ch06 the production process

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The Production Process

Chapter 6

1 Magal and Word | Integrated Business Processes with ERP Systems | © 2011


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Learning Objectives

1. Describe the master data associated with the productionprocess.

2. Identify the key steps in the production process and thedata, documents, and information associated with eachstep.

3. Effectively use SAP® ERP to execute the key steps in theproduction process.

4. Effectively use SAP ERP to extract meaningful informationabout the production process.

2 Magal and Word | Integrated Business Processes with ERP Systems | ©2011


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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

Magal and Word | Integrated Business Processes with ERP Systems | ©2011

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Types of manufacturing

Process manufacturing Not manufactured in individual units

Gallons, pints, liters

Paint, soft drinks


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A Basic Production Process


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Organizational Data

Client

Company code

Plant

Storage location

Magal and Word | Integrated Business Processes with ERP Systems | © 20116


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Master Data

Bill of materials (BOM)

Work center

Product routing

Material master Production resource tools (PRT)



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Bill of Materials

Identifies the components needed to make the material

A component can have its own BOM to creates a multi-levelBOM

BOMs are used in

Material planning

Production

Procurement

Product costing



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Single-level and Multi-level BOMs



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Bill of Materials for Touring Bikes



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Bill of Materials for Off-road Bikes



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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



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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



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BOM Structure



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Demo 6.1 BOM for Bike and Wheel

Assembly

Review some of the data included in a material master



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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



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Work Center Data



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GBI Work Centers



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Demo 6.2 Review GBI Work Center

Review the GBI work center



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Product Routing

Steps necessary to produce a material Operations

Sequence

Standard

Alternate

Parallel

Work center

Times

Setup, machine, labor



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Work Center Example



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Structure of a Routing



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Routing and Work Centers



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Routing for Deluxe Touring Bike



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Demo 6.3 Review Routing for a

Bike and Wheel Assembly

Review the routing for a bike and wheel assembly



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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



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Component Assignment



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Production Capability

A measure of how many units of a material a plant canproduce within a given timeframe

A data source for production planning



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Sample GBI Production Plan



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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


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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


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The Production Process


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Request Production

Planned order What material

How many

When

Generated by other processes

Fulfillment

Project management

Material planning

Can be created manually


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El t f th R t P d ti


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Elements of the Request Production

Step


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Data in a Planned Order


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Demo 6.4 Create a Planned Order

Review how to create a planned order


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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?


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Elements of the Authorize Production


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Elements of the Authorize Production

Step


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Data in a Production Order


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Structure of a Production Order


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Authorize Production - Outcomes

Scheduling Availability checks

Reservations

Preliminary costing Purchase requisitions


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Preliminary Cost Estimates for Men’s


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Preliminary Cost Estimates for Men s

Off-road Bike


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Cost Estimates in a Production Order


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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


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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


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Elements of the Order Release Step


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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)


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Order Release - Outcomes

Execution of subsequent steps is possible Shop floor papers can be printed

Communication with PDC is possible


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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)


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Elements of the Goods Issue Step


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Data in a Goods Issue Step


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Fi i l I f G d I


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Financial Impact of a Goods Issue


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Demo 6 6 Goods Issue to Production


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Demo 6.6 Goods Issue to Production

Order

Review the steps from goods issue to production order


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Confirmations

Order level confirmation Operations level confirmation


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Data in a Confirmation


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Financial Impact of a Confirmation



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Demo 6.7 Confirm Production

Review confirm production



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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)



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Elements of a Goods Receipt


D i G d R i


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Data in a Goods Receipt



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Financial Impact of a Goods Receipt


Demo 6 8 Goods Receipt from


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Demo 6.8 Goods Receipt from

Production

Review goods receipts from production



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Periodic Processing

Overhead calculation

Work in progress determination

Settlement



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Overhead Calculation

Indirect costs Supervisor, manager, other salaries

Utilities

Accumulated in cost centers

Periodically allocated to production orders based onpredetermined rules


Work-in-Progress Determination


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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.



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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



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Financial Impact of a Settlement



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Reporting

General SAP reporting options Online lists

Work lists

Analytics

Production-specific reporting options Stock/requirement lists


Production Information System -


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y

Components


Production Information Systems -


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Operations


Stock/Requirements List


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Stock/Requirements List



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