Creating Process Orders

As already described in the previous unit, the material requirements planning run creates planned orders as planned material receipts to cover requirements. In the case of in-house production, the production supervisor converts planned orders into process orders close to the time of production. In this unit, we will discuss which methods the Bike Company can use to convert planned orders to process orders. Additionally, we will discuss the most important supporting functions; availability check and batch determination in more detail.

There are two options to convert planned orders into process orders: The collective conversion and the individual conversion. Let's take a closer look at these two options:

In most cases, the production supervisor converts multiple planned orders into process orders at the same time. Based on the Bike Company's business requirements, they can convert planned orders into process orders using collective conversion. During conversion, the system converts each planned order into exactly one process order (resulting in n process orders for n planned orders). To select planned orders to be converted, the production supervisor can specify various selection criteria, for example plant, MRP controller, opening date, material, and so on.

Alternatively, the production supervisor from the Bike Company can manually convert one planned order into one process order using individual conversion or even create several process orders from one planned order by means of partial conversion (for example, if the manufacturing resources are not available due to unplanned events or if there is a component shortage). When converting one planned order, it is deleted and replaced by the process order.

On component level, the system replaces dependent requirements by reservations once it converts the planned order into a process order.

When converting planned orders to process orders, the production supervisor usually converts the planned orders that are due for production in the near future to process orders. This process is called time-oriented collective conversion.

Watch the following video for more details:

When scheduling a planned order, the SAP S/4HANA system determines a start date, a finished date, and a planned opening date. The planned opening date represents the date on which the planned order should be converted into a process order. In collective conversion, you can specify an opening period for selecting planned orders that are due for conversion. When executing collective conversion, the system converts all planned orders to process orders whose planned opening date lies within the specified opening period. In this example, the opening date of the first and second planned order lie within the opening period and the system therefore converts these orders. The execution time frame of the third planned order lies in the future so that the order conversion run ignores this order at this point in time.

When executing a process order, the MRP controller or production supervisor must ensure that the material components are available in the required quantity at the scheduled time. Therefore, they perform material availability checks for the process orders. The following figure shows an example of a material availability check:

When you create a process order, the system determines both the requirement quantities and the requirement dates for the material components in the order. The system automatically determines the requirement quantities based on the selected bill of material and the planned production quantity of the order. Meanwhile, the requirement dates originate from the start dates of the operations or phases to which the material components are allocated. Consider the following scenario as an example: We create a process order for the production of 100 cans of red bike paint. According to the bill of material, the order requires 100 cans. Scheduling determines that the 'filling' phase starts on April 12 at 2:30 pm. Therefore, production operators will need 100 cans available on this date.

The system executes the material availability check and searches for available quantities at different storage locations. As illustrated in the example, there are 75 cans available at storage location A and 150 cans available at storage location B. Therefore, the system commits the 100 required cans from storage location B to the process order. If the material availability check fails due to missing components, the system assigns a corresponding status to the process order. The MRP controller must then address the component shortage before the production personnel can execute the process order.

In SAP S/4HANA, batch determination is a process by which you can automatically find and allocate suitable batches for a material that is to be used in the production process. This is especially important in industries where the characteristics of individual batches of a material can vary, and specific batches need to be used based on certain criteria (for example expiration date, production date, quality specifications). The following figure shows an example how you can use batch determination to automatically find suitable batches:

The material list for the process order contains the required raw and semi-finished materials along with their necessary properties. For instance, the pH value of the component "basic paint" must lie between 6.5 and 7.5. When the production supervisor creates or releases the process order, they initiate the batch determination in the SAP S/4HANA system. In the first step, the system conducts a batch search to identify suitable batches. Although there are three batches of basic paint in stock (6641, 1476, and 9701), only batches 6641 and 9701 are suitable since their pH values fall within the specified range (6.5-7.5). Batch 1476, having a higher pH value, is not suitable, and thus the system excludes it from the result list. In the second step, the system arranges the remaining batches in descending order based on their pH values. Since the pH value of batch 9701 (7.0) is higher than that of batch 6641 (6.5), the first batch ranks higher. Assuming that the stock quantity of both batches meets the quantity required by the process order, the system assigns batch 9701 to the order and reserves the necessary quantity in the third step.

If the available on-stock quantity of batch 9701 is insufficient, the system proposes either using batch 6641 in place of batch 9701 or consuming the remaining quantity of batch 9701 and then utilizing batch 6641. The approach you choose depends on how you implement and configure your business process in the SAP S/4HANA system. If you prefer to consume older batches with a higher priority (for instance, to reduce waste), you can also sort the suitable batches by their expiration date, adhering to the first-in, first-out principle.

For the sake of simplicity, we will show how you convert an individual planned order in the SAP S/4HANA system and the effect of order conversion. We will then analyze the created process order in more detail using the Display Process Order app.