The Production Process

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The Production Process. Introduction. Production is both a SCM function and an accounting function Simply put, the process involves turning raw materials into finished goods YOUR BOOK DOES A VERY GOOD JOB WITH THIS TOPIC. Production Steps. Types of Production (1). Discrete manufacturing - PowerPoint PPT Presentation

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The Production Process

Slide 2

Introduction Production is both a SCM function and

an accounting function Simply put, the process involves turning

raw materials into finished goods

YOUR BOOK DOES A VERY GOOD JOB WITH THIS TOPIC

Slide 3

Production Steps

Slide 4

Slide 5

Types of Production (1) Discrete manufacturing

The result is an individual unit (or many of them) such as a bicycle

The finished good “could” be decomposed back into its raw materials

Production lines are set up and torn down to make batches of different materials

Hewlett Packard

Slide 6

Types of Production (2) Repetitive manufacturing

Similar to discrete manufacturing The same finished good is produced over

time on the same production line The production line is not changed to

make different products Used when production lines are very

expensive Intel (Chips) Seagate (Disks)

Slide 7

Types of Production (3) Process manufacturing Products are made by means of a recipe Categories

Continuous (flow) Gasoline

Batch Soda and beer

We will not work with these

Slide 8

Means of Production Triggers cause production runs to be

executed Make to stock

Make a batch resulting from MRP or other production trigger

Make to order Make a unit(s) as a result of a customer

order Dell

Slide 9

Production Master Data Bill of materials (BOM) contains

components that make up a product or assembly

Work centers are locations within a plant where production operations are performed

Product routings list the activities involved in producing the product defined by the BOM

Product groups are used in planning to aggregate planning activities

Slide 10

Bill of Materials (Overview) In general, the components needed to

produce semi-finished goods or finished goods

In the case of process manufacturing, we call a BOM a formula or recipe We will focus on discrete manufacturing

Slide 11

Bill of Materials (SAP) SAP implements BOM as a flat structure Hierarchical BOMs can be created using

“component” materials (assemblies) The BOM structure should mimic the

manufacturing process See the BOMs in Figure 6-4 on page 184

Slide 12

Bill of Materials (Organization) A BOM applies to a “plant”

Different plants might make the same finished good using a different BOM

A material can have “alternate” BOMs These might be used for different

processes having different lot sizes This is more common in process

manufacturing We will not work with alternate BOMS

Slide 13

Bill of Materials (Organization) Header section

Applicable to the finished good List the plant and BOM number The purpose of the BOM (production,

engineering, plant maintenance) Base quantity Minimum and maximum lot size

Slide 14

Bill of Materials (Organization) BOM Header

Slide 15

BOM Usage (+must, .can, -cannot)

Slide 16

Bill of Materials (Organization) Items section The raw materials that go into making

the finished good Item type Item Item quantity

Slide 17

Bill of Materials (Organization)

Slide 18

Bill of Materials (Organization)

Slide 19

Bill of Material (Item Categories) Inventory is maintained for stock items (L) Inventory is not maintained for non-stock

items (N) Variable sized items (R) are available in

different dimensions (quantities) Lumber, for example

Slide 20

Bill of Material (Item Categories) Document items (D) represent applicable

documentation Manuals, for example

Class Items (K) are used in variant (configurable) BOMs

Different paint colors perhaps

Slide 21

BOM Complexity A 747-400 contains

6.5 million parts Countless assemblies

The process requires that many parts are inspected before, during, and after installation

Slide 22

Bill of Materials (Navigation) Logistics / Production / Master Data /

Bills of Material / Bill of Material / Material BOM CS01 – Create CS02 – Change CS03 – Display

Slide 23

Work Center (Introduction) “A resource used to produce a material”

It can be a machine, a group of machines, or an entire production line

It can be a person or group of people (labor)

Slide 24

Work Center (Introduction) Work centers can be arranged

hierarchically Work centers have capacities

They can produce finite outputs given a set of constraints

People work 8 hours a day

Machines can perform at some speed

Slide 25

Work Center (Global Bike) We have work centers for

Bike Assembly Inspection Packaging

Slide 26

Work Center Hiererchy

Slide 27

Work Centers (SAP) A work center belongs to a plant Work centers have a category that

describes the work center Machine / Labor / Production line / Etc..

A work center has a standard value key These are activities that consume time

Setup Processing Teardown

Slide 28

Work Center Categories

Slide 29

Work Center Standard Value Key Execution time and costs are calculated

in operations using formulas and standard values

Slide 30

Work Centers (Control Keys) Control keys define how an operation

is processed based on a set of indicators Scheduling – Enables scheduling on the

operation in Quality Management and Production Planning

Capacity – Enables capacity planning for the work center

Indicators to print time tickets and shop papers

Slide 31

Work Centers (Control Keys) Control keys are managed in the IMG

Slide 32

Work Centers (SAP) Default values containing wage data

can be associated with a work center

Note that work centers are associated with cost centers. This is how we allocate production costs

See Figure 6-7 page 189

Slide 33

Work Center (Navigation) Logistics / Production / Master Data /

Work Centers CR01 – Create CR02 – Change CR03 – Display

Slide 34

Work Center (Basic Data) Every work center belongs to a work

center category (i.e. Labor) And has a standard value key for a

dimension (time in this case)

Slide 35

Work Center (Basic Data) The Assembly work center has

execution time for setup, machine, and labor

Slide 36

Work Center (Scheduling) A work center has a capacity category

usually to indicate machine or labor capacity

Formulas that calculate the setup, processing, and teardown time for the work center Formulas are a subject in themselves

Slide 37

Work Center (Scheduling) Formula use “special” variables to

calculate the dimensional value (time)

Slide 38

Work Center (Costing) Here, we allocate the costs of the work

center to a cost center The cost center must exist and belong to

the plant’s controlling area All costs from a work center must be

applied to the same cost center Costs are allocated based on a formula

key Same as scheduling

Slide 39

Work Center (Costing)

Slide 40

Work Center Costing

Slide 41

Routings (Introduction) These are the detailed operations

performed by (at) one or more work centers to produce a finished good Think of the detailed operations required

for an assembly line to run Routing Sequences Have

Operations that get performed Material(s) required

Routings apply to a material and plant

Slide 42

Routing (Header) Task / Usage

(production / plant maintenance / …) Validity information Inspection (QA / QC) information

Slide 43

Routing (Sequences) Routing sequences

Using sequences, you can create standard and parallel sequences

Remember a parallel fork Sequences are performed “in-order” Alternate sequences might be performed

in place of standard sequences Different steps based on the number of

workers

Slide 44

Routing (Sequences) We have only one routing sequence

Slide 45

Routing (Operations) The tasks we perform to manufacture Data

The time it takes to perform the task How many items are processed per

interval of time Setup, labor, machine

Steps in a routing operation are performed in a work center

Slide 46

Production Routing for (DXTR1000) (Operations)

Slide 47

Production Routing (Materials) The materials needed to produce the

good This information comes from the BOM

Slide 48

Production Routing for (DXTR1000) (Materials)

Slide 49

Routing (Navigation Path) Logistics / Production / Master Data /

Routings / Routings / Standard Routings CA01 Create / CA02 Change / CA03

Display

Slide 50

Production Capacity Production has a capacity that relies on

A factory calendar describing workdays and holidays

A capacity for people and machines Some number of shifts that workers work Look at page 195 in your text.

Slide 51

Production Capacity (Factory Calendar) Multiple calendars describe

Public holidays and the current The calendar used by the factory The assignment of a calendar to a plant

Slide 52

Production Capacity (Factory Calendar) Holiday calendar

Slide 53

Maintaining Capacities Each work center in a plant has a

capacity A capacity name (SHIFT for example) A capacity category (machine or person

for example)

Slide 54

Maintaining Capacities Capacity header describes available

capacity

Slide 55

Maintaining Capacities Global Bike runs 1 shift with 1 hours of

breaks per shift

Slide 56

The Production Process (Overview) Request production Authorize production Release production order Goods issue to production order Actual production Production confirmation Goods receipt into inventory

Slide 57

Request Production Production is typically requested

because of a trigger A customer order (make-to-order)

An MRP Manual creation

In the end, a production order gets generated

Slide 58

Authorize Production This is the actual commitment to

produce Production (machine / people) time is

allocated for specific dates Authorization might be created from

planned or unplanned orders

Slide 59

Authorize Production (SAP) Production might be authorized because

of Planned production / a sales order / for a

material (finished good) We get preliminary estimates of cost

Logistics / Production / Shop Floor Control / Order / create C001

Slide 60

Production Order (Illustration)

Slide 61

Release Production Order This is where the authorized order is

actually released to production Production starts the manufacturing

process at a given date and time RTP might happen manually or

automatically Shop papers are generated

Slide 62

Goods Issue Raw materials are removed from

storage triggered by the production order release

Material staging takes place

Backflushing

Slide 63

Goods Issue (2) Raw material inventory is updated Inventory accounts are updated Material costs are added to the

production order See the GL transactions on page 208

Slide 64

Actual Production We make the material and record

production times

Slide 65

Production Confirmation Accounting finalizes the production run Production costs are recorded

Here the produced goods are transferred from production to goods storage

Slide 66

Goods Receipt Here, the goods are released into

inventory Inventory Held for a particular customer Held for QA or other reason

Slide 67

Introduction to Planning