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
YOUR BOOK DOES A VERY GOOD JOB WITH THIS TOPIC

3. Production Steps

5. 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

6. 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)

7. 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

8. 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

9. 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
Product routings list the activities involved in producing the product defined by the BOM
Product groups are used in planning to aggregate planning activities

10. 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

11. Bill of Materials (SAP)
SAP implements BOM as a flat structure
Hierarchical BOMs can be created using “component” materials (assemblies)
The BOM structure should mimic the manufacturing process
See the BOMs in Figure 6-4 on page 184

12. Bill of Materials (Organization)
A BOM applies to a “plant”
Different plants 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

13. 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

14. Bill of Materials (Organization)
BOM Header

15. BOM Usage
(+must, .can, -cannot)

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

17. Bill of Materials (Organization)

18. Bill of Materials (Organization)

19. Bill of Material (Item Categories)
Inventory is maintained for stock items (L)
Inventory is not maintained for non-stock items (N)
Variable sized items (R) are available in different dimensions (quantities)
Lumber, for example

20. Bill of Material (Item Categories)
Document items (D) represent applicable documentation
Manuals, for example
Class Items (K) are used in variant (configurable) BOMs
Different paint colors perhaps

21. 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

22. Bill of Materials (Navigation)
Logistics / Production / Master Data / Bills of Material / Bill of Material / Material BOM
CS01 – Create
CS02 – Change
CS03 – Display

23. 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)

24. Work Center (Introduction)
Work centers can be arranged hierarchically
Work centers have capacities
They can produce finite outputs given a set of constraints
People work 8 hours a day
Machines can perform at some speed

25. Work Center (Global Bike)
We have work centers for
Bike Assembly
Inspection
Packaging

26. Work Center Hiererchy

27. Work Centers (SAP) A work center belongs to a plant
Work centers have a category that describes the work center
Machine / Labor / Production line / Etc..
A work center has a standard value key
These are activities that consume time
Setup
Processing
Teardown

28. Work Center Categories

29. Work Center Standard Value Key
Execution time and costs are calculated in operations using formulas and standard values

30. Work Centers (Control Keys)
Control keys define how an operation is processed based on a set of indicators
Scheduling – Enables scheduling on the operation in Quality Management and Production Planning
Capacity – Enables capacity planning for the work center
Indicators to print time tickets and shop papers

31. Work Centers (Control Keys)
Control keys are managed in the IMG

32. Work Centers (SAP)
Default values containing wage data can be associated with a work center
Note that work centers are associated with cost centers. This is how we allocate production costs
See Figure 6-7 page 189

33. Work Center (Navigation)
Logistics / Production / Master Data / Work Centers
CR01 – Create
CR02 – Change
CR03 – Display

34. Work Center (Basic Data)
Every work center belongs to a work center category (i.e. Labor)
And has a standard value key for a dimension (time in this case)

35. Work Center (Basic Data)
The Assembly work center has execution time for setup, machine, and labor

36. Work Center (Scheduling)
A work center has a capacity category usually to indicate machine or labor capacity
Formulas that calculate the setup, processing, and teardown time for the work center
Formulas are a subject in themselves

37. Work Center (Scheduling)
Formula use “special” variables to calculate the dimensional value (time)

38. Work Center (Costing)
Here, we allocate the costs of the work center to a cost center
The cost center must exist and belong to the plant’s controlling area
All costs from a work center must be applied to the same cost center
Costs are allocated based on a formula key
Same as scheduling

39. Work Center (Costing)

40. Work Center Costing

41. 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

42. Routing (Header) Task / Usage (production / plant maintenance / …)
Validity information
Inspection (QA / QC) information

43. 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

44. Routing (Sequences)
We have only one routing sequence

45. Routing (Operations) 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
Steps in a routing operation are performed in a work center

46. Production Routing for (DXTR1000) (Operations)

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

48. Production Routing for (DXTR1000) (Materials)

49. Routing (Navigation Path)
Logistics / Production / Master Data / Routings / Routings / Standard Routings
CA01 Create / CA02 Change / CA03 Display

50. 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
Look at page 195 in your text.

51. Production Capacity (Factory Calendar)
Multiple calendars describe
Public holidays and the current
The calendar used by the factory
The assignment of a calendar to a plant

52. Production Capacity (Factory Calendar)
Holiday calendar

53. Maintaining Capacities
Each work center in a plant has a capacity
A capacity name (SHIFT for example)
A capacity category (machine or person for example)

54. Maintaining Capacities
Capacity header describes available capacity

55. Maintaining Capacities
Global Bike runs 1 shift with 1 hours of breaks per shift

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

57. 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

58. 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

59. 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
Logistics / Production / Shop Floor Control / Order / create
C001

60. Production Order (Illustration)

61. 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

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

63. 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

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

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

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

67. Introduction to Planning