When optimizing material movements you have to be aware that every item also includes an ID and it is also assigned with an item type. Item type tells you whether the item is raw material, semi-finished product, packaging or something else.

It means that the very ID of material should tell you at which warehouse it is placed and how will it be posted (Each document type is used for specific posting. It tells you to which accounts will an item type be posted.). To illustrate a posting method depending on type of posting of document types see Automatically Posting Invoices Issued).

Let us suppose that item types are marked in the following way:

	Raw material
500	Material
	Packaging
	Product
	Semi-finished product
	Scrap
	Waste

For sake of explanation we will deal with item types later on.

Considering this we can make the scheme from the previous topic easier.

In the first step we joined a warehouse for storing raw materials, a warehouse for storing materials and that for storing packaging into one single warehouse. What type of items are stored at warehouse (raw material, material, packaging) can be observed from the item ID and the corresponding item type.

Hence there is no need for using two document types of issue.

Looking more precisely at the scheme you can see that production is also fed from the warehouse for storing semi-finished products. Because production is usually performed in multiple stages, the semi-finished product is created in the first stage. It is then placed at the product warehouse. Transfer them to the warehouse for storing semi-finished products so that they can be used in the next stage in production. Besides having the existing movements of receiving and issue you get additional documents from interwarehouse transferring. Can it be done away with this?

By all means, in the second step we join the product warehouse with the warehouse for storing semi-finished products.

The scheme was changed so that the same warehouse has both the role of warehouse for issuing semi-finished products (receiving in production) and warehouse for receiving semi-finished products and products (issuing from production).

Finally, in the third step, let us take a look at scrap and waste.

To reuse scrap in production in a similar way you use raw materials then it is wise you join warehouses for storing scrap and waste.

	To reuse scrap in production you have to ask yourself the following: a.) whether a special item type should be asssigned for scrap or whether they will be treated as raw materials? b.) whether scrap should be assigned its own ID or whether the ID for raw materials will be used? Decisions you take can further simplify Item Types and Items registers.
	If scrap is assigned its own ID or as its own item type, specify it in the specifications because they could be substituted for "regular" raw materials.

If you use scrap as waste, that is, not reusing them in production, you can change the scheme like this:

The following documents will be created should you use the above example:

work order issues:

work order receiving: What are the savings by optimizing material movements in production?

Documents	Non-optimized	Scrap=Raw Material	Scrap=Waste
Work Orders		1
Issues		2
Receipts		3
Transfers		0
All documents		6
Warehouses		3

It can be observed that 2 warehouses are redundant plus 3 to 4 documents for each work order. Supposing that you process 1000 work orders a year you will use 3000 or 4000 documents less. That is a considerable number processing of which increases costs.

Taking a moment in organizing production can save you months of work!

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