The Agile Manufacturing Company and Microsoft Dynamics NAV

Agility for manufacturing businesses is a concept that is not just the latest trend but is crucial these days to ensure they remain competitive and sustainable.

In this blog we describe the conceptual framework defining an agile business. We also show that Microsoft Dynamics NAV functionality can be a working tool for building that agility, which is much desired by businesses especially so they can give their clients customized goods and services.

agilitéWhat is agility in a business?

Agility is a constantly changing concept that is increasingly prevalent in organizational theory, asserting itself as an alignment and coherence tool between internal forces and external challenges that becomes a powerful driver for the growth and sustainability of businesses.

According to Vickoff, in practice, agility takes form as a “services” orientation, and its principles are the inseparable conjunction of three vectors:[1]

  • the rational motivation of human resources;
  • the continuous configuration of processes;
  • the intensive use of new technology (we will use the latter vector to describe the benefits of using Microsoft Dynamics NAV further this article).
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Goldman, Nagel and Preiss define agility as “A comprehensive response to the business challenges of profiting from the rapidly changing, continually fragmenting global markets for high quality, high performance, customer configured goods and services. Thus agility is dynamic, aggressively change embracing and growth oriented.”[2]

Ideally, an agile business involves an equally effective response from all its constituents forming its supply chain, its clients and its outside partners.

New technology to the rescue

To implement an agile manufacturing business, a new generation of technological tools must be developed, and existing tools must be significantly improved, in support of decision making processes to back the conceptual framework explained above.

That represents both a challenge and an opportunity for information technology (IT) to play a major role in agility.[3]

Weston [4] describes the key role that technology infrastructures and software integration can play in supporting and organizing how systems behave so they are easier to modify and expand. Such a package system is likely to become a common building block of agile manufacturing systems in coming generations.

Agility through Microsoft Dynamics NAV?

What form does the intensive use of new technology take in the new generations of advanced information systems, such as Microsoft Dynamics NAV?

We are going to use the “assembly order” function of Microsoft Dynamics NAV to demonstrate the agility and flexibility of this information management system.

Take, for example, a company that manufactures different types of power cables. Its mandate is to properly fulfill its customers’ constant requests. To do that, it may use the assembly order functions of its own ERP system to structure its production chain. Assembly orders are orders for internal consumption and are not directly intended for either suppliers or clients. They are used to manage the creation of saleable articles configured as assembly items. They specify which and how many items to assemble and which components (items or resources) go into the assembly item.

What you store in the warehouse (wires and connecters)

entreprise-manufacturiere-agile-Microsoft-Dynamics-NAV-2
entreprise-manufacturiere-agile-Microsoft-Dynamics-NAV-3

 

What you sell to your clients (cables)

entreprise-manufacturiere-agile-Microsoft-Dynamics-NAV-4 

Assembly orders also differ from other types of orders because they involve both production, or positive adjustment, and consumption, or negative adjustment, during data updates.

From this perspective, an assembly order behaves so as to be synchronized with an order/sale line, and the goal of assembly order lines is to identify the items (parts, sub-assemblies) and the quantity to be consumed.

 

An assembled product is an item that can be sold, including an assembly bill of materials. In addition, an assembly item can be configured as assemble to order or assemble to stock. Such a configuration depends on the extent to which the items sold to fulfill the customer’s order are customized.

As a general rule, assemble to order is used for items the company does not want to store because they are going to be customized to customer requests, or because the company wants to minimize inventory carrying costs.

Managing “assemble to order” with Microsoft Dynamics NAV

Listed below are the various options available in Microsoft Dynamics NAV according to our article.

  • Option for customizing assembly items when taking a sales order.
  • Overview of the availability of an assembly item and its components.
  • Option for reserving assembly components immediately to guarantee the order can be processed.
  • Option for determining the profitability of a custom order via the multilevel calculation of price and cost
  • Integration into the warehouse to facilitate assembly and shipping.
  • Option for assemble to order when a sales quotation or an open sales order is created.
  • Option for combining stock quantities and assemble to order quantities.
  • Option for recalculating and updating the cost of assemble to order items.
  • Option for recalculating and updating the unit cost of assemble to order items.

The input screen below clearly illustrates an assemble to order process, with the item that is assembled, in response to a sales order and via a one-to-one link between the assemble to order and sales order.

Assembly Order EN

Also, when an item it entered as assemble to order on a sales line, an assembly order is automatically created with a header based on the sales line and with lines based on the item’s assembly BOM, multiplied by the number of orders.

Is agility for you?

As we have just seen, becoming an agile business requires considerable consistency and cutting edge technology tools. A business seeking to provide unique goods and services tailored to the needs of its clients will definitely benefit from the assembly order function of Microsoft Dynamics NAV, but will also have to first ensure that its supply chain is efficient.

Moreover, we have chosen to show you only one facet of the options in Microsoft Dynamics NAV, but many others are available to guarantee your agility. We will be discussing them further in upcoming blogs!

 

 

References

[1] PUMA by Jean-Pierre Vickoff

[2] Preiss, Kenneth, “Agility – the Origins, the Vision and the Reality”, International Conference on Agile Manufacturing, 2005

[3] WALTERS, H. M. J., 1997, Management and improvement of the extended enterprise. IEE Colloquium (Digest), No. 386, pp. 5/1±5/8

[4] WESTON, R. H., 1998a, Integration infrastructure requirements for agile manufacturing
systems. Proceedings of the Institution of Mechanical Engineers, Part B: Journal of
Engineering Manufacture, 212(B6), 423±437.

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