When it comes to complex manufacturing projects like custom RVs, home construction, or large-scale industrial equipment, businesses often find themselves needing the precision of production orders and the flexibility of project management.
The good news? Dynamics 365 Finance & Operations (D365 F&O) offers a powerful hybrid approach that lets you use both tools together—giving you the best of both worlds.
Why Choose a Hybrid Approach?
A hybrid approach is ideal when your business needs:
Structured Manufacturing: Standardized processes that benefit from production orders, such as assembly lines or batch production.
Advanced Project Management: Complex scenarios involving long timelines, resource scheduling, or phased billing.
Financial Flexibility: The ability to manage work-in-progress (WIP), milestone billing, and detailed cost tracking.
By combining production orders and project management, you can manage standard manufacturing tasks efficiently while gaining robust tools to handle customizations, resource management, and financial intricacies.
Real-World Scenarios for Hybrid Approaches
1. Custom RV Manufacturing
In RV manufacturing, the base model might go through a standard production order, with well-defined routes and BOMs. However, when a customer requests customizations—such as personalized interiors, specific electronics, or additional features—the project management module steps in.
Production Order: For standard components like the chassis and base build.
Project Management: For custom add-ons, managing subcontractors, and handling custom billing arrangements.
Outcome: You maintain efficiency in standard manufacturing while gaining flexibility for custom project work.
2. Home Construction Projects
A custom home builder might use production orders for repetitive tasks, such as creating pre-fabricated walls or custom cabinetry. When it comes to building the home, managing contractors, and coordinating the construction timeline, the project management module takes over.
Production Order: Pre-fabrication of standard components.
Project Management: Scheduling subcontractors, managing project phases, and invoicing based on completed milestones.
Outcome: The builder can track material costs through production orders while leveraging project tools for scheduling and financial management.
3. Industrial Machinery Manufacturing
Manufacturing large industrial machines often involves both repetitive processes and custom engineering work. The production order can handle the manufacturing of core components, while the project management module manages custom configurations and installation services.
Production Order: Manufacturing of standard machine components.
Project Management: Custom configurations, on-site installations, and coordinating external services.
Outcome: Achieves a streamlined production process while maintaining control over custom elements of the project.
Best Practices for Setting Up Hybrid Models in D365
1. Define the Scope of Production vs. Project Work
Start by identifying which parts of the build are standardized and which require project management.
Use production orders for repeatable tasks with predictable material and labor costs.
Use project management for tasks with variable timelines, external resources, or advanced billing needs.
2. Create Clear Work Breakdown Structures (WBS)
Use WBS to break down project tasks into manageable phases.
Ensure that the WBS integrates both production tasks (e.g., manufacturing components) and project tasks (e.g., managing subcontractors).
3. Optimize Resource Management
Use the project management module to schedule resources, even for tasks within production orders.
Allocate resources efficiently across both production and project phases to avoid bottlenecks.
4. Implement Advanced Financial Tracking
Set up project cost controls, even for production-related activities, to maintain a holistic view of financials.
Use milestone billing where applicable, and track WIP accurately to avoid surprises in project profitability.
When your business model involves a mix of standard manufacturing and bespoke project work, D365 F&O's hybrid approach lets you have your cake and eat it too. By combining production orders with project management tools, you gain operational efficiency and financial flexibility—helping you stay on budget, on schedule, and on target.
And remember, just like my kids who want both a cookie and ice cream for dessert, sometimes the best solution isn’t choosing between options but finding a way to enjoy both!
Stay tuned for our next deep dive into how to set up these hybrid approaches in D365, with step-by-step guidance and real-world examples.
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