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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 navigation
Work Center (Navigation)
  • Logistics / Production / Master Data / Work Centers
    • CR01 – Create
    • CR02 – Change
    • CR03 – Display
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
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