process overview production planning
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Make-to-Stock Production – Discrete Industry
SAP Best Practices
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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
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Required SAP Applications and Company Roles
Required SAP Applications
Enhancement package 6 for SAP ERP 6.0
Company Roles
Production Planner
Production Supervisor Shop Floor Specialist
Warehouse Clerk
Strategic Planner
Engineering Specialist
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Detailed Process Description
Make-to-Stock Production – Discrete IndustryThis scenario describes a business process, which is typical for companies with lot sizeoriented production. The production scenarios consist of both goods movements (goodsissues 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 salesfigures 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 maycreate the production plan synchronously to sales. The planning data is transferred from Sales andOperations Planning to Demand Management. Demand Management generates independentrequirements, 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 getsexploded and production is planned right down to procured component level. MRP results in plannedorders being generated for the material to be produced.
If insufficient warehouse stock is available, purchase requisitions are created for the raw materialsrequired. 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 andvariance calculation.
After this, Work in Progress is settled to financial accounting and production variances are settled tomanagement and financial accounting.
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Process Flow DiagramMake-to-Stock Production – Discrete Industry
M a n u f a c t u r i n g
E v e n t
P l a n t
C o n t r
o l l e r
Period EndClosing
“General”Plant(181)
MaterialRequirements
Planning at PlantLevel & Evaluation ofStock / Requirement
List
Beginning ofPlanning
Cycle
PurchaseRequisiti
on
MRP List
Inventory @Standard. Cost
P r o d u c t i o n P l a n n e r
Periodic PlanRevision
ReleaseProduction
Order
CapacityLeveling
MaterialStaging for
PlannedOrders
ConfirmingAssemblyActivities / Final
Confirmation
Semi-FinishedGoods Receipt
Goods Issue/Back flush
UpdateCapacity
Goods ReceiptSlip
Pick List
Order PrintPlannedOrders
Capacity
Leveling O.k.?
MaterialAvailabl
e?
B
u y e r
W a r e -
h o u s e
C l e r k Goods Receipt
Slip
Procurementof Stock
Material withQM (127)
Procurement&
Consumptionof Cosigned
Inventory(139)
S t r a t e g i c
P l a n n e r Creating
PlannedIndependent
Requirements
ConvertPlanned Orderto Production
Order
InventoryConsumption@ Standard.
Cost
Procurementw/o QM
(130)
FinishedGoods Receipt
MMSubcontracti
ng (138)
PP-Subcontracting (ExternalProcessing)
(150)
No
Yes
No
Yes
LogisticsPlanning
(144)
1
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Process Flow DiagramMake-to-Stock Production – Discrete Industry
P r o d u c t i o n
S u p e r v i s o r
1Review
Operation List
E v
e n t
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Legend
Symbol Description Usage Comments
To next / From last Diagram: Leadsto the next / previous page of theDiagram
Flow chart continues on the next /previous page
Hardcopy / Document: Identifies aprinted document, report, or form
Does not correspond to a taskstep in a document; instead, it isused to reflect a documentgenerated by a task step; thisshape does not have any outgoingflow lines
Financial Actuals: Indicates afinancial posting document
Does not correspond to a taskstep in a document; instead, it isused to reflect a documentgenerated by a task step; thisshape does not have any outgoingflow lines
Budget Planning: Indicates abudget planning document
Does not correspond to a taskstep in a document; instead, it isused to reflect a documentgenerated by a task step; thisshape does not have any outgoingflow lines
Manual Process: Covers a taskthat is manually done
Does not generally correspond toa task step in a document;instead, it is used to reflect a taskthat is manually performed, suchas unloading a truck in thewarehouse, which affects theprocess flow.
Existing Version / Data: This blockcovers data that feeds in from anexternal process
Does not generally correspond toa task step in a document;instead, this shape reflects datacoming from an external source;this step does not have anyincoming flow lines
System Pass / Fail Decision: Thisblock covers an automaticdecision made by the software
Does not generally correspond toa task step in the document;instead it is used to reflect anautomatic decision by the systemthat is made after a step has beenexecuted.
E x t e r n a l
t o S A P
BusinessActivity / Event
Unit Process
ProcessReference
Sub-Process
Reference
ProcessDecision
DiagramConnection
Hardcopy /Document
FinancialActuals
BudgetPlanning
ManualProcess
ExistingVersion /
Data
SystemPass/FailDecision
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 ina scenario process ora non-step event
Business Activity / Event: Identifies an action thateither leads into or out of the scenario, or anoutside Process that happens during the scenario
Does not correspondto a task step in thedocument
Unit Process: Identifies a task that is covered in astep-by-step manner in the scenario
Corresponds to a taskstep in the document
Process Reference: If the scenario referencesanother scenario in total, put the scenario numberand name here.
Corresponds to a taskstep in the document
Sub-Process Reference: If the scenario referencesanother scenario in part, put the scenario number,name, and the step numbers from that scenariohere
Corresponds to a taskstep in the document
Process Decision: Identifies a decision / branchingpoint, signifying a choice to be made by the enduser. Lines represent different choices emergingfrom different parts of the diamond.
Does not usuallycorrespond to a taskstep in the document;Reflects a choice tobe made after stepexecution
< F u n c t i o n >
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Convert
Planned Order
Dependent
Reqmts
Reservations
Warehouse
Material Reqmts
Planning
Materials Requirement Planning - MRP
Planned Ind.
Requirements
Production
Order
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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 f lexibly 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
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Work Center
Work Center: Assembly
Routings CostingScheduling
& Capacity
1010,-
2150,-
3160,-
Default values
Routings
Costing Data Sched. Data
Capacity Data
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Routing Work Center / Operation
Routing Header
Operation 10:
Final Assembly
Material Components
Work centerControl key
Standard values
Activity types
Description
....
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Individual Conversion
Individual Conversion
Planned
orders
Production
orders
Collective Conversion
Collective Conversion
Planned Order Conversion
Production
order
Planned
orders
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Specify order type
Define order item
Copy routing
Lead time scheduling
Copy bill of material
Optional changes
Save production order
FridayJanuary28 2011
TuesdayJuly12 2011
Requirements planningManually
Availability check
Automatically
Optional (Customizing)
Production Order Creation
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Order proposal
(planned order)
Order creation
Availability
check
Order release and
batch determination
for components
Order settlement Order header
Operations
Components
Costs 20
50
100
Material withdrawal
Goods receipt
Production Order Processing
Production Order
Confirmations
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Material
Goods movement
Material
document
Accountingdocument
Warehouse
Operation
Mat. comp.
Prod. order
Costs
Update of stock quantities Update of stock values materials can be batch controlled
Goods Movement
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Goods issueposting
Materialdocument
Acctg.document
Goods Issue
Updating stock quantities Updating stock values Reducing reservations Calculating actual costs and up-
dating the order
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Order confirmation ...
Manual entry
Production Order Confirmations
Production
order
Operation 0010
Operation 0020
Operation 0030
Operation . . . .
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l Costing variant
Display planned/actual costs
l Cost elementsl Cost itemizationl Cost component split
Planned costs Planned costs
Material costs
Costs for external
procurement
Production costs
Material overheadcosts
Production overheadcosts
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 calculationlog
l Ind. "Rel. to costing"
l Price
Material Material components components
Order Order type type / Plant / Plant
Production Order - Preliminary Costing
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Production order cost
Overhead calculations
- Work center
- Standard value
- Quantities
- Cost center
- Activity types
- Formulas
- Activity types
Operation
Internal activities costsMaterial costs
Cost of Production Order
- Quantities
- Prices
Work center Cost centerMaterialcomponents
- Periods
Activity cost
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OrderStatus
Pre-Released or Released Partially DeliveredFinally 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
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Material
600
Product cost planning
Lotsize 1 PCCO-PC
Production OrderMat. F126
8001.200
4002.400
-2.000
400
MaterialProduction
Surcharge
GR
Variances
Actual Cost
CO-PC
Material Master
Standard Price = 2000
Target Version 0
Price 150Qty 150
Structure 100Scrap 0Lotsize 0
Production
1100
Surcharge
300
Warehouse Price difference
Financial Accounting
2000 400
SettlementFI
CO-
PA
Settlement of Order (Example)
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