Enterprise Systems Configuration Production Planning Master Data EGN 5620 Enterprise Systems Configuration Spring, 2012

Enterprise Operations Planning Process ECC 6.0 January 2008 Enterprise Operations Planning Process Execution High Level Planning Procurement Process CO/PA Detailed Planning Forecasting Sales and Operations Planning Demand Management MPS MRP Execution Sales Information System Manufacturing Execution Order Settlement January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

BPI – II Final Roadmap Procurement Process Production Process Sales ECC 6.0 January 2008 BPI – II Final Roadmap Purchase Order Purchase Requisition Procurement Process Schedule and Release Goods Receipt Convert Production Proposal Production Process Goods Issue Run MPS w/MRP Invoice Receipt Sales Process Check Availability Completion Confirmation Payment to Vendor Sales Order Entry Quality Inspection Pick Materials Goods Receipt Order Settlement Receipt of Payment Post Goods Issue January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. Invoice Customer © SAP AG and The Rushmore Group, LLC 2008

Production and Planning Master Data Concept & Theories

Production and Planning ECC 6.0 Production and Planning January 2008 Production planning is a business process which creates and maintains production plans for manufacturing of semi-finished goods or assembly of finished goods Common manufacturing processes: Discrete, and Continuous January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Planning & Execution Demand Management Sales & Operations Planning (SOP) MPS MRP Manufacturing Execution Order Settlement Procurement Process Strategic Planning Detailed Planning

Production and Planning ECC 6.0 Production and Planning January 2008 Players in the Planning Strategic Planning CEO, COO, CIO, CFO, Controller, Marketing Director Detailed Planning Line Managers, Production Scheduler, MRP Controller, Capacity Planners Execution Line Workers, Shop Floor Supervisors January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Sales and Operations Planning (SOP) - review Flexible forecasting and planning tool Usually consists of three steps: Sales Plan Production Plan Rough Cut Capacity Plan Planned at an aggregate level in time buckets

Demand Management - review Link between Sales Planning (SOP) & Detailed Planning (MPS/MRP) The results of Demand Mgmt is called the Demand Program, it is generated from our independent requirements – planned independent requirement (PIR) and customer independent requirement (CIR) Aggregating forecasts across multiple items reduces forecasting errors. A clothing store, for instance, might be able to estimate within a pretty narrow range what the demand will be for men’s dress shirts. But when that store tries to estimate the demand for individual styles, colors, and sizes of shirts, the accuracy of their forecasts will be considerably worse. Firms handle this kind of forecasting problem usually in one of three ways; they either forecast from the bottom up, from the top down, or they start in the middle and work both up and down. The “top down” forecast essentially estimates total sales demand and then divides those sales dollars level by level until the stock keeping unit (SKU) is reached. The “bottom up” method, as one might expect, starts with forecasts at the SKU level and then aggregates those demand estimates level by level to reach a company–level forecast. Another method, one might call the “in-between” method, starts forecasts at the category level (like men’s dress shirts), and then works up to determine store sales and works down to divide up the forecast into styles, colors and SKUs.

Demand Management Forecast Sales Planned Independent Requirements Customer Independent Requirements Demand Program MPS / MRP

Planning Strategies Planning strategies represent the business procedures for The planning of production quantities Dates Wide range of strategies Multiple types of planning strategies based upon environment Make-To-Stock (MTS) Make-To-order (MTO) Driven by sales orders Configurable materials Mass customization of one Assembly orders Planning strategies represent the business procedures for the planning of production quantities and dates. A wide range of production planning strategies are available in the SAP R/3 System, offering a large number of different options ranging from pure make-to-order production to make-to-stock production. Depending on the strategy you choose, you can: Use sales orders and/or sales forecast values to create the demand program Move the stocking level down to the assembly level so that final assembly is triggered by the incoming sales order Carry out Demand Management specifically for the assembly Strategies for Make-to-Stock Production  Purpose The planning strategies explained in this section are designed for planning procurement (production or purchasing) of components by planning the final products. If you can plan at component level more easily. Prerequisites Choose a make-to-stock strategy, if: The materials are not segregated. In other words, they are not assigned to specific sales orders. Costs need to be tracked at material level, and not at sales order level. Strategies for Planning Components  The planning strategies explained in this section are designed for planning the procurement (production or purchasing) of components by planning the components themselves. This is particularly useful in the following cases: There is a variety of finished products (possibly with an irregular demand pattern where planning is not possible). The finished products are consumption-based. The overall purpose of planning at component level is to procure components to stock (without sales orders) in order to react to customer demand as quickly as possible. Choose a strategy for planning components, if: The components are not segregated; that is, they are not uniquely linked at specific orders. Costs should be tracked at component (material) level and not at order level.

Planning Strategy for Make-to-Stock Planning takes place using Independent Requirements Sales are covered by make-to-stock inventory Strategies Net Requirements Planning Gross Requirements Planning Production by Lot Size Planning with Final Assembly Strategies for Make-to-Order (MTO) Production  Purpose The planning strategies explained in this section are designed for the production of a material for a specific individual sales order. In other words, you do not want to produce finished products until you receive a sales order. This means that make-to-order strategies always support a very close customer-vendor relationship, because your sales orders are closely linked to production. The same relationship exists between the sales order and production that exists in a make-to-order environment. Make-to-order is also used in the following environments. Production using variant configuration Assemble-to-order Prerequisites Choose a make-to-order strategy, if: The materials are segregated. In other words, they are uniquely assigned to specific sales orders. Costs must be tracked at sales order level and not on material level. Strategies for Configurable Materials  Definition A configurable material is a material for which different variants are possible. The strategies for configurable materials allow you to plan products with an almost unlimited number of possible combinations of characteristics and combination value keys. Use these strategies if you want to plan a product that uses a feasible combination of characteristic values and that does not include final assembly. Typical examples of such products are cars, elevators, forklifts, trucks, buses. Assemble-to-order  An assemble-to-order environment is one in which the product or service is assembled on receipt of the sales order. Key components are planned or stocked in anticipation of the sales order. Receipt of the order initiates assembly of the customized product. Assemble-to-order is useful where a large number of finished products can be assembled from common components.

Planning Strategy for Make-to-Order Planning takes place using Customer Orders Sales are covered by make-to-order production Strategies Make to Order Production Planning without Final Assembly Planning with Planning Material

Master Production Scheduling (MPS) MPS creates and maintains a weekly schedule of production for meeting independent demands. Using MPS you can carefully plan important parts or bottleneck parts in a separate planning run at the highest BOM level before the planning results have an effect on all of the production levels.

Material Requirement Planning (MRP) In MRP, the system calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production During MRP, all levels of the bill of material are planned The output of MRP is a detailed production and/or purchasing plan Detailed planning level Primary Functions Monitor inventory stocks Determine material needs Quantity Timing Generate purchase or production orders The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions or delivery schedules). This target is achieved by using various materials planning methods which each cover different procedures. Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values.

Demand-Independent vs. Dependent Independent Demand – Original source of the demand. Dependent Demand – Source of demand resides at another level.

Net Requirements Procurement Proposal Requirements – Planned Ind. Req., Reservations Sales Orders, Etc. Shortage Firmed Receipts Firmed Orders or Purchase Requisitions Stock Safety Stock

Lot sizing Static Periodic Optimum Based on fixed values in the Material Master Periodic Groups net requirements together from multiple periods Optimum Calculates the optimum lot size for a several periods of net requirements The lot-size calculation is carried out in MRP. In the net requirements calculation, the system determines material shortages for each requirement date. These shortage quantities must be covered by receipt elements. The system then calculates the quantities required for the receipts in the planning run in the procurement quantity calculation. In static lot-sizing procedures, the procurement quantity is calculated exclusively by means of the quantity specifications entered in the material master. Features The following static lot-sizing procedures are available: Lot-for-lot order quantity Fixed lot size Fixed lot size with splitting and overlapping Replenishment up to maximum stock level In period lot-sizing procedures, the system groups several requirements within a time interval together to form a lot. You can define the following periods: days weeks months periods of flexible length equal to posting periods freely definable periods according to a planning calendar The system can interpret the period start of the planning calendar as the availability date or as the delivery date. In static and period lot-sizing procedures, the costs resulting from stock keeping, from the setup procedures or from purchasing are not taken into consideration. The aim of optimum lot-sizing procedures, on the other hand, is to group shortages together in such a way that costs are minimized. These costs include lot size independent costs (setup or order costs) and storage costs.

Procurement Type External Procurement Internal Procurement Purchase Requisition Purchase Order Schedule Line Internal Procurement Planned Order Production Order Process Order

Multi-Level Scheduling Requirements Date Planned Order Purchase Requisition Finished Product Assembly 1 Semi-Finished Good Raw Material Component Time

MRP vs. Consumption-Based Whether or not a material is planned using MRP or Consumption Based is determined by the MRP Type on the MRP1 screen of the Material Master MRP Consumption Based VB – Reorder-Point PD – MRP VV – Forecast Based VSD – Seasonal MRP RP – Replenishment

Replenishment Lead Time Consumption-Based Lot Size Reorder Point Safety Stock Replenishment Lead Time

Output of MRP MRP In-House Production External Procurement Planned Order Convert to Production Orders Purchase Requisitions Process Orders Purchase Orders Schedule Lines

Production and Planning Master Data SAP Implementation

Business Process Integration ECC 6.0 January 2008 Business Process Integration FI MM PP SD Transactions Master Data MM PP SD Org Data Rules MM PP SD FI FI FI MM In the Business Process Integration class we use the stool as a metaphor for the SAP structure. There are four basic components needed to run execute SAP. Three of these are the legs of the stool: org data, master data, and rules. These ‘hold up’ the transactions. Transactions cannot be run unless these are setup. The legs are typically configured during the implementation process. During BPI 1 we will setup the stool for Finance, Materials management and Sales and Distribution. PP SD January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Business Process Integration ECC 6.0 Business Process Integration January 2008 PP Org Data Rules PP Master Data PP PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Process (Make-to-Stock) Capacity Planning Schedule and Release Production Process Shop Floor Documents Production Proposal (Planning/Other) Goods Issue Completion Confirmation Order Settlement Goods Receipt

PP: Master Production Schedule (MPS) MPS focuses on independent demand items only and serves as an input to MRP to generate subsequent dependent demands. MPS run MPS Items ESET Non-MPS Items Giftbox EPEN Stand Using MPS you can carefully plan important parts or bottleneck parts in a separate planning run at the highest BOM level before the planning results have an effect on all of the production levels. Crown Barrel Cartridge Cap

Elements of A Production Order ECC 6.0 Elements of A Production Order January 2008 Work Center Raw Materials & Sub-Components Production Order Operations Bill of Material Components (Production Parts List) Production Routing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Business Process Integration ECC 6.0 Business Process Integration January 2008 PP Org Data PP PP PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Organization Data Client Company code Plant Storage location ECC 6.0 Organization Data January 2008 Client Company code Plant Storage location Shipping point Work Center January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Enterprise Structure Work Centers Plant (P0XX) Client (600) Chart of Accounts Company Code (C0XX) Fiscal Year Variant (2012) Credit Control Area Purchasing Organization Group Shipping Point Sales Distribution Channel Division Sales Area Controlling Area SL10 SL20 WC 10 WC 20

Organization Data - Work Center ECC 6.0 Organization Data - Work Center January 2008 Unique production or assembly area May include Equipment Groups of equipment Production lines Employees Groups of employees Operations carried out at work center January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Organization Data Plant specific organizational units ECC 6.0 Organization Data January 2008 Plant specific organizational units MRP controller Production controller/production scheduler/planner group Person responsible (financially) Non-plant specific organizational units Capacity planner January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Business Process Integration ECC 6.0 Business Process Integration January 2008 PP PP Master Data PP PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Master Data for Production Planning ECC 6.0 January 2008 Master Data for Production Planning Bill of Material Master Data Work Center Master Data Work Center Control Key Product Routing Material Types Allowed in Production Controlling Activities For Production Activity Prices Materials January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Bill of Materials BOM is a hierarchical structure of the materials needed to produce a finished goods or semi-finished goods. BOMs in SAP are defined as single-level, but can be constructed multi-level by nesting several single-level BOMs. Nesting refers to a hierarchy in which a bill of materials contains its own bills of materials. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 January 2008 Bill of Material Master Data Bill of Materials (BOM) are created as single- level or multi-level relationships between one parent material and the sub-component material EPEN Barrel Cap Crown Cartridge Band Clip January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 January 2008 Bill of Material Master Data Variant Bill of Materials (BOM) Several products with a large proportion of identical parts. EPEN - Red Red Cartridge Band Etc. Black Cartridge Band Etc. EPEN - Black January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 January 2008 Bill of Material Master Data Multiple versions of Bill Of Materials (BOM) One product produced from alternative components or processes, where the differences are small (usually the quantity of a component). BOM 1 = lot size 1 - 100 BOM 2 = lot size 101 – 999 Black Cartridge (Buy) Band Etc. EPEN - Black Black Cartridge (Make) Band Etc. EPEN - Black January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 January 2008 Bill of Material Master Data Semi-finished goods Raw Material good Finished Good Raw Material Raw Material January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 Bill of Material Master Data January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 Bill of Material Master Data January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 Bill of Material Master Data January 2008 BOM in SAP consists of a header section and an item section. Header section includes data that apply to entire BOM, such as finished material number, plant, usage, validity, status, and base quantity. The BOM is valid from the date specified in the header. Usage identifies the purpose for which the BOM can be used. For example, 1 is for production. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Materials Master Data ECC 6.0 Bill of Materials Master Data January 2008 Items section identifies all materials needed to make finished goods or semi-finished goods identified in the header. Item category determines how material is used in the BOM. Data for each item are: material number, description, quantity, and item category. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data (item category) ECC 6.0 January 2008 Bill of Material Master Data (item category) L: Stock item N: Non-stock item R: Variable –size item T: Text item used to include notes and comments within the BOM. Notes may explain how to use the material or identify any unusual assembly requirement. D: Document item used to include document such as engineering drawings, assembly instructions, and photographs. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 Bill of Material Master Data January 2008 K: Class item used in variant BOMs to identify a class or group of items. A variant BOM is used to create multiple versions. M: Intra material, or phantom items used as a logical grouped set of materials that could collectively be considered as a single material. Phantom material is not an actual material and is mostly temporarily used during production planning. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data ECC 6.0 Bill of Material Master Data January 2008 Where is the Bill Of Materials (BOM) used? MRP uses BOM to determine dependent requirements Controlling uses BOM to calculate product costs Production uses BOM to issue the proper quantities of components and raw materials to the shop floor January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Work Center January 2008 Work center is a location where value- added work needed to produce a material is carried out. A work center can be a machine, a group of machines, an entire production line, a work area, or a person or group of people who are responsible for completing operations. A work center is a resource that can be used for a variety of purposes and for multiple processes. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Work center used to define capacities Capacities used in ECC 6.0 Work Center January 2008 Work center used to define capacities Labor Machine Output Emissions Capacities used in Capacity requirements planning (CRP) Detailed scheduling Costing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Assigned Cost center Human Resources (HR) Qualifications ECC 6.0 Work Center January 2008 Assigned Cost center Human Resources (HR) Qualifications Positions People January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Work Centers have multiple views of: Basic data ECC 6.0 Work Center January 2008 Work Centers have multiple views of: Basic data Default values Capacity overview Scheduling Cost center assignment Technical data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Basic data section: ECC 6.0 Work Center January 2008 Basic data section: Name, and description of the work center Person or group of people who are responsible for completing operations Task list: a list of operations that are required to accomplish a task. Operations are the specific tasks that must be completed, such as drilling, cutting, assembling. In production, a task list takes the form of a product routing or a master recipe. Standard value key: used to assign standard or planned values for operations, such as setup and execution time. Companies use these values to calculate costs, execution times, and capacity requirements. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center ECC 6.0 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Work Center January 2008 Default Values: for operations performed at the work center. Control Keys: specify how an operation or a sub- operation is scheduling, how costs will be calculated, and how operations will confirmed once they are completed in the work center. Wage data: used by processes in human capital management, such as payroll. Standard value keys: identify the normal time elements – the activities that consume time associated with the work center. Typical time elements are setup time, machine time, labor time, and teardown time. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center ECC 6.0 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Work Center January 2008 Available capacity defines how much work can be performed at the work center. A work center can include more than one resource or capacity, such as labor and machine. Scheduling basis determines the specific capacity to be utilized for production. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center ECC 6.0 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center ECC 6.0 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Work Center January 2008 A work center is associated with a cost center which is a container for accumulation of costs. Costs associated with operations completed in a work center are calculated using formulas that utilize the costs and standard values associated with each activity type, for example, setup, labor, and machine. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center ECC 6.0 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Control Key ECC 6.0 Work Center Control Key January 2008 Scheduling Determine capacity requirements Inspection characteristics required Confirmation required Rework Cost Schedule external operations – std values January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Product Routing January 2008 A list of tasks or operations that must be performed to convert a material to a part, component, or product. Routing is a sequence of operations which detail the manufacture of a product Routings are used as a template for production orders and run schedules as well as a basis for product costing. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Routing are used to determine: Operations Work centers ECC 6.0 Routing January 2008 Routing are used to determine: Operations Work centers Material components Production resources and tools Quality Checks January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing ECC 6.0 January 2008 © SAP AG and The Rushmore Group, LLC 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing ECC 6.0 January 2008 © SAP AG and The Rushmore Group, LLC 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing ECC 6.0 January 2008 © SAP AG and The Rushmore Group, LLC 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Use Routings will be used in Scheduling (dates, times) Costing ECC 6.0 Routing Use January 2008 Routings will be used in Scheduling (dates, times) Costing Capacity planning Production orders January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Standard Sequence Alternate Sequence Parallel Sequence ECC 6.0 January 2008 Routing Standard Sequence Alternate Sequence Parallel Sequence Operation 10 Operation 20 Operation 30 Operation 40 Operation 10 Operation 20 Operation 30 Operation 40 Operation 25 Operation 20 Operation 10 Operation 30 Operation 40 Operation 25 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Types Allowed In Production ECC 6.0 Material Types Allowed In Production January 2008 Multiple material types may be used in a routing/BOM Raw materials Semi-finished product Trading goods are allowed but not standard Text or Reference materials common January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Display Routing List January 2008 A collective report displaying the available routings and the material allocations to operations Four General Types Operations Related Component Related PRT Related General List (Operation Control Ticket January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Controlling Activities for Production ECC 6.0 Controlling Activities for Production January 2008 Used to perform internal cost allocation, where activities by a cost center are measured Labor time Machine hours Output activities are valued Allocation of an activity type is always made with the allocation cost element created in activity type planning January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Activity Prices Prices (costs) for planned activities ECC 6.0 Activity Prices January 2008 Prices (costs) for planned activities Fixed or Variable Labor = $$/hour Machine = $/hour Overhead = % January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Product Group Aggregate planning that group together materials or other product groups (Product Families) Manufacturing procedure Product design Market niche, etc. Proportional Factors (Percentages for components) Aggregate forecasts of a group of similar products are generally more accurate than individual forecasts of the individual products that make up the group.

Product Groups Multi-level or single-level ECC 6.0 Product Groups January 2008 Multi-level or single-level A product group is multi-level if it contains other product groups Lowest level in a product group hierarchy always consists of materials. A product group is single-level if its members are materials only A material or product group can be a member of more than one owner product group January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Business Process Integration ECC 6.0 Business Process Integration January 2008 PP Rules PP PP PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Control Parameters ECC 6.0 January 2008 MRP Control Parameters Environment Number range Master Data Materials Requirements Planning controllers Float times Planned Orders Conversion order type Dependant requirement availability January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Control Parameters (continued) ECC 6.0 January 2008 MRP Control Parameters (continued) Planning run Bill of Material (BOM) selection External procurement Planning horizon Availability Check Material Production Resource/Tool (PRT ) Capacity Scheduling Control Parameters January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

General Planning Parameters ECC 6.0 January 2008 General Planning Parameters Order Type Control Parameters Types of routings, BOM’s per order type: manually or automatically Availability checking Create Confirmation Parameters Reservations Status Updates Define Valuation of Goods Received Moving Average Price Control evaluation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Planning Parameters ECC 6.0 January 2008 Material Master Planning Parameters Materials Requirements Planning views for materials Work Scheduling views for manufactured products January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production and Planning PEN, Inc. Production and Planning Master Data

Pen Inc. Business Module II for Selling Finished Goods by Production ECC 6.0 January 2008 Pen Inc. Business Module II for Selling Finished Goods by Production Pre-Sales Activity Sales Order Delivery Billing Planned Order Production Order Completion Confirmation In Inventory Plant or Warehouse Availability Check NO YES Goods Issued to Delivery Goods from Production Order General Ledger Accounts Inventory Postings Accounts Receivable Issue Goods to Production Order Purchase Requisition Purchase Order Goods Receipt Invoice Receipt Accounts Payable NO Can start out with a pre-sales activity Ended up in Order processing Became an order Make Plan execute production order Issue goods Complete to inventory Cost Assign to sales order Send to customer Bill customer Account for all activities Or January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Activity Type/Price Planning ECC 6.0 Activity Type/Price Planning January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Group ECC 6.0 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Orders, orders, orders Planned Order (planning) A request created in the planning run for a material in the future (converts to either a production or purchase order) Production Order (execution) A request or instruction internally to produce a specific product at a specific time Purchase Order (execution) A request or instruction to a vendor for a material or service at a specific time A request or instruction from a purchasing organization to a vendor (external supplier) or a plant to deliver a quantity of material or to perform services at a certain point in time.

Exercises: 212. Create primary cost elements 213. Create secondary cost elements 214. Create cost element groups 215. Create statistical key figure 216. Create controlling document number ranges 217. Define controlling settlement document number ranges 246. Maintain plant parameters for production planning 258. Create vender master records centrally 265. Create bill of materials 266. Create person responsible for work center 267. Create work center location 269. Create capacity 270. Create activity type labor 271. Set activity prices 272. Create work center for production

Exercises: 273. Create finished products routing 274. Display routing list 275A. Create material master for production group 275B. Assign numbers for product group