Production Planning ERP

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© SAP AG

Production Planning and

Execution (PP)


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Operations management – all activities directly related to theproduction of goods and services

- Value chain

Concerned with planning! directing! and controlling the flow of

infor"ation! "aterials! and services


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Introduction

$$ PP S%Production scheduling & inventory "anage"ent influence

how assets are deployed'

Pro(le" A "issed due date or stoc)-out "ay cascade

downstrea"! "agnifying the bullwhip effect


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+he bullwhip effect is an o(servedpheno"enon in forecast-driven

distri(ution channels' ,t refers to a trend

of larger and larger swings in inventory inresponse to changes in custo"er

de"and! as one loo)s at fir"s further

(ac) in the supply chain for a product'

.i)ipedia/


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,f de"and is greater than capacity

Option ResultChoose not tomeet the de"and

1ost sales

Reduce pro"otionalexpenditures

Potential lostsales

se overtime to

increase capacity

,ncreased

costs

Build up inventory in earlier periods

,ncreasedcosts and lost

inventory


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4(ectives of operations 6 value chain

4perations "anagers are continuously involved in (alancingcapacity & output! and 78P syste"s are designed to help"anage this aspect of "anufacturing organi9ations

Provide for cost-efficient operations:- :uffer inventory for s"ooth production flow- $aintain a level wor) force

- Allowing longer production runs & ;uantity discounts

ini!u! inventor" invest!ents:- ,nventory turnover


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PP 4rgani9ational Structure

Client- An independent environ"ent in the syste"

Co"pany Code- S"allest org unit for which you can "aintain a legal set of (oo)s

Plant- 4perating area or (ranch within a co"pany

? $anufacturing! distri(ution! purchasing or "aintenance facility

Storage 1ocation- An organi9ational unit allowing differentiation (etween the various stoc)s of a

"aterial in a plant

.or) Center 1ocations in SAP syste" "aster data/

- An organi9ational unit that defines where and when an operation is perfor"ed- as an availa(le capacity

- Activities perfor"ed are valuated (y charge rates! which are deter"ined (ycost centers and activity types'

- Can (e "achines! people! production lines or groups of crafts"en


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Glo(al :i)e Structure for Production Planning

#lobal $i%e

#lobal $i%e &nc' #lobal $i%e #er!an" #!b

allas eidelberg

Client

Co"pany

Code

Plant

Storage

1ocation

Raw aterials

Se!i-fin' #oods

*inished #oods

iscellaneous

Raw aterials

Se!i-fin' #oods

*inished #oods

iscellaneous

Asse!bl"

Pac%aging

&nspection

Asse!bl"

Pac%aging

&nspection

.or) Center 1ocation/

http://aris-publisher-server.hs-harz.de:9090/businesspublisher/link.do?login=anonymous&password=anonymous&localeid=1033&ph=0mqdn7p&modelguid=424496a0-6a64-11e0-6d87-0050568608eahttp://aris-publisher-server.hs-harz.de:9090/businesspublisher/link.do?login=anonymous&password=anonymous&localeid=1033&ph=0mqdn7p&modelguid=d5325d01-7ecc-11df-24b0-005056861d3bhttp://aris-publisher-server.hs-harz.de:9090/businesspublisher/link.do?login=anonymous&password=anonymous&localeid=1033&ph=0mqdn7p&modelguid=f5dc7bc0-5772-11df-24b0-005056861d3bhttp://aris-publisher-server.hs-harz.de:9090/businesspublisher/link.do?login=anonymous&password=anonymous&localeid=1033&ph=0mqdn7p&modelguid=f5dc7bc0-5772-11df-24b0-005056861d3bhttp://aris-publisher-server.hs-harz.de:9090/businesspublisher/link.do?login=anonymous&password=anonymous&localeid=1033&ph=0mqdn7p&modelguid=d5325d01-7ecc-11df-24b0-005056861d3bhttp://aris-publisher-server.hs-harz.de:9090/businesspublisher/link.do?login=anonymous&password=anonymous&localeid=1033&ph=0mqdn7p&modelguid=424496a0-6a64-11e0-6d87-0050568608ea


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PP $aster %ata

$aterial :ill of $aterials :4$/

8outing

.or) Center

Product Group

%ata $odel PP

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:ill of $aterials :4$/

1ist of co"ponents that "a)e up a product or asse"(ly

.heel Asse"(ly

- +ire

- +u(e

- .heel

- e> nut

- 1oc) .asher

- Soc)et ead :olt

=ra"e

%erailleur Gear Asse"(ly

Seat Eit

andle :ar

Pedal Asse"(ly

Chain

:ra)e Eit

.arranty %ocu"ent

Pac)aging

:usiness Voca(ulary PP


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ulti-+evel


Single-1evel vs' $ulti-1evel

Single-+evel

=inished :i)e

andle :ar Chain%erailleur %oc'Seat :ra)ePedal Pac)'

Single-+evel

.heel =ra"e

+ire

+u(e

.heel

e> nut

1oc)

:olt


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Variant :ill of $aterials :4$/

- Several products with a large proportion of identical parts'

Single-+evel

%elu>e :i)e red/

andle :ar

Alu"inu" .heel

=ra"e red Chain

%erailleur Gear

Asse"(ly

.arranty %oc'Seat Eit

:ra)e Eit

Pedal Asse"(ly

Pac)aging

Single-+evel

Professional :i)e (lac)/

andle :ar

Car(on .heel

=ra"e (lac) Chain

%erailleur Gear

Asse"(ly

.arranty %oc'Seat Eit

:ra)e Eit

Pedal Asse"(ly

Pac)aging


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8outing

8outings ena(le you to plan the production of "aterials products/'

8outings are used as a te"plate for production orders and run

schedules

8outing are also used as a (asis for product costing'

Series of se;uential steps operations/ that "ust (e carried out toproduce a given product

8outings contain

- .hat! .here! .hen! ow


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aterial

$aterial Assign"ent

OP

0010

OP

0020

OP

0030

OP

0080

OP

0090……..

aterial

a t e r i a l

aterial

OP

0010

OP

0020

OP

0030

OP

0080

OP

0090……..

aterial

a t e r i a l

Assigned via $O:

All !aterials assigned to

first operation

Assigned via Routing:

aterials can be assigned

to specific operations


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Product Group

Aggregate planning that group together "aterials or other product

groups Product =a"ilies/

$ulti- or Single- 1evel Product Groups

- +he lowest level "ust always consist of "aterials



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PP Processes

Production Planning & 7>ecution

- =orecasting

- Sales and 4perations Planning S4P/

- %e"and $anage"ent

- $aster Production Scheduling $PS/

- $aterial 8e;uire"ent Planning $8P/ Production 4rder


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PP Processes


- =orecasting

- Sales and 4perations Planning S4P/

- %e"and $anage"ent

- $aster Production Scheduling $PS/

- $aterial 8e;uire"ent Planning $8P/ Production 4rder


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e!and

anage!ent

*orecasting

Sales , Operations

Planning

S&S O.PA

PS

RP

anufacturing

Execution

Order

Settle!ent

Procure!ent

Process

Strategic Planning

etailed Planning

anufacturing Execution


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=orecasting

=orecasting is the foundation

of a relia(le S4P

Accurate forecasts are

essential in the "anufacturing

sector

4verstoc)ed & understoc)edwarehouses result in the sa"e

thing a loss in profits'

=orecasts are A1.AFS

.84G


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+ypes of forecasting

%e"and-Supply "is"atch

+ypes of forecasting

- $oving average

- .eighted "oving average

- 7>ponential s"oothing


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=orecasting

=orecasting $odels

- +rend

- Seasonal

- +rend and Seasonal

- Constant

Selecting a $odel

- Auto"atically

- $anually


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Sales and 4perations Planning contHd'/

*orecasting results presented graphicall" in SAP ERP


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Sales and 4perations Planning S4P/

SAP uses historical data

,nfor"ation 4rigination

- Sales

- $ar)eting

- $anufacturing

- Accounting- u"an 8esources

- Purchasing

,ntra-fir" Colla(oration

- ,nstitutional Co""onSense


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Sales and operation plan with rough-cut capacit"

calculation in SAP ERP


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Page 5-2B© SAP AGoncepts in Enterprise Resource Planning3 *ourth Edition /4


%isaggregating the sales and operations plan

- Co"panies typically develop sales and operations plans for product

groups

- SAP 78P syste" allows any nu"(er of products to (e assigned to a

product group

- Sales and operation plan disaggregated

? Production plan ;uantities specified for the group are transferred to the

individual products that "a)e up the group


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Product group structure in SAP ERP


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%e"and $anage"ent

1in)s the sales and operations planning process with detailed

scheduling and "aterials re;uire"ents planning processes

4utput !aster production schedule (PS)

- Production plan for all finished goods


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Page 5-#2© SAP AGoncepts in Enterprise Resource Planning3 8hird Edition 5/

Production Strategies

+hree general approaches to production

- Make-to-stock ite"s "ade for inventory the Istoc)J/ in anticipation of

sales orders

- Make-to-order ite"s produced to fill specific custo"er orders

- Assemble-to-order ite"s produced using a co"(ination of "a)e-to-

stoc) and "a)e-to-order processes


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$a)e-to-order

7>a"ples- +ailor "ade suit

- Co""ercial airplane

- .edding ca)e

- Professional services law case! prescriptions! so"e "edical

procedures! etc'/- air styling


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Asse"(le-to-order (uilt-to-order/

7>a"ples

- Co"puters %ell/

- +rac) ho"es

- Cars (uilt to custo"erHs specs


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$a)e-to-stoc)

7>a"ples

- I4ff-the-shelfJ ite"s

- :ig ones

? Cars

? +V sets

- S"all ones

? +oothpaste

? Candy


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4verview of Product Strategy


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%ifferent types of organi9ations have different operations

considerations

e!and anage!ent -9 aster Production Schedule (PS)

+a)es into considerations production capacity! re;uired "aterials!

and production strategy

+riggered (y forecasts and actual orders -K production and

purchasing activities

Availa(le to pro"ise – future gross re;uire"ents not currently

co""itted to a custo"er


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$aterials 8e;uire"ents Planning $8P/

- .ith the $PS! the :4$! and the ,nventory Status 8eport!$8P syste"s

? ,dentify raw "aterials needed

? Calculate lead ti"es and safety stoc) levels

? %eter"ine the "ost cost-effective order ;uantities

? Produce a detailed schedule of accurate purchase orders

7cono"ic 4rder Luantity 74L/ – inventory"anage"ent techni;ue in which each raw "aterial ite"is analy9ed for its ordering and carrying costs todeter"ine opti"u" ordering ;uantities

7


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Manufacturing Systems Evolution

$aterials 8e;uire"ents Planning $8P/ – co"puteri9ed

production planning and inventory control syste" usedto control ordering and "anufacturing processes' eedsfollowing infor"ation'

- :ill of "aterial :4$/ – full list of raw "aterials necessaryto produce a single ite"

- $aster production schedule $PS/ – production schedulefor finished goods (ased on current orders plus forecastedre;uire"ents

- ,nventory status file < contains on-hand inventory (alancesof every part held in inventory

? Open orders – orders not yet filled

? +ead ti!e – ti"e that elapses (etween placing an order for raw "aterialsand receiving the"

? +ot si;ing deter"ining production ;uantities and order ;uantities

?

5

=/676 b" arianne $radford' All rights reserved


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1ead +i"es and 1ot Si9ing

.hen it co"es to purchasing raw

"aterials! what are0- I1ead +i"esJM

- I1ot Si9esJM

and why do , careM


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$easures of 4perations

+ead 8i!e vs "cle 8i!e

1ead ti"e cloc) starts when the re;uest is "ade and ends atdelivery'

Cycle ti"e cloc) starts when wor) (egins on the re;uest and endswhen the ite" is ready for delivery'

Cycle ti"e is a "ore "echanical "easure of process capa(ility'1ead ti"e is what the custo"er sees'

+i"e is an i"portant aspect of operations' As a result! we want to

- 7li"inate unnecessary operations- $ini"i9e duration of necessary operations

- $ini"i9e delays (efore! after! and during operations

- $ini"i9e dependencies (etween operations and create paralleloperations


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$ulti-1evel Scheduling

8i!e

*inished Product

Asse!bl" 7

Se!i-*inished #ood

Raw aterial

o!ponent

Re>uire!ents

atePlanned Order

Purchase Re>uisition



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7

Production Proposal

/ Order Release

5 Availabilit"hec%s

4

#oods &ssue

77

onfir!ation

75#oods Receipt

7?

OrderSettle!ent

Production

Order

"cle


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Planned 4rders vs' Production 4rders

Planned 4rders are for P+A@@&@#

Production 4rders are for EEB8&O@

Planned Order 5 wee%s in future

Planned Orders / wee%s in future

Planned Orders 7 wee% in future

Production Orders released toda"

Planning

Execution


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Production 4rder

Production orders are used to control production operations and

associated costs

- Production 4rders define the following

? $aterial produced

? Luantity

? 1ocation

? +i"e line? .or) involved

? 8esources used

? ow to costs are settled

4nce an order has (een released it is ready for e>ecution! we can

at this ti"e- Print shop floor docu"ents

- 7>ecute goods "ove"ents

- Accept confir"ations against the order


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Availa(ility Chec)

Auto"atic chec) to deter"ine whether the co"ponent! production

resource tools! or capacities in an order are availa(le

- Can (e auto"atic or "anually e>ecuted

- %eter"ines availa(ility on the re;uired date

Generates an availa(ility log

- %isplays results of the chec)- $issing parts list

- 8eservations that could not (e verified


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$aterial .ithdrawal

.hen a production order is created it references a :4$ to

deter"ine the necessary co"ponents to produce the "aterial'

,t then places a reservation on each of the co"ponents'

pon release of the order or operation/ you can withdraw the

reserved "aterials fro" inventory

- 8eservation is updated

- ,nventory is updated

- Costs are assigned to the order as actual costs


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Confir"ations

Confir"ations are used to "onitor and trac) the progression of an

order through its production cycle- Confir"ation can (e done at the operation or order level

7>act confir"ation shortly after co"pletion of an operation isessential for realistic production planning and control

%ata that needs confir"ation include- Luantities – yield! scrap! rewor)- Activity data – setup ti"e! "achine ti"e

- %ates – setup! processing! teardown started or finished

- Personnel data – e"ployee who carried out the operation! nu"(er ofe"ployee involved in the operation

- .or) center

- Goods "ove"ents – planned and unplanned

- Variance reasons

- P8+ usage


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Goods 8eceipt

Acceptance of the confir"ed ;uantity of output fro" the production

order into stoc)

- 7ffects of the Goods 8eceipt

? pdates stoc) ;uantity

? pdates stoc) value

? Price stored for future valuation changes

? Production order is updated

- +hree docu"ents are created

? $aterial docu"ent

? Accounting docu"ent

? Controlling docu"ent


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4rder Settle"ent

Consists of settling the actual costs incurred in the order to one or

"ore receiver cost o(ects

Settling a Production 4rder to Stoc)

- %e(t posting is "ade to the Production 4rder with the value of the

"aterial

- %ifference (etween the de(t posting and credit posting is posted to a

price difference account

$aterial Prod' 4rder Price %iff'

DD 2D@D

N $aterial Price is deter"ine (y the ;uantity produced

ti"es the Standard Price in the $aterial $aster'


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