1. University of Southern California Enterprise Wide Information Systems Manufacturing Planning and Execution (cont.) Instructor: Richard W. Vawter

2. University of Southern California Topics Organizational Elements and Master Data Business Process for Manufacturing Planning and Execution Reporting and Analysis

3. University of Southern California Manufacturing Planning and Execution Manufacturing Planning is the process of using forecasts and customer demand to create production and procurement schedules for finished products and component materials. Manufacturing Execution is the process of producing finished products and component materials and recording all shop floor activities and inventory movements.

4. University of Southern California Manufacturing Planning and Execution The overall manufacturing planning process comprises: Forecast values and requirements are first determined Master schedule items are planned Material requirements planning is then calculated The overall manufacturing execution comprises: Production orders are first released Materials are issued next Completion confirmations are then performed Goods are finally received into stock The manufacturing process affects capacity, costing, inventory, reporting, and analysis

5. University of Southern California Five Phases of the Manufacturing Processes Sales Info System Forecasting CO/PA Sales & Oper PlanningDemandMgmtMPSMRP Manufacturing Execution Order Settlement InventoryCosting Capacity Production Master Data Reporting and Analysis Procurement Planning process Execution process S O PProduction Order exec. 1. 2.3.4. 5.

6. University of Southern California Sales and Operations Planning (Phase 1) The forecast values and/or requirements from customer order management, sales information system, and controlling are inputs to the sales and operations planning phase. Forecasting Sales & Oper PlanningDemandMgmtMPSMRP Manufacturing Execution Order Settlement Planning process Execution process S O P

7. University of Southern California Sales and Operations Planning (cont.) The main steps in sales and operations planning are: 1. Creating a sales and production plan 2. De-aggregating the planning values 3. Transferring the planning values to demand management There are four ways to create a production plan: Based on sales Based on target inventory Based on current days on sales supply Based on running down the inventory to zero

8. University of Southern California Demand Management (Phase 2) Demand Management links top-level requirements planning (SOP) with materials planning (MPS and MRP). Forecasting Sales & Oper Planning Demand MgmtMPSMRP Manufacturing Execution Order Settlement Planning process Execution process S O P

9. University of Southern California Demand Management (cont.) Demand Management... 1.Determines the requirements dates and quantities for important assemblies and 2.Specifies the strategies for planning and producing or procuring finished products. The result of Demand Management is the demand program.

10. University of Southern California Demand Management (cont.) Demand program MPS or MRP Maintain planned independent requirements Copy from sales plan Copy from production plan Copy from forecast Maintain customer independent requirements Requirements Input:

11. University of Southern California Master Production Scheduling (Phase 3) The independent requirements from Demand Management initiate the master scheduling process for process for MPS designated items. The master production schedule is the anticipated build schedule. Forecasting Sales & Oper PlanningDemandMgmt MPSMRP Manufacturing Execution Order Settlement Planning process Execution process S O P

12. University of Southern California MPS Drives MRP Motorcycle Power Train Chassis Motor Gear Exhaust Front Wheel Rear Wheel FrameBrake Run MPS at this level Run MRP at this level Independent Requirement

13. University of Southern California MPS Run MPS creates planned orders for top-level items to satisfy independent requirements from Demand Management. Motorcycle Power Train Chassis Planned order for the motorcycle creates dependent requirements for all components There are no planned orders at this level, only dependent requirements. Independent Requirement

14. University of Southern California Material Requirements Planning (Phase 4) In material requirements planning (MRP), the system calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production. Forecasting Sales & Oper PlanningDemandMgmtMPS MRP Manufacturing Execution Order Settlement Planning process Execution process S O P

15. University of Southern California Material Requirements Planning (cont.) In material requirements planning (MRP), the system calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production. MRP requires exact requirement quantities, which allows you to work with particularly low safety stocks. The output of MRP is either a planned production order, a purchase requisition, or a planned purchase order. Note: The purpose of MPS and MRP is to guarantee material availability !

16. University of Southern California Material Requirements Planning (cont.) Converting Planned Orders M P S Conversion depends on the requirement type and the special procurement key. Conversion depends on the requirement type and the special procurement key. Purchase Order Purchase Order Production Order Purchase Requisition Planned Order M R P ? ?

17. Summary of the Four Planning Phases of the Manufacturing Process. Each step in the manufacturing planning process corresponds to a different material planning level. Each planning level provides input to the next level. Forecasting (Profitability Analysis) - Revenue forecasting - Sales forecasting (quantities) Sales and Operations Planning - Sales plan - Production plan Master Production Scheduling - Demand program - Adjusted master plan Material Requirements Planning - Dependent requirements - Planned production - Procurement plan Planning StepsPlanning Levels Parts for 1Parts for 2 Assembly of 2Assembly of 1 Product 1Product 2 Product group Co. Region 1Co. Region 2 CO/PA SOP MPS MRP OK? Feedback / Replanning

18. University of Southern California Manufacturing Execution Manufacturing Execution is initiated by releasing each production order to the shop floor. Forecasting Sales & Oper PlanningDemandMgmtMPSMRP Manufacturing Execution Order Settlement Planning process Execution process S O P Execution Phase

19. University of Southern California Production Orders: Contents Production Order Production Costs Incurred Raw Materials When to Execute Quantity of Finished Goods Resources

20. University of Southern California Production Order Execution Process Production orders go through a series of steps: Purchase Requisition Planned Order MRP Production Order Release Goods Issue Completion Confirmation Goods Receipt Order Settlement Planning Execution

21. University of Southern California Topics Organizational Elements and Master Data Business Process for Manufacturing Planning and Execution Reporting and Analysis

22. University of Southern California Standard Reporting The standard production reports and analyses provide an overview of production transaction data. Examples of standard reports and lists displays for each category include: Master Data Sales and Operations Planning Master Planning Material Requirements Planning Production Control Capacity Planning Kanban Product Costing

23. University of Southern California Logistics Information System (LIS) Sales Information System Purchasing Information System Inventory Controlling Shop Floor Information System Maintenance Information System Quality Management Information System Logistics Information Systems Sales and Distribution (SD) Materials Management (MM) Production Planning (PP) Plant Maintenance (PM) Quality Management (QM) SAP’s Logistics Processing Modules LIS Planning functionality is combined with sales and operations planning (SOP) to form one central planning and forecasting tool.

24. University of Southern California In Summary: Manufacturing Planning is the process of using forecasts and customer demand to create production and procurement schedules for finished products and component materials. Manufacturing Execution is the process of producing finished products and component materials and recording all shop floor activities and inventory movements. The output of MRP can be planned orders or purchase requisitions. Planned orders are converted into either production orders or purchase requisitions.

25. University of Southern California In Summary (cont.) The reporting tools used in the manufacturing environment are: Standard Reporting - e.g. Lists Logistics Information Systems - e.g. Shop floor information systems