You are in the Oracle Process Manufacturing Community and as a fellow member, I would appreciate your input on leading practices for this case.
A large manufacturer in the Chemicals and Petroleum space has engaged us to collaborate on a footprint to rapidly deploy Oracle Process Manufacturing (OPM) globally.
This Company uses four variance calculations not available in OPM. To illustrate, one of them is Manufacturing Yield Variance. The others are for usage, filling and batch. None of these are available in OPM.
We have identified 2 probable solutions – (1) Calculate these variances in a business intelligence tool or report and then adjust the production formulae for accuracy or (2) extend Subledger Accounting by adding these 4 variances to the existing list.
However, if you solutioned a similar requirement, we would like to know what you did to enhance OPM with these special customer calculations. A writeup, if already available would help us greatly.
Sorry for my late reply. I was trying to get my arms around these variances and finally have time to update this thread.
Here is the background.
We have a liquid batch for paint intermediate (Master Rex). Intermediate product is yielded to the Filling batch wherein the liquid is filled in drums or containers to produce the final SKU product. There is a separate costing and production formula for the liquid batch and a separate costing and production formula for filling batch. Here are the details on the variances.
1. What is MANUFACTURING YIELD VARIANCE?
1st, M-rex Theoretical Gallons Available is calculated as - Actual Output / Formula weight per gallon.
In the above, Formula weight per gallon is Total Costing Ingredient Quantity / Yield Product Costing Quantity.
2nd, Manufacturing Yield Calculation is calculated as Planned Quantity - Theoretical Gallons Available.
In the above formula, Planned Quantity = Production Formula Planned Quantity.
Manufacturing Yield Variance = Manufacturing Yield Calculation * Product Standard Cost (M-rex).
2. What is USAGE VARIANCE?
= Sum ((Actual Ingredient 1 Quantity - Planned Ingredient 1 Quantity) * Ingredient 1 Standard Cost) + ........)
3. What is FILLING YIELD CALCULATION?
1st, Filling Theoretical Gallons Available is calculated as M-rex Theoretical Gallons Available. In the current domestic system, the filling batch is automatically spawned from M-rex batch once M-rex batch is completed. Additionally, there are automatic system checks to ensure the M-rex quantity in the spawned Filling batch is same as the parent M-rex batch.
2nd, Filling Yield Calculation is calculated as Filling Theoretical Gallons Available - Actual Gallons.
In the above formula, Actual Gallons = Actual Yield * Filling Formula M-rex Quantity.
Filling Yield Variance = Filling Yield Calculation * Product Standard Cost (M-rex).
4. What is METHODS VARIANCE?
I made a 1000 gallon batch, here is the process assuming a standard cost of $1.00 for ingredients A, B and C and product X.
Cost of making 1000 gallons of product X: 1000 Gallons * $1.00 = $1000
Material cost incurred for using Ingredient A: 50 Kgs * $1.00 = $50
Material cost incurred for using Ingredient B: 100 Kgs * $1.00 = $100
Material cost incurred for using Ingredient C: 800 Kgs * $1.00 = $800
Resource charges incurred for producing X: $30
Methods Variance = $1000 – ($50 + $100 + $800 + $30) = $20.