Chapter 6

Chapter 6
The Production Process
1 Magal and Word | Integrated Business Processes with ERP Systems | © 2011
Learning Objectives
1. Describe the master data associated with the production
process.
2. Identify the key steps in the production process and the
data, documents, and information associated with each
step.
3. Effectively use SAP® ERP to execute the key steps in the
production process.
4. Effectively use SAP ERP to extract meaningful information
about the production process.
Magal and Word | Integrated Business Processes with ERP Systems | © 2011
2
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
3
Types of manufacturing
 Process manufacturing
 Not manufactured in individual units
 Gallons, pints, liters
 Paint, soft drinks
4
A Basic Production Process
5
Organizational Data
 Client
 Company code
 Plant
 Storage location
6
Master Data
 Bill of materials (BOM)
 Work center
 Product routing
 Material master
 Production resource tools (PRT)
7
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
8
Single-level and Multi-level BOMs
9
Bill of Materials for Touring Bikes
10
Bill of Materials for Off-road Bikes
11
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
12
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
13
BOM Structure
14
Demo 6.1 BOM for Bike and Wheel
Assembly
 Review some of the data included in a material master
15
Work Center
 Basic data
 Name, description
 Person responsible for maintaining master data
 Task list usage (which routings can use this work center)
 Capacities
 Scheduling
 Cost center
 HR assignment
16
Work Center Data
17
GBI Dallas Production Facility
18
GBI Work Centers
19
Demo 6.2 Review GBI Work Center
 Review the GBI work center
20
Product Routing
 Steps necessary to produce a material
 Operations
 Sequence
 Standard
 Alternate
 Parallel
 Work center
 Times
 Setup, machine, labor
21
Work Center Example
22
Structure of a Routing
23
Routing and Work Centers
24
Routing for Deluxe Touring Wheel
Assembly
25
Routing for Deluxe Touring Bike
26
Demo 6.3 Review Routing for a
Bike and Wheel Assembly
 Review the routing for a bike and wheel assembly
27
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
28
Component Assignment
29
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
30
Sample GBI Production Plan
31
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
32
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
33
The Production Process
34
Request Production
 Planned order
 What material
 How many
 When
 Generated by other processes
 Fulfillment
 Project management
 Material planning
 Can be created manually
35
Elements of the Request Production
Step
36
Data in a Planned Order
37
Demo 6.4 Create a Planned Order
 Review how to create a planned order
38
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?
39
Elements of the Authorize Production
Step
40
Data in a Production Order
41
Structure of a Production Order
42
Authorize Production - Outcomes
 Scheduling
 Availability checks
 Reservations
 Preliminary costing
 Purchase requisitions
43
Preliminary Cost Estimates for Men’s
Off-road Bike
44
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
45
Demo 6.5 Create a Production
Order
 Review how to create a production order
46
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
47
Elements of the Order Release Step
48
Order Release
 Automatic or manual
 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)
49
Order Release - Outcomes
 Execution of subsequent steps is possible
 Shop floor papers can be printed
 Communication with PDC is possible
50
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)
51
Elements of the Goods Issue Step
52
Data in a Goods Issue Step
53
Financial Impact of a Goods Issue
54
Demo 6.6 Goods Issue to Production
Order
 Review the steps from goods issue to production order
55
Confirmations
 Order level confirmation
 Operations level confirmation
56
Elements of the Confirmation Step
57
Data in a Confirmation
58
Financial Impact of a Confirmation
59
Demo 6.7 Confirm Production
 Review confirm production
60
Goods Receipt
 Goods receipt into storage
 Movement type 101
 Impact
 Material, FI, CO documents
 Material master update (quantity and value)
 Production order update (quantity, date, costing)
61
Elements of a Goods Receipt
62
Data in a Goods Receipt
63
Financial Impact of a Goods Receipt
64
Demo 6.8 Goods Receipt from
Production
 Review goods receipts from production
65
Periodic Processing
 Overhead calculation
 Work in progress determination
 Settlement
66
Overhead Calculation
 Indirect costs
 Supervisor, manager, other salaries
 Utilities
 Accumulated in cost centers
 Periodically allocated to production orders based on
predetermined rules
67
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.
68
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
69
Financial Impact of a Settlement
70
Reporting
 General SAP reporting options
 Online lists
 Work lists
 Analytics
 Production-specific reporting options
 Stock/requirement lists
71
Production Information System -
Components
72
Production Information Systems -
Operations
73
Stock/Requirements List
74
Demo 6.9 Stock/Requirement List
 Review/stock requirement list
75

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The Production Process

 Planned cost: planned cost for planned quantity

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