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Make-to-Stock Production – Discrete Industry. SAP Best Practices. Purpose, Benefits, and Key Process Steps. Purpose This scenario describes a business process, which is typical for companies with lot-size oriented production.

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purpose benefits and key process steps
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 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
Detailed Process Description
  • Make-to-Stock Production – Discrete Industry
    • This 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 diagram

No

Yes

Yes

No

Process Flow Diagram

Make-to-Stock Production – Discrete Industry

Event

Periodic Plan Revision

Beginning of Planning Cycle

StrategicPlanner

Creating Planned Independent Requirements

Logistics Planning (144)

Production Planner

Capacity Leveling O.k.?

Material Requirements Planning at Plant Level & Evaluation of Stock / Requirement List

Update Capacity

1

MRP List

Order Print

Release Production Order

Material Available?

Capacity Leveling

Convert

Planned Order to Production Order

Purchase Requisition

Planned Orders

Manufacturing

Confirming Assembly Activities

/ Final Confirmation

Semi-Finished Goods Receipt

Inventory @ Standard. Cost

Pick List

Material Staging for Planned Orders

Inventory Consumption @ Standard. Cost

Goods Issue/ Back flush

Goods Receipt Slip

Ware-house Clerk

Finished Goods Receipt

Goods Receipt Slip

Period End Closing “General” Plant

(181)

Plant Controller

Procurement & Consumption of Cosigned Inventory (139)

Buyer

Procurement w/o QM

(130)

Procurement of Stock Material with QM (127)

MM Subcontracting (138)

PP-Subcontracting (External Processing)

(150)

process flow diagram1
Process Flow Diagram

Make-to-Stock Production – Discrete Industry

Event

Production Supervisor

Review Operation List

1

legend

Diagram Connection

Legend

<Function>

Hardcopy / Document

External to SAP

Financial Actuals

Business Activity / Event

Budget Planning

Unit Process

Manual Process

Process Reference

Existing Version / Data

Sub-Process Reference

Process Decision

System Pass/Fail Decision

materials requirement planning mrp
Materials Requirement Planning - MRP

Planned Ind. Requirements

Material

Reqmts

Planning

DependentReqmts

Reservations

Planned

Order

Convert

Production

Order

Warehouse

work center
Work Center

Work Center: Assembly

Default values

Routings

Costing Data

Sched. Data

Capacity Data

Routings

Scheduling

& Capacity

Costing

1010,-

2150,-

3160,-

routing work center operation

Work center

Control key

Standard values

Activity types

Description

....

Routing Work Center / Operation

Routing Header

Operation 10: Final Assembly

Material Components

planned order conversion

Production

order

Planned Order Conversion

Planned

orders

IndividualConversion

Individual Conversion

Planned

Production

orders

orders

Collective Conversion

Collective Conversion

production order creation

FridayJanuary28 2011

TuesdayJuly

12 2011

Production Order Creation

Manually

Requirements planning

Automatically

Specify order type

Define order item

Copy routing

Lead time scheduling

Copy bill of material

Availability check

Optional changes

Save production order

Optional (Customizing)

production order processing

Order header

20

100

50

Production Order Processing

Order proposal (planned order)

Order settlement

Production Order

Operations

Order creation

Goods receipt

Components

Availability

check

Confirmations

Costs

Order release and batch determination for components

Material withdrawal

goods movement

Accounting

document

Goods Movement

Prod.order

Warehouse

Operation

Mat. comp.

Material

Costs

Goods movement

Material document

  • Update of stock quantities
  • Update of stock values
  • materials can be batch controlled
goods issue
Updating stock quantities

Updating stock values

Reducing reservations

Calculating actual costs and up-dating the order

Goods Issue

Goods issue

posting

Materialdocument

Acctg.document

production order confirmations

Production

order

Production Order Confirmations

Manual entry

Operation 0010

Operation 0020

Operation 0030

Order confirmation

...

Operation . . . .

production order preliminary costing
Production Order - Preliminary Costing

Planned costs

Planned costs

Material

components

Phases

Material

components

Phases

Cost elements

:

Cost elements

:

Ind

. "

Rel

. to

costing

"

Gen.

operation values

l

l

Material

costs

Price

Standard

values

l

l

l

Control key “costing indicator”

Costs for external

procurement

Order

type

/ Plant

Production costs

Order

type

/ Plant

Resources

Resources

Costing variant

l

Formula key for

l

Material

overhead

costing

costs

Cost center

l

Display planned/actual costs

Activity type

l

Production overhead

Formula constants

l

costs

Cost calculation

log

Costs for external

Cost elements

l

processing

Cost itemization

l

Cost component split

l

cost of production order
Cost of Production Order

Material

components

Work center

Cost center

Operation

- Work center

- Standard value

- Quantities

- Cost center

- Activity types

- Formulas

- Activity types

- Quantities

- Prices

Activity cost

- Periods

Material costs

Internal activities costs

Overhead calculations

Production order cost

wip and variance calculation in lot based cost object controlling
WIP and Variance Calculation in Lot-Based Cost Object Controlling

Actual Costs

Actual Costs

-

-

Actual Costs

Delivery

Value

Delivery

Value

=

=

=

WIP at

Actual Costs

WIP at

Actual Costs

Variances

Order

Status

DLV

TECO

PREL

REL

PDLV

Finally Delivered or Technically Completed

Pre-Released or Released

Partially Delivered

settlement of order example

CO-PC

CO-PA

FI

Financial Accounting

Settlement of Order (Example)

Production Order Mat. F126

Product cost planning

Lotsize 1 PC

800

1.200

400

2.400

-2.000

400

CO-

PC

Actual Cost

Target Version 0

Price 150

Qty 150

Structure 100

Scrap 0

Lotsize 0

Material

600

Material

Production

Surcharge

GR

Variances

Surcharge

300

Production

1100

Material Master

Standard Price = 2000

Settlement

Warehouse

Price difference

2000

400