SAP PP

An overview of the SAP R/3 Production Planning

(PP) module

Automotives Building Materials Chemicals Engineering Construction and Operations Fabricated materials Power plant Construction Healthcare Utilities Services Apparel and Footwear Discrete manufacturing Food and Beverages

Industry Sectors for Production

Manuf. Type Strategy Example

Discrete MTSMTOETO

Standard AssembliesCustom Req. MaterialConstruction

Repetitive MTS Spare Parts

Process Industry MTSMTO

Foods, Beverages & Pharmaceuticals

Production Planning Overview

Agenda Review of Materials Management PP Organization Bills of Material Work Centers Routings Material Requirements Planning

Agenda (Cont’d)

Processing Planning Results Production Order Management Capacity Planning and Leveling Product Cost The Production Cycle Sales and Operations Planning Master Planning and Demand Management Master Production Scheduling

Review of MM Organization

Material Typee.g. Raw material, semi-finished good, service, trading good, finished productControls access securityDetermines how material is procuredControls how material movements affect financial accountsLinked to material number rangesControls what fields appear on what screens

Industry SectorControls what fields appear on what screens

Unit of Measuree.g. Piece, box, crate, pallet, Each, KG, LitreDifferent parts of the business can measure quantities in different units

Multi-Lingual Texts

Material Master Data

Material Master Data

General Data St. Loc. Specific Data Plant Specific DataSales Specific Data

Material Master

Data applicable throughout the client

e.g.

Material number

Description

Units of measure

Weight

Volume

Product hierarchy

Data dependent on sales organization and distribution channel

e.g.

Delivering plant

Sales text

Sales units

Shipping data

Division

Data relevantfor planning andproduction

e.g.

MRP profile

Production costs

Planning data

Valuation

Data referring to storage and inventory management

e.g.

Quantities

Special stock

Warehouse attributes

Material Types in the Standard SAP

Material Type

DIENERSAFERTHALBHAWAHIBELEERNLAGROHVERPWETTPROD

ServiceSpare PartFinished ProductSemi-finished ProductTrading GoodOperating SupplyEmpty ContainersNon stock ItemRaw MaterialPackagingCompetitor ProductProduction Resources/ Tools

Description

ProductData

EngineeringDesign

Sales

ProductionStock

Finance

Purchasing

Master data is a key pieceof information in the system

Master data can be seen froma number of views

Each view can correspondto an SAP module

Each view has a numberof information screens

Each view belongs to an org unit within the business

One product may have multiple plant and sales views, one for each plant or sales area

Master Data Views

EngineeringDesign

Sales

Production Stock

Finance

Purchasing

Examples of How Data is Used

Texts copiedto purchase orders

Maintains stock levels by plant, storage location, and batch

Data used tocalculate MRP

lead times

Controls customer ordering rules

for material

Controls whichGeneral Ledger

Account is updated

Material descriptionused in reporting

ProductData

Production Planning

Production Planning Basic Data

Routings

Work CentersMaterials

CapacitiesInspectionPlans

Production Facilities

Bills of Material

PP Basic Data Production Resources/Tools

F06010

Production Planning Functionality

Provides overviews from rough-cut throughto detailed shop floor planning

PP-CRP Capacity Requirements Planning

Controls production costingPP-PC Product Costing

Generation of order proposals based on requirements defined by PP-SOP

PP-MRP Material Requirements Planning

Generates data used for processing orders, e.g., dates, costs and resources

PP-SFC Production Order Control

Coordination and planning of production activitiesPP-SOP Sales and Operations Planning

Monitoring / analyzing on-going production activities / data

PP-IS Shop Floor Information System

Products, Production Processes and Resource Requirements

PP-BD Basic Data for Production

Bills of Material

Bills of Material

Simple BOM Variant BOM Multiple BOM

Simple BOM representing single material

Similar materials representedby variants on one BOM

BOM representing a material which can be made up of multiple compositions e.g. different components

and quantities

Bill of Material Validity Area of Validity – The same Bill of

Material can be allocated to several plants. Before you can allocate the BOM to a different plant, the material must exist at the new plant, the unit of issue on the BOM item must be the same.

Validity Period (Valid from/to dates)• Becomes effective with the valid from date• The validity date is determined by the system

automatically to be either the next effective from date, or 12/31/1999.

A A

B C B DX----------------------------------------------------------->>>>from 1/1/95 from 12/31/95to 12/30/95 to 12/31/99

BOM Scrap Data

Assembly Scrap – yield or process scrap resulting from the assembly of components into a finished or sub-assembly. It is used for calculating material used in an assembly. MRP increases the material requirements for all components contained in the assembly.Example: Quantity to produce 1000 units with a 1% assembly scrap = 10 units

Component Scrap – considers component loss before the component is used in an assembly. For example, shrinkage during storage. The scrap refers only to the component in the assembly. When the BOM is exploded, MRP increases the quantity of the component. Example: Component Qty of 1000 units with a 5% component scrap would need 1050 units required.

Bill of Material Glossary BOM Category – categorizes BOM’s to represent

different objects; for example:• Material BOM -- structure of products manufactured• Equipment BOM -- structure of equipment for plant

maintenance• Document BOM -- structure of documents such as

drawings (3.0) BOM Group – is a collective number for all BOM’s in a

group which allows for one or several similar products to be decribed under one number.• All Alternatives of a multiple Bill of Material• All variants of a variant Bill of Material

BOM Usage – special view of the BOM which represents a specific area of the company in which the BOM is used; for example, Engineering, Production, Costing, Sales, Plant Maintenance. The BOM Usage allows different views to exist without separate BOM’s for each usage.

Technical Type – the system distinguishes BOM’s according to whether they represent product variants or production alternatives. If you create a variant for the BOM, the system marks it as a Variant Bill . If there is more than one alternative for a material, the system marks the BOM as a Multiple Bill.

Bill of Material Glossary BOM Validity – Bills of Material are valid over an area and effectivity period.

Area of Validity -- identifies which plants the BOM has been allocated to Validity Period -- identifies the from and to effectivity dates. The default to date is

12/31/9999 Item Category – When you enter a new Bill of Material item, an item category must be

assigned.It has important control functions such as: Screen selection Specific processing, such as material number required, negative values supported. The Item Category cannot be changed once set. It must be deleted and re-added. Sizes are maintained for variable-size items Item categories include:

• Stock Items -- material in stock as a component• Non-stock Items -- material not stocked - with or without a material number• Variable-size -- system calculates the quantity required using formulas• PM Structure Item -- used with plant maintenance equipment• Document Item -- used with Document BOM’s

Sub-Items – are typically used to represent different installation points for partial quantities of an item.

In assembling resistors on a printed circuit board, the installation points are described.

There is no logic related to sub-items

BOM Structure

BOM Header

Item 10

Item 20

Item 30

Sub Item 10

Sub Item 20

Plant AssignmentValidity PeriodRelease Indicator

Stock ItemsNon-stock ItemsVariable Size ItemsDocument ItemsText Items

Additional component details

e.g. installation pointsfor components

BOM StructureProduct

Component 2

Component31

Component32

Component33

Component 3(assembly)Component 1

By-product Document Part Class

Components:

Stock material Non-stock material Variable-sized item Text item Scrap/waste

Variant Bills of Material

Several similar products are represented in one bill of material

Bike withBlack Frame

HandlebarAssembly

Gear Assembly

Bike withRed Frame

Bike withBlue Frame

Red Frame/Fork Assembly

Blue Frame/Fork Assembly

Chrome Forks Black Frame

Red Frame

Blue Frame

Qty. for variant 1Qty. for variant 2

Black Frame/Fork Assembly

Multiple BOM

A finished product can be manufactured using different methods of production with different components or component quantities

Qty. for alternative 1Qty. for alternative 1Qty. for alternative 2

Alt 1 - Lot Size 1 to 100Alt 2 - Lot Size 101 to 500Alt 3 - Lot Size 501 to 1000

Qty. for alternative 2

Pigment 2

Production Variants

Blue Paint

Solvent Water Pigment 1

One material but with different combinations ofcomponent material based on production method

BOM explosion Single-level Bill of Material Multi-level Bill of Material Summarized Bill of Material

BOM Reporting

Component Where used Single-level Where used Multi-level Where used Summarized Where used

C

A B

BOM Recursiveness

E1

K1 B3 K2

E1 K3

Work Centers

AssemblyLine

Machines

People

ProductionLine

Capacity Requirements Planning

Scheduling, Execution Times

Costing

Work Centers

Work Centers

Cost Center

Work Center HierarchyPlant 1

Production

Assembly

Assm Line 1

Assm Line 2

WorkCenter 1

WorkCenter 2

Fabrication

Plant 2

Production

Fabrication

Mach = 10 hrsLabor = 8 hrs

Mach = 6 hrsLabor = 10 hrs

Mach=16 hrsLabor=18 hrs

Work Centers and Routings

Routing

Operation 10

Operation 20

Operation 30

Work Center W1

Cost Center 100Assembly

Cost Centre 200

Work Center W2 Finishing

Cost Center 200

Work Center W1

Cost Center 100Assembly

Work Center Category Work centers are allocated to different work center categories

The work center category is used to control the field and screen selectionfor work centers during work center maintenance.

Work Center Category Screen View

Statistical Work center Basic Data

Production Work Center Basic DataDefault ValuesCapacity ValuesSchedulingCost Center Assignment

Cost Center Assignment to Work Center for Operation Costing

Cost Center

Oper 0010 Oper 0020 Oper 0030 Oper 0040

Routing with standard values

Set Up (SET)

Machine (MACH)

Labor (LAB)

Work Centerwith Activitiesduring production

Activity Rates

Set Up $70.00

Mach $60.00

Labor $80.00

Overhead $70.00

Work Center Capacity

Oper 0010 Oper 0020 Oper 0030 Oper 0040

Routing with standard values

Set up Formula

Machine Time Formula

Teardown Formula

Work CenterFormulas

Set up 1.0 hrs

Machine 5.5 hrs

Teardown .5 hrs

Operation Std Values

Work Center Schedule

Use of Formulas in Work Centers

Available Capacity at a Work Center

8 hrs

1 hr

7 hrs

1 hr

6 hrs

WorkingHours

BreakTime

WorkingHours less

Breaks

PlannedDowntime

ProductiveWorkingHours

Routings

BOMGroups

Production Master Data

Materialsand PRTs

Bills of Material Routings Work

Centers

RoutingGroups

CostCenters

ComponentsAllocated toOperations

Item Category

Material Type

W/C Category

Routing Structure Views

Routing

Operation 30Operation 20Operation 10

Work Centre: PP-ASSEM

Control Key:- Time Tkts- Costing

Operation Text:Pre-assemble

frame

Std Values:Lab:10 mins

Mach:10 mins

MaterialsComponents

BOM

Process Resource Tool

(PRT)

Operation

Operation types

(Main) operation

Sub-operationSub-operation HierarchyCosting

Completion confirmations Scheduling always takes place on the

(main) operation level

The control key defines whether completion confirmations and costing are carried out on the (main) operation level, or on the sub-operation level.Indicator: group operation sub-operation level

combined operation (main) operation

Operation / Sub-operation

Operation0010

Operation0020

Sub Operation0010 / 10

at Work Center A1


at Work Center A2


at Work Center A3

Schedule at Operation Level

Useful when processing for operation 0010occurs over multiple work centers

Capacity Planning & Costingpossible at Sub Operation Level Level

03 02

Sequence CategoriesMaterial

RoutingGroup 01

Oper 10

Oper 20

Oper 30

Oper 40

Oper 50

Oper 60

Oper 10

Oper 15

Oper 20

Oper 40

Oper 50

Alternate Seq 0001

Parallel Seq 0002

Standard Seq 0000

Branch operations

Return Operations

Routing Types

Standard Routing

Reference Routing

10 20 N

10 20 N

Material

R 1

Reference Operation

Set Z

Reference Operation

Set Y

Reference Operation SetsOper 0010

Oper 0020

Oper 0030

Oper 0040

Oper 0050

Oper 0022

Oper 0024

Oper 0026

Oper 0045

Reference Operation Set X

Material Allocation

Op. 10

Op. 20

Op. 30

Op. 10

Op. 30

Routing BOM

Product

Material

1

1

2

2

01

02

01

02

1

1

1

2

3

1

2

3

1

1

Routing Group

Routing GroupCounter

Material-Routing Allocations

A routing alterative can be allocated to several materials. A material in a plant can be allocated to several alternatives.

Routing Default Values

RoutingMaterialMaster

WorkCenter

Base Unit of MeasurePlanner GroupShort Text

Control KeyStandard ValuesActivitiesStandards Text KeyHR data

External ProcessingOper 0010

Oper 0020

Oper 0040

Oper 0050

Purch Reqn

Purch Ord

Vendor Proc

Goods Rec

Routing data copied to orderincluding quantities and dates

Purchasing creates P.O.

At goods receipt, the operationis confirmed

Operation Lead Time

Float Before Float AfterOper 0010 Oper 0020 Oper 0030

Queue | Setup | Process | Teardown | Wait | Move

Execution TimeInteroperation Time

Interoperation Time

Operation Lead Time

Routing Operation Sequences

StandardRouting represents a standard sequence defining production procedure

ParallelRouting includes processes which can be performed simultaneously to achieve time efficiencies

SplitRouting includes processes which can/must be split across a numberof work centers

OverlappedRouting defines process where one operation is to overlap with the following operation

Parallel Operation Sequences

Special form of overlapping Positioning the parallel sequence at the beginning or end of an operation Usage: for example in the chemical industry for analytical processes

which run parallel to the production process

Op. 10

Op. 20 Op. 20

Op. 30 Op. 90

Op. 40

Material Requirements Planning

MRP Features

MRP

Lot sizing

Order schedulingand generation

Internal productionand external purchasing

Net requirementscalculation

Bill of MaterialExplosion

Forecasting

MRP Overview

Overview Purchased ItemsMRP

Purchasing

Accounting

Warehousemanagement

system

Goods receipt

Inventory managementValuation

Goods Transfer issue posting

Invoice receipt

Invoice verification

Master data

MaterialBatchesVendors

Customers :

MRP: Reorder Point Planning

Reorder Point

Safety Stock

Order Date Delivery DateTime

Stock

PurchasingProcess Time

Vendor Planned Delivery Time

Desired Delivery DateRelease

Order Date

Forward Scheduling for External Procurement

Today

Goods ReceiptProcess Time

Forward scheduling used for reorder point material

Daily Accumulation:

Sales Orders

Planned Individual Requirements

Reservations

Entriesfrom

Planning File

Warehouse Stock

+

Open Order Proposals

Shortages

Order Proposal

Net Change Planning

Coverage calculation per requirement date

MRP Types

VB

VM

VV

PD

M0

Manual Reorder Point Planning:MRP produces order proposals when stock falls below a “reorder point”. The reorder point and safety stock levels are entered manually

Automatic Reorder Point Planning:The reorder point and safety stock level are calculated based on the forecast results

Forecast PlanningThe latest forecast is copied as requirements which are used to create order proposals

Deterministic PlanningMRP produces order proposal(s) to match the exact quantity of the requirements based on independent and dependent demands

Master Production SchedulingSimilar to PD but used for master schedule items

Carrying Out the Planning Run

Total Planning – All materials in a given plant

All materials are reviewed by MRP regardless of activity

Only the materials in a plant that have undergone a change relevant to planning since the last planning run (net change planning)

Planning Interval – Limiting the MRP Planning Interval

Time

Planned requirements andsupply order receipts

example:100 days

MRP Planning Horizon

MRP List

MRP ControllerGroup of Materials for which controller

is responsible

Controller’s MRP Listing

Goods ReceiptGoods Issues

MRP Order Proposals and Planner Messages

from MRP Planning run.

Planner can drill down to review material movement activity

Stock OverviewThe Stock Overview shows the stock position for all locations within a Company/Plant/Storage Location/Batch for all dispositions of material

Total Company 100 20 15

Plant US01 Total 100 20 15

SLoc 0001Total 75 Batch 01 Total 45 Batch 02 Total 30

SLoc 0001Total 25

Unrestricted Quality Ins Reserved On Order ...

Stock Requirements List

Date MRP Element Supply/Demand Ref EM Quantity Available

01/01 STOCK 10001/08 ORDER Sales Order 25 7501/15 PL ORD 1000 120 05 100 17502/01 -----------------------------------------------------> Planning Time Fence

Stock Requirements List brings together all the supply orders, independent and dependent demands and stock balances for the material. MRP makesorder proposals to balance the supply/demand position for the material

Processing Planning Results

Order Proposals: Planned Orders

Procurement Type isIn-house Production

MRP MRPController

Planned OrderOrder QtyOrder DateCapacity Reqts.Resource Reqts.

Production Order

Planning for In-house Production

PlannedOrder

ProductionOrder

Auto Change/ Delete if situation changes

AutoCreation

Collective Conversioninto Production Order

Manual changes/deletion

ManualCreation

Planning Run MRP Controller

Individual Conversioninto Production Order

ProductionOrder Release

Planning for External Procurement

Planned OrderAuto Creation

Convert Planned Orders to Requisitions

Manual Change/Deletion

Manual Creation

Planning Run MRP Controller

PurchaseRequisition

Purchase Order

DeliverySchedule

Auto Change/Deletion

Auto Creation

Auto Change/Deletion

Auto Creation


Manual Creation


Create PO via Requisition

Manual Creation

Purchasing Group

Auto Change or Delete

Link to Scheduling Agreements

Quota Arrangement

External Supplier

MRP Planning Run

Source List

Schedule AgreementLines Created

MRP Supplierfrom Source List

Scheduling Agreement

50 Units50 Units50 Units

Distribution Function

50 Units 50 Units

Several planned orders are created for partial quantities of the dependent requirement quantity

The planned orders are scheduled for various dates within the run time of the production order

A daily provisioning of partial quantities distributed over the run time of the order is possible

Models a continuous flow process

Total Requirement of 250 units for the week

Master Planning and Demand Management

Master Planning Demand Management

• Planning and Consumption Strategies• Specification of Requirement Quantities and Delivery Dates

Master Production Scheduling• Planning for Master Schedule Items• Planning Time Fence• Interactive MPS

Copy from Sales Plan

Copy from Prodn Plan

Copy from Forecast

Copy from Orig Plan

Demand Management“Demand Program”

Manual Planned Independent

Requirements

Sales Demand fromSales Orders

MRP/MPS

Sales and Operations Planning

Demand Management

Planning Strategy – Make-to Stock Make product for stock in expectation of

customer sales Plan using planned independent requirements for

“anonymous” make-to-stock production. Use Net or Gross Requirements Planning

• Net Requirements -- includes warehouse stock, planned issues and receipts

• Gross Requirements -- excludes warehouse stock. Just includes planned and open orders

Example is a shelf stock item such as a bike accessory light

Planning Requirement Type is LSF - make to stock which is used in the planned independent requirements transaction

Sales Order Requirement is KSL - which is sale from stock

Sale from stock Planning

Production Push

Warehouse Stock Finished Product

Strategy: Make-To-Stock Production

Example: Common shelf items such as a bike accessory (light)

Planning Strategy – Planning with Final Assembly Make product in expectation of customer sales

Plan using planned independent requirements at finished goods level to drive demand to long lead time components

Typically there is a longer lead time to produce than the customer is willing to wait for

Sales orders consume the planned independent requirement quantities

Planned quantities that are not consumed by sales orders result in excess stock

Example is a long lead time custom product

Planning Requirement Type is VSF – planning with final assembly

Sales Order Requirement is KSV – which is sales order with consumption

Sales Order Planning

Production Push


Example: Custom furniture such as a cherry table

Final Assembly

to Sales OrderPurchase Produce

MRP without reference to sales order

Planned Independent Requirements

Strategy: Planning with Final Assembly

Planning Strategy – Planning Without Final Assembly Final assembly is initiated by the customer sales order Stop production at sub-assembly level Final assembly pull Example is automobile assembled with unique combination of features (sub-assemblies) Planning Requirement Type is VSE -- planning without final assembly Sales Order Requirement is KEV -- independent customer order with consumption

Sales Order

Planning

Production PushFinal Assembly Pull


Warehouse StockAssembly 01


Example: Option oriented product such as a car

Stop at level


Assembly when Sales Order Scheduled

Purchase Produce

Strategy: Planning Without Final Assembly

Planning Strategy – Planning with Planning Material

Planned independent requirements of Planning Material initiate procurement of the planning bill components

Sales orders for the final assembly create planned orders of the finished product and reduce planning quantities for the planning material

Possible to plan a family of products from forecast placed on the planning bill. The planning bill details, through percentages, the quantity required for common parts

Example is a bike with common sub-assemblies used in many finished items

Planning Requirement Type is VSEF -- planning with planning material

Sales Order Requirement is KEVV -- independent customer order with planning material

Sales Order Planning


Customer StockFinished Product

PlanningMaterial



Example: Bikes with the same features except for the color

Purchase Produce Note: Percentages drive lower level demands for sub assemblies

Strategy: Planning with Planning Material


Planning Strategy – Planning at (Sub)Assembly Level Used if forecasts are more reliable at the sub-

assembly level. (hour-glass) Sales orders received initiate an explosion of the

finished product level Resulting dependent requirements consume the

planning quantities of the finished product Must maintain the Mixed MRP Indicator in the

Material Master MRP2 View forsub-assembly planning. Maintain the consumption indicator in the item screen of demand management

Example is a PC where the forecast for individual features is more accurate than forecasts for the completed PC’s

Planning Requirement Type is VSFB -- planning at assembly level

Sales Order

Planning





Example: A PC with a large number of end item configurations

Brake AssemblyCommon Sub Assembly

Strategy: Planning At Assembly Level

Sales Order

Production by Lot Size Pull


Example: Combine customer orders for the same item

Strategy: Production by Lot Size

Planning Strategy – Make to Order Production Sales orders are planned according to

sales order number Produced quantities for each sales order

are managed individually Production and procurement costs are

managed in either a settlement order ora project

Example is a custom product with a unique structure such that it only applies to a particular customers order

Sales Requirement Type is KE -- independent customer order without consumption

Sales Order

Production by Lot Size Pull


Example: New machinery

Strategy: Make-To-Order Production

Customer requirements consume planning requirements directly before or after it Consumption mode is either determined in the material master record or

in the configuration menu of demand management Consumption mode determines either --

Backward consumption – requirements directly before the sales order

Forward consumption – requirements directly after the sales order

Both types are allowed – the system looks for the next closest planning requirements

If no consumption periods exist, then you can only consume requirements planned

on the same day.

Example -- Forward Consumption

01/07 01/14 01/21 01/28Planned Requirements 0 0 0 100Customer Requirements 25 -------^

Example -- Backward Consumption 01/07 01/14 01/21 01/28

Planned Requirements 0 100 0 100Customer Requirements ^----- 25

Consumption Logic

Production Order Management

Material at 0010------------------------------• Material Number• Quantity• Date

Operation 0020------------------------------• Work Center• Control Info• Operation Times

Elements of a Production Order

Order Header------------------------------ Settlement Rule Planned/Actual Costs Operation Sequence

Operation 0010------------------------------ Work Center Control Information Operation Times

Material at 0010------------------------------ Material Number Quantity Date

Production Order HeaderOrder Header

Main View

Order Type Order Number Production Order Quantity Production Order Date

Order HeaderMaster Data

For Routing For Bill of Material For Costing

Order HeaderAllocation Data

For Plant MRP Controller

Order HeaderAcct Assignment

Settlement Rates

Order HeaderOrder Monitoring

Date Quantity

Production Order Operation

OperationOverview

Operation Sequence

OperationGeneral View

Work Center Control Key Text Status

OperationStandard Values

Base Quantity Standard Times (Setup, Machine, Labor)

Operation Dates

Dates per time element

Splitting Default Values Overlap Default Values Continuous Flow Production

OperationOverlap/Split

Production Order Component

Material Number Requirement Quantity Requirement Date

Reservation Item Category Bulk Material Indicator

Operation Long Text

Text Key

ComponentOverview

ComponentGeneral Data

Production Order

Material: A, Qty: 100 PCSSchd Type: BBasic dates: Start/Finish

Components Operations0010 B 1 0010 PHNASM000020 C 1 0020 0030 0040

User fields:• General text data• Quantity data• Value data• Date fields

Production Order

0010 PHNASM00002000300040

PHNASM00Std Values:Setup: 005Prodn: 075TDown: 005

Routing

Work Center

A

B C

Bill of Material

The Production Cycle

The Production Cycle

Issue Materials to

Order

SelectBOM

SelectRouting

ScheduleTimes & Dates

CalculateCapacity

Purchase Requisitions

GoodsIssue

Production Order

CalculatePlanned Costs

ReleaseOrder

Check Availability

Print Shop Floor Papers

CreateOrder

CreateRequired Purchases

ConfirmCompletion

Receive complete goods into stock

GoodsReceipt

Confirmation Slip

CalculateActual Costs

ActualLabor

Production Order Cycle Status CREATED RELEASED DISPATCHED CONFIRMED DELIVERED COMPLETE . BOM and RTG . Completion Conf- . Capacity Leveling . Actual Production . Goods Receipt . Actual costs selected irmation possible possible for oper usage and time delivered settled to captured cost objects. Lead Time . Shop paper printed Scheduling . Milestone operation (MILE). Reservations . Availability Check created for possible, at or components before release

. Capacity Reqmts . Material issues for Work Centers after oper release . Planned Order costs created (PRC)

. Settlement Rule Determined (SETC)

CRT REL DSPT CNF DLV COMP

Production Order CreationManual

Order CreationOrder Proposal

MRP Conversion

DetermineOrder Type

RoutingSelection

Lead TimeScheduling

Bill of MaterialSelection

Enter start or finish datedepending on scheduling direction

Component Overrides Material Reservations Item Categories

Alternate Sequence Assignments One operation is required

Changes are allowedbefore order release

Production Order ReleaseProduction OrderReady for Release

Material AvailabilityCheck

Order orOperation Release

Shop Paper Printing Possible

MaterialWithdrawals Possible

Order release is carried out manually

Uses checking rules defined in configuration

On-line or in background Pick List, Confirmation Slips,...

Material Availability Check

Stock on Hand

150 Units

Reservationfor

50 Units

NetAvailable 150 100 300 100

Planned Orderfor

200 Units

Dependent Requirement

for 200 Units

Requirement for 50 Units are Available

Material Availability Check

Stock on Hand

150 Units

Reservationfor

50 Units

NetAvailable 150 100 300 100

Planned Orderfor

200 Units

DependentRequirement

for 200 Units

Requirement for 150 Units not Available

06/01/95Today

Goods Movement for a Production Order

Material 1

Material 2

Production

Goods receipt of Material 3

Goods Issue Consumption ofMaterial 1 and 2

Reservation

Planned Goods Issue

Unplanned Goods Issue

Goods issues only apply to stock items

Goods Issue Results

Goods Issue Posting

UpdateReservations

G/L AccountUpdate

Accounting

Material Document

MaterialUsage

Statistics

Cost ObjectAllocation

Completion ConfirmationsProduction Order

Operations

0010 - Assemble Board

0020 - Assemble Case

0030 - Assemble unit

0040 - Final Test

C

ConfirmOperation 0010

Activities


Activities


Activities


Activities

Partial or Final Confirmation Single or Collective Confirmation Milestone Confirmation Reduction of Capacity Requirements Determination of Actual Costs

Milestone

Confirmation DataQuantity

Dates

Labor

Yield Scrap Quantity Scrap Reason

Start date Finish date

Work Center Personnel Number Qualification Wage Group Wage Type

Capacity

Capacity Planning

MRP Requirements

Capacity Requirements

Capacity Evaluation

Work Center Capacity

MasterData

Material

BOM

Routes

WorkCenter

Capacity Levelingto adjust capacityperiods

Standard Values• Formula Key• Formula

Constants

• Std ValuesSet up .5 hrsProc 5.5 hrs

Teardown .5 hrs• No. Splits

FormulasSetup | Process | T/D

Work Center Operation

CapacityRequirements

Formulasfor

Schedulingand

CapacityReqmts

Tables

Capacity Scheduling

Float Before Float AfterOper 0010 Oper 0020 Oper 0030

Queue | Setup | Process | Teardown | Wait | Move

Execution TimeInteroperation Time

Interoperation Time

Operation Lead Time

Material Master Lead Time

Lead Time Reduction Measures

Float Before Float AfterQueue | Setup | Process | Teardown | Wait | Move (2) (1) (6) (1) (2) (2)

Use Minimum Queue Time

Optional Splittingor Overlapping

Use Minimum Move Time

ReduceFloat Time

ReduceFloat Time

Queue(1)

Split ProcessSet up(1) Split Process

Wait(1)

T Down(1)

Move(1) Float AfterFloat Before

Standard FormulasOperation Time is ....

Queue Time + Execution Time + Wait Time

Queue Time specified in the operation

Execution Time = Setup + Proc Time * Lot Size/Base Qty

Wait Time specified in the operation

Product Costing

Costing IntegrationPP

PP-PCProduct Costing

PP-MRPMat. Requirements

Planning

PP-MPSDemand Management

PP-BDBasic Data

PP-ISShop Floor Info

System

PP-CRPCapacity Planning

PP-SFCProduction Activity

Cntrl.

CO

CO-PCProduct Cost Acctg.

CO-PAProfitability Analysis

CO-PAProfit Centers

CO-OPAOrders

CO-CCACost CenterAccounting

R/3Client / Server

SD

MM

PP

QA

PM

HR IS

OC

PS

AM

CO

FISales &

Distribution

MaterialsMgmt.

ProductionPlanning

QualityAssurance

Plant Main-tenance

HumanResources

IndustrySolutions

Office &Communi-

cation

ProjectSystem

Fixed AssetsMgmt.

Controlling

FinancialAccounting

Costing and Organizational Structures

Plant PP01 Plant PP02 Plant PP03 Plant 0001

Valuationarea PP01

Valuationarea PP02

Valuationarea PP03

Valuationarea 0001

Companycode 0001

Companycode 0002

Companycode PP01

Controllingarea 0001

Controllingarea PP01

Client

Chart of accounts

GKR

(

)

()

Logistics and Cost Accounting

Logistics

Materials managementProduction planningMaterial requirements planningProduction ordersCapacity planning

Cost elementsCost centersCO orders

Cost Accounting

Pricing

Valuation

Profitability analysis

Controlling

Cost object controlling:• Preliminary and standard costing• Final costing

Master Data for CostingMaterial Master Record

• Costing View — Product Costing Indicator, Costing Lot Size, Overhead Group• Accounting View — Valuation Class, Category, Price Control

Bills of Material — Materials required to make the product

Cost Center — Accounting dataWork Center — Standard Value key and

Efficiency RateRouting — Relevancy to Costing Indicator

Component Cost Layout 02Cost Component 1 Raw MaterialsCost Component 2 ProductionCost Component 3 Overhead-MaterialCost Component 4 Overhead-ProductionCost Component 5 Overhead-AdminCost Component 6 Overhead-SalesCost Component 7 External Processing..Cost Component 15 Miscellaneous

.

Cost Components• Cost components are defined in Product Costing Customizing• Each costing variant (standard cost, current cost, ...) points to a cost component layout• There can be up to 40 cost components in a cost component layout• For each cost component identify which costs are rolled up to the next higher level

Component Cost Layout 01

Cost Component 1 Raw MaterialsCost Component 2 ProductionCost Component 3 Overhead-MaterialCost Component 4 Overhead-ProductionCost Component 5 Overhead-AdminCost Component 6 Overhead-SalesCost Component 7 External Processing..Cost Component 15 Miscellaneous.

The Production Order and Inventory Accounting

A Production Order collects all costs associated with making an inventoriable item. The order “picks up” costs through the manufacturing process from the Bill of Material and the Routing.

Billof

Material

Routing

Production Order

STATUS:Created, Released,

Confirmed, Delivered,Settled

Order: 73 Type: PP01Plant: LR001Sys Status:CRT REL CNF DLV SETCQuantities: Total Produced: 100 Tons Scrap: .001 Confirmed: 100 TonsDates: Schedule 09/15/95 Confirmed 09/16/95

Costing Production OrdersPreliminary

Order CostingFinal

Order CostingSimultaneousOrder Costing

• Planned Order Costs are calculated from target input quantities according to BOM and Routing

• Standard Price for R/M• Planned Activity Prices• Planned Overhead Rates

• Actual material and activities used & confirmed

• Invoices for external activities

• Overhead Calculated Rates

• Order confirmed complete• Quantities delivered have

been posted• Last operation confirmed

complete

Calculating Production Costs

CostCenter Formula

Routing

• Standard values• General standard values

Work center

• Formula constants

Activity type

Actual time/quantityActivity price

Costs

Overhead CostingDirect material costs

Indirect material costs

Direct production costs

Indirect production costs

Costingsheet

+

+ =

=

Material costs

Production costs

+

=Manufacturing costs

Indirect managementcosts

Indirect sales costs

Cost of goods sold

+

+

=

The Costing SheetCalculation basis

• Cost element• Origin

Overhead• Percentage rates• Planned/actual• Dependencies

Order type/categoryPlantCompany codeBusiness areaOverhead key

Credit• Cost element• Origin• Object

Cost centerOrder

Make-to-Order ProductionOrder

Delivery

Goods issue

Invoice

Material requirements planning

Production

Sales orderstock

Target—

Actual—

Individual customer requirements

Production memo

Reduction of

sales order stock

Cost Objects with Make-to-Order Production

Objects of integrated R/3 modules

Material number (MM)• Production order, operation (PP)• Sales order (SD)• Project item (PS)• Network (PS)• CO order (CO)

Basic General Functions for Cost Object Controlling

Master data• Cost object, cost object hierarchy• Internal/external numbering system

Preliminary costing• Costing items• Automatic valuation• Planning aids (revalue, copy, reference)• Cost component structure

Simultaneous costing• Actual quantity used * price• Overheads• Actual yield• Calculation of target costs• Variances according to category• Work in progress

Analysis of actual product costs• Closed periods • Settlement to stock (at standard price)• Settlement to profitability analysis (variances)

Controlling• Summarization using classifiable characteristics• Selection using classifiable characteristics• Cost object analysis

Cost Roll-up• Costs for assemblies in the low-level code with the highest number are calculated first• Upper level is production costs at this production level• Lower level is costs of all material components processed at this production level• Total costs are the sum of the costs for the upper and lower level costs

Cost Component Split - TotalMaterial Internal Activity External Activity Overhead

Cost Component Split - Upper LevelMaterial

Cost Component Split - Lower LevelMaterial Internal Activity External Activity Overhead

Cost Component Split - Upper Level Internal Activity External Activity Overhead

Cost Component Split - TotalMaterial Internal Activity External Activity Overhead

FinishedProduct

Semi-FinishedProduct

RawMaterial

Master Production Scheduling

Separate Planning Run for Master Schedule Items During an MPS run, only master schedule items are planned Dependent requirements are created for the BOM level directly below the planning level Levels below the master schedule items are not planned Changes can be made to the master plan without effecting lower BOM levels Supply orders are reviewed for timing and quantity to match requirements Allows for daily planning without a negative impact on system performance

MPS Item

Assembly 1 Assembly 2

MPS level

MRP level

MPS Functions

Protects the master plan from automatic changes to the master schedule During a planning run, no automatic change proposals are made within the

planning time fence which is determined for each item in the Material Master. The system calculates the planning time fence starting from the planning date

Planning Date Planning Time Fence

Automatic Order ProposalsOrder Proposals are Fixed

Planning Time Fence

Create PlannedIndependent Requirements

Carry outSeparate MPSPlanning Run

Make Changes UsingInteractive MPS

Start MRP Runfor Lower Levels

Using Demand Management

Proposal Changes within Planning Time Fence System Creates Order Proposals Outside PTF

Fine tune MPS Items withinPlanning Time Fence

Carry-out MRP

MPS Procedure

Planning Run Types Regenerative Planning – all master schedule

items are planned for a plant. It is generally used during initial start-up to insure all items are planned or when heavy maintenance causes most items to be re-planned.

Net Change Planning – only master schedule items which have undergone a change to the supply/demand balance, such as warehouse receipts and issues, are re-planned. It is common to run net change MPS daily.

Net Change Planning in the Planning Horizon – shortens the period over which MPS plans to the planning horizon, which is set in Customizing. It is typically set to the length of time of the longest lead time item. This means that only those master schedule items which have undergone a relevant change within the planning horizon are planned.

The system does not plan new order proposals within the planning time fence. Instead, new requirements needed within the planning time fence are scheduled at the end of theplanning time fence, depending on the fixing type.

Planning Date Planning Time Fence

Automatic Order ProposalsOrder Proposals are Fixed

During the next planning run, the system places all order proposals that crossed overthe planning time fence at the PTF. The master scheduler needs to “fix” or firm theseorder proposals to the correct date inside the PTF. Once fixed, the system will not change.

Orders can be firmed collectively (Planned orders->firm) through selection of MRP controller, material, run schedule, production version, or planning id.

Firming Planned Orders

Availability Check

Inward movementof goods

Outward movementof goods

Stock

PurchaseOrder

PurchaseRequisition Planned

Order

DeliverySalesOrder Reservation

Other factors to take into account:

Safety stockStock in transfer

Replenishment lead timeBlocked stock in QA

Documents

SAP PP