Describing the Integration of Production Orders

A production order generally defines which material is to be produced, in which quantity, at which time, and in which way.

In our business example, production orders are used to initiate and control the production of the bicycles in our bicycle company. The individual production orders define the following information:

• Which types of bicycles (for example, mountain bikes, children’s bikes, and so on) are to be produced?
• Which quantities are to be produced?
• When will the bicycles be produced?
• Which material components are required?
• Which operations are to be carried out at which work centers?

You have already had an introduction to production orders. The next video will deepen your knowledge by giving you an overview of the handover from planning to execution.

As you have seen in the previous video, the demand program either originates from concrete sales orders or from a forecast based on previous sales cycles. After having maintained the demand program as planned independent requirements, they are processed by the MRP run to generate planned orders. In the following demonstration, you will see how planned independent requirements are maintained.

As you have seen in the previous demonstration, proposed sales quantities for, for example, make-to-stock manufacturing of bikes, are maintained as planned independent requirements. The system compares the requirements and the stock evaluation over time and determines whether the requirement is covered or not. If the requirements are covered from stock, planned orders or production orders, the MRP run does not create planned orders. If they are not covered, the MRP run generated planned orders that can be converted into production orders to manufacture the missing quantities, for example, bikes.

In this demonstration, you will see the following process steps:

1. Analyze the material coverage before the MRP run.
2. Execute the MRP run.
3. Analyze the material coverage after the MRP run.

As you have learned in the planning chapter of this e-learning, planned orders can be interpreted as future goods receipts that are created by the MRP run to fulfill an uncovered demand (that is, for example, a planned independent requirement or a sales order). However, planned orders cannot be used for manufacturing goods. To finally fulfill the demand, a product, for example, a bike, must be manufactured and received in stock such that it can be used to deliver a sales order.

Depending on the industry variant (discrete or processing industry), you convert planned orders to production or process orders. In the Bike Company, production orders are used for the final assembly of the bike, whereas process orders are used to produce bike paint (if necessary, refer to the previous unit where we defined our production scenario).

In the following demonstration, you will see how a planned order is converted to a production order. Since production orders are embedded into the entire planning process, related objects, for example, dependent requirements of planned orders, are also affected by the conversion.