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Make-to-Stock Production – Discrete Industry
SAP Best Practices
Purpose, Benefits, and Key Process Steps
Purpose
 This scenario describes a business process, which is typical for companies with lot-size
oriented production.
 The production scenario produces a finished good and all dependent components in maketo-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 Steps






Creating Planned Independent Requirements
Material Requirements Planning at Plant Level
In-House Production (subassembly)
In-House final assembly (Finished Good)
Capacity Leveling
Confirming Assembly Activities
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Required SAP Applications and Company Roles
Required SAP Applications
 Enhancement package 6 for SAP ERP 6.0
Company Roles






Production Planner
Production Supervisor
Shop Floor Specialist
Warehouse Clerk
Strategic Planner
Engineering Specialist
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Detailed Process Description
Make-to-Stock Production – Discrete Industry
This scenario describes a business process, which is typical for companies with lot size
oriented production. 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, such as
preliminary costing and period-end closing.
 The typical planning process starts with sales quantity planning. The previous period’s actual sales
figures 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 you may
create the production plan synchronously to sales. The planning data is transferred from Sales and
Operations Planning to Demand Management. Demand Management generates independent
requirements, 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 gets
exploded and production is planned right down to procured component level. MRP results in planned
orders being generated for the material to be produced.
 If insufficient warehouse stock is available, purchase requisitions are created for the raw materials
required. When the order is created, target costs are calculated for the order lot size (preliminary
costing).
 During the production process, costs incurred are updated on the order, which enables you to keep track
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 calculation and
variance calculation.
 After this, Work in Progress is settled to financial accounting and production variances are settled to
management and financial accounting.
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Process Flow Diagram
Production Planner
Strategic Event
Planner
Make-to-Stock Production – Discrete Industry
Beginning of
Planning
Cycle
Creating
Planned
Independent
Requirements
Periodic Plan
Revision
Logistics
Planning
(144)
Material
Requirements
Planning at Plant
Level & Evaluation of
Stock / Requirement
List
Update
Capacity
No
Capacit
y
Levelin
g O.k.?
1
Yes
MRP List
Purchase
Requisiti
on
Planned
Orders
Convert
Planned Order
to Production
Order
Material
Availabl
e?
Yes
Capacity
Leveling
Release
Production
Order
Order Print
Pick List
Confirming
Assembly
Activities
/ Final
Confirmation
Inventory
Consumption
@ Standard.
Cost
Warehouse
Clerk
Manufacturing
No
Material
Staging for
Planned
Orders
Semi-Finished
Goods Receipt
Goods Issue/
Back flush
Goods Receipt
Slip
Goods Receipt
Slip
Finished
Goods Receipt
Period End
Closing
“General”
Plant
(181)
Plant
Contr
oller
Buyer
Inventory @
Standard. Cost
Procurement
w/o QM
(130)
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Procurement
of Stock
Material with
QM (127)
Procurement
&
Consumption
of Cosigned
Inventory
(139)
MM
Subcontracti
ng (138)
PPSubcontracti
ng (External
Processing)
(150)
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Process Flow Diagram
Production
Supervisor
Event
Make-to-Stock Production – Discrete Industry
1
© 2013 SAP AG. All rights reserved.
Review
Operation List
6
Legend
<Function>
Symbol
Description
Usage Comments
Band: Identifies a user role, such as Accounts
Payable Clerk or Sales Representative. This band
can also identify an organization unit or group,
rather than a specific role.
Role band contains
tasks common to that
role.
Symbol
Diagram
Connection
The other process flow symbols in this table go
into these rows. You have as many rows as
required to cover all of the roles in the scenario.
External
to SAP
External Events: Contains events that start or end
the scenario, or influence the course of events in
the scenario.
Business
Activity / Event
SubProcess
Reference
Process
Decision
Flow line (solid): Line indicates the normal sequence
of steps and direction of flow in the scenario.
Flow line (dashed): Line indicates flow to
infrequently-used or conditional tasks in a
scenario. Line can also lead to documents involved
in the process flow.
Connects two tasks in
a scenario process or
a non-step event
Business Activity / Event: Identifies an action that
either leads into or out of the scenario, or an
outside Process that happens during the scenario
Does not correspond
to a task step in the
document
Unit Process: Identifies a task that is covered in a
step-by-step manner in the scenario
Corresponds to a task
step in the document
To next / From last Diagram: Leads
to the next / previous page of the
Diagram
Flow chart continues on the next /
previous page
Hardcopy / Document: Identifies a
printed document, report, or form
Does not correspond to a task
step in a document; instead, it is
used to reflect a document
generated by a task step; this
shape does not have any outgoing
flow lines
Financial Actuals: Indicates a
financial posting document
Does not correspond to a task
step in a document; instead, it is
used to reflect a document
generated by a task step; this
shape does not have any outgoing
flow lines
Budget Planning: Indicates a
budget planning document
Does not correspond to a task
step in a document; instead, it is
used to reflect a document
generated by a task step; this
shape does not have any outgoing
flow lines
Manual Process: Covers a task
that is manually done
Does not generally correspond to
a task step in a document;
instead, it is used to reflect a task
that is manually performed, such
as unloading a truck in the
warehouse, which affects the
process flow.
Existing Version / Data: This block
covers data that feeds in from an
external process
Does not generally correspond to
a task step in a document;
instead, this shape reflects data
coming from an external source;
this step does not have any
incoming flow lines
System Pass / Fail Decision: This
block covers an automatic
decision made by the software
Does not generally correspond to
a task step in the document;
instead it is used to reflect an
automatic decision by the system
that is made after a step has been
executed.
Financial
Actuals
Process Reference: If the scenario references
another scenario in total, put the scenario number
and name here.
Corresponds to a task
step in the document
Sub-Process Reference: If the scenario references
another scenario in part, put the scenario number,
name, and the step numbers from that scenario
here
Corresponds to a task
step in the document
Process Decision: Identifies a decision / branching
point, signifying a choice to be made by the end
user. Lines represent different choices emerging
from different parts of the diamond.
Does not usually
correspond to a task
step in the document;
Reflects a choice to
be made after step
execution
© 2013 SAP AG. All rights reserved.
Usage Comments
Hardcopy /
Document
Budget
Planning
Unit Process
Process
Reference
Description
Manual
Process
Existing
Version /
Data
System
Pass/Fail
Decision
7
Materials Requirement Planning - MRP
Material Reqmts
Planning
Planned Ind.
Requirements
Dependent
Reqmts
Reservations
Planned Order
Convert
Production
Order
Warehouse
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Alternative Planning Strategies for Finished Product
Strategy
Customer requirements passed on to
production
This means . . .
Net Requirements Planning (10)
No
Planning with Final Assembly (40)
Yes
... sales orders do not influence production
... sales orders that exceed planned
independent requirements can influence
production
... the main objective is to ensure smooth
production
... the most important factor here is the
ability to react flexibly to customer demand
Planned independent requirements
allocated and reduced during sales
order processing
No
Yes
Planned independent requirements
reduced at goods issue for delivery
Yes
No
© 2013 SAP AG. All rights reserved.
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Work Center
Work Center: Assembly
Default values
Routings
Routings
Costing Data
Sched. Data
Capacity Data
Costing
Scheduling
& Capacity
1010,2150,3160,-
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10
Routing Work Center / Operation
Routing Header
Operation 10:
Final Assembly
Work center
Control key
Standard values
Activity types
Description
....
Material Components
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Planned Order Conversion
Production
order
Planned
orders
Individual
Conversion
Individual Conversion
Planned
orders
Production
orders
Collective
Conversion
Collective Conversion
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Production Order Creation
Friday
January
28 2011
Manually
Tuesday
July
12 2011
Requirements planning
Automatically
Specify order type
Define order item
Copy routing
Lead time scheduling
Copy bill of material
Availability check
Optional changes
Optional (Customizing)
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Save production order
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Production Order Processing
Order settlement
Order header
Production
Order
Order proposal
(planned order)
Operations
Order creation
Goods receipt
Components
Availability
check
Confirmations
Material withdrawal
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Costs
100
20
50
Order release and
batch determination
for components
14
Goods Movement
Prod. order
Warehouse
Operation
Mat. comp.
Material
Costs
Goods movement
Accounting
document
Material
document



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Update of stock quantities
Update of stock values
materials can be batch controlled
15
Goods Issue
Goods issue
posting
Material
document




© 2013 SAP AG. All rights reserved.
Acctg.
document
Updating stock quantities
Updating stock values
Reducing reservations
Calculating actual costs and updating the order
16
Production Order Confirmations
Manual entry
Operation 0010
Operation 0020
Operation 0030
Order confirmation
.
.
.
Operation . . . .
Production
order
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Production Order - Preliminary Costing
Planned costs
Material components
l
l
Ind. "Rel. to costing"
Price
Phases
Cost elements:
elements:
l
Material costs
l
l
Costs for external
procurement
Order type / Plant
l
Production costs
Costing variant
Display planned/actual costs
l
l
l
Cost elements
Cost itemization
Cost component split
© 2013 SAP AG. All rights reserved.
l
l
Production overhead
costs
Costs for external
processing
Control key “costing
indicator”
Resources
l
Material overhead
costs
Gen. operation values
Standard values
l
Formula key for
costing
Cost center
Activity type
Formula constants
Cost calculation
log
18
Cost of Production Order
Material
components
- Quantities
- Prices
Operation
Work center
- Work center
- Standard value
- Quantities
- Cost center
- Activity types
- Formulas
Cost center
- Activity types
Activity cost
- Periods
Material costs
Internal activities costs
Overhead calculations
Production order cost
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WIP and Variance Calculation in Lot-Based Cost Object
Controlling
Actual Costs
Actual Costs
=
WIP at
Actual Costs
Actual Costs
-
-
Delivery
Value
Delivery
Value
=
=
WIP at
Actual Costs
Variances
Order
Status
Pre-Released or Released
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Partially Delivered
Finally Delivered or Technically Completed
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Settlement of Order (Example)
Product cost planning
Lotsize 1 PC
Production Order
Mat. F126
COPC
Material
600
Production
Surcharge
300
1100
Material Master
Standard Price = 2000
2000
© 2013 SAP AG. All rights reserved.
Actual Cost
Material
Production
Surcharge
800
1.200
400
2.400
-2.000
GR
Target Version 0
Price
Qty
Structure
Scrap
Lotsize
150
150
100
0
0
400
Variances
Financial Accounting
Warehouse
COPC
FI
Settlement
COPA
Price difference
400
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