Production Process

Contents: Maintaining bills of material (BOM)

Production process

In this unit, you will: Create bills of materials for sales and production

Perform the production process

View the effects of production on inventory and accounting

Production: Purpose

Your company manufactures technical items such as printers. These items have bills of materials for production.

Some items in your product range consist of other items. You assemble these items before they are delivered to the customer. One example of an assembled item is a PC set.

These items have two bills of materials for sales and for production.

Production: Business Example

Production Process Overview

Create Production

Order

Release to shop floor

Report Completion

Issue Components

System Configuration

Purchasing

Warehouse management

Production

Inbound logistics

Outbound logistics

Marketing & Sales

Service

Financial controlling

Master data

Bills of Materials: Unit Overview Diagram

Production

Topic 1: Bills of Materials

Topic 2: Production Process

Bills of Materials Types

Printer

PrinterHead1 pc.

Power Pack1 pc.

Memory Boards2 pcs.

BOM Types Production

Sales

Assembly

Template

Category of the Item Master Record of the Parent Item in Bills of Material

Assembly BOM

Production BOM

Sales BOM

Inventory Item

Sales Item

Purchased Item (1.)

(1.) optional

TemplateBOMType

ItemCategory

(1.)

(1.)

(1.)(1.)

Phantom Item

Board1 Unit

Axis2 Units

Screws8 Units

Wheels4 Units

Tire 1 Unit

Rim1 Unit

Screws4 Units

Skateboard1 Unit

Phantom Item(does not appear in production orders and only for information in MRP)

Bills of Material: Topic Summary

Key points from the Bills of Material topic:

Four types of Bills of Materials Production

Sales

Assembly

Template

The item categories allowed for a parent item in a bill of materials are determined by the bill of materials type.

Exercises for Bills of Material

Production Process: Unit Overview Diagram

Production

Topic 1: Bills of Material

Topic 2: Production Process

Production Order

Production Orders include: Finished product Components Component issue method

Production orders can be generated automatically by MRP or created manually.

Production Process Steps

Create Production

Order

Release to shop floor

Report Completion

Issue Components

System Configuration

Purchasing

Warehouse management

Production

Inbound logistics

Outbound logistics

Marketing & Sales

Service

Financial controlling

Master data

Production Order Types

Standard Production Order

Product

A B C

Special Production Order

Item

X Y Z

Disassembly Production Order

Product

A B C

Steps to Enter a Production Order

Select production order type Select parent item Enter quantity to be produced Enter a finish date for production Make any desired adjustments to

components, warehouses or quantities Save the production order.

Release to Shop Floor

Initially set as Planned Release the order to begin

work Components can then be

issued

Issue Components

Backflush ComponentsManual Components

Control quantity issued Precise timing

possible

Commonly used items Typical quantities used

Report Completion

When you report completion, the system automatically: Receives finished item into inventory Issues backflushed components Calculates the cost of producing the item

Stock Changes for Standard Production Order

In Stock - Committed + Ordered = Available

Sta

nd

ard

P

rod

uct

ion

Ord

er

Completion reported

Status: Planned

Components

Finished Product

Components

Finished Product

+ +

+

+ -

-

- -

+ Indicates increase in quantity- Indicates decrease in quantity

Type Standard / Special / Disassembly Due Date 20.10.2004Status Planned / Released / Closed / Cancelled Origin Manual / AutomaticProduct No. P1001 User Marc ManagerPlanned Qty 2 Sales Order …Warehouse 01 Customer …

Post Production Cost Information

Components

Costs

Actual Component Cost 80Actual Additional CostActual Product Cost 80Total VarianceVariance per ProductVariance %

Journal Remark Production Order - P1001

Production Order

Summary

Quantities

Planned Quantity 2Completed Quantity 2Rejected QuantityDatesDue Date 20.10.2004 Actual Close Date Overdue

Production Process Postings

Issue For ProductionIssue For

Production

Receipt from Production

Receipt from Production

Production Order CloseProduction Order Close

100

Stock Account(of components)

90

Stock Account(of Product)

100

WIP Account

90

WIP Account

-10

WIP Account

-10

WIP Variance Account

Production Process: Topic Summary

Key points from the Production Process topic:

Three types of production orders: standard, special and disassembly

The four main steps in the production process are: Create

Release

Issue components

Report Completion

Production orders are generated by MRP or created manually.

Release signals production is ready to begin.

Components can be issued manually or by backflush

Reporting completion receives the finished product into inventory.

Exercises for the Production Process

Production: Unit Summary

You should now be able to: Create bills of material for sales and production

Perform the steps in the production process

View the effects of production on inventory and accounting