Processing Production Orders

This lesson focuses on production execution – shop floor processing in SAP S/4HANA as highlighted in the graphic below. The steps for production execution take place in the production module (PP) of SAP S/4HANA.

Scenario: As a result of the materials requirements planning, you received as input planned orders for production execution. The created purchase requisitions will be processed by the purchasing department. Here you will focus on the in-house Production.

Production orders control the whole process of in-house production of products. They are a central part of a complex process chain starting with a Planned Independent Requirement (PIR) or sales order and ending with the goods receipt of the finished product.

Key features:

• Important steps in production order processing are order creation, scheduling, release, material withdrawal, confirmation, goods receipt, and settlement.
• Production orders are integrated into the functions of capacity requirements planning, costing, inventory management, and into many other applications.

The following graphic provides an overview of the integration of production orders and other applications.

Production orders include the following information:

The order release is the basis for the further processing of the production order. Production orders have a status management that controls the possible processing sequence of the individual business processes. When an order is released, a status is set accordingly.

The production order must have a Released status so that the business processes for production order execution can be performed.

An availability check can be executed automatically.

The goods issue posting is executed for consumption of a material component for a production order.

Options to post goods issue:

• Picking List You can use a picking function to prepare and post material withdrawals. You can use this function to create and print a picking list and post the material withdrawals.

• Goods Movement in Inventory Management: You can use the Goods Movement app / transaction in inventory management to post the goods issues.

• Backflushing: A material component withdrawal can be posted automatically (backflushing), synchronously or asynchronously when an operation or the order is confirmed. Always use backflushing when you do not want to stage materials for a specific order. It is assumed that the material is staged and available at the work center.

  Typical application areas are flow and assembly lines and the staging of less valuable materials.

  You can control backflushing in the material master, in the work center or for each BOM component assignment to an operation.

Effects of Goods Issue Posting

The following graphic illustrate the effects of goods issue posting.

1. Stock Quantity: To document the quantity changes for the materials, we generate a materials document. Here we would see the movement types as well.

2. Account Determination: The accounts posted are determined automatically in the background using a functionality called: MM account determination.

3. G/L Accounts: As we change the inventory while consuming products, we post to G/L Accounts. This could be balance sheet account as consumption accounts. This is documented by the accounting document.

4. Point of Consumption: The goods issue (Gl) is posted to a costing object. For our example the Gl is posted to Production Order. The costs for consuming the products are posted as actual costs to the production order.

5. Goods Issue Slip: If required, you can print a Goods Issue Slip.

Time confirmations are an important element of production orders.

1. Confirmations are the premise for progress control and basis for entering internal activities.
2. They should be as prompt and efficient as possible.
3. Confirmations from process control systems are possible using various interfaces.

Explore the chart below to learn more about the different functions that can work with the data from time confirmations.

1. Capacity Requirements: Open Capacity requirements are reduced during confirmation.
2. Material Documents: Automatic Goods Movement postings (GR and GI) can occur during time confirmation. This would result in Material Documents being posted during confirmation of time.
3. Confirm: Time confirmations can be automatic or manual.
   • Automatic: Process control
   • Manual:Online apps/transactions; Mass processing
4. Actual Costs: For the time processed, the system posts actual labor and/or machine costs to the production order at the tariff of the cost center and activity type assigned to the work center.
5. HR Data: If assigned to a personal master data record, relevant data could be handed over to HCM for payroll, for example.

During the confirmation of time, the work center records the time that has been used for the production steps. As the work center is assigned to a cost center providing different activity types, actual costs are posted to the production order by the confirmation of time.

The graphic below shows what processes are triggered next.

The following processes are triggered:

1. Automatic Goods Receipt
2. Order
   • Status
   • Activities/Quantities
   • Actual Costs
3. HR Data Transfer
4. Backflush Goods Issue
5. Reduce capacity requirements
6. Actual Costs

Scenario: In the bike company in our example the planned number of eBikes is successfully produced. You post a goods receipt. Goods receipts are handled in Inventory Management.

What processes are triggered now? The following graphic provides an overview.

1. Stock/Requirements list: The production order is deleted in the stock/requirements list and in the product view.
2. Stock Quantity: The quantity in the storage location in inventory management is increased.
3. Account Determination: The account determination takes place automatically using the MM account determination from Customizing.
4. G/L Accounts:
   • Stock Account
   • Plant Activity
   During the GR posting the Stock Account is debited and the plant activity account is credited.
5. Order:
   • Status
   • Quantity
   • Actual Costs
   The order status and the delivery quantity are updated. Actual costs are determined (evaluated) and credited to the order.
6. Material Document: Material, accounting, and controlling documents are generated.
7. EWM Inbound Delivery Order: When you use EWM, you need to create an Inbound Delivery Order for putaway and processing the steps in the Warehouse.
8. Goods Receipt Slip: The Goods Receipt is posted with movement type 101. A movement type is always necessary when posting goods movements.

As the process flow of a production order is controlled by the system status (for example CRTD for created or REL for released) the order should be technically completed once the order is finished from a production point of view. The status is then TECO: technical completed

When setting an order to TECO, the order is closed and cannot be changed any more. As subsequent activities, the period end closing procedures will take place.