Running the Production Process in SAP Business One

The production process starts with creating a Production Order. This is the main document in the production process. It records the progress of the production process for each item produced.

Before work can begin, the Production Order status must be changed to Released. At this point, the Production Order can begin collecting the costs of production.

Components used in the production process can then be released to the shop floor (depending on the issuing method). When all work is done, you report completion of the production order. At this point, the finished items are received in the warehouse.

Note that when the automatic method for issuing components to the shop floor is selected, the components and resources are reported as issued as soon as you report completion.

When the production process is over, the Production Order is closed. This closure creates a journal entry for balancing inventory accounts at perpetual inventory-managed companies.

A Production Order is a command to produce (or repair) a production item.

A Bill of Material (BOM) is copied into the Production Order document. Then the needed quantity of finished item is entered together with the desired due date of production and other relevant data.

The Production Order also tracks all the material transactions and costs that are involved in the production process.

Note that production orders can be generated in the MRP and Pick and Pack and Production processes as well. These topic are covered in details in the MRP and Picking Process course topics.

This is the header of a Production Order for a Decorative Wooden Door BOM (Bill of Materials).

Once you select the item to produce in the Products No. field, the data is copied from the Bill of Materials document to the Production Order.

At the header of the document, in the Planned Quantity field, the production manager indicated that he wants to produce 10 Decorative Wooden Doors. The Base Quantity of components in the rows is multiplied by this Planned Quantity.

Use the Priority field to manually determine the priority of a production order for example set the value 1 for the highest priority. By default the value is set to 100. OC WoodTrend gives higher priorities to large orders. The priority field is displayed in the Pick Pack and Production window and in the Open Items List report.

When opening a Production Order, the status of the order is set to Planned. In this status, you cannot issue components or report completion of the Production Order. However, you can make changes to the data in the Production Order. Later on, to proceed to the next step in the production process, the production manager changes the status to Released.

Look at the dates on the right hand of the image. The Order Date is the date the Production Order was posted and the Start date and end date are the planned date range for this production process.

By default, the due date equals the start date + lead time of the produced item if it exists. This lead time is defined in the item master data, in the planning tab and is used in production and MRP process to define the expected time for purchasing or manufacturing an item.

The Start Date can provide additional flexibility for the production manager in scheduling production orders.

Note that header information is also used as a basis or default for the production order rows. Let us examine the production order rows in the next slide.

You can see that row data was also copied to the production order but changes can still be applied.

Use the arrows on the right to define the correct sequence of the rows or change data in the rows.

The Production Time field indicates the total calculated resource time in the row.The Base Quantity was copied from the BOM and the Planned Quantity was calculated according to the header planned quantity that the production manager entered.

There is also a status in the row level. This status can be adjusted manually. It is not affected by the status in the header and it is used for information only.

You can see date fields in the rows as well. By default, the Start Date and End Dates in the rows are copied from the Start Date and Due Date of the header respectively. When you change a date in the header you can choose to apply the changes to the rows. In this basic scenario, the decorative wooden door is manufactured in one day so the start date and end date are the same in all rows.

Let us start the production process for the Decorative Wooden Door.

Once the production order is entered, the following happens:

- The quantity of the item components of the production order is subtracted from the Available quantity of the items and became a Committed quantity (we can see it in the Item Master Data → Inventory tab).

- The capacity of the resources of the production order is subtracted from the Internal Capacity and became a Committed Capacity (More about resource capacity in the Resource Capacity training).

The production manager changes the status of the order to Released to start the production process.

Once the status has been set to Released, we can:

issue components (depending on the issue method),

receive the produced item into inventory and

report completion for the production order.

You still have the option to add or change components and resources that have not yet been issued.

Since OC WoodTrend manages the shop floor area as a separate warehouse, the production manager transfers the components from the main warehouse to the shop floor. He does this by creating an inventory transfer from the context menu of the production order.

At the end of the process, the production manager reports completion of production.

From the context menu he chooses Report Completion.

When reporting completion, the system automatically:

• Receives the finished product into inventory by adding a Receipt from Production document.
• Issues backflushed components by adding an Issue for Production document.
• Calculates the cost of producing the item.

Note: a Receipt from Production document can be issued also from the Production menu entry.

This slide summarizes the changes made in the inventory data during the production process.

When the production status is planned, a commitment is created for the components and the ordered quantity of the produced item increases.

When the Production Order is completed, the finished product is received in inventory.

Remember that components may be issued in different stages in the production process according to their issue method (manual or backflush).

Note that it is possible to view inventory changes (and the costing) of each component by production order, by entering the Variance Report from the Summary tab of the order.

Here are some key points about production process to take away from this session:

• The Production Order is based on the Bill of Materials.
• A Production Order is in a planning state until its status changes to Released. When the production order is released to the shop floor, components (items and resources) can be issued to production and work can begin.
• Components are issued when an Issue for Production document is added.
• Components can be issued using either the Manual or the Backflush method.
• With the Backflush method, once a Receipt from Production is created, the items are automatically issued for production.
• The manual issue method allows you to issue the components precisely when they are required in the production process and also issue a partial quantity, even before reporting completion.
• When you report completion, the system automatically receives the finished product in inventory and issues backflushed components

• OC WoodTrend produce wooden furniture.
• For complex manufacturing, OC WoodTrend defined bill of materials with routing that include sequenced stages and date dependencies.
• They want to start producing these bill of materials.

In this scenario we examine the production process of a White Cabinet bill of materials.

There are 4 stages in the production process of the cabinet: Cutting, Sanding, Painting and Assembly as shown in the image.

This bill of materials is copied to the Production Order.

This is a production order for the White Cabinet bill of materials.

As explained in the Bill of Materials topic, a bill of materials with routing consists of several stages where each stage groups a set of items and resources that are relevant for the stage.

In the image we see two of the stages. Beneath each stage we can see the components related to that stage. This display can be adjusted from the context menu or from the Go To menu at the top of the screen.

In addition, production orders with routing allow optional automated calculation of date dependencies between the route stages. The system can automatically schedule the start and end dates of both item and resource components to more relevant dates. This will be further discussed in the next slides.

When using production orders with routing, it is important to understand how the Routing Date Calculation field and function works.

This definition in the production order can affect the start date and end date of each row in the production order as well as the resource capacity allocation in the row.

Depending on the routing date calculation value, it may also affect the start date and due date in the header.

Date scheduling is also relevant for item components because their row start date impacts the MRP.

OC WoodTrend manage resource capacity to make sure a given resource is available during production and to be able to plan production ahead.

There are four methods of routing date calculation: On Start Date, On End Date, Start Date Forwards, and End Date Forwards.

Let us examine them in the next slide.

The start date and end date in the header are the time range for the consumption of the component in the production order.

However different calculation methods may set different start and end dates of the stages within this range.

With methods: On Start Date and On End Date, there are no date dependencies between stages in the order.

The start date of all stages is defaulted from the start date of the header.

The end date of all stages is defaulted from the due date of the header.

With the On Start Date method, resources are allocated to the stage start date and with the On End Date method, resources are allocated to the end date of the stage.

The other two methods are more sophisticated:

With the Start Date Forwards method the start date from the header is copied to the start date of the first stage. Then if there is not enough capacity to meet the planned quantity of the resource, the system continues to allocate resource capacity in the coming days until all planned capacity is fully allocated. The end date of this stage is the last day of capacity allocation.The next stage start date is the end date of the previous stage.When the last stage is reached, the end date is set to the header's due date.Note that capacity allocation is calculated from the beginning of the day.

The End Date Backwards method works similarly but starting from the end date of the last stage.

The header's due date is copied to the end date of the last stage. Then if there is not enough capacity to meet the planned quantity of the resource, the system continues to allocate resource capacity for each day backwards, until all planned capacity is allocated. The start date of this stage will be the last day of capacity allocation.The previous stage end date will be the start date of the last stage calculated.

When reaching the first stage, the start date is set to the header's start date.

Note that capacity allocation is calculated from the end of the day.

Also note that with these two methods the production order will only consider a capacity type called: Single Run Capacity. This type of capacity assumes that only one resource can be used at a time.

Let us examine this scenario for the Start Date Forwards and End Date Backwards methods.

We examine the effect on start date and end date of a stage and on resource capacity allocation.

In our scenario, the resource planned quantity in the stage = 12.

The available single run capacity is set to 4 in day 1, 6 in day 2, 4 in day 3 and 10 on day 4.

When using the Start Date Forwards routing date calculation, the system starts to allocate the available capacity to reach the capacity needed for this stage, from the start date of the stage (day 1).To allocate 12 resource units, the system consumes the entire 4 units from day 1, then another 6 from the day 2, and lastly, another 2 of the 4 units available on day 3. This also means that it takes 2 full days of the resource available time + 2 out of 4 resource units which equals half a resource day. Therefore the required days = 2.5 days.

When using the End Date Backwards routing date calculation, the system starts to allocate from the end date of the stage (day 4).The system consumes the entire 10 units available on day 4 and another 2 out of the 4 available in day 3. With this method the required days = 1.5 days.

There are several calculation fields in the production order that provide information about times in production. This training covers a few of them.

This is an illustration of a stage in our bill of materials - the painting stage.

For each resource row there are calculated required days. The required days of the stage is the maximum required days value of all resource rows in the stage.

We also learned about the Waiting Days field in the Bill of Materials training. This is a manually added value that reflects waiting times between stages.

For the cabinet, after the painting stage is done, 1 waiting day is needed for the paint to dry.

These Waiting Days are added to the Required Days and sum up to the Total Days value of 2.5.

The resource Production Time is the planned resource quantity expressed in time (according to the time per resource unit field in the resource master data).

In this case it is a total of 10 hours for the painting machine and 5 hours for the machine operator.

To calculate the production time of a stage, the system simply takes the largest production time of all resource rows in the stage - in this case it is 10.

It is important to understand the main difference between Production Time and Required Days values. For example, the Production Time in the row may represent the actual machining time of a resource whereas the Required Days is the total time that the resource has to be allocated to this task overall.

In a production order with routing, manual changes made in the production order header or rows may require recalculation of row dates and resource capacity allocation.

The system does not trigger this update automatically, but instead allows the user to decide whether to update the rows or not.To indicate to the user that an update is advised, the button Update Now turns red as shown in the image.

At OC WoodTrend there is a need to recalculate stage dates when the production start date is postponed and the routing date calculation is Start Date Forwards.

Once the production manager changes the start date in the header of the production order, the Update Now button turns red. The production manager chooses the button and a system message appears asking the user for permission to update the rows date accordingly.

A similar procedure happens, when a certain resource is replaced with another resource. Since the new resource has a different production time and available capacity, the production manager chooses the red button to update stage start and end dates and the resource capacity allocation.

After a production order is released, the production manager in OC WoodTrend issues components to production one stage at a time.

Issuing components from a production order with routing, can be done per route stage.

From the Production Order context menu, He chooses the option Issue Components which displays the Issue Components - Selection Criteria window. From this window he can adjust the stages or components to issue. Remember that only manual issue items are available for issue.

Here are some key points about production order with routing:

• A production order with routing is based on a BOM with routing and composed of stages.
• Each stage may contain several component rows and different production calculations at the stage level.
• The routing date calculation method:
• Can set date dependencies between the different stages and update the stages dates accordingly
• Can set the resource capacity allocation according to the single run capacity defined for the resource
• Manual changes made in the production order header or rows may raise the need to recalculate row dates and resource capacity allocation. When the system recognizes this scenario, the Update Now button turns red, alerting the user to choose the button and thus activate this update.