1. Production Planning Processes EGN 5620 Enterprise Systems Configuration Spring, 2012

2. Production Planning Processes Theories & Concepts

3. Production Planning Process
ECC 6.0
January 2008
Production 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
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4. Production Planning Processes
ECC 6.0
Production Planning Processes
January 2008
High Level Planning
Control and profit analysis (CO/PA)
Forecasting
Sales and operations planning (SOP)
Demand management
Detailed planning
MPS
MRP
Execution
Procurement
Manufacturing Execution
Order settlement
January 2008
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5. Manufacturing Execution
ECC 6.0
Manufacturing Execution
January 2008
Request Production
Create Production Order
Release Production Order
Issue Goods for Production Order
Confirm Completion of Production Order
Receive Goods for Production Order
Settle Production Order
January 2008
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6. Production Planning Processes SAP Implementation

7. 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
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8. Business Process Integration
ECC 6.0
Business Process Integration
January 2008 PP
Transactions
January 2008
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9. Transaction Data (Review)
ECC 6.0
Transaction Data (Review)
January 2008
Unlike master data, transactional data is dynamic - it constantly changes, usually many times per day
Transactions data include
organizational structure,
master data,
rules, as well as
business activities
January 2008
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10. Production Order Process (Make-to-Stock)
ECC 6.0
January 2008
Production Order Process (Make-to-Stock)
Production order creation (Capacity Planning)
Production
Order Request
Production Order Release
Order Settlement
Goods
Issue
Goods
Receipt
Confirmation of
Production Order
Completion
January 2008
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11. ECC 6.0
January 2008
Production Request
A request for production is triggered by a need to produce materials (finished goods or semi-finished goods).
With a make-to-order strategy, the receipt of a customer order will trigger the need to produce the products in the customer’s order.
With a make-to-stock strategy, production is triggered by the material planning process, which is concerned with ensuring that sufficient quantities of planned products are available.
Other processes may also trigger production. For example, demand for parts from project management
January 2008
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12. Production Planning Strategies

13. Production Planning Strategies

14. ECC 6.0
Production Request
January 2008
Regardless of the source of the trigger, the outcome of this step is a planned order.
Planned order is a formal request for production.
Planned order is a transaction document.
In a planned order, the following information is defined:
What products are needed
How many units of the products are needed
When they are needed
In this step, no FI or CO documents are created, so there is no financial impact.
There is no movement of materials.
January 2008
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15. Planned Order Header ECC 6.0 January 2008
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16. Planned Order (Components review)
ECC 6.0
Planned Order (Components review)
January 2008
January 2008
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17. ECC 6.0
January 2008
Production Order
Production orders are created in an authorization step of the production planning process
Production order is an actual commitment to produce a specific quantity of goods by a certain date.
Various resources, including materials and work centers are committed to produce the goods in a production order.
January 2008
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18. Production Order A production order defines: Goods to be processed
ECC 6.0
Production Order
January 2008
A production order defines:
Goods to be processed
Quantity
At what location (work center)
At what time
Resources to be used
Amount of resources required
Order costs settlement
January 2008
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19. Creation of Production Order
Results in several outcomes, including
schedule,
availability checks,
materials reservation,
preliminary costing, and
necessary purchase requisitions.
But it creates no FI or CO documents; there is no any financial impact.
There is no movement of materials.

20. ECC 6.0
January 2008
Production Order
A production order is typically created by converting a planned order, but it can also be generated directly without using a planned order.
Planned orders can be converted individually, collectively, or partially.
A production order includes reference to PP master data, such as a BOM, routing, and work centers.
BOM identifies materials to be used in production.
Routing identifies operations needed for the order.
Work centers are the working locations where operations are to be performed and work centers define the capacity requirement for the order.
January 2008
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21. Production Order (Creation)
ECC 6.0
January 2008
Production Order (Creation)
While creating a production order, the following actions are carried out:
Select a routing: operations and sequences.
Transfer the bill of materials from database for master data.
Reserve items in stock, according to the bill of materials
Generate the planned costs
Generate the capacity requirements for the work centers
Generate purchase requisitions for non-stock items and externally-processed operations
January 2008
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22. Production Order (Creation)
ECC 6.0
Production Order (Creation)
January 2008
January 2008
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23. Production Order (structure)
ECC 6.0
January 2008
Production Order (structure)
Production Order Structure
Header
Operations
Capacity
Components
Costs
Scheduling
Settlement Rules
Document Link
Confirmation
January 2008
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24. Production Order (data elements)
ECC 6.0
January 2008
Production Order (data elements)
Order header
Order number
Material to be produced
Plant
Quantity
Scheduler (Dates)
Status
PRT (Production Resource Tool)
Tooling
Equipment
Operations
Tasks
Work centers
Times, Dates
Standard value
Control keys
Components
Material components
Quantity
Required date
January 2008
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25. Production Order (Header)
How
Components
What
How many
Time Line

26. Production Order (Operations)
ECC 6.0
Production Order (Operations)
January 2008
January 2008
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27. Production Order - (Components)
ECC 6.0
January 2008
Production Order - (Components)
January 2008
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28. Production Order (Master Data)
ECC 6.0
Production Order (Master Data)
January 2008
January 2008
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29. Production Order– Preliminary Cost
A production order includes preliminary estimates for various cost components, such as material and overhead.
Material costs are based on the costs of the components assigned to the production order. These costs are maintained in master data of each component.
Production costs are based on data in work center, such as activity types and formulas that identify which activities (e. g. lab and setup) are required and in what quantity.

30. Production Order– Preliminary Cost
The costs are associated with appropriate accounts in general ledger, such as material consumption accounts.
As production is executed, actual costs are assigned in the production order along with the preliminary cost estimates.
After a production order has been completed, the cost accumulated in the production order must be settled.
During settlement, the actual costs incurred are allocated to cost objects based on specified settlement rules.

31. Production Order (Preliminary Cost)
ECC 6.0
January 2008
Production Order (Preliminary Cost)
January 2008
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32. Production Order– Schedule
SAP calculates the production dates and capacity requirements for all operations within an order
Scheduling function uses data from production order (quantity and dates) and work centers.
Determines a Routing
Operation specific time lines
Material Consumption Points
Links to Material Master
Scheduling Margin Key (Floats)
Links to Work Center
Formulas
Standard Inter-operation Times

33. Production Order (Scheduling) Work Center Formulas
ECC 6.0
January 2008
Production Order (Scheduling) Work Center Formulas
January 2008
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34. Production Order (Scheduling)
ECC 6.0
Production Order (Scheduling)
January 2008
January 2008
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35. Production Order (Settlement Rules)
ECC 6.0
January 2008
Production Order (Settlement Rules)
January 2008
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36. Production Order (Document Link )
A production order may contain reference to various documents.
A BOM for example, may include a document item.
Production order often includes links to documents in the document management system (DMS).
DMS is used to ensure the most current version of documents is employed during production.

37. Production Order (Availability Check)
Automatic check to determine whether the components, production resources tools, and capacities in an order are available
It can be automatic or manually executed
It determines availability on the required date
Unlike scheduling, availability checks are not repeated automatically if the production order is changed.
It generates an availability log which displays:
Results of the check
Missing parts list
Reservations that could not be verified

38. Production Order Release
The time between scheduling and releasing an order is used for preparation needed for the processing of the order
Once an order is released, it is ready for execution. At this time, the user can:
print shop floor documents
execute goods movements
accept confirmations against the order

39. Goods Issue for production Order
Note:
That when a production order is being created, it references a BOM that determines the necessary components to produce the goods, it also places a reservation on each of the components
Upon release of the order (or operation) the reserved materials can be issued from inventory; and the system (SAP):
Updates the reservation
Updates the inventory
Assigns costs to the order as actual costs
You can withdraw materials for an order that are not listed as components in the order. These "unplanned withdrawals" cause the actual costs of the production order to be updated.

40. Goods Issue for production Order
Effects of the Goods Issue
updates stock quantity
updates stock value
Updates production order status
Three documents are created:
material document
accounting document
controlling document
You can withdraw materials for an order that are not listed as components in the order. These "unplanned withdrawals" cause the actual costs of the production order to be updated.

41. Goods Issue for Production Order

42. Good Issue for Production Order

43. Goods Issue (Cost Itemization)

44. Confirmation of Production Order Completion
Confirmations are used to monitor and track the progression of an order through its production cycle
confirmation can be done at the operation or order level
Exact confirmation shortly after completion of an operation is essential for realistic production planning and control

45. Confirmation of Production Order Completion
ECC 6.0
January 2008
Confirmation of Production Order Completion
Completion confirmation
Quantities of material used
Operations completed
Time
Personnel
Costs
Planned costs and actual costs
Settlement rule for the order for accounts/cost centers
Settlement profile
Settlement receiver
January 2008
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46. Confirmation of Production Order Completion
ECC 6.0
January 2008
Confirmation of Production Order Completion
Completion confirmation:
Confirms both the yield and scrap quantities
Can do product receipt if automatic Goods Receipt (G/R) set
Generates labor cost based on activity costs
January 2008
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47. Confirmation of Production Order Completion (Cost updated)
ECC 6.0
Confirmation of Production Order Completion (Cost updated)
January 2008
Planned costs
Primary Costs
Material Costs (BOM)
Based on material master price for each component
Updated when goods are issued to order, or when purchased materials are received
Cost for External Processing
Secondary Cost
Production Costs (Routing)
Time cards from operations
Material Overhead Costs
Production Overhead Costs
Gets updated at completion confirmation
January 2008
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48. Confirmation of Production Order Completion

49. Confirmation of Production Order Completion (Labor cost is added)

50. Goods Receipt for Production Order
Acceptance of the confirmed quantity of output from the production order into stock
Effects of the Goods Receipt
update stock quantity
update stock value
update production order (status)
store price for future valuation changes
Three documents are created
material document
accounting document
controlling document

51. Goods Receipt for Production Order

52. Goods Receipt for Production Order (Cost Target/Actual Comparison)

53. Goods Receipt for Production Order (Updated cost Itemization)

54. Production Order Settlement
ECC 6.0
Production Order Settlement
January 2008
Settlement Rule
Automatically assigned to order according to settlement rules defined in production order
Distribution rule (cost receiver, settlement share and type)
January 2008
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55. Production Order Settlement (Production Order Status)
ECC 6.0
January 2008
Production Order Settlement (Production Order Status)
GMPS: Goods movement posted
MACM: Material Committed
MANC: Mat. Availability not checked
NTUP: Dates are not updated
SETC: Settlement rule created
REL: Released
CRTD: Created
PRT: Printed
PCNF: Partially Confirmed
CNF: Confirmed
PDLV: Partially Confirmed
DLV: Delivered
PRC: Pre-costed
January 2008
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56. Production Order Settlement
Settling a Production Order to Stock
postings are made to the materials & labor and production order accounts with the value of the material and labor and received finished goods.
difference between the debt posting and credit posting is posted to a price difference account
Material & Labor
Prod. Order
Price Diff.
Since production costs were higher than planned, the additional expenditure negatively affects the operating profit. This means that the profit decreases by the amount by which the actual costs charged to the production order exceed the standard price.
The actual costs charged to the production order affect net income just as the posting of the inventory change at the time of the goods receipt. Since the actual expense was 20 higher than expected, the operating profit is 200 lower than it would have been if production had been at standard cost.
84.23
120
35.77
**Material Price determined by the quantity produced times the Standard Price in the Material Master.

57. Production Order Settlement
Costs analyzed
Primary
Materials
External Processing
Secondary
Production, Administrative Overhead, and
Labor
Cost Analysis Reporting
Calculate and analyze planned costs, target costs, and actual costs of the production order.
Calculate and analyze variances
Calculate and analyze planned costs, target costs, and actual costs of production orders and process orders
Calculate or update the work-in-process inventory and the finished goods inventory
Calculate and analyze variances
Transfer data to Financial Accounting (FI)
Transfer data to Profitability Analysis (CO-PA)
Transfer data to Profit Center Accounting (EC-PCA)
Transfer data to Actual Costing / Material Ledger (CO-PC-ACT)

58. Production Order Settlement

59. PEN, Inc.
Production Planning
Processes

60. Actual Material Cost Line Items for Order

61. Actual Labor Cost Line Items for Order

62. Good Issue Material Document for Order

63. Goods Issue G/L Document for Order

64. Confirmation Document for Order

65. Goods Receipt Material Document for Order

66. Goods Receipt G/L Document for Order

67. Exercises: 259. Create purchase order 260. Create goods receipt
262. Post invoice receipt from vendor
263. Display vendors invoice (gross) document
264. Post payment to vendor
276. Create a production plan
277. Display stock/requirements list
278. Transfer planning data to demand management
279. Review demand management
280. Display stock/requirements list
281. Run master production schedule
282. Display stock/requirement list
283. Convert planned order to production order
284. Issue goods to production order
285. Confirm production completion

68. Exercises: 286. Receipt of goods from production order
287. Settle costs of production order
287A. Display stock/requirements list