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Make-to-Stock Production – Discrete Industry SAP Best Practices Baseline Package SAP Best Practices.

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Presentation on theme: "Make-to-Stock Production – Discrete Industry SAP Best Practices Baseline Package SAP Best Practices."— Presentation transcript:

1 Make-to-Stock Production – Discrete Industry SAP Best Practices Baseline Package SAP Best Practices

2 Scenario Overview – 1 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 Purpose and Benefits:

3 Scenario Overview – 2 Required SAP enhancement package 4 for SAP ERP 6.0 Company roles involved in process flows Production Planner Production Supervisor Shop Floor Specialist Warehouse Clerk Strategic Planner Engineering Specialist SAP Applications Required:

4 Scenario Overview – 3 Make-to-Stock Production – Discrete Industry This scenario describes a business process, which is typical for companies with lot size oriented production. The production scenarios consist of both goods movements (goods issues and receipts) and confirmation of completion of the production order. Furthermore, the scenario is supported by the main cost object controlling functions required, such as preliminary costing and period-end closing. The typical planning process starts with sales quantity planning. The previous period’s actual sales figures can be used as a basis for future planning. In Sales and Operations Planning, you ensure that production stays in line with sales so that you may create the production plan synchronously to sales. The planning data is transferred from Sales and Operations Planning to Demand Management. Demand Management generates independent requirements, which are used in the subsequent Material Requirements Planning (MRP) run. In material requirements planning, the bill of materials (BOM) for the top-level material demand gets exploded and production is planned right down to procured component level. MRP results in planned orders being generated for the material to be produced. If insufficient warehouse stock is available, purchase requisitions are created for the raw materials required. When the order is created, target costs are calculated for the order lot size (preliminary costing). During the production process, costs incurred are updated on the order, which enables you to keep track of and compare target costs and actual costs at any time. Period-end-closing activities are applied to the order. This includes Work In Progress calculation and variance calculation. After this, Work in Progress is settled to financial accounting and production variances are settled to management and financial accounting. Detailed Process Description:

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

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

7 Legend SymbolDescriptionUsage Comments Band: Identifies a user role, such as Accounts Payable Clerk or Sales Representative. This band can also identify an organization unit or group, rather than a specific role. The other process flow symbols in this table go into these rows. You have as many rows as required to cover all of the roles in the scenario. Role band contains tasks common to that role. External Events: Contains events that start or end the scenario, or influence the course of events in the scenario. Flow line (solid): Line indicates the normal sequence of steps and direction of flow in the scenario. Flow line (dashed): Line indicates flow to infrequently- used or conditional tasks in a scenario. Line can also lead to documents involved in the process flow. Connects two tasks in a scenario process or a non-step event Business Activity / Event: Identifies an action that either leads into or out of the scenario, or an outside Process that happens during the scenario Does not correspond to a task step in the document Unit Process: Identifies a task that is covered in a step-by-step manner in the scenario Corresponds to a task step in the document Process Reference: If the scenario references another scenario in total, put the scenario number and name here. Corresponds to a task step in the document Sub-Process Reference: If the scenario references another scenario in part, put the scenario number, name, and the step numbers from that scenario here Corresponds to a task step in the document Process Decision: Identifies a decision / branching point, signifying a choice to be made by the end user. Lines represent different choices emerging from different parts of the diamond. Does not usually correspond to a task step in the document; Reflects a choice to be made after step execution SymbolDescriptionUsage Comments To next / From last Diagram: Leads to the next / previous page of the Diagram Flow chart continues on the next / previous page Hardcopy / Document: Identifies a printed document, report, or form Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow lines Financial Actuals: Indicates a financial posting document Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow lines Budget Planning: Indicates a budget planning document Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow lines Manual Process: Covers a task that is manually done Does not generally correspond to a task step in a document; instead, it is used to reflect a task that is manually performed, such as unloading a truck in the warehouse, which affects the process flow. Existing Version / Data: This block covers data that feeds in from an external process Does not generally correspond to a task step in a document; instead, this shape reflects data coming from an external source; this step does not have any incoming flow lines System Pass / Fail Decision: This block covers an automatic decision made by the software Does not generally correspond to a task step in the document; instead it is used to reflect an automatic decision by the system that is made after a step has been executed. External to SAP Business Activity / Event Unit Process Process Reference Sub- Process Reference Proces s Decisio n Diagram Connection Hardcopy / Document Financial Actuals Budget Planning Manual Proces s Existing Version / Data System Pass/F ail Decisio n

8 Convert Planned Order Dependent Reqmts Reservations Warehouse Material Reqmts Planning Materials Requirement Planning - MRP Planned Ind. Requirements Production Order

9 Alternative Planning Strategies for Finished Product StrategyNet Requirements Planning (10) Planning with Final Assembly (40) Customer requirements passed on to production NoYes This means sales orders do not influence production... sales orders that exceed planned independent requirements can influence production... the main objective is to ensure smooth production... the most important factor here is the ability to react flexibly to customer demand Planned independent requirements allocated and reduced during sales order processing NoYes Planned independent requirements reduced at goods issue for delivery YesNo

10 Work Center Work Center: Assembly Routings Costing Scheduling & Capacity 1010,- 2150,- 3160,- Default values Routings Costing Data Sched. Data Capacity Data

11 Routing Work Center / Operation Routing Header Operation 10: Final Assembly Material Components Work center Control key Standard values Activity types Description....

12 Individual Conversion Planned orders Production orders Collective Conversion Planned Order Conversion Production order Planned orders

13 Specify order type Define order item Copy routing Lead time scheduling Copy bill of material Optional changes Save production order Friday January Tuesday July Requirements planning ManuallyManually Availability check AutomaticallyAutomatically Optional (Customizing) Production Order Creation

14 Order proposal (planned order) Order creation Availability check Order release and batch determination for components Order settlement Order header Operations Components Costs Material withdrawal Goods receipt Production Order Processing Production Order Confirmations

15 Material Goods movement Material document Accounting document Warehouse Operation Mat. comp. Prod. order Costs  Update of stock quantities  Update of stock values  materials can be batch controlled Goods Movement

16 Goods issue posting Material document Acctg. document  Updating stock quantities  Updating stock values  Reducing reservations  Calculating actual costs and up- dating the order Goods Issue

17 Order confirmation Manual entry Production Order Confirmations Production order Operation 0010 Operation 0020 Operation 0030 Operation....

18 Costing variant Display planned/actual costs Cost elements Cost itemization Cost component split Planned costs Material costs Costs for external procurement Production costs Material overhead costs Production overhead costs Costs for external processing Cost elements : : Phases Gen. operation values Standard values Control key “costing indicator” Resources Formula key for costing Cost center Activity type Formula constants Cost calculation log Ind. "Rel. to costing" Price Material components Order type / Plant Production Order - Preliminary Costing

19 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 centerCost center Material components - Periods Activity cost

20 Order Status Pre-Released or ReleasedPartially DeliveredFinally Delivered or Technically Completed Variances Delivery Value Actual Costs WIP at Actual Costs = WIP at Actual Costs = - Delivery Value = - PREL REL PDLV DLV TECO WIP and Variance Calculation in Lot-Based Cost Object Controlling Actual Costs

21 Material 600 Product cost planning Lotsize 1 PC CO-PC Production Order Mat. F Material Production Surcharge GR Variances Actual Cost CO- PC Material Master Standard Price = 2000 Target Version 0 Price 150 Qty 150 Structure 100 Scrap 0 Lotsize 0 Production 1100 Surcharge 300 WarehousePrice difference Financial Accounting Settlement FI CO- PA Settlement of Order (Example)

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