource Master Data. In this case, the capacities are summarized for the capacity period selected at the top of this tab. The capacities are displayed as Internal, Committed, Consumed, and Available.
  • Internal capacity is the full resource capacity in the selected time period.
  • Committed capacity is the capacity allocated to a specific Production Order in the selected time period, but was not issued to production yet (open quantity).
  • Consumed capacity is the capacity that was consumed in the selected time period, for example , issued for production in the selected time period.
  • Available capacity = Internal - Committed - Consumed.
• Note that the Committed resource capacity that is related to a specific Production Order, is allocated according to the date (start date or end date) in the row of that Production Order. There are different resource allocation methods are available. This topic will be discussed further on the next slides.
• Let us examine the numbers. We defined an internal capacity of 1,536 cycles for the defined period. 24 cycles of the internal capacity are committed to a Production Order, 6 cycles were already released in an Issue for Production, and 1,506 cycles are left to use if needed.
• In the Resource training, we learned about connecting a resource to an item, to buy or sell resources. Some of the purchasing documents also generate capacity that is accumulated in another column, called Ordered.

We saw that the Resource Capacity window has a column for each day in the specified range. In each day column, we can see the Internal/ Committed/ Consumed/Available quantities. The system allocates the committed quantity (derived from production orders) according to the start or end date of the production order rows.

There are four Resource Allocation methods:

On Start Date - The entire row quantity is allocated to the start date of the row.

On End Date - The entire row quantity is allocated to the end date of the row

Start Date Forward - The committed quantity is allocated according to the available single run capacity for each day. The system checks each day, starting from the start date (or the system date in case the start date is earlier), whether or not the capacity can fulfil the committed quantity. If there is not enough quantity on that day, the system checks available capacity quantity on the next day, until the system finishes allocating the entire committed quantity. If the system reaches the end date and there is still quantity to allocate, then the system allocates the remaining balance quantity to the start date.

End Date Backwards - This method is similar to the previous one, but instead of allocating from the start date forward, allocation is performed starting from the end date backwards.

For production orders with no routing, we can set the default resource allocation method for each resource, as shown in the image. However, we can also change the allocation method in each row of the production order.

Let's examine an example of allocation according to the different methods.

Let us look at the example shown here, to better understand the different methods.

We have a production order with a resource row quantity of 10.

The start date in the row is March 1. The end date in the row is March 4.

Let us see the possible available outcomes with each method.

When using the On Start Date method, the entire quantity of 10 is drawn from the start date, March 1, which results in a negative available quantity of -4. Nothing happens on the following days.

When using the On End Date method, the entire quantity is drawn from the end date, March 4, which results in a negative quantity of -2 on March 4.

When using the Start Date Forward method, the available quantity of 6 is fully used, then, going one day forward, to March 2, the entire available quantity of 3 is drawn as well. Since an additional quantity of 1 is still needed, it is drawn from March 3, leaving a quantity of 1 remaining. Nothing happens to the quantity from March 4.

When using the End Date Backwards, the available quantity of 8 is fully drawn from the end date, March 4. Then, going backwards to March 3, the entire quantity of 2 is also drawn, to complete the quantity of 10 needed for this resource.

The Start Date Forward method can be relevant when production is being made to raise inventory levels and when the end date is not critical. It is more important that the inventory be produced as soon as possible.The End Date Backwards method can be relevant when production is being made for specific customer demand with a specific due date.  Assuming we want to minimize the inventory held in our warehouses, we want to produce on a just-in-time basis, so that a customer order demanded at a specific date will be supplied on that date and not sooner.  

The Resource Capacity window also provides a cumulative capacity view.

In this view, all the capacity quantities are accumulated daily. Each day shows an accumulation from the preceding days.This view can be helpful for spotting when a resource capacity is overcommitted.

To switch to the cumulative capacity view, select the Show Cumulative Capacity from Today checkbox.

In the upper image, we see the resource capacity window. Notice that on May 3, there is a negative available quantity of -26. But is that a true overload? The production manager can easily bring forward the production to the day before.

The cumulative view, as shown in the lower image, can more clearly indicate a true resource overload. In our case, no negative available quantity appears, since the quantity is accumulated from today forward. A negative available quantity, however, would indicate that the total available quantity up to that date is negative and that the total commitment is higher than the total internal capacity. In this case, a manual change of production order dates can help to avoid negative available quantities.

Here are some key points to take away from this session.

• The Resource Capacity feature visualizes available capacity to avoid bottlenecks and optimize production plan.
• There are four capacity views: Internal, Committed, Consumed, and Available.
• A daily standard capacity can be defined in the Planning Data tab of the Resource Master Data.
• An internal capacity can be generated according to the planned daily capacity.
• Resource capacity can be allocated on the start date of the Production Order row, end date, from the start date forward, or from the end date backwards.
• The cumulative view, in the Resource Capacity window, can be helpful in spotting when a machine's capacity is overcommitted.