Dynamics GP 2013 Manufacturing Work Order Transactions with Posting Summarized

I recently put together a specification for customization, which is intended to automatically issue materials to work-centers as work orders move through their routing steps.   This customization relies on a custom Production Management window which handles the work-flow of completing routing steps, ordering rework and picking the routing step to return the work order to if rework is necessary, etc.  

The customization also issues additional material automatically, if rework is required for a previously completed step. This paperless system enables the flow of work orders from one work center to the next by pointing and clicking.

Prior to signing off the CFO asked a series of questions about the impact this would have on financial transactions - in order to sum up the changes, I found it necessary to create an overview of what happens when processing a manufacturing work order to compare and contrast standard to custom. 

This is a simple overview, which doesn't cover automated data collection, or outsourced manufacturing, but it does cover straight forward work order processing in Dynamics GP succinctly.

Standard GP Manufacturing Process - Make to Order

A Work Order must be released prior to performing any transactions against it – nothing can be done to a work order prior to it being released other than changing it's status.

Valid Manufacturing Order Status are:
Quote/Estimate
Open
Hold
Cancelled
Partially Received
Complete
Closed

Manufacturing transactions can be entered using the Component Transaction Entry window. 

Transactions > Manufacturing > Component Transaction Entry

Transaction Types allowed in the Component Transaction Entry window are Allocation, Issues and Scrap (and the reverse of these transactions)

Alternatively the Picklist window can be used to backflush (or reverse-backflush) materials for work orders.  

Transactions > Manufacturing > Picklist 

Backflush - is the process of assuming the materials consumed by a work order are consistent with the quantities defined in the item's Bill of Materials 

(Qty  Made * Quantities to make one item = Total Material Consumed)

Backflushing is easiest way to conduct  manufacturing operations and the least accurate.  Backflusing assumes everything goes to plan all the time - in my experience it rarely does.

Since it is unnecessary to Allocate or Issue materials to work orders - most material transactions are optional.

Optional Transaction 1 – Raw Materials can be Allocated to the Work Order

This can be done manually or automatically.  To configure Dynamics GP to allocate Raw Material Inventory automatically when a work order is released use the following setting

The automatic function in GP allocates all required materials immediately 

Setup > System Defaults > Manufacturing Orders

Allocation – Decreases inventory on hand, but has no financial impact (no GL transactions are posted)

Optional Transaction 2 – Raw Materials can be Issued to the Work Order, Issues move Raw Materials Inventory (RMI) to Work in Process (WIP) manually – 

Standard GP functionality cannot automate material issues.

Issues – Decrease the inventory on hand, AND have a financial impact
(Credit Raw Materials Inventory and Debit Work In Process)

Optional Transaction 3 – Raw Materials can be scrapped
(Credits Raw Materials Inventory and Debits Scrap)

Optional Transaction 4 – Cancel MO:  
Users must manually reverse issues and allocations of materials
(Credit WIP and Debit Raw Materials Inventory [RMI])

AND/OR use Scrap, to write off materials that can’t be return to inventory.
(Credit RMI and Debit Scrap - see Optional Transaction 3 above)

Optional Transaction 5 – Rework.
Material must manually be issued to the MO 
(Credit Raw Materials Inventory and Debit WIP)
This is done until workers get the Work Order right – variance posted later.

Optional Transaction 6 – customer wants  an alternative configuration

Materials are manually added or removed - a.k.a. Soft Bill Changes
(Credit/Debit Raw Materials Inventory and Debit/Credit WIP)
Added items Credit RMI and Debit WIP
Removed items Debit RMI and Credit WIP

Manufacturing Order Receipts move Raw Materials Inventory or WIP to Finished Goods Inventory, depending on whether backflushing is being used or issues were done respectively. 
(Credit WIP/RMI and Debit Finished Goods Inventory)

Manufacturing Order is Completed – no more data can be collected against the MO, no more materials issued, or receipts reported.  No Financial Transaction happens at this step. This is very important, as failing to Close Completed work orders will not provide an accurate picture of inventory or finances related to inventory.

Manufacturing Order is Closed – WIP variance transactions cleared to Variance Account. Closing work orders is and absolutely necessary step! 
(Credit WIP and Debit Material Variance and Finished Goods Inventory)

Finished Goods Allocated / Fulfillment of Sales Order

Item Ships and is Invoiced – Move Finished Good from Inventory to COGS 
(Credit Finished Goods Inventory and Debit Cost of Goods Sold [COGS])

Feel free to ask questions or take umbrage with my assertions. I hope this gets you where you're going.