1. The Production Process

2. Introduction
Production is both a SCM function and an accounting function
Simply put, the process involves turning raw materials into finished goods

3. Types of Production (1) Discrete manufacturing
The result is an individual unit (or many of them) such as a bicycle
The finished good “could” be decomposed back into its raw materials
Production lines are set up and torn down to make batches of different materials
Hewlett Packard

4. Types of Production (2) Repetitive manufacturing
Similar to discrete manufacturing
The same finished good is produced over time on the same production line
The production line is not changed to make different products
Used when production lines are very expensive
Intel (Chips)
Seagate (Disks)

5. Types of Production (3) Process manufacturing
Products are made by means of a recipe
Categories
Continuous (flow)
Gasoline
Batch
Soda and beer
We will not work with these

6. Means of Production Triggers cause production runs to be executed
Make to stock
Make a batch resulting from MRP or other production trigger
Make to order
Make a unit(s) as a result of a customer order
Dell

7. Production Master Data
Bill of materials (BOM) contains components that make up a product or assembly
Work centers are locations within a plant where production operations are performed
OFBiz does not use these
Product routings list the activities involved in producing the product defined by the BOM
Product groups are used in planning to aggregate planning activities

8. Bill of Materials (Overview)
In general, the components needed to produce semi-finished goods or finished goods
In the case of process manufacturing, we call a BOM a formula or recipe
We will focus on discrete manufacturing

9. Bill of Materials SAP implements BOM as a flat structure
Hierarchical BOMs can be created using “component” materials (assemblies)
The BOM structure should mimic the manufacturing process

10. Bill of Materials (Organization)
A BOM applies to a product in a facility
Different facilities might make the same finished good using a different BOM
A material can have “alternate” BOMs
These might be used for different processes having different lot sizes
This is more common in process manufacturing
We will not work with alternate BOMS

11. Bill of Materials (Organization)
Header section
Applicable to the finished good
List the plant and BOM number
The purpose of the BOM (production, engineering, plant maintenance)
Base quantity
Minimum and maximum lot size

12. Bill of Materials (Organization)
Items section
The raw materials that go into making the finished good
Item type
Item
Item quantity

13. Bill of Materials (Organization)

14. BOM (Items)
A bill of material has items

15. BOM (Items)
Here are the items in our BOM

16. BOM Complexity A 747-400 contains 6.5 million parts
Countless assemblies
The process requires that many parts are inspected before, during, and after installation

17. Work Center (Introduction)
“A resource used to produce a material”
It can be a machine, a group of machines, or an entire production line
It can be a person or group of people (labor)
OFBiz does not use these

18. Work Center Costing

19. Routings (Introduction)
These are the detailed operations performed by (at) one or more work centers to produce a finished good
Think of the detailed operations required for an assembly line to run
Routing Sequences Have
Operations that get performed
Material(s) required
Routings apply to a material and plant

20. Routing (Header) In OFBiz, Routings are made up of two parts
Routing tasks are the individual steps we perform in a manufacturing task
Routings are ordered sequences of routing tasks

21. Routing (Tasks) The tasks we perform to manufacture Data
The time it takes to perform the task
How many items are processed per interval of time
Setup, labor, machine

22. Routing (Tasks)
Each task has a time to perform

23. Routing (Sequences) Routing sequences
Using sequences, you can create standard and parallel sequences
Remember a parallel fork
Sequences are performed “in-order”
Alternate sequences might be performed in place of standard sequences
Different steps based on the number of workers

24. Routing (Sequences)

25. Routing (Sequences)

26. Production Routing (Materials)
The materials needed to produce the good
This information comes from the BOM

27. Production Capacity Production has a capacity that relies on
A factory calendar describing workdays and holidays
A capacity for people and machines
Some number of shifts that workers work
OFBiz is not this sophisticated

28. Production Order (Example)
Production header tells us status, dates, and production quantities

29. Production Order (Example)
Routing tasks performed and quantities produced

30. Production Order (Example)
BOM quantities

31. The Production Process (Overview)
Request production
Authorize production
Release production order
Goods issue to production order
Actual production
Production confirmation
Goods receipt into inventory

32. Request Production
Production is typically requested because of a trigger
A customer order (make-to-order)
An MRP
Manual creation
In the end, a production order gets generated

33. Authorize Production This is the actual commitment to produce
Production (machine / people) time is allocated for specific dates
Authorization might be created from planned or unplanned orders

34. Authorize Production (SAP)
Production might be authorized because of
Planned production / a sales order / for a material (finished good)
We get preliminary estimates of cost

35. Release Production Order
This is where the authorized order is actually released to production
Production starts the manufacturing process at a given date and time
RTP might happen manually or automatically
Shop papers are generated

36. Goods Issue
Raw materials are removed from storage triggered by the production order release
Material staging takes place
Backflushing

37. Goods Issue (2) Raw material inventory is updated
Inventory accounts are updated
Material costs are added to the production order
See the GL transactions on page 208

38. Actual Production
We make the material and record production times

39. Production Confirmation
Accounting finalizes the production run
Production costs are recorded
Here the produced goods are transferred from production to goods storage

40. Goods Receipt Here, the goods are released into inventory Inventory
Held for a particular customer
Held for QA or other reason

41. MRP Introduction MRP gets complicated quickly OFBiz is pretty simple
It looks at
Sales (outgoing)
Purchases and procurement (incoming)

42. MRP (Example)