make-to-stock production – discrete industrysapidp/012002523100005746092015e/... · make-to-stock...

Make-to-Stock Production – Discrete Industry

SAP Best Practices

© 2011 SAP AG. All rights reserved. 2

Purpose, Benefits, and Key Process Steps

Purpose This scenario describes a business process, which is typical for companies with lot-size oriented

production.

The production scenario produces a finished good and all dependent components in make-to-stock production (MTS).

Furthermore, the scenario is supported by the main cost object controlling functions required, such as preliminary costing and period-end closing.

Benefits Production triggered by a production plan

Serial number and batch management included

Optional with: quality management, consigned inventory, external processing

Key Process Steps Creating Planned Independent Requirements

Material Requirements Planning at Plant Level

In-House Production (subassembly)

In-House final assembly (Finished Good)

Capacity Leveling

Confirming Assembly Activities


Required SAP Applications and Company Roles

Required SAP Applications

Enhancement package 5 for SAP ERP 6.0

Company Roles

Production Planner

Production Supervisor

Shop Floor Specialist

Warehouse Clerk

Strategic Planner

Engineering Specialist


Detailed Process Description

Make-to-Stock Production – Discrete Industry

This scenario describes a business process, which is typical for companies with lot size oriented production. The production scenarios consist of both goods movements (goods issues and receipts) and confirmation of completion of the production order. Furthermore, the scenario is supported by the main cost object controlling functions required, such as preliminary costing

and period-end closing.

The typical planning process starts with sales quantity planning. The previous period’s actual sales figures can be used as a basis for future planning.

In Sales and Operations Planning, you ensure that production stays in line with sales so that you may create the production plan synchronously to sales. The planning data is transferred from Sales and Operations Planning to Demand Management. Demand Management generates independent requirements, which are used in the subsequent Material Requirements Planning (MRP) run.

In material requirements planning, the bill of materials (BOM) for the top-level material demand gets exploded and production is planned right down to procured component level. MRP results in planned orders being generated for the material to be produced.

If insufficient warehouse stock is available, purchase requisitions are created for the raw materials required. When the order is created, target costs are calculated for the order lot size (preliminary costing).

During the production process, costs incurred are updated on the order, which enables you to keep track of and compare target costs and actual costs at any time.

Period-end-closing activities are applied to the order. This includes Work In Progress calculation and variance calculation.

After this, Work in Progress is settled to financial accounting and production variances are settled to management and financial accounting.


Process Flow Diagram Make-to-Stock Production – Discrete Industry

Man

ufa

ctu

rin

g

Eve

nt

Pla

nt

Co

ntr

oller

Period End Closing

“General” Plant (181)

Material Requirements

Planning at Plant Level & Evaluation of Stock / Requirement

List

Beginning of Planning

Cycle

Purchase Requisiti

on

MRP List

Inventory @ Standard. Cost

Pro

du

cti

on

Pla

nn

er

Periodic Plan Revision

Release Production

Order

Capacity Leveling

Material Staging for

Planned Orders

Confirming Assembly Activities

/ Final Confirmation

Semi-Finished Goods Receipt

Goods Issue/ Back flush

Update Capacity

Goods Receipt Slip

Pick List

Order Print Planned Orders

Capacity

Leveling O.k.?

Material Availabl

e?

Bu

yer

Ware

-h

ou

se

Cle

rk

Goods Receipt Slip

Procurement of Stock

Material with QM (127)

Procurement &

Consumption of Cosigned

Inventory (139)

Str

ate

gic

P

lan

ner

Creating Planned

Independent Requirements

Convert Planned Order to Production

Order

Inventory Consumption @ Standard.

Cost

Procurement w/o QM

(130)

Finished Goods Receipt

MM Subcontracti

ng (138)

PP-Subcontracting (External Processing)

(150)

No

Yes

No

Yes

Logistics Planning

(144)

1


Process Flow Diagram Make-to-Stock Production – Discrete Industry

Pro

du

cti

on

S

up

erv

iso

r

1 Review

Operation List

Ev

en

t


Legend

Symbol Description Usage Comments

To next / From last Diagram: Leads to the next / previous page of the Diagram

Flow chart continues on the next / previous page

Hardcopy / Document: Identifies a printed document, report, or form

Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow lines

Financial Actuals: Indicates a financial posting document


Budget Planning: Indicates a budget planning document


Manual Process: Covers a task that is manually done

Does not generally correspond to a task step in a document; instead, it is used to reflect a task that is manually performed, such as unloading a truck in the warehouse, which affects the process flow.

Existing Version / Data: This block covers data that feeds in from an external process

Does not generally correspond to a task step in a document; instead, this shape reflects data coming from an external source; this step does not have any incoming flow lines

System Pass / Fail Decision: This block covers an automatic decision made by the software

Does not generally correspond to a task step in the document; instead it is used to reflect an automatic decision by the system that is made after a step has been executed.

Exte

rnal

to S

AP

Business Activity / Event

Unit Process

Process Reference

Sub-Process

Reference

Process Decision

Diagram Connection

Hardcopy / Document

Financial Actuals

Budget Planning

Manual Process

Existing Version /

Data

System Pass/Fail Decision

Symbol Description Usage Comments

Band: Identifies a user role, such as Accounts

Payable Clerk or Sales Representative. This band

can also identify an organization unit or group,

rather than a specific role.

The other process flow symbols in this table go

into these rows. You have as many rows as

required to cover all of the roles in the scenario.

Role band contains

tasks common to that

role.

External Events: Contains events that start or end

the scenario, or influence the course of events in

the scenario.

Flow line (solid): Line indicates the normal

sequence of steps and direction of flow in the

scenario.

Flow line (dashed): Line indicates flow to

infrequently-used or conditional tasks in a

scenario. Line can also lead to documents involved

in the process flow.

Connects two tasks in a scenario process or a non-step event

Business Activity / Event: Identifies an action that either leads into or out of the scenario, or an outside Process that happens during the scenario

Does not correspond to a task step in the document

Unit Process: Identifies a task that is covered in a step-by-step manner in the scenario

Corresponds to a task step in the document

Process Reference: If the scenario references another scenario in total, put the scenario number and name here.


Sub-Process Reference: If the scenario references another scenario in part, put the scenario number, name, and the step numbers from that scenario here


Process Decision: Identifies a decision / branching point, signifying a choice to be made by the end user. Lines represent different choices emerging from different parts of the diamond.

Does not usually correspond to a task step in the document; Reflects a choice to be made after step execution

<F

unction>


Convert

Planned Order

Dependent

Reqmts

Reservations

Warehouse

Material Reqmts

Planning

Materials Requirement Planning - MRP

Planned Ind.

Requirements

Production

Order


Alternative Planning Strategies for Finished Product

Strategy Net Requirements Planning (10) Planning with Final Assembly (40)

Customer requirements passed on to

production No Yes

This means . . . ... sales orders do not influence production ... sales orders that exceed planned

independent requirements can influence

production

... the main objective is to ensure smooth

production

... the most important factor here is the

ability to react flexibly to customer demand

Planned independent requirements

allocated and reduced during sales

order processing No Yes

Planned independent requirements

reduced at goods issue for delivery Yes No


Work Center

Work Center: Assembly

Routings Costing Scheduling

& Capacity

1010,-

2150,-

3160,-

Default values

Routings

Costing Data Sched. Data

Capacity Data


Routing Work Center / Operation

Routing Header

Operation 10:

Final Assembly

Material Components

Work center

Control key

Standard values

Activity types

Description

....


Individual Conversion Individual Conversion

Planned

orders

Production

orders

Collective Conversion Collective Conversion

Planned Order Conversion

Production

order Planned

orders


Specify order type Specify order type

Define order item Define order item

Copy routing Copy routing

Lead time scheduling Lead time scheduling

Copy bill of material Copy bill of material

Optional changes Optional changes

Save production order Save production order

Friday January 28 2011

Tuesday July 12 2011

Requirements planning Requirements planning Manually Manually

Availability check Availability check

Automatically Automatically

Optional (Customizing)

Production Order Creation


Order proposal

(planned order)

Order creation

Availability

check

Order release and

batch determination

for components

Order settlement Order header

Operations Operations

Components Components

Costs Costs 20

50 100

Material withdrawal

Goods receipt

Production Order Processing

Production Order

Confirmations


Material

Goods movement

Material

document

Accounting document

Warehouse Warehouse

Operation

Mat. comp.

Prod. order

Costs

Update of stock quantities Update of stock values materials can be batch controlled

Goods Movement


Goods issue posting

Material document

Acctg. document

Goods Issue

Updating stock quantities Updating stock values Reducing reservations Calculating actual costs and up-

dating the order


Order confirmation Order confirmation . . .

Manual entry

Production Order Confirmations

Production order

Operation 0010

Operation 0020

Operation 0030

Operation . . . .


l Costing variant

Display planned/actual costs

l Cost elements l Cost itemization l Cost component split

Planned costs Planned costs

Material costs

Costs for external

procurement

Production costs

Material overhead

costs

Production overhead

costs

Costs for external

processing

Cost elements Cost elements : : Phases Phases

l Gen. operation values

l Standard values

l Control key “costing

indicator”

Resources Resources

l Formula key for

costing

l Cost center

l Activity type

l Formula constants

Cost calculation log

l Ind . " Rel . to costing "

l Price

Material Material components components

Order Order type type / Plant / Plant

Production Order - Preliminary Costing


Production order cost Production order cost

Overhead calculations Overhead calculations

- Work center

- Standard value

- Quantities

- Cost center

- Activity types

- Formulas

- Activity types

Operation

Internal activities costs Material costs

Cost of Production Order

- Quantities

- Prices

Work center Cost center Material

components

- Periods

Activity cost


Order Status

Pre-Released or Released Partially Delivered Finally Delivered or Technically Completed

Variances

Delivery

Value

Actual Costs

WIP at

Actual Costs

=

WIP at

Actual Costs

=

- Delivery

Value

=

-

WIP and Variance Calculation in Lot-Based Cost Object

Controlling

Actual Costs Actual Costs


Material

600

Product cost planning

Lotsize 1 PC CO- PC

Production Order Mat. F126

800 1.200

400 2.400

-2.000

400

Material Production Surcharge GR Variances

Actual Cost

CO-

PC

Material Master

Standard Price = 2000

Target Version 0

Price 150 Qty 150 Structure 100 Scrap 0 Lotsize 0

Production

1100

Surcharge

300

Warehouse Price difference

Financial Accounting

2000 400

Settlement FI

CO-

PA

Settlement of Order (Example)


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