ERP Production Overview

With support for all product strategy for companies in the discrete process and consumer products industry, ERP helps companies manage the full range of production activities, from planning and analysis for the execution in one end-to-end system. ERP delivers all elements of customer-oriented production management system and is fully compatible with just-in-time (JIT) and Kanban methodology.

Combining information from different business processes (including planning, cost accounting, Human Capital Management, materials management, warehouse Management, plant maintenance and quality management), ERP supports the development and implementation of plans and ensure efficient production of accurate, comprehensive information available in any time, with those who need care. The company may share data through the production companies and the supply network to co-ordinate the production processes and promote cooperation. In addition, data from the plant process control and data collection systems can be included as well as improving decision-making, including the production of accurate data.

Production and Manufacturing in the ERP, in cooperation with all other integrated SAP applications, not much more than just facilitate effective production. It establishes a connection between the critical sales, production planning, as well as the factory floor. SAP integrates the supply chain to make your company competitive as possible. On the seamless integration with external real-time process control and laboratory information systems. This represents significant progress for information systems in the production of repeated and industry. SAP offers a complete integration between its design, material requirements planning (MRP), shop floor control system and module. SAP standard interface connection to the external CAD, product data management, data collection and plant systems. Therefore, SAP ERP is a state-of-the-art production system for discrete manufacturers and engineering in order to companies.

Production Order Execution

The production order is the main central data object in shop floor control and manufacturing execution process. The production order contains every data relevant to the production objectives, material components, required resources, and costs. A normal production order will cover the demand for a single material or product, but you can also produce multiple products jointly in one production order (co-products) and distribute incurred costs between the different products.

In a production order, you can also specify external operations that are to be processed in an outside workshop. If you need to carry out a rework, you can create a separate rework order that is directly assigned to the primary production order. Alternatively, you can insert specific rework operations into an existing order. SAP Production orders are usually created from planned orders.

The complete process includes several steps:

Order Settlement for Production Order

Order settlement for a production order means clearing the differences between the actual costs incurred and the credits that the order received from goods receipts. Order settlement demonstrates the close integration between Production and Management Accounting in mySAP ERP. Normally, a production order is settled when it is completed or before month-end closing. During settlement, you can post cost variances to one or more cost objects. For example, you can post variances due to excessive scrap to a scrap cost collector, and variances due to poor performance to a productivity problem cost collector. Alternatively, you can simply post the entire variance to inventory. The system posts an entry to the G/L price variance account when you work with standard costing.

You can analyze production costs at the product level, for example, with the online variance reports. These reports show planned costs for the order, actual incurred costs, and calculated variances. The reports also show detailed costs per cost element. You can also select a report showing the corresponding quantities. You can interactively analyze the variances and use a drill-down technique to display individual cost allocations. You can access every single cost allocation item, including information about dates, quantity, and origin of the allocation transaction. You can use other standard reports that compare standard cost estimates for products with current production orders or production cost collectors. You can also define production order hierarchies, where you summarize orders for the same product or for product groups. The full power and flexibility of mySAP ERP Financials are available for analyzing production costs.