Outlining Production Types

Production orders are a central part of a complex process chain, starting with a requirement (planned independent requirement (PIR) or sales order) and ending with the goods receipt of the finished product. They control the whole process of in-house production of products. Depending on the manufacturing process, product complexity, stability of production, and other criteria, a company has various requirements with regards to shop floor control. For this reason, SAP S/4HANA supports the following different production order types:

• Production Orders for Discrete Industries

  A production order is usually used to plan and execute manufacturing processes in discrete manufacturing industries. It is primarily designed for engineering, automotive and plant engineering, consumer goods, construction, wood-working, electronics industry, aerospace and defense, and so on. From a management perspective, you want to track and analyze each order individually, for example, with respect to order status and costs.

• Process Orders for Process Industries

  A process order provides an integrated tool for planning and execution in (usually batch-oriented) process manufacturing industries. It is primarily designed for the chemical, pharmaceutical, food and beverage industries, as well as the batch-oriented electronics industry. From a management perspective, you want to track and analyze each order individually, for example, with respect to order status and costs.

• Repetitive Manufacturing

  Repetitive manufacturing in SAP S/4HANA can be used for production planning and execution in a repetitive manufacturing environment. You can use repetitive manufacturing for either make-to-stock or make-to-order processes, such as in the automotive industry, for example. In contrast to manufacturing with production or process orders, you want to manufacture certain product quantities on a period basis and are therefore not interested in the individual details of each order.

  In general, you can distinguish between order-related production, which is used in discrete industries and process industries, and repetitive manufacturing, which is mainly used in discrete industries. In the following section, you will learn more about order-related production and how to apply these processes in the production process of the Bike Company. The bike is manufactured in various steps, starting from the assembly of raw materials (for example rims, tubes, and so on), through the modification of semi-finished goods (for example, painting of assembled tubes), until the finished product, the bike, is assembled. The entire bike production can be modeled using repetitive manufacturing, process manufacturing, and discrete manufacturing processes, respectively.

Let us start with the final assembly of a bike: This manufacturing process is a typical production process that can be modeled and executed using discrete production orders. In the figure, the typical flow of a production lot though the production process is displayed:

Starting from either a customer order or a make-to-stock order, a production order for a production lot of 100 bikes is created. To assemble the bikes, the production operators must execute various steps (for example, pre-assembly, assembly, quality inspection, packaging, and so on), and assemble various semi-finished components in each step. Each step is modeled in manufacturing master data as operations in a routing. The list of semi-finished components that are required to manufacture a bike is modeled as a bill of material.

Each operation is executed by one production operator at a work center, which is assigned to the manufacturing operation in the routing. The work center can, for example, correspond to an automated assembly robot or a manual assembly station operated by a worker. When a manufacturing operation is finished, the assembly robot or the operator submits relevant data to the SAP S/4HANA system (for example, production yield, scrap, rework, and production time efforts). Then, the production lot is transferred to the work center assigned to the next operation in the routing where this manufacturing operation is executed by a worker or a machine. This process is repeated until, finally, the last operation of the routing is executed, and the bike is completely assembled. Usually, after the last step of a production order is executed, the goods receipt of the manufactured goods is posted in the SAP S/4HANA system to update inventory records.

As indicated previously, semi-finished components are required to assemble the finished good ‘bike’. An example of a semi-finished component is a frame. Since the bike will be available in various colors, the frame must be painted. Let’s imagine we need red bikes and require 1500 l red paint so that the next bike production lot can be painted. For the sake of illustration, we assume that the bike manufacturing company also produces the required paint by mixing the required components (for example, solvents, basic paint, and pigment). To fulfill this demand, a process order for the respective quantity is created. In the following video, a typical flow of a process order is illustrated:

From a master data perspective, each step is modeled in manufacturing master data as operations in a recipe. The list of semi-finished components that are required to manufacture the red paint is modeled as a bill of material. Each reaction vessel is modeled as a resource in the SAP S/4HANA system.

As in the discrete production process, when a step is finished, the operator (or vessel, if the process is automated) submits relevant data to the SAP S/4HANA system (for example, production yield, scrap, rework, and production time efforts) such that the order status can be easily tracked at each point during production. Usually, after the last step of a process order is executed, the goods receipt of the manufactured goods is posted in the SAP S/4HANA system to update inventory records.

Now, let's move on to the bicycle tires. The Bike Company needs tires for all their new bikes and for bike service. Therefore, this item is regularly needed in large quantities. In our Bike Company, tires are manufactured by assembling rims and spokes.

In contrast to order-related production, repetitive manufacturing focuses on the period and quantity-oriented production of highly standardized products (for example, electronic devices, car parts, and so on). The manufacturing process (which is usually highly automated) is executed on, for example, an automated production line.

From a master data perspective, the production line corresponds to one work center. Since the assembly process is automated, the detailed assembly steps don’t need to be specified in the routing. Instead, the routing used in repetitive manufacturing usually contains one single manufacturing operation, for example, ‘assembly’. As in the previous examples, the required list of components is modeled in a bill of material.

From a management and analytic perspective, you are not interested anymore in tracking and analyzing individual orders. Instead, you want to know which quantity is manufactured in which time period. From a technical point of view, SAP S/4HANA uses planned orders to execute and monitor repetitive manufacturing processes.

In the following unit, we will focus only on manufacturing processes in discrete industries with production orders. However, from a technical point of view, process orders are very similar to production orders, and you can therefore also apply the knowledge obtained in this course to process orders.

Repetitive manufacturing follows a different approach than order-based manufacturing using production or process orders and will therefore not be discussed in this course.