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SAP PP Case study by Murali Krishna Nookella
- 1. Module : PP(Production Planning)
- 2. The SAP PPbusiness processes uses the following organizational elements: – Client – Company Code – Plant – Storage Location Organizational Elements
- 3. Organizational Elements Client A HighestHierarchical Level in SAP (e.g. a corporation) Used to Differentiate between a Development, Quality Assurance, and Production 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. BALANCING / (LEGAL)BALANCING/ (LEGAL) ENTITYENTITY == Company Code **** Assets Liabilities Revenues - Expenses Profit/Loss Organizational Elements Company Code A company code represents an independent balancing/legal accounting entity, for example, a company within a corporate group. Balance sheets and profit & loss statements, required by law, can be created at the company code level.
- 5. Organizational Elements Plant Usuallya manufacturing facility, a warehouse, or a location that stocks , 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 be associated to a plant i.e. Administrative vs. Manufacturing cost centers) Links to production (PP), materials management (MM), and sales and distribution (SD) A plant is assigned to a company code Purchasing organization are assigned to plants.
- 6. Organizational Elements Storage Locations Astorage location is the place where stock is physically kept 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 value basis at storage location level. Physical inventories are carried out at storage location level. Storage locations are always created for a plant.
- 8. Master Data List ofMaster Data in SAP PP Module are: – Material Master – Bills Of Material – Work Centers – Routings
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- 11. Material master recordis a company's main source of material-specific data. It is used by all components in the R/3 Logistics System. The integration of all material data in a single database object prevents the problem of data redundancy. Every area, such as Purchasing, Inventory Management, Materials Planning, and Invoice Verification can use the data stored. Material Master
- 12. Since materials areprocessed by various user departments within a company and each department stores different information for the materials, the material master is subdivided into information grouped by user departments. Each user department has a different view of the material master record and is responsible for maintaining the data to support its function. The data maintained within a view may be valid for more than one organizational level. Material Master
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- 19. Base unit: Piece Box (unitof issue) Crate (order unit) Pallet (sales unit) 4 16 72 Material Master – Units of Measure
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- 22. Master Data Bills OfMaterial
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- 71. Sub Operations inRouting
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- 73. Production Planning • DemandManagement • Material Requirement Planning − Planning of Purchased parts − Planning of in house assemblies
- 74. Planning Process: Processflow Demand planning cell PPC Production MRP Run Third Party Log Vendor Web site Demand (Weekly) Production Requirement (Week wise, Model wise) Planned Prod. Confirmed Production Planned Vendor Schedule Confirmed Vendor Schedule Dispatch plan Central marketing office Dispatch sheet
- 75. While doing planning,you need to decide which planning strategy to use when the customer places their order. • Make-to-Stock Production − Make-to-stock production means we build stock in anticipation of customer demand. We ship 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 as per demand from customer Planning Process: Strategies
- 76. Dealer Territory office Area OfficeArea Office Area Office Area Office Zonal Central Marketing office Consolidation of Demand Territory office PPC Dealer Dealer Dealer Dealer Dealer Planning process: Demand Planning
- 77. Demand management isthe link between top-level requirements planning (SOP) and materials planning (MRP). Input for the demand program can come from several sources: Planning Process: Demand Management
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- 84. Planning Run -Types
- 85. MRP - ControlParameters
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- 87. Planning in PlanningHorizon
- 88. Planning Run -Single Item
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- 104. Safety Time inProduction
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- 106. Lot Sizing -Overview
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- 108. Period Lot -Sizing Procedure
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- 110. Long Term LotSizing
- 111. Other Lot SizingFeatures
- 112. Lot Size RoundingProfiles
- 113. Layout of MRPList
- 114. Stock Req. List- Layout
- 115. MRP List -Collective Display
- 116. MRP List -Functions
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- 119. Old / NewException Message
- 120. Planned New ExceptionMessage Order Conversion
- 121. Material Supply forProduction
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- 124. Current List -Functions
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- 130. Scheduling - BasicDates
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- 134. Production Execution • Stocktransfer to WIP location • Order Execution − Production confirmation − Error handling
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- 137. Production Execution Physical Movement StorageLoc MAINStorage Loc MAINStorage Loc MAINStorage Loc MAIN Storage Loc WIPStorage Loc WIPStorage Loc WIPStorage Loc WIP
- 138. Production Order BOM Work Center Routings Release Availcheck Goods issue Production Goods receipt Confirmation TECO Move floorstock Planned Order Availability Check Convert Order Production Execution
- 139. Best Practices Logistics Planning Make-To-StockDiscrete Manufacturing Production Subcontracting (External Processing) Rework Processing (Stock-Manufactured Material) Rework Processing (Work-In-Process)
- 140. Logistics Planning • Purpose −The purpose of logistics planning is to make sure that future demand can be satisfied by your company’s available resources and to point out situations where demand cannot 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 Planning Purpose and Benefits:
- 141. Logistics Planning •This processsometimes is called ‘Sales and Operations Planning’. The process usually takes place in a simulative mode and at an aggregated (usually product group rather than end-item) level. Once a feasible production plan is found that satisfies demand it can be used as the basis for operational production planning (MRP and Detailed Capacity Scheduling). •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 product group level if demand can be satisfied (using the SOP functionality) Transfer of results to Long Term Planning (using the LTP module) to enable simulation 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 (independent requirements) is then transferred to active demand management for detailed MRP and Production Planning / Scheduling in the active version. Detailed Process Description:
- 142. Logistics Planning –Process Flow Diagram Revenue Planner StrategicPlanEvent Acceptable Plan Sales Qty Budget and Transfer to SOP (with CO- PA), Revenue Planning (172) Operational Production Planning & Control (Production scenarios) SOP Verification Demand Verification (Check Sales Plan) Create Rough-Cut Production Plan Periodic Sales and Operations Meeting Operative Productio n Data CO-PA = Profitability Analysis, SOP = Sales and Operations Planning, LTP = Long Term Planning, MRP = Material Requirements Planning Transfer Rough Cut Production Plan to Inactive Demand Management Copy to Active Demand Management Execute LTP MRP Create LTP Planning Scenario No Yes Evaluate Capacity Planning Sales Quantity forecast (179)
- 143. Make-To-Stock Production withDiscrete Manufacturing • 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 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 Activities Purpose and Benefits:
- 144. Make-To-Stock Production withDiscrete Manufacturing 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. Detailed Process Description:
- 145. Make-to-Stock Production –Discrete Industry – Process Flow Diagram ManufacturingEventPlant Control ler Period End Closing “General” Plant (181) Material Requirements Planning at Plant Level & Evaluation of Stock / Requirement List Beginning of Planning Cycle Purchase Requisition MRP List Inventory @ Standard. Cost ProductionPlanner Periodic Plan Revision Release Production Order Capacity Leveling Material Staging for Planned Orders Confirming Assembly Activities / Final Confirmation Semi-Finished Goods Receipt Goods Issue/ Back flush Update Capacity Goods Receipt Slip Pick List Order PrintPlanned Orders Capacit y Levelin g O.k.? Material Available ? BuyerWare- house Clerk Goods Receipt Slip Procurement of Stock Material with QM (127) Procurement & Consumption of Cosigned Inventory (139) Strategic Planner Creating Planned Independent Requirements Convert Planned Order to Production Order Inventory Consumption @ Standard. Cost Procurement w/o QM (130) Finished Goods Receipt MM Subcontracting (138) PP- Subcontracting (External Processing) (150) No Yes No Yes Logistics Planning (144) 1
- 146. Make-to-Stock Production –Discrete Industry – Process Flow Diagram Production Supervisor 1 Review Operation List Event
- 147. Production Subcontracting (ExternalProcessing) • 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-center operations which require external processing. External processing is when you have individual production steps, that are operations or sub-operations, which are performed outside of your company by a vendor. This type of processing is particularly important for subcontracting. It can also provide a company with a feasible alternative to in-house processing, if capacity bottlenecks occur. • Benefits − An outline agreement can specify that a certain operation of the production order is executed by an external subcontractor on a regular basis − In the case of capacity bottlenecks, the assembly procedure of the finished product can be assigned to a subcontractor • Key process flows covered − Creating Purchase Order for External Processing − Goods Receipt for “subcontracting” Purchase Order − Enter Invoice − Periodic Payment Purpose and Benefits:
- 148. Production Subcontracting (ExternalProcessing) •Production Subcontracting (External Processing) − When a Production Order is scheduled, external operations need to be taken into account. The duration of an external operation is calculated either by using the planned delivery time or using the standard values. The system automatically creates a purchase requisition for the operation or sub-operation that requires external processing. The Production scheduler should inform the buyer they need to check the workload for requisitions that require external processing. − When data is maintained for an external activity, a cost element is specified. The cost element determines how the external activity is to be valuated. A decision needs to be made as to whether an operation or sub-operation is processed externally via its control key. In the control key, it is determined whether externally processed operations are scheduled on the basis of their standard values or the planned delivery time. This information is needed to settle externally processed operations and sub-operations that have been marked as relevant for costing in their control keys. − Purchasing should not convert the purchase requisition until the external processing is required. The reason for this is that any quantity changes on the production order will automatically update the requisition. − Once the purchase order is created it is printed and sent to the vendor. The purchase order informs the vendor which service is required. The buyer/planner/scheduler creates a manual shipping document and provides the information to the shipping department on what components need to be gathered for the external processing and ships the components to the vendor. − When the vendor has completed the external processing, the material is shipped back. The warehouse clerk receives the externally processed goods back into the warehouse. The vendor service is reflected on the production order via an operation confirmation. The purchase order and the production order show the quantity 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 - partial delivery) and for final delivery of a external process operation the status is: EOFD (External operation - final delivery). Detailed Process Description:
- 149. Production Subcontracting (ExternalProcessing) – Process Flow Diagram PurchaserVendorWarehouse Clerk Create PO from Purchase Req (Vendor assigned by Info record) Vendor Receives Material and Performs External Services Ship Material to Vendor Print Purchase Order Subcontract Services GR/IR PP = Production Planning, RFQ = Request for Quotation, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price Variance Ship External Material Back to Plant Incoming Vendor Invoice Completion Confirmatio n of Production Order Production Order Generates Purchase Requisition for External Services Goods Receipt for Subcontracting PO Deliver Material Back to Shop Floor Accounts Payable Accountant Event Invoice Receipt GR/IR PPV Vendor Periodic Payment: Accounts Payable (158) Perform External Services Production Supervisor Check Order Operations
- 150. 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-Activities Purpose and Benefits:
- 151. Rework Processing (Work-In-Process) Thisscenario focuses on a rework process within production. All required rework activities are related to the parent production order. For this reason, errors are recognized and corrections initiated such as insertion of a rework operation within the same production order. The additional rework operation is confirmed and settled within the original production order, causing production variances within controlling and price differences for the dedicated product. Detailed Process Description:
- 152. Rework Processing (Work-in-Process)– Process Flow Diagram ShopFloorEvent Any Complaint Quantity to Be Scrapped? Confirm Scrap Defective Material Confirming Production Activities No End Process Insert Rework Operation on Parent Production Order Automatically Confirm Parent Production Order at Rework Operation for Non- Defective Quantity Scrap Defective Quantity that Can’t Be Reworked Confirm Parent Production Order for Reworked Quantity That Can Proceed to Subsequent Operations Continue Shop-Floor- Activities for Non- Defective-Quantity Yes
- 153. Rework Processing (Stock-ManufacturedMaterial) • Purpose − This process covers the rework of defective manufactured materials that are found 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 order Purpose and Benefits:
- 154. Rework Processing (Stock-ManufacturedMaterial) •Rework Processing (Stock-Manufactured Material) •For materials that can be reworked, a production order is created for correcting the defect. The costs associated with the rework production order will be settled to profitability as a material variance. Detailed Process Description:
- 155. Rework Processing (Stock-ManufacturedMaterial) – Process Flow DiagramEventProduction Planner Productio Superviso Warehouse Clerk Create Rework Production Order Identified Component in Stock Requires Changes End Process Confirmation of Rework Production Activities Posting Goods Receipt for Rework Production Order Goods Issue for defective Material Shopfloor Specialist Review Order Confirmations Release Rework Production Order