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The Production Process

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1 The Production Process
Chapter 6 The Production Process Magal and Word | Integrated Business Processes with ERP Systems | © 2011

2 Learning Objectives Describe the master data associated with the production process. Identify the key steps in the production process and the data, documents, and information associated with each step. Effectively use SAP® ERP to execute the key steps in the production process. Effectively use SAP ERP to extract meaningful information about the production process. Magal and Word | Integrated Business Processes with ERP Systems | © 2011

3 Types of Manufacturing
Discrete vs. repetitive vs. process Discrete and repetitive Tangible products Manufactured in individual units Skateboards, bicycles Repetitive manufacturing Same or similar products are produced over a period of time A specified quantity is produced over a period of time Discrete Batches of different materials over time Magal and Word | Integrated Business Processes with ERP Systems | © 2011

4 Types of manufacturing
Process manufacturing Not manufactured in individual units Gallons, pints, liters Paint, soft drinks Magal and Word | Integrated Business Processes with ERP Systems | © 2011

5 A Basic Production Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

6 Organizational Data Client Company code Plant Storage location
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

7 Master Data Bill of materials (BOM) Work center Product routing
Material master Production resource tools (PRT) Magal and Word | Integrated Business Processes with ERP Systems | © 2011

8 Bill of Materials Identifies the components needed to make the material A component can have its own BOM to creates a multi-level BOM BOMs are used in Material planning Production Procurement Product costing Magal and Word | Integrated Business Processes with ERP Systems | © 2011

9 Single-level and Multi-level BOMs
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

10 Bill of Materials for Touring Bikes
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

11 Bill of Materials for Off-road Bikes
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

12 Bill of Materials - Header
Applies to the entire BOM Status: active, inactive Base quantity: materials specified are needed to make the base quantity (typically 1 unit). Usage: production, engineering, costing, etc. Plant: each plant can have a different BOM Validity: date range Magal and Word | Integrated Business Processes with ERP Systems | © 2011

13 Bill of Materials - Items
Apply to the specific item in the BOM Item category: Stock item – must have a material master Nonstock item – no material master Variable-sized item – must specify size Document item – diagrams, additional instructions Material number Quantity Magal and Word | Integrated Business Processes with ERP Systems | © 2011

14 BOM Structure Magal and Word | Integrated Business Processes with ERP Systems | © 2011

15 Demo 6.1 BOM for Bike and Wheel Assembly
Review some of the data included in a material master Magal and Word | Integrated Business Processes with ERP Systems | © 2011

16 Work Center Basic data Capacities Scheduling Cost center HR assignment
Name, description Person responsible for maintaining master data Task list usage (which routings can use this work center) Capacities Scheduling Cost center HR assignment Magal and Word | Integrated Business Processes with ERP Systems | © 2011

17 Work Center Data Magal and Word | Integrated Business Processes with ERP Systems | © 2011

18 GBI Dallas Production Facility
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

19 GBI Work Centers Magal and Word | Integrated Business Processes with ERP Systems | © 2011

20 Demo 6.2 Review GBI Work Center
Review the GBI work center Magal and Word | Integrated Business Processes with ERP Systems | © 2011

21 Product Routing Steps necessary to produce a material Operations
Sequence Standard Alternate Parallel Work center Times Setup, machine, labor Magal and Word | Integrated Business Processes with ERP Systems | © 2011

22 Work Center Example Magal and Word | Integrated Business Processes with ERP Systems | © 2011

23 Structure of a Routing Magal and Word | Integrated Business Processes with ERP Systems | © 2011

24 Routing and Work Centers
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

25 Routing for Deluxe Touring Wheel Assembly
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

26 Routing for Deluxe Touring Bike
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

27 Demo 6.3 Review Routing for a Bike and Wheel Assembly
Review the routing for a bike and wheel assembly Magal and Word | Integrated Business Processes with ERP Systems | © 2011

28 Component Assignment Specifies the relationship between a BOM and a routing Assigns components (materials) in a BOM either to a routing or to a specific operation within routing If not assigned assumed to be assigned to the first operation Magal and Word | Integrated Business Processes with ERP Systems | © 2011

29 Component Assignment Magal and Word | Integrated Business Processes with ERP Systems | © 2011

30 Production Capability
A measure of how many units of a material a plant can produce within a given timeframe A data source for production planning Magal and Word | Integrated Business Processes with ERP Systems | © 2011

31 Sample GBI Production Plan
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

32 Material Master Previously discussed views
Basic data Purchasing related Sales related Accounting related Additional view needed for production Work scheduling – plant specific MRP – plant specific More relevant in material planning Will be discussed in that chapter Magal and Word | Integrated Business Processes with ERP Systems | © 2011

33 Production Resource Tools
Movable objects required for production Shared among different work centers Documents (instructions) Materials (calibration tool) Equipment (machine that is not in a fixed location) Miscellaneous Magal and Word | Integrated Business Processes with ERP Systems | © 2011

34 The Production Process
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

35 Request Production Planned order Generated by other processes
What material How many When Generated by other processes Fulfillment Project management Material planning Can be created manually Magal and Word | Integrated Business Processes with ERP Systems | © 2011

36 Elements of the Request Production Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

37 Data in a Planned Order Magal and Word | Integrated Business Processes with ERP Systems | © 2011

38 Demo 6.4 Create a Planned Order
Review how to create a planned order Magal and Word | Integrated Business Processes with ERP Systems | © 2011

39 Authorize Production With planned order: convert
Convert to production order Without planned order: create production order Production order What material is to be produced? How many? When? Where will they be produced? What resources are to be used? How much is it expected to cost? Magal and Word | Integrated Business Processes with ERP Systems | © 2011

40 Elements of the Authorize Production Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

41 Data in a Production Order
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

42 Structure of a Production Order
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

43 Authorize Production - Outcomes
Scheduling Availability checks Reservations Preliminary costing Purchase requisitions Magal and Word | Integrated Business Processes with ERP Systems | © 2011

44 Preliminary Cost Estimates for Men’s Off-road Bike
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

45 Cost Estimates in a Production Order
Planned cost: planned cost for planned quantity Based on material and labor cost estimates Target cost: planned cost for actual quantity Actual cost: actual cost for actual quantity Magal and Word | Integrated Business Processes with ERP Systems | © 2011

46 Demo 6.5 Create a Production Order
Review how to create a production order Magal and Word | Integrated Business Processes with ERP Systems | © 2011

47 Order Release On creation order status is created (CRTD)
Order must be released (REL) to permit subsequent steps such as Goods movement not possible Confirmations not possible Documents cannot be printed Settlement Magal and Word | Integrated Business Processes with ERP Systems | © 2011

48 Elements of the Order Release Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

49 Order Release Automatic or manual Release at different levels
If no time is needed between creation and release for preparation, then release occurs automatically Release at different levels Header: All operations are released Operations: Release specific operations Operations status: REL Order status: PREL (partially released) Magal and Word | Integrated Business Processes with ERP Systems | © 2011

50 Order Release - Outcomes
Execution of subsequent steps is possible Shop floor papers can be printed Communication with PDC is possible Magal and Word | Integrated Business Processes with ERP Systems | © 2011

51 Goods Issue Movement type 261 Impact Material, FI, CO documents
G/L accounts updated Inventory updated Reservations updated (reduced) Costs updated (actual cost in order) Magal and Word | Integrated Business Processes with ERP Systems | © 2011

52 Elements of the Goods Issue Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

53 Data in a Goods Issue Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

54 Financial Impact of a Goods Issue
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

55 Demo 6.6 Goods Issue to Production Order
Review the steps from goods issue to production order Magal and Word | Integrated Business Processes with ERP Systems | © 2011

56 Confirmations Order level confirmation Operations level confirmation
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

57 Elements of the Confirmation Step
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

58 Data in a Confirmation Magal and Word | Integrated Business Processes with ERP Systems | © 2011

59 Financial Impact of a Confirmation
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

60 Demo 6.7 Confirm Production
Review confirm production Magal and Word | Integrated Business Processes with ERP Systems | © 2011

61 Goods Receipt Goods receipt into storage Impact Movement type 101
Material, FI, CO documents Material master update (quantity and value) Production order update (quantity, date, costing) Magal and Word | Integrated Business Processes with ERP Systems | © 2011

62 Elements of a Goods Receipt
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

63 Data in a Goods Receipt Magal and Word | Integrated Business Processes with ERP Systems | © 2011

64 Financial Impact of a Goods Receipt
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

65 Demo 6.8 Goods Receipt from Production
Review goods receipts from production Magal and Word | Integrated Business Processes with ERP Systems | © 2011

66 Periodic Processing Overhead calculation
Work in progress determination Settlement Magal and Word | Integrated Business Processes with ERP Systems | © 2011

67 Overhead Calculation Indirect costs Accumulated in cost centers
Supervisor, manager, other salaries Utilities Accumulated in cost centers Periodically allocated to production orders based on predetermined rules Magal and Word | Integrated Business Processes with ERP Systems | © 2011

68 Work-in-Progress Determination
Work-in-progress (WIP) inventory Inventory between GI and GR inventory Periodically the value of what is in the production process is calculated and posted to the general ledger Not essential For short production processes Value of materials is not high GBI Essential When value of materials is high Production takes weeks, months, or years Aircraft production, construction. Magal and Word | Integrated Business Processes with ERP Systems | © 2011

69 Settlement Settle the difference between planned and actual costs (variance) Only panned costs are posted in the GR step Variance is settled in this step Magal and Word | Integrated Business Processes with ERP Systems | © 2011

70 Financial Impact of a Settlement
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

71 Reporting General SAP reporting options
Online lists Work lists Analytics Production-specific reporting options Stock/requirement lists Magal and Word | Integrated Business Processes with ERP Systems | © 2011

72 Production Information System - Components
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

73 Production Information Systems - Operations
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

74 Stock/Requirements List
Magal and Word | Integrated Business Processes with ERP Systems | © 2011

75 Demo 6.9 Stock/Requirement List
Review/stock requirement list Magal and Word | Integrated Business Processes with ERP Systems | © 2011


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