Production Processes

Production Planning (PP)

- Overview -

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

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Overview

• Components of Production Planning• Production Process Overview• Planning Process Overview• MRP• Elements of a Production Order


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Components of Production Planning

ProductionPlanning

(PP)

ProductionPlanning

SOP

CapacityPlanning

MRP

ProductCost

Planning

RepetitiveMfg.

ProductionControl

KANBANMasterData

DRP


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Planning Process

Execution

Execution

Detailed Planning

High Level Planning

ForecastingSales and Operations

Planning

Demand

ManagementMPS MRP

Sales Information

System

CO/PA

Manufacturing

Execution

Order

Settlement

Procurement

Process


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Material Requirements Planning

• A set of techniques utilizing bills of materials, inventory data (lead times and current status) and the master production schedule to calculate requirements for raw materials, components, and subassemblies

• A time-phased planning tool with a defined, specific algorithm

• Balances supply and demand


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Inventory

MasterSchedule

Planning Rules

Bill of Material

OrdersForecasts

MRP

Process

RecommendedProcurement

RecommendedProduction

Inputs Outputs

MRP Process


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Material Requirements Planning Elements

• Requirement elements (demand)– Withdrawals from inventory– Maintenance must be done at source of demand– Two types of demand

• Replenishment elements (supply)– Receipts into inventory– Maintenance can be adjusted manually


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Elements of A Production Order

Raw Materials & Sub-Components

Bill of Material

Components

(Production Parts

List)

Work Center

Operations

Production Routing

Production Order

Organizational Data

• Client• Company code• Plant (shipping plant)• Storage location

• Work center location


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Scheduleand Release

Shop FloorDocuments

Goods Receipt

Order Settlement

GoodsIssue

ProductionProposal

(Planning/Other)

CompletionConfirmation

Capacity Planning

Production Process (Make-to-Stock)


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Organization

• Plant specific organizational units– Materials Requirements Planning controller – Production controller/production scheduler/planner group – Person responsible (financially)


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Organization

• Non-plant specific organizational units– Capacity planner


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MRP Control Parameters

• Environment– Number range

• Master Data – Materials Requirements Planning controllers– Float times

• Planned Orders– Conversion order type– Dependant requirement availability


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MRP Control Parameters (continued)

• Planning run – Bill of Material (BOM) selection – External procurement– Planning horizon

• Availability Check– Material– Production Resource/Tool (PRT )– Capacity

• Scheduling Control Parameters


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General Planning Parameters

• Order Type Control Parameters– Types of routings, BOM’s per order type: manually or

automatically– Availability checking

• Create Confirmation Parameters – Reservations– Status Updates

• Define Valuation of Goods Received– Moving Average Price Control evaluation


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Material Master Planning Parameters

• Materials Requirements Planning views for materials

• Work Scheduling views for manufactured products

Business Rules and Parameters

• Automatic postings (account determination)– COGS, Material consumption, inventory

• Activate MRP• Availability checks• Scheduling parameters• Order parameters• Confirmation parameters• Planning parameters

– Consumption based planning– MRP


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Master Data

• Master data is relatively fixed– Material master data– Vendor master data– Purchasing information record– General Ledger master data

• Before making the master data configurations, you must have completely defined the organizational structures


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Overview

• Material Group• Material Master• Material Types• Material Master Views• Purchasing Info Record• Source List


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Material Group

• The material group field allows similar materials to be managed together

• Material group is used in reporting– Executive Information Systems (EIS)– Logistics Information Systems (LIS)– Etc.


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Material Master

• Material master data can be related directly to all organizational levels

• General information of a material (description, number, base unit of measure) however has to be related to the highest level of organization - the client – Further tailor the material master at the plant level or

lower


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Material Type

• Categorizes materials• Defines the material attributes

– Valuation– Procurement– Price control– Etc.

• Controls transaction involving the material• Controls screen sequence, number assignment,

field selection, account determination


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Material Types

Standard material types are used in all industries

• ROH: Raw Materials – Purchased externally only – No sales view

• HAWA: Trading Goods – Always purchased externally– Sold without any change to the material– No manufacturing views exist

• FERT: Finished Products– Are normally produced internally – No purchasing views exist


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Additional Material Type

• HIBE: Operating Supplies• VERP: Customer returnable packaging• LEER: Empty containers• KMAT: Configurable material• ERSA: Spare parts • DIEN: Services


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Material Master Views

• Basic data • Classification • Sales: sales organization data• Sales: general/plant data• Sales text• Purchasing• Purchase order text• Forecasting

Purchasing

View MRP 1View

Executive Pen


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Material Master Views (continued)

• MRP 1, 2 • Work scheduling • Storage• Warehouse management• Quality management• Accounting• Costing

Purchasing

View MRP 1View

Executive Pen


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Material Master Forecasting

• Number of Periods Required– Historical Periods

• The number of historical values the system uses for the forecast– Forecast Periods

• Number of period splits for which a forecast should be created

• Forecast Values– The numeric quantity for future periods

• Consumption Values– The sum of planned and unplanned consumption


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Material Master MRP 1

• General Data– Purchasing Group

• The buyer(s) who are responsible for certain purchasing activities

• MRP Procedures– MRP Type

• Determines whether and how the material is planned– Reorder Point

• If stock falls below this point, the system is flagged to create a planned order

– MRP Controller• The person(s) responsible for the material planning


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Material Master MRP 1 (cont.)

• Lot Size Data– Lot Size

• The lot sizing procedure to calculate the quantity to be produced or procured

– Minimum Lot Size• The smallest order quantity

– Fixed Lot Size• The quantity to be ordered


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• Scheduling– Planned Delivery Time

• Number of calendar days needed to obtain the material– Scheduling Margin Key

• Used to determine the floats required for scheduling

• Net Requirement Calculation– Safety Stock

• Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period


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• Availability Check– Specifies whether and how the system checks

availability and generates requirements for materials planning


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Production oriented Master data

• Bill of Material Master Data• Work Center Master Data• Work Center Control Key• Routing• Routing Use• Material Types and Production• Controlling Activities For Production• Activity Prices


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Bill of Material Master Data

• Bill of Materials (BOM’s) are created as single-level relationships between one parent material and the sub-component material

EPEN

Barrel Cap Crown Cartridge Band Clip


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• Variant Bill of Material (BOM)– Several products with a large proportion of identical

parts.

EPEN - Red

RedCartridge

Band Etc.Black

CartridgeBand Etc.

EPEN - Black


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• Multiple Bill Of Materials (BOM)– One product produced from alternative components

or processes, where the differences are small (usually the quantity of a component).

– BOM 1 = lot size 1 - 100– BOM 2 = lot size 101 – 999

BlackCartridge

(Make)

BandEtc.

EPEN - Black

BlackCartridge

(Buy)

Band Etc.

EPEN - Black


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• Where is the Bill Of Material (BOM) used?– MRP uses the BOM to determine dependent

requirements– Controlling uses the Bill Of Material (BOM) to calculate

product costs– Production uses the Bill Of Material (BOM) to issue the

proper quantities of components and raw materials to the shop floor


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Work Center Master Data

• Unique production or assembly area• May include

– Equipment – Groups of equipment– Production lines– Employees– Groups of employees

• Operations carried out at work center


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• Work center used to define capacities – Labor– Machine– Output– Emissions

• Capacities used in– Capacity requirements planning (CRP)

• Detailed scheduling• Costing


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• Assigned– Cost center

• Work Center only assigned to one cost center

– Human Resources (HR)• Qualifications• Positions• People


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Work Center

• Work Centers have multiple views– Basic data– Default values– Capacity overview– Scheduling– Cost center assignment– Technical data


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Work Center Control Key

• Scheduling• Determine capacity requirements• Inspection characteristics required• Automatic goods receipt by operation• Print time tickets & confirmations• Rework• Cost• Schedule external operations – std values• Confirmations


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Routing

• Routings enable you to plan the production of materials

• Routings are used as a template for production orders and run schedules as well as a basis for product costing.

• Routing is a sequence of operations which detail the manufacture of a product


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Routing

• Routing are used to determine:– Operations– Work centers– Material components – Production resources and tools– Quality Checks


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Routing Use

• Routings will be used in– Scheduling (dates, times)– Costing– Capacity planning– Production orders


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Routing

StandardSequence

AlternateSequence

ParallelSequence

Operation 10

Operation 20

Operation 30

Operation 40

Operation 10

Operation 20

Operation 30

Operation 40

Operation 25

Operation 20

Operation 10

Operation 30

Operation 40

Operation 25


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Material Types Allowed In Production

• Multiple material types may be used in a routing/BOM– Raw materials– Semi-finished product– Trading goods are allowed but not standard– Text or Reference materials common


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Display Routing List

• A collective report displaying the available routings and the material allocations to operations

• Four General Types– Operations Related– Component Related– PRT Related– General List (Operation Control Ticket)


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Controlling Activities for Production

• Used to perform internal cost allocation, where activities by a cost center are measured– Labor time– Machine hours

• Output activities are valued• Allocation of an activity type is always made with

the allocation cost element created in activity type planning


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Activity Prices

• Prices (costs) for planned activities– Fixed or Variable

• Labor = $$/hour• Machine = $/hour• Overhead = %


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Transaction Data

• Includes transactions that describe business activities

• Unlike master data, aggregate transactional data is dynamic - it constantly changes, usually many times per day

• Transactions use organizational structure, master data, and rules


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Scheduleand Release

Shop FloorDocuments

Goods Receipt

Order Settlement

GoodsIssue

ProductionProposal

(Planning/Other)


Capacity Planning

Production Process (Make-to-Stock)


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Production Order

• Production Order Defines– Material is to be processed– At what location (work center)– At what time– How much work is required– Resources to be used– Order costs settlement


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Production Order Standard Process

• Documents/Procedures used in the manufacture of material

– Order creation/Order Conversion– Capacity planning– Order scheduling– Order release/processing– Shop floor documents– Completion confirmation– Goods receipts– Order settlement


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Production Order Release

• When a production order is created the following actions are carried out:– A routing selected: operations and sequences– The bill of materials transferred– Reservations generated for bill of material items in stock


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Production Order Release (cont.)

• When a production order is created the following actions are carried out:– The planned costs are generated– The capacity requirements generated for the work centers– Purchase requisitions generated for non-stock items and externally-

processed operations


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Production Order Elements

• Order header– Order number– Material produced– Plant– Quantity– Dates

• PRT– Tooling– Equipment

• Operations– Tasks – Work centers– Times– Dates– Control keys

• Components– Material components– Quantity


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Production Order Completion and Settlement

• Completion confirmation – Quantities of material

used– Operations completed– Time– Personnel

• Costs – Planned costs and

actual costs

• Settlement rule for the order for accounts/cost centers– Settlement profile– Settlement receiver


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Production Order Completions

• Completion confirmation:– Confirms both the yield and scrap quantities– Backflushing

• Can create goods movements • Reduction of component reservations

– Receipt of product if automatic Goods Receipt (G/R) set– Activity costs


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Production Order Costs

• Planned costs– Primary Costs

• Material Costs (BOM)– Based on material master price for each component

• Cost for External Processing

– Secondary Cost• Production Costs (Routing)• Material Overhead Costs• Production Overhead Costs


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Production Order Costs

• Actual costs– Primary Costs

• BOM components– Updated when goods are issued to order, or when purchased

materials are received

– Secondary Costs• Uses routing

– Time Cards from Operations

• May include activity costs• Material Overhead Costs• Production Overhead Costs

• Gets updated at completion confirmation


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Production Order Status

• REL: Released• CRTD: Created• PRT: Printed• CNF: 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


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Sales Order Process

Sales OrderEntry

Check Availability

ProductionProcess

Run MPS w/MRP

Convert ProductionProposal

Scheduleand Release

ProcurementProcess

Pick Materials

GoodsIssue

Purchase Requisition

Purchase Order

GoodsReceipt

InvoiceReceipt

Paymentto Vendor


Goods Receipt

QualityInspection

Order Settlement

Post Goods Issue

Invoice Customer

Receipt ofPayment

Overall Process

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