Industry types/production type

1 Discret manufacturing
2 Process industry
3 Repetitive manufacturing
4 Engineering to order(ETO)
5 Assemble to order(ATO)
The below characteristics it determine the type of the industries/ind
Complexity of production
Repetitive nature of production
Volume of production
Batch management
Regulations
Process controls and instructions
Frequently switching
Lathe or shop floor oriented production

Desecrate manufacturing
The main characteristics of discreet is frequently switch
Ex;- Tools mfg., furniture industry , Plastic indust
More shop floor oriented and lathe oriented productio
Ex-Engineering equipment / Mechinieries
We can store as intermediary product (SFG)and later c
That means there is time gap between from one
The demand pattern is irregular nature so low volume
High complexity of the production
The products are usually mfg individually like small lot o
Difficult to arrange production line that means arrange
We can produce both make to stock and make to order
 Discret mfg. is relevant for both MTS&MTO scenarios
Example for Descrete Mfg:
Ex Transport equipment , Electronic product

We can assemble and also possible to di-assemble the

Ex: Motor Cycle , Car , Mechaniries etc

Ex: assemble and disassemble service or semi manu

e industries/industry types

equently switching from one mfg product to anther MFG product

y , Plastic industry etc
nted production ( Mechanical shop)
hinieries
SFG)and later can be processed further
ween from one process stage to the another process stage
so low volume of the production produced based on the demand pattern

y like small lot or batch wise

means arrangement of sequence of machinery is very difficult due to mfg. of differen
d make to order scenarios
MTO scenarios

ctronic products, industrial equipment , medical equipment, fabricated equipment, e

-assemble the assemble cycle that is we can get back the sub components.
niries etc

e or semi manufacturing oriented purely descrete like our YCHEM in S4/ecc (SCR Stati
o mfg. of different type of product
ted equipment, electrical equipment, furniture or engineering products/equipment’s

onents.

n S4/ecc (SCR Stationary and SCR Units)

ucts/equipment’s.
Process industries

Where the products which are manufactured can't be ea

It is impossible to be reworked upon these products.
Example : Chemicals, Medicines,Towels,Paper ,
The production process is carried out in batches , that is n

It is more liquid nature of production and continuous flow

Ex: Chemical, beverages, food industry,pharma
More process oriented and controlled by regulation
Ex: Govt regulation, pharma, cosmetics , food i
More batch oriented
More quality and batch oriented production
There is no intermediary stage of production that means
The product process industries also mfg. in both make to

Example :
Food Industry:
Biscuits, Ice Creams , dairy Pro
Chemical :
Acids, Chemical Preparations-
Pharma :
Tablets, Syrups, Bulk Drugs
tured can't be easily dis-assesmbled once they are manufactured.
ese products.
es,Towels,Paper , Steel, Food Industry
batches , that is non-reproduciable units are characterised by certain specifications.

d continuous flow of production

industry,pharma, health care, fertilizers, cosmetic products, bulk drugs
y regulation
cosmetics , food industries etc

ction that means continues flow of production

. in both make to stock and make to order scenarios

Creams , dairy Products etc

cal Preparations-Liquid

ps, Bulk Drugs

in specifications.
Repetitive manufacturing
Not frequently change the product , the same product is m
The product are not mfg individual lot wise.
The total quantity is produced for certain period ba
Eg;- One lakh units per year
The products are produced in repetitive environme
The demand pattern is constant and more time orie
Less complexity of product
More stable & stabilize (standaralize product)
Continuous flow of production and SFG products ar
The arrangement of production line simpleàThe ar
In repetitive mfg also we can produce the product b
Eg;- Steel mfg , computer processer , mother
Pulp Mfg
ame product is mfg repetitively for certain period (longer period).
ot wise.
ertain period based on the time based planning

tive environment with quantity based planning and scheduling

d more time oriented planning

e product)
SFG products are usually processed immediately without being kept in interm
simpleàThe arrangement sequence of machinery are simple because of sa
ce the product both make to stock and make to order scenarios
cesser , mother boards, foundry
ng kept in intermediary storage that means there is no another production st
e because of same product is mfg for longer period.
er production stage
Engineering to order {ETO}
The product are mfg based on customer requirement and
More complex nature of production
Un-structured product mfg from the beging of designing
More planning and monitoring is required for each stage
This is more relevant to make to order scenario’s
Project systems is used to maintain better planning and c
Ex: Metro projects, air crafts, gas turbans, power gene
Heavy Drilling Machiniers , Earth Movers
 requirement and more R & D related nature of prodcts (unique type of products)

ging of designing till the completion of production along with customer specifications
ed for each stage wise and also planning & monitoring is required to be integrated b/
cenario’s
er planning and controlling for each stage of the production
bans, power generate equipment’s , Weather equipments , Sensors etc
Movers
 e of products)

mer specifications
o be integrated b/w stages
Assemble to order (ATO)
According to customer requirement will do small modific
The products are completed near to SFG than the produc
Ex: Engineering equipment, computer assembl
It is more relevant to make order scenario’s
 do small modification of products and assemble the product
G than the products just assemble according to customer requirement and dispatch t
omputer assembles, housing projects
nt and dispatch to customer
Production techniques in SAP.

1Production order
2Process orders
3P.C.C (product cost collector) ===>

4Sales Order
5Project Systems

The below production techniques can be used in SAP to a

1Production Order
Where we want to track , monitor and contro
High setup cost involved for each job so you n
Flexible production environment
More complex of production
More shop floor or lathe oriented ( mechanic
Demand pattern is not constant hence requir
Not standardize and stable product where jo
Where more focus is required on control the
The production order is used in control in the
The production order is used both in MTS and
Production order is used in Descrete mfg whe
PCC(Product cost collectors) can also be used
2Process Orders
The process order can be used in below busin
 PP-PI(Process instruction sheet) is desig
Where job or batch wise costing requir
More process controls and instruction n
Where you need to apply Process shee
Where you need to apply more quality
More liquid nature of production and c
Not a shop floor and not a lathe oriente
More batch oriented Production
Process order can be use in both M.T.S
Example :
Pharma , food industries ,fertilize

Process order having additional feature

Structure of Process Order:
Process order consists of operatio
Operation is subdivided into Phas
A Phase is Independent process s
Phases carried out at the primary
Phases relationship can be seque
Components can be assigned eith
Activities need to be assgned to
Phase contains a number of proc
During order processing, the proc
Inspection lot for inspection durin

3 Product cost collector (product cost by period)

 Where we need to track the cost at the
we can analyze the cost of the product
PCC can be used to analyze the cost of
This method can be used in below busi
1In repetitive mfg. environment w
2PCC can also be use in desecrate
3Where you want to calculate bot
4Low complexity of production
5Low setup cost
6Stable demand pattern
Ex: One lakh units

Repetitive nature of product (same pro

FMCG product, car engine, found
PCC can be use for both MTS and MTO

4Product cost by sales order

Where the product is mfg based on the custo

The sales order can also to collect and contro
Sales order can also be used to plan revenue
To know the profitability of the customer ord
Involved huge additional expenditure to exec
ex:
 Installation cost, special packing c
To calculate the WIP, cost of sales, calculate r
To calculate revenue recongnization that mea
To book the procurement cost directly to the
To track the mfg cost and additional expendit
In product cost by sales order, we can use the
The sales order component (product cost by
Ex:
GAS turbains, capital equipment,
Sensors , Weather equipments e
 All Mfg activities planned and monitored either through the
===> Production Order, Process order , PCC

sed in SAP to address requirement of different types of production types

itor and control the cost for Job wise production or Batch wise production
ach job so you need to monitor and control the high setup cost

ted ( mechanical Oriented)

nt hence required to produce the product with low volume of production.
oduct where job and batch wise costing required
on control the cost for mfg certain quantity of the product
n control in the production lot or batch wise
both in MTS and MTO scenario’s
screte mfg where job or batch wise costing required
an also be used in descrete mfg where the costing is required at product leve

in below business cases

n sheet) is designed for the batch oriented process mfg companies like Pham
e costing required
nd instruction need to be given to the shop Floor
y Process sheets to record the results from the shop floor
y more quality control
oduction and continues flow of production
a lathe oriented production
oduction
e in both M.T.S and M.T.O scenario’s

ustries ,fertilizers , Chemical

ditional features like PI sheets , Phase wise activities planning and more inte

sists of operations, each of which is performed at a primary resource.

vided into Phases.
ndent process step that contains the detailed descriptions of a part of the en
t at the primary resource of their superior operations.
p can be sequencial , parallel or Overlapping.
be assigned either to the specific operation or phases for better planning and
be assgned to the Phase.
number of process instructions that convey information relevant to process c
essing, the process instructions of a Phase are transferred to the conrol recip
nspection during production can be created when process order is relesed.

by period)
 the cost at the product level then will prefer to use the product cost by peri
of the product which are mfg. in the same way over longer periods
yze the cost of the product for the specific period for the specific product
d in below business scenario’s
environment where the product is stable and continuous flow of production
e in desecrate mfg. environment where the product is standalize and not re
o calculate both WIP and variance at any level and irrespect of the status o
production

One lakh units per year

duct (same product is mfg. repetitive over a longer period)

r engine, foundry, steel industry
MTS and MTO scenario’s

ed on the customer designing and to track the cost based on the requiremen
lect and control the cost for the specific customer order wise
o plan revenue and cost and also to collect actual revenue and cost for specifi
e customer order wise
nditure to execute the customer order
pecial packing cost, insurance , delivery cost
ales, calculate revenue based on the progressive method (percentage of com
zation that means to diatribute revenue across the contract periods / Billing
directly to the customer order wise while procurement of material
tional expenditure separately
we can use the production orders, process and PCC to control , monitor the
roduct cost by sales order) can be used in desecrate mfg. , repetitive mfg,pro

tal equipment, AMC contracts, SPM(Special purpose machiniers)

r equipments etc
 monitored either through the
der , PCC

rent types of production types

duction or Batch wise production then we will prefer to use Production Orde
the high setup cost

with low volume of production.

quired
y of the product

g required
costing is required at product level ( Not required job / batch wise costing)
process mfg companies like Phama , Food, Brevaragies, Tobaco etc

the shop floor

activities planning and more integrated with quality conrols to address the

med at a primary resource.

ed descriptions of a part of the entire Mfg Process.

operations.

or phases for better planning and execution purpose.

information relevant to process controls.

are transferred to the conrol recipe destination that requires the information
d when process order is relesed.
er to use the product cost by period
way over longer periods
period for the specific product

nd continuous flow of production

e product is standalize and not required job or batch wise costing. Costing is
level and irrespect of the status of the order

a longer period)

the cost based on the requirement of customer specific order wise

stomer order wise
actual revenue and cost for specific customer order wise
essive method (percentage of completion method) and also to make the pr
ross the contract periods / Billing Periods
procurement of material

s and PCC to control , monitor the mfg. activities and also to control mfg. cos
desecrate mfg. , repetitive mfg,process industries ,ETO (engineering to order

al purpose machiniers)
e Production Orders(where job/Batch wise costing required)

tch wise costing)

obaco etc

ols to address the various legal requirements

res the information for process control

costing. Costing is required at the product level

rder wise
lso to make the provisions / reserves for excess or shortage cost

to control mfg. cost

gineering to order) ,assemble to order (ATO)
MTS ( Make to Stock)

The product is mfg. based on d

The mfg. product kept under
Example :
FMCG product ,pharma,

It can be used in both desecrate

MTO ( Make to Order)

The product is mfg according to customer specifications and modifica

The mfg. product kept under the Sales order stock ( Reserved stock), T
The Mfg and Procurement Acivities start after receiving the confirme
Example:
Capital Equipents,Software produts,AMC Cotracts,Air craft, Gas turb
It can be used in desecrate, process and Repettive Mfg
can be supplied or saleable only to spcific customer

enerated equipments etc.

Note : 1 Product cost Collector(PCC) can be used in Descre
1 Costing is required at product level
2 Need to calculate both WIP and Variance at
 3 Not a complex production environment tha
4 Simple production process
Example : Car engine, Electronic compon

2 Production order in Descrete Mfg :

1 It is prefer where job or batch wise costing
2 More complexity of production
3 Production in individual lots or batch wise
4 More shop floor oriented or lathe oriented
5 High setup cost involved
6 No continuous flow of production (interme
example : All capital equipment’s

3 Process Order in Process Industries :

1 Where process controls required
2 More quality controls required
3 Batch wise monitoring required
4 Ingredient management required (PI-Sheet
5 Job or batch wise costing required
6 More liquid nature of the production and n

4 PCC in Repetetive Mfg

1 Where the product is stable and continuous
2 Repetitive nature of product
3 Simple production process
4 Job/batch wise costing not required
5 Costing is required at product level
 6 To calculate both WIP and variance at the s
7 Simple data record process by using with ba
Example : Foundary , steel mfg
8 Back Flush Functionality

MTO Process

ETO/ATO
e used in Descrete Mfg in the below cases:
uct level
P and Variance at any level and also at the same time
environment that means more stable and standized product

lectronic components

atch wise costing is required and not the standardized product

ts or batch wise
or lathe oriented

duction (intermediary stage of production)

uipment’s

equired (PI-Sheet)
equired
production and no intermediary Products

e and continuous flow of production that means there is no intermediary stage of pr

t required
uct level
 variance at the same time at any level
s by using with back flush functionality
eel mfg
ediary stage of production
 Std cost INR
base Price 1000
OH Transportation@5% 50
Facility cost@10% 100
Std cost 1150

PO
Base Price 1000 ==>vendor Billing
OH Recovery 50 Stastical Cond Type
100 Stastical Cond Type

Dr Stock 11500

Cr GR/IR 10000
Cr Transportatio 500 Cr
Cr Facility 1000 Cr
 10PC

11500

endor Billing
cal Cond Type
cal Cond Type

Factory CC 500
Factory CC 1000