Cancel Production Order in Microsoft Dynamics NAV

In every day production a possibility exists that the created production order (PO) was ex.:

1. Wrong data ex. output item no. should have been different
2. Production went wrong and the PO needs to be discarded

If no postings (consumption of capacity/materials or output) have been done, deleting a PO is a simple matter and just requires some replanning for the correct PO.

If on the other hand the PO has entries for some reason ex. forward consumption or manual consumption then it’s a totally different matter.

An order having entries cannot be deleted and requires to be finished using Change Status functionality to Finished. This can however only be done if output has been posted. NAV needs the output item ledger entry to place the production costs and forward to general ledger. 

The question then arises what to do with the output of the item.

Consumption reversed

If possible try to reverse materials consumption. This is possible if the components can be put back on inventory. Otherwise don’t reverse.

Capacity consumption IS actually used so these cannot be reversed, but the choice is yours. Remember that even if consumption is reversed using apply original consumption or not, NAV still needs the output entry to clear the WIP account.

Posting only scrap quantity

Because posting of scrap does not create an item ledger entry, this method cannot be used.

Posting of Output Quantity

This will create an item ledger entry. The Output Quantity should be set to the order quantity. The reason for this is no matter what output quantity will be used, it will be wrong from a costing perspective. If the output item is a Standard Cost item then the variance accounts will be affected and explaination to audit is needed. If the output item is a FIFO (etc). item then the output entry will carry the wrong cost thus changing the item card Unit Cost to a wrong value.

Seen from an inventory perspective this is a nightmare that some of the items have a wrong cost, but seen from a costing perspective this is correct. The change in unit cost is actually a reflection of production errors.

That’s why the Output Quantity should be set to the lowest number available for the unit of measure. This means = 1 for a PCS item and 0,01 for KG item and 0,00001 for something else.

If the full order quantity is used then the items will have << unit cost than a perfect production. Even if that is true the production errors should never reduce unit cost of a item, but the opposite.

Best practices regarding item tracking, reason codes, dimensions and locations

When the output entry is created one can attach certain properties to the entry to make it stand out from the crowd.

• Changing item tracking information – only for item tracking items
  Setting the item tracking (lot number, serial number) to other values than expected, following POs that expect these values cannot find them. If you have linked orders on a item tracking level – output from on PO is component in the next PO – then this link does not automatically apply.
  Likewise in terms of QA the correct tracking is not put on inventory.
  If not changing the item tracking then you will get problems with cost as well when the applying report runs.
• Change location code
  If possible this is a good way to separate output from valid processes and invalid processes. Try outputting to another WASTE location code. From there it’s easier to handle separately.
• Set Reason Code
  Try posting output entries with a reason code that makes the entry easy to find in the pile of entries.
• Use different dimension codes
  Same concept. Posting output using different dimension code (or value) makes it easier to identify in analysis etc.
• Use variant codes
  Setting a variant code makes it easy to find in the masses. 
• Business Posting Group
  Change this for a tracking to finance as well. The output can be scrapped financially this way.

The idea is to mark the data as “different” compared to expected values. Using Location Code and/or Variant Code changes makes it possible to isolate the cost for waste orders only, but requires the (complicated) use of Stock Keeping Unit (SKU) cards for each item.

Scrapping the output

Last, but not least you will have to remove the output item from inventory using the item journal negative adjustment.

In the same way as the output entry the negative adjustment can also have a marking on reason codes, Business Posting Group, dimensions etc. The location code and variant code have to be the same as the output entry above.