Production Planning Overview in SAP ERP

Production Planning Overview in SAP ERP

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 the 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 coordinate 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 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 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 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, actually 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.

What is Production Planning?

Production Planning is the process of aligning forecasts with the manufacturing capability to create production and procurement schedules for finished products and component materials. It also tracks and records the detail of the manufacturing process, for example, the planned and actual costs and material flows. It is fully integrated with the other SAP modules: SD, MM, LE, QM, CO

Any production planning activities still involves the creation of master data.

Here are the transactions related to master data maintenance.

  • MM03 –Display Material Master
  • C203 –Display Master Recipe
  • CRC3 –Display Resource
  • CR03 –Display Work Center

What is Production Execution?

Production Execution is the final part of the Production Planning process. The availability of materials for production is checked in the production location. The transfer of any shortages is requested using the staging transaction. As orders are completed, order operations are confirmed. Material and utility usage are recorded by ‘back-flush.

Process Flow for Production Execution

Production Order

A production order defines which material is to be processed, at which location, at what time and how much work is required. It also defines which resources are to be used and how the order costs are to be settled.

Production Order Statuses

  • Created–Order is created and changes can be made
  • Released–Order released, suggested not to make any change
  • Partially confirmed–Production qty/activity partially confirmed
  • Fully confirmed–Production qty/activity fully confirmed
  • Delivery completed–Entire order quantity has been received
  • Technically completed–Order processing is over, ready for month-end processing by accounts

Confirmation of Production Orders

Confirmation for operation–Reporting of yield quantity and consumed activities and utilities for a specific order and at specific operation.
Milestone confirmation–Reporting of yield quantity and consumed activities and utilities for a specific order and specific operation. This confirms all the previous operations in the order.
Collective confirmation-Reporting of yield quantity and consumed activities and utilities for many orders.

Manufacturing Month End Processes

WIP calculation – Work in progress are the items which are issued from the stores and the process is not completed and lying in the shop floor. WIP is calculated by costing and reported in the inventory value.
Variance calculation – Variance is the difference between planned and actual consumption of material, activity, and utilities. It is calculated at the end of the month.
Settlement of order – Calculated variance for each order are settled to the costing objects according to the costing methodology and procedures

Transactions related to Production Order

  • MMBE –Stock overview
  • MD16 –Display planned orders
  • MD04 –Stock requirement list and convert planned order to production order
  • MIGO –Goods issue to production order
  • MIGO –Goods receipt for the production order
  • CO15 –Confirmation for order
  • C001 Create Production Order
  • C005N Collective Release
  • C011N Time Ticket
  • C012 Confirmation – Collective
  • C013 Confirmation – Cancel
  • C00IS Production order information system
  • C0GI Reprocess Goods Movements
  • C223 Maintain production version

Who is Responsible for Production Execution

Plant Operations are responsible for the detailed control of manufacturing orders, including material staging, the printing of any shop floor documents and recording of produced quantities. These quantities will also cause the issue of the appropriate quantities of raw materials and components via backflushing.

Understanding Process Manufacturing

Process manufacturing is used in processing areas as it gives greater control over very complex processes. Process manufacturing allows the end-user to input very specific information across multi-steps easily.

5 Steps involved in Manufacturing Procedure

  1. View Orders
  2. Make Product
  3. Record consumption & output
  4. Record process data & batch characteristics
  5. Final Confirmation & Back Flush
Process Orders
Confirmation –Production / Process Orders

Transactions related to Process Order

  • MMBE –Stock Overview
  • COID –Display Process Order
  • MSC1N –Create Batch
  • CORK –Process order confirmation
  • COR2 –Process Order change
  • CORS –Cancel Process Order
  • COIO –Process Order Report
  • MCRV –Process Order
  • MCRE –Material Usage
  • KKBC-HOE–Product Cost analysis

Understanding Repetitive Manufacturing

Repetitive manufacturing is used for materials that are produced in a repetitive environment, where the process is ongoing and is very flexible in its application and is an excellent tool for repetitive processes.

Transactions related to Repetitive manufacturing

  • MMBE –Stock Overview
  • MF51 –Production list report
  • MSC1N –Create Batch
  • MFBF –Back Flushes
  • COGI –Post-processing components
  • MF41 –Month-End Corrections
  • MCRE –Material Usage
  • MCP6 –Goods Receipt
  • KKBC-HOE–Product Cost analysis

Calculate Planned Activity Output Through Long Term Planning

In the Long term planning process, the planned production quantities are entered for the planning year in a particular scenario. Long term planning is executed for the scenario. This generates the planned activity requirements taking the activity quantities from the routing and multiplying with the planned production.

The activity requirements are then transferred to the controlling module as scheduled activity quantities. Thereafter you execute a plan activity reconciliation which will reconcile the scheduled activity and the activity you have planned manually. The reconciliation program updates the scheduled activity quantity as the planned activity in the controlling module.


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