QUIZ CHAPTER 4

1. Explain the difference between sell-from-stock and

configure-to-order strategies
2. Explain the key steps in a basic fulfillment process?
3. Briefly describe the key documents in the fulfillment
process in terms of their role in the process.
4. Explain the difference between a backorder and a stock-
out.

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 Chapter 5: The Production Process

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 A Basic Production Process

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 Outline
 A Basic Production Process
 Role of Enterprise Systems in the Production Process
 Exercise Using Simulated SAP

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 Basic Production Process
 Definition
 Plan to produce
 Design to produce (customizable products)
 Engineer to produce (highly specialized)
 Key concepts and assumptions
 Conceptual Framework
 Physical flow
 Data and Document Flow
 Information Flow
 NO Financial Impact

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 Key Concepts and Assumptions
 Production processes and strategies
 Assembling vs. manufacturing

Assembling involves taking a number of component

materials,such as a board, nuts, and bolts, and putting
them together to produce the desired finished products,
such as a skateboard.

Manufacturing involves taking raw materials, such as

plastic pellets, and creating something from them, such a
plate or a cup
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 Key Concepts and Assumptions
 Production processes and strategies
 Discrete vs. process manufacturing

Discrete manufacturing eg., furniture,

computers
Manufacturing eg., oil and gas

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 Key Concepts and Assumptions
 Production processes and strategies
 Assembling vs. manufacturing
 Discrete vs. process manufacturing
 Make-to-stock vs. make-to-order
 Master Data in the Production Process
 What were master data in procurement and fulfillment?
 Bill of Material
 Work Centers
 Product Routing

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 About process manufacturing
 In process manufacturing, after a product is produced it cannot
then be broken down into its component parts. Examples of
process manufacturing products include solder, chemicals and
substances for raw materials, adhesives, coatings, edible or
drinkable goods like a chocolate bar or packaged fruit juice,
pharmaceutical goods, bio-engineered products, and fuels such as
petrol.
 Typically, process manufacturing involves things of a liquid or
once-liquid form that went through some kind of – yes –
“processing.” Processing usually means adding energy or some
kind of conditional change - say, adding thermal energy - for
chemical conversion. Processing usually means exposing a mixed
substance to heat, cold, time, pressure or other conditional
changes. These changes permanently create an entirely new
thing.

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 Differences between process manufacturing and
discrete manufacturing
 In process manufacturing vs. discrete manufacturing, factors
are:
 ingredients, rather than parts or assemblies
 formulas, rather than BOMs
 bulk, rather than units
 Examples of discrete manufacturing include electronics,
airplanes and spacecraft, cars, child's toys, books, and
medical equipment. Discrete manufacturing products are
easily identifiable, even without a label.

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 Production Processes and Strategies
 Assembling vs. manufacturing
 Components vs. raw materials
 Components: nuts, bolts, wheels -> skateboard
 Raw materials: plastic pellets -> plastic plate
 Discrete vs. process manufacturing
 Discrete
 Distinct items (countable)
 Pencil, computer, coffee cup, skateboard
 Component parts generally identifiable
 Process manufacturing
 Oil, chemicals, beverages
 Cannot be easily disassembled
 Formulation needed (recipe) vs. bill of material

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 Production Processes and Strategies
 Make-to-order vs. make-to-stock
 Make-to-order
 Process triggered by response to customer order
 Make-to-stock
 Process triggered by need to increase inventory

 SSB characteristics
 Discrete
 From components
 Make to stock
 Material type: assembled product (vs. trading good)
 Standard skateboard (vs. entry level skateboard)

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 Bill of Material (BOM)
 Identifies components needed to make one unit of finished
product
 Result of the product design process which leads to an
engineering drawing
 SSB BOM for standard skateboard (next slide)
 Multiple levels of BOM
 A component may have its own components
 Example: components of the standard truck assembly
 Which components could be manufactured from raw
material?

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 Engineering Drawing of the Standard
Skateboard

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 Bill of Material

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 Work Center
 Where the work of assembling the product occurs
 One or more tasks are completed in each work center
 SSB Work centers
 WC# 200: Material staging
 WC# 230: Final assembly
 WC# 300 Packing and inspection
 SSB “Plant” includes
 Front office space
 Warehouse - storage area
 Loading and unloading docks
 Shop floor – production area

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 SSB Plant Layout

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 Product Routing
 Define the steps or operations needed to produce the
product
 For each operation
 Work center
 Time needed (for some unit of measure, such as “each”)
 Materials used

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 Product Routing for Standard Skateboard

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 Production capacity
 Number of skateboards per unit of time (hour, day)
 Approximately 50 per day (8 hours)

Operation Operation Name Time (minutes) per unit Time needed for 50 SB
Number (or operation) (minutes)
10 Stage Material 5 per 50 5
20 Assemble SB 6 per SB 300
30 Inspect Deck 1 per SB 50
40 Pack in Packing Box 1 per SB 50
50 Final Inspection 1 per SB 50
60 Move to Storage 5 per 50 5
Total Time 460 = 7.66 hours

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 Conceptual Framework
 Physical Flow
 Document and Data Flow
 Planned Order
 Production Order
 Material Withdrawal Slip
 Goods Receipt Document
 Information Flow
 Instance-level Information
 Process-level Information

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 Physical Flow
 What is the trigger?
 What are the steps?
 What is the purpose of each step?
 Who is involved in each step?
 How is communication and coordination accomplished

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 A Basic Production Process

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 Planned Order

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 Production Order – Initial State

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 Production Order – Completed State

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 Material Withdrawal Slip

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 Goods Receipt Document

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 Role of Enterprise Systems in the
Production Process
 Execute the Process
 Request Production
 Authorize Production
 Issue Raw Materials to Production Order
 Create (Assemble) Products
 Receive Finished Goods into Storage
 Capture and Store Process Data
 Monitor the Process
 Instance-Level Information Flow
 Process-Level Information Flow

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 Information Flow
 Instance level information
 What is the status of a particular planned order
 Has it been approved?
 Have the skateboards been produced?
 What step in the process is the order in?
 Process level information
 What is the average time needed to make a skateboard?
 What is the average time taken to complete each step in the routing?
 What percent of the production orders are completed on time? What
percent are delayed?
 What is the cause of the delays in completing production orders?
 What percent of the skateboards fail final inspection and have to be
scrapped? Why do they fail?

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 ES in the Production– Process
Execution and Capture and Store

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 Creating a Planned Order in SAP

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 Goods Issue for Production Order in SAP

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 Production Confirmation in SAP

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 Goods Receipt for Production Order in SAP

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 ES in Production – Monitor
 Instance level
 Inventory status report
 Stock requirements list
 Drill down to a production order

 Process level

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 Stock Requirements List in SAP

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 Production Order Status in SAP

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 Process Level Information
 Average time to produce a skateboard
 Average time to produce an order (of 50)
 How many on time? How many delayed?
 Reasons for delay

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 Process Level Information

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 Exercise Using Simulated SAP
 The exercises will take you through the following steps that
have been discussed in this chapter:
 Create a planned order
 Convert the planned order to a production order
 Issue materials to the production order
 Confirm production
 Move finished materials to inventory

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