SAP PP Case study by Murali Krishna Nookella

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SAP PP Case study by Murali Krishna Nookella

  1. 1. Module : PP (ProductionPlanning)
  2. 2. The SAP PP business processes uses the following organizationalelements:– Client– Company Code– Plant– Storage LocationOrganizational Elements
  3. 3. Organizational ElementsClientA Highest Hierarchical Level in SAP (e.g. a corporation)Used to Differentiate between a Development, Quality Assurance, andProduction System within SAP R/3Common Set of Rules Common Tables Common Master Files Common Data BasesStandardized data across the client A vendor number and name is common across the client A customer is common across the client A material number and description is common across the client
  4. 4. BALANCING / (LEGAL)BALANCING / (LEGAL)ENTITYENTITY==Company Code ****Assets Liabilities Revenues- ExpensesProfit/LossOrganizational ElementsCompany Code A company code represents an independent balancing/legalaccounting entity, for example, a company within a corporategroup. Balance sheets and profit & loss statements, required by law, canbe created at the company code level.
  5. 5. Organizational ElementsPlant Usually a manufacturing facility, a warehouse, or a location thatstocks , manages, and valuates inventory May be a physical site with multiple manufacturing/production lines May be multiple manufacturing/production lines at one physical site Can be a physical location (cost centers may or may not beassociated to a plant i.e. Administrative vs. Manufacturing costcenters) Links to production (PP), materials management (MM), and sales anddistribution (SD) A plant is assigned to a company code Purchasing organization are assigned to plants.
  6. 6. Organizational ElementsStorage LocationsA storage location is the place where stock is physicallykept within a plantA storage location has the following attributes: There may be one or more storage locations within a plant. Stocks are managed only on a quantity basis and not on a valuebasis at storage location level. Physical inventories are carried out at storage location level. Storage locations are always created for a plant.
  7. 7. Master DataList of Master Data in SAP PP Module are:– Material Master– Bills Of Material– Work Centers– Routings
  8. 8. Master DataMaterial Master
  9. 9. Material Master
  10. 10. Material master record is a companys main source ofmaterial-specific data. It is used by all components inthe R/3 Logistics System.The integration of all material data in a single databaseobject prevents the problem of data redundancy. Everyarea, such as Purchasing, Inventory Management,Materials Planning, and Invoice Verification can usethe data stored.Material Master
  11. 11. Since materials are processed by various userdepartments within a company and each departmentstores different information for the materials, thematerial master is subdivided into information groupedby user departments.Each user department has a different view of thematerial master record and is responsible formaintaining the data to support its function.The data maintained within a view may be valid formore than one organizational level.Material Master
  12. 12. Material Master
  13. 13. Material Master
  14. 14. Material Master
  15. 15. Material Master
  16. 16. Material Master
  17. 17. Material Master
  18. 18. Base unit: PieceBox(unit of issue)Crate(order unit)Pallet(sales unit)416 72Material Master – Units of Measure
  19. 19. Material Master
  20. 20. Material Master
  21. 21. Master DataBills Of Material
  22. 22. Bills Of Material
  23. 23. Bills Of Material
  24. 24. Bills Of Material
  25. 25. Bills Of Material
  26. 26. Bills Of Material
  27. 27. Bills Of Material
  28. 28. Bills Of Material
  29. 29. Bills Of Material
  30. 30. Bills Of Material
  31. 31. Bills Of Material
  32. 32. Bills Of Material
  33. 33. Bills Of Material
  34. 34. Bills Of Material
  35. 35. Bills Of Material
  36. 36. Bills Of Material
  37. 37. Bills Of Material
  38. 38. Master DataWork Centers
  39. 39. Work Center
  40. 40. Work Center
  41. 41. Work Center
  42. 42. Work Center
  43. 43. Work Center
  44. 44. Work Center
  45. 45. Work Center
  46. 46. Work Center
  47. 47. Work Center
  48. 48. Work Center
  49. 49. Work Center
  50. 50. Work Center
  51. 51. Work Center
  52. 52. Work Center
  53. 53. Work Center
  54. 54. Work Center
  55. 55. Work Center
  56. 56. Work Center
  57. 57. Master DataRoutings
  58. 58. Routing
  59. 59. Routings - Components
  60. 60. Routing - Components
  61. 61. Routings
  62. 62. Routing - Group
  63. 63. Routing - Group
  64. 64. Material Allocation
  65. 65. PRT Assignments
  66. 66. Sequences in Routing
  67. 67. Parallel Sequences
  68. 68. Scheduling in PP
  69. 69. Scheduling
  70. 70. Sub Operations in Routing
  71. 71. Scheduling
  72. 72. Production Planning• Demand Management• Material Requirement Planning− Planning of Purchased parts− Planning of in house assemblies
  73. 73. Planning Process: Process flowDemand planning cellPPCProductionMRP RunThird Party LogVendorWeb siteDemand (Weekly)Production Requirement (Week wise, Model wise)Planned Prod.Confirmed ProductionPlanned Vendor ScheduleConfirmedVendorScheduleDispatch planCentral marketing officeDispatch sheet
  74. 74. While doing planning, you need to decide which planning strategy to use when the customerplaces their order.• Make-to-Stock Production− Make-to-stock production means we build stock in anticipation of customer demand. Weship the customer order from our stock of finished goods• Make-to-order Production− We wait for a customer order before we start production/procurement. i.e. We produce asper demand from customerPlanning Process: Strategies
  75. 75. DealerTerritory officeArea Office Area Office Area Office Area OfficeZonalCentral Marketing officeConsolidation of DemandTerritory officePPCDealer Dealer Dealer Dealer DealerPlanning process: Demand Planning
  76. 76. Demand management is the link between top-levelrequirements planning (SOP) and materials planning(MRP).Input for the demand program can come from severalsources:Planning Process: Demand Management
  77. 77. Materials Requirement Planning
  78. 78. MRP Overview
  79. 79. Uses of MRP
  80. 80. MRP Functions
  81. 81. MRP Prerequisites
  82. 82. Planning Run
  83. 83. Planning Run - Types
  84. 84. MRP - Control Parameters
  85. 85. Net Change Planning
  86. 86. Planning in Planning Horizon
  87. 87. Planning Run - Single Item
  88. 88. Single-item, Multi-Level Planning
  89. 89. Single-Level MRP
  90. 90. Multi-Level MRP
  91. 91. Total Planning
  92. 92. MRP Procedure
  93. 93. MRP Control Parameters
  94. 94. MRP Control Parameters
  95. 95. MRP Control Parameters
  96. 96. MRP Control Parameters
  97. 97. MRP Control Parameters
  98. 98. MRP Control Parameters
  99. 99. Net Requirements Calculation
  100. 100. Requirement Quantities
  101. 101. Safety Stock
  102. 102. Safety Time
  103. 103. Safety Time in Production
  104. 104. Lot Size Calculation
  105. 105. Lot Sizing - Overview
  106. 106. Static Lot Sizing
  107. 107. Period Lot - Sizing Procedure
  108. 108. Optimum Lot Sizing
  109. 109. Long Term Lot Sizing
  110. 110. Other Lot Sizing Features
  111. 111. Lot Size Rounding Profiles
  112. 112. Layout of MRP List
  113. 113. Stock Req. List - Layout
  114. 114. MRP List - Collective Display
  115. 115. MRP List - Functions
  116. 116. Exception Messages
  117. 117. Rescheduling Checks
  118. 118. Old / New Exception Message
  119. 119. Planned New Exception Message OrderConversion
  120. 120. Material Supply for Production
  121. 121. Collective Display
  122. 122. Search in Individual List
  123. 123. Current List - Functions
  124. 124. Pegged Requirements
  125. 125. Order Report
  126. 126. Planning Time Fence
  127. 127. Planning Time Fence
  128. 128. Scheduling in PP
  129. 129. Scheduling - Basic Dates
  130. 130. Scheduling - Production Time
  131. 131. Planning ProcessPlantStockPlantStockMRPOrderProposalExternalProcurementIn-HouseProductionSupplySupplyDemandDemandPlanningParametersPlanningParameters
  132. 132. Planning Process
  133. 133. Production Execution• Stock transfer to WIP location• Order Execution− Production confirmation− Error handling
  134. 134. Planning Process
  135. 135. Planning Process
  136. 136. Production ExecutionPhysical MovementStorage Loc MAINStorage Loc MAINStorage Loc MAINStorage Loc MAIN Storage Loc WIPStorage Loc WIPStorage Loc WIPStorage Loc WIP
  137. 137. ProductionOrderBOMWork CenterRoutingsRelease Avail checkGoods issueProductionGoods receiptConfirmationTECOMovefloorstockPlanned OrderAvailability CheckConvert OrderProduction Execution
  138. 138. Best PracticesLogistics PlanningMake-To-Stock Discrete ManufacturingProduction Subcontracting (ExternalProcessing)Rework Processing (Stock-ManufacturedMaterial)Rework Processing (Work-In-Process)
  139. 139. Logistics Planning• Purpose− The purpose of logistics planning is to make sure that future demand can be satisfiedby your company’s available resources and to point out situations where demandcannot be met in time or in the desired quantities.• Benefits− Seamless Integration in complete planning cycle• CO-PA  SOP  LTP  Demand Planning• Key process flows covered− Sales and Operation Planning− Long Term PlanningPurpose and Benefits:
  140. 140. Logistics Planning•This process sometimes is called ‘Sales and Operations Planning’. The process usuallytakes place in a simulative mode and at an aggregated (usually product group rather thanend-item) level. Once a feasible production plan is found that satisfies demand it can beused as the basis for operational production planning (MRP and Detailed CapacityScheduling).•The Best Practice scenarios in this section cover the following planning workflow: Planning/forecasting of future demand Aggregated production planning including capacity check in order to check at productgroup level if demand can be satisfied (using the SOP functionality) Transfer of results to Long Term Planning (using the LTP module) to enablesimulation of material requirements, based on the production plan (s) Planning takes place in separate (simulative) planning versions within LTP Review and adjustments of planned requirements as needed Once the simulated requirements are accepted, the demand (independentrequirements) is then transferred to active demand management for detailed MRP andProduction Planning / Scheduling in the active version.Detailed Process Description:
  141. 141. Logistics Planning – Process Flow DiagramRevenuePlannerStrategicPlanEventAcceptablePlanSales QtyBudget andTransfer toSOP (with CO-PA), RevenuePlanning(172)OperationalProductionPlanning &Control(Productionscenarios)SOP VerificationDemandVerification (CheckSales Plan) Create Rough-CutProduction PlanPeriodic SalesandOperationsMeetingOperativeProduction DataCO-PA = Profitability Analysis, SOP = Sales and Operations Planning, LTP = Long Term Planning, MRP = MaterialRequirements PlanningTransfer RoughCut ProductionPlan to InactiveDemandManagementCopy to ActiveDemandManagementExecute LTPMRPCreate LTPPlanningScenarioNoYesEvaluateCapacityPlanningSales Quantityforecast (179)
  142. 142. Make-To-Stock Production with DiscreteManufacturing• Purpose− This scenario describes a business process, which is typical for companies with lot-sizeoriented 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 flows covered− Creating Planned Independent Requirements− Material Requirements Planning at Plant Level− In-House Production (subassembly)− In-House final assembly (Finished Good)− Capacity Leveling− Confirming Assembly ActivitiesPurpose and Benefits:
  143. 143. Make-To-Stock Production with Discrete ManufacturingThis scenario describes a business process, which is typical for companies with lot size orientedproduction. 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, suchas preliminary costing and period-end closing. The typical planning process starts with sales quantity planning. The previous period’s actual salesfigures 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 youmay create the production plan synchronously to sales. The planning data is transferred from Salesand Operations Planning to Demand Management. Demand Management generates independentrequirements, 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 getsexploded and production is planned right down to procured component level. MRP results inplanned orders being generated for the material to be produced. If insufficient warehouse stock is available, purchase requisitions are created for the raw materialsrequired. When the order is created, target costs are calculated for the order lot size (preliminarycosting). During the production process, costs incurred are updated on the order, which enables you to keeptrack 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 calculationand variance calculation. After this, Work in Progress is settled to financial accounting and production variances are settled tomanagement and financial accounting.Detailed Process Description:
  144. 144. Make-to-Stock Production – Discrete Industry – Process Flow DiagramManufacturingEventPlantControllerPeriod EndClosing “General”Plant(181)Material RequirementsPlanning at Plant Level &Evaluation of Stock /Requirement ListBeginning ofPlanning CyclePurchaseRequisitionMRP ListInventory @Standard. CostProductionPlannerPeriodic PlanRevisionReleaseProduction OrderCapacityLevelingMaterial Stagingfor PlannedOrdersConfirmingAssemblyActivities/ FinalConfirmationSemi-FinishedGoods ReceiptGoods Issue/Back flushUpdate CapacityGoods ReceiptSlipPick ListOrder PrintPlannedOrdersCapacityLeveling O.k.?MaterialAvailable?BuyerWare-houseClerkGoods ReceiptSlipProcurement ofStock Materialwith QM (127)Procurement &Consumption ofCosigned Inventory(139)StrategicPlannerCreatingPlannedIndependentRequirementsConvertPlanned Order toProduction OrderInventoryConsumption @Standard. CostProcurement w/oQM(130)Finished GoodsReceiptMMSubcontracting(138)PP-Subcontracting(ExternalProcessing)(150)NoYesNoYesLogisticsPlanning(144)1
  145. 145. Make-to-Stock Production – Discrete Industry – Process Flow DiagramProductionSupervisor1ReviewOperation ListEvent
  146. 146. Production Subcontracting (External Processing)• Purpose− During the Manufacturing process, when a "Planned Order" for Production is converted to a"Production Order", the system will check to see if there are any routing/work-centeroperations which require external processing. External processing is when you haveindividual production steps, that are operations or sub-operations, which are performedoutside of your company by a vendor. This type of processing is particularly important forsubcontracting. It can also provide a company with a feasible alternative to in-houseprocessing, if capacity bottlenecks occur.• Benefits− An outline agreement can specify that a certain operation of the production order is executedby an external subcontractor on a regular basis− In the case of capacity bottlenecks, the assembly procedure of the finished product can beassigned to a subcontractor• Key process flows covered− Creating Purchase Order for External Processing− Goods Receipt for “subcontracting” Purchase Order− Enter Invoice− Periodic PaymentPurpose and Benefits:
  147. 147. Production Subcontracting (External Processing)•Production Subcontracting (External Processing)− When a Production Order is scheduled, external operations need to be taken into account. The durationof an external operation is calculated either by using the planned delivery time or using the standardvalues. The system automatically creates a purchase requisition for the operation or sub-operation thatrequires external processing. The Production scheduler should inform the buyer they need to check theworkload for requisitions that require external processing.− When data is maintained for an external activity, a cost element is specified. The cost element determineshow the external activity is to be valuated. A decision needs to be made as to whether an operation orsub-operation is processed externally via its control key. In the control key, it is determined whetherexternally processed operations are scheduled on the basis of their standard values or the planneddelivery time. This information is needed to settle externally processed operations and sub-operations thathave been marked as relevant for costing in their control keys.− Purchasing should not convert the purchase requisition until the external processing is required. Thereason for this is that any quantity changes on the production order will automatically update therequisition.− Once the purchase order is created it is printed and sent to the vendor. The purchase order informs thevendor which service is required. The buyer/planner/scheduler creates a manual shipping document andprovides the information to the shipping department on what components need to be gathered for theexternal processing and ships the components to the vendor.− When the vendor has completed the external processing, the material is shipped back. The warehouseclerk receives the externally processed goods back into the warehouse. The vendor service is reflected onthe production order via an operation confirmation. The purchase order and the production order show thequantity received.− The goods receipt of an externally processed material causes the status of the operation to be updated:For a partial delivery of an external process operation, the status is: EOPD (External operation - partialdelivery) and for final delivery of a external process operation the status is: EOFD (External operation -final delivery).Detailed Process Description:
  148. 148. Production Subcontracting (External Processing) – Process Flow DiagramPurchaserVendorWarehouseClerkCreate PO fromPurchase Req(Vendor assigned byInfo record)Vendor ReceivesMaterial andPerformsExternalServicesShipMaterialto VendorPrint PurchaseOrderSubcontractServicesGR/IRPP = Production Planning, RFQ = Request for Quotation, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase PriceVarianceShipExternalMaterialBack toPlantIncomingVendorInvoiceCompletionConfirmation ofProductionOrderProduction OrderGeneratesPurchaseRequisition forExternal ServicesGoods ReceiptforSubcontractingPODeliverMaterialBack toShopFloorAccountsPayableAccountantEventInvoiceReceiptGR/IR PPVVendorPeriodicPayment:AccountsPayable (158)PerformExternalServicesProductionSupervisorCheck OrderOperations
  149. 149. Rework Processing (Work-In-Process)• Purpose− Processing of defective material on a production order.• Benefits− Scraps at defined operation automatically trigger rework process.− After rework, additional activity and material consumption can be confirmed.− Fully integrated in the production process• Key process flows covered− Confirming Production Activities− Confirm Scrap defective material− Confirm Parent Order at Rework Operation− Continue Shop floor-ActivitiesPurpose and Benefits:
  150. 150. Rework Processing (Work-In-Process)This scenario focuses on a rework process within production. All required reworkactivities are related to the parent production order. For this reason, errors arerecognized and corrections initiated such as insertion of a rework operation within thesame production order. The additional rework operation is confirmed and settled withinthe original production order, causing production variances within controlling and pricedifferences for the dedicated product.Detailed Process Description:
  151. 151. Rework Processing (Work-in-Process) – Process Flow DiagramShopFloorEventAnyComplaintQuantity toBeScrapped?Confirm ScrapDefective MaterialConfirmingProductionActivitiesNoEnd ProcessInsert ReworkOperation onParent ProductionOrderAutomaticallyConfirm ParentProduction Orderat ReworkOperation for Non-Defective QuantityScrap DefectiveQuantity thatCan’t BeReworkedConfirm ParentProduction Order forReworked QuantityThat Can Proceed toSubsequent OperationsContinue Shop-Floor-Activities for Non-Defective-QuantityYes
  152. 152. Rework Processing (Stock-Manufactured Material)• Purpose− This process covers the rework of defective manufactured materials that arefound in the warehouse.• Benefits− Transparent costs for rework activities− Use of all standard shop-floor control functionalities is possible• Key process flows covered− Create rework production order− Goods issue for defective material− Confirmation of rework production activities− Posting goods receipt for rework production orderPurpose and Benefits:
  153. 153. Rework Processing (Stock-Manufactured Material)•Rework Processing (Stock-Manufactured Material)•For materials that can be reworked, a production order is created for correcting thedefect. The costs associated with the rework production order will be settled toprofitability as a material variance.Detailed Process Description:
  154. 154. Rework Processing (Stock-Manufactured Material) – Process Flow DiagramEventProductionPlannerProductioSupervisoWarehouseClerkCreate ReworkProductionOrderIdentifiedComponent inStock RequiresChangesEnd ProcessConfirmationof ReworkProductionActivitiesPosting GoodsReceipt forReworkProductionOrderGoods Issue fordefectiveMaterialShopfloorSpecialistReview OrderConfirmationsRelease ReworkProductionOrder

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