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 are to be produced?
• Which quantities are to be produced?
• When will the bicycles be produced to meet customer orders or other requirement dates?
• Which material components are required?
• Which operations are to be carried out at which work centers?

Production orders can either derive from planned independent requirements, or from sales orders.

Watch the next video to learn more about these 2 possibilities and the overall integration of production orders.

As you have seen above, the demand program for a material either originates from concrete sales orders, from a forecast based on previous sales cycles, or from a combination of both. In this training, we solely focus on a make-to-stock production scenario for our bike. Therefore, the production planner only needs to maintain the demand program in the form of planned independent requirements. Individual sales orders are not taken into account.

Note

From a production execution point of view, it does not matter whether production orders are executed in a make-to-stock or make-to-order scenario.

After having maintained 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 by the production planner.

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 that already exist, the MRP run does not create additional planned orders. If the requirements are not covered, the MRP run generates planned orders that can be converted into production orders to manufacture the missing quantities, for example, bikes.

In the next demonstration, you will learn how to execute the MRP run and compare the material coverage situation before and after the MRP run.

Note

If you have access to a practice system, you can now execute the exercises Assign your Area of Responsibility and Create Planned Independent Requirements, and Run MRP.