Why do you create SAP Production Order or Process Order
Why do you create SAP Production Order or Process Order
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Why do you create SAP Production Order or Process Order
Criteria to create an Order: Think over it
All the products which are manufactured in-house and stored in the inventory would need an order in SAP.
One order in SAP is always created for only one product. You cannot have two finish products being produced from one order. On the other hand you could have one finished product being produced and also a co-product of appreciable value being produced from the same order in a predetermined percentage split.
The first goal in implementing SAP PP or SAP PPPI is to understand the products which are manufactured in the organization and the way they are manufactured. It becomes difficult for a consultant to understand for which products we create a production order.
There is always confusion on how many semi-finished products go in to making a final product. In SAP, all the semi-finished products would have their own BOM and Task lists leading to them having their own orders. The best way to decide this is by finding answers to some questions like:
a) During the production of the final product, are there any stages where you break the production process and store the “half made product” for appreciable amount of time. This breaks the continuity of manufacturing
Wherever the production breaks and storage is required, you can call the “half made product” as a semi-finished product.
All the semi-finished products have their own BOM and there own Task list and thus they would have their own orders.
b) A final Product may already have semi-finished products marked which go in to making it. Thus we have to adopt the same and create separate orders for the same.
c) Finally, one more interesting argument can be, anything in SAP which needs to be produced and stocked should have an order.
d) Even if the organization decides to stop storing a semi-finished product in inventory and optimize/increase the continuity of the production, they have to keep in mind that they cannot ever bring it in to stock for the purpose of further consumption or sale to any customer (if ever they decide to sell it).
Bottom-line: You have to create multiple orders in the system for producing each of the stock able products.
For example:
If you have to make a product “A” and it has a BOM structure as below, then you would need to create 3 separate orders each for “A”, “B” and “C”.
SAP Production Order / Process Order for finished Products:
All the products which are manufactured in-house and stored in the inventory need an order. Thus all the finish products which are manufacture in-house and stored would have one.
Receiving Co-products: You can receive co-products from the order, but the problem with co-products is that it reduces the total percentage of the header material to be received stock proportionate to the percentage you have received for the co-products. For example if the predefined co-product split rule is 95% receipt for the header material and 5% for the co-products, you can only receive 95 units of 100 units for the header material and 5 units for the co-product material.
So as to receive co-products from an order, you can define the settlement rule or the percentages that would be received for the co-product and header material. The co-product also needs to be maintained in the bill of material with a negative quantity with the “co-product” indicator selected.
You can receive co-products from the order as you receive the header material in to stock (using 101-MB31).
Receiving by-products: By definition, by-products are products which carry very less value and are received during production of the main product. These products are either sold off for very less price or scrapped eventually. By-products are received from an order using a different movement type (531 – transaction code MB1c). The only problem in receiving by-products is that, every receipt of by-product reduces the order cost proportionate to the cost of the received product. So if you receive semi-finished products as by-products it will reduce the cost of the order immensely.
So as to define a material as by-product being received from an order, you have to maintain the material as a component in the header material BOM with a negative quantity.
When you create one order, the only material that you can receive in stock is the header material for which you are creating the order. You cannot receive multiple semi-finished materials from that order, in to stock.
Though you can receive co-products from the order, but the problem with co-products is that it reduces the total percentage of the header material to be received stock proportionate to the percentage you have received for the co-products. For example, if the predefined co-product split rule is 95% receipt for the header material and 5% for the co-products, you can only receive 95 units of 100 units for the header material and 5 units for the co-product material.
Remember you can also receive many by-products from one order (which are supposed to be for materials which do not have appreciable value at all) apart from receiving the header material. The only issue here is that the by-products which are received
There is no method formulized to receive semi-finished products in to stock from the same order as the products being produced on the production line have no identity (have no material codes) at all in SAP.
Is there a Work around to create only one order and receive multiple semi-finished products?
There is a method according to me, which can be used as a work around through which you can create just one order as well as receive multiple semi-finished products from that order.
For example:
If you have to make a product “A” it has a BOM structure as below, then you would need to create 3 orders each for “A”, “B” and “C”.
Though there is a method to avoid creating 3 orders and just create one order. Follow the steps as below:
Step 1: Create a Bill of Material as below:
Create 2 Phantom materials in the SAP and then create Bill of Material for the same, with the component of “B” assigned to the “X” BOM and components of “C” assigned to the “Y” BOM. Then assign the semi-finished material “B” to the Phantom BOM “X” and assign the semi-finished material “C” to the Phantom BOM “Y” as shown below.
The components B and C assigned to the X and Y BOM are assigned a negative qty to declare them as by-products.
Step 2: Component assignment in the task list
When you create a Routing or Recipe for the finish product “A” as below, assign the components to required operations. You would combine the operations required to produce the semi-finished product “B” and Semi-finished product “C”, in one task list.
Let’s say you had 3 operations which were originally used for product “B” and 2 for product “C” and there are 2 operations added for manufacturing the product “A” itself.
Therefore the new Routing for Product “A” (Combined Routing) is as follows:
Operation 0010 -
Operation 0020 -
Operation 0030 - Assign components – E, F, G, B
Operation 0040 -
Operation 0050 - Assign components – X, Y, E, C
Operation 0060
Operation 0070
Step 3: Receiving Product “B” and “C” in between the production of product “A”.
Mark the semi-finished products “B” and “C” as backflush materials.
Create an order for the header material “A” and start creating the operation confirmations, when you create the confirmation at operation 0030, the component “B” is automatically backflushed and received in to stock as by-product through movement type 531.
Once the semi-finished product is received in stock, it would remain in stock and then the users would have to manually re-issue the product “B” to the same order using movement type 532. This nullifies the 531 activities; as if you had never done 531 on the order.
Similarly the product “C” would be received in stock at operation 0050 as by-products (movement type 531) and re-issued to the order for production of the header material “A”, using movement type 532 (byproduct reversal) again nullifying the by-product receipt activities.
In short, when the order is still in processing you would receive product “B” and “C” as byproducts (movement type 531) and stock them and eventually re-issue them for production of the final product “A” using movement type 532 (reversal movement of 531).
You could possibly think of automating the process of re-issue of the semi-finished products to the order using 531 movement type as required using ABAP developments.
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