Module 10

Setupfor

Production

Plant Parameters

Configuring the SAP R/3 system for production is one of the most challenging tasks in R/3 configuration CO will not be configured for production in this

exercise Configuring the CO module to accurately track

manufacturing costs is extremely challengingRequires balance between accurate cost

allocations and data collection requirements. To much detail can make the SAP system difficult to use, which means it is not likely to be used correctly.

Planning vs. Scheduling

Configuring the production planning (PP) module is complicated by the fact that planning and scheduling are two separate, but highly related, activities.

Planning, typically implemented via Material Requirements Planning (MRP), is used to create planned orders and purchase requisitions—suggestions by the SAP system as to what should be produced on the shop floor or procured from suppliers (vendors), respectively.

Planning vs. Scheduling

Scheduling is the process of converting planned orders into production orders and purchase requisitions into purchase orders, then managing these orders in detail.

PlannedOrder

PurchaseRequisition

ProductionOrder

PurchaseOrder

InternalProcurement

ExternalProcurement

Planned Scheduled

Floats

In both planning and scheduling, floats can be added to planning times to provide for a buffer against uncertainty. The production lead time for a material might be 12 days. Of that 12 days, 10 days might be the expected production time with a float of 2 days added to allow for production disruptions.

Floats are organized in the SAP R/3 system using Schedule Margin Keys.

Floats

Four floats are defined in a schedule/margin key: Opening period: Workdays prior to order start. Float Before Production: Workdays between order

start and scheduled start. Float after Production: Workdays between order

due date and scheduled finish date. Release Period: Workdays in release period.

Planning Parameters

The MRP 2 view of the material master gives: In-house production time Goods Receipt (GR) processing time Schedule Margin Key, which gives:

Opening periodFloat Before ProductionFloat After ProductionRelease Period

Planning ParametersM

ater

ial

Mas

ter

MR

P 2

Vie

wS

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Mar

gin

Key

MRP

Planning, which is done by the MRP process, needs: In-house production time GR processing time Opening Period

The MRP process will determine the order start and order finish date, as well as the planned opening date

The planned opening date can be used by planners to convert planned orders to production orders by groups rather than individually. The MRP planner can convert groups of planned orders based on the planned opening date.

Material Requirements Planning

GRprocess

In-house productionOpeningPeriod

DemandA

vailable for P

lanning

Order F

inish

Order S

tart

Planned

Opening D

ate

Example in SAP

Demand (Independent Requirement)Available for Planning

Order startOrder finishPlanned opening date

Planned Order Detail

The float before production and float are used to calculated the scheduled start and scheduled finish dates when the planned order is converted into a production order.

The float before production is a start float. It has two functions: It can compensate for delays in the staging of the material components. If there is a capacity bottleneck at the work

centers involved, the production dates can be moved forward in the future. In this way it

serves as a float for capacity leveling.

Production Order Scheduling

The float after production is a finish float. It is used to compensate for unexpected disturbances in the production process, so that they do not delay the scheduled finish date.

The system calculates the scheduled start of the order by adding the float before production to the order start date. It calculates the scheduled finish of the order by subtracting the float after production from the order finish date.

Production Order Scheduling

Production Order Scheduling

In-house production

Order F

inish

Order S

tart

Float beforeProduction

Float afterProduction

ReleasePeriod

Scheduled

Start

Scheduled

Finish

Scheduled

Release

Note how the float before production and float after production are used to calculate the scheduled start and scheduled finish time. The in-house production time specified on the MRP 2 View of the material master should be the sum of the expected processing time plus the float before production plus the float after production.

Production Order Scheduling

Release Period

The SAP system can be configured so that a production order is released as soon as it is created. This means that the production facility can begin production.

The SAP system can also be configured to make the release of the production order a separate step. In this case, the SAP system deducts the number of days defined in the release period from the scheduled start of the order to determine the scheduled release date of the order. This date can be used by the production scheduler to perform collective release, i.e., release a group of production orders based on the scheduled release date.

Number Ranges

Every transaction in SAP is numbered. Some companies are very interested in the format of numbers assigned to different objects. The SAP R/3 system gives the user the ability to define different number ranges (number of digits, numeric or alphanumeric, starting number, etc.) and then assign them to different objects.

Number Ranges

In defining plant parameters, number ranges must be defined and assigned to: Planned orders Reservations/Dependent requirements Purchase requisitions MRP lists Simulated dependent requirement

MRP Controllers

In the SAP system, the person designated to manage the production and inventory levels for a material is called the MRP Controller.

Each material can be assigned to a particular MRP Controller.

The MRP Controller is used to select materials for reports like the Stock/requirements list.

The Stock/requirements list, is an interactive transaction for managing the production and inventory levels for a material

Production Scheduling Profile

The production scheduling profile determines how production scheduling is to be carried out in the plant. Settings in the production scheduling profile control things like: When production orders are released for

production (upon creation, for example). When production orders are scheduled (on

release, for example).

Production Scheduler

Similar to the MRP Controller, a Production Scheduler must be defined in the SAP system to control detailed production scheduling for a material. A production scheduling profile is assigned to the Production Scheduler, and the Production Schedule is defined in the Work Scheduling view of the Material Master.

Material Availability Check

When the MRP system creates a planned order, it can also check whether the components and sub-assemblies required to complete the planned order will be available.

Bill of Material

The Bill of Material (BOM) defines the relationship between materials that make up an assembled product:

It is the “recipe” for

a material

## NRG–A(case)

## Dough NRG–A(lb)

## Oats(lb)

## Wheat Germ(lb)

## Cinnamon(lb)

## Nutmeg(lb)

## Cloves(lb)

## Honey(gal)

## Vit/Min Powder(lb)

## Carob Chips(lb)

## Raisins(lb)

## Canola(gal)

Routings

Routings define the relationship between a material and the sequence of workcenters (operations) that are required to produce the material. Routings determine: The operations (work steps) to be carried out during

production of a material The activities to be performed in the operations as a

basis for determining dates (start, finish, available, etc.), capacity requirements, and costs for a production order

The use of materials during production The use of work centers The quality checks to be carried out during

production

BOM and Routing Selection ID

Different routings and BOMs may be defined for a material. These routings may be applicable for different production quantities, for example. When products change, the BOM and/or routing may change, so BOMs and routings can have validity periods to define when the changes occur.

BOM and Routing Selection IDs determine how the SAP system will find the correct BOM and routing for a production order.

BOM and Routing Selection ID

With the routing selection ID 01, when an order is created, the system looks for a routing that is valid for the date the production order is being created and the lot size of the production order. If more than one routing is valid for a production order, the SAP system selects the first valid routing.

Similarly, with BOM selection ID 01, the system looks for a BOM for the material with the correct status (active), lot size and validity date.

Creating Production Orders

Manual MRP Automatic

Copy Routing

Copy Bill of Material

Lead Time Scheduling

Availability Checks

Save Order

Read in FirstForms BackboneGenerates

Material and/or Capacity

Planning Horizon

The planning horizon (measured in days) determines how far in the future the MRP planning process looks to create production orders.

A production scheduler can structure the MRP process to create production orders for all demand (forecast demand, customer orders) recorded in the system, or only that demand that is within the number of days in the planning horizon into the future.

Production Order Availability Checks

For standard production order type PP01, availability checks can be specified on a plant-by-plant basis.

Availability checks can be performed for: Materials: availability of component materials Production Resources and Tools (PRT) Production Capacity

Checks can be specified to be determined when a production order is created, a production order is released, or both times.

Production Order Availability Checks

If availability checks are specified, then production orders cannot be created if the availability check is not passed.

For example, if a material availability check is specified at order creation, then a production order for a batch of snack bar dough cannot be created unless all raw materials (oats, wheat germ, cinnamon, etc. are in stock in sufficient quantities. ## Dough NRG–A

(lb)

## Oats(lb)

## Wheat Germ(lb)

## Cinnamon(lb)

## Nutmeg(lb)

## Cloves(lb)

## Honey(gal)

## Vit/Min Powder(lb)

## Carob Chips(lb)

## Raisins(lb)

## Canola(gal)

Forward and Backward Scheduling

Two basic methods of production order scheduling are available Forward Scheduling, where a production

order is scheduled to start immediately and finish as soon as possible

Backward Scheduling, where the scheduling begins at the due date and works backward.Most students use backward schedulingBackward scheduling can lead to

problems if there is not enough float time in the schedule to account for disruptions

Backward Scheduling

PlannedFinish

ScheduledFinish

ScheduledStartPlanned StartToday

Float afterproduction

In-house production time

Float beforeproduction

Forward Scheduling

PlannedFinish

ScheduledFinish

ScheduledStartPlanned Start

Today

Float afterproduction

In-house production time

Float beforeproduction

Material Master Views for Production

The MRP views in the Material Master define a range of parameters for planning.

There are four MRP views (MRP 1, MRP 2, MRP 3 and MRP 4) that contain Production Planning Parameters

Production scheduling parameters are entered in the Work Scheduling View

MRP 1 View

MRP Type: How the material is plannedPD—Using MRP logicVB—Consumption-based planning

Lot Size: How many units to make in a production order

FX—Fixed, make the fixed lot sizeEX—Lot-for-lot, make exactly the

quantity required

MRP Controller: Controller responsible forthis material

MRP 2 View

In-house production: Number of days required to produce the material

GR processing time: Number of daysrequired to process the materialafter production before it can beused. May allow for quality inspection, for example.

Schedule margin key: Set of floats used.

MRP 3 View

Strategy group: setting for how inventory,forecasts and customer orders affectthe MRP planning process.

Tot. repl. lead time: Total replenishmentlead time. This is used in the salesorder process. If there is no stockon hand for this material, then thesales order process will assumethe material will be available inthis number of days if an order isplaced. The SAP system willcalculate a promised delivery dateusing the total replenishment leadtime as well as a delivery timecalculated from other system settings.

Work Scheduling View

Production Scheduler: Production schedulerresponsible for this material.

Prod. Sched. Profile: Production schedulingprofile for this material.

As described previously, the productionscheduler and production schedulingprofile determines the way productionorders are created and managed.

MRP Run

In Single-item, Single-level planning, only the material is planned, not other materials that may be required to make the material

For example, if single-item, single-level planning is used on the dough material, then only the dough is planned and not the materials needed to make dough, like oats, wheat germ, etc.

A number of parameters areset that in MRP planning to determinehow planning is to proceed and whatit is to produce (planned orders vs.purchase requisitions, for example).

Stock/Requirements List

The Stock/requirements list is an interactive report that provides a comprehensive set of information about a material, including inventory, planned orders, forecast demand, customer orders.

In addition, by double-clicking on specific items, the user can access a variety of data like material masters, detailed stock overviews, production order details, etc.

The Stock/requirements list is the primary tool used by planners and schedulers.