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Make-to-Order Production: Contents

 Make-to-order production strategy

 Assembly processing with production order
 Introduction to variant configuration

 SAP AG 1999

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0.2
Make-to-Order Production: Unit Objectives

At the conclusion of this unit, you will be able to:

 Explain the make-to-order production strategy.
 Interpret the individual customer segment in the planning
reports.
 State the main difference between make-to-order
production and assembly processing.
 Explain the term "variant configuration".

 SAP AG 1999

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0.3
Make-to-Order Production: Business Scenario

 Precision Pumps manufactures certain heavy-duty pumps

only when a customer orders one.
 Standard assemblies are used when possible.
 Other assemblies are also formed for the sales order.
 The pump is manufactured specifically for and shipped to
the customer that ordered it.

 SAP AG 1999

 Precision Pumps supplies special heavy-duty pumps for the construction industry. A customer will
call and request a pump with two or three particular features that suit their needs.
 Engineering has designed these pumps to use standard assemblies where possible. Sometimes,
however, an assembly must be specially manufactured to meet the customer's requirements.
 Precision Pumps only builds this kind of pump after an appropriate sales order has been received.
 Once the pump has been built and tested, it is shipped to the customer that ordered it.

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0.4
Make-to-Order Planning

Make-to-order
planning
strategies

Make-to-order Planning without

planning Assembly final assembly
processing

Production
Repetitive Project
order
manufacturing

 SAP AG 1999

 Make-to-order planning means warehouse stock is built up to satisfy the requirements of each sales
order. Each product is specially produced when an appropriate sales order is received.
 SAP has several planning strategies that support make-to-order planning.
 One of the strategies that will be discussed in this unit is make-to-order production. This is also
called strategy 20.
 Assembly processing is a part of make-to-order planning. The strategies used here are similar to the
other make-to-order strategies, with the exception that they automatically create a procurement
element (for example, a production order) when a sales order is received.
 The other strategy that will be discussed in this unit is assembly processing with a production order.
This is also called strategy 82.

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0.5
Make-to-Order Production (1)

Material X Material X

Sales order item A Sales

Sales order
order item
item B
B

 SAP AG 1999

 You do not enter planned independent requirements in demand management for materials that are
planned with make-to-order strategies. Instead, a sales order item initiates the make-to-order process.
 The example above contains two sales orders from different customers for the same finished product,
material X.

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0.6
Make-to-Order Production (2)

Material X Material X

Sales order item A Sales order item B

Material Requirements Planning (MRP)

 SAP AG 1999

 The lot-for-lot lot-sizing procedure is normally used in MRP for make-to-order production parts,
independent of the lot-sizing procedure set in the material master. MRP, therefore, creates a planned
order for each sales order item. The planned order quantity corresponds to the sales order item.
 Each sales order item of the corresponding planned order is displayed in an individual segment in the
MRP list (and the stock/requirements list).
 In the previous exercises, the MRP list had only one segment, called the net segment. The net
requirements calculation would consider issue and receipt elements in the entire MRP list. If the
MRP list, however, has several segments, the issue and receipt elements only apply to one particular
segment. Therefore, the planned order created by MRP only applies to the sales order item in
question.

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0.7
Make-to-Order Production (3)

Material X Material X

Sales order item A Sales order item B

MRP

Production Production

Sales order stock Sales order stock

 SAP AG 1999

 After it is produced, the finished product is forwarded to the sales order stock of one specific sales
order item. You must manage the finished product stock individually for each sales order item.
 In this example, each individual customer segment contains the same finished product.

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0.8
Make-to-Order Production (4)

Material X Material X

Sales order item A Sales

Sales order
order item
item B
B
D D
e e
l MRP l
i i
v v
e e
r
Production
Production Production
Production r
y y

Sales
Sales order
order stock
stock Sales
Sales order
order stock
stock

 SAP AG 1999

 The sales order stock is reduced when goods are issued to a sales order.
 The customer requirements are reduced in planning when goods are issued to a sales order. The
stock/requirements list will no longer show the requirement for the quantity issued. The MRP list
generated in the next MRP run will not include the quantity issued.
 If the sales order delivery is considered to be complete and no sales order stock is left, any remaining
customer requirements are removed from planning. They will neither be contained in the
stock/requirements list, nor in the MRP list when next generated by MRP.

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0.9
Individual/Collective Requirements Indicator

Strategy 20
Sales
order A Sales
order B
Qty = 10
Qty = 12
Material
Material X
X
Individual/ Individual/
collective collective
requirements Stock / Requirements List: X requirements
indicator = 1 or indicator = 2
'blank' Avail
Date MRP Element Quantity Qty
Material
Material Y
Y Today Stock 0
Material
Material Z
Z
Today Order A 0
Stock / Requirements List: Y Date Planned order 12310 10 Stock / Requirements List: Z
Date Order A 10- 0
Avail Avail
Date MRP Element QuantityQty Today Order B 0 Date MRP Element Quantity Qty
Today Stock 0 Date Planned order 12412 12 Today Stock 5
Date Order B 12- 0
Today Order A 0 Date Planned order 127 5 10
Date Planned order 125 10 10 Date Dependent Req X 10- 0
Date Dependent Req X 10- 0 Date Planned order 128 12 12
Date Dependent Req X 12- 0
Today Order B 0
Date Planned order 126 12 12
Date Dependent Req X 12- 0

 SAP AG 1999

 Example: A make-to-order production strategy is used for material X; two sales orders have been
entered and the planning run has taken place. The stock/requirements list shows two customer
segments, one for each sales order item.
 Suppose you want one or more components from the bill of material (BOM) to be produced or
procured for the same sales order as the higher-level assembly. To accomplish this, you will use the
individual/collective indicator, which is in the MRP view of the material master.
 A setting of '1' designates individual requirements. This means the component is produced or
procured for the same requirement as the higher-level assembly. A separate segment is created for
each requirement. In the example, two customer stock segments are maintained for material Y.
 A setting of '2' designates collective requirements. This means the component is being produced or
procured for several requirements (that is, not for any specific requirement). In the example, material
Z is planned using a lot-for-lot lot-sizing procedure and the 5 pieces of the material in the make-to-
stock inventory are offset against requirements.
 A setting of 'blank' designates the component is planned the same way as its higher-level assembly.
 If you need BOM control for this indicator, use the Explosion type field in the BOM item. This
overwrites the material master setting.

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0.10
Assembly Processing

Quantity Confirmed quantity

Confirmed delivery
Customer Material Sales
Sales order date
Desired order Assembly type
delivery date Net price

Run schedule
quantities/
repetitive Production order Network
manufacturing
Strategy 81 Strategy 82 Strategy 83

 SAP AG 1999

 Assembly processing is a form of make-to-order production. In assembly processing, procurement

elements are generated at the same time as the sales order items.
 In general, the components of the finished product are already produced in assembly production.
 A component availability check, delivery date determination, and preliminary costing are carried out
during sales order processing.

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0.11
Assembly Processing: Process Flow

SD
SD
Availability
Sales order
check

Production order Scheduling

PP
PP
Production
Staging components
and capacity check
Sales order stock

SD
SD
Delivery

 SAP AG 1999

 When the assembly processing with production order strategy is used, a production order is created
when the sales order is entered. No planning run takes place.
 Production order processing through goods receipt posting is carried out for each individual sales
order using the functions of the PP module.
 The delivery is created in the Sales and Distribution (SD) module.

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0.12
Assembly Processing: Availability Check

Repetitive
manufacturing
Sales
order Production order

Network

Component
availability check

Component list/missing parts list

 Confirmed quantity and date per component
 Quantity available at desired date
 Availability date of total quantity
 Missing parts are highlighted

 SAP AG 1999

 One advantage of assembly processing is that you can check component availability when creating
the sales order. Because the finished product is not usually kept in stock, checking component
availability is more appropriate.
 The confirmation date depends on the date of the last component available.
 The quantity confirmed depends on the available quantity of the component with the smallest
committed quantity.
 You can change the sequence of columns and/or fields in the missing parts list dynamically.
 If you do not require the availability check or if you do not want to view the component list or the
missing parts list, you can switch this function off in the system configuration.

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0.13
Assembly Processing: Changes

Sales Production
Integration
order order

 Changes to the sales order are also made in the production order.
 Changes to the production order are also made in the sales order.

 SAP AG 1999

 Changes to dates and quantities made in the sales order take effect in the production order until:
An operation is partially confirmed (system status = PCNF)
An operation is fully confirmed (system status = CNF)
The order header system status is set to deleted, locked or technically completed
A component is withdrawn for the production order
 Changes made to quantities or dates in the production order will only affect the schedule lines in the
sales order.

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0.14
Variant Configuration

Pump type
• Piston
Medium Drive
• Centrifugal
• Oil • Rotary • Manual
• Water • Electrical

Type of connection
• Rectangular flange
• Circular flange (2 holes) Delivery head
• Circular flange (4 holes) • 2 - 20 m
• Miscellaneous

Circuit
Color • Open
• Blue • Closed
• Black Direction of rotation
• Red • Left
• Right
• Any

 SAP AG 1999

 Customers could request a product with many options that suits their exact needs. If the number of
options is large, no two products are likely to be exactly the same. A pump, for example, may have
different drive options, circuits, or directions of rotation, for example. This pump, therefore, has a
large number of variants.
 Products with variants often have dependencies between the individual characteristics. Not all
combinations of characteristics are allowed. In the case of the pump, for example, a rotary pump
with manual and electric drive may be available, but a piston pump is only available with electric
drive.
 The term "configurable product" is used to denote a product that can be manufactured in several
variants. It comprises all the possible characteristics of the product, and is therefore not
representative of any single product.

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0.15
Variant Configuration: Overview

Select suitable Maintain configurable

characteristics product
Characteristics Material master record

Combine characteristics
in classes
Classes

Link the characteristics

Maintain object (classes) with configurable product
dependencies for
Configuration profile
variant configuration
Characteristics
Classes
Create a super BOM Organize the super task list
Configuration profiles
with all possible components with all possible operations
BOM management Routing management

Maintain object dependencies Maintain object dependencies

for BOM components for task list operations
BOM management Routing management

Test in simulation mode

 SAP AG 1999

 Many steps are necessary to build up the master data for a configurable material.
 First, you must use the R/3 classification system to describe the product characteristics. You allocate
the characteristics to a class used for variant configuration. You maintain object dependencies for
characteristics and characteristic values so that only allowed values can be chosen.
 You must also maintain the necessary settings for the configurable material in the material master.
You create a configuration profile by specifying the configuration parameters and allocating the
material to the class with the characteristics that describe it.
 The components and operations for a material are specified in a super BOM and a super task list.
You maintain object dependencies for the BOM components and task list operations that can only be
selected for particular variants.
 Before you use variant configuration productively, you should simulate the configuration. This
allows you to check whether all the data has been maintained correctly.

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0.16
Configuration of a Pump

Super BOM Configured BOM

Super task list Object Configured task list

dependencies

 SAP AG 1999

 In the case of products that exist in many variants, the "super BOM" contains all the parts that could
be required to manufacture the configurable material. The parts actually required can be determined
from the object dependencies.
 Likewise, the "super routing" contains all the operations that could be needed to manufacture the
configurable material. The operations and production tools and resources that are actually needed for
manufacture can be determined from the object dependencies.
 A special product structure is generated dynamically for a configurable material during sales order
processing.

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0.17
Make-to-Order Production: Unit Summary

 The make-to-order production process is initiated by a

sales order.
 The individual customer segment defines a special
planning segment within MRP.
 A procurement element is created when a material is
planned with an assembly processing strategy.
 If a product has many features or options then it has so-
called variants. Variants can be managed using the
variant configuration function in R/3.

 SAP AG 1999

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0.18Exercises

Unit: Make-to-Order Production

Topic: Assembly Processing

At the conclusion of these exercises, you will be able to:

 Create a new material, BOM, and routing for a make-to-order pump.
 Enter a sales order and create a production order automatically.
 Check how sales and production orders are integrated.

You will first create a new pump using components from an existing
pump. You will use make-to-order assembly processing for which a
production order is created on the basis of the sales order. You will then
check the integration. To do so, use a predefined Role (activity group).

1-1 Follow the instructions provided in point 1.1 of the unit 'Planning and Execution
with Final Assembly'. To do so, either choose Menu  Display menu of an
activity group or click the Other menu button. In the following screen, you can
select activity group LO050II using the Find icon. This section of the SAP menu
tree is used for the following unit. You can then return to the standard menu by
choosing Menu  SAP standard menu or by clicking the SAP standard menu
pushbutton.

1-2 You will now create a new pump as a finished product by copying the material,
BOM, and routing of pump T-F1##.
1-2-1 First, create a new material master for the new pump T-G1##.

Material T-G1##
Industry sector Mechanical engineering
Copy from…Material T-F1##

Select all basic data views, sales views Sales Org. Data 1 and Sales Org.
Data 2, all MRP views, the work scheduling view, and all accounting views.

Organizational levels:
Plant 1000 Copy from 1000
Storage location 0001 Copy from 0001
Sales org 1000 Copy from 1000
Distr. channel 10 Copy from 10

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 Ensure that all views are displayed on the screen by clicking the
pushbutton with the green tick. Acknowledge any warning messages
then Save.

1-2-2 Next, create a BOM for T-G1## by copying the BOM from T-F1##.

Material T-G1##
Plant 1000
BOM usage 1

Click the Copy from pushbutton and copy the BOM from T-F1## to
plant 1000 for BOM usage 1. Select all components then click the
Copy pushbutton.

This pump will have two rotors. Change the quantity of the appropriate
component from 1 to 2.
Save your new BOM

1-2-3 Finally, create a routing for T-G1## by copying the routing from T-F1##.

Material T-G1##
Plant 1000

Select Copy from, select task list type Routing and complete the
tasks (the status should be 4 Released (general)).

Save your new routing.

1-3 Set the planning strategy for pump T-G1## in plant 1000 to assembly processing
with production order. Change the material so that it is handled as traditional MRP.

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 1-3-1 Change the "Strategy group" field in the "MRP 3" view of the material
master to the appropriate value. Change the "MRP type" field in the "MRP
1" view of the material master to the value "PD".

Save.

1-4 One of the components of the pump T-B3## has its individual/collective indicator
set to blank. A sales order for the higher-level component will, therefore, cause this
component to be produced as a make-to-order part. This component is to be
produced for all requirements, not just for the sales order requirement.
1-4-1 Change the individual/collective indicator in the MRP 4 view of the material
master for T-B3## to the appropriate value.

1-5 Enter a sales order for your pump T-G1##.

Use the following data:

Order type Standard order

Sales organization 1000

Distribution channel 10

Division 00
Enter.

On the next screen, enter the order information:

Sold-to party 1000

Ship-to party 1000

PO number PO-##

Des. deliv. date Day 15 of month+1

Material T-G1##
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 Order quantity 10

Save.

1-5-1 Note the messages at the bottom of the screen as the production order is
created.
What is the sales order and item number? __________ ________

Exit the screen

1-6 Display the stock/requirements list for pump T-G1## in plant 1000. Note the
individual customer segment, which contains the production order and the sales
order.
Change the sales order quantity to 12 pieces.

Select the sales order then click the Change element pushbutton.

Save the sales order.

Refresh the stock/requirements list and note the change to the production order.

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0.19Solutions

Unit: Make-to-Order Production

Topic: Assembly Processing

1-1

1-2
1-2-1 Logistics  Production  Master Data  Material Master  Material
 Create (Special)  Finished Product
1-2-2 Logistics  Production  Master Data  Bills of Material 
Bill of Material  Material BOM  Create
1-2-3 Logistics  Production  Master Data  Routings 
Routings  Standard Routings  Create

1-3 Logistics  Production  Master Data  Material Master  Material 

Change  Immediately
1-3-1 Strategy 82

1-4 Logistics  Production  Master Data  Material Master  Material 

Change  Immediately
1-4-1 2 = Collective requirements only

1-5 Logistics  Sales and Distribution  Sales Order  Create

1-5-1 Varies, for example 5433 10

1-6 Logistics  Production  MRP  Evaluations  Stock/Reqmts List

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