Production Planning and Management Summary

Production Planning Overview

• Production planning involves generating planned orders from various inputs. These can come from fulfillment or project management, especially when in-house materials are needed.
• Project management entails checking material availability; if insufficient, a planned order is generated for additional production.

Material Planning

• Material buying ensures the balance of stock levels to avoid excess inventory or stock-outs, which can incur costs.
• Levels to maintain:
• Maximum level
• Reorder level
• Safety stock
• Buffer stock
• Planned orders can be manually or automatically created, providing flexibility in production management.

Production Order Concepts

• A production order transforms from a planned order and needs to be scheduled for actual production.
• Key initial outcomes of a production order include:
• Scheduling
• Capacity planning
• Availability checks
• Reservations
• Preliminary costing
• Purchase requisitions
• Production orders must be released before further processing steps can take place such as:
• Goods movement
• Confirmation of labor hours
• Cost payments
• The initial production order status is "CRT" (created).

Order Release Status

• Upon release of the order, several operational aspects become actionable:
• Confirmation of labor hours logged
• Document printing and adjustments
• An order can be released fully or partially, affecting how associated operations are managed.

Goods Movement

• Refers to the movement of raw materials or semi-finished products from inventory into the production process.
• Two primary types of movements are:
• Goods issue (e.g., moving materials into production)
• Goods receipt (e.g., received finished goods into inventory)
• Each movement type affects inventory accounts and is documented for tracking costs and processes.

Work In Progress (WIP)

• Represents inventory still in production and carries a value between raw material and finished goods.
• WIP valuation is important for accurate financial statements and asset management.
• Evaluation of WIP is essential for ongoing accounting processes.

Enterprise Structure

• Organizational data includes plants, controlling areas, and work centers.
• Multiple work centers can exist within a single plant, each with defined tasks and capabilities for production.
• Master data must be assigned to work center locations for effective operation.

Master Data in Production

• Essential constructs include work center locations, material master data, and production resource tools (PRT).
• The setup ensures that all necessary data is available for effective execution of production tasks.

Production Scheduling

• Scheduling parameters help monitor production flow and ensure deadlines are met.
• Schedulers must follow guidelines established in production profiles to maintain efficiency.

Production Order Confirmation

• Confirmation involves recording the actual events of production operations, including labor hours and resource usage.
• Parameters allow for immediate or delayed confirmations and tracking of tolerance levels between planned and actual execution.

Costing in Production

• Planned costs should align with actual production costs, impacting financial accounting and controlling functions.
• Variants in costs are settled in general ledgers to reflect actual production outcomes.

Bill of Materials (BOM)

• BOM defines the components required for production and can exist in single or multi-level structures.
• MRP (Material Requirements Planning) ensures that necessary materials are available for production and that inventory levels are optimized.
• It reacts to both oversupply and shortages, creating a balanced operational workflow.

Integration Points

• Various components of production (like purchasing and costs) integrate within systems to manage overall activity flows effectively.
• Many parameters must be set for smooth operation across the different business processes tied to production and resource management.

Handling Variance in Production Costs

• Settlements capture actual operational costs to compare with planned costs, identifying areas for efficiency improvement.
• Consistent tracking of costs aids accountability and financial reporting accuracy.