Production Planning Controls Configuration and Reporting Session Code: 506 Heather J. Stewart Chris J. Wardak Rohit Ravindran San Francisco, CA New York, NY Stamford, CT Information Risk Management

Content Overview Background Organization Structure Basic Data Risks Long Range Production Planning Sales & Operation Plan (SOP) Demand Management Master Production Schedule (MPS) Medium Range Production Planning Capacity Plan Material Requirements Planning (MRP) Short Range Production Planning Production Order Links To Other Modules

Background Purpose of Controls Used to mitigate risk SAP is a large and complex package Introduces a high degree of risk Impacts security and internal controls environment To mitigate the risk, SAP offers the following features: Configurable Controls (Preventive) Control Reports (Detective) Security Design: Segregation of Duties (SoD) Need to be effective and efficient Build into each phase of project life cycle Regulatory Compliance Sarbanes-Oxley Act (Section 404)

Background Design, Implement & Assess Controls KPMG Methodology Management of Information Technology Risks Framework to design effective controls/security Re-engineering business processes Implementing new technologies (e.g., SAP R/3) Potential risk during an upgrade Based on our experience with clients Implementing/Reviewing SAP controls/security Requires experience in Auditing Security Information Systems SAP

Production Planning Organization Structure No dedicated organization structure: PP component Uses Logistics organization structure Plant Valuation of materials will typically be at a Plant Level (OX14)

Production Planning Basic Data Material Master Record Bills of Material/Recipe Work Center/Resource Routing Line Design Rough-cut Planning Profile Production Resources and Tools CAPP Standard Values (Computer Aided Process Planning) Standard Trigger Points Engineering Change Management Engineering Workbench

Basic Data Material Master Use in Production Planning and Control Material Requirements Planning Scheduling Work Scheduling Certain Material Master Record views are relevant Basic Data 1,2 MRP 1-4 Costing 1,2 Forecasting Work Scheduling (for Semi-finished and Finished Products) Quality Management Security Design: Restrict access to a view (Maint. Status)

Material Master Configurable Controls Assigning MRP Type/Planning Strategy to Material (MM03)

Material Master Configurable Controls Field Status (OMSR, OMS9)

Basic Data Bills of Material (BOM) List of components that make up a product (CS12) Contains the name, quantity, and unit of measure Process Industry – Recipe

Bills of Material (BOM) Configurable Controls BOM - Define Modification Parameters (OS27) Define Valid Material Types in BOM (OICG) BOM - Define Default Values (OS28)

Bills of Material (BOM) Configurable Controls Number Range for Standard BOM (CS91) BOM – Field Selection (OPFA)

Bills of Material (BOM) Control Reports Change Documents for Standard BOM (CS81)

Basic Data Work Center Location for operation/activity Specifies position of machine/people Determines costs, capacities and dates for operations Process Industry – Resource Assignment of Work Center to Cost Center (Link to CO)

Basic Data Routing Sequence of Work Centers to produce material Standard time for execution of an operation Lead Time Scheduling Capacity Planning Product Costing Process Industry - Master Recipe with material list

Routing Configurable Controls Control Keys for Operations (OP00, OPJ8)

Production Planning An Overview

Production Planning Risks Inaccurate basic data Incorrect transaction processing Material Master (MRP View) Bills of Material Work Center Routing Ineffective/Inefficient Supply Chain Process Upstream: Excess vendor orders, production (Links to APO) Downstream:Inability to meet customer req’ments (Links to CRM) Overstocking: Storage costs, potential obsolescence Stock-outs: Stoppage of assembly line, Customer dissatisfaction Lack of timely goods receipts/issues Misstated inventory and material records Miscalculation of Work-in-process cost

Long Range Production Plan Sales & Operations Plan (SOP) Flexible forecasting and planning tool Based on: Historical Existing Estimated future data Planned qty is passed to Demand Mgmt.

Sales & Operations Plan (SOP) Configurable Controls Activating Plant for SOP (MC60) Maintain Checking Groups for Availability Check (OVZ2)

Sales & Operations Plan (SOP) Configurable Controls Availability Check (OMB1)

Long Range Production Plan Demand Management Business activity that places demand on capacity Includes: Forecasting Customer Demand Order Entry Order Promising (Availability Check, ATP – SD) Inter-Plant Demand Inter-Company Demand Parts & Accessories Requirements Demand program uses: Planned Independent Requirements Customer Requirements

Demand Management Configurable Controls Allocate Requirements Class to Requirements Type (OMP1) Requirements Type: Maintenance of Messages (OMPJ)

Demand Management Configurable Controls Define Planning Strategy (OPPS)

Long Range Production Plan Master Production Scheduling MPS should be performed for critical items such as: Finished Products Assemblies Raw Materials Obtained by disaggregating the production plan Planned with extra attention to ensure accuracy MPS is the primary input to MRP

Master Production Scheduling Configurable Controls MRP Types for Master Production Scheduling (OMDQ)

Medium Range Production Plan Capacity Planning Supports planning to ensure economic use of resources Long-term, rough-cut planning Medium-term planning Short-term, detailed planning Capacity Evaluation Analyse load at a work centre level based on MPS Compare capacity available against requirements Capacity Levelling To optimize capacity commitment (adherence to dates) Ensure selection of appropriate resources

Capacity Plan Configurable Controls Capacity Leveling: Overall Profiles (OPD0) Capacity Leveling: Selection Profiles (OPD1)

Capacity Plan Configurable Controls and Reporting Scheduling Types for Capacity Planning (OPJN) Capacity Planning Evaluation (CM01)

Medium Range Production Plan Material Requirements Planning MRP is utilized to procure for Production/Process Order Project Sales and Distribution (Customer Order)

Material Requirements Planning Consumption-based planning Reorder point Safety stock MRP Sales orders Planned independent requirements Dependent requirements Automatic MRP Run Total planning (at plant level for all materials) Single-item planning (for a material/product group) Exception message for MRP controller If material is ordered but not delivered on time If stock is below safety level

Material Requirements Planning Configurable Controls Activate requirements planning indicator for plants (OMDU) MRP Planning Horizon: By Plant or MRP Group (OMDX)

Material Requirements Planning Configurable Controls Plant Parameters for MRP (OPQQ) Error Handling in Planning Run

Material Requirements Planning Configurable Controls Exception Messages (OPP1)

Material Requirements Planning Control Reports Display Stock Requirement Situation (T-Code: MD04) MRP List – Collective Display (MD06) Missing Parts Info System (CO24) MRP Evaluation (MD45) Cross Plant Evaluation (MD48) Maintain Number Ranges for MRP (MD90)

Short Range Production Plan Production Order A production order specifies Material to be produced Production dates Work Center to dispatch capacity load Production costs Order status Created (CRTD) Released (REL) Delivered (DLV) Closed (CLSD) Technically Complete (TECO) Should have a zero balance

Production Order Configurable Controls Availability Check during Order Release (OPJK) Account Assignment Category (OPJP)

Production Order Control Reports Automatic Goods Receipt: Error Handling (COGI) Production Order Overview (CO26) Shop Floor Info System (MCPO) WIP/Results Analysis (KOB8) Analyze Production Orders by Controlling Area (KKBC_ORD) Target versus Actuals

Production Planning Links To Other Modules Production Order Settlement Profile OK07)

Production Planning Links To Other Modules Account Determination (FI) Based on Procedures Report: RM07C030

Production Planning Links To Other Modules Posting Rules in WIP and Results Analysis (CO) (OKG8)

Questions? e-mail address Heather Stewart hjstewart@kpmg.com Chris Wardak cwardak@kpmg.com Rohit Ravindran rkravindran@kpmg.com

Thank you for attending! Please remember to complete and return your evaluation form following this session. Session Code: 560