Outlining Make-to-Order Production

Pure make-to-order production (without planning of assemblies or components) is done in SAP S/4HANA using strategy 20. In this strategy, the sales order is the defining element. Planned independent requirements are not possible for the finished product.

Procurement or production are triggered by the sales order when using strategy 20. Pure make-to-order production (without planning of assemblies or components) is done in SAP S/4HANA using strategy 20.

You make the settings for this strategy in the master of the finished product (MRP 3). The individual/collective indicators for the assemblies must be set accordingly in the corresponding master.

Together with the strategy group, the individual/collective indicator in the assemblies is the decisive factor. The consumption parameters are not relevant here.

The individual/collective requirements indicator in the material master determines whether a component is procured for a specific customer requirement in an individual segment.

The following are the options for the individual/collective requirements indicator:

• SAP S/4HANA Indicator 1:

  The SAP S/4HANA Indicator 1 for individual requirements means that the material is being specially manufactured or procured for a sales order. An individual segment is specially created for each requirement. An individual requirement is only created if the higher-level material does not generate a collective requirement.

• SAP S/4HANA Indicator 2:

  The SAP S/4HANA Indicator 2 for collective requirements means that the material is produced or procured for various requirements. The requirements are contained in the net requirements segment.

• Empty SAP S/4HANA Indicator:

  An empty SAP S/4HANA indicator means that the component is planned in the same way as the higher-level assembly. If the SAP S/4HANA indicator represents the finished product produced in make-to-order production and the indicator is blank, the constraint for make-to-order production replaces the entry with 1, which means individual requirements only.

In the example shown in the figure, Individual/Collective Indicator–Example (I), two individual segments (for sales orders A and B) are created for the shaft.

If you want to control the material item for each BOM individually in SAP S/4HANA, use the Explosion type field in the component’s item data (General Data view). The setting in the SAP S/4HANA BOM overrides the setting in the material master.

All materials that appear under one material in collective requirements in the BOM are planned as collective requirements (inheritance) irrespective of the setting in the material master.

As in make-to-order production, planning without final assembly with planning strategy 50 enables you to manufacture products specifically for a sales order. However, with this planning strategy, certain assemblies can be produced or procured before the sales order for the finished product is received.

As in make-to-order production, planning without final assembly (planning strategy 50) enables you to manufacture products specifically for a customer. However, with this planning strategy, certain assemblies can be produced or procured before the sales order for the finished product is received. At first, production does not extend to the finished product level. The material is produced up to the production stage before final assembly. The assemblies and components are stored until the sales order is received. Final assembly is only triggered upon receipt of the sales order. This strategy is useful if a large part of the value-added process occurs at final assembly.

Planning, which is independent of the sales order, takes place with the help of planned independent requirements. These planned independent requirements are created for the finished product. In the planning run, the system first creates planned orders for the finished product to cover these requirements. You cannot convert these planned orders into production orders (planned orders without a conversion indicator and the order type VP). You can only convert planned orders into production orders after receiving the sales order. This process triggers final assembly. However, if there is a material shortage, the system creates planned orders at assembly and component levels in the planning run. These planned orders can be converted into production orders or purchase requisitions since production and procurement have already been triggered for the lower production levels before the sales order is received.

The planning without final assembly strategy enables you to reduce delivery times (since production can access existing assemblies and components without delay) without having to carry out final assembly for the product.

The receipt of the sales order triggers the final assembly. The sales order appears within an individual customer segment in which planning is performed separately for the sales order. In the next planning run, the system creates a planned order for the newly created sales order in the individual customer segment. This planned order can be converted into a production order, which then allows final assembly.

In the planning segment, however, the planned order quantity for the planned order without conversion indicator (with the order type VP) is reduced by MRP in accordance with the new requirements situation.

In this strategy, you manage the sales order in the individual customer planning segment. Alternatively, you can manage the sales order in the net requirements segment (planning strategy 52). If you choose this procedure, you have to work with the lot-sizing procedure with lot-for-lot order quantity. In this case, you must not maintain the rounding value, rounding profile, and the minimum or maximum lot sizes. Furthermore, stocks are not considered.

Consider a situation in which a planned independent requirement of 100 pieces exists and you receive a sales order for 40 pieces, which consumes the planned independent requirements. In this situation, the sales order for 40 pieces remains in the individual customer planning segment and a planned independent requirement for 60 pieces in the forecast segment. When you plan the product again in the next planning run, the system creates a planned order for 40 pieces in the individual customer planning segment, which you can convert into a production order. At the same time, the system reduces the existing planned orders in the planning segment from 100 to 60 pieces.

Maintain strategy group 50 (on the MRP 3 view) for the finished product, and also maintain the consumption parameters. Maintain the individual/collective indicator 2 in the material master for the assemblies that are to be procured and stored (supplied for storage) before the sales order is received. It is also possible that production for the finished product and special assemblies is triggered upon receipt of a sales order.

If a large part of the value added process occurs at final assembly, use planning without final assembly (planning strategy 50). The final assembly is not triggered until a sales order is available. The storage level is always below the finished product level.

If the stocking level (the amount up to which is produced to stock) is not directly below the finished product within the product structure, you can move the stocking level for certain materials. If you set the individual/collective indicator to 1 (individual requirements only) or leave it empty (individual and collective requirement) in the material master (material requirements planning (MRP) view) for the material assembly 2, it is produced for the sales order when the sales order is received and not produced to stock in advance (planned order with VP status). Only the components of material assembly 2 are procured and stored before the sales order is received. Therefore, you must set the individual/collective indicator to 2 (collective requirements only) for the components of assembly 2 as well. You must enter the strategy group for the finished product only.

If you do not wish to create IndR (that is, of VP status) planned orders in all BOMs for a particular material, you can assign the Planning off explosion control indicator in the Basic Data for the BOM item. You define this indicator under Define Explosion Types in Customizing for BOMs.

Capacity evaluations are possible for planned orders with order type VP. You can use planned orders with order type VP for external procurement, subcontracting, stock transfer, or direct production. However, it is not possible to change these orders manually and convert them into production orders or purchase orders.