2Organizational Elements The SAP PP business processes uses the following organizational elements:ClientCompany CodePlantStorage LocationSIPC E-Business Project Phase I (Financial Accounting Level I training)
3Organizational Elements ClientA Highest Hierarchical Level in SAP (e.g. a corporation)Used to Differentiate between a Development, Quality Assurance, and Production System within SAP R/3Common Set of RulesCommon TablesCommon Master FilesCommon Data BasesStandardized data across the clientA vendor number and name is common across the clientA customer is common across the clientA material number and description is common across the clientSIPC E-Business Project Phase I (Financial Accounting Level I training)
4= Organizational Elements Company CodeA 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=AssetsLiabilitiesRevenues- ExpensesProfit/LossSIPC E-Business Project Phase I (Financial Accounting Level I training)
5Organizational Elements PlantUsually a manufacturing facility, a warehouse, or a location that stocks , manages, and valuates inventoryMay be a physical site with multiple manufacturing/production linesMay be multiple manufacturing/production lines at one physical siteCan 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 codePurchasing organization are assigned to plants.SIPC E-Business Project Phase I (Financial Accounting Level I training)
6Organizational Elements Storage LocationsA storage location is the place where stock is physically kept within a plantA 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)
8Master DataList of Master Data in SAP PP Module are:Material MasterBills Of MaterialWork CentersRoutingsSIPC E-Business Project Phase I (Financial Accounting Level I training)
9Master Data Material Master SIPC E-Business Project Phase I (Financial Accounting Level I training)9
10Material Master4/6/2017The 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 schedulingThe 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 PlanningSince 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.
11Material MasterMaterial 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.
12Material MasterSince 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.
14Material Master4/6/2017Some 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.
15Material Master4/6/2017When 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.
16Material Master4/6/2017You 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.
17Material Master4/6/2017Like 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.
18Material Master4/6/2017The 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.
19Material Master – Units of Measure 4/6/2017Base unit: Piece16724Crate(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.
20Material Master4/6/2017Once 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.
21Material MasterBasic 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.
22Master Data Bills Of Material SIPC E-Business Project Phase I (Financial Accounting Level I training)
65Material AllocationOn 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.
66PRT AssignmentsYou can assign production resources/tools (PRTs) to each operation.The PRT must be identified by a material master or a PRT master.
67Sequences in RoutingAlternative 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.
68Parallel SequencesParallel 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.
69Scheduling in PPThe 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.
70Scheduling The two order float times serve different purposes. Float before production - date shift, capacity planningFloat after production - dealing with malfunctionsThe 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 timeMove time is defined at the from (previous) operation but added to the next operation’s earliest start date
71Sub 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.
72SchedulingThe 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.
73Production Planning Demand Management Material Requirement Planning Planning of Purchased partsPlanning of in house assembliesIBM Confidential
74Planning Process: Process flow Central marketing officeDemand (Weekly)Dispatch planDemand planning cellProduction Requirement (Week wise, Model wise)Planned Prod.PPCMRP RunConfirmedVendorSchedulePlanned Vendor ScheduleVendorWeb siteProductionDispatch sheetConfirmed ProductionThird Party LogIBM Confidential
75Planning Process: Strategies While doing planning, you need to decide which planning strategy to use when the customer places their order.Make-to-Stock ProductionMake-to-stock production means we build stock in anticipation of customer demand. We ship the customer order from our stock of finished goodsMake-to-order ProductionWe wait for a customer order before we start production/procurement. i.e. We produce as per demand from customerIBM Confidential
76Consolidation of Demand Central Marketing office Planning process: Demand PlanningDealerDealerDealerDealerDealerDealerTerritory officeTerritory officeArea OfficeArea OfficeArea OfficeArea OfficeZonalConsolidation of DemandCentral Marketing officePPCIBM Confidential
77Planning 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 planIBM Confidential
78Materials 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.
86Net 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 periodwhether the BOM has to be re-exploded
87Planning 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.
88Planning 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.
100Net 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.
102Safety 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.
103Safety 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.
104Safety 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).
105Lot 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 sizeyou can specify that the system is to round up/down the lot size according to a preset rounding value
106Lot Sizing - OverviewWhen maintaining the material master record, you can define a minimum and a maximum lot size which the system uses when calculating lot sizes.
107Static 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.
108Period 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.
109Optimum 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.
113Layout 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.
114Stock 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.
115MRP 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.
118Rescheduling 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.
119Old / 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.
120Planned 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.
129Scheduling 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.
130Scheduling - 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.
131Scheduling - 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.
132Planning Process IBM Confidential Supply Plant Stock Demand Planning ParametersMRPOrderProposalExternalProcurementIn-HouseProductionIBM Confidential
140Logistics 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.BenefitsSeamless Integration in complete planning cycleCO-PA SOP LTP Demand PlanningKey process flows coveredSales and Operation PlanningLong Term Planning
141Logistics 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 demandAggregated 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 LTPReview and adjustments of planned requirements as neededOnce 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.
142Logistics Planning – Process Flow Diagram EventOperational Production Planning & Control(Production scenarios)Periodic Sales and Operations MeetingRevenue PlannerSales Qty Budget and Transfer to SOP (with CO-PA), Revenue Planning (172)Sales Quantity forecast (179)Strategic PlannerSOP Verification Demand Verification (Check Sales Plan)Create Rough-Cut Production PlanTransfer Rough Cut Production Plan to Inactive Demand ManagementCreate LTP Planning ScenarioExecute LTP MRPEvaluate Capacity PlanningOperative Production DataNoAcceptable PlanCopy to Active Demand ManagementYesCO-PA = Profitability Analysis, SOP = Sales and Operations Planning, LTP = Long Term Planning, MRP = Material Requirements Planning
143Make-To-Stock Production with Discrete Manufacturing Purpose and Benefits:PurposeThis 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.BenefitsProduction triggered by a production planSerial number and batch management includedOptional with: quality management, consigned inventory, external processingKey process flows coveredCreating Planned Independent RequirementsMaterial Requirements Planning at Plant LevelIn-House Production (subassembly)In-House final assembly (Finished Good)Capacity LevelingConfirming Assembly Activities
144Make-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.
145Make-to-Stock Production – Discrete Industry – Process Flow Diagram EventBeginning of Planning CyclePeriodic Plan RevisionStrategic PlannerCreating Planned Independent RequirementsLogistics Planning (144)Production PlannerNoMaterial Requirements Planning at Plant Level & Evaluation of Stock / Requirement ListCapacity Leveling O.k.?Update Capacity1YesMRP ListConvertPlanned Order to Production OrderMaterial Available?YesCapacity LevelingRelease Production OrderOrder PrintPurchase RequisitionPlanned OrdersNoManufacturingPick ListMaterial Staging for Planned OrdersConfirming Assembly Activities/ Final ConfirmationSemi-Finished Goods ReceiptStandard. CostInventory Standard. CostGoods Issue/ Back flushGoods Receipt SlipWare-house ClerkGoods Receipt SlipFinished Goods ReceiptPlant ControllerPeriod End Closing “General” Plant(181)BuyerProcurement 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)
146Make-to-Stock Production – Discrete Industry – Process Flow Diagram EventProduction SupervisorReview Operation List1
147Production Subcontracting (External Processing) Purpose and Benefits:PurposeDuring 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.BenefitsAn outline agreement can specify that a certain operation of the production order is executed by an external subcontractor on a regular basisIn the case of capacity bottlenecks, the assembly procedure of the finished product can be assigned to a subcontractorKey process flows coveredCreating Purchase Order for External ProcessingGoods Receipt for “subcontracting” Purchase OrderEnter InvoicePeriodic Payment
148Production 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).
149Production Subcontracting (External Processing) – Process Flow Diagram VendorVendor Receives Material and Performs External ServicesPerform External ServicesShip External Material Back to PlantIncoming Vendor InvoiceEventProduction Order Generates Purchase Requisition for External ServicesCompletion Confirmation of Production OrderProduction SupervisorCheck Order OperationsPurchaserCreate PO from Purchase Req (Vendor assigned by Info record)Print Purchase OrderWarehouse ClerkShip Material to VendorSubcontract Services GR/IRGoods Receipt for Subcontracting PODeliver Material Back to Shop FloorAccounts Payable AccountantPeriodic Payment:Accounts Payable (158)GR/IR PPV VendorInvoice ReceiptPP = Production Planning, RFQ = Request for Quotation, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price Variance
150Rework Processing (Work-In-Process) Purpose and Benefits:PurposeProcessing of defective material on a production order.BenefitsScraps at defined operation automatically trigger rework process.After rework, additional activity and material consumption can be confirmed.Fully integrated in the production processKey process flows coveredConfirming Production ActivitiesConfirm Scrap defective materialConfirm Parent Order at Rework OperationContinue Shop floor-Activities
151Rework 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.
152Rework Processing (Work-in-Process) – Process Flow Diagram EventConfirming Production ActivitiesEnd ProcessShop Floor SpecialistConfirm Scrap Defective MaterialConfirm Parent Production Order for Reworked Quantity That Can Proceed to Subsequent OperationsContinue Shop-Floor-Activities for Non-Defective-QuantityNoAny Complaint Quantity to Be Scrapped?Insert Rework Operation on Parent Production Order AutomaticallyConfirm Parent Production Order at Rework Operation for Non-Defective QuantityScrap Defective Quantity that Can’t Be ReworkedYes
153Rework Processing (Stock-Manufactured Material) Purpose and Benefits:PurposeThis process covers the rework of defective manufactured materials that are found in the warehouse.BenefitsTransparent costs for rework activitiesUse of all standard shop-floor control functionalities is possibleKey process flows coveredCreate rework production orderGoods issue for defective materialConfirmation of rework production activitiesPosting goods receipt for rework production order
154Rework 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.
155Rework Processing (Stock-Manufactured Material) – Process Flow Diagram EventIdentified Component in Stock Requires ChangesEnd ProcessProduction PlannerCreate Rework Production OrderRelease Rework Production OrderShop floor SpecialistConfirmation of Rework Production ActivitiesWarehouse ClerkGoods Issue for defective MaterialPosting Goods Receipt for Rework Production OrderProduction SupervisorReview Order Confirmations