Information management, SAP Project by Vanessa Günther, Alina Sachapow, Hanna Tresselt

Faculty 3, Department of Economics I

Course: Bachelor of International Business

B25: Information Management 2

Summer Semester 2011

Individual Case Study:

Production of Bicycles Based on SAP (ECC 6.0; IDES system)

Written by: Vanessa Günther

Alina Sachapow

Hanna Tresselt

Berlin, 07.07.2011

Table of Contents

1. Introduction ................................................................................................................................. 2

2. Creating Material Master Records ............................................................................................... 3

2.1. Material Master Record for Bicycle (Finished Product)........................................................ 3

2.2. Creating Material Master Record for Frame (Semi-finished Product) .................................. 8

2.3. Creating Material Master Record for Frame Assembly (Semi-finished Product) ................. 9

2.4. Creating Material Master Record for Wheel (Semi-finished Product) ................................ 10

2.5. Creating Material Master Record for Pedal Assembly (Semi-finished Product) ................ 10

2.6. Creating Material Master Record for Gear Wheel (Semi-finished Product) ....................... 10

2.7. Creating Material Master Record for Drive Chain (Semi-finished Product) ....................... 11

2.8. Creating Material Master Record for Spoke (Raw Material) .............................................. 11

2.9. Creating Material Master Record for Hub (Raw Material) ................................................. 13

2.10. Creating Material Master Record for Rim (Raw Material) ................................................. 14

2.11. Creating Material Master Record for Cover (Raw Material)............................................... 15

3. Creating Required Bills of Materials ......................................................................................... 16

3.1. Creating Bill of Material for Wheel ..................................................................................... 16

3.2. Creating Bill of Material for Frame ..................................................................................... 17

3.3. Creating Bill of Material for Bicycle ................................................................................... 17

4. Creating Routings ...................................................................................................................... 19

4.1. Routing for Wheel ............................................................................................................... 19

4.2. Routing for Frame ................................................................................................................ 24

4.3. Routing for Bicycle .............................................................................................................. 25

5. Testing the Business Process ..................................................................................................... 27

5.1. Calculating Product Costs .................................................................................................... 27

5.2. Updating Prices .................................................................................................................... 29

5.3. Price Release ........................................................................................................................ 30

6. Manufacturing ........................................................................................................................... 31

6.1. Receiving Goods for Required Components ....................................................................... 31

6.2. Creating Production Order ................................................................................................... 32

6.3. Confirming Production Order .............................................................................................. 34

6.4. Displaying Automatic Goods Movement ............................................................................ 35

6.5. Checking Warehouse Stock ................................................................................................. 36

6.6. Calculating Manufacturing Time ......................................................................................... 36

7. Conclusion ................................................................................................................................. 37

8. Bibliography .............................................................................................................................. 38

Individual Case Study: Production of Bicycles

Vanessa Günther, Alina Sachapow, Hanna Tresselt

2

1. Introduction

IDES system is a motorcycle and bicycle manufacturing company that has recently received a special

order to produce 25 fixed-gear bicycles. These are a type of “a bicycle that has no freewheel, meaning

it cannot coast – the pedals are always in motion when the bicycle is moving”.1 The order was placed

by the Cycle Ball Club Cycle Ball Lovers. The price offered is €599,00. Thus, this case study will try

and create the necessary logistics master data to further use it in a simple manufacturing process. For

that purpose it will apply SAP Enterprise Resource Planning System (ECC 6.0; IDES system). It will

further calculate production costs and manufacturing time using Microsoft Excel.

Each fixed-gear bicycle in question will consist of two identical in the structure front and rear

wheels, one frame and a pedal assembly including a gear wheel and a drive chain + a chain lock. All

wheels will be manufactured by assembling 32 spokes, a rim, a hub and a cover (including a tire and

a valve). At each rear wheel a gear wheel will be drawn up. Thus, the targeted bill of material should

have the following structure:

Bicycle

(finished product)

FRAME

(semi-finished goods)

WHEEL


GEAR WHEEL


DRIVE CHAIN


FRAME

ASSEMBLY

PEDAL

ASSEMBLY

GEAR

WHEEL

SPOKES HUB RIM COVER

The first chapter will create the material master record for the finished and semi-finished products as

well as raw materials. The second chapter will deal with the required bill of materials for the wheel,

the frame and the bicycle. The third chapter will proceed with creating the routings for the wheel, the

frame and the bicycle. The forth chapter will test the generated business process, calculate, update and

release the prices. Finally, the targeted product will be manufactured in the SAP system.

1 Wikipedia, the free encyclopedia (2011), http://en.wikipedia.org/wiki/Fixed-gear_bicycle. Accessed 05.06.2011.

http://en.wikipedia.org/wiki/Fixed-gear_bicycle



3

2. Creating Material Master Records

2.1. Material Master Record for Bicycle (Finished Product)

To create a material master record for the finished product RGD-BICYCLE732, one should select

Logistics Materials Management Material Master Material Create (Special)

Finished Product or just key in transaction code MMF1 in the SAP Easy Access menu. As has

already been mentioned, the material number is ‘RGD-BICYCLE732’. The industry sector is

Mechanical Engineering [M] and the main views that are of interest and have to be activated are

Basic Data 1 and 2, all three Sales entries, all four MRP entries, Work Scheduling, Accounting 1

and 2, and Costing 1 and 2. Thus, the first screenshot looks as follows:



4

Note: Create views selected is activated, too.

The next step is to enter the organizational levels so that the system can create the new material. The

required information includes the production plant in Hamburg [1000], the storage location Lager

0001 Materiallager [0001], the sales organization [1000], which is situated in Frankfurt, Germany and

is responsible for selling and distributing pumps, elevators, lighting, motorcycles, vehicles and high

tech products2, and, finally, distribution channel 10, which is aimed at the final customer (see below):

The first data view for creating the material master record for the final product is Basic Data 1. It

covers the main facts concerning the final product RGD-BICYCLE732, which is measured in units

[PC], has a gross weight of 10,5 kilograms [KG], a net weight of 10 kilograms, a volume of 60 cubic

centimeters [CCM] and is produced cross divisionally [00].

The sales org.1 view specifies the key facts concerning the delivering plant and tax particulars. The

delivering plant for the bicycles is Werk Hamburg [1000], and the product is fully taxed [1] in

Germany. The tax type is VAT or Mehrwertssteuer, which is the output tax for IDES system as they

are going to sell the final product:

2 See SAP Help (2011),

http://help.sap.com/saphelp_ides/helpdata/en/e6/4a6f959e0311d189b70000e829fbbd/content.htm. Accessed 02.07.2011.

http://help.sap.com/saphelp_ides/helpdata/en/e6/4a6f959e0311d189b70000e829fbbd/content.htm



5

The Sales: general/plant view describes further sales particulars. It deals with the transportation

details – Lot for Truck [0005] and loading – Manual [0003]. The sales venue is the general plant and

availability check is performed daily [01]. For further details, please, see below:



6

MRP 1 view defines the MRP type as [PD]. The MRP type is a key that controls the MRP

procedure to be used for planning a material. It controls which planning parameters must or can be

entered when maintaining the material master record.3 MRP controller [001] is a disponent who is

responsible for the allocation and supervision of the final product in IDES system. The person can

be contacted under the telephone number 1174. The lot size [EX] is Lot-for-lot order quantity.

MRP 2: The fixed-gear bicycles are planned to be produced in-house [E] and stored in the

production storage location [0001]. The planned in-house production time is 3 days and the

scheduling margin key is [001]:

MRP 3: A total replenishment lead time is 5 days. This is the time that the company needs to order the

required raw materials and semi-finished products, receive them and assemble everything to get the

finished product.4 The period indicator is a month [M] and the availability check is performed daily [01].

3 See sap-img.com (2011), http://www.sap-img.com/production/how-mrp-type-in-mm-mrp-view-1-works.htm. Accessed

02.07.2011. 4 See SAP Help (2011),

http://help.sap.com/saphelp_46c/helpdata/en/93/744b8a546011d1a7020000e829fd11/content.htm. Accessed 03.07.2011.

http://www.sap-img.com/production/how-mrp-type-in-mm-mrp-view-1-works.htm

http://help.sap.com/saphelp_46c/helpdata/en/93/744b8a546011d1a7020000e829fd11/content.htm



7

Accounting 1 view: The fixed-gear bicycles are finished products, thus, valuation class 7920 is

chosen. The material ledger is not active, hence, the two methods of price control that are available

are a standard price and a moving price. Price control S (standard price) is taken because of the

assumption that the price of the final product will not fluctuate too often. The targeted price of

€599,00 per 1 bicycle is specified. This price is relevant for the current period of May 2011 and

there is still no stock at hand:

In the Costing 1 view, Material origin is activated. As the final product shall later be sold to the

Cycle Ball Club Cycle Ball Lovers (a German customer), the necessary entry is created in the

additional data subcategory:

Finally, the material master record for the final product is saved.



8

2.2. Creating Material Master Record for Frame (Semi-finished Product)

A material master record for the semi-finished product RGD-FRAME732 is created under Logistics

Materials Management Material Master Material Create (Special) Semifinished Product

(transaction code MMB1). The material number is ‘RGD-FRAME732’. The industry sector is

Mechanical Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing, four MRP

entries, Work Scheduling, Accounting 1 and Costing 1. The Create views selected indicator is activated.

The entries are confirmed by pressing Enter and the Organizational Levels dialog box appears. Here

the main facts for the frame production process are specified. These are: plant Werk Hamburg

[1000] and the storage location [0001].

Basic Data 1 describes the main facts concerning the semi-finished product in question. It is

measured in units [PC], belongs to the area of mechanics – Material group [00104] – and is assigned

to Cross division [00], which implies that the actual manufacturing of this part happens in different

divisions within the company. MRP 1 view defines the MRP type as [PD], MRP controller as [001]

and the lot size as [EX]. This implies Lot-for-lot order quantity and means that the system will

create a procurement element for the exact shortage quantity (e.g. required quantity minus available

stock).5 The next view is MRP 2. As the frames are planned to have both procurement types (in-

house production and external procurement), X is assigned here. This means that the actual

assembly is done by the company’s own workforce in Werk Hamburg but it has to rely on external

suppliers, as far as the delivery of the required semi-finished products (i.e. frame assembly, gear

wheel and pedal assembly) is concerned. The frames are to be stored in the production storage

location [0001] and the storage location for EP (External Procurement) Materiallager is [0001]. The

scheduling margin key is [000] implying that there are no float times planned.

Accounting 1 view: The frames are semi-finished products, thus, valuation class 7900 is assigned to

them. The material ledger is not active, hence, the two methods of price control that are available are a

standard price and a moving price. Price control S (standard price) is taken because of the assumption

that the price of the semi-finished product will not fluctuate too often. The price of €102,00 per 1

frame is specified. This price is relevant for the current period of June 2011. The data are saved.

5 See SAP Help (2011),

http://help.sap.com/saphelp_40b/helpdata/fr/7d/c275d1454011d182b40000e829fbfe/content.htm. Accessed 03.07.2011.

http://help.sap.com/saphelp_40b/helpdata/fr/7d/c275d1454011d182b40000e829fbfe/content.htm



9

2.3. Creating Material Master Record for Frame Assembly (Semi-finished Product)

A material master record for the semi-finished product RGD-FRAME-ASSEMBLY732 is created

under Logistics Materials Management Material Master Material Create (Special)

Semifinished Product (transaction code MMB1). The material number is ‘RGD-FRAM-

ASSEMB732’. The industry sector is Mechanical Engineering [M]. The views of interest are Basic

Data 1 and 2, Purchasing, four MRP entries, Work Scheduling, Accounting 1 and Costing 1. The

Create views selected indicator is activated.

In the Organizational Levels dialog box, the main facts for the frame assembly production are

specified. These are: plant Werk Hamburg [1000] and the storage location [0001].

Basic Data 1 describes the main facts concerning the semi-finished product in question. It is

measured in units [PC], belongs to the area of mechanics – Material group [00104] – and is assigned

to Cross division [00]. MRP 1 view defines the MRP type as [PD], MRP controller as [001] and the

lot size as [EX]. The next view is MRP 2. As the frame assemblies are planned to have both

procurement types (in-house production and external procurement), X is assigned here. They are to

be stored in the production storage location [0001] and the storage location for EP Materiallager is

[0001]. The scheduling margin key is [000] meaning that there are no float times planned.

Accounting 1 view: The frame assemblies are semi-finished products, thus, valuation class 7900 is

assigned to them. The material ledger is not active, hence, the two methods of price control that are

available are a standard price and a moving price. Price control V (moving average price) is taken

because of the intention to value the stocks with the latest price. The price of €75,00 per 1 frame is

specified. This price is relevant for the current period of June 2011. Save is pressed to confirm all

the entries and to be directed to the easy access menu.



10

2.4. Creating Material Master Record for Wheel (Semi-finished Product)

As the bicycle wheel is also a semi-finished product, transaction MMB1 is used in order to create its

material master record. The material number here is ‘RGD-WHEEL732’ with the industry sector

Mechanical Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing, MRP 1 to 4,

Work Scheduling, Accounting 1 and Costing 1. The main facts for production are plant Werk

Hamburg [1000] and the storage location [0001].

Basic Data 1, MRP 1, and MRP 2 repeat the steps explained under the previous semi-finished

products. As far as Accounting 1 view is concerned, the only difference here is the moving average

price of €58,20.

2.5. Creating Material Master Record for Pedal Assembly (Semi-finished Product)

As the pedal assembly is also a semi-finished product, transaction MMB1 is used in order to create

its material master record. The material number here is ‘RGD-PEDAL732’ with the industry sector

Mechanical Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing, MRP 1 to 4,

Work Scheduling, Accounting 1 and Costing 1. The main facts for production are plant Werk

Hamburg [1000] and the storage location [0001].

Basic Data 1, MRP 1, and MRP 2 repeat the information discussed above. As far as Accounting 1

view is concerned, the only difference here is the moving average price of €10,00.

2.6. Creating Material Master Record for Gear Wheel (Semi-finished Product)

As the bicycle wheel is also a semi-finished product, transaction code MMB1 is used in order to

create its material master record. The material number here is ‘RGD-WHEEL732’ with the industry

sector Mechanical Engineering [M]. The views of interest here are Basic Data 1 and 2, Purchasing,

MRP 1 to 4, Work Scheduling, Accounting 1 and Costing 1. The main facts for production are plant

Werk Hamburg [1000] and the storage location [0001].



11

Basic Data 1, MRP 1, and MRP 2 repeat the information discussed above. As far as Accounting 1

view is concerned, the only difference here is the moving average price of €17,00.

2.7. Creating Material Master Record for Drive Chain (Semi-finished Product)

As the drive chain is one more semi-finished product, the whole process needs to be repeated again.

Therefore, only the differences will be described here. The expression given under the material

number is ‘RGD-CHAIN732’. As far as Accounting 1 view is concerned, the moving average price

for the drive chain is set at €13,00.

2.8. Creating Material Master Record for Spoke (Raw Material)

For the purpose of producing the wheels for the bicycle, it is now necessary to create the material

master record data for all raw materials required in the manufacturing process. The detailed

description of creating all these entries will be given for the spokes. All other raw material entries

(i.e. hub, rim and cover) will be visualized in a table format.

In order to create the material master record for the raw material spoke, the transaction code MMR1

is typed in. The material number is ‘RGD-SPOKE732’. The industry sector is Mechanical

Engineering [M]. The views of interest are Basic Data 1 and 2, Purchasing and all four MRP entries,

as well as Accounting 1 and Costing 1. The Create views selected indicator is activated. In the

Organizational Levels dialog box, the main facts for the raw material are selected. These are: plant

Werk Hamburg [1000] and the storage location [0001].

When accessing the Basic Data 1 view the short text “RGD-SPOKE732” is entered. All raw materials

are measured in units [PC], belong to the area of mechanics – Material group [00104] – and are

available in Cross division [00]. As the supplier of the spokes and the final customer for the finished

product are located in Germany, the necessary entry is created in the additional data subcategory:



12

The Purchasing view is the one that is changed next. Here Frank T.’s purchasing group [012] is

chosen. Frank T. is the company’s manager who is responsible for buying the raw materials that are

needed in the production process of the wheels. He is reachable under telephone number 551-0012

in case urgent issues and problems should arise.

MRP 1 view defines the MRP type as [PD], MRP controller as [001] and the lot size as [EX]. The

next view is MRP 2. Raw materials are to be stored in the production storage location [0001] and

the storage location for EP Materiallager is [0001]. Always Backflush [1] has to be selected in order

to ensure that the goods movement is posted automatically once the production order has been

confirmed. The planned delivery time is two days and, because float times are not allowed, the

scheduling margin key is [000]. To ensure that the availability check is carried out daily, [01] is

chosen in the MRP 3 view.

Accounting 1 view: The spokes are raw materials, thus, valuation class 3000 is assigned to them.

The material ledger is not active, hence, the two methods of price control that are available are a

standard price and a moving price. Price control V (moving price) is taken because of the

assumption that price of externally purchased raw materials can change frequently. The advantage

of such a usage is that the company’s inventory costs will always reflect the current market cost.

The price of €0,10 per 1 spoke is specified. Finally, in the Costing 1 view Material origin is

activated and the data are saved.



13

2.9. Creating Material Master Record for Hub (Raw Material)

Transaction MMR1

Material RGD-HUB732

Industry Sector Mechanical Engineering

Views Basic Data 1 and 2, Purchasing, MRP 1 to 4,

Accounting 1, Costing 1

Plant [1000] Werk Hamburg

Storage Location [0001] Materiallager

Basic Data

Description RGD-HUB732

Base Unit of Measure [PC] Piece(s)

Material Group [00104] Mechanics

Division [00] Cross-division

Additional Data – Descriptions

Language [DE] German

Material description RGD-NABE732

Purchasing

Purchasing Group [012] Frank, T.

MRP 1

MRP Type [PD] MRP

MRP Controller [001] MRP CONTROLLER 001

MRP Lot Size [EX] Lot-for-lot order quantity

MRP 2

Production Storage Location [0001] Materiallager

Storage loc. for EP [0001] Materiallager

Backflush [1] Always backflush

Planned Delivery Time 2 days

Scheduling Margin Key [000]

Procurement Type [F] External procurement

MRP 3

Availability Check [01] Daily requirements

Accounting 1

Valuation Class [3000] Raw materials 1

Price Control [V] Moving average price

Moving Average Price €15,00

Costing 1

Select indicator Material origin is active



14

2.10. Creating Material Master Record for Rim (Raw Material)

Transaction MMR1

Material RGD-RIM732






Basic Data

Description RGD-RIM732






Material description RGD-RADKRANZ732

Purchasing

Purchasing Group [012] Frank T.

MRP 1

MRP Type [PD] MRP



MRP 2







MRP 3


Accounting 1




Costing 1




15

2.11. Creating Material Master Record for Cover (Raw Material)

Transaction MMR1

Material RGD-COVER732






Basic Data

Description RGD-COVER732






Material description RGD-MANTEL732

Purchasing

Purchasing Group [012] Frank T.

MRP 1

MRP Type [PD] MRP



MRP 2







MRP 3


Accounting 1




Costing 1




16

3. Creating Required Bills of Materials

A bill of material (BOM) can be described as a list of all the items that make up a product or an

assembly. The list is complete for its given purpose, has a formal structure, and states the name,

quantity, and unit of measure for each component.6 In the bicycle example, the BOM consists of

several levels and can be considered a multi-level BOM.

3.1. Creating Bill of Material for Wheel

A bill of material for the wheel RGD-WHEEL732 is created under Logistics Production

Master Data Bills of Material Bill of Material Material BOM Create (transaction code

CS01). The description is ‘RGD-WHEEL732’. The storage location is plant [1000] in Hamburg.

Production [1] is specified as the usage. The BOM validity is set to June 1 of the current fiscal year.

The list of raw materials that are required to produce one wheel are created by filling in the active

description fields of the BOM. Thus, for each component the item category [L], the component

name (e.g. RGD-SPOKE732) and the component quantity (i.e. 32 spokes, 1 hub, 1 rim and 1 cover)

are keyed in. When pressing Enter, the system is able to fill in the left blanks by accessing the

necessary information from the material master records. This, for example, includes the information

concerning the unit quantities (pieces) and the validity of all the entries from June 1, 2011 onwards

(see the screenshot below):

6 See Singh (2008), http://www.saptechies.com/bill-of-material-bom/. Accessed 02.07.2011.

http://www.saptechies.com/bill-of-material-bom/



17

3.2. Creating Bill of Material for Frame

A bill of material for the frame RGD- FRAME732 is created in the same way as for the wheel RGD-

WHEEL732 under Logistics Production Master Data Bills of Material Bill of Material

Material BOM Create (transaction code CS01). The description is ‘RGD-WHEEL732’. The

storage location is plant [1000] in Hamburg. Production [1] is specified as the usage. The BOM

validity is set to June 1 of the current fiscal year. The three items are needed in order to produce the

frame. These are RGD-PEDAL732, RGD-GEAR732 and RGD-FRAME-ASSEMBLY732, each in

the quantity of 1 piece (see the screenshot below):

3.3. Creating Bill of Material for Bicycle

Finally, the bill of material for the completed bicycle RGD-BICYCLE732 in plant [1000] for

production [1] is created. The same steps are taken again. The semi-finished products required for

production of 1 finished product are 2 wheels, 1 frame, 1 gear wheel and 1 drive chain (see the

screenshot below):



18

The completed BOM can be viewed under Logistics Production Master Data Bills of

Material Reporting BOM Explosion Material BOM Multilevel BOM (transaction code

CS12). This is a crucial step when checking whether all parts are available in the right quantity,

assembled and allocated to the right components. This should ensure a smooth production process in

the future. In the BOM header the material ‘RGD-BICYCLE732’ is entered together with the plant

[1000] and the bill of material application Production – general [PP01]. F5 (view) is pressed. In the

upcoming Display field group, the Variable list indicator is ticked and F8 is hit to execute the

petitions. The BOM appears in a text format:

To display the BOM as a graphic F5 is chosen. The graphic looks like the targeted structure

visualized on page 2 of this paper.



19

4. Creating Routings

The right coordination of the production process is essential in every business in order to maintain

efficiency and to be able to keep costs as low as possible. Thus, routings are used to define the

production process necessary to manufacture materials or to provide services in the production

industry. Additionally, they form a basis for product costing. Since it is necessary to always control

costs, this feature of a routing is of great importance. The detailed description of creating all the

necessary entries for a routing will be given on the example of the wheel. All other routings will be

visualized in a table format.

4.1. Routing for Wheel

A routing for the wheel is created by selecting Logistics Production Master Data Routings

Routings Standard Routings Create (transaction code CA01). The material number is

‘RGD-WHEEL732’, the production location is Werk Hamburg [1000] and the valid date is set at

June 1, 2011. The routing is applied for Production [1] and the status Released (general) [4] is

assigned to it. By selecting “Operations” or F7, a blank table is revealed. In the first line “Operation

0010”, work center [1410] Assembly III is keyed in. The control key is [PP01] In-house production.

The standard text key is [P000001] Material staging. Material staging implies that the material is

shifted from the main store to the production location before the whole manufacturing process

starts.7 By pressing Save the information is confirmed.

In the Operation Details screen (double-click the Description field) the time required for the main

activities is entered. 1 minute is considered to be enough for the setup activity [1422] that is aimed

to prepare materials, systems, machines and devices for the following assembly process. The labor

time (activity [1421]) is 3 minutes (for more details see the screenshot below):

7 See sap-img.com (2011), http://www.sap-img.com/warehouse/what-is-material-staging.htm. Accessed 03.07.2011.

http://www.sap-img.com/warehouse/what-is-material-staging.htm



20

After returning to the activity overview the same process is repeated to define “Operation 0020”.

The work center is [1410] Assembly III. The control key is [PP01] In-house production. It is not

necessary to fill in the Standard text key field because there is no predefined text for this activity.

“Assembly Wheel” is the description. The Operation details screen defines the machine time

(activity type [1420]) as 5 minutes and the labor time (activity type [1421]) as 10 minutes (for more

details see the screenshot below):



21

“Operation 0030” is processed in work center [1420] Assembly IV. In the inspection process several

safety aspects of the wheel are tested to ensure the quality standards. Again, the control key is

[PP01] In-house production. The standard text key is Mechanics Inspection [Q000002]. The setup

time (activity [1422]) is defined to be 1 minute; the labor time (activity [1421]) is 3 minutes (for

more details see the screenshot below):



22

The whole routing looks as follows:

a) in a text format



23

b) as a graphical display

The overview of the main transactions is as follows:

Transaction CA01

Material RGD-WHEEL732


Usage [1] Production

Status [4] Released (general)

Operation 0010

Work Center [1410] Assembly III

Control Key [PP01] In-house production

Standard Text Key [P000001] Material staging

Setup Time [1422] 1 minute

Labor Time [1421] 3 minute

Operation 0020



Standard Text Key

Setup Time

Machine Time [1420] 5 minutes

Labor Time [1421] 10 minutes

Operation 0030

Work Center [1420] Assembly IV

Control Key [PP01] In house production

Standard Text Key [Q000002] Mechanics inspection





24

4.2. Routing for Frame

Transaction CA01

Material RGD-FRAME732




Operation 0010





Labor Time [1421] 5 minute

Operation 0020



Standard Text Key

Setup Time



Operation 0030


Control Key [PP01] In house production

Standard Text Key [Q000002] Mechanics inspection




a) in a text format



25

b) as a graphical display

4.3. Routing for Bicycle

Transaction CA01

Material RGD-BICYCLE732




Operation 0010




Setup Time [1422] 4 minutes


Operation 0020


Control Key [PP99] In-house prod. milestone with GR

Standard Text Key

Setup Time [1422] 7 minutes





26


a) in a text format

a) as a graphical display



27

5. Testing the Business Process

Product costs are the sum of all costs that are incurred when producing manufactured goods or

services. Their calculation is necessary because it helps to get an overview of all costs, to choose the

adequate markup and to find a desired price that will also be accepted by customers.

5.1. Calculating Product Costs

Product costing calculates the unit cost of goods manufactured and sold. Products are priced

automatically using bills of materials and routings from Production Planning. The product cost is

calculated under Accounting Controlling Product Cost Controlling Product Cost Planning

Material Costing Cost Estimate with Quantity Structure Create (transaction code CK11N).

The estimation of costs is performed for the bicycle RGD-BICYCLE732. The production location is

[1000] Werk Hamburg. On the Costing Data tab, the Costing Variant [PPC1] Standard Cost Est.

(Mat.), Costing Version [01] and Costing Lot Size 1 are entered. All the entries are confirmed by

pressing Enter. On the Dates tab, the Costing Date From is altered to the current date of June 16,

2011 and is confirmed again. The SAP program calculates the bicycle costs based on the previously

created bills of materials and routings. The result can be viewed below:



28

As one can see, the overall manufacturing cost is €300,37. This figure is essential for many

decision-making processes, especially for determining the product price, which should not be less

than the total calculated costs.

In the itemized list for the bicycle, the system displays the manufacturing and material costs for the

semi-finished products with the production operation costs for each cost center, work center, and

activity type. The prices for the activity types are predefined in the IDES Corp:

The exact cost components can be display under Costs Display Cost Components.

should be clicked and Layout... should be chosen. Under the Cost Component Groups [1SAP02]

layout the system displays the following table:



29

This table is very helpful in differentiating between the various cost components incurred in the

production of RGD-BICYCLE732.

5.2. Updating Prices

The Price Update function is used to transfer the calculated product cost as a cost estimate to the

material master record. The cost is transferred in two steps: marking and release.

The marking is performed by selecting Logistics Production Product Cost Planning

Material Costing Price Update (transaction code CK24). It is executed in the current month of

June for the bicycle RGD-BICYCLE732. The company code is [1000] and the plant is [1000]. The

indicator from the Test Run field is removed and the marking is executed by pressing F8. The

system displays that “Of 1 materials, 1 cost estimates were updated successfully” (see below):



30

The marking can also be viewed in the material master record under Logistics Materials

Management Material Master Material Display Display Current (transaction code

MM03). The material is ‘RGD-BICYCLE732’, the plant is [1000] and the Costing 2 view is

activated. The system displays the marked future price in the left costing column (see below):

5.3. Price Release

The price is released under Logistics Production Product Cost Planning Material Costing

Price Update (transaction code CK24). Release is clicked and the current period of June 2011,

company code [1000], plant [1000] and the material RGD-BICYCLE732 are chosen. The Test Run

indicator is removed. After pressing F8 the system releases the price:

The release can be viewed in the material master record under Logistics Materials Management

Material Master Material Display Display Current (transaction code MM03). The

material is ‘RGD-BICYCLE732’, the Costing 2 view is selected and the plant is [1000] Werk

Hamburg. Now the released planned price is displayed in the middle column:



31

6. Manufacturing

The following section describes the basic process of producing a bicycle. It assumes that enough

semi-finished products are available on stock, so that no production or procurement of components

is necessary. The chapter will deal with the following steps:

Receive goods for required components

Create production order

Confirm production order

Display automatic goods movement

Check warehouse stock.

6.1. Receiving Goods for Required Components

A goods receipt is an official document that is given out in order to confirm that certain products

have been received.8 It can be accessed under Logistics Materials Management Inventory

Management Goods Movement Goods Movement (transaction code MIGO). [A01] Goods

Receipt, [R10] Others, and movement type [501] GI receipt w/o PO are chosen. At this stage it is

important to have the current date as the Document Date. On the lower screen, in the Material tab,

RGD-WHEEL732 is entered. On the next tab, a quantity of 50 pieces [PC] is defined. This specifies

that the company will require 50 wheels to be able to produce 25 bicycles. On the Where tab, plant

[1000] and storage location [0001] are entered. After that the entries are confirmed.

As the bicycle consists of more than two wheels, the Next item on the bottom of the screen is

selected and the following data are entered:

Material: RGD-FRAME732

Quantity: [PC] 25 pieces

Plant: [1000] Hamburg

Storage Location: [0001] Materiallager

8 See BusinessDictionary.com (2011), http://www.businessdictionary.com/definition/goods-receipt.html. Accessed

03.07.2011.

http://www.businessdictionary.com/definition/goods-receipt.html



32

The process is repeated for RGD-GEAR732 and RGD-CHAIN732. These items are also required in

the quantity of 25.

After that the entries are confirmed by pressing Enter and are checked by choosing Check. This

function makes it possible to view the document and to make sure that all information is accurate.

The correctness is indicated by the green circles (see below):

Now the goods receipt document is posted and saved. The material document numbers are:

4900035891 and 400035576. The amount of stock and the entry correctness can further be checked

under Environment Stock Stock/Requirements List (transaction MD04) by keying in the right

material and plant [1000]. For example, the system should display a stock quantity of 25 for frames

or 50 pieces for wheels.

6.2. Creating Production Order

A manufacturing order registers all production requirements to make sure that a required quantity

of materials or services is produced or supplied for a certain date. It further specifies the work

center and resources that are utilized in the manufacturing process. A manufacturing order is

subdivided into a production order (also called discrete manufacturing) and a process order (also

called process manufacturing).

The order for RGD-BICYCLE732 is created under Logistics Production Shop Floor Control

Order Create With Material (transaction code CO01). The production plant is [1000] and

the order type is [PP01] Standard Production Order (int. number). The information is confirmed by

pressing Enter. On the first screen (Production order Create: Header) an overall amount of 25

bicycles is typed in. As the basic dates for order type PP01 are calculated backwards, the last

working day of June 2011 is chosen as the finish date. All entries are confirmed and the basic dates

are calculated by the system:



33

The “Calculator” is picked and the system determines the planned costs for the order. To view a

copy of the routing master data and the bill of material one should first press F5 and then F6:



34

By clicking the “Flag” or choosing Functions Release, the order is released. The production order

number assigned by the system is 60003589.

6.3. Confirming Production Order

To speed up the production process, it is assumed that the production order is successfully

completed on the same day. When the material master data were created in the MRP 2 view, the

defined Backflush field made it possible to confirm the order without removing the required

components from the warehouse.

The order is confirmed under Logistics Production Shop Floor Control Confirmation

Enter For Order (transaction code CO15). Production order number 60003589 is keyed into the

Order field and confirmed. The system displays the yield to be validated in line with the planned

data (25 pieces of the bicycle RGD-BICYCLE732). The Final confirmation is selected. As

“Operation 0020” was categorized as a milestone operation in the routing, all previous operations

are also automatically confirmed, and the system posts all goods movements into and out of the

warehouse. Goods movements is clicked to display an overview:

After that the entries are saved. The confirmation is carried out successfully and the confirmation

number is 4900036145.



35

6.4. Displaying Automatic Goods Movement

The automatic goods movement document can be displayed under Logistics Materials

Management Inventory Management Material Document Display (transaction code MB03):

As one can see, at the right end of the document the system displays the movement type and a sign.

This sign indicates whether the goods movement is a receipt (+) or an issue (-). The system has now

officially taken the components for production and moved 25 bicycles to the warehouse.

Furthermore, the relevant accounting document can be viewed by selecting “Accounting

Documents” and double-clicking “Accounting Document”. The system displays the value-based

stock postings at the current moving average:



36

6.5. Checking Warehouse Stock

The warehouse stock of the materials affected by the production of RGD-BICYCLE732 is checked

under Logistics Production MRP Evaluations Stock/Requirements List (transaction

code MD04). The material number is ‘RGD-BICYCLE732’ and the plant is [1000]. The system

displays the lot of produced earlier 25 pieces as an available amount:

6.6. Calculating Manufacturing Time

The manufacturing time for producing a bicycle, a wheel or a frame can be clearly seen when

creating a production order (Operation Overview). The system estimates the required time by taking

the specified routings into account. A visual display of SAP calculations in terms of manufacturing

time can be found below:

a) RGD-BICYCLE732



37

b) RGD-FRAME732

c) RGD-WHEEL732

The required manufacturing time and the production costs are further calculated using Microsoft

Excel. The spreadsheets are attached separately.

7. Conclusion

The targeted product RGD-BICYCLE732 has been successfully created and manufactured. IDES

system is now ready to deliver the order to Cycle Ball Lovers.



38

8. Bibliography

1. BusinessDictionary.com (2011), “Goods receipt” [Online]. Available at:

http://www.businessdictionary.com/definition/goods-receipt.html. Last accessed 03.07.2011.

2. SAP Help (2011) [Online]. Available at: http://help.sap.com/. Last accessed 07.07.2011.

3. sap-img.com (2011) [Online]. Available at: http://www.sap-img.com/. Last accessed

07.07.2011.

4. Singh, Sh. (2008), “Bill of material (BOM)”, on: SAP Support Portal [Online]. Available at

http://www.saptechies.com/bill-of-material-bom/. Last accessed 02.07.2011.

5. Weidner, S. (2009), “Integration Case Study PP: SAP ERP 6.0”, for: SAP University

Competence Center [Online]. Available at: http://moodle.htw-

berlin.de/moodle/mod/resource/view.php?inpopup=true&id=18353. Last accessed 05.06.2011.

6. Wikipedia, the free encyclopedia (2011), “Fixed-gear bicycle” [Online], (last modified

2 June 2011 at 12:24). Available at: http://en.wikipedia.org/wiki/Fixed-gear_bicycle. Last

accessed 05.06.2011.

http://www.businessdictionary.com/definition/goods-receipt.html

http://help.sap.com/

http://www.sap-img.com/

http://www.saptechies.com/bill-of-material-bom/

http://moodle.htw-berlin.de/moodle/mod/resource/view.php?inpopup=true&id=18353

http://moodle.htw-berlin.de/moodle/mod/resource/view.php?inpopup=true&id=18353

http://en.wikipedia.org/wiki/Fixed-gear_bicycle

Education

Information management, SAP Project by Vanessa Günther, Alina Sachapow, Hanna Tresselt