Module 10 Setup for Production

Plant Parameters Configuring the SAP R/3 system for production is one of the most challenging tasks in R/3 configuration CO will not be configured for production in this exercise Configuring the CO module to accurately track manufacturing costs is extremely challenging Requires balance between accurate cost allocations and data collection requirements. To much detail can make the SAP system difficult to use, which means it is not likely to be used correctly.

Planning vs. Scheduling Configuring the production planning (PP) module is complicated by the fact that planning and scheduling are two separate, but highly related, activities. Planning, typically implemented via Material Requirements Planning (MRP), is used to create planned orders and purchase requisitions—suggestions by the SAP system as to what should be produced on the shop floor or procured from suppliers (vendors), respectively.

Planning vs. Scheduling Scheduling is the process of converting planned orders into production orders and purchase requisitions into purchase orders, then managing these orders in detail. Planned Scheduled Internal Procurement Planned Order Production Order External Procurement Purchase Requisition Purchase Order

Floats In both planning and scheduling, floats can be added to planning times to provide for a buffer against uncertainty. The production lead time for a material might be 12 days. Of that 12 days, 10 days might be the expected production time with a float of 2 days added to allow for production disruptions. Floats are organized in the SAP R/3 system using Schedule Margin Keys.

Floats Four floats are defined in a schedule/margin key: Opening period: Workdays prior to order start. Float Before Production: Workdays between order start and scheduled start. Float after Production: Workdays between order due date and scheduled finish date. Release Period: Workdays in release period.

Planning Parameters The MRP 2 view of the material master gives: In-house production time Goods Receipt (GR) processing time Schedule Margin Key, which gives: Opening period Float Before Production Float After Production Release Period

Planning Parameters Material Master MRP 2 View Schedule Margin Key

MRP Planning, which is done by the MRP process, needs: In-house production time GR processing time Opening Period The MRP process will determine the order start and order finish date, as well as the planned opening date The planned opening date can be used by planners to convert planned orders to production orders by groups rather than individually. The MRP planner can convert groups of planned orders based on the planned opening date.

Material Requirements Planning Demand Opening Period In-house production GR process Available for Planning Planned Opening Date Order Start Order Finish

Example in SAP Available for Planning Demand (Independent Requirement) Order start Order finish Planned opening date Planned Order Detail

Production Order Scheduling The float before production and float are used to calculated the scheduled start and scheduled finish dates when the planned order is converted into a production order. The float before production is a start float. It has two functions: It can compensate for delays in the staging of the material components. If there is a capacity bottleneck at the work centers involved, the production dates can be moved forward in the future. In this way it serves as a float for capacity leveling.

Production Order Scheduling The float after production is a finish float. It is used to compensate for unexpected disturbances in the production process, so that they do not delay the scheduled finish date. The system calculates the scheduled start of the order by adding the float before production to the order start date. It calculates the scheduled finish of the order by subtracting the float after production from the order finish date.

Production Order Scheduling In-house production Float before Production Float after Production Release Period Scheduled Release Scheduled Start Scheduled Finish Order Start Order Finish

Production Order Scheduling Note how the float before production and float after production are used to calculate the scheduled start and scheduled finish time. The in-house production time specified on the MRP 2 View of the material master should be the sum of the expected processing time plus the float before production plus the float after production.

Release Period The SAP system can be configured so that a production order is released as soon as it is created. This means that the production facility can begin production. The SAP system can also be configured to make the release of the production order a separate step. In this case, the SAP system deducts the number of days defined in the release period from the scheduled start of the order to determine the scheduled release date of the order. This date can be used by the production scheduler to perform collective release, i.e., release a group of production orders based on the scheduled release date.

Number Ranges Every transaction in SAP is numbered. Some companies are very interested in the format of numbers assigned to different objects. The SAP R/3 system gives the user the ability to define different number ranges (number of digits, numeric or alphanumeric, starting number, etc.) and then assign them to different objects.

Number Ranges In defining plant parameters, number ranges must be defined and assigned to: Planned orders Reservations/Dependent requirements Purchase requisitions MRP lists Simulated dependent requirement

MRP Controllers In the SAP system, the person designated to manage the production and inventory levels for a material is called the MRP Controller. Each material can be assigned to a particular MRP Controller. The MRP Controller is used to select materials for reports like the Stock/requirements list. The Stock/requirements list, is an interactive transaction for managing the production and inventory levels for a material

Production Scheduling Profile The production scheduling profile determines how production scheduling is to be carried out in the plant. Settings in the production scheduling profile control things like: When production orders are released for production (upon creation, for example). When production orders are scheduled (on release, for example).

Production Scheduler Similar to the MRP Controller, a Production Scheduler must be defined in the SAP system to control detailed production scheduling for a material. A production scheduling profile is assigned to the Production Scheduler, and the Production Schedule is defined in the Work Scheduling view of the Material Master.

Material Availability Check When the MRP system creates a planned order, it can also check whether the components and sub-assemblies required to complete the planned order will be available.

Bill of Material The Bill of Material (BOM) defines the relationship between materials that make up an assembled product: It is the “recipe” for a material ## NRG–A (case) ## Dough NRG–A (lb) ## Oats ## Wheat Germ ## Cinnamon ## Nutmeg ## Cloves ## Honey (gal) ## Vit/Min Powder ## Carob Chips ## Raisins ## Canola

Routings Routings define the relationship between a material and the sequence of workcenters (operations) that are required to produce the material. Routings determine: The operations (work steps) to be carried out during production of a material The activities to be performed in the operations as a basis for determining dates (start, finish, available, etc.), capacity requirements, and costs for a production order The use of materials during production The use of work centers The quality checks to be carried out during production

BOM and Routing Selection ID Different routings and BOMs may be defined for a material. These routings may be applicable for different production quantities, for example. When products change, the BOM and/or routing may change, so BOMs and routings can have validity periods to define when the changes occur. BOM and Routing Selection IDs determine how the SAP system will find the correct BOM and routing for a production order.

BOM and Routing Selection ID With the routing selection ID 01, when an order is created, the system looks for a routing that is valid for the date the production order is being created and the lot size of the production order. If more than one routing is valid for a production order, the SAP system selects the first valid routing. Similarly, with BOM selection ID 01, the system looks for a BOM for the material with the correct status (active), lot size and validity date.

Creating Production Orders Manual MRP Automatic Copy Routing Copy Bill of Material Lead Time Scheduling Availability Checks Save Order Read in First Forms Backbone Generates Material and/or Capacity

Planning Horizon The planning horizon (measured in days) determines how far in the future the MRP planning process looks to create production orders. A production scheduler can structure the MRP process to create production orders for all demand (forecast demand, customer orders) recorded in the system, or only that demand that is within the number of days in the planning horizon into the future.

Production Order Availability Checks For standard production order type PP01, availability checks can be specified on a plant-by-plant basis. Availability checks can be performed for: Materials: availability of component materials Production Resources and Tools (PRT) Production Capacity Checks can be specified to be determined when a production order is created, a production order is released, or both times.

Production Order Availability Checks If availability checks are specified, then production orders cannot be created if the availability check is not passed. For example, if a material availability check is specified at order creation, then a production order for a batch of snack bar dough cannot be created unless all raw materials (oats, wheat germ, cinnamon, etc. are in stock in sufficient quantities. ## Dough NRG–A (lb) ## Oats (lb) ## Wheat Germ (lb) ## Cinnamon (lb) ## Nutmeg (lb) ## Cloves (lb) ## Canola (gal) ## Honey (gal) ## Carob Chips (lb) ## Raisins (lb) ## Vit/Min Powder (lb)

Forward and Backward Scheduling Two basic methods of production order scheduling are available Forward Scheduling, where a production order is scheduled to start immediately and finish as soon as possible Backward Scheduling, where the scheduling begins at the due date and works backward. Most students use backward scheduling Backward scheduling can lead to problems if there is not enough float time in the schedule to account for disruptions

Backward Scheduling Float after production In-house production time Scheduled Start Scheduled Finish Planned Finish Today Planned Start Float after production In-house production time Float before production

Forward Scheduling Float after production In-house production time Today Scheduled Start Scheduled Finish Planned Finish Planned Start Float after production In-house production time Float before production

Material Master Views for Production The MRP views in the Material Master define a range of parameters for planning. There are four MRP views (MRP 1, MRP 2, MRP 3 and MRP 4) that contain Production Planning Parameters Production scheduling parameters are entered in the Work Scheduling View

MRP 1 View MRP Type: How the material is planned PD—Using MRP logic VB—Consumption-based planning Lot Size: How many units to make in a production order FX—Fixed, make the fixed lot size EX—Lot-for-lot, make exactly the quantity required MRP Controller: Controller responsible for this material

MRP 2 View In-house production: Number of days required to produce the material GR processing time: Number of days required to process the material after production before it can be used. May allow for quality inspection, for example. Schedule margin key: Set of floats used.

MRP 3 View Strategy group: setting for how inventory, forecasts and customer orders affect the MRP planning process. Tot. repl. lead time: Total replenishment lead time. This is used in the sales order process. If there is no stock on hand for this material, then the sales order process will assume the material will be available in this number of days if an order is placed. The SAP system will calculate a promised delivery date using the total replenishment lead time as well as a delivery time calculated from other system settings.

Work Scheduling View Production Scheduler: Production scheduler responsible for this material. Prod. Sched. Profile: Production scheduling profile for this material. As described previously, the production scheduler and production scheduling profile determines the way production orders are created and managed.

MRP Run In Single-item, Single-level planning, only the material is planned, not other materials that may be required to make the material For example, if single-item, single-level planning is used on the dough material, then only the dough is planned and not the materials needed to make dough, like oats, wheat germ, etc. A number of parameters are set that in MRP planning to determine how planning is to proceed and what it is to produce (planned orders vs. purchase requisitions, for example).

Stock/Requirements List The Stock/requirements list is an interactive report that provides a comprehensive set of information about a material, including inventory, planned orders, forecast demand, customer orders. In addition, by double-clicking on specific items, the user can access a variety of data like material masters, detailed stock overviews, production order details, etc. The Stock/requirements list is the primary tool used by planners and schedulers.