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Scenario Overview – 1 Purpose and Benefits: Purpose Benefits

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Presentation on theme: "Scenario Overview – 1 Purpose and Benefits: Purpose Benefits"— Presentation transcript:

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

2 Scenario Overview – 1 Purpose and Benefits: Purpose Benefits
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

3 Scenario Overview – 2 SAP Applications Required: 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

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

5 Process Flow Diagram Make-to-Stock Production – Discrete Industry
Event Beginning of Planning Cycle Periodic Plan Revision Strategic Planner Creating Planned Independent Requirements Logistics Planning (144) Production Planner Material Requirements Planning at Plant Level & Evaluation of Stock / Requirement List Capacity Leveling O.k.? Update Capacity No 1 Yes MRP List Convert Planned Order to Production Order Material Available? Capacity Leveling Release Production Order Order Print Purchase Requisition Planned Orders Yes Manufacturing No 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)

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

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

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

9 Alternative Planning Strategies for Finished Product
Strategy Net Requirements Planning (10) Planning with Final Assembly (40) Customer requirements passed on to production No Yes This means . . . ... sales orders do not influence production ... sales orders that exceed planned independent requirements can influence production ... the main objective is to ensure smooth production ... the most important factor here is the ability to react flexibly to customer demand Planned independent requirements allocated and reduced during sales order processing Planned independent requirements reduced at goods issue for delivery

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

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

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

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

14 Production Order Processing
Order proposal (planned order) Order settlement Production Order Order header Operations Order creation Goods receipt Components Availability check Confirmations Costs 20 50 100 Order release and batch determination for components Material withdrawal

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

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

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

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

19 Cost of Production Order
Material components Operation Work center Cost center - Work center - Standard value - Quantities - Cost center - Activity types - Formulas - Activity types - Quantities - Prices Activity cost - Periods Material costs Internal activities costs Overhead calculations Production order cost

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

21 Settlement of Order (Example)
CO- PC Production Order Mat. F126 Product cost planning Lotsize 1 PC 800 1.200 400 2.400 -2.000 CO- PC Actual Cost Material 600 Material Production Surcharge GR Variances Surcharge 300 Target Version 0 Price Qty Structure Scrap Lotsize Production 1100 Material Master Standard Price = 2000 FI Settlement CO- PA Financial Accounting Warehouse Price difference 2000 400

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