Make-to-Stock Production – Discrete Industry

Make-to-Stock Production – Discrete Industry

SAP Best Practices

© 2011 SAP AG. All rights reserved. 2

Purpose, Benefits, and Key Process Steps

Purpose This scenario describes a business process, which is typical for companies with lot-size oriented

production. The production scenario produces a finished good and all dependent components in make-to-

stock production (MTS). Furthermore, the scenario is supported by the main cost object controlling functions required,

such as preliminary costing and period-end closing.

Benefits Production triggered by a production plan Serial number and batch management included Optional with: quality management, consigned inventory, external processing

Key Process Steps Creating Planned Independent Requirements Material Requirements Planning at Plant Level In-House Production (subassembly) In-House final assembly (Finished Good) Capacity Leveling Confirming Assembly Activities


Required SAP Applications and Company Roles

Required SAP Applications Enhancement package 5 for SAP ERP 6.0

Company Roles Production Planner Production Supervisor Shop Floor Specialist Warehouse Clerk Strategic Planner Engineering Specialist


Detailed Process Description

Make-to-Stock Production – Discrete IndustryThis scenario describes a business process, which is typical for companies with lot size oriented production. The production scenarios consist of both goods movements (goods issues and receipts) and confirmation of completion of the production order. Furthermore, the scenario is supported by the main cost object controlling functions required, such as preliminary costing

and period-end closing. The typical planning process starts with sales quantity planning. The previous period’s actual sales figures can be used

as a basis for future planning. In Sales and Operations Planning, you ensure that production stays in line with sales so that you may create the

production plan synchronously to sales. The planning data is transferred from Sales and Operations Planning to Demand Management. Demand Management generates independent requirements, which are used in the subsequent Material Requirements Planning (MRP) run.

In material requirements planning, the bill of materials (BOM) for the top-level material demand gets exploded and production is planned right down to procured component level. MRP results in planned orders being generated for the material to be produced.

If insufficient warehouse stock is available, purchase requisitions are created for the raw materials required. When the order is created, target costs are calculated for the order lot size (preliminary costing).

During the production process, costs incurred are updated on the order, which enables you to keep track of and compare target costs and actual costs at any time.

Period-end-closing activities are applied to the order. This includes Work In Progress calculation and variance calculation. After this, Work in Progress is settled to financial accounting and production variances are settled to management and

financial accounting.


Process Flow DiagramMake-to-Stock Production – Discrete Industry

Man

ufa

ctu

rin

gE

ven

t

Pla

nt

Co

nt

rolle r

Period End Closing

“General” Plant(181)

Material Requirements

Planning at Plant Level & Evaluation of Stock / Requirement

List

Beginning of Planning

Cycle

Purchase Requisiti

on

MRP List

Inventory @ Standard. Cost

Pro

du

ctio

n P

lan

ner

Periodic Plan Revision

Release Production

OrderCapacity Leveling

Material Staging for

Planned Orders

Confirming Assembly Activities

/ Final Confirmation

Semi-Finished Goods Receipt

Goods Issue/ Back flush

Update Capacity

Goods Receipt Slip

Pick List

Order PrintPlanned Orders

Capacity

Leveling O.k.?

Material Availabl

e?

Bu

ye r

War

e-h

ou

se

Cle

rk Goods Receipt Slip

Procurement of Stock

Material with QM (127)

Procurement &

Consumption of Cosigned

Inventory (139)

Str

ateg

ic

Pla

nn

er Creating Planned

Independent Requirements

ConvertPlanned Order to Production

Order

Inventory Consumption @ Standard.

Cost

Procurement w/o QM

(130)

Finished Goods Receipt

MM Subcontractin

g (138)

PP-Subcontractin

g (External Processing)

(150)

No

Yes

No

Yes

Logistics Planning

(144)

1


Process Flow DiagramMake-to-Stock Production – Discrete Industry

Pro

du

ctio

n

Su

per

viso

r

1 Review Operation List

Eve

nt


Legend

Symbol Description Usage Comments

To next / From last Diagram: Leads to the next / previous page of the Diagram

Flow chart continues on the next / previous page

Hardcopy / Document: Identifies a printed document, report, or form

Does not correspond to a task step in a document; instead, it is used to reflect a document generated by a task step; this shape does not have any outgoing flow lines

Financial Actuals: Indicates a financial posting document


Budget Planning: Indicates a budget planning document


Manual Process: Covers a task that is manually done

Does not generally correspond to a task step in a document; instead, it is used to reflect a task that is manually performed, such as unloading a truck in the warehouse, which affects the process flow.

Existing Version / Data: This block covers data that feeds in from an external process

Does not generally correspond to a task step in a document; instead, this shape reflects data coming from an external source; this step does not have any incoming flow lines

System Pass / Fail Decision: This block covers an automatic decision made by the software

Does not generally correspond to a task step in the document; instead it is used to reflect an automatic decision by the system that is made after a step has been executed.

Ext

erna

l to

SA

P

Business Activity / Event

Unit Process

Process Reference

Sub-Process

Reference

Process Decision

Diagram Connection

Hardcopy / Document

Financial Actuals

Budget Planning

Manual Process

Existing Version /

Data

System Pass/Fail Decision

Symbol Description Usage Comments

Band: Identifies a user role, such as Accounts Payable Clerk or Sales Representative. This band can also identify an organization unit or group, rather than a specific role.

The other process flow symbols in this table go into these rows. You have as many rows as required to cover all of the roles in the scenario.

Role band contains tasks common to that role.

External Events: Contains events that start or end the scenario, or influence the course of events in the scenario.

Flow line (solid): Line indicates the normal sequence of steps and direction of flow in the scenario.Flow line (dashed): Line indicates flow to infrequently-used or conditional tasks in a scenario. Line can also lead to documents involved in the process flow.

Connects two tasks in a scenario process or a non-step event

Business Activity / Event: Identifies an action that either leads into or out of the scenario, or an outside Process that happens during the scenario

Does not correspond to a task step in the document

Unit Process: Identifies a task that is covered in a step-by-step manner in the scenario

Corresponds to a task step in the document

Process Reference: If the scenario references another scenario in total, put the scenario number and name here.


Sub-Process Reference: If the scenario references another scenario in part, put the scenario number, name, and the step numbers from that scenario here


Process Decision: Identifies a decision / branching point, signifying a choice to be made by the end user. Lines represent different choices emerging from different parts of the diamond.

Does not usually correspond to a task step in the document; Reflects a choice to be made after step execution

<F

unct

ion>


Convert

Planned Order

Dependent Reqmts

Reservations

Warehouse

Material ReqmtsPlanning

Materials Requirement Planning - MRP

Planned Ind. Requirements

ProductionOrder


Alternative Planning Strategies for Finished Product

Strategy Net Requirements Planning (10) Planning with Final Assembly (40)

Customer requirements passed on to production No Yes

This means . . . ... sales orders do not influence production ... sales orders that exceed planned independent requirements can influence production

... the main objective is to ensure smooth production

... the most important factor here is the ability to react flexibly to customer demand

Planned independent requirements allocated and reduced during sales order processing No Yes

Planned independent requirements reduced at goods issue for delivery Yes No


Work Center

Work Center: Assembly

Routings Costing Scheduling& Capacity

1010,-2150,-3160,-

Default valuesRoutings

Costing Data Sched. DataCapacity Data


Routing Work Center / Operation

Routing Header

Operation 10: Final Assembly

Material Components

Work centerControl keyStandard valuesActivity typesDescription....


Individual ConversionIndividual Conversion

Plannedorders

Productionorders

Collective ConversionCollective Conversion

Planned Order Conversion

Productionorder

Plannedorders


Specify order typeSpecify order type

Define order itemDefine order item

Copy routingCopy routing

Lead time schedulingLead time scheduling

Copy bill of materialCopy bill of material

Optional changesOptional changes

Save production orderSave production order

FridayJanuary28 2011

TuesdayJuly12 2011

Requirements planningRequirements planningRequirements planningRequirements planningManuallyManuallyManuallyManually

Availability checkAvailability check

AutomaticallyAutomaticallyAutomaticallyAutomatically

Optional (Customizing)

Production Order Creation


Order proposal (planned order)

Order creation

Availability check

Order release and batch determination

for components

Order settlement Order headerOrder header

OperationsOperations

ComponentsComponents

CostsCosts 2050

100

Material withdrawal

Goods receipt

Production Order Processing

Production Order

Confirmations


Material

Goods movementGoods movement

Material document

Accountingdocument

Warehouse Warehouse

OperationOperation

Mat. comp.Mat. comp.

Prod.Prod. orderorder

CostsCosts

Update of stock quantitiesUpdate of stock quantities Update of stock valuesUpdate of stock values materials can be batch controlledmaterials can be batch controlled

Goods Movement


Goods issue posting

Materialdocument

Acctg.document

Goods Issue

Updating stock quantitiesUpdating stock quantities Updating stock valuesUpdating stock values Reducing reservationsReducing reservations Calculating actual costs and up-Calculating actual costs and up-

dating the order dating the order


Order confirmationOrder confirmation ...

Manual entry

Production Order Confirmations

Productionorder

Operation 0010

Operation 0020

Operation 0030

Operation . . . .


Costing variant

Display planned/actual costs

Cost elementsCost itemizationCost component split

Planned costsPlanned costs

Material costs

Costs for externalprocurement

Production costs

Material overheadcosts

Production overheadcosts

Costs for externalprocessing

Cost elementsCost elements:: PhasesPhases

Gen. operation values

Standard valuesControl key “costing

indicator”

ResourcesResources

Formula key forcosting

Cost center

Activity type

Formula constants

Cost calculationlog

Ind. "Rel. to costing"

Price

MaterialMaterial components components

OrderOrder type type / Plant / Plant

Production Order - Preliminary Costing


Production order cost Production order cost

Overhead calculationsOverhead calculations

- Work center- Standard value- Quantities

- Cost center- Activity types- Formulas

- Activity types

Operation

Internal activities costsMaterial costs

Cost of Production Order

- Quantities- Prices

Work center Cost centerMaterialcomponents

- Periods

Activity cost


Order Status

Pre-Released or Released Partially Delivered Finally Delivered or Technically Completed

Variances

DeliveryValue

Actual Costs

WIP atActual Costs

=WIP atActual Costs

=

-DeliveryValue

=

-

PREL

REL PDLVDLV

TECO

WIP and Variance Calculation in Lot-Based Cost Object Controlling

Actual Costs Actual Costs


Material600

Product cost planningLotsize 1 PC

CO-CO-PCPC

Production Order Mat. F126

8001.200

4002.400

-2.000

400

MaterialProductionSurcharge

GR

Variances

Actual Cost

CO-PC

Material MasterStandard Price = 2000

Target Version 0

Price 150 Qty 150 Structure 100 Scrap 0 Lotsize 0

Production1100

Surcharge300

Warehouse Price difference

Financial Accounting

2000 400

SettlementFI

CO-PA

Settlement of Order (Example)


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Make-to-Stock Production – Discrete Industry