Production Planning Processes EGN 5620 Enterprise Systems Configuration

Production Planning Processes EGN 5620 Enterprise Systems Configuration Spring, 2015

Production Planning Processes SAP Implementation

Business Process Integration PP SD Data MM Master FI Rules Org Data FI MM PP SD FI FI MM MM PP PP SD SD January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 3

Business Process Integration PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 4

Transaction Data (Review) Unlike master data, transactional data is dynamic - it constantly changes, usually many times per day Transactions data, such as production order, purchase order, or sales order include ◦ organizational structure, ◦ master data, ◦ rules, as well as ◦ business activities for making, purchasing, or © SAP AG - University Alliances selling. and The Rushmore Group, LLC January 2008 2007. All rights reserved. 5

Production Order Process (Make-to-Stock) 1. Request Product 2. Create Production Order (Capacity Planning) 3. Release Production Order 7. Settle Production Order 4. Issue Goods 6. Receive Goods 5. Confirm Production Order © SAP AG - University Alliances and The Rushmore Group, LLC Completion January 2008 2007. All rights reserved. 6

1. Request Product • Outcome of this step (request product) 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. • Planned order can be automatically created by running MPS, MRP, or manually created. 7

2. Create Production Order Production order - created by converting a planned order, or - generated directly without using a planned order. Planned orders can be converted individually, collectively, or partially. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 8

2. 1 Master Data for Production Order Materials (Raw, Semi-finished, and finished product) BOM: identifies materials and structure Routing: identifies operations and sequences Work center: defines working locations required capacity PRT: Production resources/tools January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 9

2. 2 Production Order Structure 2. 2. 1 2. 2. 2. 3 2. 2. 4 2. 2. 5 2. 2. 6 2. 2. 7 Header Operations Components Costs Scheduling Document Link Availability check January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 10

2. 2. 1 Production Order Header ◦ ◦ ◦ Order number Material to be produced Plant Quantity Time line (Dates) Status Order number What (Finished good) Plant Status Quantity Time Line January 2008 11

2. 2. 2 Operations ◦ ◦ ◦ Tasks Work centers Times, Dates Standard value Control keys: Determines which business transactions should be executed for the object that belongs to the production order. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 12

2. 2. 3 Components ◦ Quantity ◦ Required date January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 13

2. 2. 4 Production Order 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 activity 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.

Production Order 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.

2. 2. 5 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

2. 2. 6 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. •

2. 2. 7 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 ◦ Results of the check ◦ Missing parts list ◦ Reservations that could not be verified displays:

3. Release Production Order 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

4. Issue Goods for Production Order BOM determines necessary components for production order, 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

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

5. Confirm 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

Confirm Production Order Completion confirmation: ◦ Quantities of material used ◦ Operations completed ◦ Time used ◦ Personnel ◦ yield and scrap quantities ◦ Actual labor cost based on activity costs January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 23

Confirm Production Order Completion (Cost updated) 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 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 24

6. 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

7. Production Order Settlement Rule ◦ Automatically assigned to order according to settlement rules defined in production order ◦ Distribution rule (cost receiver, settlement share and type) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 26

Production Order Settlement (Production Order Status) REL: CRTD: PRT: PCNF: PDLV: PRC: Released Created Printed Partially Confirmed Delivered Pre-costed GMPS: MACM: MANC: NTUP: SETC: Goods movement posted Material Committed Mat. Availability not checked Dates are not updated Settlement rule created January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 27

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

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

Production Planning Processes GBI, Inc.

Request Product: Planned Order January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 31

Production Request - Planned Order (Components review) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 32

Production Order (Creation) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 33

Production Order Cost January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 34

Actual Labor Cost Line Items for Order

Production Order Scheduling January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 36

Goods Issue for Production Order

Good Issue Material Document for Order

Confirmation of Production Order Completion

Goods Receipt for Production Order

Goods Receipt Material Document for Order

Production Order Settlement

Exercises: (Due Date – 4/6/2015) 1. Create customer for finished product 2. Create price conditions for finished products 3. Extend accounting view for semi-finished product 4. Create sales order for finished product 5. Run MPS 6. Convert planned orders to production orders 7. Issue materials to production order for semi-finished product 8. Confirm production order for semi-finished product 9. Receive semi-finished product 10. Settle costs of production order for semi-finished product 11. Issue goods to production order for finished product 12. Confirm production completion for finished product 13. Receive finished product from production order 14. Settle costs of production order for finished product