Production Planning Processes EGN 5620 Enterprise Systems Configuration Spring, 2014

Production Planning Processes SAP Implementation Production Planning Processes SAP Implementation

Business Process Integration January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.3 MM PP SD Org Data Rules MM PP SD Master Data MM PP SD FISD MM FI PP

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.4 Business Process Integration PP

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.5 Transaction Data (Review) 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 All rights reserved.6 3. Production Order Release 6. Goods Receipt 7. Order Settlement 4. Goods Issue 1. Production Order Request 5. Confirmation of Production Order Completion 2. Production order creation ( Capacity Planning ) Production Order Process (Make-to-Stock)

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.7 1. Production Order Request 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 All rights reserved.8 Production Request (Planned Order Header)

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.9 Production Request - Planned Order (Components review) Production Request - Planned Order (Components review)

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved 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 All rights reserved Production Order Creation While creating a production order, the following actions are carried out: 1)Select a routing: operations and sequences. 2)Transfer the bill of materials from database for master data. 3)Reserve items in stock, according to the bill of materials 4)Generate the planned costs 5)Generate the capacity requirements for the work centers 6)Generate purchase requisitions for non-stock items and externally-processed operations

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.12 Production Order (Creation)

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved Production Order Structure Production Order Structure 1) Header 2) Operations 3) Components 4) Costs 5) Scheduling 6) Document Link 7) Availability check

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.14 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

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

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved Production Order Operations

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved Production Order Components

2.2.4 Production Order 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 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.

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.20 Production Order Cost

2.2.5 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

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.22 Production Order Scheduling: Work Center Formulas

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.23 Production Order Scheduling

2.2.6 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.

2.2.7 Production Order Availability Check Automatic check to determine whether the components, production resources tools, and capacities in 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

3. 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

4. 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

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

Goods Issue for Production Order

Good Issue for Production Order

5. 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

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved.32 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 All rights reserved.33 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 All rights reserved.34 Confirmation of Production Order Completion (Cost updated) 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

Confirmation of Production Order Completion

6. 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

January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved Production Order Settlement 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 All rights reserved.39 Production Order Settlement (Production Order Status) REL: Released CRTD: Created PRT:Printed PCNF:Partially Confirmed CNF:Confirmed PDLV:Partially Confirmed DLV: Delivered PRC:Pre-costed GMPS:Goods movement posted MACM:Material Committed MANC:Mat. Availability not checked NTUP:Dates are not updated SETC:Settlement rule created

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 **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

Production Order Settlement

PEN, Inc. PEN, Inc. Production Planning Processes

Actual Material Cost Line Items for Order

Actual Labor Cost Line Items for Order

Good Issue Material Document for Order

Goods Receipt Material Document for Order

Exercises: (Due Date – 3/26/2014) 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: (Due Date – 3/26/2014) 286. Receipt of goods from production order 287. Settle costs of production order 287A. Display stock/requirements list