An overview of the SAP R/3 Production Planning (PP) module

Industry Sectors for Production
   


  


  

Automotives Building Materials Chemicals Engineering Construction and Operations Fabricated materials Power plant Construction Healthcare Utilities Services Apparel and Footwear Discrete manufacturing Food and Beverages

Production Planning Overview
Manuf. Type Discrete Strategy MTS MTO ETO Example Standard Assemblies Custom Req. Material Construction

Repetitive

MTS

Spare Parts

Process Industry

MTS MTO

Foods, Beverages & Pharmaceuticals

Agenda
Review of Materials Management  PP Organization  Bills of Material  Work Centers  Routings  Material Requirements Planning

Agenda (Cont’d)
Processing Planning Results  Production Order Management  Capacity Planning and Leveling  Product Cost  The Production Cycle  Sales and Operations Planning  Master Planning and Demand Management  Master Production Scheduling

Review of MM Organization

Material Master Data
Material Type
e.g. Raw material, semi-finished good, service, trading good, finished product
Controls access security Determines how material is procured Controls how material movements affect financial accounts Linked to material number ranges

Controls what fields appear on what screens

Industry Sector
Controls what fields appear on what screens

Unit of Measure
e.g. Piece, box, crate, pallet, Each, KG, Litre Different parts of the business can measure quantities in different units

Multi-Lingual Texts

Material Master Data
Material Master

General Data
Data applicable throughout the client e.g. Material number Description Units of measure Weight Volume Product hierarchy

Sales Specific Data
Data dependent on sales organization and distribution channel e.g. Delivering plant

Plant Specific Data
Data relevant for planning and production e.g. MRP profile

St. Loc. Specific Data
Data referring to storage and inventory management e.g. Quantities Special stock Warehouse attributes

Sales text
Sales units Shipping data Division

Production costs
Planning data Valuation

Material Types in the Standard SAP
Material Type
DIEN ERSA FERT HALB HAWA HIBE LEER NLAG ROH VERP WETT PROD

Description
Service Spare Part Finished Product Semi-finished Product Trading Good Operating Supply Empty Containers Non stock Item Raw Material Packaging Competitor Product Production Resources/ Tools

Master Data Views

Master data is a key piece of information in the system

Finance

Engineering Design

Master data can be seen from a number of views
Each view can correspond to an SAP module

Sales

Product Data
Production Stock

Purchasing

Each view has a number of information screens
Each view belongs to an org unit within the business

One product may have multiple plant and sales views, one for each plant or sales area

Examples of How Data is Used
Controls which General Ledger Account is updated
Finance Engineering Design

Material description used in reporting

Controls customer ordering rules for material

Sales

Product Data
Production

Purchasing

Texts copied to purchase orders

Stock

Data used to calculate MRP lead times

Maintains stock levels by plant, storage location, and batch

Production Planning

Production Planning Basic Data
Routings

Materials

Work Centers

Production Facilities

PP Basic Data

Production Resources/Tools

Inspection Plans Bills of Material

Capacities

F06010

Production Planning Functionality
PP-BD PP-SOP PP-MRP PP-CRP
Basic Data for Production Sales and Operations Planning Material Requirements Planning Capacity Requirements Planning Production Order Control Products, Production Processes and Resource Requirements Coordination and planning of production activities

Generation of order proposals based on requirements defined by PP-SOP Provides overviews from rough-cut through to detailed shop floor planning Generates data used for processing orders, e.g., dates, costs and resources Controls production costing Monitoring / analyzing on-going production activities / data

PP-SFC PP-PC PP-IS

Product Costing Shop Floor Information System

Bills of Material

Bills of Material
Simple BOM Variant BOM Multiple BOM

Simple BOM representing single material

Similar materials represented by variants on one BOM

BOM representing a material which can be made up of multiple compositions e.g. different components and quantities

Bill of Material Validity

Area of Validity – The same Bill of Material can be allocated to several plants. Before you can allocate the BOM to a different plant, the material must exist at the new plant, the unit of issue on the BOM item must be the same.

Validity Period (Valid from/to dates)
• •

Becomes effective with the valid from date The validity date is determined by the system automatically to be either the next effective from date, or 12/31/1999.
A B C B from 12/31/95 to 12/31/99 A D

X----------------------------------------------------------->>>>
from 1/1/95 to 12/30/95

BOM Scrap Data

Assembly Scrap – yield or process scrap resulting from the assembly of components into a finished or subassembly. It is used for calculating material used in an assembly. MRP increases the material requirements for all components contained in the assembly. Example: Quantity to produce 1000 units with a 1% assembly scrap = 10 units
Component Scrap – considers component loss before the component is used in an assembly. For example, shrinkage during storage. The scrap refers only to the component in the assembly. When the BOM is exploded, MRP increases the quantity of the component. Example: Component Qty of 1000 units with a 5% component scrap would need 1050 units required.

Bill of Material Glossary

BOM Category – categorizes BOM’s to represent different objects; for example:
• •

Material BOM -- structure of products manufactured Equipment BOM -- structure of equipment for plant maintenance • Document BOM -- structure of documents such as drawings (3.0)

BOM Group – is a collective number for all BOM’s in a group which allows for one or several similar products to be decribed under one number.
• •

All Alternatives of a multiple Bill of Material All variants of a variant Bill of Material

BOM Usage – special view of the BOM which represents a specific area of the company in which the BOM is used; for example, Engineering, Production, Costing, Sales, Plant Maintenance. The BOM Usage allows different views to exist without separate BOM’s for each usage. Technical Type – the system distinguishes BOM’s according to whether they represent product variants or production alternatives. If you create a variant for the BOM, the system marks it as a Variant Bill . If there is more than one alternative for a material, the system marks the BOM as a Multiple Bill.

Bill of Material Glossary

BOM Validity – Bills of Material are valid over an area and effectivity period.
 

Area of Validity -- identifies which plants the BOM has been allocated to Validity Period -- identifies the from and to effectivity dates. The default to date is 12/31/9999

Item Category – When you enter a new Bill of Material item, an item category must be assigned. It has important control functions such as:
    

Screen selection Specific processing, such as material number required, negative values supported. The Item Category cannot be changed once set. It must be deleted and re-added. Sizes are maintained for variable-size items Item categories include: • • • • • Stock Items -- material in stock as a component Non-stock Items -- material not stocked - with or without a material number Variable-size -- system calculates the quantity required using formulas PM Structure Item -- used with plant maintenance equipment Document Item -- used with Document BOM’s

Sub-Items – are typically used to represent different installation points for partial quantities of an item.
 

In assembling resistors on a printed circuit board, the installation points are described. There is no logic related to sub-items

BOM Structure
Plant Assignment Validity Period Release Indicator

BOM Header

Item 10 Item 20 Item 30

Stock Items Non-stock Items Variable Size Items Document Items Text Items

Sub Item 10 Sub Item 20

Additional component details e.g. installation points for components

BOM Structure
Product

Component 1

Component 2

Component 3
(assembly)

Component 31 Components:
 Stock material  Non-stock material  Variable-sized item  Text item  Scrap/waste    

Component 32

Component 33

By-product Document Part Class

Variant Bills of Material
Bike with Blue Frame Bike with Red Frame Bike with Black Frame

Blue Frame/Fork Assembly Red Frame/Fork Assembly Black Frame/Fork Assembly

Handlebar Assembly

Gear Assembly

Qty. for variant 1 Qty. for variant 2

Blue Frame Red Frame Chrome Forks Black Frame

Several similar products are represented in one bill of material

Multiple BOM
Production Variants Blue Paint
Alt 1 - Lot Size 1 to 100 Alt 2 - Lot Size 101 to 500 Alt 3 - Lot Size 501 to 1000

Solvent
Qty. for alternative 1 Qty. for alternative 2

Water

Pigment 1
Qty. for alternative 1

One material but with different combinations of component material based on production method A finished product can be manufactured using different methods of production with different components or component quantities

Pigment 2
Qty. for alternative 2

BOM Reporting
BOM explosion
  

Single-level Bill of Material Multi-level Bill of Material Summarized Bill of Material

Component Where used
  

Single-level Where used Multi-level Where used Summarized Where used

A

B

C

BOM Recursiveness
E1

K1

B3

K2

E1

K3

Work Centers

Work Centers
Machines
Cost Center

Capacity Requirements Planning

Assembly Line

Work Centers

People

Costing

Production Line

Scheduling, Execution Times

Work Center Hierarchy
Plant 1 Production Fabrication Mach=16 hrs Labor=18 hrs Assm Line 1 Work Center 1 Work Center 2 Assembly Assm Line 2 Plant 2 Production Fabrication

Mach = 10 hrs Mach = 6 hrs Labor = 8 hrs Labor = 10 hrs

Work Centers and Routings
Routing
Operation 10

Work Center W1
Assembly

Cost Center 100

Work Center W1
Assembly

Operation 20

Cost Center 100

Work Center W2
Finishing

Operation 30

Cost Centre 200 Center

Work Center Category
 

Work centers are allocated to different work center categories The work center category is used to control the field and screen selection for work centers during work center maintenance. Work Center Category Statistical Work center Production Work Center Screen View Basic Data Basic Data Default Values Capacity Values Scheduling Cost Center Assignment

Cost Center Assignment to Work Center for Operation Costing
Cost Center Activity Rates
Set Up (SET) Set Up $70.00 Mach $60.00 Labor $80.00 Overhead $70.00

Work Center with Activities during production

Machine (MACH)
Labor (LAB)

Routing with standard values
Oper 0010 Oper 0020 Oper 0030 Oper 0040

Use of Formulas in Work Centers
Work Center Schedule

Work Center Capacity

Work Center Formulas

Set up Formula Machine Time Formula Teardown Formula

Operation Std Values
Set up 1.0 hrs Machine 5.5 hrs Teardown .5 hrs

Routing with standard values
Oper 0010 Oper 0020 Oper 0030

Oper 0040

Available Capacity at a Work Center
1 hr
Break Time 1 hr 8 hrs 7 hrs 6 hrs Planned Downtime

Working Hours

Working Hours less Breaks

Productive Working Hours

Routings

Production Master Data
Material Type

BOM Groups

Materials and PRTs Routing Groups

Cost Centers
W/C Category

Item Category

Bills of Material

Components Allocated to Operations

Routings

Work Centers

Routing Structure Views

Routing

Operation 10

Operation 20

Operation 30

Process Resource Tool (PRT)

Materials Components BOM

Work Centre: PP-ASSEM

Control Key: - Time Tkts - Costing

Operation Text: Pre-assemble frame

Std Values: Lab:10 mins Mach:10 mins

Operation
Operation types
(Main) operation Sub-operation
Sub-operation  HierarchyCosting  Completion confirmations  Scheduling always takes place on the (main) operation level

The control key defines whether completion confirmations and costing are carried out on the (main) operation level, or on the sub-operation level. Indicator: group operation combined operation sub-operation level (main) operation

Operation / Sub-operation
Schedule at Operation Level

Operation 0010

Capacity Planning & Costing possible at Sub Operation Level Level Sub Operation 0010 / 10 at Work Center A1 Sub Operation 0010 / 20 at Work Center A2

Sub Operation 0010 / 30 at Work Center A3

Operation 0020

Useful when processing for operation 0010 occurs over multiple work centers

Sequence Categories
Standard Seq 0000 Alternate Seq 0001 Branch operations

Material Oper 10
03 02 Routing Group 01 Oper 20 Oper 30 Oper 40 Oper 50 Oper 60
Return Operations

Oper 10 Oper 15 Oper 20

Parallel Seq 0002

Oper 40 Oper 50

Routing Types

Standard Routing
10 20 N
Material

Reference Routing
R 1

10

20

N

Reference Operation Sets
Oper 0010 Oper 0020 Oper 0022

Reference Operation Set X

Oper 0024 Oper 0026

Reference Operation Set Y

Oper 0030

Oper 0040 Oper 0045 Oper 0050

Reference Operation Set Z

Material Allocation
Product
Routing BOM

Op. 10 Op. 20 Op. 30

Op. 10 Op. 30

Material-Routing Allocations
Material 1 1 2 2 01 02 01 02

Routing Group
1 1 1 2 3

Routing Group Counter
1 2 3 1 1

 

A routing alterative can be allocated to several materials. A material in a plant can be allocated to several alternatives.

Routing Default Values
Material Master Routing

Work Center

Base Unit of Measure Planner Group Short Text

Control Key Standard Values Activities Standards Text Key HR data

External Processing
Oper 0010 Oper 0020 Purch Reqn Purch Ord
Routing data copied to order including quantities and dates Purchasing creates P.O.

Vendor Proc
Goods Rec Oper 0040 Oper 0050
At goods receipt, the operation is confirmed

Operation Lead Time

Float Before

Oper 0010

Oper 0020

Oper 0030

Float After

Operation Lead Time Queue | Setup | Process | Teardown | Wait | Move Interoperation Time Execution Time Interoperation Time

Routing Operation Sequences
Standard
Routing represents a standard sequence defining production procedure Routing includes processes which can be performed simultaneously to achieve time efficiencies

Parallel

Split

Routing includes processes which can/must be split across a number of work centers

Overlapped

Routing defines process where one operation is to overlap with the following operation

Parallel Operation Sequences
Op. 20 Op. 20

Op. 10

Op. 30

Op. 90

Op. 40

Special form of overlapping  Positioning the parallel sequence at the beginning or end of an operation  Usage: for example in the chemical industry for analytical processes which run parallel to the production process

Material Requirements Planning

MRP Features
Net requirements calculation Lot sizing

MRP
Forecasting

Internal production and external purchasing

Order scheduling and generation

Bill of Material Explosion

MRP Overview

Overview Purchased Items
MRP

Purchasing

Master data

Goods receipt Warehouse management system Inventory management Valuation Goods issue Transfer posting

Invoice receipt
Invoice verification

Material Batches Vendors Customers :

Accounting

MRP: Reorder Point Planning

Stock

Reorder Point

Safety Stock

Time

Order Date

Delivery Date

Forward Scheduling for External Procurement

Forward scheduling used for reorder point material

Release Order Date

Desired Delivery Date

Purchasing Process Time

Vendor Planned Delivery Time

Goods Receipt Process Time

Today

Net Change Planning
Daily Accumulation: Planned Individual Requirements Entries from Planning File Coverage calculation per requirement date Warehouse Stock Open Order Proposals

Sales Orders

+
Order Proposal Shortages

Reservations

MRP Types
VB
Manual Reorder Point Planning: MRP produces order proposals when stock falls below a “reorder point”. The reorder point and safety stock levels are entered manually Automatic Reorder Point Planning: The reorder point and safety stock level are calculated based on the forecast results

VM VV PD

Forecast Planning The latest forecast is copied as requirements which are used to create order proposals
Deterministic Planning MRP produces order proposal(s) to match the exact quantity of the requirements based on independent and dependent demands Master Production Scheduling Similar to PD but used for master schedule items

M0

Carrying Out the Planning Run
Total Planning – All materials in a given plant

All materials are reviewed by MRP regardless of activity
Only the materials in a plant that have undergone a change relevant to planning since the last planning run (net change planning)

Planning Interval – Limiting the MRP Planning Interval
example: 100 days
Planned requirements and supply order receipts Time MRP Planning Horizon

MRP List
MRP Controller Group of Materials for which controller is responsible Controller’s MRP Listing
MRP Order Proposals and Planner Messages from MRP Planning run. Planner can drill down to review material movement activity

Goods Issues

Goods Receipt

Stock Overview
The Stock Overview shows the stock position for all locations within a Company/Plant/Storage Location/Batch for all dispositions of material
Unrestricted Quality Ins Reserved On Order ...

Total Company Plant US01 Total 100

100 20

20 15

15

SLoc 0001Total Batch 01 Total Batch 02 Total
SLoc 0001Total

75 45 30
25

Stock Requirements List
Date MRP Element Supply/Demand Ref EM Quantity Available 100 75 175

01/01 STOCK 01/08 ORDER Sales Order 25 01/15 PL ORD 1000 120 05 100 02/01 -----------------------------------------------------> Planning Time Fence

Stock Requirements List brings together all the supply orders, independent and dependent demands and stock balances for the material. MRP makes order proposals to balance the supply/demand position for the material

Processing Planning Results

Order Proposals: Planned Orders

Production Order

Procurement Type is In-house Production

Planned Order

MRP

Order Qty Order Date Capacity Reqts. Resource Reqts.

MRP Controller

Planning for In-house Production
Planning Run MRP Controller
Manual Creation Auto Creation Manual changes/ deletion
Planned Order

Auto Change/ Delete if situation changes

Collective Conversion into Production Order

Individual Conversion into Production Order

Production Order

Production Order Release

Planning for External Procurement
Planning Run
Auto Creation

MRP Controller Planned Order
Manual Creation Manual Change/ Deletion Convert Planned Orders to Requisitions

Auto Change or Delete

Auto Creation
Auto Change/Deletion

Purchase Requisition

Purchasing Group
Manual Creation Manual Change/Deletion

Purchase Order
Auto Creation

Create PO via Requisition Manual Creation

Auto Change/Deletion

Delivery Schedule

Manual Change/Deletion

Link to Scheduling Agreements
MRP Planning Run

Quota Arrangement
MRP Supplier from Source List

Source List

External Supplier

Scheduling Agreement

Schedule Agreement Lines Created

Distribution Function
Total Requirement of 250 units for the week
50 Units 50 Units 50 Units 50 Units 50 Units

Several planned orders are created for partial quantities of the dependent requirement quantity The planned orders are scheduled for various dates within the run time of the production order A daily provisioning of partial quantities distributed over the run time of the order is possible Models a continuous flow process

Master Planning and Demand Management

Master Planning

Demand Management

Planning and Consumption Strategies • Specification of Requirement Quantities and Delivery Dates

Master Production Scheduling

Planning for Master Schedule Items • Planning Time Fence • Interactive MPS

Sales and Operations Planning
Copy from Sales Plan Copy from Prodn Plan Copy from Forecast Copy from Orig Plan

Manual Planned Independent Requirements

Demand Management “Demand Program”

Sales Demand from Sales Orders

MRP/MPS

Demand Management

Planning Strategy – Make-to Stock
 

Make product for stock in expectation of customer sales Plan using planned independent requirements for “anonymous” make-to-stock production. Use Net or Gross Requirements Planning
• •

Net Requirements -- includes warehouse stock, planned issues and receipts Gross Requirements -- excludes warehouse stock. Just includes planned and open orders

Example is a shelf stock item such as a bike accessory light Planning Requirement Type is LSF - make to stock which is used in the planned independent requirements transaction Sales Order Requirement is KSL - which is sale from stock

Strategy: Make-To-Stock Production shelf items such as a bike accessory (light) Example: Common
Sale from stock
Warehouse Stock Finished Product

Planning

Production Push

Planning Strategy – Planning with Final Assembly
 

Make product in expectation of customer sales

Plan using planned independent requirements at finished goods level
to drive demand to long lead time components

Typically there is a longer lead time to produce than the customer is willing to wait for

Sales orders consume the planned independent requirement quantities

Planned quantities that are not consumed by sales orders result in

excess stock
  

Example is a long lead time custom product Planning Requirement Type is VSF – planning with final assembly

Sales Order Requirement is KSV – which is sales order with
consumption

Strategy: Planning with Final Assembly
Example: Custom furniture such as a cherry table

Final Assembly to Sales Order

Sales Order

Planning
Warehouse Stock Finished Product

Purchase

Produce

Planned Independent Requirements

MRP without reference to sales order

Production Push

Planning Strategy – Planning Without Final Assembly
Final assembly is initiated by the customer sales order  Stop production at sub-assembly level  Final assembly pull  Example is automobile assembled with unique combination of features (subassemblies)  Planning Requirement Type is VSE -planning without final assembly  Sales Order Requirement is KEV -independent customer order with consumption

Strategy: Planning Without Final Assembly
Example: Option oriented product such as a car
Planning

Assembly when Sales Order Scheduled

Sales Order

Warehouse Stock Finished Product

Planned Independent Requirements Stop at level

Purchase
Warehouse Stock Assembly 01

Produce
Warehouse Stock Assembly 02

Final Assembly Pull

Production Push

Planning Strategy – Planning with Planning Material

Planned independent requirements of Planning Material initiate procurement of the planning bill components Sales orders for the final assembly create planned orders of the finished product and reduce planning quantities for the planning material Possible to plan a family of products from forecast placed on the planning bill. The planning bill details, through percentages, the quantity required for common parts Example is a bike with common sub-assemblies used in many finished items Planning Requirement Type is VSEF -- planning with planning material Sales Order Requirement is KEVV -- independent customer order with planning material

Strategy: Planning with Planning Material
Example: Bikes with the same features except for the color
Planning Sales Order
Customer Stock Finished Product Planning Material

Purchase

Produce

Planned Independent Requirements Note: Percentages drive lower level demands for sub assemblies

Warehouse Stock Assembly 01

Warehouse Stock Assembly 02

Final Assembly Pull

Production Push

Planning Strategy – Planning at (Sub)Assembly Level

Used if forecasts are more reliable at the sub-assembly level. (hour-glass) Sales orders received initiate an explosion of the finished product level Resulting dependent requirements consume the planning quantities of the finished product Must maintain the Mixed MRP Indicator in the Material Master MRP2 View for sub-assembly planning. Maintain the consumption indicator in the item screen of demand management

Example is a PC where the forecast for individual features is more accurate than forecasts for the completed PC’s
Planning Requirement Type is VSFB -- planning at assembly level

Strategy: Planning At Assembly Level
Example: A PC with a large number of end item configurations

Sales Order

Warehouse Stock Finished Product

Common Sub Assembly Brake Assembly
Warehouse Stock Assembly 02 Warehouse Stock Assembly 03

Planning

Final Assembly Pull

Production Push

Strategy: Production by Lot Size
Example: Combine customer orders for the same item

Sales Order

Warehouse Stock Finished Product

Production by Lot Size Pull

Planning Strategy – Make to Order Production
 

Sales orders are planned according to sales order number Produced quantities for each sales order are managed individually Production and procurement costs are managed in either a settlement order or a project Example is a custom product with a unique structure such that it only applies to a particular customers order Sales Requirement Type is KE -- independent customer order without consumption

Strategy: Make-ToOrder Production
Example: New machinery

Sales Order

Warehouse Stock Finished Product

Production by Lot Size Pull

Consumption Logic
  

Customer requirements consume planning requirements directly before or after it Consumption mode is either determined in the material master record or in the configuration menu of demand management Consumption mode determines either -Backward consumption – requirements directly before the sales order Forward consumption – requirements directly after the sales order Both types are allowed – the system looks for the next closest planning requirements If no consumption periods exist, then you can only consume requirements planned on the same day.

Example -- Forward Consumption
Planned Requirements Customer Requirements

01/07 01/14 01/21 01/28 0 0 0 100 25 -------^

Example -- Backward Consumption 01/07 01/14 01/21 01/28 Planned Requirements 0 100 0 100 Customer Requirements ^----- 25

Production Order Management

Elements of a Production Order
Order Header ----------------------------- Settlement Rule  Planned/Actual Costs  Operation Sequence Operation 0020 -----------------------------• Work 0010 Operation Center • Control Info -----------------------------• Operation  Work Center Times  Control Information  Operation Times

Material at 0010 -----------------------------Material at 0010 • Material Number -----------------------------• Quantity  Material Number • Date  Quantity  Date

Production Order Header
Order Header Main View
   

Order Type Order Number Production Order Quantity Production Order Date
  

Order Header Master Data

For Routing For Bill of Material For Costing For Plant MRP Controller

Order Header Allocation Data

 

Order Header Acct Assignment

 

Settlement Rates Date Quantity

Order Header Order Monitoring

 

Production Order Operation
Operation Overview

Operation Sequence
   

Operation General View

Work Center Control Key Text Status
 

Operation Standard Values

Base Quantity Standard Times (Setup, Machine, Labor)

Operation Dates

Dates per time element

Operation Overlap/Split

  

Splitting Default Values Overlap Default Values Continuous Flow Production

Production Order Component
Component Overview
  

Material Number Requirement Quantity Requirement Date
  

Component General Data

Reservation Item Category Bulk Material Indicator

Operation Long Text

Text Key

Production Order
Production Order
Bill of Material A
Material: A, Qty: 100 PCS Schd Type: B Basic dates: Start/Finish Components Operations 0010 B 1 0010 PHNASM00 0020 C 1 0020 0030 0040 User fields: • General text data • Quantity data • Value data • Date fields

Routing
0010 PHNASM00 0020 0030 0040

B

C

Work Center
PHNASM00 Std Values: Setup: 005 Prodn: 075 TDown: 005

The Production Cycle

The Production Cycle
Print Shop Floor Papers
Confirmation Slip

Select Routing

Select BOM

Schedule Times & Dates Release Order

Check Availability Actual Labor Issue Materials to Order Confirm Completion Calculate Actual Costs Receive complete goods into stock
Goods Receipt

Create Order
Production Order

Calculate Capacity

Calculate Planned Costs

Create Required Purchases

Purchase Requisitions

Goods Issue

Production Order Cycle Status
CRT
CREATED . BOM and RTG selected . Lead Time Scheduling . Reservations created for components . Capacity Reqmts for Work Centers . Planned Order costs created (PRC) . Settlement Rule Determined (SETC)

REL
RELEASED . Completion Confirmation possible . Shop paper printed

DSPT
DISPATCHED . Capacity Leveling possible for oper

CNF
CONFIRMED . Actual Production usage and time captured . (MILE)

DLV
DELIVERED

COMP
COMPLETE

. Goods Receipt . Actual costs delivered settled to cost objects Milestone operation

. Availability Check possible, at or before release . Material issues after oper release

Production Order Creation
Manual Order Creation Order Proposal MRP Conversion Determine Order Type

Routing Selection

 

Alternate Sequence Assignments One operation is required Enter start or finish date depending on scheduling direction
  

Changes are allowed before order release
Lead Time Scheduling

Bill of Material Selection

Component Overrides Material Reservations Item Categories

Production Order Release
Production Order Ready for Release

Order release is carried out manually

Material Availability Check

Uses checking rules defined in configuration

Order or Operation Release

Shop Paper Printing Possible

 

On-line or in background Pick List, Confirmation Slips,...

Material Withdrawals Possible

Material Availability Check
Stock on Hand 150 Units Reservation for 50 Units Planned Order for 200 Units Dependent Requirement for 200 Units

Net Available

150

100 Requirement for 50 Units are Available

300

100

Material Availability Check
Stock on Hand 150 Units Reservation for 50 Units Planned Order for 200 Units Dependent Requirement for 200 Units

Today Available 150

06/01/95
Net 100 300 100

Requirement for 150 Units not Available

Goods Movement for a Production Order
Reservation
Planned Goods Issue

Material 1
Unplanned Goods Issue

Production

Material 2 Consumption of Material 1 and 2 Goods receipt of Material 3
Goods issues only apply to stock items

Goods Issue

Goods Issue Results
Update Reservations
Material Usage Statistics

Goods Issue Posting
G/L Account Update Accounting Material Document Cost Object Allocation

Completion Confirmations
Production Order Operations
0010 - Assemble Board 0020 - Assemble Case C
Confirm Operation 0010 Activities

Confirm Operation 0020 Activities

0030 - Assemble unit
0040 - Final Test

Milestone
Confirm Operation 0030 Activities

    

Partial or Final Confirmation Single or Collective Confirmation Milestone Confirmation Reduction of Capacity Requirements Determination of Actual Costs

Confirm Operation 0040 Activities

Confirmation Data
Quantity
  

Yield Scrap Quantity Scrap Reason

Dates

 

Start date Finish date Work Center Personnel Number Qualification Wage Group Wage Type

Labor

    

Capacity

Capacity Planning
MRP Requirements Master Data Material BOM Capacity Requirements Capacity Leveling to adjust capacity periods

Routes
Work Center

Capacity Evaluation

Work Center Capacity

Standard Values
Tables Formulas for Scheduling and Capacity Reqmts Work Center • Formula Key • Formula Constants Operation • Std Values
Set up .5 hrs Proc 5.5 hrs Teardown .5 hrs

• No. Splits

Formulas Setup | Process | T/D

Capacity Requirements

Capacity Scheduling
Material Master Lead Time Float Before Oper 0010 Oper 0020 Oper 0030 Float After

Operation Lead Time

Queue | Setup | Process | Teardown | Wait | Move Interoperation Time

Execution Time

Interoperation Time

Lead Time Reduction Measures
Float Before
Reduce Float Time

Queue | Setup | Process | Teardown | Wait | Move (2) (1) (6) (1) (2) (2)
Use Minimum Queue Time Optional Splitting or Overlapping Use Minimum Move Time

Float After
Reduce Float Time

Float Before

Queue (1)

Set up (1)

Split Process Split Process

T Down (1)

Wait (1)

Move (1)

Float After

Standard Formulas
Operation Time is ....

Queue Time + Execution Time + Wait Time
Queue Time specified in the operation Execution Time = Setup + Proc Time * Lot Size/Base Qty Wait Time specified in the operation

Product Costing

Costing Integration
PP PP-PC Product Costing
MM SD FI

CO
Sales & Distribution Materials Mgmt. Financial Accounting

Controlling

CO

CO-PC Product Cost Acctg.
Fixed Assets Mgmt.

PP-MRP Mat. Requirements Planning PP-MPS Demand Management PP-BD Basic Data PP-IS Shop Floor Info System PP-CRP Capacity Planning PP-SFC Production Activity Cntrl.

Production Planning

PP

AM

R/3
Client / Server
PM
Human Resources

Quality Assurance

QA

Plant Maintenance

HR

Industry Solutions

IS

Office & Communication

OC

Project System

PS

CO-PA Profitability Analysis CO-PA Profit Centers CO-OPA Orders CO-CCA Cost Center Accounting

Costing and Organizational Structures
Client
Controlling area PP01
Chart of accounts GKR

Controlling area 0001

Company code PP01

Company code 0001

Company code 0002

Valuation area PP01

Valuation area PP02

Valuation area PP03

Valuation area 0001

Plant PP01

Plant PP02

Plant PP03

Plant 0001

Logistics and Cost Accounting
Logistics
Materials management Production planning Material requirements planning Production orders Capacity planning Pricing Valuation

Cost Accounting
Cost elements Cost centers CO orders

Cost object controlling:
• Preliminary and standard costing • Final costing

Profitability analysis Controlling

Master Data for Costing
Material Master Record • Costing View — Product Costing Indicator, Costing Lot Size, Overhead Group • Accounting View — Valuation Class, Category, Price Control Bills of Material — Materials required to make the product Cost Center — Accounting data Work Center — Standard Value key and Efficiency Rate Routing — Relevancy to Costing Indicator

Cost Components
• Cost components are defined in Product Costing Customizing • Each costing variant (standard cost, current cost, ...) points to a cost component layout • There can be up to 40 cost components in a cost component layout • For each cost component identify which costs are rolled up to the next higher level Component Cost Layout
Cost Component 2 Cost Component 3 Cost Component 1 Cost Component 4 Cost Component 2 Production Cost Component 3 Cost Component 5 Cost Component 4 Cost Component 6 Cost Component 5 Cost Component 7 Cost Component 6 . Cost Component 7 . . . Cost Component 15 . Cost Component 15 Cost Component 1 Raw Component Cost Layout Materials 01

02

Production Overhead-Material Raw Materials OverheadProduction Overhead-Material Overhead-Admin Overhead-Production Overhead-Sales Overhead-Admin External Processing Overhead-Sales External Processing Miscellaneous Miscellaneous

The Production Order and Inventory Accounting
A Production Order collects all costs associated with making an inventoriable item. The order “picks up” costs through the manufacturing process from the Bill of Material and the STATUS: Routing. Created, Released, Confirmed, Delivered, Production Order Settled Bill Order: 73 Type: PP01 of Plant: LR001 Sys Status: Material
CRT REL CNF DLV SETC Quantities: Total Produced: 100 Tons Scrap: .001 Confirmed: 100 Tons Dates: Schedule 09/15/95 Confirmed 09/16/95

Routing

Costing Production Orders
Preliminary Order Costing
• Planned Order Costs are calculated from target input quantities according to BOM and Routing • Standard Price for R/M • Planned Activity Prices • Planned Overhead Rates

Simultaneous Order Costing
• Actual material and activities used & confirmed • Invoices for external activities • Overhead Calculated Rates

Final Order Costing
• Order confirmed complete • Quantities delivered have been posted • Last operation confirmed complete

Calculating Production Costs
Work center • Formula constants Routing • Standard values • General standard values

Cost Center
Activity type

Formula

Activity price

Actual time/quantity

Costs

Overhead Costing
Direct material costs

+

Material costs

Indirect material costs Direct production costs Indirect production costs

=
+ =
Production costs

+

=
Manufacturing costs
Indirect management costs

+

Costing sheet

Indirect sales costs Cost of goods sold

+

=

The Costing Sheet
Calculation basis • Cost element • Origin Overhead • Percentage rates • Planned/actual • Dependencies
Order type/category Plant Company code Business area Overhead key

Credit • Cost element • Origin • Object
Cost center Order

Make-to-Order Production
Order
Individual customer requirements

Material requirements planning

Delivery

Production memo

Production

Goods issue

Reduction of sales order stock

Sales order stock
Target— Actual—

Invoice

Cost Objects with Make-toOrder Production
Objects of integrated R/3 modules Material number (MM) • Production order, operation (PP) • Sales order (SD) • Project item (PS) • Network (PS) • CO order (CO)

Basic General Functions for Cost Object Controlling
Master data
• Cost object, cost object hierarchy • Internal/external numbering system

Preliminary costing
• Costing items • Automatic valuation • Planning aids (revalue, copy, reference) • Cost component structure

Simultaneous costing
• Actual quantity used * price • Overheads • Actual yield • Calculation of target costs • Variances according to category • Work in progress

Analysis of actual product costs
• Closed periods • Settlement to stock (at standard price) • Settlement to profitability analysis (variances)

Controlling
• Summarization using classifiable characteristics • Selection using classifiable characteristics • Cost object analysis

Cost Roll-up
• Costs for assemblies in the low-level code with the highest number are calculated first • Upper level is production costs at this production level • Lower level is costs of all material components processed at this production level • Total costs are the sum of the costs for the upper and lower level costs Finished Product Cost Component Split - Total
Material Internal Activity External Activity Overhead

Cost Component Split - Upper Level
Internal Activity External Activity Overhead

Cost Component Split - Lower Level
Material Internal Activity External Activity Overhead

Semi-Finished Product Raw Material

Cost Component Split - Total
Material Internal Activity External Activity Overhead

Cost Component Split - Upper Level
Material

Master Production Scheduling

MPS Functions
Separate Planning Run for Master Schedule Items
     

During an MPS run, only master schedule items are planned Dependent requirements are created for the BOM level directly below the planning level Levels below the master schedule items are not planned Changes can be made to the master plan without effecting lower BOM levels Supply orders are reviewed for timing and quantity to match requirements Allows for daily planning without a negative impact on system performance

MPS Item

MPS level Assembly 2 MRP level

Assembly 1

Planning Time Fence
  

Protects the master plan from automatic changes to the master schedule During a planning run, no automatic change proposals are made within the planning time fence which is determined for each item in the Material Master. The system calculates the planning time fence starting from the planning date

Order Proposals are Fixed

Automatic Order Proposals

Planning Date

Planning Time Fence

MPS Procedure
Create Planned Independent Requirements

Using Demand Management

Carry out Separate MPS Planning Run

 

Proposal Changes within Planning Time Fence System Creates Order Proposals Outside PTF

Make Changes Using Interactive MPS

Fine tune MPS Items within Planning Time Fence

Start MRP Run for Lower Levels

Carry-out MRP

Planning Run Types

Regenerative Planning – all master schedule items are planned for a plant. It is generally used during initial startup to insure all items are planned or when heavy maintenance causes most items to be re-planned. Net Change Planning – only master schedule items which have undergone a change to the supply/demand balance, such as warehouse receipts and issues, are re-planned. It is common to run net change MPS daily. Net Change Planning in the Planning Horizon – shortens the period over which MPS plans to the planning horizon, which is set in Customizing. It is typically set to the length of time of the longest lead time item. This means that only those master schedule items which have undergone a relevant change within the planning horizon are planned.

Firming Planned Orders

The system does not plan new order proposals within the planning time fence. Instead, new requirements needed within the planning time fence are scheduled at the end of the planning time fence, depending on the fixing type.
Order Proposals are Fixed Automatic Order Proposals

Planning Date

Planning Time Fence

During the next planning run, the system places all order proposals that crossed over the planning time fence at the PTF. The master scheduler needs to “fix” or firm these order proposals to the correct date inside the PTF. Once fixed, the system will not change. Orders can be firmed collectively (Planned orders->firm) through selection of MRP controller, material, run schedule, production version, or planning id.

Availability Check
Inward movement of goods Purchase Order Purchase Requisition

Stock

Planned Order

Other factors to take into account: Safety stock Stock in transfer Replenishment lead time Blocked stock in QA

Delivery

Sales Order

Reservation

Outward movement of goods

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