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Semi-finished product

A semi-finished product is a product that has already been partially processed but still needs further processing before it can be sold as a finished product. In ERP software, it is often registered as an intermediate product in the production flow, with its own item number, inventory position, and cost, and can be used internally in subsequent operations or sold as a standalone product.

 

 

Master Data

  • Item number and description: unique item in the ERP database.
  • Item type: set as a sub-assembly or intermediate product.
  • Bill of materials: shows raw materials or subcomponents needed to make the semi-finished product.
  • Routing/operation plan: describes the production steps and processing times.

 

Inventory Management

  • Inventory locations: often separate storage locations for semi-finished products (warehouse or intermediate storage in production).
  • Inventory status: distinguishes between available, reserved, and work in progress (WIP).
  • Batch management: for traceability, especially in food, pharmaceuticals, or high-tech.

 

Production Planning

  • MRP (Material Requirements Planning) calculates the need for semi-finished products based on planned final production.
  • Semi-finished products can be both purchase and production-driven (purchased or internally made).
  • MRP generates work orders for semi-finished products before final assembly begins.

 

Costs and Valuation

  • Cost structure: material + direct labor + machine hours.
  • Sub-assemblies often have their own cost within ERP, making margins per production phase visible.
  • Valuation usually at standard cost, FIFO, or actual costing.

 

Use in Subsequent Production

  • Semi-finished products are directly consumed in assembly or production of final products via the bill of materials.
  • ERP automatically records consumption once the next production step begins.

 

Reporting and Analysis

  • Inventory levels and lead times per sub-assembly.
  • Costs per production phase.
  • Bottleneck analysis in production planning.

 

(Source: ChatGPT, accessed August 12, 2025)

 

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