Identifying Labor and Cost Structures for Production

Objective

After completing this lesson, you will be able to describe the labor which is needed to manufacture a product.

Lesson Overview

You want to know how SAP S/4HANA determines the composition of a product (material). Which type of labor, and how much labor, is needed to manufacture this product?

Routing

After completing this lesson, you will know how to describe labor for a product in SAP S/4HANA.

This image outlines the operations used during a routing: Staging, Assembly, Checking, and Delivery.

A routing describes a sequence of production steps, otherwise known as operations.

Each operation in the production process includes the following three essential elements:

  • Work Center
  • Assigned Activity: Setup,labor, or processing.
  • Planned Duration

The routing, which outlines the sequence of operations, assists in determining the overall production costs.

Note

The process industry uses a master recipe instead of a routing. It contains both the operations and materials list within one master record. You refer to work centers as resources. It contains both the operations and materials list within one master record. You refer to work centers as resources.

Routing Header

This image displays the different details available under a routing header: Assignment of materials, Usage, Routing status, Lot-size range, and Validity period.

The header of the routing includes the following details:

  • Product Assignment: You can link routing to multiple products that follow the same production steps.
  • Usage: Routings can be assigned to different work areas, like production, plant maintenance, or engineering, which means multiple routings can be created for a single product.
  • Routing Status:: The status shows the stage of the plan, such as whether it is still being created or has been finalized.
  • Lot-size Range: This allows for defining different routes if the production process changes based on the number of products.
  • Validity Period: This specifies the period during which the routing can be used.

Operations

This image displays how a routing operation occurs, step by step. First, the pieces used for bike assembly move from the storage location to the work center. Then, the bike is assembled. Then, the bike goes through a quality check. Finally, the checked bike moves from the work center back to the storage location.

In this video, we learn how to outline routing operations. This covers the different stages of bike assembly, and whether any costing occurs during these operations.

Not all operations affect costs. Some operations, like issuing materials, are just instructional. The operation’s control key determines the costing indicator.

If operations are relevant to costing, it's assigned to a work center where the task occurs. The work center links production and control through the cost center. Operations also specify the expected amount of activity, such as ten minutes of work.

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