In class, please insert the following Transaction Codes ... · MRP calculation, ECC 6.0 systems...

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Final Version

In class, please insert the following Transaction

Codes into Favorites:

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This Production Planning script was developed in a specific order to enhance educational

benefit. Performing sections out of sequence causes the user to lose functionality and

minimizes the benefit of the material. Please note that the tables of input information take

precedence over the screenshots of input information, which are purely supplemental. Your

instructor will assign you a control number. This is to be used wherever you see XX in the

scripts. Prior to starting any of the units, a cash account must be created. Information needed

to create the cash account is in the introductory section of our materials.

Through the Production Planning module managers can plan and forecast the utilization and

availability of resources for the production process. The aim of this module is to increase

throughput and to reduce product stock. This enables organizations to increase efficiency and

productivity and at the same time minimize production time and costs.

Production planning also allows managers to determine how assets are to be utilized. They can

also prioritize the production schedule on the basis of the availability of resources to determine

the estimated date of delivery or on the basis of the committed delivery date. Managers utilize

the resources of production planning to effectively track the progress of production orders

through the various stages and can then determine whether or not the delivery schedules will

be met.

Production Planning in SAP ECC 6.0 Within SAP ECC 6.0 the approach to the production planning process is as follows.

2.1 - Introduction to Production Planning

Sales and Operations Planning

Sales Forecasting

Demand Management

Production

MRP

Starting Inventory

Detailed Scheduling

Purchasing

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The production process flows through the steps shown above. In the following section, each

step will be explained in greater detail.

Sales Forecasting

Sales Forecasting is the process of developing a prediction of the future demand for a

company’s products. There are a range of different forecasting techniques that can be used to

predict customer demand. With its built-in integration tools, SAP’s ECC 6.0 system allows

historical data to be used in forecasting.

Sales and Operations Planning (SOP)

This is the process of determining what the company will produce. The Sales Forecast and

Starting Inventory levels are inputs to this process. At first glance, it would seem that a

company should just make products to match the forecasted sales, but developing the

production plan can be complicated because capacity must be considered. Many products have

seasonal demand, and to meet demand during peak periods, production planners must decide

whether to build up inventory levels before the peak demand, increase capacity during the peak

period, subcontract production, or use some combination of these approaches.

Demand Management

This is the process of breaking down the production plan into finer time units, such as weekly

or even daily production figures, to meet demand for individual products. The output of the

Demand Management process is the master production schedule (MPS), which is the

production plan for all finished goods.

Detailed Scheduling

This uses Demand Management’s productions plans as an input for a production schedule. A

detailed plan must be created stating what needs to be developed, considering machine capacity

and available labor. In detailed scheduling, longer production runs means fewer machine

setups are required, reducing the production costs and increasing the effective capacity of the

equipment. On the other hand, shorter production runs can be used to lower the inventory

levels for finished products. Thus, the production run length requires a balance between setup

costs and holding costs to minimize total costs to the company. Methods of detailed scheduling

depend on the manufacturing environment.

Production

Production uses the detailed schedule to manage daily operations, answering the questions,

“What should we be producing?” and “What staffing do I need?”

Materials Requirements Planning (MRP)

MRP determines the amount and timing of raw material orders. This process answer the

questions, “What raw materials should we be ordering so we can meet a particular level of

production, and when should we order them?”

Purchasing

Purchasing takes the quantity and timing information from MRP and creates purchase orders

for raw materials, which it transmits to qualified suppliers.

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Production Planning Terminology in SAP ECC 6.0

In addition to the production planning process described above, there are several key terms that

must be understood in order to use production planning in SAP. They are defined as follow:

Material Master

Material is defined as any product that takes part in business activity that could be traded,

consumed, or produced. The data related to a particular material is stored as a “material master”

associated with a particular level of organizational structure. Basically, a material master is a

database that contains all critical information about materials. It contains information about all

of the materials that a company produces, stores, and sells. Material masters are created for

every assembly, component, tool, or spare part. The information that is stored could be

descriptive (a name, a size, or a dimension) or control function forms. There are several views

in a material master that contain different types of information. This may include a basic data

view, a Materials Requirement Planning (MRP) view, a sales view, a warehouse management

view, a costing view and an accounting view.

Bill of Materials (BOM)

Bill of Materials is an engineering document that shows a formally structured list of

components that is required to make a product or assembly. Production Planning bill of

materials contain the master data that is needed for production planning in discrete

manufacturing. The data stored serves as the basis for activities such as MRP, work scheduling,

and product costing. Production planning BOM consists of two elements, BOM header and

BOM items. BOM header gives the BOM assignment to plant locations, defines the validity

period, and determines the status management of a component. BOM items are a list of the

components of an assembly. Another BOM term used is multiple BOM. This is defined as a

collection of bill of materials that specify the alternative combinations of components for a

product. The user can display BOM in two different ways, single level or multi level.

Work Center

Work centers are organizational units that perform operation functions within a plant. A work

center might include a production line, quality checkpoint, packaging line, and a warehouse.

All manufacturing processes are routed through work centers. Each work center is connected

to a cost center as defined in the Work Center Master Records. These allow costing,

scheduling, and capacity planning to be done for each functional production area individually.

The amount of work that can take place at a work center is represented as its capacity. When

capacity is used, the operations are evaluated by charge rates. Generally, a work center is a

combination of machinery, equipment, vehicles, employees, production lines, and assembly

lines.

Product Structure

Product structure is a graphical view that displays information about the product data. The

information in product structure is helpful for engineering and design as well as for production.

The graphical view enables the user to have a quick overview of product-defined data. The

user can navigate within a product structure and access all data that is relevant for a particular

product.

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Routing

A routing defines the sequence of steps and the resources required to complete the production

of a planned order for materials. A routing can have one or more alternative sequences and

parallel sequences. An alternative sequence gives options to choose other operations in place

of operations in the standard sequence. A parallel sequence allows different operations to be

performed at the same time. Routings list work centers, activity descriptions, and additional

information necessary to perform production. They may have one or several steps. A routing

includes standard time value for activities, work center where operation is carried, materials

assigned to the operations, production resources required for the operations, etc.

Material Requirement Planning (MRP)

MRP is a generic term for the activities involved in creating a production schedule or a

procurement plan for all the materials in a plant, a company, or a company group. In a typical

MRP calculation, ECC 6.0 systems consult production planning master data such as material

masters, bills of material, routings, and material inventories. If it turns out that available stock

is less than quantity required, SAP creates an order proposal.

MRP controllers can interact with MRP to verify that the correct amount of production will

take place. They can create and maintain planned orders, re-run MRP for individual materials

when necessary, and consult MRP reports to check for errors. The system calculates the order

quantity according to a lot-sizing procedure that is specified in the MRP view at the material

master. The system allows us to define various MRP and lot sizing procedures for material

masters.

MRP can be carried out for an individual material or for all of the materials in a plant. In the

total planning procedure, one can plan all the materials in a particular plant starting with the

basic database of planned independent requirements, the BOM, and the material master, or can

plan the materials that have undergone change relevant to the requirement planning since the

last planning run.

Production Order

Production order is a data object that specifies the material to be produced by internal processes.

It also defines what activities have been carried out, when the material is available for delivery,

and the production costs. Production order processes begin with a planned order or other

internal request that has been generated by a planning process such as MRP. Another source

can be an assembly order where the task is to put components together.

The planned dates and costs associated with the production order allow it to be used to monitor

the progress of production activities and to calculate the costs of various activities involved.

Although we can schedule using either the start date or the finish date, production orders are

generally scheduled backwards from the finish date. The production order also shows where

the outputs of various production facilities will be available for dispatch.

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Goods Issue

The goods necessary for a production planning order have to be physically issued from stock

and accounted for by posting a goods issue document. When these goods arrive and are

counted as stock, they are acknowledged and accounted by posting goods receipts. Each goods

movement is assigned to a movement type in the system. Movement types will enable the

system to find predefined posting rules to determine how stock and consumption accounts are

to be posted. If movement for the reservation is not allowed then goods issue is not allowed.

Order Confirmation

Order confirmations are used to enter activities carried out within a company for a production

order. The purpose of the confirmation is to record a phase in the progress of a production

order. With order confirmation, the progress carried out for a production order can be

monitored.

Purchase Requisition

In cases where a planned order is not assigned for in-house production or to an external party,

a purchase requisition can be generated. A purchase requisition is an internal document that

requires the purchasing department to procure a material. It is the primary instrument for

identifying materials that must be procured externally, it is an internal document that is not

used outside of the company, and it authorizes the purchasing department to purchase materials

in specified quantities and at specified time.

Purchase Order

Purchase orders contain information on the purchase terms and conditions and are designed to

give legal protection. The Purchase Order identifies information such as order quantity,

material or service specifications, quality requirements, price, delivery date, order date, method

of shipment, and terms of payment. In addition, the purchase order determines whether the

ordered material is placed in stock or consumed directly upon the receipt of goods.

Gantt Chart

A Gantt Chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the

start and finish dates of the terminal elements and summary elements of a project. Terminal

elements and summary elements comprise the work breakdown structure of the project. By

using a Gantt Chart, the user can view the work schedule for each component of a production

plan broken down into a desired unit of time such as hour, half hour, quarter hour, etc.

Accounting and Control within Production Planning

When you create an operation in a routing, you enter the work center where the operation is to

be performed. Work centers are assigned to cost centers. A work center is allocated to one

and only one cost center.

Cost centers are organizational units within a controlling area that represent a defined location

of cost incurrence. You can make organizational divisions on the basis of functionality,

settlement-related, activity-related, spatial, and/or responsibility-related business

requirements.

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You plan standard activity costs in the corresponding cost centers using activity types. When

an activity type is allocated to a cost center, it is given a value, for example, in dollars per hour.

The work center specifies production activity availability for operations at the work center.

One work center can perform up to six different production activities within different charge

rates. Examples of activity types are labor, machine, materials, setup costs, quality costs, and

resource consumption.

In the following example, 150 units of a motorcycle were produced. Of the finished units, 30

have been sold thus far. This is seen in the figures below.

Finished Goods

Inventory

Debit Credit

Beginning 0

Work is

completed 150

Units are Sold 30

Ending 120

Units Sold

Debit Credit

Beginning 0

Work is

completed

Units are Sold 30

Ending 30

When the units are completed, work in progress must be credited for the 150 units, and the

finished goods inventory must be debited the same. When the 30 units are sold, the Units Sold

must be debited for the units and the finished goods inventory must be credited.

When looking at a financial point of view, there are actual costs of $233,211.00, $336.11, and

$156.52. The standard cost of creating the motorcycles is $210,000. This can be found by

taking the price of $1400 per motorcycle and multiplying it by the 150 units. When the 30

units are sold, they have a cost of $42,000, and there is $168,000 remaining in the finished

goods inventory. This can be seen in the figures below.

Work In

Progress

Debit Credit

Beginning 150

Work is

completed 150

Ending 0

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Finished Goods

Inventory

Debit Credit

Beginning $0

Work is

completed 210,000

Units are Sold 42,000

Ending $168,000

$210,000.00 cost = $1400.00 Standard cost

150 Units

$233,703.68 cost = $1558.03 Actual cost

150 Units

Because of the difference between the standard cost and the actual cost, there is a Production

variance of $23,703.68. When broken down by units, this variance is $158.02. Was the

production of these motorcycles efficient?

Unit 2- Production Planning

Sections: Within SAP You Will Do The Following

1. Create a Sales Operating Plan

2. Create A Planned Order

3. Evaluate Stock Requirements

4. Create A Production Order

5. Release Orders for Production

6. Confirm Production Order

7. Display and Evaluate Production Reports

Work In Process

Actual Standard

Cost $233,211.00 210,000

336.16

156.52

Total Cost 233,703.68 210,000

Production

Variance $23,703.68

Units Sold

Debit Credit

Beginning $0

Work is

completed

Units are Sold 42,000

Ending $42,000

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2.2.1 SAP Easy Access

Step Action

1. Start the transaction LOGISTICS, PRODUCTION, SOP, PLANNING, FOR MATERIAL,

CHANGE (T-Code = MC88) by double clicking it.

2.2.2 Change Plan: Initial Screen

2.2 – Change Rough-Cut Plan

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Step Action

1. Enter MOTORCYCLE–0XX in the Material box.

2. Enter 3000 in the Plant box.

3. Click on .

2.2.3 Change Rough-Cut Plan

Step Action

1. Enter 40 in the box in the M Current Month column and Sales row.

2. Enter 50 in the box in the M Second Month column and Sales row.

3. Enter 60 in the box in the M Third Month column and Sales row.

4.

Enter 70 in the box in the M Fourth Month column and Sales row.

5. Enter 10 in the box in the M Current Month column and the Target stock level row.

6. Enter 15 in the box in the M Second Month column and the Target stock level row.

7. Enter 20 in the box in the M Third Month column and the Target stock level row.

8. Enter 20 in the box in the M Fourth Month column and the Target stock level row.

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Step Action

1. Click on .


Step Action

1. Click on the menu item to execute it.


3. Click on Save .

4. Click on Exit .

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Step Action

1.

Start the transaction LOGISTICS, PRODUCTION, SOP, DISAGGREGATION,

TRANSFER MATERIAL TO DEMAND MANAGEMENT (T-Code = MC74) by double

clicking it.

2.3.1 Transfer Planning Data to Demand Management

2.3 – Transfer Planning Data to Demand Management

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Step Action

1. Enter MOTORCYCLE-0XX in the Material box.


3. Enter A00 in the Version box.

4. Click on .

5. Invisible transfer is deselected.

6. Active is selected.

7. Click on .

8. Click on Exit .

2.3.2 Planned Requirements Table

Step Action

1. Click on Save .

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Step Action

1. Start the transaction LOGISTICS, PRODUCTION, MRP, PLANNING, SINGLE ITEM –

MULTI-LEVEL (T-Code = MD02) by double clicking it.

2.4.1 Single-Item, Multi-Level

2.4 – Create a Planned Order

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Step Action

1. Enter NETCH in the Processing key box.

2. Enter 2 in the Create purchase req. box.

3. Enter 1 in the Delivery schedules box.

4. Enter 1 in the Create MRP list box.

5. Enter 1 in the Planning mode box.

6. Enter 1 in the Scheduling box.

7. Also plan unchanged components is deselected.

8. Display material list is deselected.

9. Click on Enter . (Soft code error may occur, requiring you to hit Enter a second time)

10. Click on Enter .

2.4.2 Single-Item, Multi-Level

Step Action

1. Click on Exit .

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Step Action

1. Start the transaction LOGISTICS, PRODUCTION, MRP, EVALUATIONS,

STOCK/REQUIREMENTS LIST (T-Code = MD04) by double clicking it.

2.5.1 Stock/Requirements List: Initial Screen

2.5 – Evaluate Stock Requirements

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Step Action

1. Enter MOTORCYCLE-0XX in the Material box.


3. Click on Continue .

2.5.2 Stock/Requirements List

Step Action

1. Click on the Most Recent Production Order in the MRP element box.

2.5.3 Stock/Requirements List as of 20:22 Hrs

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Step Action

1. Click on .

2. Click on Save .

3. Click on Exit .

Step Action

1. Start the transaction LOGISTICS, PRODUCTION, SHOP FLOOR CONTROL, ORDER,

CHANGE (T-Code = CO02) by double clicking it.

2.6 – Create Production Order

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2.6.1 Production Order Change: Initial Screen

Step Action

1. Click on Enter .

Note: Display Overview should be selected by default.

2.6.2 Production order Change: Header

Step Action

1. Click on .

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2.6.3 Production order Change: Header

Step Action


2. Click on Save . Please write down your Order Number.______________________.

2.6.4 Production Order Change: Initial Screen

Step Action

1. Click on Exit .

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Step Action

1. Start the transaction LOGISTICS, PRODUCTION, SHOP FLOOR CONTROL,

CONFIRMATION, ENTER, FOR ORDER (T-Code = CO15) by double clicking it.

2.7.1 Create Production Order Confirmation: Initial Screen

Step Action

1. Enter YOUR PRODUCTION ORDER # in the Order box. (Note: You should have written

this number down in the previous step. If not, you can search for it.)

2. Click on Enter .

2.7 – Release Order for Production

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2.7.2 Confirmation of Production Order Create: Actual Data

Step Action

1. Select .

2. Click on Save .

3. Click on Exit .

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Step Action

1. Start the transaction LOGISTICS, PRODUCTION, SHOP FLOOR CONTROL, GOODS

MOVEMENTS, GOODS RECEIPT (T-Code = MB31) by double clicking it.

2.8.1 Goods Receipt for Order: Initial Screen

2.8 – Goods Receipt for Order

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Step Action

1. Enter 101 in the Movement Type box.




4. Enter 0001 in the Stor. Location box.

5. Click on Enter .

2.8.2 Goods Receipt for Order

Step Action

1. Click on Post .

2. Click on Exit .

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Step Action

1. Start the transaction LOGISTICS, PRODUCTION, SHOP FLOOR CONTROL, ORDER,

DISPLAY (T-Code = CO03) by double clicking it.

2.9.1 Production Order Display: Initial Screen

Step Action



2. Click on Enter .

2.9 – Confirm and Display Production Order

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2.9.2 Production order Display: Header

Step Action

1. Click on .



2.9.3 Production Order: Display Operation Graphic

Step Action

1. Click on Close .

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Step Action

1. Click on .



2.9.5 Gantt chart

Step Action



3. Click on Close .

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Step Action

1. Click on .



2.9.7 Target/Actual - Comparison

Step Action

1. Double click on .

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2.9.8 Display Actual Cost Line Items for Orders

Step Action


2.9.9 Display Material Document

Step Action

1. Click on the tab to select it.

2. Click on .

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2.9.10 Display Material Document

Step Action


2.9.11 Display Document: Data Entry View

Step Action

1. Click on Back .

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2.9.12 Display Document: Data Entry View

Step Action

1.

Click on Back .

2.9.13 Display Material Document 5000012268 – Motorcycle-0XX

Step Action

1.

Click on Cancel .

2.

Click on Back .

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Step Action

1.

Click on Back .


Step Action

1. Click on .

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2.9.16 Target/Actual - Comparison

Step Action

1.

Click on Back .


Step Action

1.

Click on .

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Step Action




Step Action

1. Click on Continue .

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2.9.20 CP Japan: Layout for Demo

Step Action

1. Click on Exit .

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Regenerate a new production order for the second month of production. Go to the cost screen

and determine what your actual cost was, what your standard cost was, and what the variance

is.

1. The acronym SOP stands for:

a) Systems, Operations, and Products in Data Processing

b) Systems Operating Processes

c) Sales and Operations Plan

d) Sales, Organization, and Process

e) None of these

2. The main purpose of Demand Management is to:

a) Get overview of customer demand

b) Poll the people to find out preferences and produce to their demand

c) Distribute the material in the most efficient manner

d) Break down the production plan into individual components to meet customer

demand

e) None of the above

3. MPS is the abbreviation for:

a) Material Production for Sales

b) Man Power Schedule

c) Master Production Schedule

d) Material Presentation Screen

e) None of the above

2.10 - Simulation

2.11 - Quiz

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4. What is the central purpose of the screen that is shown?

a) To analyze past inventory levels of the Motorcycle-0XX

b) To calculate the demand for the Motorcycle-0XX

c) To review the proposed production plan for the Motorcycle-0XX

d) To enter inventory information for logistical purposes

e) All of the above

5. What is the sales demand projected for January 2008?

a) 50

b) 55

c) 60

d) 15

e) 2

6. What is the planned stock level for the Motorcycle-0XX for January?

a) 60

b) 65

c) 20

d) 3

e) 10

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7. How many motorcycles are to be produced in the month of January?

a) 65

b) 60

c) 3

d) 20

e) 10

8. How many motorcycles are to be produced in the month of February?

a) 2

b) 20

c) 3

d) 70

e) 10

Cost of Production/Cost Schedule

9. What is the total actual cost to manufacture the product?

a) $233,703.68

b) $210,000.00

c) $233,211.00

d) $23,703.63

10. What is the value of the inventory (at standard) transferred out of the factory into the

finished goods inventory warehouse?

a) $210,000.00

b) $139,726.50

c) $233,211.00

d) $23,703.68

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11. Which of the following are true with respect to BOM?

a) BOM stands for Basic Operations Management.

b) A BOM is a recipe for building a product.

c) A BOM lists every component piece or sub-assembly needed to

manufacture a product.

d) A BOM lists every manufacturing operation needed to manufacture a

product.

Essay 1

Looking at the cost schedule, what was the standard cost of production that was transferred out

of factory into finished goods inventory warehouse? How many units is this based on? What

was the unit standard cost? Where did the standard cost information come from?

Essay 2

What is meant by bill of materials? What are the components that make up the motorcycle?

Essay 3

How is the sales forecast determined? Who is responsible for determining it?

Essay 4

What is meant by material requirements planning?

Essay 5

If you were interested in finding out the number of units to be produced three months from

now, what schedule would you look at?

In class, please insert the following Transaction Codes ... · MRP calculation, ECC 6.0 systems...

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Transcript of In class, please insert the following Transaction Codes ... · MRP calculation, ECC 6.0 systems...