The Production Process

1. The Production Process

2. Introduction • Production is both a SCM function and an accounting function • Simply put, the process involves turning raw materials into finished goods • YOUR BOOK DOES A VERY GOOD JOB WITH THIS TOPIC

3. Production Steps

5. Types of Production (1) • Discrete manufacturing • The result is an individual unit (or many of them) such as a bicycle • The finished good “could” be decomposed back into its raw materials • Production lines are set up and torn down to make batches of different materials • Hewlett Packard

6. Types of Production (2) • Repetitive manufacturing • Similar to discrete manufacturing • The same finished good is produced over time on the same production line • The production line is not changed to make different products • Used when production lines are very expensive • Intel (Chips) • Seagate (Disks)

7. Types of Production (3) • Process manufacturing • Products are made by means of a recipe • Categories • Continuous (flow) • Gasoline • Batch • Soda and beer • We will not work with these

8. Means of Production • Triggers cause production runs to be executed • Make to stock • Make a batch resulting from MRP or other production trigger • Make to order • Make a unit(s) as a result of a customer order • Dell

9. Production Master Data • Bill of materials (BOM) contains components that make up a product or assembly • Work centers are locations within a plant where production operations are performed • Product routings list the activities involved in producing the product defined by the BOM • Product groups are used in planning to aggregate planning activities

10. Bill of Materials (Overview) • In general, the components needed to produce semi-finished goods or finished goods • In the case of process manufacturing, we call a BOM a formula or recipe • We will focus on discrete manufacturing

11. Bill of Materials (SAP) • SAP implements BOM as a flat structure • Hierarchical BOMs can be created using “component” materials (assemblies) • The BOM structure should mimic the manufacturing process • See the BOMs in Figure 6-4 on page 184

12. Bill of Materials (Organization) • A BOM applies to a “plant” • Different plants might make the same finished good using a different BOM • A material can have “alternate” BOMs • These might be used for different processes having different lot sizes • This is more common in process manufacturing • We will not work with alternate BOMS

13. Bill of Materials (Organization) • Header section • Applicable to the finished good • List the plant and BOM number • The purpose of the BOM (production, engineering, plant maintenance) • Base quantity • Minimum and maximum lot size

14. Bill of Materials (Organization) • BOM Header

15. BOM Usage • (+must, .can, -cannot)

16. Bill of Materials (Organization) • Items section • The raw materials that go into making the finished good • Item type • Item • Item quantity

17. Bill of Materials (Organization)

18. Bill of Materials (Organization)

19. Bill of Material (Item Categories) • Inventory is maintained for stock items (L) • Inventory is not maintained for non-stock items (N) • Variable sized items (R) are available in different dimensions (quantities) • Lumber, for example

20. Bill of Material (Item Categories) • Document items (D) represent applicable documentation • Manuals, for example • Class Items (K) are used in variant (configurable) BOMs • Different paint colors perhaps

21. BOM Complexity • A 747-400 contains • 6.5 million parts • Countless assemblies • The process requires that many parts are inspected before, during, and after installation

22. Bill of Materials (Navigation) • Logistics / Production / Master Data / Bills of Material / Bill of Material / Material BOM • CS01 – Create • CS02 – Change • CS03 – Display

23. Work Center (Introduction) • “A resource used to produce a material” • It can be a machine, a group of machines, or an entire production line • It can be a person or group of people (labor)

24. Work Center (Introduction) • Work centers can be arranged hierarchically • Work centers have capacities • They can produce finite outputs given a set of constraints • People work 8 hours a day • Machines can perform at some speed

25. Work Center (Global Bike) • We have work centers for • Bike Assembly • Inspection • Packaging

26. Work Centers (SAP) • A workcenter belongs to a plant • Work centers have a category that describes the work center • Machine / Labor / Production line / Etc.. • A work center has a standard value key • These are activities that consume time • Setup • Processing • Teardown

27. Work Centers (SAP) • Control keys define how an operation is scheduled • Default values containing wage data can be associated with a work center • Note that work centers are associated with cost centers. This is how we allocate production costs • See Figure 6-7 page 189

28. Work Center Categories

29. Work Center (Navigation) • Logistics / Production / Master Data / Work Centers • CR01 – Create • CR02 – Change • CR03 – Display

30. Work Center (Basic Data)

31. Work Center (Scheduling)

32. Work Center (Costing)

33. Routings (Introduction) • These are the detailed operations performed by (at) one or more work centers to produce a finished good • Think of the detailed operations required for an assembly line to run • Routing Sequences Have • Operations that get performed • Material(s) required • Routings apply to a material and plant

34. Routing (Header) • Task (production / plant maintenance / …)

35. Routing Sequences • Routing sequences • Using sequences, you can create standard and parallel sequences • Sequences are performed “in-order” • Alternate sequences might be performed in place of standard sequences

36. Routing (Operations) • The tasks we perform to manufacture • Data • The time it takes to perform the task • How many items are processed per interval of time • Setup, labor, machine • Steps in a routing operation are performed by a work center

37. Production Routing for (DXTR1000) (Operations)

38. Production Routing (Materials) • The materials needed to produce the good • This information comes from the BOM

39. Production Routing for (DXTR1000) (Materials)

40. Routing (Navigation Path) • Logistics / Production / Master Data / Routings / Routings / Standard Routings • CA01 Create / CA02 Change / CA03 Display

41. Production Capacity • Production has a capacity that relies on • A factory calendar describing workdays and holidays • A capacity for people and machines • Some number of shifts that workers work • Look at page 195 in your text.

42. Production Capacity (Factory Calendar) • Multiple calendars describe • Public holidays and the current • The calendar used by the factory • The assignment of a calendar to a plant

43. Production Capacity (Factory Calendar) • Holiday calendar

44. Maintaining Capacities • Each work center in a plant has a capacity • A capacity name (SHIFT for example) • A capacity category (machine or person for example)

45. Maintaining Capacities • Capacity header describes available capacity

46. Maintaining Capacities • Global Bike runs 1 shift with 1 hours of breaks per shift

47. The Production Process (Overview) • Request production • Authorize production • Release production order • Goods issue to production order • Actual production • Production confirmation • Goods receipt into inventory

48. Request Production • Production is typically requested because of a trigger • A customer order (make-to-order) • An MRP • Manual creation • In the end, a production order gets generated

49. Authorize Production • This is the actual commitment to produce • Production (machine / people) time is allocated for specific dates • Authorization might be created from planned or unplanned orders

50. Authorize Production (SAP) • Production might be authorized because of • Planned production / a sales order / for a material (finished good) • We get preliminary estimates of cost • Logistics / Production / Shop Floor Control / Order / create • C001