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Process 207

operations that have been released. The production order includes much of the
data related to the goods issue. User input specifi es the actual materials and
quantities issued. The materials, quantities, and location (plant, storage loca-
tion) can be changed as needed during this step.

Tasks
The principal task in the goods issue step is to issue materials from storage to
the production order. An additional step, material staging, is sometimes neces-
sary if materials must be prepared for use.
Many companies do not explicitly track the issue of materials to each
production order. Instead, they employ backflushing, a technique that auto-
matically records the goods issue when the order is confi rmed. Thus, the mate-
rials issued are not recorded at the time they are withdrawn from inventory.
Consequently, there is a time lag between the actual issue of the materials and
the recording of the issue in the ERP system. Nevertheless, many companies
prefer this technique because it eliminates a step and can make the production
process more effi cient. Backfl ushing can be specifi ed in the material master,
routing, or work center data.

Outcomes
There are several signifi cant consequences of a goods issue to a production
order.
• The material master is updated to refl ect a reduction in the quan-
tity on hand and the inventory value of the material issued.
• General ledger accounts are updated. Specifi cally, the relevant
material consumption account(s) and inventory account(s) are
updated to refl ect an increase in consumption and a reduction in
inventory.
• Material reservations are updated. Specifi cally, reservation quanti-
ties are reduced by the quantity of materials issued.
• Because this step involves a goods movement, a material document
is created to record the data associated with the movement.
• Because the general ledger accounts are affected, an FI document
is created to record fi nancial accounting data.
• Actual costs associated with material consumption are calculated
and added to the production order. Recall that the production
order is a cost object and serves as a collector of costs incurred
during production. During the goods issue step, material costs are
debited to the production order. A corresponding management
accounting document is created.

• A goods issue document that notes the materials and quantities
issued can be created, although it is not required. This document
is included with other shop papers that have already been printed,
and it serves as a record of which goods were issued. Note that a
goods issue document is not the same as a material document. It is
used when paper records of the process are maintained.

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