Knowledge | Transferred | Sustained

Production Order Basics

Content excerpted from our SAP
Production Planning course
Webex Hints
Speaker Introduction – Alexis Parker
• ERPtips lead instructor for supply chain courses
and consults as either a principal or managing
consultant in the area of SAP Supply Chain
Management
• Over 13 years of experience in the SAP Sales &
Distribution, Materials Management,
Production Planning and Supplier Relationship
Management Modules
• Contracted by three of the big 4 consulting
firms for special supply chain projects in the
US, Germany and Korea
• Articulate
i l speaker
k with
i h the
h ability
bili off engaging
i
all audiences.
• Alexis can be reached at
alexis parker@erptips com
alexis.parker@erptips.com
 Getting to know all the production
order has to offer
Learning Points
• During this session, we will cover
– Plan
Pl tto Produce
P d Business
B i P
Process O
Overview
i
– Production Order Overview
– Production Order Key Fields
– Production Order Type Configuration
• At the end of the session, you will walk away
with some tips on working with production
orders.
4
 First, a quick poll
How many years have you worked with SAP production orders?
• Never
• Less than 1 year
• 1 – 5 years
• More than 5 years

Do you use Production Versions?

• Yes
• No
• Don’t know

Do you use the MRP suggested planned orders to automatically generate production
orders?
• Yes
Y
• No
• Don’t know
Plan to Produce Business Process Overview
Production Planning Organizational Units and Master Data

Routing Bill of Materials

Work Center
(T k List)
(Task Li t) (BOM)

Demand
Optional: Sales Optional: Long-Term Planned orders
Management
& Operation Planning and Material are created as
defines how
Planning defines Requirements Planning supply
demand is
demand for (MRP) utilizes demand to components for
utilized for
production drive production production
production

Planned Goods
Optional: Capacity
order is Material for receipt is
Planning determines Production
converted use in performed
if the available orders are
into a production is and stock is
capacity
p y is sufficient confirmed
production
d ti staged
t d placed
l d iinto
t
for production
order inventory

KANBAN / Material Staging

g g
 Production Order Overview
• Discrete manufacturing requires production orders to execute
and capture the results of production.
• Once the MRP creates the planned orders, the planned orders
are then converted into production orders for production
execution and scheduled for capacity if required.
• After the production order is created, it is released to
production to begin the production process.
• Production orders are used to define:
– The
Th product
d t tto b
be produced
d d
– The time in which production occurs
– The quantity of product to produce
 Production Order Overview
• Once a production order is generated, the following steps
occur:
– Selecting the Routing
– Selecting the BOM
– Generating Replenishment Reservations for the BOM items
stored in inventory
– Generating Planned Cost
– Generating Capacity Requirements
– Triggering Requisitions for non‐stock items and externally
procured items via Procurement
 Production Order Overview
• The production order can be broken down
into three different sections:
– Header – contains the order quantity, status information,
scheduling, assignments, goods receipt information,
control data and master data assignments.
– Operations – contains the
h operations and dddefault
f l settings
for process execution during production.
– Components – contains the components for the material
from the BOM.
 Production Order Overview
• Production orders are created either by converting a planned order or by
manual creation
creation. There are two methods to convert the planned order – by
single planned order conversion or collective conversion.

• Production orders are created using the following transactions:

– CO01 – Reference to a material
– CO07 – Without reference to a material
– CO40 – Reference to a planned order
– CO08 – Reference to a sales order
– CO10 – Reference to a project
p j
– CO41 – Collective Conversion of Planned Order
– MD04 – Conversion of a Planned Order in the stock requirements list
 Production Order Overview

• In the
h Production
d Order
d Overview
Demonstration, we:

– Convert a planned order to a production order in

the stock requirements list

– Review the structure elements of the production

order
 Production Order Key Fields
Scheduling in the Production Order
• Scheduling type – determines how the order is scheduled
during creation.
– backward from the basic finish date
– forward from the basic start date
– today
today'ss date sta
starting
t g scheduled
sc edu ed forward
o a d from
o bas
basicc sta
startt
date
– only capacity requirements are calculated basic dates are
scheduled
h d l dd dates
– forward/backward scheduling with exact times
 Production Order Key Fields
Scheduling in the Production Order
• Scheduling margin key
– Opening period – the number of workdays reduced from
the order start date to set the creation date.
date
– Float before production – the number of workdays the
order can float before production.
– Float after production – the number of workdays the order
can float after production.
– Release
R l period
i d – the
h number
b off workdays
kd ffor the
h release
l
period of the order.
 Production Order Keyy Fields
Master Data in the Production Order
• Production version ‐ Defines alternative BOM explosion and
routing determination with validity date for the versions.
• Routing
R ti ‐ If th the production
d ti versioni iis nott maintained,
i t i d ththe
routing is selected by validity dates and status.
• Bill of Material ‐ If the production version is not maintained,
the bill of material is selected by validity dates and status.
 Production Order Key Fields
Master Data Selection
• During the creation of the production order, the master data
and the configuration are evaluated to determine the master
d selection
data l i procedure.
d
• The most commonly used method to derive the correct
master data is through the production version, which defines
the alternative BOM explosion and routing based on validity
dates for the versions.
 Production Order Key Fields
Operation Components
• Operations are generated from the routing
defined and selected in the production order.
– General settings – includes parameters on the sequence number,
scrap, shop floor papers, wage information and setup group sequence.
– Standard values – the base unit quantity from the routing and the
standard value times are copied into the order for use in determining
the amount of time required to complete the order quantity. The
standard values are used as a baseline to determine the values for the
order using the order quantity.
– External processing – if an operation is setup to send a component out
for external processing
processing, this setting allows for the procurement
proposals to be processed.
 Production Order Key Fields
Operation Components
– Standard values calculation – determines how the standard values of
an order are calculated.
– Interoperation times – the reduction strategy for handling lead times
longer than the dates available and the standard wait, queue and
move times.
– Splitting – determines how lots are distributed during scheduling.
– Overlap – defines how operations can or cannot overlap in the order.
– Dates – defines the dates for the operation. Dates include queue,
setup processing,
setup, processing teardown
teardown, wait and move
move.
– Quantities and activities – the order quantities and the activity times
are defined for the operation in the order.
 Production Order Key Fields
Standard Values
• Standard Values ‐ The base quantity of the standard value is the amount
from the operation in the routing to define the times of setup, machine,
labor and teardown when producing the base quantity. The conversion
allows for the base unit and order unit to be converted if required when
calculating standard values.
 Production Order Key Fields
External Processing
• The following are the key fields in the
external processing section of the production
order:
– Purchasing Information Record – the purchasing info record is a master data
object in purchasing, which defines the vendor and material relationship for
creating procurement proposals.
– Outline agreement – a type of purchase order that allows releases of
purchasing items in the form of delivery schedule lines
lines.
– Purchasing organization elements – include the purchasing organization,
purchasing group, price unit, price, material group and unloading point. All
of these fields are used if there are no other sources of supply
pp y defined.
Source of supply in this case means the purchasing info record or an outline
agreement.
 Production Order Key Fields
Interoperation times for operation
• Reduction strategy – defines how the system reduces lead
time by reduction procedures when the lead time exceeds
the amount of available time
time.
• Reduction level – the level defined, which reduces the
reduction lead time.
• Wait time – the amount of time a material can wait
between the one operation and the next.
• Queue time – the time a material waits at an operation
before production starts.
• Move time – time required to move a material from one
operation to another.
 Production Order Key Fields
Splitting for operation
• Required splitting – this indicator is set if the operation must
be split for scheduling.
• Maximum number b off splits
l – the
h maximum number b off splits
l
that can be determined when dividing lots during
scheduling.g
• Minimum processing time – the processing time should be
above this amount always during splitting.
 Production Order Key Fields
Overlapping for operation
• Required overlapping – overlapping of the operation is
required if this box is selected.
• Optional overlapping – overlapping of the operation is
optional.
• Continuous flow prod – overlapping should always occur to
provide a continuous flow of production.
• No overlapping – overlapping of production is not allowed.
• Minimum
Minim m o overlap
erlap time – the shortest amount
amo nt of time ttwo
o
operations should overlap to be most efficient.
• Minimum send‐ahead Qtyy – the smallest amount of the
material that must be sent to the next operation during
overlapping.
 Production Order Key Fields
Components
• The components in the production order are all the
materials required to produce the production order
material.
material
• The components and component information is pulled from
the BOM,, routing,
g, material master or – in the case of addingg
materials – they are added directly into the production
order.
• The
Th mostt common method th d off material
t i l entry
t iin th
the
production order is from the BOM.
 Production Order Key Fields
Components
• In addition to the BOM item categories for materials
that are copied from the BOM, the relevancy for
costing, bulk material and operation lead time offset
are copied into the production order from the BOM.
– The costing relevance indicator defines if a component is costed
costed.
– If the bulk material flag is set, the material is not relevant for costing or the
MRP. This is typical for materials that are low value and high volume and
therefore require
q different pprocess pprocedures.
– The operation lead time offset determines the time the material must be at
the operation before or after the start date.
 Production Order Keyy Fields
Component Backflushing
• In the routing, the materials can be assigned to a specific
operation. This is performed so materials can be backflushed
at the time they are used in the production process.
• If the materials are not allocated to any operation in the
routing, the components are defaulted to the first operation.
• The function of backflushing is to release material from
inventory when it is used in the production process.
• The backflush indicator can be set in the material master
master, the
BOM or the routing.
 Production Order Key Fields

• In the
h Production
d Order
d Key Fields
ld
Demonstration, we:

– Review the key fields in the production order

 Production Order Configuration
g
Production Order Type
• Production orders types define the following:
– How the order is costed
– How the order is organized for removal from the system
– How orders are settled in production
– Status
S profiles
fil ffor order
d flflow
– Planning of the order
– Updates to the order
– Controlling the order
– Viewingg the order
 Production Order Configuration
g
• The production order related parameters
accomplish
li h the
h ffollowing:
ll i
– Releasing the order automatically
– Automatically
A t ti ll selecting
l ti mastert ddata
t ffor th
the production
d ti
version
– Specifying purchase requisition and reservation during
release of the order
– Executing of document printing at releases
– Defining a new production scheduler to assign the new
order type
– Scheduling parameters for the new order type
– Checking control parameters for the new order type
 Production Order Configuration

• In the
h Production
d Order
d Configuration
f
Demonstration, we:

– Review the production order type configuration

– Review the order type dependent parameters
Key Learnings
• Understanding of the structure within the
production order; header, operation and
components.
components
• The key fields in the production order that
drive the production execution process
process.
• Key configuration for order types; production
order
d type and d order
d type ddependent
d
parameters.
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