PRODUCTION PROCESS

04.04.2020
OVERVIEW OF THE PRODUCTION PROCESS – SAP BUSINESS
ONE
 The production order is the main document in the production process.
It records the progress of the production process for each item
produced. It supports the planning and assembly of a production item.
It also tracks all the material transactions and costs that are involved
in the production process.

Production orders can come from recommendations in MRP or be

created manually. Before work can be done, they must be released. At
this point, the production order can begin collecting the costs of
INTRODUCTI production. Components used in the production process can be
issued manually as used or backflushed at the end of production.
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When all work is done, you report completion of the production order.
At this point, the finished items are received into the warehouse. Then
change the Status to Closed. Even after the production order is
closed, details on the production order costs can be found on the
summary.
 PRODUCTION

TYPE OF SALES
BILL OF
MATERIAL
(BOM) ASSEMBLY

TEMPLATE
 This BOM is used in the production order.
The parent item is a finished material, and
the children are the components. You can
add labor as one of the components; this will
be a non-inventory item with a standard cost.
During the production process, you turn the
BILL OF components into the finished product. The
Production BOM is the only type used in the
MATERIAL - MRP run and it is always used in standard
PRODUCTIO production orders. The item at the head of
the Production BOM has its own price.
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 This BOM is used in sales documents. The
parent item must be a sales item only. For
example, if you sell a gift package that contains
multiple products, this could be set up as a sales
bill of materials. The parent item will be the
BILL OF package name, and the children will be the
inventory items inside the package. Once you
MATERIAL selected the parent in a sales document, all its
children appear as sub-items. You can update the
(SALES) quantities of the parent or the children; however
you cannot delete children or add new sub-items
to the package in the sales document. When you
set up the BOM, you can select the Hide BOM
Components in Printout option, so that when you
print the document, only the parent appears.
 This BOM is similar to the sales bill of materials. It
represents a collection of individual items in a set
with a specific price. Unlike the sales bill of
materials, only the finished product appears in the
sales order document; the components do not
appear as sub-items.
BILL OF
MATERIAL - For both the sales BOM and the assembly BOM,
you do not manage the finished product as an
ASSEMBLY inventory item, but rather as a sales item. The
components can be sales items and stock items
at the same time.
 This BOM has no restrictions. Both the parent and the
BILL OF phantom or subs can be any type of items. It can be
used in sales and purchasing document. Once you
MATERIAL - select the parent item, all its phantom or subs appear.
You can delete, add or duplicate rows and make any
TEMPLATE modification as necessary.
Category for the
parent item
 A. For the assembly and sales BOMs the finished product has to be a Sales
Item.
B. For the production BOM the finished product has to be an Inventory Item.
If you also want to purchase this item, you can define it as a Purchased
Item. If you also want to sell it, you can also define it as a Sales Item. If
you produce it for stock, as a component of another parent item, then do
not define it as a sales item so it will not appear as a choice in a sales
document list of items.
C. Templates can have each of the three attributes (Purchased, Sales, and

Parent Item Inventory Items). One tip for defining items in an implementation: Define items
in a multi-level bill of materials from the bottom up. First the children then the
parent item.

The components can also have each of the three categories (Purchased,
Sales, and Inventory Items), and can also be purchased or sold individually.
The components for Sales BOMs and Assembly BOMs must be sales items.

Templates can have each of the three attributes (Purchased, Sales, and
Inventory Items).
 A phantom item is a sub-assembly in the
BOM that does not actually exist in
inventory. It is used to simplify the BOM.
Although the phantom item appears in
the BOM, the Production Order will show
Phantom the components needed to make the
Item phantom item rather than the phantom
item itself.

An item can be defined as a phantom

item in the Item Master Data.
 TYPES OF
PRODUCTION
ORDER

• STANDARD PRODUCTION
ORDER
• SPECIAL PRODUCTION
ORDER
• DISASSEMBLY PRODUCTION
ORDER
 Production Order is a command to produce or repair a
production item. The production order supports the planning
and assembly of a production item. It also tracks all the
material transactions and costs that are involved in the
production process.

The production order document records the finished material

to be produced, its components and their issue method. In all
cases, a production order must list the items involved in the
production process. With the standard and disassembly

INTRODUCTI production orders, a production bill of materials is used to

describe the items used during production.

ON Production orders can be created automatically by MRP or

created manually. In the make to order process, a production
order is created manually for each sales order that creates a
demand. Before any further transactions can be associated
with the production order, such as goods issues, the
production order must be released by an authorized user.

When components are issued to the production order or

when finished products are received into inventory, an
accounting document will be created automatically to
document the costs associated (as long as you are using
perpetual inventory).
 • The Standard production order is based on the
production BOM; you use it to produce a regular
STANDARD production item. You manage material transactions
of the regular production process. In addition, you
PRODUCTION can change components at the production stage.
When you open a new standard production order,
all the components fill in automatically. You issue
ORDER components from inventory to the production order.
After production is completed, you receive the
finished parent product into inventory.
SPECIAL
PRODUCTION ORDER
Use the Special production order to
produce and repair items or to perform
activities that are not necessarily bill of
material items, for example, repair order
for customer equipment cards, or repair
order for rejected assemblies. You create
special production order components
manually. You issue components from
inventory to the production order, and
ultimately receive the finished parent to
the inventory. The parent can be any
inventory item.
 Use the Disassembly production
order to disassemble a parent item
of the regular product into its
components. You disassemble the
DISASSEMBL product into separate parts that can
then be put into stock and sold. For
Y example, you can purchase a used
car, take it apart, and sell the
PRODUCTION individual components. In this case,
ORDER the parent item is issued to the
production order, and the
disassembled sub-items are received
into inventory at the end of
production.
 1. CREATE THE PRODUCTION ORDER
2. RELEASE TO SHOP FLOOR
MAIN STEPS 3. ISSUE COMPONENTS SUCH AS
IN THE A. MANUAL

PRODUCTIO B. BACKFLUSH
4. REPORT COMPLETION
N PROCESS 5. POSTING INFORMATION
 CREATE
THE
PRODUCTIO
N ORDER
RELEASE
TO SHOP
FLOOR
 Components can only be issued when the status of the production
order is set to Released. You issue component items using either the
Manual or the Backflush method. Items that are managed with
serial numbers or batch numbers cannot be backflushed; therefore,
they are automatically set to a manual issue method.

a. Manual. You issue individual component items to the production

order. This enables you to post components issued to a production
COMPONEN order precisely when they are required in the production process.
Manual issue is always used for serialized or batch-managed items.
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b. Backflush. SAP Business One automatically issues item
transactions for the needed component items (as defined in the
Components tab) when a product is reported as completed. Items
that are set to backflush are issued automatically when you choose
Report Completion.
COMPONENTS
DIAGRAM
REPORT
COMPLETION
POSTING IN SAP
 POSTING - IN SUMMARY TAB
Actual Component Cost: Displays the total value of all components issued to
the production order.

Actual Additional Cost: Displays the actual additional costs that occur when a
component is defined in the Item Master Data as a non-inventory item. This can
be, for example, a service or labor cost. If there is more than one additional cost
for the item, the cost displayed is the sum of all additional costs.

Actual Product Cost: Displays the total value of all products assembled for this
production order.

Total Variance: Displays the value that is the result of the actual components
value subtracted from the actual products value. Variance Per Product:
Displays the value that is the total variance divided by the planned quantity
value. Variance %: Displays the percentage of the variance per product value.
POSTING – IN SUMMARY TAB CONTINUATION
Journal Remark: Displays the product number by default. The value is saved in
the General Ledger and is displayed during the General ledger transactions
and reports. You can modify the value of the field.

Quantities - Planned Quantity: Displays the total planned quantity of the

production order completed

Quantity: Displays the total completed quantity after you report the production
completion. Rejected Quantity: Displays the total rejected quantity of the
production order.

Dates - Due Date: Displays the due date of the production order. Actual Close
Date: Displays the date when the production order was closed. Overdue:
Displays the number of days that the actual close date exceeded the due date.