List of Business Processes to be implementedProcess

IdProcess Description

1.1 Master Data

1.1.1 Material Master & Batch Management

1.1.2 Resource Management

1.1.3 Bills of Material and Production Version

1.1.4 Master Recipe

2.1 Process Flow Chart

3.1 Production Planning & Control

3.1.1 Planned Orders

3.1.2 Converting Planned Order to Process Orders

3.1.3 Selection of Production Version, Master Recipe

3.1.4 Approval of Process Orders

3.1.5 Scheduling

3.1.6 Capacity Leveling

3.1.7 Batch Determination & Material Quantity Calculation

3.1.8 Checking the Availability of Material Component

3.1.9 Releasing Process Orders

3.1.10 Goods Issue To Production

3.1.11 Process Order Confirmations

3.1.12 Goods Receipt From Production

3.1.13 Rework

3.1.14 Process order settlement

3.1.15 Technical Completion of Process Orders

3.1.16 Business Closing of Process Orders

3.1.17 External Processing(Subcontracting) and Toll Manufacturing

3.1.18 Production Campaign

1.1 Master Data

1.1.1 Material Master & Batch Management

The material master record contains descriptive data such as the size, dimension, and weight of material,

control data such as the material type and the industry sector. It is the company's central source for retrieving

material-specific data. This information is stored in individual material master records.

Material Master shall be created for required materials so as to provide information for all the stages of

Production Planning. Every material will be identified in material master through material type and material

code.

It is possible to enter and change most of the data in a material master record. However, some information

can only be updated by the system. For example, the system updates the administrative data a material

master record is processed, and stock balances when goods receipts or goods issues are posted.

Following are the example of some of the types of materials that are to be used in IPL:

1. FERT: Identifies the finished goods.

2. HALB: Identifies the semi-finished material.

3. ROH: Identifies the raw materials

4. VERP: Identifies the Packaging material

For more clarification on material types please go through MM BBP.

SAP PP related material master like MRP type, Planning strategy, In house production time, Production

version, Production scheduling profile etc. will be captured in material master.

A batch is a homogeneous quantity of a material. In the SAP system, all necessary information concerning a specific batch are kept in the batch master record.

For the following activities SAP is able to create a new batch master in the background:

Posting of a goods receipt from supplier (procurement) Creation of a process order (production) Transfer posting (e.g. batch split) Creation of a purchase order

Batch number is mandatory for the material for which batch management requirement indicator has been set

in the material master record.

Batch number can be assigned either manually or automatically using the Internal Batch Number Assignment

function.

1.1.2 Resource Management

Resources are production facilities and persons involved in a production process that have capacities. They are subdivided into categories to specify their suitability for certain purposes or their use in certain processes.

Resources can be, for example:

Persons involved in production that are also recorded as employees in personnel administration Parts of the plant that are used for production (processing units) Parts of the plant that are used for intermediate storage (storage resources) Parts of the plant that are used for both intermediate storage and production (storage resources /

processing units)

Depending on the resource category, resources can be assigned as follows:

Resources used for production are assigned as the Primary resource for the operation (if the resource is occupied for the entire duration of the operation) Secondary resource for operations and phases (if the resource is required in addition to the primary

resource for a certain period of time)

Resources that are only used for storage are assigned a storage location at which the stocks are managed. A storage location can be assigned for: Header material that is stored Material components that are withdrawn from storage (in the case of ingredients) or placed into storage (in

the case of by-products or co-products)

The data in the resource are used, for example, for: Scheduling

Operating times and formulas for calculating the operation duration are maintained in the resource. Costing

Formulas for calculating the operation costs are maintained in the resource. In addition, a resource is assigned to a cost centre.

Capacity Requirements PlanningFormulas for calculating capacity requirements for an operation are maintained in resources.

Simplification of Operation MaintenanceVarious default values are maintained for the operation in the resource.

1.1.3 Bills of Material and Production Version

Bills of Material

The BOM is a formally structured list of the components that make up a product or assembly. The list

contains the object number of each component (raw or packing material), together with the quantity and unit

of measure. BOMs are used in their different forms in various situations where a finished product is

assembled from several materials. They contain important basic data for numerous areas of a company, for

example: MRP, Material provisions for production, Product costing.

Alternative BOM

Where ever the product is manufacturing with different types of materials and product output is same, there

we need to maintain more than one BOM, which is known as alternative bill of material. This will be helpful to

maintain more than one BOM based on input materials, input quantities and base quantity. You can give

effective dates and inactive the BOMs so that the active BOM will be considered at the time of MRP, and

production order creation.

Production Version  

A production version determines which alternative BOM is used together with which task list/master recipe to produce a material or create a master production schedule.

For one material, process owner may have several production versions for various validity periods and lot-size ranges.

Production versions are used in Sales and Operations Planning (SOP), material requirements planning (MRP), process order creation, and product costing to select the most suitable task list or recipe and the corresponding material list.

After user has created a production version, the material components of the relevant alternative BOM are available in the recipe as a material list or can be created from within the recipe. Only now can user enter material data specific to a recipe, such as the component assignment to operations and phases and the formulas for material quantity calculation.

In the production version, user can assign a storage location to the material user want to produce, thus specifying that the material is stored there after production.

User can also select a recipe and BOM without a production version. Note, however, that if he do so, material quantity calculation data is not copied.

A production version comprises the following data:

Details on the material user wants to produce, for example, the material number and storage location where the material is to be stored

General data about the production version

This includes:

o Key, lot-size range, and validity period of the production version o Information on whether the production version is locked o The date of the latest consistency check

The assignment of task lists/master recipes to the production version

The assignment of the alternative BOM to the production version

The change number that was last used to change the production version as well as further administrative data

1.1.4 Master Recipe

The business object master recipe is the description of an enterprise-specific process in process industries, which does not relate to a specific order. The master recipe is used for the manufacture of products or for rendering services.

In a master recipe, user plans:

        The individual steps to be carried out in a process, that is, the operations and its subdivisions, the phases

        The activities that are to be carried out in a phase and are used as the basis for determining dates, capacity requirements, and costs

        The process sequence by maintaining relationships between phases

        The use and production of materials in the course of the process

        The use of resources

        The quality inspections to be carried out during production

In addition, user uses process instructions to provide information that is collected during production and is required by process control to carry out the process.

Editing a master recipe is a complex task in which process data for various specialist areas is planned and this also involves different departments. As per GMP guidelines this editing is done through strict approval procedures (Engineering Change Management).

Assigning Inspection Characteristics in Master Recipe 

In a production process, it is necessary to carry out inspections to ensure the quality of a product. An inspection lot documents a request for an inspection.

Inspection characteristics are assigned to the inspection lot. An inspection characteristic defines what needs to be inspected. A distinction is made between qualitative characteristics and quantitative characteristics.

With in-process inspections, an inspection lot is created for a process order. Characteristics are assigned to individual operations in the master recipe. The characteristics define the inspection requirements.

The results of the inspection are then recorded for each inspection characteristic and stored in the inspection lot.

User also has the option of creating an inspection lot manually in the process order.

 

3.1.1 Planned Orders

A planned order is an MRP request for the procurement of a particular material at a determined time. A planned order has the following characteristics:

It is a procurement proposal in MRP for requirements coverage, that is, an internal planning element. It is not binding and does not therefore trigger procurement directly, but serves for planning purposes.

It can be changed or deleted at any time (exceptions: planned orders for direct production and for direct procurement).

Whether a material will later be produced in-house or procured externally is left open. For materials produced in-house, it represents the pegged requirement for dependent

requirements and can be used in the capacity calculation. For materials produced in-house, it specifies the basic dates for production.

Planned orders are converted into production orders for in-house production and into purchase requisitions for external procurement. In contrast to planned orders, production orders and purchase requisitions are fixed receipt elements, which commit to the procurement.

Automatic Creation of Planned Orders

During the planning run, the system automatically calculates the materials to be procured as well as the requirements quantity and date. The system then creates the corresponding planned order.

The system also explodes the BOM for materials that are produced in-house and uses the BOM components as material components for the planned order. The system creates a corresponding dependent requirement for these components. If the quantity or the date of the planned order changes or if the bill of material changes, the bill of material is re-exploded in the next planning run and the dependent requirements of the material components are adjusted accordingly.

Manual Creation of Planned Orders

MRP controller can also create planned orders manually. For this, he determines which material should be procured, the quantity of material to be procured, the date it should be available and whether it is to be procured externally or produced internally.

If user create or change a planned order manually, he can also explode the BOM manually and adjust the material components.

Structure

The planned order consists of

order data (quantities, dates, account assignment, material data, procurement data and so on)

component overview

In IPL planned orders will be generated for all the internal production like Finished Goods and the Semi-finished goods.

The system adapts the quantities and dates of planned orders that are created automatically in the planning run to suit the requirements situation if the situation has changed in the next planning run. If user wants to prevent the system from adapting them automatically, he can firm the planned order. Firmed planned orders are no longer changed by the planning run. They can only be changed manually.

User can define that the planned orders, for which there are components available, are firmed after the availability check. This is also possible if the planned orders cannot be fully confirmed.

If the user manually creates the planned order, it is automatically flagged as firmed. Firmed planned orders are not changed by the system in a subsequent planning run.

If the user changes a planned order, it is then regarded as firmed for the planning run, (as is a planned order that is created manually). Thus, it will not be changed automatically during subsequent planning runs.

Order proposals that lie within a defined planning time fence are firmed for the planning run if they are set to an MRP type with the appropriate firming type. The firming indicator is not set and they are only firm as long as they lie within the planning time fence.

The manual firming date lengthens, if necessary, the planning time fence up to the date entered. This has the advantage over the planning time fence that user can firm planned orders for materials with an MRP type that contains no firming type.

3.1.2 Converting Planned Order to Process Orders  

Planned order to be converted in to production order which carries all information about material, qty, etc….

Once planned order is converted into production order, reservations are created automatically for dependent

components, which are maintained in the BOM of the header material for the required quantity & the capacity

at the work centres are blocked. Production order is treated as confirmed order which will be manufactured

on prescribed date.

The following options are available:

Collective conversion (n planned orders n process orders)

Individual conversion (1 planned order 1 process order)

Partial conversion (1 planned order n process orders)

Process orders are used to control production within a company and also to control cost accountingA Process order can be used to specify:

What is to be produced

When production is to take place

Which capacity is use to process the order

How much production costs

A process order can be created manually also.

Batch Number:

In IPL, batch number will be entered manually (numeric or alphanumeric) after the conversation of planned

order to process order. Appropriate validation should be given to prevent wrong entry of batch number.

Status in Process Orders 

The status menu that user can call up in the process order from the Header - General Data screen provides information on the various statuses the system assigns to order in the course of processing. These statuses are also displayed in the System status field on the header screen.

3.1.3 Selection of Production Version, Master recipe  

When a process order is created, a Production Version is selected to determine a suitable recipe along with the corresponding material list. Production version can be selected automatically or manually.

[A master recipe is used to specify the operations and phases required in a production process. When a process order is created, the system selects a master recipe. The individual operations and phases of the master recipe, as well as the material list and other recipe data, are taken over into the process order.]

In special cases, it may be required to create a process order without using a master recipe. This may be the case, for example, if user wants to create an order for unplanned rework.

It may be required to create a process order without a material and with a master recipe. Example: Process order for a reworking procedure

3.1.4 Approval of Process Orders

For production in compliance with Good Manufacturing Practices (GMP), process orders must be approved before production. It is done in the following ways:

Create with approved master data. Master data is approved in engineering change management.

Individual approval (for first three batches and before locking Master Recipe)

Each order in a collective order is checked individually and approved independently of the other orders. If, for example, approval is denied for a subordinate order, approval is not withdrawn automatically for the higher-level order or the collection as a whole.

For each non-approved order in the collective order, an individual approval is required to meet the prerequisites.

The collective order cannot be released until all orders have been approved.

3.1.5 Scheduling  

Scheduling

1. The system calculates the basic dates for planned orders.

The basic dates are the order finish date and the order start date. The order finish date determines the latest possible date by which production has to be finished and the order start date determines the earliest possible start of production.

Basic dates are calculated automatically during every planning run or may be entered manually.

2. The system calculates the exact production dates (through lead time scheduling).

The production dates are the production start date and the production finish date.

Additionally, capacity requirements are created during lead time scheduling.

Lead time scheduling is only carried out on request.

Lead time scheduling

The production dates are determined using the routing. The system hereby uses the floats that are allocated to the material via the scheduling margin key in the material master. These floats include the float before production and the float after production, as well as the extra time factors specified in the routing such as the queue times, setup times, labor times, machine times, and so on.

The system normally executes the lead time scheduling with backwards scheduling and starts from the determined order finish date. The system only switches to forward scheduling and starts from the order start date, if the times in routing are substantially shorter than the times in the material master and the determined production start date is therefore further in the future than necessary.

Process steps

1. The system calculates the float after production using the order finish date and thus determines the production finish date. Starting from the production finish date, the individual operations of the routing are then scheduled backwards. The starting date of the first operation is the production start date.

The float after production is the number of workdays that are planned as a buffer between the production finish date and the order finish date. This serves to compensate for interruptions during production to avoid displacing the order finish date.

2. The system checks whether the production start date is later than the order start date. If the user determines that the order start dates are to be adjusted in lead time scheduling in Customizing for MRP the system subtracts the float before production from the production start date to calculate the new order start date. If he does not want the system to adjust the order start date, the system will not change the old order start date.

The float before production is the number of workdays that are planned as a buffer between the order start date and the production start date. By using this float, delays in material staging do not cause delays in starting production. Additionally, if there are capacity bottlenecks or delays in an incoming sales order, the production dates can be brought forward.

3. The system checks whether the production start date is earlier than the order start date and, if necessary, determines new production dates. To do this, user must determine a possible time reduction in two places:

o To reduce the floats before and after production. o To reduce the times in the operation.

The system must set an order finish date so that the material is available for the start of production. Therefore, the order finish date always lies after the production finish date. If a float after production is not maintained, the order finish date always lies exactly one day after the production finish date.

If the in-house production time is much less than a day and if user wants the material to be available for the production finish date, then he maintains the in-house production time in the material master record with zero (the float after production likewise with zero). Then, the production date is the same as the order finish date.

A process order is always scheduled automatically when it is created. The order will be automatically rescheduled before saving whenever user makes changes that are relevant to scheduling.

Secondary Resource Scheduling  

The system uses this function in master recipe or process order scheduling to determine the start or finish dates of the secondary resources.

The system uses the following data to determine the secondary resource dates:

The dates of the superior phase or operation

The offset between the start and finish dates of the phase/operation and the secondary resources, which has been defined in the detail data of the secondary resource

The following rules apply in secondary resource scheduling:

A positive offset is added to the corresponding phase or operation date, that is, the secondary resource date is after the reference date

A negative offset is subtracted from the corresponding phase or operation date, that is, the secondary resource date is before the reference date

If no offsets have been defined for a secondary resource, the system uses the relevant phase or operation date as the secondary resource date.

 Deviation Recording  

After a process order has been released, a periodic background job checks whether there are schedule deviations for operations or phases in process orders. If tolerances are exceeded or fallen short of, specific users are notified.

Only orders that were released after the creation (and planning) of the corresponding variants are taken into account in deviation recording.

 

3.1.6 Capacity Leveling  

In the second step of lead time scheduling, the capacity requirements for the order are calculated and scheduled.

The capacity requirements are calculated for an operation using the formulas that are maintained for the capacity categories on the capacity overview screen of the work center. The dates of calculated capacity requirements correspond to the dates of the operation.

The system displays all work centers and capacity categories (person or machine) that form the basis for the capacity requirement of the material. The system displays the maximum load for every capacity category. Any overload is highlighted.

As standard, a capacity is overloaded if the load is bigger or equal to 100%, that is, the same as or larger than the available capacity. User can, however, also set own user-defined percentage values.

To eliminate overload user can change the dates or quantity of the planned order. The system plans the order again immediately.

3.1.7 Batch Determination and Material Quantity Calculation  

This function is used to determine batch or batches of material component to be issued to production. System should consider the potencies, overage of different batch components (active ingredients) and adjust the quantity of same components for a process order. If required it will increase or decrease the quantity of filler components. FEFO (First Expiry First Out) method is used to select a batch. If the batches have same expiry date, FIFO (First In First Out) method is used.

3.1.8 Checking the Availability of Material Component  

Before start of production, user can check whether all the material components allocated to the process order are available on the calculated requirements dates.

Availability checks can be triggered either automatically or manually. The availability of components in an order can be checked automatically during order creation and/or order release. User can always trigger a manual availability check.

3.1.9 Releasing Process Orders  

When user releases a process order all operations and phases in the order then have the status Released. User can release individual operations/phases of the process order. If an operation is released, all the phases belonging to this operation are also released. User can select several process orders and release them. When a process order is released, the resource classes are replaced by the selected individual resources. The characteristics of reserved ingredients, such as the active ingredient potency of a particular warehouse batch, replace the values taken over from the master recipe.

3.1.10 Goods Issue to Production  

After the release of a process order first actual function is printing of documents which are required to collect material components from Warehouse. Goods movement will be posted manually in inventory management. Component may be transferred to intermediate store in production floor. From this store good issue is done after confirmation. The issue of the components causes the value of the components issued to be debited to the order for each cost element and origin as actual costs.

If required If the ‘backflush’ indicator is set for a component (usually for packing components) contained in the material list, the goods issue is posted automatically when user creates the confirmation for the respective phase.

To issue material components from stock, user can either refer to the order number or to the reservation number. The reservation number is displayed on the General Data screen for the component.

(If user does not refer to a reservation or to a process order when post a goods issue is posted, the reservations remain open and the required quantity reserved, even though the requirement no longer physically exists.)

Unplanned Withdrawal of Components for an Order  

User can withdraw materials for an order even if the materials are not listed as components in the order. These "unplanned withdrawals" cause the actual costs of the order to be updated.

If the material user wants to issue is subject to handling in batches, he will have to either enter a specific batch number or carry out batch determination.

 

3.1.11 Process Orders Confirmations

A completion confirmation documents the processing status of orders, operations, phases and individual capacities. As such, completion confirmations are used to monitor the progress of process orders.

A completion confirmation is used to record

The quantity processed in a phase How much activity is used to carry out a phase The actual dates of a phase The resource at which the phase is carried out Who carried out the phase? Posting date for every completion confirmation. Posting planned and unplanned goods movements with every confirmation

A completion confirmation can cause:

A reduction in the capacity load on the resource

An update of the costs, based on the confirmed data

An update of the order data, such as times or order status

Withdrawal postings for backflushed components

An automatic goods receipt (only for one phase per order)

MRP relevant update of the expected yield in the order.

Goods Movements and Confirmations  

When user creates a confirmation, user can also post planned or unplanned goods movements. Two types of planned goods movements exist: Backflushing or Automatic Goods Receipt. An automatic goods receipt can only be posted for one phase/operation per order.

If, for some reason, errors occurred in the goods movement (for example, not enough material in stock when the backflushing occurs), user can process the incorrect goods movements either directly in the confirmation transaction or in a separate transaction for processing goods movements with errors.

Canceling Completion Confirmations  

It is possible to cancel data previously confirmed.

If user wants to cancel a confirmation, user must first specify which completion confirmations he wants to cancel:

If only one confirmation has been entered for a phase, user only has to identify the phase.

If several confirmations have been entered for a phase, user must also specify which completion confirmation he wants to cancel.

To reverse the cancellation of a confirmation he must manually reenter a confirmation.

3.1.12 Goods Receipt from Production

Goods receipt from production in a warehouse occurs in the same way as for normal goods receipts from a

purchase order. Goods receipt from production can be posted either manually or automatically.

In the control key of an operation or phase, user can specify that the system should automatically post the finished material to stock when the operation or phase is confirmed.

An automatic goods receipt can only be posted for one operation or phase per order. user should therefore make sure that only one operation or phase in the order (normally the last operation or phase) has a control key that specifies automatic goods receipt.

If several operations or phases in an order have a control key that specifies automatic goods receipt, the system issues a warning message when user confirm one of them. In this case, he has to post the goods receipt manually.

Delivery to Stock: Costs  

When the material is delivered to stock, the system determines the costs of the material produced in the following way:

If the price control indicator in the material master record is set to "S", the delivered quantity is multiplied by the standard price in the material master record of the material produced.

If the price control indicator in the material master record is set to "V", the delivered quantity is multiplied by the price defined by the valuation variant.

3.1.13 Rework

Material that can be reworked undergoes this process after the QC has given the decision to do so.

A rework order is created for the material which will be uniquely identified by the order type. Rework process steps

are as follows:

Define the process

Release the Process Order

Issue the rework stock.

Perform the process order confirmation

Do the Goods receipts

 

3.1.14 Process order settlement

When user creates a production order and after each subsequent change to the order, the system calculates

the planned order costs that are expected to be incurred during production. The planned costs are assigned

to cost elements.

Costs that are considered as primary cost elements include:

1. Material costs

2. Costs for external procurement/external processing

These costs are assigned to the order, for example, via primary costs, such as material withdrawals or the

purchasing of externally processed parts.

Costs that are considered to be secondary cost elements include:

Production costs

Material overhead costs

Production overhead costs

These costs are allocated to the order via internal cost allocation.

Cost Segments

Cost elements are recorded in so-called cost segments that are managed per fiscal year. The system uses

the latest start date of the operation or the requirement date of the material to calculate in which period of

which fiscal year the planned costs of an order are incurred.

The system calculates the planned costs for the activities contained in an operation via the valuation variant

specified for the order type (defined via the costing variant). The values of the individual activities are

specified via the activities defined in cost centre accounting.

To calculate the planned costs for carrying out an operation, the system first sets up a quantity structure for

the produced activities. In a second step, the quantity structure is valuated with a price.

Planned/Actual Cost Comparison:

Both planned costs and actual costs are recorded in cost segments. Actual costs are updated when material

withdrawals or confirmations are carried out for the order, or when a goods receipt is posted for an externally

procured material component, for example. This enables to compare planned with actual costs at any stage

of order processing.

When a production order is settled, the actual costs incurred for the order are settled to one or more receiver cost-objects (for example, to the account for the material produced or to a sales order). Offsetting entries are generated automatically to credit the production order:

If the costs for the production order are settled to a material account, the order is credited each time material is delivered to stock. The material stock account is debited accordingly.

If the costs for the production order are settled to another receiver (for example to a sales order), the order is credited automatically at the time of settlement. The cost-objects are debited accordingly.

The debit posting remains in the order and can be displayed even after the costs have been settled. The settled costs are updated in the corresponding receiver cost-object and can be displayed in reporting.

 

  Requirements for Settlement  

Before you can settle a production order, you must maintain valid settlement parameters for the order. The settlement parameters include a settlement profile and a settlement structure:

Settlement Profile

Settlement Structure

Settlement Rule

 

Settlement Profile  

A settlement profile is specified in Customizing for each order type. The settlement profile specifies:

To which settlement receivers the order can be settled,

The maximum number of distribution rules

Whether the settlement share is to be calculated as a percentage rate or as equivalence numbers

A default for the settlement structure

 

Settlement Structure  

The settlement structure determines how the debit cost elements are assigned to settlement cost elements. Each debit cost element may only be assigned to one settlement cost element.

  

Settlement Rule  

The system automatically assigns a settlement rule to the production order when the order is created. The assignment is carried out via the default rule defined in Customizing.

The settlement rule includes one or more distribution rules for the production order. The distribution rule consists of a cost receiver, a settlement share and a settlement type:

The settlement receiver determines to which cost object the actual costs of the production order are to be settled. Possible receivers include

o a material o a cost center o an internal order o a sales order o a project o a network o a fixed asset

The settlement share determines the percentage rate or the equivalence number to distribute the costs to the individual cost receivers.

The settlement type determines whether all the costs are settled which were incurred for the order (full settlement) or whether the costs collected on the order are to be settled periodically (periodic settlement).

The settlement receiver Material allows periodic settlement only for orders.

Settlement: Standard Settings  

In the standard system, the system requires that the production order is assigned to the material to be produced. The settlement receiver in this case is the material's stock account. The settlement share is 100 %. The settlement type is "full settlement".

 

Delivery to Stock  

If a production order is settled to a material account, the system expects one or more deliveries to stock.

Each delivery to stock credits the order and debits the stock account of the material.

Crediting the Order

In Customizing for Shop Floor Control it is defined how the production order is to be credited when a goods receipt is posted. A valuation variant is defined for each valuation area. This specifies which price is to be transferred from the material master record when the order is credited.

Debiting the Stock Account

The price control indicator in the material master specifies how stocks of a material are to be valuated:

If the Price control indicator in the material master of the material produced is S, the quantity delivered is multiplied by the standard price. Any difference between this debit posting and the credit posting to the order is posted to a price difference account.

If the Price control indicator in the material master of the material produced is V, the quantity delivered is valuated with the price according to the valuation variant. The stock account for the material produced is debited with these costs and the moving average price changes accordingly.

If the production order is settled to a material account, user can only settle the order after the final delivery has taken place for the order.

 

Result of Settlement 

Where a production order is settled to a material account, the amount settled is the difference between the actual costs incurred for the order and the costs credited to the order when the goods produced were delivered to stock (see section Delivery to Stock).

The order is credited with the settled costs. Following the credit posting, the order has a balance of zero. The offsetting entry for this credit is made as follows:

If the Price control indicator in the material master record is S, a price difference account is debited.

If the Price control indicator in the material master record is V, the total stock value and the moving average price change accordingly.

 

Settlement in the Case of Stock Shortage  

If at the time of settlement the warehouse stock of the material is less than the order quantity, because goods have since been issued from stock, this has the following effect on settlement:

The costs referring to the order quantity still in stock are settled as usual to the stock account for the material in question

The remaining costs are automatically posted to a price difference account

 Settling Scrap  

In the standard system, all actual costs incurred in an order are settled 100 % to the material produced. Any scrap produced in the production process causes the average price to increase in the standard system, due to the difference between the order quantity and the actual yield. To avoid the price of the material increasing when scrap occurs, user must manually adjust the percentage of the existing distribution rule to the actual yield produced and then create a new distribution rule for the actual scrap percentage. User could then, for example, enter a cost center as the settlement receiver for the new distribution rule.

 

Example: Settling Scrap 

The order quantity to be manufactured is 10 pieces. The actual yield is 8 pieces, the scrap quantity is 2 pieces.

You change the distribution rule in the settlement rule so that only 80 % of the costs are settled to the stock account of the material. Then you create a second distribution rule that specifies that the remaining 20% of the costs are to be settled to a cost center.

The actual costs for the order are US$ 2,800. Due to the delivery of 8 pieces to stock, the order was credited with US$ 2,000.

80% of the total costs are US$ 2,240.

20% of the total costs are US$ 560.

The order has already been credited with US$ 2,000 due to the delivery to stock.

As a result, US$ 240 is settled to the stock account for the material and US$ 560 to the cost center.

 

 

3.1.15 Technical Completion of Process Orders  

Technical completion is the completion of a process order from the logistics point of view. This function is used when the user wants to terminate execution of an order prematurely, or if the order was not properly

executed and he wants to delete open requirements of the order (for example, reservations, capacity requirements).

The following actions are carried out when the order is technically completed:

The order is not indicated as relevant to MRP anymore.

The reservations are deleted.

The capacity requirements are deleted.

Purchase requisitions that may exist for externally processed operations or non-stock components are deleted.

The system status Technically completed (TECO) is set for the order and the operations.

If an order is technically completed, it is not possible to make any changes to the order. User can only display it. However, if the order data must be changed, the technical completion of the order can be revoked.

User can still make postings for the order after the technical completion. User can, for example, post a material withdrawal or a confirmation if they were forgotten.

 

3.1.16 Business Closing of Process Orders  

As a rule you perform business closing of a process order when you do not expect any more cost postings for it. Such an order is then considered closed for cost accounting and is not taken into account when evaluating process orders that are still open.In the system, business closing, in contrast to technical completion, is usually only called "close".

The following actions are carried out when the order is closed:

In contrast to the technical completion, no more costs can be posted to the order. This means no more confirmations or goods movements are allowed for this order.

User can no longer change the order. User can only display the order data, revoke the Closed (CLSD) status, and set the deletion flag.

All actions belonging to the status Technically completed (TECO) are carried out.

The system status Closed (CLSD) is set for the order and the operations. This status (or Technically completed) is a prerequisite for archiving.

In the collective order, the status Closed (CLSD) is also set for lower-level orders.If the system detects an order in the collective order that cannot be closed, the orders along the way to the leading order are not closed either. Other parts of collective orders are closed if they only contain orders that can be closed.

3.1.17 External Processing (Subcontracting) and Toll Manufacturing  

Subcontract

User can use external processing to have an individual process step that is operations or phases, carried out by a different company. This process describes how externally processed steps are treated in order processing.

Process Flow

1.  When user creates a process order, the external processing data of the phases and secondary resources is copied to the order. User can still change this data in the process order.

2. When user save the process order, the system creates a purchase requisition for externally processed phases and secondary resources for the quantity of the phase or secondary resource.

Depending on the data entered in the master recipe, the purchase requisition created is of type Standard purchase order or Subcontracting and is assigned to the process order account. In addition to the external processing data, the system also copies the short text for the phase or secondary resource to the purchase requisition.

The purchase requisition number is copied to the external processing data of the phase or secondary resource in the process order (see General Data detail screen).

If user later changes the dates and quantities in the order, these changes are automatically copied to the purchase requisition. However, they are not copied to an existing purchase order.

3.  Purchasing converts the purchase requisitions into purchase orders.I

n subcontracting phases, the allocated material components are automatically provided in the purchase order.

In subcontracting secondary resources, user must enter the material components to be provided to the vendor in the purchase order.

In the process order, the system sets the P.O. exists (Purchase order exists) indicator in the external processing data for the phase or secondary resource.

4. By monitoring the material stocks to be provided to a vendor, inventory management determines whether all material components in a reservation are available. If required, it makes a transfer posting to this stock for the material to be provided (movement type 541).

5. The vendor externally processes the phase or secondary resources.

6. After external processing has been completed, user post a goods receipt for the warehouse for the purchase requisition (movement type 101).

The following activities are carried out at the same time:

In the case of subcontracting purchase orders, the system posts a goods issue for the material to be provided (movement type 543).

The quantity from the goods receipt is copied to the external processing data of the phase or secondary resource in the process order.

The phase or secondary resources receives status EOPD, External operation partly delivered or EODL, External operation delivered

The process order account is charged with the costs for external processing and the material to be provided

 

Toll Manufacturing

In consideration of conversion service charges, service provider company manufactures material for other company or sister concerns. Material component required for production is supplied by either service provider or service procurer. Toll manufacturing process operations or phases are defined in a master recipe. On the basis of this recipe , process order is released.

3.1.18 Production Campaign

Production campaign is grouping of planned orders and process orders to produce a certain amount of a material over a certain period of time. This is done in an uninterrupted sequence on one production line.

The aims of campaign management are the following:

   Reduced costs achieved by grouping sequences of identical production charges and thus carrying out more efficient setup and clean-out processes which can be very costly

   Higher product quality in cases where the desired quality level is achieved gradually in the production process as opposed to immediately from the first batch

   More exact settlement resulting from clear distribution of campaign fixed costs (setup, clean-out, and tear down costs) to the orders involved

Business requirement

Process Id

Requirement List

Material Master & Batch Management

Resource Management

Bills of Material and Production Version

Master Recipe

Planned Orders

Converting Planned Order to Process Orders

Selection of Production Version, Master Recipe

Approval of Process Orders

Scheduling

Capacity Leveling

Batch Determination & Material Quantity Calculation

Checking the Availability of Material Component

Releasing Process Orders

Goods Issue To Production

Process Order Confirmations

Goods Receipt From Production

Rework

Process order settlement

Technical Completion of Process Orders

Business Closing of Process Orders

External Processing(Subcontracting) and Toll Manufacturing

Production Campaign

Others

Documents & Reports

Material Master & Batch Management

Please go through the MM Business Requirements for Material Master Business Requirements

For the manual administration of batches the following functions should be available: Creation of a batch master Change of a batch master Display of a batch master

The batch number should be unique on material/plant level.

The batch number should be assigned in this way: internally, if no batch number is entered externally, if a batch number is entered manually

It should be possible to enter the following shelf-life information: production date expiration date

It should be possible to enter the number under which the batch is managed at the vendor.

Batch status management should be activated (to identify unrestricted-use stock/restricted-use stock/quality inspection stocks/ blocked stocks for a batch.)

The system issues a warning or an error message if the batch to be withdrawn is restricted (part of the restricted-use stock).

If a partial quantity of an unrestricted batch is to be managed as a restricted batch, it would be possible to transfer this partial quantity to another batch (using a transfer posting).

Defining search strategy to facilitate determination of batch

Every change of a batch master should be recorded in a change document. The following information should be available in the change history:

Name of the user who executed the changeDate and time of the changeContent of the field before the changeContent of the field after the change

Resource Management

The following resource categories should be available:

Labor Processing Unit Storage resources Processing unit / storage resource

It will be possible to copy existing resources to change resources or create new resources.

The performance efficiency rate key should be activated.

It would be possible to perform following task:

Resource assignment to cost centres

Cost allocation to business processes

Resource assignment to business processes

Checking a resource for completeness of its data

Locking and unlocking a resource

Deleting resources, marking for deletion

Creating resource hierarchy

Creating shift definitions and shift sequences

It will be possible to replace a resource in a recipe:

Directly in the operation of a particular recipe

In all recipes where it is used (mass replacement)

Concerned user will get message at the time of resource addition/deletion/capacity modification

The following task list usages should be available: Usage for master recipe (individual resource) Usage for master recipe(resource group for planning only)

Every change should be seen in a change history with the following data: Date and time of the change User who carried out the change The content of the field before the change The content of the field after the change

Bills of Material and Production Version

It will be possible to create the following BOMs in the SAP system:

        Material BOMs

        Equipment BOMs

        Functional location BOMs

        Document structures

        Order BOM

        Work breakdown structure (WBS) BOM

BOM processing will be as per Incepta workflow. Basic data that is relevant to all applications will be created in a central department, then application-specific data will be added using the change function and under structured authorization system.

For the maintenance of BOMs the following functions should be available: Creation Change Display BOM,BOM group ,Plant allocation Mass changes Archiving BOM explosion# Where used list # BOM comparison Display change documents Deleting BOM

It should be possible to create a BOM for the following range of use:Subcontracting

It will be possible to use the mass change function to change items in several BOMs at once

The following status for a BOM should be available: Inactive (blocked for processing) Active (released for subsequent processing) Active with obligation to maintain history

It should be possible to insert general text information to a bill of material on Header level Item level

It should be possible to indicate a component as relevant for material provision. The following indicators, which should control MRP, are necessary: Material is provided to a vendor (dependent requirements must be generated) Material is provided by the vendor (dependent requirements must not be generated)

It should be possible to insert a base quantity for the BOM to which all component quantities relate. The

default value should be 1000.

In case of in house production of Material, BOM will consider process loss or gain, overage, scrap etc.

Only the authorized person will be able to print the BOM

The initial creation as well as every change should be seen in a change history with the following data: Date of the change User who carried out the change The content of the field before the change The content of the field after the change

Master Recipe

It should be possible to create/copy/edit a master recipe for production purposes without having a production

order (according to Incepta workflow).

It should be possible to allocate the following material types to master recipes: Finished products Semifinished products

It should be possible to determine which master recipe is used for: material requirements planning (MRP) product costing process order creation

It should be possible to plan the individual steps to be carried out in a process, that is, the operations and its

subdivisions, the phases.

It should be possible to plan the activities that are to be carried out in a phase and are used as the basis for

determining dates, capacity requirements, and costs.

It should be possible to plan the process sequence by defining relationships between phases.

It should be possible to change the data of individual master recipes or to replace objects in several or in all

master recipes.

It should be possible to plan the use of materials and resources and the production of materials in the course

of the process.

It should be possible to plan the quality inspections to be carried out during production (in-process-control

activities)

It should be possible to group master recipes according to user defined criteria

Where several resources can be used as the primary resource of an operation, system will select suitable

resources automatically on the basis of preset criteria

It should be possible to enter and editing external processing data.

Creation or change of master recipes will be done with an engineering change order.

It will be possible to use mass change function to replace the following objects in many or all of master recipes:

Resources Production resources/tools (PRT) Process instructions

It will be possible to archive and delete Master Recipes.

Every change should be seen in a change history with the following data: Date and time of the change User who carried out the change The content of the field before the change The content of the field after the change

Planned Order Please go through the MM Business Requirements for Planned Order Business Requirements.

Process Order

The following should be possible:

Collective conversion (n planned orders to n process orders)

Individual conversion (1 planned order to 1 process order)

Partial conversion (1 planned order to n process orders)

It should be possible to distinguish process orders into following process order types: Semi finished Finished

Planned orders or process orders should be distributed to process owner group based on predefined criteria.

The system should automatically assign a consecutive number from a predefined number range for all orders

of a particular order type.

It should be possible to create process orders manually:o With reference to a material and master recipe o With reference to a material but without a master recipe o With an approved master recipe o Without reference to a material but using a master recipe (rework)

Assigning batch number automatically or manually (numeric or alphanumeric with appropriate validation)

It should be possible to assign a batch number shift wise.

System should have the option to create an inspection lot manually in the process order

It should be possible to calculate the target costs of the process order and compare the planned cost with actual costs at any stage of order processing.

Selection of Production Version, Master Recipe

It should be possible to assign only a valid production version to the process order (automatically or manually).

Assigning/changing values to process instruction characteristics in the process order.

In the operation & process instruction overview, it would be possible to change operation/phase and process

instruction data both in the create mode and change mode

Approval of Process Orders

Process orders must be approved before production in the following ways:

Create with approved master data Individual approval((for first three batches and before locking Master Recipe)

The collective order cannot be released until all orders have been approved

A withdrawal of the approval is possible, if required.

Scheduling

It should be possible to schedule process orders with the following options: Forwards (with times) Backwards (with times) Scheduling to current date Only capacity requirements

It would be possible to schedule secondary resources.

The system should automatically schedule the process order when it is created. In addition, order shall be rescheduled automatically or manually whenever changes relevant to scheduling have been made.

After a process order has been released, a periodic background job will check whether there are schedule deviations for operations or phases in process orders. If tolerances are exceeded or fallen short of, specific users will be notified.

Capacity Leveling

It would be possible to calculate capacity requirements for process order. To eliminate overload user can change the dates or quantity of the planned order.

Batch Determination & Material Quantity Calculation

During batch determination and material quantity calculation, system should consider the potencies and overage of different batch components (active ingredients) and adjust the quantity of same components for a process order. If required it will increase or decrease the quantity of filler components. FEFO (First Expiry First Out) method is used to select a batch. If the batches have same expiry date, FIFO (First In First Out) method is used.

Availability Checking

The availability of materials (for single order/selected orders) should be checked automatically during order creation and/or order release

Releasing Process Orders

It should be possible to release individual operations, phases, single process order or several process orders.

Goods Issue To Production

Material issue should be possible against process order/Reservation/BOM and as per Incepta work flow.Unplanned goods issue also be possible under proper authorization system (urgent request/additional material for production order/trial production)

All related terms and conditions shall be displayed at the time of issue.

If the number of reference document is not available, it would be possible to find it using requisition/issue type, the material number or account assignment

For every material movement, the system should automatically perform an availability check of the material.

If there is not enough stock to cover the withdrawal, the system issues an error message.

It should not be possible to withdraw materials for process orders automatically.

At the time of goods issue, system should automatically determine and propose storage location (up to pallet

level), batches and distribution of material qty according to the preset criteria and planned quantity. All of

these could be changed manually.

It would be possible to adjust shortage & surplus material if found at the time of dispensing through proper

authorization system

It should be possible for goods issues, to create a manual account assignment for a cost centre.

The system should automatically print a goods issue slip after saving the goods issue posting.

Process Order Confirmations

The following confirmation types should be recorded:

Partial confirmation

Final confirmation

It should be possible to enter completion confirmations for each shift.

The following data should be recorded for a completion confirmation:

Quantity processed in a phase / process order

How much activity was used to carry out a phase / process order

Date and time the process was started and finished

The resource at which the phase was carried out

Who carried out the phase/ process order

Machine name / production line

Batch number

Process order number.

Yield (material actually issue for production and material consuming)

Machine utilization

Operator details (name, code, employee personal status, working status etc)

Man shift Process and machine parameters

Remarks(reason for not meeting the process order target, any issue related to production)

The system should propose the difference between standard value (quantity) and confirmed values as open quantities respective activities.

For each phase confirmations:

partial or final confirmation should be proposed by the system

a costing log should be displayed if errors occur during the calculation of costs

The default time unit for completion confirmations

the underdelivery and/or overdelivery tolerances of the order should be checked during confirmation

the system should react if the phase/operation sequence is not adhered to

previously confirmed data, or data which is planned to be confirmed should be displayed during confirmation

an error log is displayed for goods movements with errors (for backflushing /automatic goods receipts), and it will be possible to correct the errors in the material overview before posting the confirmation

the system should check that the date is in the future.

It would be possible to correct goods movements errors arising from confirmation and to carry out the goods movement again.(Examples of some errors : missing storage location, missing batch, blocked material data, too little stock, posting in the incorrect period etc)

It would be possible to redetermine actual costs if an error has occurred during a previous determination of actual costs during confirmation.(Examples of some errors : missing activity price, invalid cost center, or incorrect allocation of activity type to cost center etc)

Goods Receipt from Production

System needs to post Auto GR after confirmation by creating a notification. Then GR need to confirm by

store people.

At the time of GR posting system will suggest all required data from process order.

It should be possible to carry out several part-deliveries for a single process order.

If the goods receipt quantity is less than the expected quantity minus the under delivery tolerance, the

system will issue a corresponding message. Process owner should be confirmed through immediate

message.

The system will not accept a goods receipt which is greater than the order quantity plus the over delivery

tolerance. If this case arises, the system issues an error message during the posting of the goods receipt.

However after investigation process owner can give permission to accept GR.

If the PO has latest possible delivery date and the goods are delivered after this date, the recipient receives a

warning or an error message when entering the GR.

If material is intended for the warehouse, the orderer can define a storage location (upto pallet level) for it.

This storage location is then automatically suggested by the system during entry of the GR and recipient can

accept or change it. If no storage location is entered in the PO, recipient have to specify a storage location

when he/she enters the GR.

It should be possible to post finished goods either to the warehouse or consumption.

It should be possible to post goods receipts into the following stock types: Unrestricted-use stock

Stock in quality inspection Blocked stock

After production excess, unused or damaged material component should be transferred back to appropriate

store.

The system should automatically print a goods receipt slip after posting the goods receipt.

Rework

Rework activity will be possible through a separate process order.

Rework activity will be possible under the same process order

If required a new batch number or identification number may be assigned to the Rework

It will be possible to determine the cost of Rework

Process order settlement

It should be possible to settle the actual costs incurred for the production order to one or more receiver cost-

objects. Therefore, offsetting entries should be generated automatically to credit the production order.

It should be possible to display the debit posting in the order.

It should be possible to display the settled costs of the corresponding receiver cost-object in reporting.

Each debit cost element should only be assigned to one settlement cost element.

The system should automatically assign a settlement rule to the production order when the order is created.

It should be possible to settle all costs which were incurred for the order (full settlement).

It should be possible to settle costs collected on the order periodically (periodic settlement).

Technical Completion of Process Orders

It would be possible to use TECO function to terminate execution of an order prematurely, or if the order was not properly executed and it is required to delete open requirements of the order (for example, reservations, capacity requirements).

External Processing(Subcontrcating), Toll Manufacturing

External processing and related control will be possible

Toll manufacturing and related control will possible

Production Campaign

The following will be possible-

        Campaign creation

        Campaign processing

        Campaign conversion

        Settlement of the campaign fixed costs for the materials (using business processes)

        Preliminary costing of a production campaign

        Cost reports for a production campaign

        Cost reports for the business processes involved

It will be possible to include existing planned orders and process orders in a production campaign.

Others

Process data documentation

Reorganization of process orders (archiving and deleting)

Documents & Reports

Report Description Comments

01

The goods receipt slip should contain at least the following information:

Material document number Material code number / description Batch number Posted quantity of goods Reference document (process order number) Stock type Process Order Number Date of Goods Receipt Person who Received/posted the Goods

Pls consult and review with warehouse people

02

The goods issue slip should contain at least the following information:

Material document number Material code number / description Batch number Posted quantity of goods Reference document (process order number) Stock type Process Order Number Date of Goods Issue Person who Issued/posted the Goods

Pls consult and review with warehouse people

03

The shop floor paper which should contain the following information:

Type wise quantity Total Quantity (According to standardization) Starting Date & Time Phase/operation Name & Code Date & time of Release Assigning the Production Line/Machine Batch Number Order Number Person who release PO

Production Version

04

Master Recipe hardcopy for record Please Elaborate

05

Periodical(daily, weekly, monthly, yearly) Production Report

Pls Elaborate

06

List of Materials for which process orders are not possible to release

Pls Elaborate

07

Stock adjustment report Pls Elaborate

08

WIP report Pls Elaborate

09

Process loss or gain report Pls Elaborate

10

Resource utilization report Pls Elaborate

11

12

13

14

15

Printing requirements:

Only the authorized user will be entitled to print documents or export documents to other system ( from SAP )

Printing will be possible only to predefined printer

User code or name should be mentioned on the printed documents

All documents should contain Company logo and name.