What are key steps in production order execution?

There are three types of production process in SAP.

1. Discrete Manufacturing
2. Repetitive Manufacturing
3. Production – Process Industries.
Configuration settings related to Discrete Manufacturing and

essential Repetitive manufacturing is discussed in detail here.

First let us understand what is happening in the system prior

to the production execution process.

a. Planning quantities are derived and maintained in

the system.
b. Material Requirement Planning run will generate

the planned order for the net required quantity with

the start date of the production process

c. Master data (BOM and Routing details) will be

copied in to the planned order automatically during

MRP run.

Guys, I believe you got an idea about the steps involved prior
to the production execution process. OK, let’s discuss about

the production execution process now.

Production Execution process contains five important steps.

They are

1. Converting planned order to production order

2. Releasing the production order

3. Goods Issue for production order

4. Confirmation of production order

5. Goods Receipt against production order
1. Converting planned order to production order:-

Planned order has to be converted to production order to

account the entire production.
Production order or process order type has to be

mentioned when converting the planned order. Entire

master data will be copied to the respective order when

converting the planned order.

Order type is the most important configuration setting for

production execution.

2. Releasing the production order:-

Release of production order is an important step in
production order. Releasing of production order indicates

the commencement of production. Unless the order is

released, further processing of order is not possible.

While releasing the production order system can perform

1 Material availability

2 Capacity availability

3 Creation of Batch
4 Reservation creation
Configuration settings related to the above functions are
covered in Availability check, order type parameters.

3. Goods Issue for production order:-

Goods issue covers issuing required components to make
the finished product to a production order. While making

the goods issue, the document number can be updated in

the production order.
Configuration setting related to this is discussed in order

type parameter.
Goods issue can be made in parallel during confirmation

of operation. Relevant configuration settings related to

goods issue during confirmation are discussed in

confirmation parameter.

4. Confirmation of production order:-

Reporting of usage of components and activities are
termed as confirmation.
Confirmation to the each operation will be executed

according to the control key attached with each

operation.

Confirmation configuration setting controls

Adhering to the sequence of operation

Under delivery / over delivery tolerance

Back-flush components
Proposal and calculation of activity standard value

Above configuration settings are discussed in

confirmation parameter.
5. Goods Receipt against production order:-
Once the production is completed, finished products will
be received from the production order into the respective

storage area.

This can be achieved through two ways

1. Through confirmation
2. Through separate transaction.
Document number will be generated for each goods

receipt. This document number can be updated in the

production or process order.

Configuration settings related to these are discussed in

Production scheduling profile and order type parameter.

Now you will easily understand what is backflush? It is the

process of issuing components automatically while confirming

the production or process order.

Hope the above briefing has given you the enough idea to go

ahead for configuration of production execution process.

Business process reengineering (BPR) involves the examination and redesign of business
processes and workflows in your organization. A business process is a set of related work activities
that are performed by employees to achieve business goals. Basically, a business process is the
way we perform our work and business process reengineering is the process of changing the way
we do our work so we do it better to accomplish the goals of our business.

The concept of business process reengineering (BPR) is to rethink and break down existing
business processes. This allows a company to reduce costs and improve
productivity through newer, more efficient processes. It is important to remember however,
that though there are instances where this is necessary, business process reengineering is
not without its disadvantages. This makes it vital to weigh your decision carefully. One of
the most obvious adverse effects of a company’s decision to reengineer is a lowered
employee morale. Most people are vary of change and do not manage to adapt to it easily.
This aspect needs to be kept in mind when trying to make the decision to go through with
the activity

There are a lot of both successful and catastrophic business process reengineering
examples in history, one of the most famous being that of Ford.

BPR Examples: Ford Motors

One of the most referenced business process reengineering examples is the case
of Ford, an automobile manufacturing company.

In the 1980s, the American automobile industry was in a depression, and in an attempt
to cut costs, Ford decided to scrutinize some of their departments in an attempt to find
inefficient processes.

One of their findings was that the accounts payable department was not as efficient as it
could be: their accounts payable division consisted of 500 people, as opposed to
Mazda’s (their partner) 5.

While Mazda was a smaller company, Ford estimated that their department was still 5
times bigger than it should have been.

Accordingly, Ford management set themselves a quantifiable goal: to reduce the

number of clerks working in accounts payable by a couple of hundred employees.
Then, they launched a business process reengineering initiative to figure out why was
the department so overstaffed.

They analyzed the current system, and found out that it worked as follows:

1. When the purchasing department would write a purchase order, they sent a copy to
accounts payable.
2. Then, the material control would receive the goods, and send a copy of the related
document to accounts payable.
3. At the same time, the vendor would send a receipt for the goods to accounts
payable.
Then, the clerk at the accounts payable department would have to match the three
orders, and if they matched, he or she would issue the payment. This, of course, took a
lot of manpower in the department.

Old Payable Process

So, as is the case with BPR, Ford completely recreated the process digitally.

1. Purchasing issues an order and inputs it into an online database.

2. Material control receives the goods and cross-references with the database to make
sure it matches an order.
3. If there’s a match, material control accepts the order on the computer.
New payable process

This way, the need for accounts payable clerks to match the orders was completely
eliminated.

What are different Planning strategies?

Make to Stock Planning strategy

This is planning strategy where stock is produced without sales order. It is used to
meet customer demands in future.

When you use Planning strategy 10, only PIR quantity is considered for MRP run and
sales order are completely ignored. In this PIR requirement type LSF and is reduced
when you deliver stock to customer.

When you use Planning strategy 40, for MRP run maximum of 2 PIR and Sales order
can be considered and PIR is reduced when enter the Sales order. PIR requirement
type is VSF in this case.

Make to Order planning strategy

In this planning strategy, finish products are not produced until you receive sales order
from a customer. For MRP run, you only consider Sales order.

In MTO strategy, you only produce sales order stock and products are delivered as per
sales orders from specific customer.
You use Planning strategy 20 for make to order MTO process and planning strategy 25
is used to produce product variants when there is request for variant products from
customer.