Chapter 6 The Production Process 1
Learning Objectives 1. Describe the master data associated with the production process. 2. Identify the key steps in the production process and the data, documents, and information associated with each step. 3. Effectively use SAP ERP to execute the key steps in the production process. 4. Effectively use SAP ERP to extract meaningful information about the production process. 2
Types of Manufacturing Discrete vs. repetitive vs. process Discrete and repetitive Tangible products Manufactured in individual units Skateboards, bicycles Repetitive manufacturing Same or similar products are produced over a period of time A specified quantity is produced over a period of time Discrete Batches of different materials over time 3
Types of manufacturing Process manufacturing Not manufactured in individual units Gallons, pints, liters Paint, soft drinks 4
A Basic Production Process 5
Organizational Data Client Company code Plant Storage location 6
Master Data Bill of materials (BOM) Work center Product routing Material master Production resource tools (PRT) 7
Bill of Materials Identifies the components needed to make the material A component can have its own BOM to creates a multi-level BOM BOMs are used in Material planning Production Procurement Product costing 8
Single-level and Multi-level BOMs 9
Bill of Materials for Touring Bikes 10
Bill of Materials for Off-road Bikes 11
Bill of Materials - Header Applies to the entire BOM Status: active, inactive Base quantity: materials specified are needed to make the base quantity (typically 1 unit). Usage: production, engineering, costing, etc. Plant: each plant can have a different BOM Validity: date range 12
Bill of Materials - Items Apply to the specific item in the BOM Item category: Stock item must have a material master Nonstock item no material master Variable-sized item must specify size Document item diagrams, additional instructions Material number Quantity 13
BOM Structure 14
Demo 6.1 BOM for Bike and Wheel Assembly Review some of the data included in a material master 15
Work Center Basic data Name, description Person responsible for maintaining master data Task list usage (which routings can use this work center) Capacities Scheduling Cost center HR assignment 16
Work Center Data 17
GBI Dallas Production Facility 18
GBI Work Centers 19
Demo 6.2 Review GBI Work Center Review the GBI work center 20
Product Routing Steps necessary to produce a material Operations Sequence Standard Alternate Parallel Work center Times Setup, machine, labor 21
Work Center Example 22
Structure of a Routing 23
Routing and Work Centers 24
Routing for Deluxe Touring Wheel Assembly 25
Routing for Deluxe Touring Bike 26
Demo 6.3 Review Routing for a Bike and Wheel Assembly Review the routing for a bike and wheel assembly 27
Component Assignment Specifies the relationship between a BOM and a routing Assigns components (materials) in a BOM either to a routing or to a specific operation within routing If not assigned assumed to be assigned to the first operation 28
Component Assignment 29
Production Capability A measure of how many units of a material a plant can produce within a given timeframe A data source for production planning 30
Sample GBI Production Plan 31
Material Master Previously discussed views Basic data Purchasing related Sales related Accounting related Additional view needed for production Work scheduling plant specific MRP plant specific More relevant in material planning Will be discussed in that chapter 32
Production Resource Tools Movable objects required for production Shared among different work centers Documents (instructions) Materials (calibration tool) Equipment (machine that is not in a fixed location) Miscellaneous 33
The Production Process 34
Request Production Planned order What material How many When Generated by other processes Fulfillment Project management Material planning Can be created manually 35
Elements of the Request Production Step 36
Data in a Planned Order 37
Demo 6.4 Create a Planned Order Review how to create a planned order 38
Authorize Production With planned order: convert Convert to production order Without planned order: create production order Production order What material is to be produced? How many? When? Where will they be produced? What resources are to be used? How much is it expected to cost? 39
Elements of the Authorize Production Step 40
Data in a Production Order 41
Structure of a Production Order 42
Authorize Production - Outcomes Scheduling Availability checks Reservations Preliminary costing Purchase requisitions 43
Preliminary Cost Estimates for Men s Off-road Bike 44
Cost Estimates in a Production Order Planned cost: planned cost for planned quantity Based on material and labor cost estimates Target cost: planned cost for actual quantity Actual cost: actual cost for actual quantity 45
Demo 6.5 Create a Production Order Review how to create a production order 46
Order Release On creation order status is created (CRTD) Order must be released (REL) to permit subsequent steps such as Goods movement not possible Confirmations not possible Documents cannot be printed Settlement 47
Elements of the Order Release Step 48
Order Release Automatic or manual If no time is needed between creation and release for preparation, then release occurs automatically Release at different levels Header: All operations are released Operations: Release specific operations Operations status: REL Order status: PREL (partially released) 49
Order Release - Outcomes Execution of subsequent steps is possible Shop floor papers can be printed Communication with PDC is possible 50
Goods Issue Movement type 261 Impact Material, FI, CO documents G/L accounts updated Inventory updated Reservations updated (reduced) Costs updated (actual cost in order) 51
Elements of the Goods Issue Step 52
Data in a Goods Issue Step 53
Financial Impact of a Goods Issue 54
Demo 6.6 Goods Issue to Production Order Review the steps from goods issue to production order 55
Confirmations Order level confirmation Operations level confirmation 56
Elements of the Confirmation Step 57
Data in a Confirmation 58
Financial Impact of a Confirmation 59
Demo 6.7 Confirm Production Review confirm production 60
Goods Receipt Goods receipt into storage Movement type 101 Impact Material, FI, CO documents Material master update (quantity and value) Production order update (quantity, date, costing) 61
Elements of a Goods Receipt 62
Data in a Goods Receipt 63
Financial Impact of a Goods Receipt 64
Demo 6.8 Goods Receipt from Production Review goods receipts from production 65
Periodic Processing Overhead calculation Work in progress determination Settlement 66
Overhead Calculation Indirect costs Supervisor, manager, other salaries Utilities Accumulated in cost centers Periodically allocated to production orders based on predetermined rules 67
Work-in-Progress Determination Work-in-progress (WIP) inventory Inventory between GI and GR inventory Periodically the value of what is in the production process is calculated and posted to the general ledger Not essential For short production processes Value of materials is not high GBI Essential When value of materials is high Production takes weeks, months, or years Aircraft production, construction. 68
Settlement Settle the difference between planned and actual costs (variance) Only panned costs are posted in the GR step Variance is settled in this step 69
Financial Impact of a Settlement 70
Reporting General SAP reporting options Online lists Work lists Analytics Production-specific reporting options Stock/requirement lists 71
Production Information System - Components 72
Production Information Systems - Operations 73
Stock/Requirements List 74
Demo 6.9 Stock/Requirement List Review/stock requirement list 75