Hi Mario,
Are you saying that you want to load up the space occupied by a workstation onto the costs of the items that the workstation transforms/makes?
And other expenses such as Electricity, Consumables, etc.?
It’s very complicated to do that and you may not get a better result of loading up those costs even if you do. But if you really want to do it, this is how I would do it:
Take all the costs that you want loaded like Rent, Electricity and Consumables and charge it to Expenses included in Valuation when you incur expenses in those areas. Since, Rent is for the entire factory and not just for the workstation, now you need to figure out how much of that cost you are going to appropriate to the workstation. Is it a percentage of the floor area? Are there other complexities? Now you may not have just one workstation, but many workstations, so you need to figure out the appropriation percentages for each of the workstations. Then there are other facilities: like the lobby, restrooms, common areas, office spaces, stores, etc. etc. So you really need to crunch all of this on a spreadsheet and then come up with a number for each workstation. Even when you do that, are you going to appropriate those costs for the period for the workstation? Are are you going to appropriate it based on the the time that the workstation is utilized. Like let’s say you run one shift and let’s say you assume 20 working days in a month (there you already have to deal with a complexity of some months having more than 20 working days and other months having less) and your total rent costs for the factory is $5,000.00 and you have crunched from your spreadsheet that a particular workstation needs to be appropriated 4% of the monthly rental cost. So that is $200.00. Now you have to assume the utilization of this workstation. Assuming 20 working days to a month, and 8 hours per shift and 1 shift per day, you have 160 hours of operation of this workstation. But will this workstation actually only run 160 hours? Or will it run less? Or more (Because of overtime, maybe)? Let’s say you assume 120 hours as the utilization of this workstation. So the cost per running hour is $200/120 + $ 1.75 per hour of operation. Now it’s perhaps possible to take all of these costs and load it up on an item that got transformed on the workstation and the time to make/transform that item was 2.25 Hours. It’s possible to load up that cost, but I just think it’s way too complicated to try to do that (and I am not just saying that ERPNext does not have an easy way to manage all of this - it does not. But even if you were to use an ERP that makes managing all of this a breeze, the underlying logic of appropriation of costs is so subjective and so variable that it’s very difficult to gain any business advantage out of this.
What I think is more optimal is for organizations to get this information from ERPNext. Like the Manufacturing Stock Entry can capture information about time of operation crunch all of that on a Spreadsheet and arrive at the mark up of each item you sell. The one place you need this is in your costing process as you make quotations to customers/prospects.
I am, not for a moment saying that organizations should not be on top of workstation costs. But using spreadsheets for a few months/quarters to monitor the logic of appropriation of costs and checking if it is making sense and tweaking and fine tuning it would be more optimal. Once you determine that it’s making sense, enough to start incentivising people based on these numbers is when you can think of actually making it part of ERPNext.
Hope this helps. I think it’s very complicated and maybe I haven’t put the complexities across crisply.
If you do decide to run this whole process on ERPNext, please do share your experiences.
Hope this helps.
Thanks
Jay
