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The Production Process
Chapter 6 The Production Process Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Learning Objectives Describe the master data associated with the production process. Identify the key steps in the production process and the data, documents, and information associated with each step. Effectively use SAP® ERP to execute the key steps in the production process. Effectively use SAP ERP to extract meaningful information about the production process. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Types of Manufacturing
Discrete vs. repetitive vs. process Discrete and repetitive Tangible products Manufactured in individual units Skateboards, bicycles Repetitive manufacturing Same or similar products are produced over a period of time A specified quantity is produced over a period of time Discrete Batches of different materials over time Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Types of manufacturing
Process manufacturing Not manufactured in individual units Gallons, pints, liters Paint, soft drinks Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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A Basic Production Process
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Organizational Data Client Company code Plant Storage location
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Master Data Bill of materials (BOM) Work center Product routing
Material master Production resource tools (PRT) Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Bill of Materials Identifies the components needed to make the material A component can have its own BOM to creates a multi-level BOM BOMs are used in Material planning Production Procurement Product costing Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Single-level and Multi-level BOMs
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Bill of Materials for Touring Bikes
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Bill of Materials for Off-road Bikes
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Bill of Materials - Header
Applies to the entire BOM Status: active, inactive Base quantity: materials specified are needed to make the base quantity (typically 1 unit). Usage: production, engineering, costing, etc. Plant: each plant can have a different BOM Validity: date range Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Bill of Materials - Items
Apply to the specific item in the BOM Item category: Stock item – must have a material master Nonstock item – no material master Variable-sized item – must specify size Document item – diagrams, additional instructions Material number Quantity Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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BOM Structure Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Demo 6.1 BOM for Bike and Wheel Assembly
Review some of the data included in a material master Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Work Center Basic data Capacities Scheduling Cost center HR assignment
Name, description Person responsible for maintaining master data Task list usage (which routings can use this work center) Capacities Scheduling Cost center HR assignment Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Work Center Data Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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GBI Dallas Production Facility
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GBI Work Centers Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Demo 6.2 Review GBI Work Center
Review the GBI work center Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Product Routing Steps necessary to produce a material Operations
Sequence Standard Alternate Parallel Work center Times Setup, machine, labor Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Work Center Example Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Structure of a Routing Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Routing and Work Centers
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Routing for Deluxe Touring Wheel Assembly
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Routing for Deluxe Touring Bike
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Demo 6.3 Review Routing for a Bike and Wheel Assembly
Review the routing for a bike and wheel assembly Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Component Assignment Specifies the relationship between a BOM and a routing Assigns components (materials) in a BOM either to a routing or to a specific operation within routing If not assigned assumed to be assigned to the first operation Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Component Assignment Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Production Capability
A measure of how many units of a material a plant can produce within a given timeframe A data source for production planning Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Sample GBI Production Plan
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Material Master Previously discussed views
Basic data Purchasing related Sales related Accounting related Additional view needed for production Work scheduling – plant specific MRP – plant specific More relevant in material planning Will be discussed in that chapter Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Production Resource Tools
Movable objects required for production Shared among different work centers Documents (instructions) Materials (calibration tool) Equipment (machine that is not in a fixed location) Miscellaneous Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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The Production Process
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Request Production Planned order Generated by other processes
What material How many When Generated by other processes Fulfillment Project management Material planning Can be created manually Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Elements of the Request Production Step
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Data in a Planned Order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Demo 6.4 Create a Planned Order
Review how to create a planned order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Authorize Production With planned order: convert
Convert to production order Without planned order: create production order Production order What material is to be produced? How many? When? Where will they be produced? What resources are to be used? How much is it expected to cost? Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Elements of the Authorize Production Step
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Data in a Production Order
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Structure of a Production Order
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Authorize Production - Outcomes
Scheduling Availability checks Reservations Preliminary costing Purchase requisitions Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Preliminary Cost Estimates for Men’s Off-road Bike
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Cost Estimates in a Production Order
Planned cost: planned cost for planned quantity Based on material and labor cost estimates Target cost: planned cost for actual quantity Actual cost: actual cost for actual quantity Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Demo 6.5 Create a Production Order
Review how to create a production order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Order Release On creation order status is created (CRTD)
Order must be released (REL) to permit subsequent steps such as Goods movement not possible Confirmations not possible Documents cannot be printed Settlement Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Elements of the Order Release Step
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Order Release Automatic or manual Release at different levels
If no time is needed between creation and release for preparation, then release occurs automatically Release at different levels Header: All operations are released Operations: Release specific operations Operations status: REL Order status: PREL (partially released) Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Order Release - Outcomes
Execution of subsequent steps is possible Shop floor papers can be printed Communication with PDC is possible Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Goods Issue Movement type 261 Impact Material, FI, CO documents
G/L accounts updated Inventory updated Reservations updated (reduced) Costs updated (actual cost in order) Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Elements of the Goods Issue Step
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Data in a Goods Issue Step
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Financial Impact of a Goods Issue
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Demo 6.6 Goods Issue to Production Order
Review the steps from goods issue to production order Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Confirmations Order level confirmation Operations level confirmation
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Elements of the Confirmation Step
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Data in a Confirmation Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Financial Impact of a Confirmation
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Demo 6.7 Confirm Production
Review confirm production Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Goods Receipt Goods receipt into storage Impact Movement type 101
Material, FI, CO documents Material master update (quantity and value) Production order update (quantity, date, costing) Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Elements of a Goods Receipt
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Data in a Goods Receipt Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Financial Impact of a Goods Receipt
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Demo 6.8 Goods Receipt from Production
Review goods receipts from production Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Periodic Processing Overhead calculation
Work in progress determination Settlement Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Overhead Calculation Indirect costs Accumulated in cost centers
Supervisor, manager, other salaries Utilities Accumulated in cost centers Periodically allocated to production orders based on predetermined rules Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Work-in-Progress Determination
Work-in-progress (WIP) inventory Inventory between GI and GR inventory Periodically the value of what is in the production process is calculated and posted to the general ledger Not essential For short production processes Value of materials is not high GBI Essential When value of materials is high Production takes weeks, months, or years Aircraft production, construction. Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Settlement Settle the difference between planned and actual costs (variance) Only panned costs are posted in the GR step Variance is settled in this step Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Financial Impact of a Settlement
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Reporting General SAP reporting options
Online lists Work lists Analytics Production-specific reporting options Stock/requirement lists Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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Production Information System - Components
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Production Information Systems - Operations
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Stock/Requirements List
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Demo 6.9 Stock/Requirement List
Review/stock requirement list Magal and Word | Integrated Business Processes with ERP Systems | © 2011
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