In discrete manufacturing products that should or could be produced at the same time in addition to the main material are usually manufactured together using one production order as auxiliary products. We called that co-product and by-product
Co-Product: Co-product is a product, we get this product while manufacturing finished material or semi-finished material. It could have solid financial value due to the fact that it might be used in other material manufacturing processes or even sold as a finished material.
By-product: By-product is a product, we get this product while manufacturing finished material or main material. The material valuation of a by-product is always based on the price specified by price control in the material master. By-product has lower financial value.
Creating a production order to manufacture co-products has the following advantages:
- The main product and co-product(s) are settled to different receivers.
- Goods movements can be posted simultaneously for all product manufacturing in the order.
- It offers better controls, more checks, and balances.
- It can be planned in the production process.
- Setup of costing as a joint production.
- Joint production setup and appropriation structure.
In general co-product is:
- MM (in the Costing view or in the MRP 2, first activated causes it to be shown in the other) and BOM flag, to designate as a co-product.
- Negative quantity in BOM.
- Good receipt against order – 101.
- Co-product option offers better controls.
The by-product does not any requirements to set flags in MM or BOM header or item. From this point of view, it is easy to use.