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The SAP PP business processes uses the following organizationalelements:– Client– Company Code– Plant– Storage LocationOrganizational Elements
Organizational ElementsClientA Highest Hierarchical Level in SAP (e.g. a corporation)Used to Differentiate between a Development, Quality Assurance, andProduction System within SAP R/3Common Set of Rules Common Tables Common Master Files Common Data BasesStandardized 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
BALANCING / (LEGAL)BALANCING / (LEGAL)ENTITYENTITY==Company Code ****Assets Liabilities Revenues- ExpensesProfit/LossOrganizational ElementsCompany Code A company code represents an independent balancing/legalaccounting entity, for example, a company within a corporategroup. Balance sheets and profit & loss statements, required by law, canbe created at the company code level.
Organizational ElementsPlant Usually a manufacturing facility, a warehouse, or a location thatstocks , 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 beassociated to a plant i.e. Administrative vs. Manufacturing costcenters) Links to production (PP), materials management (MM), and sales anddistribution (SD) A plant is assigned to a company code Purchasing organization are assigned to plants.
Organizational ElementsStorage LocationsA storage location is the place where stock is physicallykept within a plantA 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 valuebasis at storage location level. Physical inventories are carried out at storage location level. Storage locations are always created for a plant.
Master DataList of Master Data in SAP PP Module are:– Material Master– Bills Of Material– Work Centers– Routings
Material master record is a companys main source ofmaterial-specific data. It is used by all components inthe R/3 Logistics System.The integration of all material data in a single databaseobject prevents the problem of data redundancy. Everyarea, such as Purchasing, Inventory Management,Materials Planning, and Invoice Verification can usethe data stored.Material Master
Since materials are processed by various userdepartments within a company and each departmentstores different information for the materials, thematerial master is subdivided into information groupedby user departments.Each user department has a different view of thematerial master record and is responsible formaintaining the data to support its function.The data maintained within a view may be valid formore than one organizational level.Material Master
Production Planning• Demand Management• Material Requirement Planning− Planning of Purchased parts− Planning of in house assemblies
Planning Process: Process flowDemand planning cellPPCProductionMRP RunThird Party LogVendorWeb siteDemand (Weekly)Production Requirement (Week wise, Model wise)Planned Prod.Confirmed ProductionPlanned Vendor ScheduleConfirmedVendorScheduleDispatch planCentral marketing officeDispatch sheet
While doing planning, you need to decide which planning strategy to use when the customerplaces their order.• Make-to-Stock Production− Make-to-stock production means we build stock in anticipation of customer demand. Weship 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 asper demand from customerPlanning Process: Strategies
DealerTerritory officeArea Office Area Office Area Office Area OfficeZonalCentral Marketing officeConsolidation of DemandTerritory officePPCDealer Dealer Dealer Dealer DealerPlanning process: Demand Planning
Demand management is the link between top-levelrequirements planning (SOP) and materials planning(MRP).Input for the demand program can come from severalsources:Planning Process: Demand Management
Logistics Planning• Purpose− The purpose of logistics planning is to make sure that future demand can be satisfiedby your company’s available resources and to point out situations where demandcannot 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 PlanningPurpose and Benefits:
Logistics Planning•This process sometimes is called ‘Sales and Operations Planning’. The process usuallytakes place in a simulative mode and at an aggregated (usually product group rather thanend-item) level. Once a feasible production plan is found that satisfies demand it can beused as the basis for operational production planning (MRP and Detailed CapacityScheduling).•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 productgroup level if demand can be satisfied (using the SOP functionality) Transfer of results to Long Term Planning (using the LTP module) to enablesimulation 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 (independentrequirements) is then transferred to active demand management for detailed MRP andProduction Planning / Scheduling in the active version.Detailed Process Description:
Logistics Planning – Process Flow DiagramRevenuePlannerStrategicPlanEventAcceptablePlanSales QtyBudget andTransfer toSOP (with CO-PA), RevenuePlanning(172)OperationalProductionPlanning &Control(Productionscenarios)SOP VerificationDemandVerification (CheckSales Plan) Create Rough-CutProduction PlanPeriodic SalesandOperationsMeetingOperativeProduction DataCO-PA = Profitability Analysis, SOP = Sales and Operations Planning, LTP = Long Term Planning, MRP = MaterialRequirements PlanningTransfer RoughCut ProductionPlan to InactiveDemandManagementCopy to ActiveDemandManagementExecute LTPMRPCreate LTPPlanningScenarioNoYesEvaluateCapacityPlanningSales Quantityforecast (179)
Make-To-Stock Production with DiscreteManufacturing• Purpose− This scenario describes a business process, which is typical for companies with lot-sizeoriented 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 ActivitiesPurpose and Benefits:
Make-To-Stock Production with Discrete ManufacturingThis scenario describes a business process, which is typical for companies with lot size orientedproduction. 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, suchas preliminary costing and period-end closing. The typical planning process starts with sales quantity planning. The previous period’s actual salesfigures 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 youmay create the production plan synchronously to sales. The planning data is transferred from Salesand Operations Planning to Demand Management. Demand Management generates independentrequirements, 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 getsexploded and production is planned right down to procured component level. MRP results inplanned orders being generated for the material to be produced. If insufficient warehouse stock is available, purchase requisitions are created for the raw materialsrequired. When the order is created, target costs are calculated for the order lot size (preliminarycosting). During the production process, costs incurred are updated on the order, which enables you to keeptrack 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 calculationand variance calculation. After this, Work in Progress is settled to financial accounting and production variances are settled tomanagement and financial accounting.Detailed Process Description:
Make-to-Stock Production – Discrete Industry – Process Flow DiagramManufacturingEventPlantControllerPeriod EndClosing “General”Plant(181)Material RequirementsPlanning at Plant Level &Evaluation of Stock /Requirement ListBeginning ofPlanning CyclePurchaseRequisitionMRP ListInventory @Standard. CostProductionPlannerPeriodic PlanRevisionReleaseProduction OrderCapacityLevelingMaterial Stagingfor PlannedOrdersConfirmingAssemblyActivities/ FinalConfirmationSemi-FinishedGoods ReceiptGoods Issue/Back flushUpdate CapacityGoods ReceiptSlipPick ListOrder PrintPlannedOrdersCapacityLeveling O.k.?MaterialAvailable?BuyerWare-houseClerkGoods ReceiptSlipProcurement ofStock Materialwith QM (127)Procurement &Consumption ofCosigned Inventory(139)StrategicPlannerCreatingPlannedIndependentRequirementsConvertPlanned Order toProduction OrderInventoryConsumption @Standard. CostProcurement w/oQM(130)Finished GoodsReceiptMMSubcontracting(138)PP-Subcontracting(ExternalProcessing)(150)NoYesNoYesLogisticsPlanning(144)1
Make-to-Stock Production – Discrete Industry – Process Flow DiagramProductionSupervisor1ReviewOperation ListEvent
Production Subcontracting (External Processing)• 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-centeroperations which require external processing. External processing is when you haveindividual production steps, that are operations or sub-operations, which are performedoutside of your company by a vendor. This type of processing is particularly important forsubcontracting. It can also provide a company with a feasible alternative to in-houseprocessing, if capacity bottlenecks occur.• Benefits− An outline agreement can specify that a certain operation of the production order is executedby an external subcontractor on a regular basis− In the case of capacity bottlenecks, the assembly procedure of the finished product can beassigned to a subcontractor• Key process flows covered− Creating Purchase Order for External Processing− Goods Receipt for “subcontracting” Purchase Order− Enter Invoice− Periodic PaymentPurpose and Benefits:
Production Subcontracting (External Processing)•Production Subcontracting (External Processing)− When a Production Order is scheduled, external operations need to be taken into account. The durationof an external operation is calculated either by using the planned delivery time or using the standardvalues. The system automatically creates a purchase requisition for the operation or sub-operation thatrequires external processing. The Production scheduler should inform the buyer they need to check theworkload for requisitions that require external processing.− When data is maintained for an external activity, a cost element is specified. The cost element determineshow the external activity is to be valuated. A decision needs to be made as to whether an operation orsub-operation is processed externally via its control key. In the control key, it is determined whetherexternally processed operations are scheduled on the basis of their standard values or the planneddelivery time. This information is needed to settle externally processed operations and sub-operations thathave been marked as relevant for costing in their control keys.− Purchasing should not convert the purchase requisition until the external processing is required. Thereason for this is that any quantity changes on the production order will automatically update therequisition.− Once the purchase order is created it is printed and sent to the vendor. The purchase order informs thevendor which service is required. The buyer/planner/scheduler creates a manual shipping document andprovides the information to the shipping department on what components need to be gathered for theexternal processing and ships the components to the vendor.− When the vendor has completed the external processing, the material is shipped back. The warehouseclerk receives the externally processed goods back into the warehouse. The vendor service is reflected onthe production order via an operation confirmation. The purchase order and the production order show thequantity 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 - partialdelivery) and for final delivery of a external process operation the status is: EOFD (External operation -final delivery).Detailed Process Description:
Production Subcontracting (External Processing) – Process Flow DiagramPurchaserVendorWarehouseClerkCreate PO fromPurchase Req(Vendor assigned byInfo record)Vendor ReceivesMaterial andPerformsExternalServicesShipMaterialto VendorPrint PurchaseOrderSubcontractServicesGR/IRPP = Production Planning, RFQ = Request for Quotation, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase PriceVarianceShipExternalMaterialBack toPlantIncomingVendorInvoiceCompletionConfirmation ofProductionOrderProduction OrderGeneratesPurchaseRequisition forExternal ServicesGoods ReceiptforSubcontractingPODeliverMaterialBack toShopFloorAccountsPayableAccountantEventInvoiceReceiptGR/IR PPVVendorPeriodicPayment:AccountsPayable (158)PerformExternalServicesProductionSupervisorCheck OrderOperations
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-ActivitiesPurpose and Benefits:
Rework Processing (Work-In-Process)This scenario focuses on a rework process within production. All required reworkactivities are related to the parent production order. For this reason, errors arerecognized and corrections initiated such as insertion of a rework operation within thesame production order. The additional rework operation is confirmed and settled withinthe original production order, causing production variances within controlling and pricedifferences for the dedicated product.Detailed Process Description:
Rework Processing (Work-in-Process) – Process Flow DiagramShopFloorEventAnyComplaintQuantity toBeScrapped?Confirm ScrapDefective MaterialConfirmingProductionActivitiesNoEnd ProcessInsert ReworkOperation onParent ProductionOrderAutomaticallyConfirm ParentProduction Orderat ReworkOperation for Non-Defective QuantityScrap DefectiveQuantity thatCan’t BeReworkedConfirm ParentProduction Order forReworked QuantityThat Can Proceed toSubsequent OperationsContinue Shop-Floor-Activities for Non-Defective-QuantityYes
Rework Processing (Stock-Manufactured Material)• Purpose− This process covers the rework of defective manufactured materials that arefound 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 orderPurpose and Benefits:
Rework Processing (Stock-Manufactured Material)•Rework Processing (Stock-Manufactured Material)•For materials that can be reworked, a production order is created for correcting thedefect. The costs associated with the rework production order will be settled toprofitability as a material variance.Detailed Process Description: