Production Planning Processes EGN 5620 Enterprise Systems Configuration Spring, 2013

Production Planning Processes SAP Implementation EGN 5620 Enterprise Systems Configuration

Business Process Integration ECC 6.0 January 2008 Business Process Integration FI MM PP SD Transactions Master Data MM PP SD Org Data Rules MM PP SD FI FI FI MM In the Business Process Integration class we use the stool as a metaphor for the SAP structure. There are four basic components needed to run execute SAP. Three of these are the legs of the stool: org data, master data, and rules. These ‘hold up’ the transactions. Transactions cannot be run unless these are setup. The legs are typically configured during the implementation process. During BPI 1 we will setup the stool for Finance, Materials management and Sales and Distribution. PP SD January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Business Process Integration ECC 6.0 Business Process Integration January 2008 PP Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Transaction Data (Review) ECC 6.0 Transaction Data (Review) January 2008 Unlike master data, transactional data is dynamic - it constantly changes, usually many times per day Transactions data include organizational structure, master data, rules, as well as business activities January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Process (Make-to-Stock) ECC 6.0 January 2008 Production Order Process (Make-to-Stock) Production order creation (Capacity Planning) Production Order Request Production Order Release Order Settlement Goods Issue Goods Receipt Confirmation of Production Order Completion January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Request ECC 6.0 Production Order Request January 2008 Regardless of the source of the trigger, the outcome of this step is a planned order. Planned order is a formal request for production. Planned order is a transaction document. In a planned order, the following information is defined: What products are needed How many units of the products are needed When they are needed In this step, no FI or CO documents are created, so there is no financial impact. There is no movement of materials. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Request (Planned Order Header) ECC 6.0 Production Request (Planned Order Header) January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Request - Planned Order (Components review) ECC 6.0 Production Request - Planned Order (Components review) January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Production Order A production order is typically created by converting a planned order, but it can also be generated directly without using a planned order. Planned orders can be converted individually, collectively, or partially. A production order includes reference to PP master data, such as a BOM, routing, and work centers. BOM identifies materials to be used in production. Routing identifies operations needed for the order. Work centers are the working locations where operations are to be performed and work centers define the capacity requirement for the order. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Creation) ECC 6.0 January 2008 Production Order (Creation) While creating a production order, the following actions are carried out: Select a routing: operations and sequences. Transfer the bill of materials from database for master data. Reserve items in stock, according to the bill of materials Generate the planned costs Generate the capacity requirements for the work centers Generate purchase requisitions for non-stock items and externally-processed operations January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Creation) ECC 6.0 Production Order (Creation) January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (structure) ECC 6.0 January 2008 Production Order (structure) Production Order Structure Header Operations Capacity Components Costs Scheduling Settlement Rules Document Link Confirmation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (data elements) ECC 6.0 January 2008 Production Order (data elements) Order header Order number Material to be produced Plant Quantity Scheduler (Dates) Status PRT (Production Resource Tool) Tooling Equipment Operations Tasks Work centers Times, Dates Standard value Control keys Components Material components Quantity Required date January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Header) How (Routing) Components (BOM) What (Finished good) How many Time Line

Production Order (Operations) ECC 6.0 Production Order (Operations) January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order - (Components) ECC 6.0 January 2008 Production Order - (Components) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Master Data) ECC 6.0 Production Order (Master Data) January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order– Preliminary Cost A production order includes preliminary estimates for various cost components, such as material and overhead. Material costs are based on the costs of the components assigned to the production order. These costs are maintained in master data of each component. Production costs are based on data in work center, such as activity types and formulas that identify which activities (e. g. lab and setup) are required and in what quantity.

Production Order– Preliminary Cost The costs are associated with appropriate accounts in general ledger, such as material consumption accounts. As production is executed, actual costs are assigned in the production order along with the preliminary cost estimates. After a production order has been completed, the cost accumulated in the production order must be settled. During settlement, the actual costs incurred are allocated to cost objects based on specified settlement rules.

Production Order (Preliminary Cost) ECC 6.0 January 2008 Production Order (Preliminary Cost) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order– Schedule SAP calculates the production dates and capacity requirements for all operations within an order Scheduling function uses data from production order (quantity and dates) and work centers. Determines a Routing Operation specific time lines Material Consumption Points Links to Material Master Scheduling Margin Key (Floats) Links to Work Center Formulas Standard Inter-operation Times

Production Order (Scheduling) Work Center Formulas ECC 6.0 January 2008 Production Order (Scheduling) Work Center Formulas January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Scheduling) ECC 6.0 Production Order (Scheduling) January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Settlement Rules) ECC 6.0 January 2008 Production Order (Settlement Rules) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order (Document Link ) A production order may contain reference to various documents. A BOM for example, may include a document item. Production order often includes links to documents in the document management system (DMS). DMS is used to ensure the most current version of documents is employed during production.

Production Order (Availability Check) Availability check is to determine whether the components, production resources tools, and capacities for an order are available It can be automatic or manually executed It determines availability on the required date Unlike scheduling, availability checks are not repeated automatically if the production order is changed. It generates an availability log which displays: Results of the check Missing parts list Reservations that could not be verified

Production Order Release The time between scheduling and releasing an order is used for preparation needed for the processing of the order Once an order is released, it is ready for execution. At this time, the user can: print shop floor documents execute goods movements accept confirmations against the order

Goods Issue for production Order Note: That when a production order is being created, it references a BOM that determines the necessary components to produce the goods, it also places a reservation on each of the components Upon release of the order (or operation) the reserved materials can be issued from inventory; and the system (SAP): Updates the reservation Updates the inventory Assigns costs to the order as actual costs You can withdraw materials for an order that are not listed as components in the order. These "unplanned withdrawals" cause the actual costs of the production order to be updated.

Goods Issue for production Order Effects of the Goods Issue updates stock quantity updates stock value Updates production order status Three documents are created: material document accounting document controlling document You can withdraw materials for an order that are not listed as components in the order. These "unplanned withdrawals" cause the actual costs of the production order to be updated.

Goods Issue for Production Order

Good Issue for Production Order

Confirmation of Production Order Completion Confirmations are used to monitor and track the progression of an order through its production cycle confirmation can be done at the operation or order level Exact confirmation shortly after completion of an operation is essential for realistic production planning and control

Confirmation of Production Order Completion ECC 6.0 January 2008 Confirmation of Production Order Completion Completion confirmation Quantities of material used Operations completed Time Personnel Costs Planned costs and actual costs Settlement rule for the order for accounts/cost centers Settlement profile Settlement receiver January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Confirmation of Production Order Completion ECC 6.0 January 2008 Confirmation of Production Order Completion Completion confirmation: Confirms both the yield and scrap quantities Can do product receipt if automatic Goods Receipt (G/R) set Generates labor cost based on activity costs January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Confirmation of Production Order Completion (Cost updated) ECC 6.0 Confirmation of Production Order Completion (Cost updated) January 2008 Planned costs Primary Costs Material Costs (BOM) Based on material master price for each component Updated when goods are issued to order, or when purchased materials are received Cost for External Processing Secondary Cost Production Costs (Routing) Time cards from operations Material Overhead Costs Production Overhead Costs Gets updated at completion confirmation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Confirmation of Production Order Completion

Confirmation of Production Order Completion (Labor cost is added)

Goods Receipt for Production Order Acceptance of the confirmed quantity of output from the production order into stock Effects of the Goods Receipt update stock quantity update stock value update production order (status) store price for future valuation changes Three documents are created material document accounting document controlling document

Goods Receipt for Production Order

Goods Receipt for Production Order (Cost Target/Actual Comparison)

Production Order Settlement ECC 6.0 Production Order Settlement January 2008 Settlement Rule Automatically assigned to order according to settlement rules defined in production order Distribution rule (cost receiver, settlement share and type) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Settlement (Production Order Status) ECC 6.0 January 2008 Production Order Settlement (Production Order Status) GMPS: Goods movement posted MACM: Material Committed MANC: Mat. Availability not checked NTUP: Dates are not updated SETC: Settlement rule created REL: Released CRTD: Created PRT: Printed PCNF: Partially Confirmed CNF: Confirmed PDLV: Partially Confirmed DLV: Delivered PRC: Pre-costed January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Settlement Settling a Production Order to Stock postings are made to the materials & labor and production order accounts with the value of the material and labor and received finished goods. difference between the debt posting and credit posting is posted to a price difference account Since production costs were higher than planned, the additional expenditure negatively affects the operating profit. This means that the profit decreases by the amount by which the actual costs charged to the production order exceed the standard price. The actual costs charged to the production order affect net income just as the posting of the inventory change at the time of the goods receipt. Since the actual expense was 20 higher than expected, the operating profit is 200 lower than it would have been if production had been at standard cost. **Material Price determined by the quantity produced times the Standard Price in the Material Master.

Production Order Settlement Costs analyzed Primary Materials External Processing Secondary Production, Administrative Overhead, and Labor Cost Analysis Reporting Calculate and analyze planned costs, target costs, and actual costs of the production order. Calculate and analyze variances Calculate and analyze planned costs, target costs, and actual costs of production orders and process orders Calculate or update the work-in-process inventory and the finished goods inventory Calculate and analyze variances Transfer data to Financial Accounting (FI) Transfer data to Profitability Analysis (CO-PA) Transfer data to Profit Center Accounting (EC-PCA) Transfer data to Actual Costing / Material Ledger (CO-PC-ACT)

Production Order Settlement

PEN, Inc. EGN 5620 Enterprise Systems Configuration Production Planning Processes PEN, Inc. EGN 5620 Enterprise Systems Configuration

Actual Material Cost Line Items for Order

Actual Labor Cost Line Items for Order

Good Issue Material Document for Order

Confirmation Document for Order

Goods Receipt Material Document for Order

Exercises: (due date: 3/27/2013) 259. Create purchase order 260. Create goods receipt 262. Post invoice receipt from vendor 263. Display vendors invoice (gross) document 264. Post payment to vendor 276. Create a production plan 277. Display stock/requirements list 278. Transfer planning data to demand management 279. Review demand management 280. Display stock/requirements list 281. Run master production schedule 282. Display stock/requirement list 283. Convert planned order to production order 284. Issue goods to production order 285. Confirm production completion

Exercises: 286. Receipt of goods from production order 287. Settle costs of production order 287A. Display stock/requirements list