Production and MRP:

Production Concept
SAP Business One
Version 10.0

PUBLIC

Welcome to the Production Concept topic.

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 Objectives

At the end of this topic, you will be able to:

▪ Describe the main production process at a high level

▪ Explain the Bill of Materials concept
▪ Explain the Resource concept

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After completing this topic, you will be able to:

Describe the main production process at a high level
Explain the Bill of Materials concept.
Explain the Resource concept.
 The Production Concept in SAP Business One

Bill of Materials Production Process Finished goods

▪ Items ▪ Production Order ▪ Report Completion

▪ Resources: ▪ Release to shop floor ▪ The finished product is

▪ Machine added to inventory
▪ Labor ▪ Components are drawn
from inventory

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In SAP Business One we can manage the company’s entire production processes.
In addition to items, we can define and manage different resources, such as machinery usage hours
and employees labor time, that are necessary for the production process.
In the Bill of Material document, we indicate the components and resources needed to manufacture
the finished product.
Then, to start the production process, we issue a Production Order document, based on the Bill of
Materials, and release the components from the warehouse to the shop floor.
When the production process is completed, the finished product is added to inventory.

Note that this is the main production process concept in SAP Business One, but not the only one.

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 Resource Concept

Two main types of resource master data:

Machine Labor

Fixed Assets Employees

Plan and monitor resource capacity

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The resource is defined as master data in the system. There are two main types of resources:
Machine type – A resource linked to a fixed asset, taken from the Fixed Assets
Master Data list
Labor type – A resource linked to an employee, taken from the Employees Master
Data list.
When a bill of materials is produced, a machine is often needed in a production process and an
employee may be needed as well, for example, to operate this machine.
In SAP Business One, we can plan and define a daily capacity for the resources. By monitoring this
capacity, we can optimize the production plan and avoid bottlenecks.

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 Bill of Material Example

= Item
= Resource Decorative
Wooden Door

Wooden door Handle

Lathe Machine
Machine Operator

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Let us try to understand the Bill of Materials concept by using the following example:
To manufacture an engraved wooden door, we need two items: a plain wooden door and a handle.
In addition, we need to engrave a decoration pattern. To do this, we need two resources: a lathe
machine and a machine operator employee.
These items and resources combine the decorative wooden door bill of materials.
In real life production, bills of materials often have several levels. In our example, the wooden door
component can also have its own bill of materials.
Note that the finished products are also defined as items (master data) in the system.

To start a production process, this Bill of Materials is copied to a Production Order.

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 Production Order
Production Order

Production Order:

Decorative Wooden Door X 6

Due Date: 31.09.2020

Item: Wooden Door

Item: Handle
Resource: Machine Operator
Resource: Lathe Machine

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A Production Order is a command to produce (or repair) a production item.

A Bill of Materials is copied into the Production Order document (manually or in an automatic process).
Then, the needed quantity of the finished good is entered, along with the required due date of
production and other relevant data.

In the next course topics, we will learn about the detailed production process.

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 Production with Routing

Route Stage Components Total Days ▪ A production order with routing

Stage 1 - Cutting 2 days contains several route stages
Resource
Resource ▪ Each stage has its own items and
Item resources and calculates its own
Stage 2 - Sanding 1 day dates
Resource
Resource
Stage 3 - Painting 3 days
Resource
Resource
Item

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Bill of materials can be defined with routing. This bill of materials contains different
stages in production.
Each stage has its own items and resources and calculates its own dates.
There can be a dependency between stage date calculations, in which a subsequent
stage begins when the immediately preceding stage ends.
The calculation of Total Days per stage is done according to the available capacity of
the resources in each individual stage.
Like every other bill of materials, a bill of materials with routing is copied to a
production order. Then, each stage in the production order can be separately issued,
transferred, or received from production.

To learn more about resource capacity management, refer to the course: Resource
Capacity

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 Summary

Here are some key points:

▪ The production process starts by creating a Production Order and releasing it to

production.
▪ The Production Order is based on the Bill of Materials.
▪ The Bill of Materials is composed of items and resources.
▪ There are two main types of resources: labor and machine.

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▪ Here are some key points to take away from this session.
▪ The production process starts by creating a production order and releasing it to production.
▪ The production order is based on the bill of materials.
▪ The bill of materials is composed of items and resources.
▪ There are two main types of resources: labor and machine.

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