Enterprise Wide Information Systems Manufacturing Planning and Execution (cont.) Instructor: Richard W. Vawter

1. Enterprise Wide Information Systems Manufacturing Planning and Execution (cont.)Instructor: Richard W. Vawter

2. Topics • Organizational Elements and Master Data • Business Process for Manufacturing Planning and Execution • Reporting and Analysis

3. Manufacturing Planning and Execution • Manufacturing Planning is the process of using forecasts and customer demand to create production and procurement schedules for finished products and component materials. • Manufacturing Execution is the process of producing finished products and component materials and recording all shop floor activities and inventory movements.

4. Manufacturing Planning and Execution • The overall manufacturing planning process comprises: • Forecast values and requirements are first determined • Master schedule items are planned • Material requirements planning is then calculated • The overall manufacturing execution comprises: • Production orders are first released • Materials are issued next • Completion confirmations are then performed • Goods are finally received into stock • The manufacturing process affects capacity, costing, inventory, reporting, and analysis

5. Planning process Execution process S O P Production Order exec. Sales Info System Procurement Sales & Oper Planning Demand Mgmt MPS MRP Manufacturing Execution Order Settlement Forecasting CO/PA Inventory Costing Capacity Production Master Data Reporting and Analysis Five Phases of the Manufacturing Processes 1. 5. 2. 3. 4.

6. Planning process Execution process S O P Sales & Oper Planning Demand Mgmt MPS MRP Manufacturing Execution Order Settlement Forecasting Sales and Operations Planning (Phase 1) The forecast values and/or requirements from customer order management, sales information system, and controlling are inputs to the sales and operations planning phase.

7. Sales and Operations Planning (cont.) • The main steps in sales and operations planning are: 1. Creating a sales and production plan 2. De-aggregating the planning values 3. Transferring the planning values to demand management • There are four ways to create a production plan: • Based on sales • Based on target inventory • Based on current days on sales supply • Based on running down the inventory to zero

8. Planning process Execution process S O P Sales & Oper Planning Demand Mgmt MPS MRP Manufacturing Execution Order Settlement Forecasting Demand Management (Phase 2) Demand Management links top-level requirements planning (SOP) with materials planning (MPS and MRP).

9. Demand Management (cont.) • Demand Management... 1. Determines the requirements dates and quantities for important assemblies and 2. Specifies the strategies for planning and producing or procuring finished products. • The result of Demand Management is the demand program.

10. Requirements Input: Maintain planned independent requirements Copy from sales plan Copy from production plan Copy from forecast Maintain customer independent requirements Demand program MPS or MRP Demand Management (cont.)

11. Planning process Execution process S O P Sales & Oper Planning Demand Mgmt MPS MRP Manufacturing Execution Order Settlement Forecasting Master Production Scheduling (Phase 3) The independent requirements from Demand Management initiate the master scheduling process for process for MPS designated items. The master production schedule is the anticipated build schedule.

12. Motorcycle Run MPS at this level Power Train Chassis Run MRP at this level Rear Wheel Front Wheel Gear Motor Exhaust Frame Brake MPS Drives MRP Independent Requirement

13. Power Train Chassis Motorcycle MPS Run MPS creates planned orders for top-level items to satisfy independent requirements from Demand Management. Planned order for the motorcycle creates dependent requirements for all components Independent Requirement There are no planned orders at this level, only dependent requirements.

14. Planning process Execution process S O P Sales & Oper Planning Demand Mgmt MPS MRP Manufacturing Execution Order Settlement Forecasting Material Requirements Planning (Phase 4) In material requirements planning (MRP), the system calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production.

15. Material Requirements Planning (cont.) • In material requirements planning (MRP), the system calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production. • MRP requires exact requirement quantities, which allows you to work with particularly low safety stocks. • The output of MRP is either a planned production order, a purchase requisition, or a planned purchase order. Note: The purpose of MPS and MRP is to guarantee material availability !

16. Planned Order ? Purchase Order Production Order Purchase Requisition Material Requirements Planning (cont.) Converting Planned Orders M P S Conversion depends on the requirement type and the special procurement key. M R P

17. Summary of the Four Planning Phases of the Manufacturing Process. • Each step in the manufacturing planning process corresponds to a different material planning level. • Each planning level provides input to the next level. Planning Steps Planning Levels Forecasting (Profitability Analysis) - Revenue forecasting - Sales forecasting (quantities) Sales and Operations Planning - Sales plan - Production plan Master Production Scheduling - Demand program - Adjusted master plan Material Requirements Planning - Dependent requirements - Planned production - Procurement plan CO/PA Co. Region 1 Co. Region 2 OK? SOP Product group OK? Feedback / Replanning MPS Product 1 Product 2 OK? Assembly of 1 Assembly of 2 MRP OK? Parts for 1 Parts for 2

18. Planning process Execution process S O P Sales & Oper Planning Demand Mgmt MPS MRP Manufacturing Execution Order Settlement Forecasting Manufacturing Execution Manufacturing Execution is initiated by releasing each production order to the shop floor. Execution Phase

19. Production Order Production Orders: Contents When to Execute Raw Materials Quantity of Finished Goods Production Costs Incurred Resources

20. Purchase Requisition Planned Order Production Order Production Order Execution Process Production orders go through a series of steps: Planning MRP Execution Order Release Goods Issue Completion Confirmation Goods Receipt Order Settlement

21. Topics • Organizational Elements and Master Data • Business Process for Manufacturing Planning and Execution • Reporting and Analysis

22. Standard Reporting • The standard production reports and analyses provide an overview of production transaction data. • Examples of standard reports and lists displays for each category include: • Master Data • Sales and Operations Planning • Master Planning • Material Requirements Planning • Production Control • Capacity Planning • Kanban • Product Costing

23. Logistics Information Systems Quality Management Information System Sales Information System Purchasing Information System Shop Floor Information System Maintenance Information System Inventory Controlling Sales and Distribution (SD) Production Planning (PP) Materials Management (MM) Quality Management (QM) Plant Maintenance (PM) SAP’s Logistics Processing Modules Logistics Information System (LIS) LIS Planning functionality is combined with sales and operations planning (SOP) to form one central planning and forecasting tool.

24. In Summary: • Manufacturing Planning is the process of using forecasts and customer demand to create production and procurement schedules for finished products and component materials. • Manufacturing Execution is the process of producing finished products and component materials and recording all shop floor activities and inventory movements. • The output of MRP can be planned orders or purchase requisitions. Planned orders are converted into either production orders or purchase requisitions.

25. In Summary (cont.) • The reporting tools used in the manufacturing environment are: • Standard Reporting - e.g. Lists • Logistics Information Systems - e.g. Shop floor information systems