1. Production Planning Processes EGN 5620 Enterprise Systems Configuration Fall, 2015

2. Production Planning Processes SAP Implementation Production Planning Processes SAP Implementation

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

4. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.4 Business Process Integration PP

5. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.5 Transaction Data (Review) Unlike master data, transactional data is dynamic - it constantly changes, usually many times per day Transactions data, such as production order, purchase order, or sales order include ◦organizational structure, ◦master data, ◦rules, as well as ◦business activities for making, purchasing, or selling.

6. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.6 3. Release Production Order 6. Receive Goods 7. Settle Production Order 4. Issue Goods 1. Request Product 5. Confirm Production Order Completion 2. Create Production Order ( Capacity Planning ) Production Order Process (Make-to-Stock)

7. 7 1. Request Product Outcome of this step (request product) 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. Planned order can be automatically created by running MPS, MRP, or manually created.

8. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.8 2. Create Production Order Production order - created by converting a planned order, or - generated directly without using a planned order. Planned orders can be converted individually, collectively, or partially.

9. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.9 2.1 Master Data for Production Order Materials (Raw, Semi-finished, and finished product) BOM: identifies materials and structure Routing: identifies operations and sequences Work center: defines working locations required capacity PRT: Production resources/tools

10. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.10 2.2 Production Order Structure Production Order Structure 2.2.1 Header 2.2.2 Operations 2.2.3 Components 2.2.4 Costs 2.2.5 Scheduling 2.2.6 Document Link 2.2.7 Availability check

11. January 200811 2.2.1 Production Order Header ◦Order number ◦Material to be produced ◦Plant ◦Quantity ◦Time line (Dates) ◦Status What (Finished good) Order number Quantity Plant Time Line Status

12. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.12 2.2.2 Operations ◦Tasks ◦Work centers ◦Times, Dates ◦Standard value ◦Control keys: Determines which business transactions should be executed for the object that belongs to the production order.

13. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.13 2.2.3 Components ◦Components ◦Quantity ◦Required date

14. 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 activity 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.

15. 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.

16. 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

17. 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.

18. 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

19. 3. Release Production Order 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

20. 4. Issue Goods for Production Order BOM determines necessary components for production order, 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

21. 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

22. 5. Confirm 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

23. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.23 Confirm Production Order Completion Completion confirmation: ◦Quantities of material used ◦Operations completed ◦Time used ◦Personnel ◦yield and scrap quantities ◦Actual labor cost based on activity costs

24. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.24 Confirm 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

25. 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

26. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.26 7. 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)

27. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.27 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

28. 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

29. 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

30. GBI, Inc. GBI, Inc. Production Planning Processes

31. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.31 Request Product: Planned Order

32. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.32 Production Request - Planned Order (Components review) Production Request - Planned Order (Components review)

33. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.33 Production Order (Creation)

34. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.34 Production Order Cost

35. Actual Labor Cost Line Items for Order

36. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved.36 Production Order Scheduling

37. Goods Issue for Production Order

38. Good Issue Material Document for Order

39. Confirmation of Production Order Completion

40. Goods Receipt for Production Order

41. Goods Receipt Material Document for Order

42. Production Order Settlement

43. Exercises: (Due Date – 11/9/2015) 1. Create customer for finished product 2. Create price conditions for finished products 3. Extend accounting view for semi-finished product 4. Create sales order for finished product 5. Run MPS 6. Convert planned orders to production orders 7. Issue materials to production order for semi-finished product 8. Confirm production order for semi-finished product 9. Receive semi-finished product 10. Settle costs of production order for semi-finished product 11. Issue goods to production order for finished product 12. Confirm production completion for finished product 13. Receive finished product from production order 14. Settle costs of production order for finished product