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The Production Process. Introduction. Production is both a SCM function and an accounting function Simply put, the process involves turning raw materials into finished goods YOUR BOOK DOES A VERY GOOD JOB WITH THIS TOPIC. Production Steps. Types of Production (1). Discrete manufacturing

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  • Production is both a SCM function and an accounting function

  • Simply put, the process involves turning raw materials into finished goods


Types of production 1
Types of Production (1)

  • Discrete manufacturing

    • The result is an individual unit (or many of them) such as a bicycle

    • The finished good “could” be decomposed back into its raw materials

    • Production lines are set up and torn down to make batches of different materials

      • Hewlett Packard

Types of production 2
Types of Production (2)

  • Repetitive manufacturing

    • Similar to discrete manufacturing

    • The same finished good is produced over time on the same production line

    • The production line is not changed to make different products

    • Used when production lines are very expensive

      • Intel (Chips)

      • Seagate (Disks)

Types of production 3
Types of Production (3)

  • Process manufacturing

    • Products are made by means of a recipe

    • Categories

    • Continuous (flow)

      • Gasoline

    • Batch

      • Soda and beer

  • We will not work with these

Means of production
Means of Production

  • Triggers cause production runs to be executed

    • Make to stock

      • Make a batch resulting from MRP or other production trigger

    • Make to order

      • Make a unit(s) as a result of a customer order

      • Dell

Production master data
Production Master Data

  • Bill of materials (BOM) contains components that make up a product or assembly

  • Work centers are locations within a plant where production operations are performed

  • Product routings list the activities involved in producing the product defined by the BOM

  • Product groups are used in planning to aggregate planning activities

Bill of materials overview
Bill of Materials (Overview)

  • In general, the components needed to produce semi-finished goods or finished goods

  • In the case of process manufacturing, we call a BOM a formula or recipe

    • We will focus on discrete manufacturing

Bill of materials sap
Bill of Materials (SAP)

  • SAP implements BOM as a flat structure

  • Hierarchical BOMs can be created using “component” materials (assemblies)

  • The BOM structure should mimic the manufacturing process

  • See the BOMs in Figure 6-4 on page 184

Bill of materials organization
Bill of Materials (Organization)

  • A BOM applies to a “plant”

    • Different plants might make the same finished good using a different BOM

  • A material can have “alternate” BOMs

    • These might be used for different processes having different lot sizes

    • This is more common in process manufacturing

    • We will not work with alternate BOMS

Bill of materials organization1
Bill of Materials (Organization)

  • Header section

    • Applicable to the finished good

    • List the plant and BOM number

    • The purpose of the BOM (production, engineering, plant maintenance)

    • Base quantity

    • Minimum and maximum lot size

Bom usage
BOM Usage

  • (+must, .can, -cannot)

Bill of materials organization3
Bill of Materials (Organization)

  • Items section

  • The raw materials that go into making the finished good

    • Item type

    • Item

    • Item quantity

Bill of material item categories
Bill of Material (Item Categories)

  • Inventory is maintained for stock items (L)

  • Inventory is not maintained for non-stock items (N)

  • Variable sized items (R) are available in different dimensions (quantities)

    • Lumber, for example

Bill of material item categories1
Bill of Material (Item Categories)

  • Document items (D) represent applicable documentation

    • Manuals, for example

  • Class Items (K) are used in variant (configurable) BOMs

    • Different paint colors perhaps

Bom complexity
BOM Complexity

  • A 747-400 contains

    • 6.5 million parts

      • Countless assemblies

    • The process requires that many parts are inspected before, during, and after installation

Bill of materials navigation
Bill of Materials (Navigation)

  • Logistics / Production / Master Data / Bills of Material / Bill of Material / Material BOM

    • CS01 – Create

    • CS02 – Change

    • CS03 – Display

Work center introduction
Work Center (Introduction)

  • “A resource used to produce a material”

    • It can be a machine, a group of machines, or an entire production line

    • It can be a person or group of people (labor)

Work center introduction1
Work Center (Introduction)

  • Work centers can be arranged hierarchically

  • Work centers have capacities

    • They can produce finite outputs given a set of constraints

      • People work 8 hours a day

      • Machines can perform at some speed

Work center global bike
Work Center (Global Bike)

  • We have work centers for

    • Bike Assembly

    • Inspection

    • Packaging

Work centers sap
Work Centers (SAP)

  • A workcenter belongs to a plant

  • Work centers have a category that describes the work center

    • Machine / Labor / Production line / Etc..

  • A work center has a standard value key

    • These are activities that consume time

      • Setup

      • Processing

      • Teardown

Work centers sap1
Work Centers (SAP)

  • Control keys define how an operation is scheduled

  • Default values containing wage data can be associated with a work center

  • Note that work centers are associated with cost centers. This is how we allocate production costs

  • See Figure 6-7 page 189

Work center categories
Work Center Categories

Work center navigation
Work Center (Navigation)

  • Logistics / Production / Master Data / Work Centers

    • CR01 – Create

    • CR02 – Change

    • CR03 – Display

Work center basic data
Work Center (Basic Data)

Work center scheduling
Work Center (Scheduling)

Work center costing
Work Center (Costing)

Routings introduction
Routings (Introduction)

  • These are the detailed operations performed by (at) one or more work centers to produce a finished good

    • Think of the detailed operations required for an assembly line to run

  • Routing Sequences Have

    • Operations that get performed

    • Material(s) required

  • Routings apply to a material and plant

Routing header
Routing (Header)

  • Task (production / plant maintenance / …)

Routing sequences
Routing Sequences

  • Routing sequences

    • Using sequences, you can create standard and parallel sequences

    • Sequences are performed “in-order”

    • Alternate sequences might be performed in place of standard sequences

Routing operations
Routing (Operations)

  • The tasks we perform to manufacture

  • Data

    • The time it takes to perform the task

    • How many items are processed per interval of time

      • Setup, labor, machine

    • Steps in a routing operation are performed by a work center

Production routing materials
Production Routing (Materials)

  • The materials needed to produce the good

  • This information comes from the BOM

Routing navigation path
Routing (Navigation Path)

  • Logistics / Production / Master Data / Routings / Routings / Standard Routings

    • CA01 Create / CA02 Change / CA03 Display

Production capacity
Production Capacity

  • Production has a capacity that relies on

    • A factory calendar describing workdays and holidays

    • A capacity for people and machines

    • Some number of shifts that workers work

    • Look at page 195 in your text.

Production capacity factory calendar
Production Capacity (Factory Calendar)

  • Multiple calendars describe

    • Public holidays and the current

    • The calendar used by the factory

    • The assignment of a calendar to a plant

Production capacity factory calendar1
Production Capacity (Factory Calendar)

  • Holiday calendar

Maintaining capacities
Maintaining Capacities

  • Each work center in a plant has a capacity

    • A capacity name (SHIFT for example)

    • A capacity category (machine or person for example)

Maintaining capacities1
Maintaining Capacities

  • Capacity header describes available capacity

Maintaining capacities2
Maintaining Capacities

  • Global Bike runs 1 shift with 1 hours of breaks per shift

The production process overview
The Production Process (Overview)

  • Request production

  • Authorize production

  • Release production order

  • Goods issue to production order

  • Actual production

  • Production confirmation

  • Goods receipt into inventory

Request production
Request Production

  • Production is typically requested because of a trigger

    • A customer order (make-to-order)

  • An MRP

  • Manual creation

  • In the end, a production order gets generated

Authorize production
Authorize Production

  • This is the actual commitment to produce

    • Production (machine / people) time is allocated for specific dates

  • Authorization might be created from planned or unplanned orders

Authorize production sap
Authorize Production (SAP)

  • Production might be authorized because of

    • Planned production / a sales order / for a material (finished good)

  • We get preliminary estimates of cost

  • Logistics / Production / Shop Floor Control / Order / create

    • C001

Release production order
Release Production Order

  • This is where the authorized order is actually released to production

    • Production starts the manufacturing process at a given date and time

    • RTP might happen manually or automatically

    • Shop papers are generated

Goods issue
Goods Issue

  • Raw materials are removed from storage triggered by the production order release

  • Material staging takes place

  • Backflushing

Goods issue 2
Goods Issue (2)

  • Raw material inventory is updated

  • Inventory accounts are updated

  • Material costs are added to the production order

  • See the GL transactions on page 208

Actual production
Actual Production

  • We make the material and record production times

Production confirmation
Production Confirmation

  • Accounting finalizes the production run

  • Production costs are recorded

Here the produced goods are transferred from production to goods storage

Goods receipt
Goods Receipt

  • Here, the goods are released into inventory

    • Inventory

    • Held for a particular customer

    • Held for QA or other reason