{"id":57019,"date":"2017-07-22T23:22:14","date_gmt":"2017-07-22T16:22:14","guid":{"rendered":"https:\/\/bahtera.jp\/implementation\/"},"modified":"2026-09-12T14:11:48","modified_gmt":"2026-09-12T07:11:48","slug":"implementation","status":"publish","type":"post","link":"https:\/\/bahtera.jp\/en\/implementation\/","title":{"rendered":"Challenges and Solutions in the Implementation and Operation of Production Management Systems"},"content":{"rendered":"<p>The production management system covers production activities from the receipt of materials in the warehouse to processing in the manufacturing process, and sales activities after the product warehouse. When materials are introduced into the manufacturing process, material and processing costs occur, and when they become products, they are managed as manufacturing costs. Upon shipment, they are managed as cost of goods sold, which is the flow of costs managed by the cost management system.<\/p>\n\t\t\t\t<a href=\"https:\/\/bahtera.jp\/en\/production-control-indonesia\/\" class=\"st-cardlink\" aria-label=\"Production Management Systems in Indonesia\">\r\n\t\t\t\t<div class=\"kanren st-cardbox\" >\r\n\t\t\t\t\t\t\t\t\t\t<dl class=\"clearfix\">\r\n\t\t\t\t\t\t<dt class=\"st-card-img\">\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-3-150x150.png\" class=\"attachment-st_thumb150 size-st_thumb150 wp-post-image\" alt=\"Structured diagram of production management systems and manufacturing DX in Indonesia\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-3-150x150.png 150w, https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-3-100x100.png 100w\" sizes=\"(max-width: 150px) 100vw, 150px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dt>\r\n\t\t\t\t\t\t<dd>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"st-cardbox-t\">Production Management Systems in Indonesia<\/p>\r\n\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"st-card-excerpt smanone\">\r\n\t\t\t\t\t\t\t\t\t<p>The ultimate goal in manufacturing is to improve productivity and meet delivery deadlines. Understanding the differences between manufacturing cost, cost of\u2026<\/p>\n\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"cardbox-more\">\u7d9a\u304d\u3092\u898b\u308b<\/p>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dd>\r\n\t\t\t\t\t<\/dl>\r\n\t\t\t\t<\/div>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t\n<div class=\"article-point\" id=\"key-takeaways\">\n<h2 class=\"article-point-title\">What this article covers<\/h2>\n<ul>\n<li>Production management systems manage activities from material receipt to product shipment.<\/li>\n<li>There are two methods for system implementation in Indonesia: top-down and musyawarah.<\/li>\n<li>Reflecting inventory information based on physical inventory is crucial at the start of system operation.<\/li>\n<li>Manufacturing instructions are issued by creating MPS from order information and running MRP.<\/li>\n<li>Inventory management systems manage the flow of quantity and amount, supporting cost management.<\/li>\n<\/ul>\n<\/div>\n<p><script type=\"application\/ld+json\" id=\"wprestapi-ai-jsonld\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"BlogPosting\",\"@id\":\"https:\/\/bahtera.jp\/en\/implementation\/#article\",\"headline\":\"Challenges and Solutions in the Implementation and Operation of Production Management Systems\",\"description\":\"Production management systems manage activities from material receipt to product shipment. There are two methods for system implementation in\u2026\",\"mainEntityOfPage\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/bahtera.jp\/en\/implementation\/\"},\"inLanguage\":\"en\",\"datePublished\":\"2017-07-22T23:22:14\",\"dateModified\":\"2026-08-08T14:44:02\",\"author\":{\"@type\":\"Person\",\"name\":\"yamazou\"}},{\"@type\":\"ItemList\",\"@id\":\"https:\/\/bahtera.jp\/en\/implementation\/#key-takeaways\",\"name\":\"What this article covers\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Production management systems manage activities from material receipt to product shipment.\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"There are two methods for system implementation in Indonesia: top-down and musyawarah.\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Reflecting inventory information based on physical inventory is crucial at the start of system operation.\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Manufacturing instructions are issued by creating MPS from order information and running MRP.\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"Inventory management systems manage the flow of quantity and amount, supporting cost management.\"}]}]}<\/script><\/p>\n<h2>Define Requirements and Decide System Specifications<\/h2>\n<p>In the introduction of a production management system, defining requirements to determine how the system will instruct and record the actual work on the shop floor is crucial. When introducing a system to a local subsidiary in Indonesia, it is common for the information systems department of the Japanese headquarters and Japanese staff responsible for the introduction locally to take the lead in defining requirements.<\/p>\n<p>However, there are two approaches: a top-down method where Indonesian staff are told to use a system designed by Japanese, and a musyawarah method where Indonesian staff are involved in discussions to reach a consensus.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Top-Down Method: This is a Japan-led requirement definition to standardize specifications across the group.<\/li>\n<li>Musyawarah Method: Since the system is used by Indonesian staff, discussions are held locally until everyone agrees.<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>The top-down method requires strong leadership from the Japanese side and the Japanese expatriates in the Indonesian subsidiary. However, if this is not the case or if staff dispatched from the partner side have influence due to capital relationships, there may be resistance during the implementation phase.<\/p>\n<p>Comments such as &#8220;We don&#8217;t do it this way in Indonesia&#8221; or &#8220;The master numbers are wrong, but it was decided by the Japanese, so it doesn&#8217;t matter&#8221; may arise. Furthermore, dissatisfaction such as &#8220;Salaries are not increasing because a lot of money is being spent on system implementation&#8221; may spread on the shop floor, creating tension during visits.<\/p>\n<h2>System Specifications Materialize on the Shop Floor<\/h2>\n<p>Everything is based on the requirements definition decided in meeting rooms. Parts that are insufficient in the system&#8217;s standard functions are supplemented with add-on development, and specification changes or additional development are carried out while listening to the voices of shop floor staff during operation explanation meetings and training. From the start to the end of system operation, operational rehearsals are conducted to confirm the inter-departmental coordination methods necessary for actual operation, with each department entering data.<\/p>\n<p>In the implementation phase, where instructions such as transfer instructions, manufacturing instructions, and picking lists are issued from the system according to the movement of people and goods on the shop floor, and results are entered, you can experience the sense of theory becoming reality. The excitement and enjoyment of introducing a business system are precisely at this moment.<\/p>\n<p>However, during operation, troubles not anticipated in the requirements definition may occur. If the impact on operation is greater than expected, manual work that burdens the shop floor may arise, hindering system operation.<\/p>\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case Study:<\/strong> For example, if the label printer for issuing product tickets breaks down, labels need to be output on A4 paper from a regular multifunction machine instead of label-specific paper, and attached to products with tape. Carrying tape and a cutter to attach A4 labels to products in a large warehouse is very challenging (based on experience).<\/p>\n<p class=\"field-generalization\" style=\"clear:both;width:100%;box-sizing:border-box;margin:0 0 22px;padding:10px 14px 10px 16px;background:#f5f9fc;border-left:4px solid #2f80ed;border-radius:0 6px 6px 0;color:#1f2937;line-height:1.7;\">Key Point: Even if peripheral equipment failures are not anticipated, shop floor work may increase rapidly, hindering system operation.<\/p>\n<h2>Implementation Work of Production Management System<\/h2>\n<h3>Reflecting Inventory Based on Physical Inventory and Moving Inventory to Relevant Warehouse Locations<\/h3>\n<p>At the start of operating a production management system, it is important to first reflect inventory information based on physical inventory in the system. In manufacturing, after confirming the inventory quantity and location of materials and supplies, the schedule for issuing manufacturing instructions in the system is determined. There are two methods for attaching product tickets to existing inventory in the warehouse.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Conduct lot inspection for all lots received in inventory and issue product tickets<\/li>\n<li>Enter issued P\/O backdated, and issue product tickets by conducting acceptance inspection after receipt processing<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>Materials and supplies allocated by manufacturing instructions are linked as issuance instructions, and issuance results are recorded by scanning the barcode on the product ticket when issuing from the warehouse. The barcode must include the item code and lot number. Transfer instructions are issued to store products with product tickets issued by QC department&#8217;s lot inspection or acceptance inspection on designated shelves in the warehouse.<\/p>\n<p>Shelf numbers are recorded as transfer results by scanning the barcode on the shelf when moving products within the warehouse.<\/p>\n<h3>Issuing Manufacturing Instructions by Creating MPS from Order Information and Running MRP<\/h3>\n<p>Once the inventory on the shop floor matches the system inventory, manufacturing instructions that match the production batch size on the shop floor are generated from the system by creating a Master Production Schedule (MPS) from order information and running MRP. At this time, the following two points are questioned by the shop floor staff.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Is the manufacturing start date staggered according to the current lead time?<\/li>\n<li>Does the manufacturing lot size match the actual situation?<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>As the accuracy of the master improves and system operation becomes established, work will be carried out mechanically based on manufacturing instructions issued by the system. However, immediately after introduction, it is important for the system to issue manufacturing instructions according to shop floor operations to gain trust in the system.<\/p>\n<h3>Issuing Issuance Instructions and Recording Issuance Results<\/h3>\n<p>On the shop floor, instructions are often issued by manufacturing personnel, while results are recorded by warehouse personnel. Since the timing of instructions and results differ, the production management system also involves a two-step process.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Issue instructions and record results (manufacturing, issuance, transfer)<\/li>\n<li>Create information and record results (P\/O, inspection)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>Issuance instructions are generated linked to manufacturing instructions. Usually, manufacturing personnel perform this, and warehouse personnel who can handle forklifts move products from the warehouse to the manufacturing site. The only specifications on the issuance instructions are the item code, lot number, and quantity, and the transfer results are recorded by scanning the barcode on the shelf when the warehouse personnel perform the work.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Moving to the warehouse: Specify From &#8220;item code + lot number&#8221; and To &#8220;warehouse&#8221; in the instructions, and record To &#8220;shelf number&#8221; in the results<\/li>\n<li>Moving from the warehouse: Specify From &#8220;item code + lot number&#8221; and To &#8220;warehouse&#8221; in the instructions, and record From &#8220;shelf number&#8221; in the results<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<h3>Recording Input Results and Manufacturing Results<\/h3>\n<p>If a backflush method is used, where the standard required quantity set in the BOM (Bill of Materials) is automatically input at the time of production results recording, all products in the factory can be identified by the item code in the production management system. However, if there is a discrepancy between the timing of input and the timing of production results, there will be work-in-process inventory on the shop floor that is not aggregated into item codes.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Work-in-process with item codes<\/li>\n<li>Work-in-process without item codes<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>Materials do not become expenses just by being received, but when processing costs are added and they become work-in-process, they are accounted as expenses incurred in the current month (expenses). If they remain as work-in-process at the end of the month without becoming products, they are recorded as work-in-process inventory (assets). When work-in-process inventory becomes products, they are accounted as the cost of manufacturing products for the current month, and if they remain unsold at the end of the month, they are recorded as product inventory (assets).<\/p>\n<h3>Production Management Up to the Factory and Sales Management Beyond the Product Warehouse<\/h3>\n<p>The functions of the production management system are broadly classified into the following three categories.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Purchasing Management (Material Warehouse)<\/li>\n<li>Manufacturing Management (Factory)<\/li>\n<li>Sales Management (Product Warehouse)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>Depending on whether the products stored in a location are related to production or sales, they are classified into the following two categories.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Production Management (Material Warehouse and Factory)<\/li>\n<li>Sales Management<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>When the production results of a product are recorded, the product moves from the production location to the sales location, and from here on, it falls under the scope of sales management.<\/p>\n<h2>Dividing by Production Management and Sales Management<\/h2>\n<p>Through the receipt and payment results of production management, the manufacturing cost, which shows how many products were manufactured in a month and at what cost, can be calculated. On the other hand, using the receipt and payment results of sales management, the cost of goods sold, which is the cost of the products actually sold and shipped, can be calculated from the product inventory at the beginning of the month and the product output for the current month.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>Average unit cost of products = (Product inventory at the beginning of the month + Manufacturing cost of products for the current month) \/ (Product quantity at the beginning of the month + Manufacturing quantity for the current month)<\/li>\n<li>Cost of goods sold = Average unit cost of products x Shipment quantity<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p>To calculate the cost of goods sold, the shipment results of sales management are necessary, and to calculate the gross profit, the sales results of sales management are indispensable.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>Sales &#8211; Cost of goods sold = Gross profit<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p><img decoding=\"async\" alt=\"seminer2\" class=\"wp-image-102643 aligncenter\" height=\"493\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2026\/08\/prod-child-seminer2.jpg-en.png\" width=\"662\"\/><\/p>\n<h2>Two Perspectives: Inventory Management and Cost Management<\/h2>\n<p>When considering the factory from the perspectives of inventory and cost, it can be broadly divided into three locations. The departments that oversee each location are usually different.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Material Warehouse (RM warehouse): The purchasing department manages the receipt results.<\/li>\n<li>Manufacturing Process (Plant): The manufacturing department manages the input results and manufacturing results.<\/li>\n<li>Product Warehouse (Finished good warehouse): The logistics department (sales department) manages the shipment results.<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>To calculate the manufacturing cost, the following information held by the purchasing and manufacturing departments is necessary.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Beginning inventory of the material warehouse<\/li>\n<li>Receipt results of the material warehouse<\/li>\n<li>Beginning inventory of the manufacturing process<\/li>\n<li>Input results of the manufacturing process<\/li>\n<li>Manufacturing results of the manufacturing process<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>To calculate the cost of goods sold, the following information held by the logistics department (sales department) is necessary.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Beginning inventory of the product warehouse<\/li>\n<li>Receipt results of the product warehouse<\/li>\n<li>Shipment results of the product warehouse<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>To calculate both the manufacturing cost and the cost of goods sold, all the information held by the purchasing, manufacturing, and logistics departments (sales department) is necessary.<\/p>\n<h2>All Receipt and Payment Data and Inventory Data Retain Department Information<\/h2>\n<p>All receipt and payment data in the business system retain information about the department where they occurred. Additionally, inventory data entering the warehouse as a result of receipt and payment also retain information about the department managing the warehouse. In a physical organization, each department sends Excel-format data via email, which is then compiled and merged. At this time, it is important that the target period and format of each department&#8217;s data are unified.<\/p>\n<p>The actual data managed on the production management system is also summarized by department, and to calculate the gross profit, it is necessary to convert different department codes into a common department code. The departments involved in the receipt and payment of the production management system (purchasing, manufacturing, sales) are the main entities on the organizational chart managing the locations where inventory is stored. However, in the accounting system or cost management system, lines or product groups are the aggregation units.<\/p>\n<p>In the system, to separate report perspectives and authority, non-existent general departments may be set up, or fictitious common departments may be set up to account for costs that cannot be borne by specific departments.<\/p>\n<h2>Instructions and Results of Inventory Movement<\/h2>\n<p>In Indonesian factories, materials categorized by item are stacked in the material warehouse, and the history of receipts and issues is recorded on handwritten stock cards, which are bound and hung. This handwritten history is recorded at the time of issuing or receiving materials, making it an item-specific receipt and payment history based on results.<\/p>\n<p>However, in reality, before the warehouse department staff move materials, a request to &#8220;issue&#8221; comes from the manufacturing department staff, and the manufacturing department staff requested material issuance because there was an instruction to &#8220;manufacture&#8221; from the production management department staff.<\/p>\n<p>When starting production on the shop floor, materials need to be picked from the material warehouse and moved to the shop floor. These physical movements on the shop floor correspond to the following in the production management system.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Start of production \u21d2 Manufacturing instructions + issuance instructions<\/li>\n<li>Picking materials in the material warehouse \u21d2 Picking list<\/li>\n<li>Issuing and moving to the shop floor \u21d2 Issuance results<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<h2>Omitting Issuance Input<\/h2>\n<p>In Japanese factories in Indonesia, labor costs have soared in recent years, making it important to reduce labor costs in indirect departments. With no surplus personnel, it is necessary to streamline system operations.<\/p>\n<p>Instead of allocating issuance at the time of manufacturing instructions, a method of automatically deducting the standard input quantity corresponding to the output at the time of manufacturing results input from the BOM (backflush) or defining the material warehouse as a process warehouse to create continuity with the manufacturing site, thereby eliminating issuance itself, can be considered.<\/p>\n<p>However, since the standard quantity is a theoretical value, it is necessary to periodically adjust the inventory to maintain accuracy.<\/p>\n<h2>The Meaning of Issuing Instructions and Entering Results<\/h2>\n<p>The purpose of issuing instructions and entering results is when it is necessary to separate the management of instruction information and result information. This method is used especially when managing inventory movement is important to clarify the person in charge and timing. The following four inventory movements are the targets.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Issuing materials allocated by manufacturing instructions from the material warehouse to the manufacturing site \u21d2 Issuance instructions<\/li>\n<li>Issuing materials and work-in-process allocated based on P\/O to subcontractors \u21d2 Subcontractor issuance instructions<\/li>\n<li>Inventory movement between warehouses \u21d2 Transfer instructions<\/li>\n<li>Disposal \u21d2 Disposal instructions<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<h2>The Position of Inventory Management<\/h2>\n<p>It goes without saying that inventory management is important in conducting business. An inventory management system is introduced to streamline inventory management operations and effectively utilize inventory data. This systemizes the receipt of goods and materials, the collection of manufacturing results on the production line, and the shipment to customers, forming an integrated business system (ERP) centered on the inventory management system.<\/p>\n<p>To simplify data entry, IT devices such as barcode readers, handheld terminals, POP terminals, and iPads are used.<\/p>\n<p>Inventory management is at the core of the business flow and is closely connected with all operations of sales, purchasing, and production. If systemization is successful, it greatly contributes to the accuracy of internal business data and the improvement of business efficiency.<\/p>\n<p>In manufacturing inventory management, the receipt and payment of three types of items\u2014materials, work-in-process, and products\u2014are performed through the inventory management system&#8217;s results input function. To determine whether input (input results) or output (production results) is manual or automatic, a Bill of Materials (BOM) is necessary. The level to which this BOM is set is also important in the introduction of a manufacturing inventory management system.<\/p>\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case Study:<\/strong> When introducing an inventory management system for the first time in manufacturing, there is a method of reflecting receipt and payment results for materials and products only, and reflecting work-in-process from the end-of-month inventory count in the system. This allows for a gradual expansion to manage work-in-process inventory in processes, reducing the burden on the shop floor.<\/p>\n<p class=\"field-generalization\" style=\"clear:both;width:100%;box-sizing:border-box;margin:0 0 22px;padding:10px 14px 10px 16px;background:#f5f9fc;border-left:4px solid #2f80ed;border-radius:0 6px 6px 0;color:#1f2937;line-height:1.7;\">Key Point: Starting with receipt and payment of materials and products, and expanding to reflect work-in-process through inventory counts, can help reduce the burden on the shop floor during initial implementation.<\/p>\n\n<h2>Cost Management on the Inventory Management System<\/h2>\n<p>In the business flow, there are two flows: quantity and amount. The inventory management system manages the flow of quantity. Its main functions are current inventory list, receipt and payment history management (stock card), and receipt and payment results input.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>Current Inventory List<\/li>\n<li>Receipt and Payment History Management (Stock Card)<\/li>\n<li>Receipt and Payment Results Input<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>In sales businesses, to manage the receipt and payment of purchased goods and the cost (unit price) in real-time, there is a choice between calculating using the moving average method or managing by lot using the first-in, first-out method. The cost of purchased goods must consider not only the purchase price but also incidental costs such as shipping and customs fees. Especially for imported goods, the ratio of incidental costs is high, and the allocation of items when making them inventory management targets is a challenge.<\/p>\n<p>In manufacturing, materials are procured and introduced into the manufacturing process, becoming products through work-in-process. While the cost of materials can be managed, the cost management of work-in-process and products is complex. Material unit prices can be calculated using the moving average, but labor costs and expenses are finalized at the end of the month, requiring the use of standard costs and adjusting the difference with actual costs at the end of the month.<\/p>\n<p><img decoding=\"async\" alt=\"Inventory management in manufacturing\" class=\"aligncenter wp-image-102637 size-full\" height=\"171\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2026\/08\/prod-child-seizougyouzaiko.gif-en.png\" width=\"597\"\/><\/p>\n<p>In actual cost calculation, material costs, labor costs, and expenses are calculated in batches at the end of the month. Material costs are calculated as &#8220;monthly average unit price x actual input quantity,&#8221; and labor costs and expenses are allocated based on the balance of the general ledger (G\/L) aggregated by the accounting system.<\/p>\n<p>For inventory valuation methods, there are monthly averages and moving averages. When using the moving average method to update the latest average unit price in real-time and determine the selling price by adding a margin, it is necessary to enter receipts in chronological order.<\/p>\n<h2>Two-Way Business Flow Occurring at the Time of Procurement<\/h2>\n<p>FOB (Free On Board) is treated as inventory on board the ship, with the date of invoice arrival from the Japanese material supplier to the Indonesian company being the date of liability (A\/P) recognition. However, as an accounting officer, there is a desire to grasp transactions that will become future A\/P during the period from FOB (receipt) to invoice arrival.<\/p>\n<p>Therefore, at the time of FOB (receipt), it is accumulated in the A\/P Accrued account as unrealized liabilities, and reclassified to A\/P upon invoice arrival.<\/p>\n<h3>Inventory Management Side Flow<\/h3>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>The inventory quantity of goods increases<\/li>\n<li>The unit price of goods is updated (in the case of moving average)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<h3>Accounting Side Flow<\/h3>\n<p>Journal entry at the time of receipt and invoice arrival<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Purchase 10,000 (Credit) A\/P Accrued 10,000<\/li>\n<li>(Purchase) (A\/P Accrued)<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) A\/P Accrued 10,000 (Credit) Accounts Payable 10,000<\/li>\n<li>(A\/P Accrued) (A\/P)<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h2>Indirect Cost Processing Method<\/h2>\n<p>If the unit price of purchased items consists only of the item purchase amount on the purchase order (P\/O), there is no problem. However, usually, costs such as shipping, customs duties (Bea Masuk) included in the import declaration (Pemberitahuan Impor Barang = PIB), PPh21, and customs clearance permit (Surat Persetujuan Pengeluaran Barang = SPPB) occur. There are mainly two ways to handle these procurement-related costs.<\/p>\n<h3>Recorded as Expenses at the Time of Occurrence (When the Amount is Small)<\/h3>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Procurement-related expenses 400 (Credit) Customs broker accounts payable 400<\/li>\n<li>(Expense) (A\/P Accrued)<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<h3>Recorded as Cost of Goods Sold at the Time of Sale (When the Amount is Large)<\/h3>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Purchase 7,000 (Credit) Forwarder accounts payable 7,000<\/li>\n<li>(Purchasing) (A\/P Accrued)<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p>Recording in the purchase account means that the invoice amount from the Japanese forwarder is collectively recorded in the cost of the entire inventory at the end of the month. There is no need for detailed processing to allocate indirect costs to each item and accumulate them in the purchase account at the time of transaction occurrence. There is also no need to separate accounting entries by item.<\/p>\n<h2>Implementation Method of Indirect Cost Item Allocation on the System<\/h2>\n<p>Although it is not necessary to allocate indirect costs to items in the accounting entries at the time of transaction occurrence, it is required to reflect indirect costs in the item unit price at a specific point in time to determine an appropriate selling price.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>Want to update the moving average unit price after reflecting CIF costs each time.<\/li>\n<li>Want the inventory management system to automatically calculate item unit prices reflecting CIF costs for the valuation of end-of-period inventory.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p>For this reason, if it is necessary to allocate indirect costs to item unit prices in the inventory management system for each transaction, the issue is which screen to enter from. The amount of indirect costs is not always known at the time of order (P\/O issuance) or receipt, and invoices from forwarders may arrive after shipment. Therefore, it is difficult to enter indirect costs in the purchasing system at the time of ordering or receiving goods.<\/p>\n<h3>Add a Field (Separate Tab) to Enter Procurement-related Expenses on the Receipt Screen<\/h3>\n<p>The drawback is that once the journal entry of the receipt processing is posted to the ledger, it cannot be entered. In such cases, posting is either pending, or it is posted once and adjusted later, which is often adopted in commercial ERP packages.<\/p>\n<h3>Link with P\/O Number, Receipt Number, or Invoice Number Using Direct Invoice Function<\/h3>\n<p>The Direct Invoice function allows A\/P to be recorded without issuing a P\/O or receiving goods, and by linking it to any key that can identify the item, it is possible to allocate indirect costs to items.<\/p>\n<h3>Process as a Purchase of Services (Uncounted Item) and Enter from the Purchasing Module<\/h3>\n<p>After issuing a P\/O, either process the receipt or build a mechanism to link the item with the P\/O using the Purchase Direct function without a P\/O. In this case, the cost that can be managed on the inventory management system is limited to purchased goods only.<\/p>\n<p class=\"field-note\" style=\"clear:both;width:100%;box-sizing:border-box;margin:18px 0 8px;padding:14px 16px 14px 18px;background:#fffaf3;border:1px solid #f0e0c8;border-left:5px solid #d97706;border-radius:6px;color:#3f3a32;line-height:1.75;\"><strong style=\"display:inline-block;margin-right:0.35em;color:#b45309;font-weight:700;\">Case Study:<\/strong> There are cases where the forwarder&#8217;s invoice arrives some time after shipment, making it impossible to enter indirect costs at the time of order or receipt.<\/p>\n<p class=\"field-generalization\" style=\"clear:both;width:100%;box-sizing:border-box;margin:0 0 22px;padding:10px 14px 10px 16px;background:#f5f9fc;border-left:4px solid #2f80ed;border-radius:0 6px 6px 0;color:#1f2937;line-height:1.7;\">Key Point: Indirect costs may not be determined at the time of order or receipt, and a system that allows for subsequent input is necessary.<\/p>\n<h2>Factors That Break Document Linkage<\/h2>\n<p>In the system business flow of domestic transactions in Indonesia, if documents (vouchers) correspond one-to-one, an efficient flow can be realized. Specifically, an order number is assigned at the time of order registration, and order information is called up by selecting the order number at the time of order registration. At the time of receipt registration, order information is called up by selecting the order number.<\/p>\n<p>Furthermore, at the time of shipment registration, receipt information is called up by selecting the receipt number, and at the time of invoicing, shipment information is called up by selecting the shipment number. At the time of settlement registration, invoice information is called up by selecting the invoice number.<\/p>\n<div class=\"graybox\">\n<div class=\"maruno\">\n<ol>\n<li>An order number is assigned at the time of order registration.<\/li>\n<li>Order information is called up by selecting the order number at the time of order registration.<\/li>\n<li>Order information is called up by selecting the order number at the time of receipt registration.<\/li>\n<li>Receipt information is called up by selecting the receipt number at the time of shipment registration.<\/li>\n<li>Shipment information is called up by selecting the shipment number at the time of invoicing.<\/li>\n<li>Invoice information is called up by selecting the invoice number at the time of settlement registration.<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<p>In systems where sales registration is done in order management or shipment management, invoice registration in accounting is skipped, and the timing of A\/R occurrence is at the time of sales registration. Usually, orders and purchases are not linked, but in non-manufacturing industries such as trading companies, purchases are made based on orders. If direct shipment from the manufacturer occurs, it becomes drop shipping, and receipt and shipment are skipped.<\/p>\n<p>When developing a production management system, the following processes should be considered to ensure that document linkage is not broken within the business flow.<\/p>\n<div class=\"graybox\">\n<ol>\n<li>Order\n<ul>\n<li>Prospective order before receiving order<\/li>\n<li>Allocate from inventory without ordering<\/li>\n<li>Consolidate multiple orders into one order<\/li>\n<\/ul>\n<\/li>\n<li>Receipt<\/li>\n<li>Shipment\n<ul>\n<li>Partial delivery<\/li>\n<li>Termination<\/li>\n<li>Return<\/li>\n<li>Consolidate multiple orders (purchases) into one shipment (receipt)<\/li>\n<li>Sample shipment (receipt) from inventory before receiving order<\/li>\n<\/ul>\n<\/li>\n<li>Invoice (A\/R)\n<ul>\n<li>Consolidate multiple shipments into one invoice (monthly summary)<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/div>\n<h2>Frequently Asked Questions | Introduction and Operation of Production Management Systems<\/h2>\n<p>From requirement definition to cost and indirect costs, points that are repeatedly confirmed at the introduction site are briefly summarized.<\/p>\n<h3>What is the difference between the top-down method and the musyawarah method?<\/h3>\n<p>The top-down method prioritizes standard specifications led by Japan, while the musyawarah method involves consensus building with local staff. Depending on leadership and capital relationships, there may be resistance during the implementation stage even with the top-down method.<\/p>\n<h3>What is the first thing needed at the start of operation?<\/h3>\n<p>Reflecting inventory in the system based on physical inventory is necessary. After confirming location and quantity, the schedule for issuing manufacturing instructions is determined, leading to product ticket and barcode operation.<\/p>\n<h3>Is it necessary to allocate procurement-related costs by item in accounting entries?<\/h3>\n<p>In accounting entries at the time of transaction occurrence, detailed allocation by item is not mandatory. However, there is a need to reflect CIF costs in unit prices for sales pricing and inventory valuation, and the design of input timing is a point of discussion.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Production management systems oversee activities from material receipt to product shipment. In Indonesia, system implementation can follow a top-down or\u2026<\/p>\n","protected":false},"author":2,"featured_media":104606,"parent":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[633],"tags":[],"class_list":["post-57019","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-indonesia-production-control-system"],"_links":{"self":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/comments?post=57019"}],"version-history":[{"count":7,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57019\/revisions"}],"predecessor-version":[{"id":104605,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57019\/revisions\/104605"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media\/104606"}],"wp:attachment":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media?parent=57019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/categories?post=57019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/tags?post=57019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}