For food and beverage manufacturers, by-products are the unfortunate leftovers of producing valuable products and co-products. By definition, by-products are the manufacturing outputs that can’t be resold, repurposed or reused. They’re refuse.  By-products don’t add anything to production except effort and cost. It’s tempting to just ignore them and simply write them off as the cost of doing business.

But we all know by-products don’t just go away, and in most cases food and beverage manufacturers understand they ignore by-products and their costs at their own peril. There’s a price to pay. In some cases, the costs of not dealing with by-products properly are regulatory, environmental or safety problems and penalties. In other cases, the costs are less onerous, usually not knowing the true costs of production or misstating your real margins on products and co-products. Most food and beverage manufacturers must deal with both the internal and external impacts of producing by-products.

Fortunately, Microsoft Dynamics AX 2012 for the food and beverage industry makes identifying, tracking and accounting for by-products a straightforward, well — by-product, of planning and managing production. With a little preparation and forethought, Dynamics AX will help you capture critical by-products information during manufacturing and use that information to calculate the costs of by-products and handle any required regulatory reporting.

To effectively manage by-products in Microsoft Dynamics AX, you need to follow a three-stage process:

  1. Identify by-products resulting from the manufacture of a product, gather the data that describes them and define these by-products in Dynamics AX;
  2. Systematically capture production data as you manufacture products and co-products and produce the by-products; and
  3. Pass the collected data to the appropriate Dynamics AX functions, evaluate it and incorporate it into internal analyses and external reporting.

While these steps over-simplify things a bit, it’s basically the same process you follow in defining and using any set of data within Dynamics AX. Each of these steps includes a number of subsidiary tasks and involves decisions and potential mistakes that could affect the quality of the resulting information and external reports. Fortunately, none of the tasks or decisions is very difficult once you understand your data, your requirements and the steps you need to follow. Read the rest of this entry »