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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.