Analyzing Master Data for Process Manufacturing

To illustrate the production processes in a company, we use the example of the Bike Company. The company produces its own bicycles and maps the production processes in SAP S/4HANA.

In addition to manufacturing bicycles, the Bike Company has another production line for paint. The company uses a part of the paint for their own bike production. Another part is filled into cans and sold to customers. To produce these paint cans, the Bike Company uses process manufacturing. Let's follow the different steps of paint production and learn more about process manufacturing!

In this unit you will learn about the prerequisites for master data and the integration of process orders with production planning. Then you will learn how to create process orders and finally how to execute them. Let's start and get an understanding of the master data!

Before production can start, the Bike Company must first create master data in the SAP S/4HANA system. This includes:

• Materials

• Bills of material

• Master recipes

• Resources

• Production versions

Let's get to know the master data in more detail.

Material master records must be created for the materials that are produced and procured in a company. In our bicycle company, for example, material master records were created for the finished product "bike paint in cans", for the required assemblies that are produced in-house, such as "basic paint", and for raw materials to be procured via purchasing, such as "cans" or "pigments". In the material master record of each item, planning data, procurement data, production execution-relevant data, and so on, are maintained.

In different sectors, especially in the process industry, it is necessary to work continuously through the logistical quantity and value chain using homogeneous partial quantities of a material. In SAP S/4HANA, a batch is defined as a subset of the total quantity of a material held in stock. This subset is managed separately from other quantities of the same material. Quantities of a material belonging to one batch share the same physical and chemical properties, while another batch of the same material has different physical and chemical properties. From a production perspective, a batch often corresponds to a quantity of a semi-finished material produced during a specific production run. If it is a raw material, a batch often corresponds to a quantity purchased from a supplier at a certain point in time.

In addition to quantities, you can also manage the (for example physical and chemical) properties of a sub quantity in a batch by using a batch master record. In the batch class, the master data specialist defines a list of properties, for example density, color, pH value, and so on. When creating a batch master record, the warehouse clerk posting the goods receipt maintains the characteristic values of that batch in the corresponding record. For example, the basic paint's pH value is 7.0 for batch C1, and 6.9 for batch C2.

Throughout the logistical chain, you can track individual batches of raw, semi-finished, and finished materials in a where-used list. For example, when using batches, you can track which raw material that was procured from a certain supplier is used in a batch of a finished product that was shipped to a certain customer.

The next image illustrates an example of a batch management:

In this example, the Bike Company must produce 1200 l of red bike paint in cans of 1 l. Due to resource constraints, the entire quantity of 1200 l cannot be produced using one process order. Instead, the production planner creates two separate process orders (60114, and 60225). To each process order, they assign a batch of basic paint (C1 and C2). As you can see, both batches have different chemical properties (for example viscosity, pH value, and maximum absorption wavelength). Since the SAP S/4HANA system manages each batch individually, the production planner knows the remainder quantity of each batch (567 kg and 693 kg) and can adjust the process order quantity accordingly: For example, they could create one process order that entirely consumes batch C1, whereas batch C2 is entirely consumed in a separate process order. The reason for producing using two separate process orders is that, from a business perspective, it is not allowed to mix two component batches in the same process order.

The material components required for finished products and assemblies are to be defined via bills of materials (BOMs). The bill of material for "bike paint (cans)" manufactured in our company can, for example, consist of the material components basic paint, can, pigment, and further components. Assemblies, such as the basic paint themselves, have a BOM, which results in multi-level BOM structures.

In a BOM, you furthermore define how many components are required to assemble a product. For example, 1000 cans of bike paint require 1000 l of basic paint, 1000 cans, and 100 kg pigment, respectively:

The BOM is used in production planning to determine, for example, how many items of a purchased raw material are required in a certain time frame. The system then compares the amount of on-stock items to the required quantity and creates, if necessary, a purchase requisition. In production execution, the SAP S/4HANA system uses the BOM in a process order to determine how many items of a raw material are required to produce the requested quantity. In our example, the production of 1000 cans of bike paint would require 1000 l of basic paint, 1000 cans, and 100 kg pigment.

Master recipes define, in detail, which steps are to be carried out to manufacture a finished product or an assembly. From a technical perspective, the steps are modeled as operations and phases: An operation is an independent step that is entirely executed using one resource. For a more detailed description of the step, the master data specialist defines one or more phases in an operation. From a business perspective, phases separate an operation into logical steps. The resource you allocated to the superior operation is automatically transferred to the phase. The master data specialist also defines the sequence in which the individual phases must be executed, how they are connected, and the respective phase duration. The latter is required to calculate the processing duration of the process order. For example, a master recipe for the production of bike paint in cans can have the following structure:

• Operation 10: Mixing paint

  When executing this operation, the shop floor personnel mixes all components in a reactor and stirs the mixture for three hours at 50 °C. First, they charge the basic paint mix and heat the mix to 50 °C which takes 0.5 h. Then, they add the pigment and stir the mixture for another 2.5 h. Lastly, they trigger discharging of the reactor via a pipe system and the paint mixture is pumped into the paint filling station for bottling. From a technical perspective, charging basic paint mix, adding pigment, and discharging are modeled as phases. All three phases are grouped together into one operation since they are executed on the same resource. From a business perspective, you usually define the steps that are executed by the shop floor personnel as phases and then group the phases logically into operations if they are executed on the same resource.

• Operation 20: Filling and labeling

  After all components were mixed and the chemical reaction occurred, the finished product is transferred via pipes from the mixing unit to the paint filling station where the paint mix is filled into 1 l cans and then labeled. From a technical perspective, filling and labeling is the only phase of this operation.

This example is also displayed in the following figure:

As you can also see, all phases of a recipe have a relationship: For example, adding pigment can only start after charging of basic paint was finished. However, discharging and filling & labeling starts at the same time. The system takes the phase relationship into account if it calculates, for example the total manufacturing duration and the duration of each phase. In our example, discharging and filling & labeling start at the same time; however they end at a different point in time since discharging takes less time than filling & labeling.

A resource is assigned to each operation to define the physical location or means of production where this operation is to be processed. In the chemical industry, you often define processing units (for example mixer, reaction vessel, and so on) as resources. By assigning a resource, you also specify costing- and planning-relevant parameters for the individual operations since the master record of a resource contains essential information that is used for capacity planning, scheduling, and costing of process orders. In our example, the "mixing paint" operation (and all three phases) is executed at resource "mixing unit", while the operation "filling & labeling" (and the respective phase) is executed at resource "paint filling station".

After the master data specialist created the master recipe and the BOM, they define which component is used in which production step. In our example, the component "basic paint" is used in the phase "charging basic paint", whereas the component "can" is used in the phase "filling and labeling cans".

A process order for a finished product or an assembly is always created with reference to a production version of the corresponding material. A production version defines which bill of material in combination with which master recipe is to be used in the process order to manufacture a product. A suitable production version is automatically selected when the order is created according to criteria such as production quantity and production time:

Why do you need production versions in SAP S/4HANA? Let's consider the following example: Depending on the number of bike paint cans to be manufactured, the Bike Company has two options to execute the manufacturing process. They can either use a big mixing unit with 1000 l volume or a small mixing unit with 100 l volume. If there is a small lot size, for example 75 l, it does not make sense to use the big mixing unit since a lot of paint residue would remain in the mixing unit after discharging due to its size. In this case, it makes more sense to use the small mixing unit. If the lot size is bigger, for example 500 l, it is not even possible to use the small mixing unit since the manufactured amount of paint does not even fit into the small vessel. Therefore, the big vessel must be used. To model both situations in SAP S/4HANA, the Bike Company can define two production versions:

• Production version A combines the BOM for the bike paint in cans with a master recipe where the first operation is executed on the resource 'mixing unit (1000 l)'. This production version is used for lot sizes bigger than, for example, 100 cans.

• Production version B combines the BOM for the bike paint in cans with a master recipe where the first operation is executed on the resource 'mixing unit (100 l)'. This production version is used for lot sizes up to, for example, 100 cans.

The master data specialist assigns the production version to the manufactured material. There can be one or more production versions for the same manufactured material. They can differ in the master recipe but use the same BOM, use the same master recipe but different BOMs, or refer to different master recipes and BOMs, respectively.

In some chemical reactions, the component quantity (for example a catalyst) depends on the size or surface of the used reaction vessel. Therefore, depending on the production resource, different quantities of the same component are required in order to execute the same chemical reaction in two different vessels. You would model this use case with two different production versions that refer to two different master recipes and BOMs, respectively.

Now that you're familiar with the essential master data needed for process orders, let's move on to the next step: Learning how to see or display this data. In the following system demonstration, you will get to know how to display a BOM, a material master, a production version, and a master recipe. Since some raw materials are managed in batches, you will also get to know how to display them using the Batch Information Cockpit.