The production in a warehouse is based on the production order.

The
production order tells what needs to be produced and quantity and
time of production.
When a production order is raised, all the components that are
required for production is listed in the bill of material. You need to
stage the products for a production order. Production Supply Area
(PSA) is an area where products are staged in a warehouse.
There are different staging types that can be used, some of them are
−

 Pick Parts
 Release Order Parts
 Crate Parts
Each PSA contains storage bin to stage the products for production
order. Each PSA can contain one or multiple storage bins.

How to Setup a Master Data for Production Supply Process?

The first step is to review the bill of material. Then go to SAP ERP
system, Easy access Go to Logistics → Production → Master
Data → Bills of Material → Bill of Material → Material BOM →
Display.