Module : PP (Production Planning)

Module : PP (Production Planning)

Organizational Elements
The SAP PP business processes uses the following organizational elements: Client Company Code Plant Storage Location SIPC E-Business Project Phase I (Financial Accounting Level I training)

Client A Highest Hierarchical Level in SAP (e.g. a corporation) Used to Differentiate between a Development, Quality Assurance, and Production System within SAP R/3 Common Set of Rules Common Tables Common Master Files Common Data Bases Standardized data across the client A vendor number and name is common across the client A customer is common across the client A material number and description is common across the client SIPC E-Business Project Phase I (Financial Accounting Level I training)

= Organizational Elements
Company Code A company code represents an independent balancing/legal accounting entity, for example, a company within a corporate group. Balance sheets and profit & loss statements, required by law, can be created at the company code level. Company Code **** BALANCING / (LEGAL) ENTITY = Assets Liabilities Revenues - Expenses Profit/Loss SIPC E-Business Project Phase I (Financial Accounting Level I training)

Plant Usually a manufacturing facility, a warehouse, or a location that stocks , manages, and valuates inventory May be a physical site with multiple manufacturing/production lines May be multiple manufacturing/production lines at one physical site Can be a physical location (cost centers may or may not be associated to a plant i.e. Administrative vs. Manufacturing cost centers) Links to production (PP), materials management (MM), and sales and distribution (SD) A plant is assigned to a company code Purchasing organization are assigned to plants. SIPC E-Business Project Phase I (Financial Accounting Level I training)

Storage Locations A storage location is the place where stock is physically kept within a plant A storage location has the following attributes: There may be one or more storage locations within a plant. Stocks are managed only on a quantity basis and not on a value basis at storage location level. Physical inventories are carried out at storage location level. Storage locations are always created for a plant. SIPC E-Business Project Phase I (Financial Accounting Level I training)

Master Data List of Master Data in SAP PP Module are: Material Master Bills Of Material Work Centers Routings SIPC E-Business Project Phase I (Financial Accounting Level I training)

Master Data Material Master
SIPC E-Business Project Phase I (Financial Accounting Level I training) 9

Material Master 4/6/2017 The material master is the central master record for logistics. For example, data for sales, production and procurement are stored in the same master record but can be related to differnt organizational units. The general data is valid for all clients (groups of companies). The description can be entered in as many languages as you wish. The sales-specific data can be entered dependent on sales organization and distribution channel. Most of the data relevant for purchasing and inventory management are related to a plant. For the Warehouse Management system, data can be entered by warehouse number as well as by storage type of a warehouse number. In Production Planning and Control for material requirements planning, scheduling, and work scheduling The material master record is a company's main source of material-specific data. It is used by all components in the SAP Logistics System. The integration of all material data in a single database object prevents the problem of data redundancy. Every area, such as Purchasing, Inventory Management, Materials Planning, and Invoice Verification can use the data stored. The data contained in the material master record is required for many functions within the R/3 Logistics System, for example: Purchasing data for ordering Inventory management data for posting goods movements and managing physical inventory Accounting data for material valuation MRP data for Material Requirements Planning Since materials are processed by various user departments within a company and each department stores different information for the materials, the material master is subdivided into information grouped by user departments. Each user department has a different view of the material master record and is responsible for maintaining the data to support its function. The data maintained within a view may be valid for more than one organizational level.

Material Master Material master record is a company's main source of material-specific data. It is used by all components in the R/3 Logistics System. The integration of all material data in a single database object prevents the problem of data redundancy. Every area, such as Purchasing, Inventory Management, Materials Planning, and Invoice Verification can use the data stored.

Material Master Since materials are processed by various user departments within a company and each department stores different information for the materials, the material master is subdivided into information grouped by user departments. Each user department has a different view of the material master record and is responsible for maintaining the data to support its function. The data maintained within a view may be valid for more than one organizational level.

Material Master

Material Master 4/6/2017 Some material data is valid for all organizational levels, while some is only valid for certain levels. The material master is designed to reflect the structure of your enterprise so that you can manage the material data in your enterprise centrally, without overloading your datasets with redundant information. Data at client level: General material data that is valid for the whole company is stored at client level. Data at plant level: All data that is valid within a plant, and for all storage locations in it, is stored at plant level. Data at storage location level: All data that is valid for a particular storage location is stored at storage location level.

Material Master 4/6/2017 When editing material master data, you go through a number of screens. From the initial screen, you go to two successive dialog boxes. In the first dialog box, you specify the views you want to process. In the second, you specify the relevant organizational levels. You then go to the data screens. You can change the standard screen sequence by changing the default values. Some screens are not integrated in the standard screen sequence. You can only access these screens by specifically choosing them from the menu bar.

Material Master 4/6/2017 You can assign materials with the same characteristics to the same material type. Material types include raw materials, semi-finished products, and finished products, for example. The material type controls: The type of number assignment (internal or external). The permitted number range interval. Which screens are displayed and in which order. Which user-department-specific data (view) is suggested for entry. Which procurement type is permitted for a material; that is, whether the material is produced in-house, procured externally, or whether both options are allowed. Along with the plant, the material type determines a material's inventory management requirement; that is, whether the system updates quantity changes in the material master record or updates changes in value in the stock accounts in Financial Accounting. The material type also determines which accounts are posted when a material is posted to stock or leaves the warehouse. Various material types are provided in the standard SAP R/3 System. If your company needs additional material types, you can define these in Customizing according to your requirements.

Material Master 4/6/2017 Like the material type, the industry sector has a control function in the R/3 System.When you create a material master record, the industry sector defines: Which screens are displayed and in which order Which industry-specific fields are displayed on each screen The industry sector you assign to a material cannot be changed later. In Customizing, you can define new industry sectors and maintain the field reference for field selection control according to your company-specific requirements.

Material Master 4/6/2017 The data screens used in processing material master records can be subdivided into the following types of screens: Main work level These are the screens for each user-department, such as basic data, materials planning, and so on. Additional data level These are screens you use to maintain additional information, such as units of measure, material descriptions, consumption values, and forecasting data. Most data in the material master record can be maintained directly by the user. But some information is automatically updated by the system. When you enter goods movements, for example, the system updates the stock and consumption data. Via the Information on material icon, you can call up statistical information (for example, the date on which the data was first created and when it was last changed). Some data in the material master is only used for information purposes (for example, description, size, and dimensions). Other types of material data have a controlling function in an application. For example, the MRP type controls the MRP procedure, and the price control indicator determines which material valuation procedure is used.

Material Master – Units of Measure
4/6/2017 Base unit: Piece 16 72 4 Crate (order unit) Pallet (sales unit) Box (unit of issue) Base unit of measure: Unit in which stocks are managed. All quantities which you enter in other units of measure are converted into the base unit. For units of measure which cannot be converted on a standard basis, a conversion factor must be specified during material master record maintenance. Order unit (purchasing): Unit of measure in which the material is ordered. It is defaulted, and can be changed as desired, in purchasing functions. Sales unit: Unit in which the material is sold. It is defaulted, and can be changed, in the sales order. Unit of issue: Unit of measure in which the material is issued from the warehouse or stores. Goods issue and physical inventory transactions can be entered in this unit.

Material Master 4/6/2017 Once a department has created data for a material, a material master record is created for it in the database. If someone from another department then wants to enter data, he or she has to extend (add) the information from his or her department. The system also extends a material master record when data for a material is saved for other organizational levels. You can add the missing views or organizational levels to the material master by choosing the transaction Create material master record.. You can only change the data for views and organizational levels that have already been maintained by choosing the transaction Change material master. Any changes (creation or change) you make to data in the material master record are saved in a change document. This means that you can check the change history at any time. You can also activate engineering change management for materials.

Material Master Basic data view consists of common material information which can be used by all business functions and processes. The units of measure, dimensions, and configurable material indicator are used in BOMs and routings. Classification data is part of the general material data. The characteristic values are used to find a group of materials sharing an attribute. MRP data is plant-specific. The material status, backflush indicator, assembly scrap, and component scrap values are used in BOMs and routings. Work scheduling data is plant-specific. The issue/base units of measure are used in BOMs and routings. The lot size-dependent in-house production time in the work scheduling view can be updated from the material's routing data.

Master Data Bills Of Material
SIPC E-Business Project Phase I (Financial Accounting Level I training)

Bills Of Material

Master Data Work Centers
SIPC E-Business Project Phase I (Financial Accounting Level I training)

Work Center

Master Data Routings SIPC E-Business Project Phase I (Financial Accounting Level I training)

Routing

Routings - Components

Routing - Components

Routings

Routing - Group

Material Allocation On the material component overview, you can display components and allocate them to individual operations. The material component list can be sorted or filtered according to various criteria. You can use a routing to manufacture several products (materials). Other functions include: Reallocation and deletion of material allocations, navigation between operations if several were selected. You can maintain BOMs completely from within routing maintenance without leaving the operations you are editing.

PRT Assignments You can assign production resources/tools (PRTs) to each operation. The PRT must be identified by a material master or a PRT master.

Sequences in Routing Alternative sequences are linked to the standard sequence. The number of the start operation of the alternative sequence should not be less than in the standard sequence and the number of the last operation of the alternative sequence should not be greater than the number of the link operation in the main sequence. Branch operations in the standard sequence are ignored in the procedure.

Parallel Sequences Parallel sequences are a special type of overlapping of operations. Application: Mechanical engineering for assemblies with production of individual components. In the chemicals industry for analytical processes. An alignment key defines the start of the individual parallel sequences.

Scheduling in PP The two types of scheduling in production planning are used in different ways. Production orders are scheduled using lead time scheduling on operations. You can also use lead time scheduling to calculate capacity requirements for planned orders in material requirements planning. The production order always uses both pairs of dates (basic and target dates). The target dates are the dates relevant to production.

Scheduling The two order float times serve different purposes.
Float before production - date shift, capacity planning Float after production - dealing with malfunctions The order float can be predefined in Customizing and the material master (scheduling margin key). The duration of an operation consists of a maximum of five time elements: queue time setup time processing time teardown time process-related wait time Move time is defined at the from (previous) operation but added to the next operation’s earliest start date

Sub Operations in Routing
Sub-operations are arranged in a hierarchy under the operation. They are used to carry out more detailed costing and capacity planning. Here, the control key serves an important function. Scheduling always takes place at operation level. The standard values of the sub-operations can be cumulated to the appropriate operation according to the dimension and the unit of measure.

Scheduling The dates of the sub-operations are determined by the reference to the start or finish of an operation by entering an offset. The relevant reference date for a sub-operation may be before or after the operation segments setup, processing, teardown and wait. Note: If an operation is divided into sub-operations, the standard values for the operation are cumulated in the routing. If sub-operations are processed in parallel, the standard values should only be maintained in the operation.

Production Planning Demand Management Material Requirement Planning
Planning of Purchased parts Planning of in house assemblies IBM Confidential

Planning Process: Process flow
Central marketing office Demand (Weekly) Dispatch plan Demand planning cell Production Requirement (Week wise, Model wise) Planned Prod. PPC MRP Run Confirmed Vendor Schedule Planned Vendor Schedule Vendor Web site Production Dispatch sheet Confirmed Production Third Party Log IBM Confidential

Planning Process: Strategies
While doing planning, you need to decide which planning strategy to use when the customer places their order. Make-to-Stock Production Make-to-stock production means we build stock in anticipation of customer demand. We ship the customer order from our stock of finished goods Make-to-order Production We wait for a customer order before we start production/procurement. i.e. We produce as per demand from customer IBM Confidential

Consolidation of Demand Central Marketing office
Planning process: Demand Planning Dealer Dealer Dealer Dealer Dealer Dealer Territory office Territory office Area Office Area Office Area Office Area Office Zonal Consolidation of Demand Central Marketing office PPC IBM Confidential

Planning Process: Demand Management
Demand management is the link between top-level requirements planning (SOP) and materials planning (MRP). Input for the demand program can come from several sources: The sales plan or the production plan from SOP . A material forecast . Manual entry . Another program plan IBM Confidential

Materials Requirement Planning
In MRP, all existing requirements and receipts with quantities and dates are taken into account as well as stocks. Requirements such as sales orders, planned independent requirements, material reservations and dependent requirements are used as the basis of the planning run. The existing receipt elements such as planned orders or production orders, purchase requisitions, purchase orders, schedule lines and so on are compared with the requirements.

MRP Overview

Uses of MRP

MRP Functions

MRP Prerequisites

Planning Run

Planning Run - Types

MRP - Control Parameters

Net Change Planning In net change planning, the system only plans materials with the appropriate indicator. The planning file entry contains the following information: the low-level code of the material whether the change refers to an element within the planning period whether the BOM has to be re-exploded

Planning in Planning Horizon
To improve the performance of the planning run, you can limit the planning horizon. This means that the system will only create receipt elements for the requirements that lie in the planning horizon. Note that as time passes, requirements that are not yet covered by receipts may move into the planning time fence. If no other changes relevant to planning occur, these requirements will not be covered until you carry out a planning run over the total time axis using the control indicator NETCH. Therefore, you should carry out this planning run at regular intervals.

Planning Run - Single Item
In the single-item, multi-level planning run, the materials planned using MRP techniques are planned according to the structure of the bill of materials. The MRP controller can view the planning results of assemblies or components during the multi-level planning run and can make manual changes before the system continues the planning run. In the single-item, single-level planning run, dependent requirements are created for materials in the next lower BOM level. The planning results of the single-item, single and multi-level planning runs can be processed interactively. The MRP controller can create, change, delete and reschedule order proposals.

Single-item, Multi-Level Planning

Single-Level MRP

Multi-Level MRP

Total Planning

MRP Procedure

MRP Control Parameters

Net Requirements Calculation
A comparison of firmed receipts and requirements takes place along the time axis. If a material shortage occurs, the system calculates a net requirement. The lot-size calculation is carried out on the basis of the net requirements.

Requirement Quantities

Safety Stock You can define the available part of the safety stock in the MRP group. A new order proposal is not created until stock levels have fallen below the available portion of the safety stock. This order proposal replenishes stock (at least) back up to the safety stock level. Advantage: no order proposals are created for very small material shortages. This reduces the administrative effort and planning is more stable.

Safety Time The safety time is used to avoid material shortages caused, for example, by an unreliable vendor. The order proposals are brought forward by the number of workdays specified in the safety time. The safety time is defined in the material master record.

Safety Time in Production
If a safety time has been defined at finished product level and also at assembly level, these two times are added together when planning the assemblies. This may not be necessary. Therefore, you can define per material whether the safety time is valid for all independent requirements or only for certain independent requirements (such as sales orders).

Lot Size Calculation The net requirements are used in the lot-size calculation to determine the quantities of the individual order proposals. For period or optimum lot-sizing procedures, several net requirements are grouped together into one lot. Moreover, you also have the option of restricting the lot size as follows: you can define a maximum lot size or a minimum lot size you can specify that the system is to round up/down the lot size according to a preset rounding value

Lot Sizing - Overview When maintaining the material master record, you can define a minimum and a maximum lot size which the system uses when calculating lot sizes.

Static Lot Sizing In the static lot-sizing procedure, future material shortages are not taken into account, that is, when a material shortage occurs, the system simply creates an order proposal for the amount defined in the static lot size. No check is made to see when a future material shortage exists. In the lot-for-lot order quantity, the system creates an order proposal for the amount of the material shortage. If on a particular day, several issues cannot be covered, the system will still only create one order proposal for the total shortage quantity on this day. In the fixed order quantity, the system creates an order proposal for the quantity determined as the fixed lot size. If this quantity does not cover the complete requirement quantity, the system creates several order proposals for the same date. In replenishment up to maximum stock level, the system creates an order proposal for the quantity necessary to bring the stock level up to the maximum stock level.

Period Lot - Sizing Procedure
In the period lot-sizing procedures, all the requirements within a predefined period are grouped together into one lot. The resulting receipt can be set to the start of the period, the end of the period or to the date of the first requirement.

Optimum Lot Sizing Dynamic lot-sizing procedures optimize the total costs resulting from order and storage costs. On the basis of various costing criteria, the requirements are grouped together into a lot in such a way as to optimize the total costs.

Long Term Lot Sizing

Other Lot Sizing Features

Lot Size Rounding Profiles

Layout of MRP List The MRP list displays the results of the last planning run. Changes to the stocks, requirements or receipts cannot be seen until after the next planning run.

Stock Req. List - Layout The current stock/reqmts list displays the most up-to-date information on stocks, requirements and receipts. Changes to stocks, requirements or receipts can be seen immediately.

MRP List - Collective Display
The MRP controller can use the collective display of the MRP list to select materials specifically assigned to the controller. Using this display it is possible, for example, to only select materials with exceptional situations that have not yet been processed.

MRP List - Functions

Exception Messages

Rescheduling Checks The planning run will not automatically displace firmed receipts. Instead, if a firmed receipt should be rescheduled out, the system will create an exception message to this effect. Note that the system will only do this if the date to be rescheduled lies in the rescheduling horizon. Otherwise, no exception message will be created. Firmed receipts in the rescheduling horizon for which no requirements exist any more are flagged with a reversal proposal You can use the rescheduling period to avoid the system from using receipts that lie in the distant future to cover requirements in the near future. Within the rescheduling period, the system only searches for firmed receipts that can be brought forward. To reduce the number of exception messages, you can set tolerance values for rescheduling in and out. Then, the system will only create an exception message when the difference between the current date of the receipt and the rescheduling date exceeds the tolerance value.

Old / New Exception Message
In the planning run, the system compares the exception messages in the new MRP list with the exception messages in the old list. If one exception messages appears in both lists, it is indicated an ‘old’ exception message. In the collective list display, you can select lists with new exception messages only. In the individual display of the MRP list, you can search specifically for new or old exception messages.

Planned New Exception Message Order Conversion
In the collective conversion, the MRP controller can select the planned orders for the materials for which he is responsible and convert them collectively into production orders, process orders or purchase requisitions. The opening period is the interval between the opening date and the start date in the planned order. It represents the processing time required by the MRP controller to convert the planned orders. Therefore, for collective conversion, the system selects the planned orders using the opening date. It is also possible to select planned orders with opening dates in the past.

Material Supply for Production

Collective Display

Search in Individual List

Current List - Functions

Pegged Requirements

Order Report

Planning Time Fence

Scheduling in PP The two types of scheduling in production planning are used in different ways. Production orders are scheduled using lead time scheduling on operations. You can also use lead time scheduling to calculate capacity requirements for planned orders in material requirements planning. The production order always uses both pairs of dates (basic and target dates). The target dates are the dates relevant to production.

Scheduling - Basic Dates
Material Requirements Planning explodes a material’s BOM, generates planned orders for the components to be procured and calculates basic order dates. Basic order dates (planned dates) are calculated using the in-house production time or the planned delivery time in the material master. The in-house production time for a material can be calculated using lead time scheduling of a routing without an order and is then copied to the material master. The floats before and after production are defined using a scheduling margin key. The scheduling margin key is assigned in the material master.

Scheduling - Production Time
You maintain the in-house production time in the material master. To calculate basic dates correctly in requirements planning, it is very important that the in-house production time in the material master agrees with the results of lead time scheduling using a routing.

Planning Process IBM Confidential Supply Plant Stock Demand Planning
Parameters MRP Order Proposal External Procurement In-House Production IBM Confidential

Planning Process IBM Confidential

Production Execution Stock transfer to WIP location Order Execution
Production confirmation Error handling IBM Confidential

Planning Process IBM Confidential

Production Execution IBM Confidential Physical Movement
Storage Loc MAIN Storage Loc WIP IBM Confidential

Production Execution IBM Confidential Planned Order Availability Check
Convert Order BOM Production Routings Move Order floorstock Work Center Release Avail check Goods issue Production Confirmation Goods receipt TECO IBM Confidential

Best Practices 4/6/2017 Logistics Planning
Make-To-Stock Discrete Manufacturing Production Subcontracting (External Processing) Rework Processing (Stock-Manufactured Material) Rework Processing (Work-In-Process)

Logistics Planning Purpose and Benefits: Purpose Benefits
The purpose of logistics planning is to make sure that future demand can be satisfied by your company’s available resources and to point out situations where demand cannot be met in time or in the desired quantities. Benefits Seamless Integration in complete planning cycle CO-PA  SOP  LTP  Demand Planning Key process flows covered Sales and Operation Planning Long Term Planning

Logistics Planning Detailed Process Description:
This process sometimes is called ‘Sales and Operations Planning’. The process usually takes place in a simulative mode and at an aggregated (usually product group rather than end-item) level. Once a feasible production plan is found that satisfies demand it can be used as the basis for operational production planning (MRP and Detailed Capacity Scheduling). The Best Practice scenarios in this section cover the following planning workflow: Planning/forecasting of future demand Aggregated production planning including capacity check in order to check at product group level if demand can be satisfied (using the SOP functionality) Transfer of results to Long Term Planning (using the LTP module) to enable simulation of material requirements, based on the production plan (s) Planning takes place in separate (simulative) planning versions within LTP Review and adjustments of planned requirements as needed Once the simulated requirements are accepted, the demand (independent requirements) is then transferred to active demand management for detailed MRP and Production Planning / Scheduling in the active version.

Logistics Planning – Process Flow Diagram
Event Operational Production Planning & Control (Production scenarios) Periodic Sales and Operations Meeting Revenue Planner Sales Qty Budget and Transfer to SOP (with CO-PA), Revenue Planning (172) Sales Quantity forecast (179) Strategic Planner SOP Verification Demand Verification (Check Sales Plan) Create Rough-Cut Production Plan Transfer Rough Cut Production Plan to Inactive Demand Management Create LTP Planning Scenario Execute LTP MRP Evaluate Capacity Planning Operative Production Data No Acceptable Plan Copy to Active Demand Management Yes CO-PA = Profitability Analysis, SOP = Sales and Operations Planning, LTP = Long Term Planning, MRP = Material Requirements Planning

Make-To-Stock Production with Discrete Manufacturing
Purpose and Benefits: 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 flows covered 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

Make-To-Stock Production with Discrete Manufacturing
Detailed Process Description: 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.

Make-to-Stock Production – Discrete Industry – Process Flow Diagram
Event Beginning of Planning Cycle Periodic Plan Revision Strategic Planner Creating Planned Independent Requirements Logistics Planning (144) Production Planner No Material Requirements Planning at Plant Level & Evaluation of Stock / Requirement List Capacity Leveling O.k.? Update Capacity 1 Yes MRP List Convert Planned Order to Production Order Material Available? Yes Capacity Leveling Release Production Order Order Print Purchase Requisition Planned Orders No Manufacturing Pick List Material Staging for Planned Orders Confirming Assembly Activities / Final Confirmation Semi-Finished Goods Receipt Standard. Cost Inventory Standard. Cost Goods Issue/ Back flush Goods Receipt Slip Ware-house Clerk Goods Receipt Slip Finished Goods Receipt Plant Controller Period End Closing “General” Plant (181) Buyer Procurement w/o QM (130) Procurement of Stock Material with QM (127) Procurement & Consumption of Cosigned Inventory (139) MM Subcontracting (138) PP-Subcontracting (External Processing) (150)

Make-to-Stock Production – Discrete Industry – Process Flow Diagram
Event Production Supervisor Review Operation List 1

Production Subcontracting (External Processing)
Purpose and Benefits: Purpose During the Manufacturing process, when a "Planned Order" for Production is converted to a "Production Order", the system will check to see if there are any routing/work-center operations which require external processing. External processing is when you have individual production steps, that are operations or sub-operations, which are performed outside of your company by a vendor. This type of processing is particularly important for subcontracting. It can also provide a company with a feasible alternative to in-house processing, if capacity bottlenecks occur. Benefits An outline agreement can specify that a certain operation of the production order is executed by an external subcontractor on a regular basis In the case of capacity bottlenecks, the assembly procedure of the finished product can be assigned to a subcontractor Key process flows covered Creating Purchase Order for External Processing Goods Receipt for “subcontracting” Purchase Order Enter Invoice Periodic Payment

Production Subcontracting (External Processing)
Detailed Process Description: Production Subcontracting (External Processing) When a Production Order is scheduled, external operations need to be taken into account. The duration of an external operation is calculated either by using the planned delivery time or using the standard values. The system automatically creates a purchase requisition for the operation or sub-operation that requires external processing. The Production scheduler should inform the buyer they need to check the workload for requisitions that require external processing. When data is maintained for an external activity, a cost element is specified. The cost element determines how the external activity is to be valuated. A decision needs to be made as to whether an operation or sub-operation is processed externally via its control key. In the control key, it is determined whether externally processed operations are scheduled on the basis of their standard values or the planned delivery time. This information is needed to settle externally processed operations and sub-operations that have been marked as relevant for costing in their control keys. Purchasing should not convert the purchase requisition until the external processing is required. The reason for this is that any quantity changes on the production order will automatically update the requisition. Once the purchase order is created it is printed and sent to the vendor. The purchase order informs the vendor which service is required. The buyer/planner/scheduler creates a manual shipping document and provides the information to the shipping department on what components need to be gathered for the external processing and ships the components to the vendor. When the vendor has completed the external processing, the material is shipped back. The warehouse clerk receives the externally processed goods back into the warehouse. The vendor service is reflected on the production order via an operation confirmation. The purchase order and the production order show the quantity received. The goods receipt of an externally processed material causes the status of the operation to be updated: For a partial delivery of an external process operation, the status is: EOPD (External operation - partial delivery) and for final delivery of a external process operation the status is: EOFD (External operation - final delivery).

Production Subcontracting (External Processing) – Process Flow Diagram
Vendor Vendor Receives Material and Performs External Services Perform External Services Ship External Material Back to Plant Incoming Vendor Invoice Event Production Order Generates Purchase Requisition for External Services Completion Confirmation of Production Order Production Supervisor Check Order Operations Purchaser Create PO from Purchase Req (Vendor assigned by Info record) Print Purchase Order Warehouse Clerk Ship Material to Vendor Subcontract Services GR/IR Goods Receipt for Subcontracting PO Deliver Material Back to Shop Floor Accounts Payable Accountant Periodic Payment: Accounts Payable (158) GR/IR PPV Vendor Invoice Receipt PP = Production Planning, RFQ = Request for Quotation, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price Variance

Rework Processing (Work-In-Process)
Purpose and Benefits: Purpose Processing of defective material on a production order. Benefits Scraps at defined operation automatically trigger rework process. After rework, additional activity and material consumption can be confirmed. Fully integrated in the production process Key process flows covered Confirming Production Activities Confirm Scrap defective material Confirm Parent Order at Rework Operation Continue Shop floor-Activities

Rework Processing (Work-In-Process)
Detailed Process Description: This scenario focuses on a rework process within production. All required rework activities are related to the parent production order. For this reason, errors are recognized and corrections initiated such as insertion of a rework operation within the same production order. The additional rework operation is confirmed and settled within the original production order, causing production variances within controlling and price differences for the dedicated product.

Rework Processing (Work-in-Process) – Process Flow Diagram
Event Confirming Production Activities End Process Shop Floor Specialist Confirm Scrap Defective Material Confirm Parent Production Order for Reworked Quantity That Can Proceed to Subsequent Operations Continue Shop-Floor-Activities for Non-Defective-Quantity No Any Complaint Quantity to Be Scrapped? Insert Rework Operation on Parent Production Order Automatically Confirm Parent Production Order at Rework Operation for Non-Defective Quantity Scrap Defective Quantity that Can’t Be Reworked Yes

Rework Processing (Stock-Manufactured Material)
Purpose and Benefits: Purpose This process covers the rework of defective manufactured materials that are found in the warehouse. Benefits Transparent costs for rework activities Use of all standard shop-floor control functionalities is possible Key process flows covered Create rework production order Goods issue for defective material Confirmation of rework production activities Posting goods receipt for rework production order

Rework Processing (Stock-Manufactured Material)
Detailed Process Description: Rework Processing (Stock-Manufactured Material) For materials that can be reworked, a production order is created for correcting the defect. The costs associated with the rework production order will be settled to profitability as a material variance.

Rework Processing (Stock-Manufactured Material) – Process Flow Diagram
Event Identified Component in Stock Requires Changes End Process Production Planner Create Rework Production Order Release Rework Production Order Shop floor Specialist Confirmation of Rework Production Activities Warehouse Clerk Goods Issue for defective Material Posting Goods Receipt for Rework Production Order Production Supervisor Review Order Confirmations

Module : PP (Production Planning)

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Module : PP (Production Planning)

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Presentation on theme: "Module : PP (Production Planning)"— Presentation transcript:

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