Faculty 3, Department of Economics ICourse: Bachelor of International Business                                            ...
Table of Contents1.      Introduction .......................................................................................
Individual Case Study: Production of Bicycles                                                                          Van...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                             Vanessa Günther,...
Individual Case Study: Production of Bicycles                                                         Vanessa Günther, Ali...
Individual Case Study: Production of Bicycles                                                            Vanessa Günther, ...
Individual Case Study: Production of Bicycles                                                         Vanessa Günther, Ali...
Individual Case Study: Production of Bicycles                                                             Vanessa Günther,...
Individual Case Study: Production of Bicycles                                                          Vanessa Günther, Al...
Individual Case Study: Production of Bicycles                                                       Vanessa Günther, Alina...
Individual Case Study: Production of Bicycles                                                         Vanessa Günther, Ali...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                  Vanessa Günther, Alina Sach...
Individual Case Study: Production of Bicycles                                                   Vanessa Günther, Alina Sac...
Individual Case Study: Production of Bicycles                                                   Vanessa Günther, Alina Sac...
Individual Case Study: Production of Bicycles                                                                  Vanessa Gün...
Individual Case Study: Production of Bicycles                                                         Vanessa Günther, Ali...
Individual Case Study: Production of Bicycles                                                       Vanessa Günther, Alina...
Individual Case Study: Production of Bicycles                                                                Vanessa Günth...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                      Vanessa Günther, Alina ...
Individual Case Study: Production of Bicycles                                           Vanessa Günther, Alina Sachapow, H...
Individual Case Study: Production of Bicycles                                                         Vanessa Günther, Ali...
Individual Case Study: Production of Bicycles                                              Vanessa Günther, Alina Sachapow...
Individual Case Study: Production of Bicycles                                       Vanessa Günther, Alina Sachapow, Hanna...
Individual Case Study: Production of Bicycles                                           Vanessa Günther, Alina Sachapow, H...
Individual Case Study: Production of Bicycles                                                         Vanessa Günther, Ali...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                                Vanessa Günth...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                      Vanessa Günther, Alina ...
Individual Case Study: Production of Bicycles                                                      Vanessa Günther, Alina ...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                        Vanessa Günther, Alin...
Individual Case Study: Production of Bicycles                                                   Vanessa Günther, Alina Sac...
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Information management, SAP Project by Vanessa Günther, Alina Sachapow, Hanna Tresselt

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Information management, SAP Project by Vanessa Günther, Alina Sachapow, Hanna Tresselt

  1. 1. Faculty 3, Department of Economics ICourse: Bachelor of International Business B25: Information Management 2 Summer Semester 2011 Individual Case Study: Production of Bicycles Based on SAP (ECC 6.0; IDES system)Written by: Vanessa Günther Alina Sachapow Hanna Tresselt Berlin, 07.07.2011
  2. 2. Table of Contents1. Introduction ................................................................................................................................. 22. Creating Material Master Records ............................................................................................... 3 2.1. Material Master Record for Bicycle (Finished Product)........................................................ 3 2.2. Creating Material Master Record for Frame (Semi-finished Product) .................................. 8 2.3. Creating Material Master Record for Frame Assembly (Semi-finished Product) ................. 9 2.4. Creating Material Master Record for Wheel (Semi-finished Product) ................................ 10 2.5. Creating Material Master Record for Pedal Assembly (Semi-finished Product) ................ 10 2.6. Creating Material Master Record for Gear Wheel (Semi-finished Product) ....................... 10 2.7. Creating Material Master Record for Drive Chain (Semi-finished Product) ....................... 11 2.8. Creating Material Master Record for Spoke (Raw Material) .............................................. 11 2.9. Creating Material Master Record for Hub (Raw Material) ................................................. 13 2.10. Creating Material Master Record for Rim (Raw Material) ................................................. 14 2.11. Creating Material Master Record for Cover (Raw Material)............................................... 153. Creating Required Bills of Materials ......................................................................................... 16 3.1. Creating Bill of Material for Wheel ..................................................................................... 16 3.2. Creating Bill of Material for Frame ..................................................................................... 17 3.3. Creating Bill of Material for Bicycle ................................................................................... 174. Creating Routings ...................................................................................................................... 19 4.1. Routing for Wheel ............................................................................................................... 19 4.2. Routing for Frame ................................................................................................................ 24 4.3. Routing for Bicycle .............................................................................................................. 255. Testing the Business Process ..................................................................................................... 27 5.1. Calculating Product Costs .................................................................................................... 27 5.2. Updating Prices .................................................................................................................... 29 5.3. Price Release ........................................................................................................................ 306. Manufacturing ........................................................................................................................... 31 6.1. Receiving Goods for Required Components ....................................................................... 31 6.2. Creating Production Order ................................................................................................... 32 6.3. Confirming Production Order .............................................................................................. 34 6.4. Displaying Automatic Goods Movement ............................................................................ 35 6.5. Checking Warehouse Stock ................................................................................................. 36 6.6. Calculating Manufacturing Time ......................................................................................... 367. Conclusion ................................................................................................................................. 378. Bibliography .............................................................................................................................. 38
  3. 3. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 1. IntroductionIDES system is a motorcycle and bicycle manufacturing company that has recently received a specialorder to produce 25 fixed-gear bicycles. These are a type of “a bicycle that has no freewheel, meaningit cannot coast – the pedals are always in motion when the bicycle is moving”.1 The order was placedby the Cycle Ball Club Cycle Ball Lovers. The price offered is €599,00. Thus, this case study will tryand create the necessary logistics master data to further use it in a simple manufacturing process. Forthat purpose it will apply SAP Enterprise Resource Planning System (ECC 6.0; IDES system). It willfurther calculate production costs and manufacturing time using Microsoft Excel.Each fixed-gear bicycle in question will consist of two identical in the structure front and rearwheels, one frame and a pedal assembly including a gear wheel and a drive chain + a chain lock. Allwheels will be manufactured by assembling 32 spokes, a rim, a hub and a cover (including a tire anda valve). At each rear wheel a gear wheel will be drawn up. Thus, the targeted bill of material shouldhave the following structure: Bicycle (finished product) GEAR WHEEL DRIVE CHAIN FRAME WHEEL (semi-finished goods) (semi-finished goods) (semi-finished goods) (semi-finished goods) FRAME PEDAL GEAR ASSEMBLY ASSEMBLY WHEEL SPOKES HUB RIM COVERThe first chapter will create the material master record for the finished and semi-finished products aswell as raw materials. The second chapter will deal with the required bill of materials for the wheel,the frame and the bicycle. The third chapter will proceed with creating the routings for the wheel, theframe and the bicycle. The forth chapter will test the generated business process, calculate, update andrelease the prices. Finally, the targeted product will be manufactured in the SAP system.1 Wikipedia, the free encyclopedia (2011), http://en.wikipedia.org/wiki/Fixed-gear_bicycle. Accessed 05.06.2011. 2
  4. 4. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2. Creating Material Master Records 2.1. Material Master Record for Bicycle (Finished Product)To create a material master record for the finished product RGD-BICYCLE732, one should selectLogistics  Materials Management  Material Master  Material  Create (Special) Finished Product or just key in transaction code MMF1 in the SAP Easy Access menu. As hasalready been mentioned, the material number is ‘RGD-BICYCLE732’. The industry sector isMechanical Engineering [M] and the main views that are of interest and have to be activated areBasic Data 1 and 2, all three Sales entries, all four MRP entries, Work Scheduling, Accounting 1and 2, and Costing 1 and 2. Thus, the first screenshot looks as follows: 3
  5. 5. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltNote: Create views selected is activated, too.The next step is to enter the organizational levels so that the system can create the new material. Therequired information includes the production plant in Hamburg [1000], the storage location Lager0001 Materiallager [0001], the sales organization [1000], which is situated in Frankfurt, Germany andis responsible for selling and distributing pumps, elevators, lighting, motorcycles, vehicles and hightech products2, and, finally, distribution channel 10, which is aimed at the final customer (see below):The first data view for creating the material master record for the final product is Basic Data 1. Itcovers the main facts concerning the final product RGD-BICYCLE732, which is measured in units[PC], has a gross weight of 10,5 kilograms [KG], a net weight of 10 kilograms, a volume of 60 cubiccentimeters [CCM] and is produced cross divisionally [00].The sales org.1 view specifies the key facts concerning the delivering plant and tax particulars. Thedelivering plant for the bicycles is Werk Hamburg [1000], and the product is fully taxed [1] inGermany. The tax type is VAT or Mehrwertssteuer, which is the output tax for IDES system as theyare going to sell the final product:2 See SAP Help (2011),http://help.sap.com/saphelp_ides/helpdata/en/e6/4a6f959e0311d189b70000e829fbbd/content.htm. Accessed 02.07.2011. 4
  6. 6. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe Sales: general/plant view describes further sales particulars. It deals with the transportationdetails – Lot for Truck [0005] and loading – Manual [0003]. The sales venue is the general plant andavailability check is performed daily [01]. For further details, please, see below: 5
  7. 7. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltMRP 1 view defines the MRP type as [PD]. The MRP type is a key that controls the MRPprocedure to be used for planning a material. It controls which planning parameters must or can beentered when maintaining the material master record.3 MRP controller [001] is a disponent who isresponsible for the allocation and supervision of the final product in IDES system. The person canbe contacted under the telephone number 1174. The lot size [EX] is Lot-for-lot order quantity.MRP 2: The fixed-gear bicycles are planned to be produced in-house [E] and stored in theproduction storage location [0001]. The planned in-house production time is 3 days and thescheduling margin key is [001]:MRP 3: A total replenishment lead time is 5 days. This is the time that the company needs to order therequired raw materials and semi-finished products, receive them and assemble everything to get thefinished product.4 The period indicator is a month [M] and the availability check is performed daily [01].3 See sap-img.com (2011), http://www.sap-img.com/production/how-mrp-type-in-mm-mrp-view-1-works.htm. Accessed02.07.2011.4 See SAP Help (2011),http://help.sap.com/saphelp_46c/helpdata/en/93/744b8a546011d1a7020000e829fd11/content.htm. Accessed 03.07.2011. 6
  8. 8. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltAccounting 1 view: The fixed-gear bicycles are finished products, thus, valuation class 7920 ischosen. The material ledger is not active, hence, the two methods of price control that are availableare a standard price and a moving price. Price control S (standard price) is taken because of theassumption that the price of the final product will not fluctuate too often. The targeted price of€599,00 per 1 bicycle is specified. This price is relevant for the current period of May 2011 andthere is still no stock at hand:In the Costing 1 view, Material origin is activated. As the final product shall later be sold to theCycle Ball Club Cycle Ball Lovers (a German customer), the necessary entry is created in theadditional data subcategory:Finally, the material master record for the final product is saved. 7
  9. 9. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2.2. Creating Material Master Record for Frame (Semi-finished Product)A material master record for the semi-finished product RGD-FRAME732 is created under Logistics Materials Management  Material Master  Material  Create (Special)  Semifinished Product(transaction code MMB1). The material number is ‘RGD-FRAME732’. The industry sector isMechanical Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing, four MRPentries, Work Scheduling, Accounting 1 and Costing 1. The Create views selected indicator is activated.The entries are confirmed by pressing Enter and the Organizational Levels dialog box appears. Herethe main facts for the frame production process are specified. These are: plant Werk Hamburg[1000] and the storage location [0001].Basic Data 1 describes the main facts concerning the semi-finished product in question. It ismeasured in units [PC], belongs to the area of mechanics – Material group [00104] – and is assignedto Cross division [00], which implies that the actual manufacturing of this part happens in differentdivisions within the company. MRP 1 view defines the MRP type as [PD], MRP controller as [001]and the lot size as [EX]. This implies Lot-for-lot order quantity and means that the system willcreate a procurement element for the exact shortage quantity (e.g. required quantity minus availablestock).5 The next view is MRP 2. As the frames are planned to have both procurement types (in-house production and external procurement), X is assigned here. This means that the actualassembly is done by the company’s own workforce in Werk Hamburg but it has to rely on externalsuppliers, as far as the delivery of the required semi-finished products (i.e. frame assembly, gearwheel and pedal assembly) is concerned. The frames are to be stored in the production storagelocation [0001] and the storage location for EP (External Procurement) Materiallager is [0001]. Thescheduling margin key is [000] implying that there are no float times planned.Accounting 1 view: The frames are semi-finished products, thus, valuation class 7900 is assigned tothem. The material ledger is not active, hence, the two methods of price control that are available are astandard price and a moving price. Price control S (standard price) is taken because of the assumptionthat the price of the semi-finished product will not fluctuate too often. The price of €102,00 per 1frame is specified. This price is relevant for the current period of June 2011. The data are saved.5 See SAP Help (2011),http://help.sap.com/saphelp_40b/helpdata/fr/7d/c275d1454011d182b40000e829fbfe/content.htm. Accessed 03.07.2011. 8
  10. 10. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2.3. Creating Material Master Record for Frame Assembly (Semi-finished Product)A material master record for the semi-finished product RGD-FRAME-ASSEMBLY732 is createdunder Logistics  Materials Management  Material Master  Material  Create (Special) Semifinished Product (transaction code MMB1). The material number is ‘RGD-FRAM-ASSEMB732’. The industry sector is Mechanical Engineering [M]. The views of interest are BasicData 1 and 2, Purchasing, four MRP entries, Work Scheduling, Accounting 1 and Costing 1. TheCreate views selected indicator is activated.In the Organizational Levels dialog box, the main facts for the frame assembly production arespecified. These are: plant Werk Hamburg [1000] and the storage location [0001].Basic Data 1 describes the main facts concerning the semi-finished product in question. It ismeasured in units [PC], belongs to the area of mechanics – Material group [00104] – and is assignedto Cross division [00]. MRP 1 view defines the MRP type as [PD], MRP controller as [001] and thelot size as [EX]. The next view is MRP 2. As the frame assemblies are planned to have bothprocurement types (in-house production and external procurement), X is assigned here. They are tobe stored in the production storage location [0001] and the storage location for EP Materiallager is[0001]. The scheduling margin key is [000] meaning that there are no float times planned.Accounting 1 view: The frame assemblies are semi-finished products, thus, valuation class 7900 isassigned to them. The material ledger is not active, hence, the two methods of price control that areavailable are a standard price and a moving price. Price control V (moving average price) is takenbecause of the intention to value the stocks with the latest price. The price of €75,00 per 1 frame isspecified. This price is relevant for the current period of June 2011. Save is pressed to confirm allthe entries and to be directed to the easy access menu. 9
  11. 11. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2.4. Creating Material Master Record for Wheel (Semi-finished Product)As the bicycle wheel is also a semi-finished product, transaction MMB1 is used in order to create itsmaterial master record. The material number here is ‘RGD-WHEEL732’ with the industry sectorMechanical Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing, MRP 1 to 4,Work Scheduling, Accounting 1 and Costing 1. The main facts for production are plant WerkHamburg [1000] and the storage location [0001].Basic Data 1, MRP 1, and MRP 2 repeat the steps explained under the previous semi-finishedproducts. As far as Accounting 1 view is concerned, the only difference here is the moving averageprice of €58,20. 2.5. Creating Material Master Record for Pedal Assembly (Semi-finished Product)As the pedal assembly is also a semi-finished product, transaction MMB1 is used in order to createits material master record. The material number here is ‘RGD-PEDAL732’ with the industry sectorMechanical Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing, MRP 1 to 4,Work Scheduling, Accounting 1 and Costing 1. The main facts for production are plant WerkHamburg [1000] and the storage location [0001].Basic Data 1, MRP 1, and MRP 2 repeat the information discussed above. As far as Accounting 1view is concerned, the only difference here is the moving average price of €10,00. 2.6. Creating Material Master Record for Gear Wheel (Semi-finished Product)As the bicycle wheel is also a semi-finished product, transaction code MMB1 is used in order tocreate its material master record. The material number here is ‘RGD-WHEEL732’ with the industrysector Mechanical Engineering [M]. The views of interest here are Basic Data 1 and 2, Purchasing,MRP 1 to 4, Work Scheduling, Accounting 1 and Costing 1. The main facts for production are plantWerk Hamburg [1000] and the storage location [0001]. 10
  12. 12. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltBasic Data 1, MRP 1, and MRP 2 repeat the information discussed above. As far as Accounting 1view is concerned, the only difference here is the moving average price of €17,00. 2.7. Creating Material Master Record for Drive Chain (Semi-finished Product)As the drive chain is one more semi-finished product, the whole process needs to be repeated again.Therefore, only the differences will be described here. The expression given under the materialnumber is ‘RGD-CHAIN732’. As far as Accounting 1 view is concerned, the moving average pricefor the drive chain is set at €13,00. 2.8. Creating Material Master Record for Spoke (Raw Material)For the purpose of producing the wheels for the bicycle, it is now necessary to create the materialmaster record data for all raw materials required in the manufacturing process. The detaileddescription of creating all these entries will be given for the spokes. All other raw material entries(i.e. hub, rim and cover) will be visualized in a table format.In order to create the material master record for the raw material spoke, the transaction code MMR1is typed in. The material number is ‘RGD-SPOKE732’. The industry sector is MechanicalEngineering [M]. The views of interest are Basic Data 1 and 2, Purchasing and all four MRP entries,as well as Accounting 1 and Costing 1. The Create views selected indicator is activated. In theOrganizational Levels dialog box, the main facts for the raw material are selected. These are: plantWerk Hamburg [1000] and the storage location [0001].When accessing the Basic Data 1 view the short text “RGD-SPOKE732” is entered. All raw materialsare measured in units [PC], belong to the area of mechanics – Material group [00104] – and areavailable in Cross division [00]. As the supplier of the spokes and the final customer for the finishedproduct are located in Germany, the necessary entry is created in the additional data subcategory: 11
  13. 13. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe Purchasing view is the one that is changed next. Here Frank T.’s purchasing group [012] ischosen. Frank T. is the company’s manager who is responsible for buying the raw materials that areneeded in the production process of the wheels. He is reachable under telephone number 551-0012in case urgent issues and problems should arise.MRP 1 view defines the MRP type as [PD], MRP controller as [001] and the lot size as [EX]. Thenext view is MRP 2. Raw materials are to be stored in the production storage location [0001] andthe storage location for EP Materiallager is [0001]. Always Backflush [1] has to be selected in orderto ensure that the goods movement is posted automatically once the production order has beenconfirmed. The planned delivery time is two days and, because float times are not allowed, thescheduling margin key is [000]. To ensure that the availability check is carried out daily, [01] ischosen in the MRP 3 view.Accounting 1 view: The spokes are raw materials, thus, valuation class 3000 is assigned to them.The material ledger is not active, hence, the two methods of price control that are available are astandard price and a moving price. Price control V (moving price) is taken because of theassumption that price of externally purchased raw materials can change frequently. The advantageof such a usage is that the company’s inventory costs will always reflect the current market cost.The price of €0,10 per 1 spoke is specified. Finally, in the Costing 1 view Material origin isactivated and the data are saved. 12
  14. 14. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2.9. Creating Material Master Record for Hub (Raw Material)Transaction MMR1Material RGD-HUB732Industry Sector Mechanical Engineering Basic Data 1 and 2, Purchasing, MRP 1 to 4,Views Accounting 1, Costing 1Plant [1000] Werk HamburgStorage Location [0001] Materiallager Basic DataDescription RGD-HUB732Base Unit of Measure [PC] Piece(s)Material Group [00104] MechanicsDivision [00] Cross-division Additional Data – DescriptionsLanguage [DE] GermanMaterial description RGD-NABE732 PurchasingPurchasing Group [012] Frank, T. MRP 1MRP Type [PD] MRPMRP Controller [001] MRP CONTROLLER 001MRP Lot Size [EX] Lot-for-lot order quantity MRP 2Production Storage Location [0001] MateriallagerStorage loc. for EP [0001] MateriallagerBackflush [1] Always backflushPlanned Delivery Time 2 daysScheduling Margin Key [000]Procurement Type [F] External procurement MRP 3Availability Check [01] Daily requirements Accounting 1Valuation Class [3000] Raw materials 1Price Control [V] Moving average priceMoving Average Price €15,00 Costing 1Select indicator Material origin is active 13
  15. 15. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2.10. Creating Material Master Record for Rim (Raw Material)Transaction MMR1Material RGD-RIM732Industry Sector Mechanical Engineering Basic Data 1 and 2, Purchasing, MRP 1 to 4,Views Accounting 1, Costing 1Plant [1000] Werk HamburgStorage Location [0001] Materiallager Basic DataDescription RGD-RIM732Base Unit of Measure [PC] Piece(s)Material Group [00104] MechanicsDivision [00] Cross-division Additional Data – DescriptionsLanguage [DE] GermanMaterial description RGD-RADKRANZ732 PurchasingPurchasing Group [012] Frank T. MRP 1MRP Type [PD] MRPMRP Controller [001] MRP CONTROLLER 001MRP Lot Size [EX] Lot-for-lot order quantity MRP 2Production Storage Location [0001] MateriallagerStorage loc. for EP [0001] MateriallagerBackflush [1] Always backflushPlanned Delivery Time 2 daysScheduling Margin Key [000]Procurement Type [F] External procurement MRP 3Availability Check [01] Daily requirements Accounting 1Valuation Class [3000] Raw materials 1Price Control [V] Moving average priceMoving Average Price €25,00 Costing 1Select indicator Material origin is active 14
  16. 16. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 2.11. Creating Material Master Record for Cover (Raw Material)Transaction MMR1Material RGD-COVER732Industry Sector Mechanical Engineering Basic Data 1 and 2, Purchasing, MRP 1 to 4,Views Accounting 1, Costing 1Plant [1000] Werk HamburgStorage Location [0001] Materiallager Basic DataDescription RGD-COVER732Base Unit of Measure [PC] Piece(s)Material Group [00104] MechanicsDivision [00] Cross-division Additional Data – DescriptionsLanguage [DE] GermanMaterial description RGD-MANTEL732 PurchasingPurchasing Group [012] Frank T. MRP 1MRP Type [PD] MRPMRP Controller [001] MRP CONTROLLER 001MRP Lot Size [EX] Lot-for-lot order quantity MRP 2Production Storage Location [0001] MateriallagerStorage loc. for EP [0001] MateriallagerBackflush [1] Always backflushPlanned Delivery Time 2 daysScheduling Margin Key [000]Procurement Type [F] External procurement MRP 3Availability Check [01] Daily requirements Accounting 1Valuation Class [3000] Raw materials 1Price Control [V] Moving average priceMoving Average Price €15,00 Costing 1Select indicator Material origin is active 15
  17. 17. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 3. Creating Required Bills of MaterialsA bill of material (BOM) can be described as a list of all the items that make up a product or anassembly. The list is complete for its given purpose, has a formal structure, and states the name,quantity, and unit of measure for each component.6 In the bicycle example, the BOM consists ofseveral levels and can be considered a multi-level BOM. 3.1. Creating Bill of Material for WheelA bill of material for the wheel RGD-WHEEL732 is created under Logistics  Production Master Data  Bills of Material  Bill of Material  Material BOM  Create (transaction codeCS01). The description is ‘RGD-WHEEL732’. The storage location is plant [1000] in Hamburg.Production [1] is specified as the usage. The BOM validity is set to June 1 of the current fiscal year.The list of raw materials that are required to produce one wheel are created by filling in the activedescription fields of the BOM. Thus, for each component the item category [L], the componentname (e.g. RGD-SPOKE732) and the component quantity (i.e. 32 spokes, 1 hub, 1 rim and 1 cover)are keyed in. When pressing Enter, the system is able to fill in the left blanks by accessing thenecessary information from the material master records. This, for example, includes the informationconcerning the unit quantities (pieces) and the validity of all the entries from June 1, 2011 onwards(see the screenshot below):6 See Singh (2008), http://www.saptechies.com/bill-of-material-bom/. Accessed 02.07.2011. 16
  18. 18. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 3.2. Creating Bill of Material for FrameA bill of material for the frame RGD- FRAME732 is created in the same way as for the wheel RGD-WHEEL732 under Logistics  Production  Master Data  Bills of Material  Bill of Material Material BOM  Create (transaction code CS01). The description is ‘RGD-WHEEL732’. Thestorage location is plant [1000] in Hamburg. Production [1] is specified as the usage. The BOMvalidity is set to June 1 of the current fiscal year. The three items are needed in order to produce theframe. These are RGD-PEDAL732, RGD-GEAR732 and RGD-FRAME-ASSEMBLY732, each inthe quantity of 1 piece (see the screenshot below): 3.3. Creating Bill of Material for BicycleFinally, the bill of material for the completed bicycle RGD-BICYCLE732 in plant [1000] forproduction [1] is created. The same steps are taken again. The semi-finished products required forproduction of 1 finished product are 2 wheels, 1 frame, 1 gear wheel and 1 drive chain (see thescreenshot below): 17
  19. 19. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe completed BOM can be viewed under Logistics  Production  Master Data  Bills ofMaterial  Reporting  BOM Explosion  Material BOM  Multilevel BOM (transaction codeCS12). This is a crucial step when checking whether all parts are available in the right quantity,assembled and allocated to the right components. This should ensure a smooth production process inthe future. In the BOM header the material ‘RGD-BICYCLE732’ is entered together with the plant[1000] and the bill of material application Production – general [PP01]. F5 (view) is pressed. In theupcoming Display field group, the Variable list indicator is ticked and F8 is hit to execute thepetitions. The BOM appears in a text format:To display the BOM as a graphic F5 is chosen. The graphic looks like the targeted structurevisualized on page 2 of this paper. 18
  20. 20. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 4. Creating RoutingsThe right coordination of the production process is essential in every business in order to maintainefficiency and to be able to keep costs as low as possible. Thus, routings are used to define theproduction process necessary to manufacture materials or to provide services in the productionindustry. Additionally, they form a basis for product costing. Since it is necessary to always controlcosts, this feature of a routing is of great importance. The detailed description of creating all thenecessary entries for a routing will be given on the example of the wheel. All other routings will bevisualized in a table format. 4.1. Routing for WheelA routing for the wheel is created by selecting Logistics  Production  Master Data  Routings Routings  Standard Routings  Create (transaction code CA01). The material number is‘RGD-WHEEL732’, the production location is Werk Hamburg [1000] and the valid date is set atJune 1, 2011. The routing is applied for Production [1] and the status Released (general) [4] isassigned to it. By selecting “Operations” or F7, a blank table is revealed. In the first line “Operation0010”, work center [1410] Assembly III is keyed in. The control key is [PP01] In-house production.The standard text key is [P000001] Material staging. Material staging implies that the material isshifted from the main store to the production location before the whole manufacturing processstarts.7 By pressing Save the information is confirmed.In the Operation Details screen (double-click the Description field) the time required for the mainactivities is entered. 1 minute is considered to be enough for the setup activity [1422] that is aimedto prepare materials, systems, machines and devices for the following assembly process. The labortime (activity [1421]) is 3 minutes (for more details see the screenshot below):7 See sap-img.com (2011), http://www.sap-img.com/warehouse/what-is-material-staging.htm. Accessed 03.07.2011. 19
  21. 21. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltAfter returning to the activity overview the same process is repeated to define “Operation 0020”.The work center is [1410] Assembly III. The control key is [PP01] In-house production. It is notnecessary to fill in the Standard text key field because there is no predefined text for this activity.“Assembly Wheel” is the description. The Operation details screen defines the machine time(activity type [1420]) as 5 minutes and the labor time (activity type [1421]) as 10 minutes (for moredetails see the screenshot below): 20
  22. 22. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt“Operation 0030” is processed in work center [1420] Assembly IV. In the inspection process severalsafety aspects of the wheel are tested to ensure the quality standards. Again, the control key is[PP01] In-house production. The standard text key is Mechanics Inspection [Q000002]. The setuptime (activity [1422]) is defined to be 1 minute; the labor time (activity [1421]) is 3 minutes (formore details see the screenshot below): 21
  23. 23. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe whole routing looks as follows: a) in a text format 22
  24. 24. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt b) as a graphical displayThe overview of the main transactions is as follows:Transaction CA01Material RGD-WHEEL732Plant [1000] Werk HamburgUsage [1] ProductionStatus [4] Released (general) Operation 0010Work Center [1410] Assembly IIIControl Key [PP01] In-house productionStandard Text Key [P000001] Material stagingSetup Time [1422] 1 minuteLabor Time [1421] 3 minute Operation 0020Work Center [1410] Assembly IIIControl Key [PP01] In-house productionStandard Text KeySetup TimeMachine Time [1420] 5 minutesLabor Time [1421] 10 minutes Operation 0030Work Center [1420] Assembly IVControl Key [PP01] In house productionStandard Text Key [Q000002] Mechanics inspectionSetup Time [1422] 1 minuteLabor Time [1421] 3 minutes 23
  25. 25. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 4.2. Routing for FrameTransaction CA01Material RGD-FRAME732Plant [1000] Werk HamburgUsage [1] ProductionStatus [4] Released (general) Operation 0010Work Center [1410] Assembly IIIControl Key [PP01] In-house productionStandard Text Key [P000001] Material stagingSetup Time [1422] 3 minuteLabor Time [1421] 5 minute Operation 0020Work Center [1410] Assembly IIIControl Key [PP01] In-house productionStandard Text KeySetup TimeMachine Time [1420] 7 minutesLabor Time [1421] 7 minutes Operation 0030Work Center [1420] Assembly IVControl Key [PP01] In house productionStandard Text Key [Q000002] Mechanics inspectionSetup Time [1422] 2 minuteLabor Time [1421] 4 minutesThe whole routing looks as follows: a) in a text format 24
  26. 26. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt b) as a graphical display 4.3. Routing for BicycleTransaction CA01Material RGD-BICYCLE732Plant [1000] Werk HamburgUsage [1] ProductionStatus [4] Released (general) Operation 0010Work Center [1410] Assembly IIIControl Key [PP01] In-house productionStandard Text Key [P000001] Material stagingSetup Time [1422] 4 minutesLabor Time [1421] 6 minutes Operation 0020Work Center [1420] Assembly IVControl Key [PP99] In-house prod. milestone with GRStandard Text KeySetup Time [1422] 7 minutesMachine Time [1420] 6 minutesLabor Time [1421] 15 minutes 25
  27. 27. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe whole routing looks as follows: a) in a text format a) as a graphical display 26
  28. 28. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 5. Testing the Business ProcessProduct costs are the sum of all costs that are incurred when producing manufactured goods orservices. Their calculation is necessary because it helps to get an overview of all costs, to choose theadequate markup and to find a desired price that will also be accepted by customers. 5.1. Calculating Product CostsProduct costing calculates the unit cost of goods manufactured and sold. Products are pricedautomatically using bills of materials and routings from Production Planning. The product cost iscalculated under Accounting  Controlling  Product Cost Controlling  Product Cost Planning Material Costing  Cost Estimate with Quantity Structure  Create (transaction code CK11N).The estimation of costs is performed for the bicycle RGD-BICYCLE732. The production location is[1000] Werk Hamburg. On the Costing Data tab, the Costing Variant [PPC1] Standard Cost Est.(Mat.), Costing Version [01] and Costing Lot Size 1 are entered. All the entries are confirmed bypressing Enter. On the Dates tab, the Costing Date From is altered to the current date of June 16,2011 and is confirmed again. The SAP program calculates the bicycle costs based on the previouslycreated bills of materials and routings. The result can be viewed below: 27
  29. 29. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltAs one can see, the overall manufacturing cost is €300,37. This figure is essential for manydecision-making processes, especially for determining the product price, which should not be lessthan the total calculated costs.In the itemized list for the bicycle, the system displays the manufacturing and material costs for thesemi-finished products with the production operation costs for each cost center, work center, andactivity type. The prices for the activity types are predefined in the IDES Corp:The exact cost components can be display under Costs  Display Cost Components.should be clicked and Layout... should be chosen. Under the Cost Component Groups [1SAP02]layout the system displays the following table: 28
  30. 30. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThis table is very helpful in differentiating between the various cost components incurred in theproduction of RGD-BICYCLE732. 5.2. Updating PricesThe Price Update function is used to transfer the calculated product cost as a cost estimate to thematerial master record. The cost is transferred in two steps: marking and release.The marking is performed by selecting Logistics  Production  Product Cost Planning Material Costing  Price Update (transaction code CK24). It is executed in the current month ofJune for the bicycle RGD-BICYCLE732. The company code is [1000] and the plant is [1000]. Theindicator from the Test Run field is removed and the marking is executed by pressing F8. Thesystem displays that “Of 1 materials, 1 cost estimates were updated successfully” (see below): 29
  31. 31. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe marking can also be viewed in the material master record under Logistics  MaterialsManagement  Material Master  Material  Display  Display Current (transaction codeMM03). The material is ‘RGD-BICYCLE732’, the plant is [1000] and the Costing 2 view isactivated. The system displays the marked future price in the left costing column (see below): 5.3. Price ReleaseThe price is released under Logistics  Production  Product Cost Planning  Material Costing Price Update (transaction code CK24). Release is clicked and the current period of June 2011,company code [1000], plant [1000] and the material RGD-BICYCLE732 are chosen. The Test Runindicator is removed. After pressing F8 the system releases the price:The release can be viewed in the material master record under Logistics  Materials Management Material Master Material  Display  Display Current (transaction code MM03). Thematerial is ‘RGD-BICYCLE732’, the Costing 2 view is selected and the plant is [1000] WerkHamburg. Now the released planned price is displayed in the middle column: 30
  32. 32. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 6. ManufacturingThe following section describes the basic process of producing a bicycle. It assumes that enoughsemi-finished products are available on stock, so that no production or procurement of componentsis necessary. The chapter will deal with the following steps:  Receive goods for required components  Create production order  Confirm production order  Display automatic goods movement  Check warehouse stock. 6.1. Receiving Goods for Required ComponentsA goods receipt is an official document that is given out in order to confirm that certain productshave been received.8 It can be accessed under Logistics  Materials Management  InventoryManagement  Goods Movement  Goods Movement (transaction code MIGO). [A01] GoodsReceipt, [R10] Others, and movement type [501] GI receipt w/o PO are chosen. At this stage it isimportant to have the current date as the Document Date. On the lower screen, in the Material tab,RGD-WHEEL732 is entered. On the next tab, a quantity of 50 pieces [PC] is defined. This specifiesthat the company will require 50 wheels to be able to produce 25 bicycles. On the Where tab, plant[1000] and storage location [0001] are entered. After that the entries are confirmed.As the bicycle consists of more than two wheels, the Next item on the bottom of the screen isselected and the following data are entered:  Material: RGD-FRAME732  Quantity: [PC] 25 pieces  Plant: [1000] Hamburg  Storage Location: [0001] Materiallager8 See BusinessDictionary.com (2011), http://www.businessdictionary.com/definition/goods-receipt.html. Accessed03.07.2011. 31
  33. 33. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe process is repeated for RGD-GEAR732 and RGD-CHAIN732. These items are also required inthe quantity of 25.After that the entries are confirmed by pressing Enter and are checked by choosing Check. Thisfunction makes it possible to view the document and to make sure that all information is accurate.The correctness is indicated by the green circles (see below):Now the goods receipt document is posted and saved. The material document numbers are:4900035891 and 400035576. The amount of stock and the entry correctness can further be checkedunder Environment  Stock  Stock/Requirements List (transaction MD04) by keying in the rightmaterial and plant [1000]. For example, the system should display a stock quantity of 25 for framesor 50 pieces for wheels. 6.2. Creating Production OrderA manufacturing order registers all production requirements to make sure that a required quantityof materials or services is produced or supplied for a certain date. It further specifies the workcenter and resources that are utilized in the manufacturing process. A manufacturing order issubdivided into a production order (also called discrete manufacturing) and a process order (alsocalled process manufacturing).The order for RGD-BICYCLE732 is created under Logistics  Production  Shop Floor Control Order  Create  With Material (transaction code CO01). The production plant is [1000] andthe order type is [PP01] Standard Production Order (int. number). The information is confirmed bypressing Enter. On the first screen (Production order Create: Header) an overall amount of 25bicycles is typed in. As the basic dates for order type PP01 are calculated backwards, the lastworking day of June 2011 is chosen as the finish date. All entries are confirmed and the basic datesare calculated by the system: 32
  34. 34. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltThe “Calculator” is picked and the system determines the planned costs for the order. To view acopy of the routing master data and the bill of material one should first press F5 and then F6: 33
  35. 35. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna TresseltBy clicking the “Flag” or choosing Functions  Release, the order is released. The production ordernumber assigned by the system is 60003589. 6.3. Confirming Production OrderTo speed up the production process, it is assumed that the production order is successfullycompleted on the same day. When the material master data were created in the MRP 2 view, thedefined Backflush field made it possible to confirm the order without removing the requiredcomponents from the warehouse.The order is confirmed under Logistics  Production  Shop Floor Control  Confirmation Enter  For Order (transaction code CO15). Production order number 60003589 is keyed into theOrder field and confirmed. The system displays the yield to be validated in line with the planneddata (25 pieces of the bicycle RGD-BICYCLE732). The Final confirmation is selected. As“Operation 0020” was categorized as a milestone operation in the routing, all previous operationsare also automatically confirmed, and the system posts all goods movements into and out of thewarehouse. Goods movements is clicked to display an overview:After that the entries are saved. The confirmation is carried out successfully and the confirmationnumber is 4900036145. 34
  36. 36. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 6.4. Displaying Automatic Goods MovementThe automatic goods movement document can be displayed under Logistics  MaterialsManagement  Inventory Management  Material Document  Display (transaction code MB03):As one can see, at the right end of the document the system displays the movement type and a sign.This sign indicates whether the goods movement is a receipt (+) or an issue (-). The system has nowofficially taken the components for production and moved 25 bicycles to the warehouse.Furthermore, the relevant accounting document can be viewed by selecting “AccountingDocuments” and double-clicking “Accounting Document”. The system displays the value-basedstock postings at the current moving average: 35
  37. 37. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt 6.5. Checking Warehouse StockThe warehouse stock of the materials affected by the production of RGD-BICYCLE732 is checkedunder Logistics  Production  MRP  Evaluations  Stock/Requirements List (transactioncode MD04). The material number is ‘RGD-BICYCLE732’ and the plant is [1000]. The systemdisplays the lot of produced earlier 25 pieces as an available amount: 6.6. Calculating Manufacturing TimeThe manufacturing time for producing a bicycle, a wheel or a frame can be clearly seen whencreating a production order (Operation Overview). The system estimates the required time by takingthe specified routings into account. A visual display of SAP calculations in terms of manufacturingtime can be found below: a) RGD-BICYCLE732 36
  38. 38. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt b) RGD-FRAME732 c) RGD-WHEEL732The required manufacturing time and the production costs are further calculated using MicrosoftExcel. The spreadsheets are attached separately. 7. ConclusionThe targeted product RGD-BICYCLE732 has been successfully created and manufactured. IDESsystem is now ready to deliver the order to Cycle Ball Lovers. 37
  39. 39. Individual Case Study: Production of Bicycles Vanessa Günther, Alina Sachapow, Hanna Tresselt8. Bibliography1. BusinessDictionary.com (2011), “Goods receipt” [Online]. Available at: http://www.businessdictionary.com/definition/goods-receipt.html. Last accessed 03.07.2011.2. SAP Help (2011) [Online]. Available at: http://help.sap.com/. Last accessed 07.07.2011.3. sap-img.com (2011) [Online]. Available at: http://www.sap-img.com/. Last accessed 07.07.2011.4. Singh, Sh. (2008), “Bill of material (BOM)”, on: SAP Support Portal [Online]. Available at http://www.saptechies.com/bill-of-material-bom/. Last accessed 02.07.2011.5. Weidner, S. (2009), “Integration Case Study PP: SAP ERP 6.0”, for: SAP University Competence Center [Online]. Available at: http://moodle.htw- berlin.de/moodle/mod/resource/view.php?inpopup=true&id=18353. Last accessed 05.06.2011.6. Wikipedia, the free encyclopedia (2011), “Fixed-gear bicycle” [Online], (last modified 2 June 2011 at 12:24). Available at: http://en.wikipedia.org/wiki/Fixed-gear_bicycle. Last accessed 05.06.2011. 38

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