SAP PP Overview

Production Planning (PP) is a core module in SAP (both ERP and S/4HANA). As the name
suggests, SAP PP is all about planning the manufacturing process. In more precise words,
SAP created the PP module for supply chain planning which covers areas such as customer
requirement management, production planning in a plant, requirement forecasting,
quantity and capacity requirement planning,

SAP PP supports three manufacturing methods:

1. Discrete manufacturing
2. Process manufacturing
3. Repetitive manufacturing

Each of these manufacturing methods has its own process which provides unique
functionalities to the respective industries. But the core concept in all the
methods is based around supply chain management. Supply chain management is
about the management of the flow of goods and transforming raw materials into
finished products.

Master Data in PP

Master data is a vital component in the ERP. It is the base on which all the
functionalities of the ERP are built upon. All modules in SAP have unique master
data and when it comes to production planning, the master data are as follows:

1. Material Master – material master acts as the central point for all the material-related
details. From the PP perspective, basic data, MRP views, and the work scheduling view
are the key areas in the material master.
2. Bill of Materials – BOM consists of all the components and consumptions which are
required for the manufacturing of products.
3. Routing – Routing is the sequence of operations followed to produce a semi-finished
good or a finished good. Routing is based on the work centers.
4. Work Center – Labor, machine, or a group of machines used to perform production
operations. Work centers are important for capacity planning, scheduling, and costing.
5. Production Versions – Combination of a BOM and routing data which is used to
uniquely identify a production method.

Supply Chain Planning

Supply chain planning and management is the core concept that is integrated
throughout the PP domain. The supply chain plan is a cycle of activities that
consists of:

 Sales and operations planning

 Demand management
 Long term planning
 Master production scheduling
 Material requirement planning
 Shop floor control
 Settlement

When carrying out these different activities, capacity planning and inventory
management play a vital role. Capacity planning is important to handle the
capacity that is available and to manage and allocate it in an optimal manner. If
done accurately, this allows higher levels of productivity and better utilization of
resources.

Supply Chain Planning Overview

Production Planning and Control

Production planning and controlling is another important aspect covered under

the PP domain and is a part of supply chain management. Production planning is
mainly focused on how the demand is managed and based on the demand, how
the requirement planning is done.

In SAP, demand can be entered as a planned independent requirement or as a

sales order requirement. Sales order requirements can be called customer
requirements because it has a direct relationship to the customer at the point of
order creation. These two demands can be called the make-to-stock and make-to-
order production scenarios. When the demand is entered into the system, a
master production schedule can be done.
The master production schedule is used mostly to determine when the materials
must be used to produce a product. The next step is the execution of MRP. The
MRP determines the quantities that need to be ordered from each material in the
bill of materials. This will also plan the dates on which the assemblies need to be
carried out. Both planning methods can be used to effectively plan the demand.

Once MRP is executed, based on the production methods such as discrete or

process manufacturing, procurement proposals will be created.

Productio
n Planning and Control

After MRP, the next activity is capacity planning and leveling. Even though MRP
creates the procurement proposals, it is required to plan the capacity in an
optimal manner. This allows the production run to be executed seamlessly
without any floats. Capacity leveling is done to manage the capacities and ensure
that capacity overloads do not occur. It can be done through work centers.

SAP Production Order

Production order is the main transactional data in the PP module. Once the MRP
is executed, plan orders are created for the materials that are produced in-house.
Plan orders are then converted to production orders and then released when the
actual production is done.

A production order is a formal document that specifies the materials needed to be

produced and in which quantities. It will have components copied from the mater
data such as the components required for production copied from the BOM and
the operation sequence and work centers derived from the routing.
The production order can be used to check the material availability, and actual
production quantities are recorded into the production order. This is useful when
calculating the actual costs of production. Most of the PP-related shop floor
activities will be based on the production order.

Once the actual production is done, production order confirmations are carried
out to record the actual output in the production. During the confirmation of the
production order, it is possible to issue materials automatically using the
backflush technique. Goods receipt can also be done automatically based on the
control key settings maintained in the work center.

As mentioned earlier, actual production costs are recorded against the production
order. The costs can be labor or machine-related costs. There can be multiple
activity-related cost items, and these can be captured through the production
order.

Once the production order is fully confirmed, order settlement and closure are
done. Order settlement finalizes the costs of the order and the goods issues and
goods receipt against the order. Once the order gets the TECO status, it will not
be considered during the MRP run and will be removed from the stock
requirement list. If there are any open reservations in the order, those will be
deleted once the TECO status is set.

The closure of the production order marks the end of the supply chain planning
cycle. This concludes our SAP PP Overview tutorial.

Production Planning Process in SAP

Supply chain management focuses on the management of the flow of goods and
how the raw materials are transformed into finished products. Below are the key
steps that are handled through the production planning process in SAP:

 Sales and Operations Planning (SOP)

 Demand Management
 Long-Term Planning
 Master Production Scheduling
 Material Requirement Planning
 Shop Floor Control
 Settlement

Capacity planning and inventory management are used throughout this cycle.
Supply Chain Planning Cycle

Sales and Operations Planning

The Sales and Operation Planning (SOP) component in SAP manages sales,
production, and other supply chain targets of the organization. This is done
through a planning tool that uses historical and current data to set up the future
supply chain targets in the system.

Information passed through sales and operations planning is passed into Master
Production Scheduling (MPS) and Material Requirement Planning (MRP). SOP is
also connected with profitability analysis, cost center accounting, and activity-
based costing. There are two main planning methods available in SOP and we can
customize further methods based on the requirement.

1. Consistent planning
2. Level-by-level planning

Demand Management

Demand management in production planning is handled through the planning

strategy. Planning strategy determines the method in which a product is
manufactured. The main demand management method is planned independent
requirements (PIR). The PIR creates demand in the system, and it can be used in
a make-to-stock (MTS) planning strategy.

The MTS is a planning strategy where the production is done without any
relationship to a sales order. Manufactured components will be stocked in a
warehouse and when the customer demand arises, the stock will be issued
against a sales order. Two planning strategies are mainly used in an MTS
scenario. The first is strategy is 10, which only considers the PIR quantity. The
second strategy is 40, which considers both PIR and sales orders. When sales
orders are raised, PIR quantity is reduced during the MRP run.

A make-to-order (MTO) planning strategy is based on sales orders. Production

does not start until the customer sales orders are placed in the system.
Production and inventory are managed with the sales order link and the
production process can be tracked using the sales order.

Long-Term Planning

Long-term planning is used to check the future demands of materials based on

the bill of material (BOM). Long-term planning can be carried out in simulation
mode. It will check the capacity availabilities, material forecast, and delivery
timelines, and if the requirements can be fulfilled, simulation can be transferred
into an operational mode.

Long-term planning can be executed based on an existing production BOM. It is

also possible to define BOM and routing specifically for long-term planning.

Master Production Scheduling

Master production scheduling (MPS) enables the planning of critical materials of

an organization with special tools. MPS increases material availability, reduces
storage costs, and increases planning stability. MPS materials are planned
independently and will not be considered in the regular MRP runs.

Material Requirement Planning

Material requirement planning (MRP) is the heart of the production planning

process. MRP matches the demand and the supply and proposes the best
methods for executing the production process. The output of the MRP run is the
procurement proposals.

There are two main procurement proposals in SAP. These are the plan order and
purchase requisitions.

Plan order is generated through MRP for materials that are produced in-house.
Plan orders are converted into production orders when the manufacturing starts.
The second procurement proposal which MRP generates is the purchase
requisitions. Purchase requisitions are generated for materials that are procured
from external parties. These include mainly the raw materials. Purchase
requisitions are converted into purchase orders.
When the MRP is executed, the BOM will be exploded. Based on the planning
strategy of the materials, a procurement proposal will be generated. There are
three processing keys used for MRP.

1. NETCH – net change planning considers materials that have undergone an MRP
relevant change after the last MRP run. An example of MRP relevant change is the
increase of stock in the system.
2. NETPL – net change in the planning horizon is similar to NETCH but it works for a
defined planning period.
3. NEUPL – regenerative planning executes MRP for all the materials in the system,
irrespective of MRP relevant changes.

Shop Floor Control

Shop floor control in production planning is mainly about executing the production
functions within the shop floor. Shop floor control determines which materials
need to be produced, the quantities to be produced, and the locations in which
the materials are to be produced. Shop floor control uses production planning
master data such as BOM, routing, work center, and production versions when
executing the shop floor activities.

Shop floor activities are based on a production order or a process order.

Production/process order has the quantities to be produced, scheduled dates,
routing sequence, work centers, and materials that are consumed during the
production. Monitoring and controlling the shop floor activities are essential for
the supply chain management.

Capacity Planning

Capacity planning is essential for the supply chain management process. Demand
vs supply capability is based on the available manufacturing capacity. The
manufacturing capacity is dependent on the capacity of the work centers. A work
center can be a person, a group of people, or a machine.

For each work center, individual capacities can be defined. Capacities are
generally defined in minutes or hours. Based on the work center capacity and the
standard values of the product, schedule dates will be determined for production.
Scheduling determines when the production can start and when it can end based
on the work center capacity and other defined constraints.

Accurate capacity planning is required to achieve a seamless production planning

process.
Inventory Management

Inventory management deals with the management of material stocks on a

quantity and value basis. Documenting goods movements and carrying out
physical inventory are also important functions of inventory management.

Inventory management also provides the capability to handle special stocks like
sales order stocks and consignment stocks. When it comes to production
planning, managing the material stocks and executing goods movements are
essential activities on the shop floor. Therefore, inventory management is used
throughout the production process.

Settlement

Once the production is complete, settlement runs are carried out to identify and
evaluate the variances. Production orders will be technically completed, and this
marks the completion of the production planning process.

Demand management in SAP is an important function of a planner. It is important

to anticipate the demand from the customers and satisfy that demand by ensuring
the availability of materials in a timely manner. Demand management mainly
focuses on forecasting the demand and balancing it. Forecasting tools are
important for demand management. In today’s business environment, sales,
production, procurement, and distribution play a vital role. Managing the above
areas will determine how effective and efficient an organization can respond to
demand.

. When it comes to demand management in SAP, planning strategies and planned

independent requirements play a vital role. We will look at each of these areas in
the next sections.

Planning Strategies in SAP Demand Management

A planning strategy is a unique identifier that is used to determine how a product

is manufactured and the manufacturing process it follows. At a higher level, there
are two main planning strategies in SAP.

 Make-to-order (MTO)
 Make-to-stock (MTS)

The make-to-order (MTO) strategy is based on the customer demand which is

received through a sales order. Production, procurement, and inventory
management will be done against the sales order. This is useful if you want to
track your production process individually for each order. After completing the
production, finish good stocks will be delivered against the sales order.
The make-to-stock (MTS) strategy is based on the process where manufacturing
is done for a forecasted demand and the production is done for stock. There is no
specific sales order requirement at the production starting point. When the
customer order is received, it will be fulfilled with the available stock.

A planning strategy group is used to maintain the planning strategy for a material.
Follow the below steps to maintain the planning strategy group:

1. Execute the transaction MM03 to view the material master.

2. Enter the material and the plant.
3. Select the MRP 3 tab of the material master and locate the planning strategy group
field.

Below are the most commonly used planning strategies.

 10 – MTS production
 20 – MTO production
 40 – Planning with final assembly
 50 – Planning without final assembly
 60 – Planning with planning material

Strategy Group

A planning strategy group can be used to define alternative planning strategies

for a material. The system will always use the main strategy by default in the
planning run. An alternative strategy needs to be manually selected.

E.g., if a material must follow both make-to-order and make-to-stock processes,

we can define one strategy as the main strategy and define the other as the
alternative strategy. When the sales order is received, we can determine the
required type and the planning strategy will be picked for the material.

It is possible to assign a strategy group to an MRP group. This is useful if we

want to use the same strategy group for multiple materials which share a
common method of production planning. If there are any exceptions, they can be
maintained in the MRP 3 view of the material master, and the settings in the MRP
3 view will have priority over the MRP group. Follow the below SPRO path to
assign a strategy group to an MRP group.

SAP IMG -> Production -> Production Planning -> Demand Management -> Planned
Independent Requirement -> Planning Strategy -> Assign MRP Group to Strategy
Group

Planned Independent Requirements (PIR)

The PIR is an important planning method when it comes to demand management

in SAP. During the MRP run, the system will check for the active version of the
PIR, and procurement proposals will be generated. The PIR can be created
independently. Follow the below menu path to create a PIR.

SAP Menu -> Logistics -> Production -> Production Planning -> Demand
Management -> Planned Independent Requirements -> Create

The MD61 transaction code can be used to directly call the PIR creation
program. PIR can be maintained based on different time intervals such as days,
weeks, and months. PIR quantities can be entered manually or be copied from
other planning tools. It can be copied from sales plans, production plans, or even
from a simulative plan. By using the version function, it is possible to have
multiple plans and make them active or inactive. It is possible to maintain
simulative plans and simulate the MRP.

PIR is automatically reduced in the system. But it is important to check the PIR
status in the system and remove or reduce the PIR. This ensures that non-
relevant PIRs are not considered during the planning run. To reduce the PIR,
follow the below menu path or execute the transaction MD74.

SAP Menu -> Logistics -> Production -> Production Planning -> Demand
Management -> Environment -> Independent Requirement Reorganization ->
Adjust Requirements.

Planned Independent Requirement Reduction

PIR is reduced during the goods issue rather than being consumed. During the
make-to-order strategy 10, the oldest PIR is reduced first. PIR reduction can be
used in planning strategies such as 40, 50, and 60.

During the planning strategy 40, PIR can be reduced when a sales order is placed.
If the strategy is configured correctly and when the VSF requirement type is used,
PIR is reduced. Consumption mode in the material master MRP view can also be
used to further control the reduction. By maintaining the consumption mode, we
can give a time limit. If a sales order is placed within this time limit, it will reduce
the PIR. This suggests that PIR has a direct link with the planning strategy used.

Production Execution in SAP Demand Management

The demand management process ends with the production execution process.
Once the demand is created in the system, it will be captured through a
production order or purchase order. Plan orders will be converted into production
orders. Purchase requisitions will be converted into purchase orders.

Production orders will be used to carry out production-related activities. A

production order confirmation will create inventory in the system. Once the
inventory is built into the system, PIR will be reduced, marking the completion of
demand fulfillment. The delivery of manufactured items to the customer marks
the completion of a successful demand management cycle in SAP.

Storage location is one of the key organizational units in SAP. It is used to

differentiate material stocks within a plant. Storage locations are important in
SAP modules like MM, PP, SD, and EWM.

Organization levels are defined in SAP to represent the legal or the organizational
views of a company. Defining the organization level is a key element in any SAP
implementation project. First, we need to analyze the structural and process
organizations within the company where SAP is going to be implemented. Then
these elements are mapped with the SAP organization levels. It is important to
get the organization level definition done accurately in the first attempt. This is
because it is difficult to change this assignment once done.

There are mainly five organizational levels in SAP. These are:

 Client
 Company code
 Plant
 Storage location
 Purchasing organization / purchasing groups

Out of these, storage location is a key organizational level. Storage location is an

organizational unit which differentiates material stocks within a plant. In SAP,
inventory management is done at storage location level.

Storage location is assigned to a plant when the organization structure is defined.

Storage location is defined by means of four-character alphanumeric key. This
key is unique for the plant. This means that a plant can have multiple storage
locations, but each storage location can only be assigned to one plant. Within the
client, same storage location key can be used but not within a single
plant. Physical inventory is also carried out at storage location level.
SAP Storage Location Example

A storage location can be physical or virtual. Raw material store is an example for
a physical storage location. Scrap storage location can be taken as an example
for a virtual storage location. It is not possible to give a capacity for a storage
location. If we want to give a capacity, it can be done in SAP warehouse
management.

Define New Storage Location

New storage locations can be defined in customizing. To create a new storage

location, follow the below IMG path (transaction SPRO).

IMG -> Enterprise Structure -> Definition -> Material Management -> Maintain
Storage Location

We can input the transaction code OX09 and directly go to the storage location
definition screen. Before defining the storage location, first we need to select the
plant which the storage location is associated with. This is mandatory because as
mentioned earlier, storage locations are assigned to a plant. Once the plant is
entered, we can see the storage locations which are already defined for the given
plant, if there are any.
To create a new storage location, click on the “new entry” button. Now, enter the
four-digit alphanumeric code which we want to use with the storage location. We
can also give a description for the storage location. Example: “Finished Good
Store”.

Next, click on “addresses of storage locations”. Next, click on “new entry” button.
A new screen will open. In this screen we can define further details of the storage
location. If there is an address for the storage location, we can enter it here. We
can also enter the search terms, communication methods such as email, mobile
number, and fax. These details are not mandatory. Once the details are entered
click on save button. Now the new storage location will be added to the plant.
This concludes the storage location definition.

he SAP PP Master Data is a unique set of data that can be used multiple times
once created. These data objects are not subject to regular changes and build the
data structure upon which the business transactions are done in SAP.

There are five main master data objects related to SAP PP:

1. Bill of Material
2. Work Center
3. Routing
4. Production Version
5. Production relevant views in the Material Master

Bill of Materials in SAP PP Master Data

SAP Bill of Materials consists of the components and the consumption of those
components that are required to manufacture or assemble a product. The
components can be further divided into:

 Semi-finished goods
 Raw materials

Semi-finished goods are considered intermediate components that are used to

manufacture the finished goods. Semi-finished goods are mainly produced
internally, or can be purchased from an external party. Raw materials are
primarily the components that are procured externally. Both semi-finished goods
and raw materials create the BOM structure. The BOM consists of header data
and item data.
 SAP Bill of Material Master Data

Work Center

SAP work center is a meaningful arrangement of machines and people that can
assemble or manufacture finished goods or semi-finished goods. The definition of
a work center can be displayed in three dimensions:

1. Capacity
2. Scheduling
3. Costing

Capacity defines the time available in the work center per day throughout the
factory calendar. Scheduling defines how the order quantities will be scheduled
across the available capacity. Costing defines the cost of running the work
center. Each dimension shares parameters with each other, and these parameters
are defined by the standard value key.

Standard values are planned values for the execution of an operation and are
maintained in the operation. Typical standard values are, for instance, set-up and
processing. The execution time, costs, and capacities are calculated in
operations using formulas from the work centers and standard values from the
operations.

Routing in SAP PP Master Data

SAP routing describes the process to manufacture a product (sub-assembly or

finished goods). It is a sequence of activities that need to be followed. This
includes the operations to be performed, their sequence, the work centers
involved, and the standard time for setup and process.

Routings could contain the following operations:

 Internal production operations

 Subcontracting operations
 Administrative operations
 Rework operations
 Inspection operations
Production Version

SAP production version determines the different production techniques that can
be used to manufacture a material. A valid production version is mandatory in
master data to create production orders in SAP S/4HANA.

A material may have several BOMs that determine the components used in its
production. The production process can also be described in various routings.
Data on the different methods or techniques used to produce the material is
recorded in production versions that are assigned to the material.

Production Relevant Views in SAP Material Master

SAP Material Master record consists of all the material-related details which are
important to all the core modules of SAP. Basic data views, MRP views, and the
work scheduling view of the material master fall under the production planning
domain. Basic data views are planted independently whereas the MRP views and
work scheduling view are plant-dependent.

What is a Material Master?

A Material Master is a central master data of an organization which contains

information related to the procurement, production, quality, sales and financial
data for a material. The information in a SAP PP material master will be stored at
different levels:

 Client Level or general data

 Plant Level
 Storage Location Level
 Valuation Level

Material type and Industrial sector in Material Master

Depending on the material type and industrial sector, we can restrict material
views and fields. E.g., material type ROH which is Raw material type enables
Purchase, Production and Accounting views, whereas material type HALB which
is semi-finished product enables Sales, Purchase, Production and Accounting
views. The same way industrial sectors will enables specific fields in Material
master. Depending on procurement method of materials (purchase or production
or trading) a suitable material type has to be selected.

Views Available in SAP PP Material Master

 General data
 Purchase Data
 Sales data
 Material Planning data
 Production information
 Quality Information
 Accounting and costing

Role of a Material Master in Production Planning

The following views are relevant for production planning:

 Material Requirement Planning (MRP1, MRP2, MRP3 and MRP4 views)

 Work scheduling view

Material master contains information related to planning and production

execution.

How to Create SAP PP Material Master?

Material master contains several views which are maintained by the respective
departments. Material master are created for all materials that a company
procures, produces or sells. We can create material master by accessing the
following menu path:

Create a Material Master in SAP PP – Menu

Path

We can also directly access the transaction by typing MM01 transaction code.
The system will show the initial screen of MM01 transaction.
 Initial Screen of MM01 Transaction

Here Material number can be external or internal number. Depending on business

requirement we choose the suitable number range. Definition of a number range is
specific to a material type. We can define different number ranges for raw
materials and finished products.

Next, the SAP system will show the window to choose views of the material
master that we would like to create or edit.

Select Views of a Material Master that Need to be Created

How to Change/Display Material Master

The transactions mentioned below are used to change and display material
master:

Transaction Description

MM02 Change Material Master

MM03 Display Material Master

We can also do mass changes of the material master particular fields using
transaction MM60.

SAP PP Material Master Views

Next, let us talk about some of the important fields in MRP and work scheduling
views.

MRP Views

MRP views in a material master give the following information:

 How the material needs to be planned

 How the material to be purchased or produced
 Material lead time information
 Safety stock details
 Planning strategy of production (Make-to-order or Make-to-stock)

Work Scheduling View

A Work Scheduling view contains the following details:

 Person responsible for production

 Lead time for the production process
 Product is batch maintained or not
MRP1 View

MRP TYPE

MRP (Material Requirement Planning) procedure in MRP1 view determines how

the material will be planned during MRP run.

SAP MRP (Material

Requirement Planning) Procedures

A Fragment of MRP1 View in

SAP PP Material Master (1)

 Planning procedure “MRP” plans the material according to current requirements. The
requirements may be a sale order, a production plan or a sales plan.
 Planning procedure “MPS” also plans the material according to current requirements.
The requirements may be a sale order, a production plan or a sales plan.
 The difference between MRP and MPS planning procedure is that MPS material will be
only planned in foreground/interactive mode.
 Material which are critical or used in bottleneck resources or influence the company
inventory cost can be defined as MRP and planned separately.
 MRP will not plan MPS item as it needs separate attention of the planner.
 Planning Procedure “Consumption based planning” plans the material based on its
historical data or past consumption data.

Example:

A reorder level of the material will be set based on its past consumption history
manually or automatically (by forecast).

 Let say last 6 months average consumption per month was 200 PCS
 Maximum Lead time for procuring the material is let say 25 days
 Reorder level = Average daily consumption * Maximum lead time of the material
 Reorder point will be calculated as (200/30 ) * 25 = 166.666 PCs = 167 PCs
 Here reorder level is based on the past 6 month historical data.
 In automatic planning scenario, the system will arrive to this reorder level from the
forecast run. But in manual planning scenario, reorder point will be calculated by
planner manually and the value will be manually set in the material master.

PLANNING TIME FENCE

Planning time fence is period in days where system will disturb the current
planning situation or existing planning situation. This topic will be explained in
details in MRP lesson.

LOT SIZE

Lot size information here will be used at the time of planning to calculate
purchase or production quantity.

A
Fragment of MRP1 View in SAP PP Material Master (2)

Lot Sizing Procedures in SAP PP

Lot sizing Procedures are here classified based on Quantity, Time and Cost.

Lot Size
Static Lot size Period Lot size Optimum Lot s
procedure

Procedure Procurement quantity is In period lot size, system groups the It group the qu
Usage calculated based quantity requirement quantity which are in the costs (setup, l
information maintained in particular time interval. (Week, Month, independent c
 material master etc.) minimized.

EX – Lot for Lot Size

GR – Groff reo
TB – Daily Lot size
FX – Fixed Lot size
Example
WI – Least un
MB – Monthly Lot size, etc.
procedure
HB – Replenishment up to
Maximum stock level

Depending on the lot size some of the fields are required to be entered.

MRP2 View

Next, let’s have a look at the MRP2 view of SAP PP material master.

A Fragment of
MRP2 View in SAP PP Material Master (1)

PROCUREMENT TYPE

During material requirement planning (MRP), once the SAP system calculated
procurement (purchase or production) quantity, it will next determine the
procurement method based on “Procurement type”. The following Procurement
types are available in the system:

F External Procurement

E In-house Production

X Both Procurement types (External or In-house)

Depending on the procurement type the system will create either a Planned order
or a Purchase requisition.

SPECIAL PROCUREMENT TYPE

Here we can define the procurement type more precisely. For example, in the
external procurement the material may be purchased as Subcontractor
Consignment stock or stock transfer from other plant. Examples of special
procurement types:

 10 Consignment
 20 External procurement
 30 Subcontracting
 40 Stock transfer
 50 Phantom assembly

BACKFLUSH

This indicator applicable for BOM components only. This controls the automatic
posting of the components. In Production Planning, we can enter backflush in 3
different levels:

 Routing – Component assignment screen

 Material master
 Work center

BATCH ENTRY

This is also applicable for the component of an assembly or finished goods. If raw
material is batch maintained, when should the batch entry, i.e. batch number
assignment for consumption to be made?

 At the time of Goods issue

 At the time of Production/Process order release
 Automatically when an order is released based on the search strategy and the sort rule.

PRODUCTION STORAGE LOCATION

If material is a component of an assembly, this fields refer to ‘Issuing storage

location”. If material is an assembly or finished material, this fields refers to
‘Receiving storage location”.
DEFAULT SUPPLY AREA

This field is used in KANBAN replenishment process. This is an area where

material will be kept for consumption. It helps to create KANBAN control cycle
between Vendor and Production area.

STORAGE LOCATION FOR EP (EXTERNAL PROCUREMENT)

When system creates Purchase requisition after MRP, this storage location will be
assigned automatically as a receiving location.

A
Fragment of MRP2 View in SAP PP Material Master (2)

IN-HOUSE PRODUCTION

Number of days required to produce the material. This is based on work days
specified in factory calendar. This is lot size independent, i.e. for any of the order
quantity the system uses this value only.

PLANNED DELIVERY TIME

This is number of days required to receive the material, when it is purchased

externally after placing the order. This value is in calendar days.

GR PROCESSING TIME

This is the number of days required for inspection and placing the material in a
storage location. This value is in calendar days.

PLANNING CALENDAR

This is useful when we plan materials using time-phased planning. Some

materials may be delivered by the Vendor on specific day or date, e.g. every
Wednesday or on the 10th of the every month, etc. This type of material will be
scheduled based on planning calendar. Planning calendar has to be created in
separate transaction (MD25) and assigned here.

SCHEDULING MARGIN KEY

We can still add some floats in addition to the material lead times (In-house,
Planned delivery time) using scheduling margin key. This value is in work days.
The following floats are available in Scheduling Margin Key:

 Opening Period: days required for planning to start the production after an order is
created
 Float before Production: days between scheduled finish date and order finish date
 Float after Production days: between order start date and scheduled start date
 Release period: days between Start date and Order release date

Floats in Scheduling Margin Key

SAFETY STOCK CALCULATION

Safety stock will be used in case of any sudden or unexpected demand. We can
set the safety stock manually. Also, it can be calculated automatically based on
forecasted value(s).

A Fragment of
MRP2 View in SAP PP Material Master (3)
MRP3 View

PLANNING STRATEGY

In planning section of MRP 3 view, we can define which planning strategy is

applicable for the material. SAP has provided a wide range of planning strategies:

 Make to order
 Make to stock
 Assembly to order, etc.

Behavior of individual strategies will be explained in tutorials about demand

management.

A
Fragment of MRP3 View in SAP PP Material Master (1)

AVAILABILITY CHECK

A
Fragment of MRP3 View in SAP PP Material Master (2)

In production planning we can perform availability check at various places:

1. At the time of production order creation.

2. At the time of production order release.
3. We can activate dynamic availability check at the time of goods issue (optional).

Availability check is based on the scope of check that we define in customizing of

SAP ERP.
 Sc
ope of Check

In the scope of check, we can define which receipts/stocks elements and which
issues elements are considered when we perform availability check. Here are
some examples of receipt/stock elements:

 Purchase requisition
 Purchase order
 Planned orders
 Production orders
 Safety stock
 QI Stocks etc.
 Here are some example of issue elements:
 Reservation
 Sales requirements
 Dependent requirement
 Sales delivery
 Shipping notification

MRP4 View

Having finished with discussing MRP3 view of SAP PP material master, let us
proceed to MRP4 view.
 A
Fragment of MRP4 View in SAP PP Material Master (1)

SELECTION METHOD

In this section, we can control how BOM and routing will be selected when we
create a production order or a planned order or do these activities in MRP. If more
than one BOM, i.e. an alternate BOM is available for a material, we can control its
selection:

 By its quantity
 By explosion date
 By production version validity.

COMPONENT SCRAP

Some partial quantity of the components may become scrap at the production due
to its nature or operation nature. These kinds of materials need to be planned in
more quantities than the requirement. Percentages in this field will be used for
this purpose at the time of MRP run.

Example:

 Assembly FG001 required raw materials RAW1 and RAW2.

 Let say we defined component scrap for RAW2 as 10%.
 Demand is coming for FG001 for the quantity of 100 PC.
 When you run MRP, the system calculates quantities as below:

Material Demand Stock Required quantity Planned quantity

PC PC PC PC

FG001 100 0 100 1000

RAW1 50 100 50
 RAW2 0 100 110

INDIVIDUAL / COLLECTIVE INDICATORS

This determines whether requirements for this material have to be started

individually or collectively.

MRP DEPENDENT REQUIREMENTS

This indicator will be only used when assembly or components are planned
separately and we don’t want the system to plan them based on dependent
requirements created for finished material requirements. This applicable only for
Make-to-stock production.

DISCONTINUED PARTS

A Fragment of MRP4 View in SAP PP Material Master (2)

This section will be used when you want MRP to plan a different material instead
of the material in subject after effective out date. After this date stocks of this
material should not be exist and the system will replace it by the follow-up
material.

Work Scheduling View

This view completely controls the production order and its execution. Some of
the important fields frequently used in any organization are explained here.
A Fragment of Work Scheduling View in SAP PP Material Master (1)

P-S MATERIAL STATUS

This field controls, when we don’t want a particular department or function in an

organization to use this material. For example, when you want to restrict
production activities for a material which is under design or development in R&D
department, we can set an appropriate status. We can also define our own plant
specific status in SAP customization. We can also maintain Valid from date from
which this restriction will be applied.

PRODUCTION UNIT

When you want to use a different unit of measurement other that Basic UOM, we
can maintain it here.

PRODUCTION SUPERVISOR

A person responsible for the production activity and scheduling for this material.

PRODUCTION SCHEDULING PROFILE

We can define which business transactions need to be executed during

Production order processing. For example, printing of shop floor paper which
contains operation, raw materials required, and user instructions after release of
the order.
SERIAL NUMBER AND BATCH MANAGEMENT

If batch or serial number is required for the material, we can define them in this
view.

TOLERANCE DATA

A
Fragment of Work Scheduling View in SAP PP Material Master (2)

We can define here, the percentage above or below the quantity that can be
posted when we do goods receipt against production order. Unlimited indicator
will allow system to do GR (goods receipt) irrespective of the order quantity.

LOT SIZE DEPENDENT

A
Fragment of Work Scheduling View in SAP PP Material Master (3)

In MRP2 view, we defined the in-house production which is lot size independent,
i.e. for any of the order quantity the system uses this value to calculate planned
end date. If you want the system to calculate it with respect to the lot size, we
can also define here.

SAP bill of materials (BOM) is one of the elements of SAP PP master data which
contains information like list of components and their quantities required to
produce an assembly or a finished good (FG). In SAP, different BOM categories are
available which are used in different applications or functional areas of an
organization.

Bill of Material Application Used

Material BOM Production Planning

Equipment BOM Plant Maintenance

 Functional Location BOM Plant Maintenance

Order BOM Sales and Distribution

WBS BOM Project System

Role of SAP Bill of Materials (BOM) in SAP PP

In SAP production planning, SAP bill of materials (BOM) is used for the
following functions:

1. Material Requirement Planning (MRP)

2. Product costing
3. Material Consumption

Usage of BOM in MRP

 MRP uses BOM to calculate required raw materials or semi-finished goods (SFG) or
components quantity for customer demand of finished materials.
 MRP performs ‘Net Requirement Calculation’ at all the level of BOM by exploding it to
determine the shortage quantity.

Usage of BOM in Costing

 During finished good (FG) product costing, the SAP system performs costing of its
component by exploding BOM.
 Product costing comprise of raw material, activity and overhead costs. Here, raw
material price is maintained in a material master and its required quantity for a
particular FG is maintained in BOM.
 During product costing, the SAP system multiplies quantity in BOM with material master
price to determine its cost against the particular FG.

Usage of BOM in Production Consumption

 When production order is created for an assembly or FG, its BOM components are
copied to the order.
 At the time of goods issue against order, the system posts the consumption based on
this BOM components in an order.
Technical Types of SAP Bills of Materials

There are 3 different types of BOM that are used in SAP PP:

1. Simple BOM
2. Multiple or Alternate BOM (technical type ‘M’)
3. Variant BOM (technical type ‘V’)

Simple Bill of Material

A Simple Bill of Materials

Alternate or Multiple BOM

An Alternate Bill of
Materials

Here, the end product is same but its components are different.

Variant BOM

A Variant SAP Bill of Materials

Here, the end products are different but having common or similar parts like
frame, saddles, etc. and a variant part.

What is BOM Explosion?

BOM explosion means break down of an assembly from a higher level to

components in lower levels. The SAP system breaks down the assembly by means
of its lower level codes. Lower level codes will be assigned by the system
automatically when an item is linked with the BOM. When one material is
appearing in several assembly BOM at different levels, the system represents the
lowest low level code.

BOM Explosion

We can display the lower level code of a material in a material master

(transaction MM03) (additional data menu item or by clicking button).

Low-Level Code in a Material Master

How to Create SAP Bill of Materials?

SAP Bill of Materials can be created by accessing the transaction code mentioned
below

Transaction Code Description

CS01 Create Material BOM

or by navigating to the following menu path:

Create an SAP Bill of Materials

Transaction in SAP Menu Create SAP Bill of Materials – Initial Screen

 A material master must exist for all assemblies and components before creating a BOM.
 Here BOM Usage controls application or business function that can use this Bill of
Materials.
 For example, BOM of a product in a design phase will have the usage ‘2’ which cannot
be used for production purposes.
 Different Values of BOM Usage
Parameter
In component overview, the SAP system shows all the components required to
produce the assembly (for base quantity).

SAP Bill of
Materials Header Data (Base Quantity)

Overview of Components of SAP Bill of Materials

SAP Bill of Materials (BOM) Structure

Each BOM has a unique structure which is applicable for all BOM types as
illustrated below.

SAP Bill of Materials Structure

BOM Header

BOM header contains below information:

BOM NUMBER

This number is assigned internally by the system. System uses this for linking
with transaction data and other PP applications like MRP, production order, etc.

ALTERNATE BOM

This field represents an alternate BOM if more than one BOM exists for the
material.

TECHNICAL TYPE

 This field tells which technical types the BOM belongs to.
 When we create a BOM for an assembly, the SAP system creates Alternate ‘1’ with
technical type “ “ (Blank).
 When we create a BOM the second time for the same assembly, it creates Alternate ‘2’
and changes technical types as “M”
 For products that have common similar parts, BOM will be created as a Variant BOM
(Technical types ‘V’)
BOM BASE QUANTITY

This is the quantity for which component quantity will be entered. This base
quantity will be used in BOM explosion at the time of MRP and costing.

BOM Items

ITEM CATEGORY

Each BOM components is assigned an item category which classify the BOM
items. Here are the possible item categories for BOMs:

Stock Item Item can be kept in stock. The SAP system generates reservation at the time of order cre

Non-Stock Item cannot be kept in stock, may be procured directly at the time of consumption. The S
Item generates PR or Planned order at the time of Order creation.

Variable Size Different sized materials are assigned with this item category. Required quantity is calcu
Item Sizes and Formula entered.

PM Structure
This item category will be used only for Plant maintenance BOM.
Item

Intra Material Temporary material which exist between 2 operations/phases. Commonly used in Process

Document Document (design, drawing, photos, etc.) can be assigned to the BOM as an item using th
Item category. A valid document master record is required for this.

Text Item A text required for shop floor paper can be maintained here.

Class Item This item category is used for configurable material to classify the materials.
Basic Data in BOM Items

FIXED INDICATOR

When component quantity is not based on an assembly quantity and always

consumed in fixed amount, this indicator can be used.

Example:

Catalyst used for a chemical process is always fixed without respect to quantity
of FG produced.

COMPONENT SCRAP

Scrap that occurs when a component is converted into a final assembly is called
‘Component Scrap’. Component scrap can occur by means of any one of the
following:

 Losses during storage

 Losses during delivery from a vendor
 Losses during transportation to production facilities

Component scrap can also be entered in BOM as well as in a material master.

Component scrap maintained in a material master is applicable for all BOM
products. When different component scrap percentage is required for particular
product, it can be maintained in BOM.

Example:

Let’s say 1 PC of Assembly A1 requires 2 PC of Raw material R1 which has 20%

component scrap in Bill of Materials. Assume that there is no stock available for
A1 and R1. When demand of 500 PCs is received for an assembly, MRP calculates
requirement quantity as follows:

Example –
Component Scrap
OPERATION SCRAP WITH NET INDICATOR

Here, the system will only consider the operation scrap percentage entered here
and not include assembly scrap (if any) entered in the MRP-1 view of a material
master.

Example:

Let say requirement quantity of R1 and R2 is 100 PCs.

Example – Operation
Scrap with Net Indicator

GENERAL DATA

General Data of BOM

Component

 Co-Product Indicator is activated if more than one finished product is produced in a

production process.
 Material which are defined as co-product will be entered with (negative sign). This
means, that a particular material will be considered as “Output Material” along with the
header material.
 Material entered with a negative sign but no co-product indicator is activated will be
consider as a “By-product”.
RECURSIVE ALLOWED

When the same material is as a header material as well as BOM item, the BOM is
called “Recursive BOM”. This case frequently happens in Process industry as well
as Pharmaceutical industry. For instance, consider an example below:

 In foundry process, liquid metal is produced by melting charge materials like ion, brass,
etc. They are melted and poured into a mold to form a casting.
 During the melting process unconsumed liquid metal also consumed in every cycle.
 Liquid metal (Unconsumed) + Charge Material (Ion, Brass etc.) under High Temperature
-> Liquid metal
 Here input and output materials are the same which cause recursion in BOM. It leads to
the situation when BOM will be exploded indefinitely without stopping.
 By setting the indicator recursive allowed at BOM item level BOM explosion will be
stopped.

ALTERNATE ITEM GROUP

We can group to gather all alternate items using Alternate Item Group. Alternate
Item Group uses 3 keys to determine the alternative material:

 Usage Probability
 Priority
 Strategy

MRP uses Usage Probability and Priority to create dependent requirements.

Production order also creates reservations based on Usage Probability. But
consumption is based on Strategy defined in the alternate item group.

This can be explained with the following example:

Let say a company manufactures a car where different brands of tires are used to
fit in the car. Depending upon availability, a suitable tire will be used by the
system. Let’s say requirement for a tire (based on car requirement) is 1000 PC
and below settings were maintained in BOM items for an Alternate Items Tire
Brand A, Tire Brand B, and Tire Brand C.
 Example –
Alternate Item Group

Alternate Item
Strategy

DISCONTINUATION ITEM

Discontinuation material is a material which is replaced by its follow-up material.

We can maintain a discontinuation material in SAP material master as well as in
SAP bill of materials. Bill of materials setting override material master record
setting. MRP will transfer the dependent requirement to follow-up material if
discontinued component is no longer in stock or has insufficient stock.

The following conditions must be fulfilled for discontinuation:

 Conditions for
Discontinuation

There are certain cases where we cannot activate discontinuation logic:

1. We cannot activate discontinuation logic for Alternate Items.

2. Co-products cannot be discontinuation items.
3. Non-stock items cannot be discontinuation items.

SORT STRING

Based on Sort String, the SAP system will sort the component’s display in report
and PP transactions.

STATUS/LONG TEXT

Statu
s/Long text in a Component of SAP Bill of Materials
PRODUCTION RELEVANT INDICATOR

 This Indicator will be activated by default for BOM usage ‘1’ and ‘3’.
 If this indicator is activated, the item is relevant for material planning and production
orders.
 For items which you want to use only for costing purposes but not for planning and
production orders uses like bulk materials, this indicator can be deactivated.

ENGINEERING/DESIGN INDICATOR

 This Indicator will be activated by default for BOM usage ‘2’.

 Usage of this BOM in other application like costing, production is optional.

PLANT MAINTENANCE INDICATOR

 Item that is relevant for Plant Maintenance will be set by default for usage ‘4’.

SPARE PART INDICATOR

 It is generally used in Plant Maintenance (equipment BOM) which can be assigned to

the equipment operations.

COSTING RELEVANCY

 Item relevancy for costing is decided by this Indicator.

 On deselecting this Indicator, Particular BOM Item will be excluded from Costing but
not relevant for Production/Planning.

MATERIAL PROVISION INDICATOR

This Indicator controls relevancy for MRP. Generally, it is used for subcontracting
materials.

 If subcontracting components are provided by the production plant, no need to activate

this indicator. So that MRP generates dependent requirement for the components.
 If components are not provided by the production plant and are already available at a
vendor’s location, activate this indicator. So that MRP will not plan or generate
dependent requirements.
BULK MATERIAL

Material which are available directly at the machine location(s) like grease,
washers can be defined as bulk materials. For bulk materials:

 Item will not be relevant for costing.

 Dependent requirement will not be generated by MRP.
 There will not be any production storage location for this item to issue store from, as it
is directly available at Machine/Work center location.
 Replenishment is based on consumption based planning.
 If a Material is used as a bulk material for all products, we can set it in its material
master (MRP2 view).
 If it is used for some products and not for every product, we can set it at BOM item
level.

PRODUCTION STORAGE LOCATION

Location from which raw materials /components are consumed for production. On
release of a production order, a warehouse person will issue the material from the
warehouse to a production storage location. Production storage location in BOM
item has a higher priority than the location in a material master (MRP2 view).

Production
Storage Location in SAP Bill of Materials

SUPPLY AREA

Supply area can be defined in any of the master data elements mentioned below:

1. SAP Work center

2. SAP Bill of Materials
3. SAP Material Master
Selection or determination of a Supply area is also performed in the same order.
Supply area is assigned with a storage location. Supply area is used in the
following scenarios:

1. KANBAN
2. Warehouse Management

How to Change SAP Bill of Material?

The transaction CS02 is used to change an existing SAP Bill of Materials. We can
also change many BOMs at the same time using the transaction CS20. This
transaction enables us to:

 Replace items in all BOMs

 Change item data like quantity, etc.

Functions of SAP Work Сenters in PP

In production planning, data in work center is used for the following operations:

1. Capacity Calculation
2. Scheduling of an Operations/Orders
3. Calculate Operation Costs

Integration with Other SAP Modules

Work center is integrated with the following business functions (or SAP modules):

1. Controlling (CO)
2. Human Resource (HCM)
3. Plant Maintenance (PM)

Work Center Capacity

Available Capacity

In general, capacity of SAP Work Centers means ‘available hours’ of a machine or

labor resource. These available hours exclude break or halt hours. For example,
assume that a lathe machine is available in a production plant from 9 AM to 9 PM
and there will be a break time of 2 hours for lunch and evening snacks. Now, the
capacity of the lathe machine is calculated as follows:

 Available Capacity = 12 Hours (total hours) – 2 Hours (break)

 Available Capacity = 10 Hours
Required Capacity

Required capacity of SAP Work Centers is hours required for a work center to
produce a particular quantity of an assembly. The SAP system uses the following
information to calculate required capacity for a work center:

 Capacity formula. Capacity formula uses standard value key parameters (maintained on
the Basic data screen of SAP Work Centers transaction).
 Operation time in a production order. This uses time defined in routing operation for
base quantity.

Let’s consider an example:

A process in steel cutting unit uses a machine called “Plasma cutting” in which
the following standard value parameters are maintained:

 Setup time
 Machine time
 Labor time

Let’s say in routing we have maintained the following times for the above
parameters:

 Base Quantity: 120 PC

 Setup time: 30 minutes
 Machine time: 90 minutes
 Labor time: 90 minutes

Capacity formula defined for this machine is as follows:

 Machine time * Quantity to be produced / Base quantity

When a production order for the quantity of 300 PC is created, the capacity is
calculated as follows:

 Required Capacity = 90 mins * 300 PC / 120 PC

 Required Capacity = 225 mins

There is also a concept of the number of individual capacities. This is the number
of individual machines available with similar capacity. When the SAP
system calculates required capacity it divides the number individual capacities
in a formula and when calculates available capacity it multiplies the number of
individual capacities.

Capacity formula defined for the machine is as follows:

 Machine time * Quantity to be produced / Base quantity * No of splits

When a production order for the quantity of 300 PC is created, the capacity is
calculated as follows (if there are two machines available):

 Required capacity = 90 mins * 300 PC / 120 PC * 2

 Required capacity = 112.5 mins

SAP Work Centers Capacity Calculation

Scheduling in SAP Work Centers

In general, scheduling means calculation of start date/start time and end date/end
time of an operation performed in a work center based on a requirement date. The
SAP system uses the following details for scheduling an operation/machine:

 Formula for scheduling in work center scheduling view.

 Requirement date/time from an order.
 Operation time from routing.
 Inter-operation times (i.e. queue time, wait time, move time, etc.) from routing.

The SAP system do backward scheduling starting from the requirement date/time
in order to schedule the order.
Scheduling in SAP Work Centers

Here queue time, wait time and move time are known as “inter-operation times”.

Queue Time

Time raw material/components need to wait before processing in a machine.

Wait Time

Time material must wait after processing in a work center.

Move time

Time required for material move to next work center for further processing.

Costing in SAP Work Centers

The SAP system calculate activity cost based on the following master data’s
information:

 Costing formula in a work center.

 Operation time in a routing and an order.
 Activity rate defined for the cost center which is assigned to the work center.
Costing in SAP Work Centers

How to Create SAP Work Centers?

SAP work centers can be created by any of the following methods:

1. By directly starting the transaction CR01.

2. By accessing the following menu path:

Create an SAP
Work Center Menu Path
The system will show you the initial screen of the create work center transaction.
Create SAP Work Centers – Initial Screen

Here, it is important to specify work center category that controls screen

sequence of the work center data. In general, the following standard screens are
available for creation of a work center:

 Basic data
 Default values
 Capacity data
 Scheduling
 Cost center assignment

Let’s discuss these screens in more details.

Basic Data

Basic Data
Screen of SAP Work Center
LOCATION

 Location in which the work center is assigned.

 This is used for Plant Maintenance purpose.

SUPPLY AREA

 Area in which raw material need to be moved for operation.

USAGE

 Work center usage field control application or function area where it is used.

BACKFLUSH INDICATOR

 Backflush in SAP is automatic posting of raw materials/components when production

activity is confirmed.
 When we confirm an operation/work center for an order, BOM components that are
assigned with that particular operation/work centers (in routing) will be posted
automatically.
 In SAP there are three places where we can set a backflush indicator:
 Routing (components assignment) screen
 Material master (MRP2 screen)
 Work center (Basic data screen)

STANDARD VALUE KEY

 Standard value key may have a maximum of 6 parameters that are used to calculate:
 Capacity
 Scheduling
 Costing
 SAP calculates capacity, scheduling and costing using these parameters defined in the
formulas.

Example

Let’s say, I have defined the following standard value key and its parameters.

Standard value key: ZSAP1

Parameters:

 Machine time (Hours) Z0001

 Labor time (Hours) Z0002

A capacity formula can be defined as follows:

 Z0001 * Operation quantity / Base quantity

Operation quantity is defined in an order and base quantity is defined in a routing.

Let’s say for the material “Wheel” the following settings are maintained in the
routing:

 Base quantity 10 PC
 Machine time 30 Mins
 Labor time 30 Mins

When a user creates a production order for 100 PC the SAP system calculates
required capacity as follows:

Capacity required (in Mins) = 30 mins (Z0001) * 100 (Operation quantity) / 10 (Base
quantity)

= 300 mins.

Default Values

Default
Values Screen of SAP Work Center

Fields appearing in this screen are used as default values in routing which
reduces the time required to enter values in routing. When a user enters machine
time for this work center in routing as 100, the unit of measure will come
automatically as MIN (copied from work center data).

Similarly, when you enter this work center in routing for a particular operation,
the SAP system will automatically copy the control key from the work center.
Furthermore, if Reference Indicator is activated, values from the work center
will be copied and cannot be changed in routing. If we don’t want these default
values to be copied to routing, no need to enter any values on this screen.

For example, let’s consider the control key field:

 For the work center Lathe we have maintained control key PP01.
 Let’s say this work center is used in different products.
 If you don’t want to use PP01 for all the products, do not activate Reference Indicator.

Capacity

Capacity screen in the work center transaction contains the

following information:

 Available capacity
 Formula to calculate required capacity
 Shift sequences

This will be explained in details in our next tutorial.

Capacities Screen of SAP Work Center

Scheduling

Scheduling screen of SAP work centers contains the following information:

 Formula to calculate scheduling time

 Inter-operation times like move time, wait time, etc.
Scheduling Screen of SAP Work Center

Costing

In the costing screen, SAP work center will be assigned to a cost center. Each
cost center will have activity types and formulas to calculate cost of activities.
This will be explained in more details in one of the next tutorials of SAP PP
Training Course.

Assignment of a work center and a cost center can be N to 1. It means that

several work centers can be assigned to the same cost center but only one cost
center can be assigned to a work center.
 SAP Work Center Assignment to Cost Center

Costing Screen of SAP Work Center

What is Capacity?

Capacity means capability to do certain work. In SAP, capacity is closely related

with work centers, i.e. capability of a work center/machine to do certain
operations. In general, capacity will be measured in “Time” unit. We can also use
other units of measure depending on production business processes.

Role of Capacity in SAP PP

In SAP Production Planning, capacity data in work center is used for calculation
of:

1. Required capacity for an order or an operation

2. Available capacity of a work center
Integration with Other Business Functions

SAP work centers are integrated with the following business functions (SAP
modules):

Human Resources

 We can assign an HR object to a work center which will be helpful for determining
qualification of an employee.
 For example, certain operations might need special skillsets like CNC
Operator/programmer. We can assign this information to the work center.

Different Skills
Required for Operation of a Machine
Plant Maintenance

 When a particular machine/work center is scheduled in PM order for maintenance

activities, its capacity will be locked for production uses.

SAP Capacity Category

SAP capacity category is used to distinguish various capacities within a work

center. If you want to maintain different capacities for labor and machine in a
work center, we can define it by means of capacity categories:

 Machine Capacity
 Labor Capacity

Example

Consider a Lathe machine which requires 3 labor units to perform the operations
and it is available 9 hours per day. In this case, we have the following capacities:

Capacity Category Available hours No of Capacity Total h

 Machine 9 1 9 Hrs.

Labor 9 3 27 Hrs.

Lathe Machine Work Center with Two

Capacity Categories

SAP Work Center Capacity

Available Capacity

In general, capacity means available hours of a machine or labor. These available

hours excludes breaks or halt hours.

Assume that a Lathe machine is available in a production plant from 9 AM to 9 PM

and there will be a break time of 2 hours for lunch and evening snacks. The
capacity of the Lathe machine is calculated as follows:

Available Capacity = 12 Hours (Total hours) – 2 Hours (Break)

Available Capacity = 10 Hours

Required Capacity

Required capacity is hours required for a work center to produce a particular

quantity of an assembly. The SAP system uses the following information to
calculate required capacity for a work center:

 Capacity formula. It uses standard value key parameters (Basic tab of work center
master data screen).
 Operation time in a production order. It uses time defined in routing operation for the
base quantity.

Example
A process in a steel cutting unit uses a machine called Plasma cutting with the
following standard value parameters:

 Setup time
 Machine time
 Labor time

Let’s say in routing we have maintained the following times for the above
parameters:

 Base Quantity: 120 PCs

 Setup time: 30 Mins
 Machine time: 90 Mins
 Labor time: 90 mins

Capacity formula defined for this machine is as follows:

Machine time * Quantity to be produced / Base quantity

When a production order for the quantity of 300 PCs is created, capacity is
calculated as follows:

Required Capacity = 90 mins * 300 PCs / 120 PCs

Required Capacity = 225 mins

It is also possible to have several similar machines to increase the capacity. SAP
has a field called “Number of Individual Capacity”. This is number of individual
machines available with similar capacity. When the SAP system calculates
required capacity, it divides the amount to the number of individual capacities in
formula. When the SAP system calculates available capacity it multiplies the
amount to the number of individual capacities.

Capacity formula defined for the machine with 2 individual capacities is as

follows:

Machine time * Quantity to be produced / Base quantity / No of splits

Required capacity = (90 mins * 300 PCs / 120 PCs) / 2

Required capacity = 112.5 mins

Calculation of Capacity

Pooled Capacity

Work centers which are having same capacity type can be assigned with a pooled
capacity. This capacity is defined globally and assigned to the all work centers.
For example, let say you have 7 lathe machines with similar capacity.

CREATION OF POOLED CAPACITY

Pooled capacity can be created by accessing following menu path.

Create SAP Pooled Capacity (Transaction CR11)

Create SAP Capacity – Initial Screen

Create SAP Capacity – Header

ASSIGNMENT OF POOLED CAPACITY

Once a pooled capacity is created (in transaction CR11), it can be assigned to a

work center in transactions CR01/CR02 in Capacity tab.
 SAP Pooled Capacity

Capacities Tab in SAP Work Center Master Data

Interval of Available Capacity

When standard available capacity of a machine needs to be replaced for certain

periods, we can use interval available capacity. For example, a work center which
has the standard available capacity of 8 hours per day but from 20 June to 28
June due to higher demand a company wants to run this machine for 16 hours per
day. In this case we can define the interval of capacity for these period as 16
hours.

Create Interval of Available Capacity

To create an interval of available capacity, go to the header part of a capacity

(transaction CR11).
SAP Work Center Capacity Header (Transaction CR11)

Then, click on button.

Intervals of Available Capacity

Next, click on button. The system will add a new line for the interval.
Intervals of Available Capacity – Adding a New Interval

Now press Enter button on the keyboard.

Intervals of Available Capacity – Adding a New Interval (20 to 28 June)

Here, you can find that during the period from 20 June to 28 June (interval of
capacity) available capacity is 16 hours, whereas for rest of the days it is 8 hours
(standard available capacity).
Intervals of Available Capacity (8 and 16 hours)

Shift Definitions, Shift Sequences, and Breaks

Capacity and planning calculations can also take into account shifts. Let’s see
how to define shifts and breaks in SAP.

Shift Definition

The following parameters are maintained in definition of a shift:

 Validity period of a shift (start date and end date)

 Start time and end time

Example

A company operate with 2 shifts:

 “A” Shift —- 06 AM to 14 PM
 “B” Shift —- 14 PM to 22 PM

Shift definition will be maintained as show on the picture below.

Definitions
of Shifts A and B
Shift definition in SAP is part of customizing activity which needs to be performed
in the transaction OP4A.

Shift Definition in SAP Customizing (Transaction OP4A)

Shift Sequences

Next, we should define the sequence of our two shifts. The sequences of the
shifts are defined in the same transaction as shown on the picture below.

Definition of Shift Sequences in SAP (Transaction OP4A)

Break definition

Additionally, we can define break times for each shift and assign them in shift
definition later.

Define Breaks (Transaction OP4A)

Assign Breaks to Shift Definitions (Transaction OP4A)

Use of Shift Sequences in Work Center

Shift timings and breaks will be used at the time of capacity and scheduling
calculations. By default, the SAP system schedules the break time to be
distributed equally over the working hours. When we want the system to uses
exact break times defined in the shift the indicator “Scheduling with Break”
needs to be maintained in the production order type.

Note: this topic will be discussed in more details in the tutorial about production
orders.

Usage of Shifts in SAP Capacity

Shift Group Specified in SAP Work Center Capacity Master Data (Transaction CR11)

Individual Capacity

Individual capacity in SAP is used for detailed capacity requirement planning.

This can be explained with the following example:

 Let’s say you have Lathe machines A and B

 Machine A is available from 06:00:00 to 17:00:00 hours
 Whereas Machine B is available from 06:00:00 to 22:00:00 hours
 A possible way of mapping in SAP for this scenario is:
 Create two work centers with different capacities
 Create only one work center but two individual capacities need to be created inside
the work center capacity
To see how it works in SAP, go to the transaction CR11.

SAP Work Center Capacity Header (Transaction CR11)

SAP Work Center Capacity Header – Go to Individual Capacities

SAP Work Center Capacity Header – Individual Capacities

Select each item in the list and click on button. The SAP system will show
individual capacities for machines A and B.

Machine A Capacity
Machine B Capacity

When creating a production order it will be necessary to assign the individual

capacity that we are going to use to perform the operation.

Capacity in Different Unit of Measure

In general, capacity is defined in the unit “Hour”. But there may be a case when a
different unit of measure (UOM) can also be maintained. UOM may be Cubic Meter
(M3) or KG or TON, etc.

For an example, let’s consider the casting industry where casting is formed from
molten metal from furnace. Here furnace capacity can also be defined in “TON”.
But the relation between TONs and Hours must be maintained in the work center
capacity. This will be used to evaluate the capacity in TONs.
SAP Work Center Capacity – Go to Units of Measure (Transaction CR11)

SAP Work Center Capacity – Define Conversion of Units of Measure

Capacity and Work Center Hierarchy

Capacity can be cumulated by means of work center hierarchy. Hierarchy of work

center enables cumulation of available capacities from child work centers to their
superior work center.

There are two types of cumulation available in SAP:

 Dynamic Cumulation
 Static Cumulation

Dynamic cumulation is used to cumulate both available capacity and required

capacity, whereas static cumulation cumulates available capacity of a hierarchy
of work centers.

Static Cumulation and Period Pattern Key

In static cumulation, available capacity cumulation is calculated using Period

pattern key. Period pattern key is used for:

 Cumulating available capacity

 Displaying available capacity

In static cumulation, cumulated available capacity of a superior node will not be

changed automatically when there is a change in the available capacity of a
subordinate work center. So, we must cumulate available capacity periodically.

Definition of Period pattern key is part of customizing activity using

transaction OP11.

Example

Let’s image that you want to cumulate available capacity as three segments on
the time axis. The first segment, cumulate next 7 days of available capacity. The
second segment, cumulate next 3 weeks from last period of the segment 1. The
third segment, cumulate 1 month of available capacity from the last period of the
segment 2.
 T
hree Periods of Static Cumulation

Work center Hierarchy for the above diagram is as shown on the picture below.

SAP Work Center Hierarchy

Here, available capacity of work center A and B are cumulated in a higher

hierarchy. That is, cumulated available capacity is displayed in available capacity
of the work center C.

Creation of a period pattern key is part of customizing activity in the

transaction OP11. Periods in a period pattern key may be work days, calendar
days, weeks, months or years.
Definition of a Period Pattern Key (Transaction OP11)

Let’s say that available capacity of SAP work center A is 12 Hours and work
center B is 18 hours. Then, available capacity of work center C will be calculated
as 30 hours. If period pattern key is defined as a week, then available capacity for
a week will be cumulated.

Dynamic Cumulation

In dynamic cumulation, the SAP system cumulates the available capacities and
the capacity requirements for all capacity categories of the work
centers specified in a hierarchy.

This is defined in Option Profile which is part of customizing activity for the case
of available capacity cumulation (transaction OPA3).
Dynamic Capacity Cumulation Option in Option Profile (Transaction OPA3)

This is defined in Evaluation Profile which is part of customizing activity for the
case of required capacity cumulation (transaction OPD0).

Dynamic Capacity Cumulation Option in Evaluation Profile (Transaction OPD0)

Example

Let’s consider the same example given for the static cumulation. When Lathe
machines are loaded with capacity by order (say 4 hours each), dynamic capacity
cumulation cumulates this required capacity (4 hours + 4 hours) into the work
center hierarchy C as 8 hours.

This will be discussed in more details in capacity requirement planning tutorial.

Indicators Influencing Capacity Planning

Finally, let’s discuss several important checkboxes in SAP work center capacity
master data (transaction CR11).

Relevant to finite scheduling indicator

When this Indicator is activated the SAP system considers the existing capacity
load while calculating available capacity.

Let’s say Machine ‘A’ which has available capacity of 8 hours was scheduled for
an order on 10 July for 4 hours 30 mins. When a new order is created for this
machine on same date, the system will propose only remaining hours (3 hours 30
mins).

Can be used by several operations indicator

When this Indicator is activated, that particular work center capacity can be
utilized by more than one operation. This allows the SAP system to consume the
available capacity for other production orders.

For example, let’s say you defined a storage tank as a work center in the
chemical industry. When two production orders try to use this storage tank to fill
the finished chemical, the SAP system will only allow this when this indicator is
activated.

A Storage Tank is Utilized by

Two Operations at the Same Time

Long term planning

When this Indicator is activated, this work center capacity can also be used to
calculate capacity requirement of long term planning.
Note: long term planning in SAP is also called simulation MRP where we can
upload demand simulation to calculate required raw materials and capacity for an
assembly/subassembly.

What is a Cost center in SAP?

SAP cost center can be created for each organization function or department to
record the cost incurred which contribute to a company’s profitability indirectly.
Here some of the cost center categories generally used in SAP

 Production
 Sales
 Administration
 Service Cost center

In SAP production planning, each work center will be assigned to one cost
center. For every activity type defined in a work center, an activity rate will be
maintained in the cost center. SAP system uses this information to calculate
activity cost for an operation.

We can assign a work center to only one cost center. But we can assign several
work centers to one cost center.

Example

Consider a steel making industry where steel billets are manufactured from DRI
steels, steel scrap, etc. A furnace operates on 120 T per day and the following
activities are performed in furnace to make the molten steel metal:

1. Furnace operation (charging, melting, slagging and tapping)

2. Labor hours

In this case, we can define two activity types in the work center EAF01 (electric
arc furnace) and assign them to work center EAF01. The work center is assigned
to the cost center F1000.

Activity rate for each activity (furnace hours and labor hours) are maintained
against the cost center. Planned furnace hours and labor hours are maintained for
the base quantity of 120 T (furnace capacity) in a routing. Formula for each
activity (furnace hours and labor hours) are maintained in a work center.

Activit
y Cost Calculation Formula
When a production order is created in the SAP system, it uses the above
information to calculate the activity cost.

Example of SAP Work Center and SAP Cost Center Integration

Activity Types in Costing

Activities produced in a cost center are created as activity types. In the above
example, two activities are produced in a furnace which are machine hours and
labor hours. We can create these two activity types and assign them to the cost
center of furnace. The same two activity types can also be assigned to cost
centers of ladle and casting.

Activity Types in SAP Cost Centers

Activity Price of Activity type

Activity price will be defined for each activity type and cost center manually. In
this example, even though we have similar activity types for all three cost
centers, activity price will be different for each cost center. The activity price is
defined in the transaction KP26.
Activity Cost in Product Costing

In general, product cost in SAP comprise of three primary components:

1. Raw material or component cost

2. Activity cost
3. Overhead cost

Here, activity cost is calculated based on work centers, cost centers and activity
prices. The SAP system calculates the activity cost by multiplying the activity
price to quantity of operations.

Example of Activity Cost in Product Costing

Let’s consider an example. A work center furnace produces molten metal for
casting formation. This work center has the following activities:

1. Setup
2. Machine
3. Labor

SAP Work Center Assignment to SAP Cost Center

The work center is assigned to the cost center (4230) and each activity (setup,
machine and labor) is assigned with an activity type (1422, 1420 and 1421).

Now, let’s look at activity price calculation. Activity prices are maintained for the
cost center (4230) and activity types (1422, 1420 and 1421) in the
transaction KP26 by a controlling person.
Setup Activity Price (Cost Center 4230 and Activity Type 1422)

Machine Activity Price (Cost Center 4230 and Activity Type 1420)
Labor Activity Price (Cost Center 4230 and Activity Type 1422)

Next, let’s check routing details of the material. It will specify how many units of
each activity are required for manufacturing a base quantity of this material.

SAP Routing for a Material (Transaction CA01)

We perform a costing run for the material CAST01 in transaction CK11N to see
how the SAP system calculates product cost for this material.
Material Cost Estimate (Transaction CK11N)

On the picture above, the highlighted area is the activity cost calculated by the
system based on the information maintained in the work center
(transaction CR01), activity price (transaction KP26) and routing
(transaction CA01).

The calculation is performed according to the following formula:

Machine hour activity cost = Machine activity price / Unit * Quantity from Formula

Quantity = ((120/100) *10)/60 = 0.200 Hour

Activity Price = 2246.88/100 = 22.47

Activity Cost = 22.47 * 0.200 = 4.49 EUR

For other activity types calculation is performed in a similar manner.

In PP and PM modules, SAP task list contains general information like operation
details, component required for an operation/activity, etc.
General Structure of SAP Task List

SAP Task List Structure

In Plant Maintenance, the following SAP PM task lists are available.

PM Task Lists Task List Type Application

1 General maintenance task list A Maintenance plan/order for an assembly

2 Equipment task list E Maintenance plan/order for an equipmen

3 Task list for functional location T Maintenance plan/order for a functional l

General maintenance task list (A) describe a sequence of individual maintenance

activities which must be performed repeatedly within a company. Equipment task
list will be used in SAP PM Orders which are created for an equipment and
similarly functional location task list will be used in PM orders created for
functional location.

In Quality Management, task list is called Inspection Plan and it contains

characteristics that are to be inspected for each inspection operation and test
equipment to be used during inspection.

QM Task Lists Task List Type Application

1 Inspection plan Q Quality inspection plan

In Production Planning, SAP task lists are categorized into different types and
each of them used in different production process.
 Task List
PP Task Lists Application
Type

1 Routing N Routing is most widely used in discrete manufacturing proc

2 Rate routing R Routing is most widely used in repetitive manufacturing pro

3 Master recipe 2 Routing is most widely used in process industries manufact

Reference operation
4 S This is used as a temple to create routing.
set

5 Reference rate routing M This is used as a temple to create rate routing.

Rough cut planning This used in sales and operation planning for capacity and r
6 3
profile availability check.

In Project System, SAP task list is known as a standard network will be used as a
template when creating other standard networks or operative networks.

PS Task Lists Task List Type Application

1 Standard network 0 Creating network in project/WBS

SAP Task List Transactions

Here is a list of transaction codes that are used for creation of different types of
SAP task lists.

SAP Task Lists Task List Type Transaction Code – Create/Change/Disp

1 Routing N CA01
 2 Rate routing R CA21/CA22/CA23

3 Master recipe 2 C201/C202/C203

4 Reference operation set S CA11/CA12/CA13

5 Reference rate routing M CA31/CA32/CA33

6 Rough cut planning profile 3 MC35/MC36/MC37

7 Inspection plan Q QP01/QP02/QP03

8 General maintenance task list A IA05/IA06/IA07

9 Equipment task list E IA01/IA02/IA03

10 Task list for functional location T IA11/IA12/IA13

11 Standard network 0 CN01/CN02/CN03

SAP Task Lists and Transactional Data

SAP task lists are copied to transactional data (e.g., orders) when creating it. For
example, when we create a production order for a material, SAP task list type N
(Routing) will be copied and values are calculated according to the production
order quantity. Similarly, when an inspection lot is created, a relevant inspection
plan will be copied.

SAP Task List Task List Type Transactional Data

1 Routing N Production order

2 Rate routing R REM (Repetitive Manufacturing) planned order

3 Master recipe 2 Process order

4 Reference operation set S Template but can also be used directly in the ord

5 Reference rate routing M Template but can also be used directly in the ord

6 Rough cut planning profile 3 When creating sales plan in SOP (Sales & Operat

7 Inspection plan Q Inspection lot

8 General maintenance task list A Maintenance order

9 Equipment task list E Maintenance order

Task list for functional

10 T Maintenance order
location

11 Standard network 0 Project system

SAP Task List Selection

Which task list has to be copied for each transactional data is defined in SAP
customizing. For example, here are the setting for creating a production order of a
particular order type.
Routing Type in a Production Order Type Customizing

SAP Task List Usage

When creating machines/resources in SAP, a task list usage can be assigned. This
ensures that a particular work center or machine will only be used in task lists
corresponding to this usage. For example, work centers created for maintenance
purposes cannot be used for production purposes.

SAP Task List Usage in Create Work Center Transaction

As shown on the screenshot above, if usage 001 is assigned to this particular

work center, then it can be only used in PP routings and cannot be used for PM or
QM task lists. Similarly, usage 009 can be used for all type of task lists.
SAP Task List Application

SAP uses information from task lists to calculate capacity, schedule and costing
of work, activities or machines. Every activity, work item or instruction in SAP
task list is linked with a control key which defines calculation that needs to be
done against this activity/operation (i.e., capacity, scheduling, costing, etc.).

Here is a standard control key used in PM:

SAP PM Control Key Settings

When control key PM01 is assigned to a particular operation, this operation

becomes relevant for scheduling, capacity requirement calculation and costing.

Here is a standard control key used in QM:

SAP QM Control Key Settings

Similarly, when control key QM01 is specified, SAP system will not calculate
schedule, capacity and costing but will expect QM inspection characteristics
against the operation. That is, inspection characteristics are required to be
assigned against the operation.

SAP PP Routing defines a list of activities/operations that are required to be performed, in

which sequence and machine they have to performed, and what are activity times required
in order to produce an assembly or a semi-finished product.

SAP PP routing for a gear is defined as the following sequence with machines and
times.

SAP PP Routing for a Gear: Furnace/Mold -> Hammer forging -> Hydraulic press -> Die press -> CNC Machine

Control Key in SAP PP Routing Operation

We have discussed control keys in work center tutorial. Control keys from work
centers will be copied to operation when we create SAP PP routing. Depending on
the control key, the system understands whether a particular operation needs to
be scheduled and if capacity and costing need to be calculated or not.

Here is the information about each field in the control key.

Control key definition in Transaction OP00

Scheduling

If this indicator is marked, the system schedules the operation using operation
time, formula (from work center) and production order quantity. I.e., the system
calculates start date/start time and finish date/time. If it is not marked, the
system considers the operation as only for information.

Det. Cap. Requirement

This indicator is set only when capacity needs to be calculated for the operation.
The system uses scheduling calculation from the previous indicator to calculate
capacity. We cannot use this indicator without the scheduling indicator activated.

Insp. Char. Required

This indicator is only activated when an inspection needs to be done after this
operation and its results are needed to be recorded. For example, before furnace
operation, analyze charge material composition and record it against that
operation using inspection characteristics.

Aut. Goods Receipt

Automatic goods movement (goods receipt) of an assembly will be posted when

this operation is confirmed. Generally, this indicator will be assigned to the final
operation.
Print Time Tickets

When shop floor paper is printed from a production order, the system uses this
indicator to determine whether this operation need to be included in a time ticket
or not.

Rework

If this indicator is activated, the system identifies that rework can be occur in
this operation, so that automatic calculation of yield quantity at the time
confirmation will not happen. For the rework quantity entered in operation no
automatic GR will happen even though we activate automatic goods receipt
indicator. It must be posted manually.

Print Confirmation, Print

These indicators are considered by the system when order is confirmed and
printing is triggered at the of order release. Operations with the relevant
indicators will be printed at the shop floor.

Cost

Cost for this operation will be calculated using operation details, order quantity
and costing formula from a work center.

External Processing

Let’s say a particular operation (e.g., a die press) is performed outside the
manufacturing premises by a vendor. In this case, we have to activate this
indicator, so that the system will generate a purchase requisition for this
operation.

External Processing

Operation with external processing will be scheduled based on lead time entered
in the operation. If you want the system to ignore lead time and schedule as per
standard values (setup, machine and labor time), activate schedule external
operation indicator.
Confirmations

Confirmations

When a milestone confirmation is selected, the system will confirm the preceding
operations automatically. If confirmation required is selected, an operator will
have to confirm the operation and enter the relevant operation details. We can
also restrict a user not to enter operation details at the time of confirmation.

SAP PP Routing Structure

SAP PP Routing Structure

SAP PP routing has different levels in its structure and different types of data are
maintained at each level. Here are these levels:

1. Header
2. Sequences
3. Operation
4. BOM Components
5. QM Inspection characteristics
6. PRT Assignment
7. Trigger point assignment

Creation of SAP PP Routing

SAP PP Routing Creation in Transaction CA01

Header Details of SAP PP Routing

SAP PP routing header contains information about routing status, usage, validity
period, lot size, etc.

Usage and Status

Usage defines for which applications the routing can be used. For example,
Production or Plant Maintenance or all applications, etc.

Status can be active and inactive. If SAP PP routing is created with incomplete
data and later a user wants to update the missing data, it can be kept with status
“Inactive”. So that it cannot be used by the system until it is marked as active.
SAP PP Routing Usage and Status in Header Details

SAP PP Routing Usage Selection

SAP PP Routing Status in Header Details

Validity

This is start date and end dates for the routing which define its validity period.

Sequences in SAP PP Routing

We have three sequences in SAP PP routing:

1. Standard sequences
2. Parallel sequences
3. Alternate sequences

Production process operations which are carried out one after another are
defined in the sequence.

Standard sequence is a linear and simple sequence created in a routing. When

there is a possibility of an alternative operation or procedure for the standard
sequence operation, it is defined in alternative sequences. When there is
possibility of an operation which can be performed at the same time with the
main operation in the standard sequence, it is defined in parallel sequences.
NOTE:

1. We have a Routing and a Rate Routing which are used in discrete and repetitive
manufacturing processes respectively.
2. In a routing, we can use alternate and parallel sequences whereas in a Rate Routing
we can only use parallel sequences.

Here are some real-life examples. Consider the previous example of gear
manufacturing where the standard sequence is as follows:

Furnace/Mold -> Hammer forging -> Hydraulic press -> Die press -> CNC Machine

Let’s say we have two hammer forging machines which are used depending on
the tonnage operated. When tonnage is less than 100 TONs, business uses
Forging Machine 1 (FM1) and if it is greater than 100 TON, they use Forging
Machine 2(FM2). In this case, an alternate sequence is created with a lot size 100
TON to Maximum TON it can be operated with the work center FM2.

When an order is created less than 100 TON, the system uses standard sequence.

Furnace/Mold ->Hammer forging FM1 -> Hydraulic press -> Die press -> CNC
Machine

When order is created more than 100 TON, the system uses the standard
sequence.

Furnace/Mold -> Hammer forging FM2 -> Hydraulic press -> Die press -> CNC
Machine

Let’s say we have two die presses which can be operated in parallel. This can be
defined as a parallel sequence.

Parallel Sequence in SAP PP Routing

SAP PP Routing Operation Details

Operation details contain:

1. Work center in which an operation needs to be performed

2. Operation description
3. Time required (activity time) to perform the operation for the base quantity
4. Interoperation times
5. Additional information for operation which system uses for scheduling and other
purposes

Control Key Selection in Operation Overview (CA01 Transaction)

Input all operations in a sequence with work centers on which they should be
performed on Operations Overview screen.
Assigning Component to the Operation (CA01 Transaction)

When a routing is created for an assembly, system will copy its bill of material
(BOM) to it. During production process, all the BOM items might be consumed at
the first operation itself or few components can also be consumed at the later
operations. SAP uses this information to post goods issue automatically during
backflush when operation is confirmed. By default, the system assigns all the
components to the FIRST operation.

Here is the procedure to change the default allocation of components. First, click

on and select the component you want to assign.

Allocate BOM Components to an Operation

Here, for example, I have added only below components in BOM and need
BARSTOCK, DUCTILE IRON and CAST IRON in furnace operation and the rest at
the die press stage.

1. BARSTOCK
2. CAST IRON
3. DUCTILE IRON
4. PLASTIC RESINS

Select components which you want to assign to the Furnace operation (here, the
first 3 components) and click on “New Assignment” button.
New Assignment Window

Click on button to display all the associated operations. Then,

select the required operation to which you want to assign the components.
First Three Components are Assigned to Operation 0010
Plastic Resins is Assigned to the Operation 0050 (Die Press)

BUSINESS EXAMPLE

The following raw materials are used in Gear Manufacturing which are
components of its BOM.

 Bar Stock
 Cast Iron
 Ductile Iron
 Forgings
 Gear Blanks
 Gear Steel
 Near-net Forgings
 Other Gear Materials
 Plastic Resins
 Plastic Stock Forms
 Powder Metal Materials
 Tool Steel

Operation sequences:

Furnace/Mold -> Hammer forging -> Hydraulic press -> Die press -> CNC Machine

Here, not all materials are required and consumed at the start of the operations
(i.e., furnace and molding). There are a few items which are consumed in
subsequence operations also. Like powder metal material and tool steel are
required in the die press. If no component assignment is done, the system will
assign them to first operation by default.

To create sequences, click on “Sequence” button. By default, a standard

sequence will be created.

Sequence Overview in SAP PP Routing

To create parallel or alternate sequences click on .

Sequence Overview – Alternate Sequence Creation

Choose relevant (alternate seq.) radio button and press Enter. The system will ask
about an operation after which you want to branch and return before which
operation.
Sequence Details in SAP PP Routing

Select an operation from which you want to create an alternate operation. Let’s
say here we are creating an alternate sequence for hydraulic press for lot size
more than 10 TONS.
Sequence Details Screen

Then, click “Operations” to maintain alternate operation(s) that you want.

Operation Details for Alternate Sequence

You can see this as graphical layout by clicking icon in Sequence
Overview screen.

Sequence Overview – Graphical Display (1)

Here, click on button.

Sequence Overview – Graphical Display (2)

QM Inspection Characteristics

When quality inspections are required to be carried out during the manufacturing
process, Quality Inspection characteristics has to be assigned for the relevant
operations. These inspection characteristics are called in-process inspection
characteristics. When an operation assigned with inspection characteristics is
confirmed, an inspection lot will be generated and quality inspection person will
enter result recording.

Click on after selecting an operation and

assign suitable inspection characteristics.

Assignment of QM Inspection Characteristics

PRT Assignment in SAP PP Routing

PRT (Production Resources/Tools) which are used for testing during production
can be assigned to the corresponding operations in routing or inspection
characteristics.

PRT can be an any of the below types:

1. Material PRT
2. Equipment PRT
3. Document PRT

Each PRT has its own behavior and usage. When you want to measure wear and
tear of the tools used for treating, we can create it as equipment PRT.
A material PRT can be procured, also keep it in stock and we can track its value
and quantity at any time. We need a valid material master for this
(transaction MM01).

Equipment production resources and tools are serviced at regular intervals. We

need a valid equipment master for this (transaction IE01).

An instruction or guide for manual testing can be attached as document PRT. We

need a valid document master info record for this (transaction CV01n).

Click on in operation overview after selecting an operation.

Assignment of PRT to an Operation

Select suitable PRT (Material or equipment or document) you want to assign and
save.

Trigger Point Assignment in SAP PP Routing

Trigger points are assigned to operations in a routing to trigger certain functions

in the production order.

Below are some of the common functionalities used for trigger points:

 Release succeeding operations

 Release up to stop indicator
 Release preceding operations
 Create order by copying
 Insert reference operation set
 Start workflow task (for example, send mail to a user)
The detailed functionality of trigger points and its functionality will be explained
in another tutorial.

Other Operation Specific Details used in Routing

Apart from these details, there is some additional information which can be
maintained at operations level which primarily controls “Scheduling” and
“Capacity”. Here some important information is explained.

Select an operation for which you want to maintain the operation specific details.

Operation details in Transaction CA01

Routing Operation Details in CA01/CA02

Reduction strategy controls scheduling of an operation when its production start

date and end date are not within the basic dates. This topic will be explained in
detail in one of the next tutorials.
Interoperation time also considered by the system at the time of scheduling
which was explained in tutorial on SAP PP Scheduling. Also, you can find a
relationship between Reduction strategy and Interoperation time in next tutorials.

Splitting Section in Routing Operation Details

If required, a split indicator can be activated. Then, the system uses “Number of
Individual capacity’ in work center at the time of scheduling (refer to work center
tutorial).

Number of splits entered here will be consider by the system to split the capacity
load to the number of splits. If this number of split is not matching with the
number of individual capacities entered in the work center, then the system uses
the smaller of these two values.

Minimum processing time entered here will be used by the system after it
calculates processing time by considering the number of splits. The system will
make sure that the processing time calculated will not drop below this value
during splitting.

SAP Rate Routing vs. SAP Routing

SAP rate routing has same behavior and structure as SAP PP routing. However,
there is no alternate sequences in SAP rate routings. SAP routing will be generally
used in discrete manufacturing whereas SAP rate routing will be used in
repetitive manufacturing.

SAP phantom assemblies are frequently used in automobile industry where

several items (like nuts, bolts or accessories) are required at different levels
of BOM. Instead of repeating these items again and again in BOM, they are
attached to a phantom item and this phantom item will represent those items.

Advantages of SAP Phantom Assembly

SAP phantom assemblies reduce master data maintenance. Since several items
are grouped by a phantom assembly, we do not need to maintain all these items
again and again. Also, changes in items can be done inside BOM of the phantom
assembly, so that changes are applicable to the high-level BOMs where this
phantom assembly is used.
Master Data Settings for SAP Phantom Assembly

Phantom materials are identified by “Special procurement” key in material

master (MRP 2 View). The special procurement key “50” represents a phantom
item.

SAP Phantom Assembly Key in Material Master Data

SAP Phantom Assembly in Planning

SAP phantom assembly is not actually produced or purchased. Therefore,

phantom assemblies pass the dependent requirements directly to the lower BOM
level. Dependent requirements will be generated for components of the phantom
assembly, and planned orders or purchase requisitions are created only for these
components. Let’s say a wheel assembly is a phantom material which groups
together rear wheels, front wheels and their associated components. This wheel
assembly is assigned to a final product “truck”.
 SAP
Phantom Assembly Example – A Wheel Assembly

Here when truck production is planned for future, SAP system also plans for
cabin, chassis and engine sub-assemblies. The requirement or demand for the
chassis assembly will be passed to the wheel assembly which is a phantom
assembly. During MRP (Material Requirement Planning) system will pass the
chassis requirement directly to front wheels and rear wheels.

SAP Phantom Assembly in Costing

During costing, SAP system explodes BOM and calculates the planned costs for
all the material components in the phantom assembly. Phantom assembly’s
material components are displayed and updated in the cost estimate of the
higher-level material. The results of the cost estimate will be updated with a
reference to the phantom assembly.

Explosion Control for SAP Phantom Assembly

We can stop the phantom assembly behavior at the BOM item level by using
phantom assembly off indicator. This will override the special procurement type
50 setting and will make it behave as a normal assembly. This business function
can be used in cases where the same assembly acts as a phantom item in some
of the final assemblies and as a normal assembly in some other final assemblies.

Let’s consider an example. A truck with 12 Ton capacity wheel assembly where
it acts as phantom item (i.e., directly assembled into the truck). But for a truck
with 20 Ton capacity, wheel assemblies are assembled separately and are
attached to the truck due to some technical design aspect. In former case, the
wheel assembly is defined as “Phantom Item” in material master by setting the
special procurement key 50. On the other hand, in the BOM of 20 T truck, the
phantom assembly off Indicator will be set. So that a separate planned order will
be generated for 20 T truck requirements alone but not for 12 T truck.

SAP Phantom Assembly Off Indicator in BOM

In the material master of the wheel assembly, phantom assembly is set in

the special procurement field. The wheel assembly is a material component in a
higher-level BOM and has item number 0010. It also has a BOM of its own,
containing components rear wheels and front wheels. In the standard system,
dependent requirements are generated for components when the BOM is
exploded in MRP.

The following graphic shows how a BOM that contains a phantom assembly is
exploded for production. The phantom assembly (wheel assembly) is ignored and
only the components of the phantom assembly (components rear wheels and back
wheels) are read.
Example of How a Phantom Assembly is Exploded for Production

The BOM of 20 T truck that contains a phantom assembly (wheel assembly) is

also exploded. However, the explosion type is set to off for phantom assembly in
BOM, so the material wheel assembly is also included in the planning run.

Example of How a Phantom Assembly is Exploded for Production when Phantom Assembly Indicator is Enabled

SAP Co-Product

Co-products are materials which are produced in one production process. That is,
more than one final product will come out from a production process. These
products will be part of the financial reporting. Any of these products will be
considered as “Primary co-product” and all other products will be known as
secondary co-products. Production process which gives co-products is called as
“Join Production”.
SAP By-Product

By-product is an output from a production process which can be useful/sellable or

sometime can be waste.

Business Example of SAP Co-Products and By-Products

Consider the Foundry Industry which manufactures castings from liquid/molten

metal. Castings A and B are molded from the same mold pattern. These are
intention products for this process and there are also metal wastes produced
from operations like fettling and runner raiser removal process. Here, castings A
and B are known as co-products and metal wastes are known as by-products.

Business Example of SAP Co-Products and By-Products

SAP Co-Product Vs By-Product

To have a better understanding of differences between co-products and by-

products, let’s compare them in a table.

SAP Co-Product SAP By-Product

Costing is based on apportionment structure defined in

Costing Costing based on net realizable
primary co-product.

BOM Co-products have negative sign along with co-product By-products have only negative
 Settings indicator in BOM.

Financial By-products will not have any in

Co-products influences on financial reporting.
Report financial reporting.

Material Master Settings

SAP co-products should have a special indicator in their material masters in MRP
2 view. In our example for materials casting A and casting B as shown on the
screenshot below.

SAP Co-Product Indicator in Material Master Record

On the other hand, for the by-products this co-product indicator need not to be
set.
No SAP Co-Product Indicator in Material Master Record of By-Product

Bill of Material for Primary Co-Product

In this example, any one of the castings will be consider as a primary co-product
(casting A) and another one is the secondary co-product (casting B) and bill of
material (BOM) will be created for the main co-product only.

Here, the assumption is that a total of 300 KG of molten metal will be used for
casting A (160 KG), casting B (120 KG) and scrap from operations (20 KG).

Bill of Material for the Main Co-Product

In the bill of materials, both the secondary co-product and the by-product will be
maintained with a negative sign. But the secondary co-product will have “Co-
product” indicator at the item level of BOM. This indicator is not required for the
by-product (called METALSCRAP in our example).

Co-Product Indicator at the Item Level of BOM

Apportionment Structure and Co-Products

Co-products are costed based on apportionment structure defined in the primary

co-products.

MRP 2 View of Co-Product

Go to master record of a co-product and click on “Join Production” button located

on MRP 2 view.
Cost Apportionment to Co-Products – Apportionment Structures

Next, assign a suitable source structure.

Cost Apportionment to Co-Products – Equivalence Numbers

Then, enter proportion percentages or equivalence numbers for the co-products.

Example

Now, let’s discuss an example of costing for co-products using apportionment

structures. The products cost consists of the following components:

Production cost = Raw material cost + Activity Cost + Overhead

In the casting example, let’s say there is not overhead cost, then

Production cost = Furnace charge material cost + Operation cost

For example, let’s say

Production cost = 12.50 + 8.50 = 21 EUR

Value for Apportion = Production cost – By-product cost

Value for Apportion = 21 – 1 = 20

Apportion for Cast A = 20 * (60 / 100) = 12 EUR

Apportion for Cast B = 20 * (40 / 100) = 8 EUR

Fixed-Price Co-Product

Some of co-products for which business don’t want to do costing based on an

apportionment structure can be defined as “fixed price co-products”. In SAP ERP,
production cost will be subtracted from fixed price co-products and by-products
and remaining value will be apportioned to the other co-products:

Value to be apportioned = Total production cost – (fixed price co-product cost +

by-products total cost)

Fixed Price Indicator in Co-Product Master Record (Cost Estimate 1 View)

Costing of By-Products

By-products can be costed based on any one of the following method (Net
Realizable Value). Price will be taken directly from the material master price. So,
cost of goods manufactured (COGM) for by-products will equal to:

by-product output quantity * its price from the material master record

SAP Multiple BOM

SAP multiple BOM (Bill of Materials) is also known as alternative BOM and
denoted as BOM type “M” in SAP ERP. When an assembly or subassembly can be
made using different sets of components or different combination of raw
materials, it will have more than one BOM which is known as multiple BOM. BOM
group for all these alternative BOM will be same.

Business Example for Multiple BOM

Consider the chemical manufacturing industry which manufactures “Ethyl

Acetate”. There are two production methodologies used to produce Ethyl Acetate.

1. Esterification of ethanol with acetic acid.

2. Catalytic condensation of acetaldehyde with alkoxides.

In this example, we have to create TWO bills of materials for Ethyl Acetate.

BOM 1:

Raw materials: Ethanol and Acetic Acid.

BOM 2:

Raw materials: Acetaldehyde and Alkoxide.

Example of SAP Multiple BOM

When we create BOM for the same assembly more than one time, SAP ERP
system automatically sets BOM technical type as “M” (Multiple BOM).

We can also have a business case where two bills of materials are created for the
same assembly because one is for production purposes and another one is for
engineering design purposes. In this case, usage of BOM will be different, but still
the SAP system considers this as an alternative BOM. When we create a
production order, a production person will select the suitable alternative BOM to
be used for the production.

In automobile industry, SAP multiple BOM is created when there is a change in

design. Let’s say that manufacturing of engine assembly requires the following
materials:

 Crankshaft
 Oil Sump
 Camshaft
 Valves
 Spark Plug
 Injector
 Connecting rods

Now, imagine that the design department wants to use different spark plug
components from next year onwards in order to improve the engine performance.
In this case, an additional alternative BOM will be created with validity date
starts from 1 January 2018 to 31.12.9999 and the first alternative BOM will be
marked for deletion or locked for production usage after the 1st of January 2018.
So that SAP ERP system will plan and consume the new spark plug for the
production orders created after the 1st of January 2018.

SAP Variant BOM

Several similar materials which have common parts can be created as SAP
variant BOM. SAP variant BOM will have BOM technical type “V”. BOM group for
all these variant bills of materials will be the same. This helps business users to
simplify the BOM maintenance.
Business Example for SAP Variant BOM

Consider an example from the food industry. A company manufactures different

chocolates with flavor of milk, coffee and cocoa butter.

In this scenario, the common ingredients of all three types of chocolates are:

 Cocoa bean
 Milk and milk powder
 Fruits and nuts

Example of SAP Variant BOM

1. Initially BOM is created for milk chocolates.

2. When BOMs for coco chocolates and coffee chocolates are created, they will be
created as variants of milk chocolates.
3. The SAP system automatically assigns technical type “V’ for these BOMs.

SAP Multiple BOM and SAP Variant BOM in Planning

By default, the SAP system plans the first alternative in multiple BOMs. On the
other hand, it performs individual planning in variant BOMs because there is a
separate BOM for each variant of materials. Selection of alternative BOM also
depends upon the following criteria:

 Lot size range

 Validity dates

Creation of Multiple BOM and Variant BOM

Both multiple and variant BOMs are created using the transaction CS01. You can
read more about creation of SAP bill of materials in this tutorial. When BOM is
created for an assembly which already has BOM, the SAP system automatically
adds an additional alternative and creates multiple or alternative BOM.
SAP master recipe is used to define the operations and phases which need to be
carried out during a manufacturing process. Operations and phases are step by
step activities which are carried out during SAP manufacturing process.

SAP has three main manufacturing methods, which are discrete manufacturing,
process manufacturing and repetitive manufacturing. Master recipe is used in
process manufacturing method. In discrete manufacturing, the above concept is
handled through routing. When we are creating the process order, system will
select the master recipe available for the material and then copy all the relevant
data into the process order.

Before creating SAP master recipe, it is important to create the production

version. Production version will have the bill of material (BOM) of the material
which is going to be manufactured. Next, we can create the master recipe and
enter the production version. Production version is a mandatory input for master
recipe creation. After adding the production version to the master recipe, we can
go to the production version and view the master recipe information. This system
will automatically add the master recipe group number and the group counter.

There is another option of creating the master recipe without the production
version. This can be achieved by creating a master recipe group. In this approach
there will be no link with the material or the plant in the initial stage.

SAP Master Recipe Creation

SAP master recipe can be created by calling the transaction code C201. We can
also follow the below menu path to execute the transaction:

SAP Menu -> Logistics -> Production-process -> Master data -> Master recipes ->
Recipe and material list -> Create

In the selection screen, we can enter the material, plant, and the production
version. Also, there is the option of enter the recipe group. Master recipe creation
has been divided into several sub screens. We will discuss these next.

Recipe Header

This screen contains the header data for the master recipe. These includes the
status of the recipe, lot sizes and the default values for operations and phases.

Materials

In the master recipe we can view the BOM and the production version together.
BOM is exploded in the master recipe to bring the material BOM details into the
recipe. With this, process manufacturing brings a special function called material
quantity calculation.
For material quantity calculations to work correctly, it is important to create the
master recipe with reference to the BOM. Material quantity calculation function
provides options such as calculating scrap at phase level and adding it to the
production costs, change component quantities with reference to other
components and change the header material quantities with reference to the
components. All these functions are useful in the process manufacturing
environment. We can go to the material quantity calculation by clicking the
button in materials tab. In here we can define formulas. To define a formula,

 Click the select the Formula button in the menu bar.

 In the Formula definition box, enter the formula.
 We can add variables also while creating the formula.
 We can use formula operators such as +, -, *, /, DIV and MOD.

Operations and Phases

Phase is a unique object in the master recipe. This is somewhat like the
operations in routing used in discrete manufacturing. Advantage of maintaining
the phases is that we can enter the production process in detail at phase level.
This gives better visibility into the operations which are carried out during the
manufacturing process.

Process orders are confirmed at phase level and not at the operations level. The
activity times such as production time, labor time and setup times are defined at
phase level. Resources are assigned at operations level. Resources are like the
work centers used in discrete manufacturing. Resources which are assigned at
operations levels will be adopted by the phases which are below the operations
level. Control key will be assigned at the phase level. In process quality
inspection activities can be carried out at operations level or phase level.

When creating a phase, it is necessary to assign the operation which the phase
belongs to. When we select the phase check box in the operations tab, resources
which are assigned to the operation will be automatically assigned to the phases
below the operation.

We can maintain relationships between phases like routing. Also, it possible to

define parallel or overlapping sequences. Process instructions are assigned to the
phases in the master recipe. As the name suggests, process instructions contain
the specific instructions that need to be followed during the execution of the
phase.
Configurations for SAP Master Recipe

SAP Master Recipe Profile

Master recipe profile can be configured by executing the transaction

code OPN1 or we can follow the below IMG path:

SAP IMG -> Production planning for process industries -> Master data -> Master
recipe -> Define profile with default values

Depending on the configuration of the master recipe profile, SAP provides process
management options such as process instructions and XSTEPS (Execution steps).

Task list assignment to material types

Task list assignment can be configured by following the below IMG path:

SAP IMG -> Production planning for process industries -> Master data -> Master
recipe -> Assign material types

Master recipe is created with reference to the task list type 2. When the process
order is created, SAP will search for master recipe with task list type 2. It is
important to assign the task list type 2 for all the material types which we plan to
use with master recipes.

Task List Status

Task list assignment can be configured by executing the transaction

code OP46 or by following the below IMG path:

SAP IMG -> Production planning for process industries -> Master data -> Master
recipe -> Data for the recipe header -> Define recipe status

By default, SAP provides certain statuses such as created, released and available
for costing. If required, we can define additional statuses based on the
requirements.

Up to now we have analyzed SAP master recipe, its functionalities and the basic
configurations required to use the master recipe. This concludes the article on
SAP master recipe.

Welcome to the tutorial about SAP reference operation set. This tutorial is part of
our free SAP PP course. After reading this tutorial, you will learn what is a
reference operation set and how to create it. Also, we will explain how to use a
reference operation set in routings and what are the benefits of doing so. You will
also learn about some real-life examples from the industry about using reference
operation sets.

What is SAP Reference Operation Set?

SAP reference operation set (ROS) is part of SAP PP master data which contains
frequently used operation sequences for assemblies or subassemblies. The main
function of SAP reference operation set is to avoid the need to enter operations
and machine details every time when creating a new assembly.

When a new SAP routing is created for an assembly, we can create it with a
reference to SAP reference operation set.

SAP reference rate routing is also similar to SAP reference operation set and will
be used to define operation sequences in SAP repetitive manufacturing. The
topics and points discussed for ROS in this tutorial are also applicable for SAP
reference rate routing.

Usage of SAP Reference Operation Set

(ROS)
When routings are created with a reference to SAP reference operation set, any
changes in operations or timings can be performed in ROS directly. This way all
SAP routings created with a reference to a particular SAP reference operation set
will be changed automatically. It reduces master data maintenance efforts.

If a new SAP routing is created by copying SAP reference operation set, then only
operation details are copied to the routing and there will not be any link between
the new routing and ROS. In this case, any changes in ROS will not update the
routing created by copying ROS.

SAP Reference Operation Set vs. SAP

Routing
Reference operation set has the same structure as routings but still it has its own
behavior in SAP:

1. ROS cannot be used directly in production as it is not created with reference to an

assembly.
2. Similar to routings, ROS will not have any BOM component assignment screen.
3. Unlike routings, ROS will not permit parallel and alternate sequences.
Technical Type of SAP Reference
Operation Set
In SAP PP, routing, rate routing, reference operation set, reference rate routing
and master recipe are called “Task lists”. They are referred as task lists because
they contain lists of tasks that are needed to be performed to produce or
manufacture a product. SAP system internally identifies each of them by means of
task list types. Here is a table with task list types used in SAP PP module.

Task List Task List Types

Routing N

Rate routing R

Reference operation set S

Reference rate routing M

Master recipe 2

Creation of SAP Reference Operation Set

SAP reference operation set is created and modified using the below
transactions.

Transaction code Description

CA11 Create reference operation set

CA12 Change reference operation set

CA13 Display reference operation set

 CA21 Create reference rate routing

CA22 Change reference rate routing

CA23 Display reference rate routing

Creation of SAP reference operation set and rate reference routing (RRR) is
similar to creation of SAP routings and the only difference is that ROS and RRR
are created without a reference to any material.

Now, let’s go SAP system and access the transaction CA11. On the initial screen,
if you leave the field Group as blank, the SAP system will assign an internal
number automatically. If you want to assign an external name for group, type it in
the Group field. Then press Enter.

Create SAP Reference

Operation Set Transaction – Initial Screen

The next screen will be ROS header screen. Enter the following details in the
header view.

Usage: 1 (Production)

Status: 4 (Released)
From lot size and to lot size: by default, it will be 0 to 99999999

Now enter the unit of measure (UOM) for this lot range. This should be the same
UOM of an assembly or sub-assembly in which we are going to create routing with
a reference to this ROS.

Next, click on Operations button.

SAP Reference Operation Set – Header Details

Create Reference Operation Set – Operation Overview

Enter the list of operations with activity times in sequences. Finally, click
on Save button.
Creation of Routing with Reference to
ROS
Let’s see how to create SAP routing with a reference to an existing ROS. Access
the transaction CA01 and enter the material number and plant, then press Enter.
In the routing header screen, enter these details:

Usage: 1 (Production)

Status: 4 (Released)

From lot size and to lot size: by default, it will be 0 to 99999999

Next, click on “Operations” button which will move you to the operations
overview screen. Now, click on the menu Extras -> Reference-> Create. Then,
enter the ROS group number. Now, operations of the SAP reference operation set
will be transferred to the operations overview screen of the routing.

SAP Reference Operation Set Where-

Used List
It is often necessary to check where a particular ROS is used. We can check a
special report to see what assembly/subassembly use a particular ROS with the
following transaction.

Transaction Description

CA90 Where-used list for ROS

We can also access this transaction using the following menu path:

Logistics -> Production -> Master Data -> Routings -> Reporting -> Where-Used
List -> Reference Operation Set

Replacing ROS with Another ROS

Whenever there is a change in operation sequences or machines, we can also
create a new ROS and assign it to the existing routing which refers the old ROS.
We can use the following transactions to replace the old ROS with the new ROS.
 Transaction Description

CA95 Mass change – replace of ROS in routing

CA95N Mass change – replace of ROS in routing

This will be used when there is change in process or design or timing, etc. There
might be also a business case when business wants a different set of operations
for only few assemblies. In this case, we can create a new ROS and replace the
old ROS only for those assemblies.

Examples from Industry

Let consider the fastener industry which manufactures nuts and bolts. The
following operations are identified to produce the bolts:

1. Round bar cutting

2. Hot forging
3. Cutting using high speed blades
4. Galvanizing
5. Zinc removal process
6. Quenching and cooling
7. Painting

There are different dimensions (length and diameter) and types of bolts produced
in the industries. Here are a few of the types: track bolt, square bolt, plow bolt,
round bolt, aircraft bolt, lag bolt, flanged bolt and elevator bolt. Since all the
above types and dimensions of bolts are following the same operations sequence,
we can create SAP reference operation set with these operation sequences and
refer it whenever creating respective type bolts.

Delink ROS Reference from Routing

When there will be a situation where the business wants a normal operation
instead of a reference operation from ROS, it is necessary to remove (or delink)
the reference. This can be done by choosing the following menu in edit routing
transaction: Extras -> Reference -> Unlock, so that that the operation will be
behave as a normal operation.

For example, let’s say a square bolt require additional operations after the cutting
operation where you can unlock the cutting operation and include an additional
new one.
SAP Reference Operation Set in Rework
SAP reference operation set is also used in rework operations. When rework is
identified during production for a particular operation, we can include rework
operations needed to be performed using a trigger point. This operation will be
defined in SAP reference operation set and included in a production order after
the operation in which rework occurred using the trigger point. A trigger point
executes a list of commands or instructions which will be performed when a
particular event occurs. The command or instruction might be printing of shop
floor papers, insert rework operation or create rework order, etc.

SAP Reference Operation Set and Rework

In the shown above, let’s say there is rework identified after the zinc removal
process. When rework is reported (EVENT) in zinc removal process, a trigger point
assigned to this operation will be triggered and it adds/inserts two additional
operations (zinc removal and visual test).

These additional two operations are defined in the ROS and this ROS is linked to
the trigger point. The trigger point is assigned to operations in SAP routing.
Configuration and master data settings are required to do this which will be
explained in another chapter.

AP PP scheduling is used to calculate start date/start time and end date/end time
for a production order or operation. Here you will learn about scheduling
production operations in SAP ERP.

There are two methods of scheduling in SAP and especially in production

planning.
1. Basic dates scheduling. Basic dates scheduling is calculated by considering the values
like goods receipt (GR) processing time, in-house production time and planned
delivery time from material master (MRP 2 view). It calculates basic start date and
basic finish date for an order.
2. Lead time scheduling. Lead time scheduling takes value from routing operation times
(setup, machine, labor, etc.) to calculate operation start date, start time, finish date
and time.

SAP PP Scheduling Types

There are different scheduling types commonly used in Production Planning and
especially in production orders.

 Forward scheduling
 Backward scheduling
 Today scheduling
 Only capacity requirements

In forward scheduling, SAP system schedules the order based on basic start
date and determines the schedule end dates.

In backward scheduling, SAP system schedules the order based on basic end date
and try to determine schedule start date.

In today scheduling, SAP system calculates schedule end date by considering

schedule start date as current date.

In only capacity requirements scheduling, basic dates are copied as schedule

dates. Operations will not be scheduled.

Basic Dates vs Schedule Dates

Basic finish dates are calculated based on requirement date (demand). SAP
system adds lead times (GR processing time, in-house production time, etc.)
defined in MRP 2 view to that to determine basic start date.

It also adds opening period defined in scheduling margin key (MRP 2 view).
Opening period is the number of days required for a planner to convert a planned
order to a production order.
SAP PP Scheduling – Basic Dates

Production start date/time and finish date/times are calculated by scheduling

individual operations defined in routing. Then, schedule start and finish dates are
calculated by adding floats (defined in scheduling margin key) to the production
start dates.

SAP PP Scheduling – Schedule Dates

Scheduling Margin Key in MRP 2 View of Material Master

Control Key in SAP PP Scheduling

Control key decides that whether an operation needs to be scheduled or not. If

scheduling indicator is activated in the control key, SAP system will schedule the
operation. Otherwise, it will not.
Control Key in Work Center

SAP PP Scheduling Components

When system schedule an operation, it uses the following parameters from

master data.

1. Operation times and base quantity from routing.

2. Formula for scheduling from work center.
3. Inter-operation timings from routing or work center.
4. Break time and shift sequences.

Operation Time in Routing

In routing, each operation contains setup, machine and labor hours required to
produce the base quantity. SAP system uses this information to calculate the
total time required for that operation.

Let’s say that in routing we have entered machine time 120 mins for the base
quantity of 500 PC. When an order for the quantity of 1200 PC is created, SAP
system will calculate the total time required for this operation as follows.

Total time required for 1200 PC = (120 / 500) * 1200 = 0.24 * 1200 = 288 minutes

Formula for Scheduling Time

This calculation is maintained inside the scheduling formula in a work center.

Operation time = (Machine time * Operation quantity /Base quantity) /Operation
split

Here, operation split is defined in routing where in this example it is ‘1’.

Processing Formula in a Work Center

Inter-Operation Time

Inter-operation time is time between operations in the work centers. In SAP, there
are 3 inter-operation times available.

1. Queue time. Queue time is time required before processing the material in a work
center.
2. Wait time. Wait time is the time material must be kept after processing in a work
center.
3. Move time. Move time is the time required to move the material from one work center
to another after processing.

Let’s consider this example from the fastener industry which deals with
manufacturing bolts and nuts. We will consider only the final stage of operation
when after bolts are produced they will be painted and packed. Let’s say before
painting previous batches are in queue for 10 mins (queue time) due to shorter
duration of preceding operation and longer duration of painting operation. After
painting, this material must wait for 15 mins (wait time) for drying. Then, it will be
moved to packing location using trolley which takes 10 mins (move time).
Break Time and Shift Time

SAP system will calculate break time from work center master data. If any shift
sequences are defined in the work center, SAP system takes break time in shift
break entered in the shift sequences. Else, it will take the total break time
entered in the capacity header.

Break time entered in the capacity header is the total break hours between start
and finish time (refer to the screenshot below). Here, a total of 1 hour of break
time is from 07 AM to midnight (available capacity = 17 hours). If your operation
time for an order is 8 hours, SAP system will calculate break time as following:

Break time for 8 hours = 1/17 * 8 = 0.47 hours

Total Break Time Maintained in SAP Work Center

Shift sequences are entered with exact break hours which will be considered for
scheduling and capacity calculations. These shift sequences will be assigned to a
work center.
Shift Sequence Definition in SAP Customizing

Reduction Strategy in Scheduling

When SAP system tries to schedule an operation, it first tries to schedule it within
the basic dates. When schedule start date falls before basic dates, it tries to
adjust the dates by reducing the inter-operation timings except wait time. From
the example discussed above, we can reduce the queue time and move time but
cannot reduce the wait time. Because painted bolts must wait for 15 mins in
order to get dry.

We can maintain standard and minimum queue time in work center and routing.
SAP system will first consider standard queue time but if scheduling dates falls
before or after basic dates, it will take minimum queue time.

Standard and Minimum Queue Times in SAP Work Center

If after considering minimum time SAP system finds that dates are not within the
basic dates, it will apply reduction strategy defined in routing operation.
Customizing Settings for Reduction Strategy

SAP system will apply reduction step by step for each of reduction levels.

1. Try to reduce 50% of the queue time.

2. Try to reduce 100% of queue time and move time.
3. Try to reduce 100% queue and move times and try to apply operation overlap defined in
routing operations.
4. Try to reduce 100% queue and move times and try to apply operation overlap and
operation split defined in routing operations.

Here, operation overlap and splits will reduce the lead time of the operation.

Factory Calendar in Work Center

When system schedule an operation or production order, it considers factory

calendar from the plant and excludes the non-working days and holidays. When
there is a business scenario where the production calendar is different from the
plant calendar, we can assign a production specific calendar in a work center. So
that at the time of scheduling SAP system considers working days from the work
center instead of the plant calendar.

SAP reduction strategy is applied to an order when lead time (scheduled dates) of
an order is greater than basic dates in the order. SAP reduction strategy reduces
the lead time of an order by applying reduction measures.

SAP Reduction Strategy

Before getting into details of SAP reduction strategy, let’s understand how
scheduling is happening in SAP. Please refer the previous tutorial SAP PP
Scheduling.
When SAP system tries to schedule a production order, the following dates are
determined:

 Basic start date

 Basic finish dates
 Schedule start date
 Schedule start time
 Schedule finish date
 Schedule finish time

In backward scheduling, the system calculates basic finish date from the
requirement date.

Scheduling in SAP PP

Here is the explanation of the time points on the diagram above:

1. Requirement date/Basic finish date

2. Schedule finish date/time
3. Schedule start date/time
4. Basic start date

Total operation lead time = inter-operation times (queue + wait + move) + activity
times in all operations.

Queue time is defined in a work center and also routing:

1. Standard queue time

2. Minimum queue time.

Wait time and move times are defined in routing operation details:

1. Standard move time and minimum move time

2. Standard wait time and minimum wait time.

The reason is wait time is related to the process can be seen on the example of
drying time. After certain time before moving the material to next work station,
the material must be dried for 30 mins. This is known as wait time which cannot
minimized or ignored.

Basic start dates and finish dates are calculated based on material master data.
 Basic Start and Finish Dates

1. Basic start date

2. Basic finish date

Material Mater Scheduling Data

When we create a production order the system calculates basic start date as
follows:
Basic start date = Basic finish date – (GR Processing time (1 day) + In-house time
(3 days)) =

= 12-DEC-2017 – (1 + 3) = 12-DEC-2017 – 4 = 08-Dec-2017.

Similarly, schedule start date and finish dates are calculated from the basic finish
date.

Schedule Finish date = Basic finish date – (GR Processing time + Schedule after
production) =

= 12-Dec-2017 – (1 +0) = 11-DEC-2017.

Schedule Start date = Schedule Finish date – (Total operations lead time + Float
before production).

SAP Production Order – Header

When schedule start date is calculated before basic start date, the system tries
to perform the following scheduling approach and tries to adopt schedule dates
within basic dates.

1. When schedule start date lies before basic start date, the system starts today
scheduling, i.e. it sets basic start date as current date and tries to schedule and
calculated basic finish date and schedule dates.
2. If the system finds schedule finish dates lies after basic finish dates after today
scheduling, it applies minimum time (wait, queue and move time) from routing.
3. If the system finds schedule finish dates lies after basic finish dates after scheduling
with minimum inter-operation time, it tries to apply “Reduction strategy” in six steps.

We can define our own reduction strategy in customization. In all 6 steps, the
system tries to reduce the inter-operation time gradually except wait time in
order to adopt the schedule dates within basic dates. As explained previously,
wait time cannot be reduced as it is related to the process. The reason is wait
time cannot be reduced is as it is related to the process, for example drying time.
After certain time before moving the material to next work station the material
must be dried for 30 mins.

Overlap Time and Minimum Send Ahead Quantity

The system also tries to reduce the operation time by means of overlap time
which means next operation starts before the previous operation has finished
when minimum send ahead quantity is produced. The lead time of an operation
also reduced by splitting the operation defined in a work center.

SAP Reduction Strategy Example

Let’s look into the following SAP reduction strategy defined in IMG.
SAP Reduction Strategy in IMG

As per this reduction strategy, it applies reduction level while it finds schedule
dates lying within basic dates.

Reduction
Action
Level

Reduction 1 Reduce the queue time by 30% and reschedule.

Reduction 2 Reduce the queue time by 50% and completely reduce move time, then reschedule.

Reduce the queue time by 70%, completely reduce move time and apply operation split, t
Reduction 3
reschedule.

Reduce the queue time by 100%, completely reduce move time and apply operation overl
Reduction 4
reschedule.

Reduce the queue time by 100%, completely reduce move time, apply operation overlap a
Reduction 5
operation split, then reschedule.
Reduction Strategy Assignment is Routing Operation
If SAP system is unable to fit schedule dates within basic dates even after
reduction strategy, it provides a scheduling log and schedules the order as per
actual dates.

This example of SAP reduction strategy is explained without screenshots as some

of the screens may be difficult to understand for beginners.

Let’s say for manufacturing product “A”, the following settings are maintained in
MRP 2 view of a material master.

Field Value Unit of Measure

In-house production time 2 Days

GR processing time 1 Days

Schedule margin key FBP – 1 Day Days

 FAP – 1 Day

Release period 1 day

Also, the following settings are maintained in a routing.

Field Time Unit

Machine time 60 Min/100 KG

Standard queue time 24 Hours

Minimum queue time 12 Hours

Standard wait time 24 Hours

Minimum wait time 18 Hours

Standard move time 30 Mins

Minimum wait time 10 Mins

Let say we have only one resource used to produce Product ‘A’ available all days
(working day) and its available time (capacity) is 24 Hours/day. When we create
an order with requirement dates of 30-JAN-2018 for 3000 KG for the product ‘A’,
the system calculates dates as follows.

BASIC DATES CALCULATION

Basic Finish date = Requirement date = 30-Jan-2018

Basic Start date = Basic finish date – (GR processing time+ In-house production
time) =
= 29-Jan-2018 – (2+1) = 26-Jan-2018

SCHEDULE DATES CALCULATION

Schedule Finish date = Basic Finish dates – (Float after production) =

= 30-Jan-2018 – 1 day = 29-Jan-2018 at 00:00 hours

Schedule Start date = Schedule finish date – (Total operation time + Float before
production + Inter-operation time)

Total operation time = (60 mins /100 Kg) * 3000 Kg = 1800 mins

Inter-operation time (Considering standard time) = Queue + Wait + Move =

= 24 hours + 24 hours + 30 mins = 2910 mins

Float before production = 1 day = 24 hours = 1440 mins

Schedule Start date = Basic finish date – (1800 + 1440 + 2910) =

= Basic finish date – 6150 mins = 4 days 6 hours 30 min =

= 29-Jan-2018 00:00 hours – 4 days 6 hours 30 min = 25-Jan-2018 18:30 hours

Here, schedule start date does not lie between Basic dates. So, the system tries
to apply minimum Inter-operation times instead of standard time.

Inter-operation time (Minimum time) = Queue + Wait+ Move =

= 12 hours + 18 hours + 10 mins = 1810 mins

Schedule Start date = Basic finish date – (1800 + 1440 + 1810) =

= 29-Jan-2018 – (3 days 12 hours 10 minutes) = 25 Jan-2018 11:50

After using minimum inter-operation time, schedule start dates still does not lie
between Basic dates, so the system will try to apply SAP reduction strategy level
by level. For every reduction step, the system will reschedule the order. When the
system finds that schedule start dates lie within basic dates, it stops reduction
and schedules the order.
SAP trigger point is an object which is assigned to an operation in routing in order
to trigger a certain function. We can trigger certain business functionality using
SAP trigger points when an operation or a production order statuses are getting
changed.

For example, we can trigger workflow to production manager when scrap is

recorded in the production or we can create another order or operation when
rework is recorded, etc. We can trigger production order relevant functions based
on production order status (system or user) only.

Here, status is updated when different business functions are performed like
Create Order, Release Order/Operation, and Confirm Operation. As these actions
are executed by a business user, SAP system updates the status to the
operations and the order. These statuses are called “system statuses”, i.e.
statuses set for the operations/order automatically by the SAP system based on
functions executed for the operation or the order.

Apart from the system statuses, we can also define our own status which are
called “user statuses” and they are based on the business process.

Let’s look at the example of production statuses. Below is the standard

production order sequence.

Order Creation -> Order Releases -> Raw material consumed -> Operation
confirmed -> Goods receipts for FG performed

For this sequence, there will be corresponding order statuses:

CRTD -> REL -> GMPS -> CNF -> DLV

Now, let’s discuss how to create SAP trigger points and how to assign them to
operations in SAP PP routings.

SAP Trigger Points

In this example, succeeding operations will be released when a preceding

operation is confirmed. This will be done using a trigger point.

Here are the steps involved in the trigger point process:

1. Create SAP trigger point

2. Assign SAP trigger point to an operation in routing
Create SAP Trigger Point

Please follow the path in SAP Easy Access menu shown on the screenshot below
to start the transaction for creation of SAP trigger points.

SAP Trigger Points Transaction

Here are the fields available on this screen and their description.

Usage: We can group trigger points with similar function using this field.

Trigger Point Group: We can group SAP trigger points with different functionality
into one group and assign it to routing operations. This field is optional.

User Status Profile: It is only required when you want to execute/trigger

functionality by user status instead of system status.

Trigger point Function definition, Release Succeeding operations:

Let’s say you have operation sequence: OP01 -> OP02 -> OP03 -> OP04.
As per the production process, operation OP02-OP04 should not be started unless
OP01 is completely done. In that case, we can define the trigger point as shown
below.

SAP Trigger Point Details

When system status of the first operation (OP-01) is changed to CNF (fully
confirmed), the trigger will perform the function. If we set “Once” checkbox, then
it the function will be performed only once. Here, the function is to release the
succeeding operations (OP02 to OP04). This function can be done automatically
by the SAP system or manually. This setting is controlled by “Activate” field. You
can see possible options for this field on the picture below.
 Activate Function –
Possible Options

Assign SAP Trigger Point to Operations

Now, go to transaction CA02 (Change Routing) and access operation overview

menu after selecting the operation for which you want to assign the trigger point.

Goto -> Trigger point overview

Overview of Routing Operations

SAP Trigger Points for Operation

You will see Operation Trigger Points overview screen. Click on

button to copy the trigger point created previously.
Copying Standard SAP Trigger Point to Operation
Operation Trigger Point

From this screen, we can also see details of the function defined in this trigger
point. Just select the line with the trigger point and navigate to the following
menu:

Details -> Trigger Point

Trigger Point in Routing Operation

You will see the screen with the details of the operation similar to the one that
we saw when created this trigger point.
SAP Trigger Point Details

Now, go back and save the routing.

SAP Trigger Point in Action

Let’s see the behavior of our trigger point during execution of a production order.
The detailed process of production order execution will be explained in
forthcoming tutorials. The idea of this small example is simply to show how the
trigger point is used in production order based on its status. For the time being,
don’t worry about unfamiliar transaction codes and menu path.

You can see that the trigger point is assigned to operation ‘0010’ in the
Production Order Operation Overview.
Production Order Operation View

By clicking the icon , we can see functionality of this trigger

point.
SAP Trigger Points in Order Operation

Now, look at the system status of each operation which is as “CRTD”, i.e. created.
System Status of Operations in Order

Operation Status after First Operation is Released

Now, we will release the first operation where the trigger point is assigned. Here,
you can see that except the first operation all other operation statuses are still
“CRTD”. Only the first operation is having status “REL”.
Order Confirmation Screen for the First Operation

When we save the first operation, the system will show Trigger Point Function
window.
Confirmation of the First Operation – Trigger Point Function

Now, you can observe the status of the second operation in the order which was
automatically released by the trigger point. The status “REL” was set for it.
Status of Operations in Production Order

This example illustrates how SAP trigger points can be used to perform certain
functions (in this case, release subsequent operations) in production orders.

Materials that have exceeded the shelf life, damaged, cannot be used, or
reworked are identified as scrap in SAP. In most industries, scraps are generated
during the manufacturing or assembly process. SAP Scrapping Process can be
related to production planning (PP) and/or material management (MM). This
segregation enables users to better understand the concepts related to scrap.

SAP MM Scrapping Process

The material management-related scrapping process mainly relates to how to

identify the material stocks which are related to scrapping, and the scrapping or
write-off of those stocks from the system.

Scrap can be categorized into three main types as raw material scraps, semi-
finish good scraps, and finish good scraps. Other than these main types, there can
be equipment or asset scraps.

Scrapping of Materials

Raw materials procured from vendors will be received at the warehouse. Upon
receiving, a quality inspection will be done for the goods received. Quality
inspection is done based on an inspection lot created at the goods received point.
Based on the inspection, it will be decided whether the received goods meet the
quality standards or need to be scrapped. There can be many reasons to scrap
raw materials such as shelf-life expiry, damaged goods, quality-related issues,
and slow-moving items.

Below are the basic steps of a purchasing process:

Material Purchasing Process

Semi-finished goods and finish goods are also scrapped when there are quality
issues, damages, or when those materials cannot be used further in the value
stream.

In SAP, a stock is maintained in three stock types:

1. Unrestricted Use Stock

2. Quality Inspection Stock
3. Blocked Stock

At the point of goods receipt or production confirmation, it is possible to decide

whether the stocks need to be posted into quality inspection stock type. By
posting them into quality inspection stocks, these stocks/batch are segregated to
see any possible quality issues or pending quality assessment.

Generally, materials that need to be scrapped are maintained in the quality

inspection stock or blocked-stock category. The quality inspection department
will check the parameters of the materials and will give the final decision for
scrapping. SAP has given the provision to scrap from all three of these stock
types and SAP has provided three movement types for each of the stock types.

Scrapping from unrestricted stock is done with the movement type 551.
Scrapping from quality inspection stock is done with movement type 553, and
scrapping from blocked stock is done with movement type 555. If the stocks
belong to special stock types such as sales order stocks, consignment stocks,
project stocks, etc., it is possible to maintain the special stock type during the
scrapping process and a corresponding movement type will be used.
Goods Movement

For the scrapping of materials, there are two transactions that we can use in SAP.
We can use MIGO or MB1A, where the latter transaction code is obsolete in the
latest SAP S/4HANA version. Follow the below steps in MIGO to carry out the
scrapping movement.

1. Select the activity as “goods issue”.

2. Select the type as “other”.
3. Set the movement as 551 which is the goods issue for scrapping.
4. Identify the material and the quantity to be scrapped.
5. Enter the cost center to which the scrap value must be posted.
6. Post the document.

When the document is posted, these stocks will be reduced from the system. We
can view the stocks by using the transaction code MB52 or MMBE.

Scrapping Process

Once the scrapping movement is executed in SAP, two documents will be posted.
One is the material document. The Material document will have the stock-related
information such as the quantity reduced, movement type, date of the posting,
etc. The second document is the accounting document which will have the
financial information of the scrapping process such as the accounts in which the
debit and credit postings happened. The cost of the scrapped material will be
posted to a cost center in SAP.

Material Document Creation

This will end the material management (MM) scrapping process in SAP.

SAP PP Scrapping Process

Manufacturing and assembly processes generate scrap during different stages of

the production life-cycle. It is important to identify and record this scrap to
capture the scrap-related cost and ensure material availability. By maintaining
scraps in the system, the planning run will consider the scrap percentage while
material requirement planning and generate the requirements to meet the
expected yield. There are mainly three types of scraps generated during
manufacturing.

1. Assembly scrap
2. Component scrap
3. Operation scrap

Assembly Scrap

Assembly processes generate scrap due to various reasons. There can be

environmental factors, as well as certain manufacturing methods that may result
in the generation of assembly scrap.

For example, let’s assume that there is a finish goods assembly that requires
three raw materials. Each raw material has individual dependent requirements.

Individual Dependent Requirements in a Finish Goods Assembly

Next, for the finished goods, an order is received for 100 pieces. When this order
is placed, it will generate dependent requirements for raw materials after
the MRP run.
 Quantity Required for Raw Materials

If there is an assembly scrap generated during the process, we can add this
assembly scrap in the MRP1 view of the material master. To do that, follow the
below process:

1. Execute MM01/MM02 and identify the material and plant.

2. Select the MRP1 view.
3. Find the assembly scrap field and maintain the value as a percentage.

Assembly Scrap Generated during SAP Scrapping Process

If there is an assembly scrap of 5% to produce the expected yield of 100 pieces,
we need to plan more. When assembly scrap is used, it will increase the order
quantity of the header material and subsequently increase the order quantity of
the components based on the bill of material (BOM). This ensures the material
availability to overcome the scrap generated and ensures the scrap cost incurred
during the assembly process gets captured correctly.

Component Scrap

There can be certain components within a manufacturing process where it always

consumes more than the planned quantity in the bill of materials. To avoid
material unavailability for such components, we can use components scrap.

Component scrap can be maintained as a percentage in the material master or

the BOM. Follow the below steps to maintain component scrap in the material
master:

1. Execute the material master maintenance transaction MM01/MM02.

2. Select the plant.
3. Select the MRP4 view.
4. Maintain the component scrap as a percentage value.

Follow the below steps to maintain the component scrap in the BOM.

1. Execute the BOM maintenance transaction code CS01/CS02.

2. Give the material, plant, and BOM usage and execute.
3. Select a component and click on “item”. If the BOM is being created, add the necessary
components first.
4. Enter the component scrap as a percentage.
If component scrap is maintained in the material master, that scrap percentage
will apply to all the bills of materials to which that component is attached.

If the component scrap is maintained in the bill of material, it will apply only to
that assembly or manufacturing component. Component scrap maintained in the
bill of material has a higher priority than the value maintained in the material
master.

By entering components scrap, it will increase the required quantity of that

component and if there are any dependent requirements, the consumption
quantities of those will also be increased.

Component Scrap in SAP Scrapping Process

Operation Scrap

During the production process, a sequence of operations will be followed. Some of

the operations in the production sequence might generate scrap and generate a
production loss. This is considered as operation scrap in SAP. When there is an
operation scrap, it is necessary to adjust the following operation quantities:

In this scenario,

1. The quantities of the following operations will be reduced.

2. The capacity of the work centers in the following operation will become free so that
during capacity planning, new order quantities can be allocated.

Example:

Finished Good A is produced by carrying out three operations (Operation A, B, and

C). Operation B has 5% of scrap.

If there is a production order to produce 100 units from finished good A, in order
to achieve this planned quantity, we need to confirm 100 units from operation A
and then 100 units from operation B. Since there is a 5% loss at operation B, the
quantity to confirm in operation C will be 95 units.
Operation scrap is maintained in the routing of the material. Routing is used to
define the sequence of operations that we need to follow during the production of
that material. To maintain operation scrap in routing follow the below steps:

1. Execute the route, create/change transaction CA01 / CA02.

2. If the routing is not created, first enter the routing operations by selecting the
“operation” button.
3. Enter the operations in sequence.
4. Double-click on the operation sequence number. This will drill down the operation
details.
5. Scroll until you find the operation scrap field. The value entered here will be taken as a
percentage.

Operation scrap can also be maintained in the bill of material. This will be useful
when there is an assembly scrap maintained at the header level. If there is an
assembly component that has assembly scrap maintained in the material master
and there is also operation scrap maintained, the system will only consider the
operation scrap.

This setup is particularly useful for assembling high-valued materials. Rather than
maintaining assembly scrap which affects the entire process, we can maintain
the operation scrap and eliminate the scrap from the operation itself. To facilitate
this, we need to maintain the net indicator in the BOM item view.

To maintain operation scrap in the BOM, follow the below steps:

1. Execute the BOM create or change transaction CS01 / CS02.

2. Enter the material, plant, and BOM usage and execute.
3. Now we can view the component list of the BOM. If the BOM is being created, insert
the components and the consumptions.
4. Select a component and click on the “Item” button. This will display the BOM
component or item-related details.
5. Enter the percentage value in the “operation scrap” field.

SAP Production Order is a transactional data object that belongs to

the production and planning module. Production orders are used to capture the
quantities and cost-related to production.

How to Create SAP Production Orders

If the production planning process is MRP-driven, once the MRP run is

executed, planned orders will be created. For the items that are produced in-
house, it is possible to convert these planned orders into production orders.

SAP Production Order creation can be done after evaluating the stock
requirement list in SAP. Transaction to view the stock requirement list is MD04.
From this interface, we can view the planned orders created and we can convert
the planned orders into production orders. Other than the above transaction code,
there are many options and transaction codes available to create production
orders in SAP. Some of these are CO01, CO08, CO41, and MD16. Any of these
transactions can be used depending on the requirement.

When a production order is created, the following actions are carried out:

 A routing is selected. Its operations and sequences are transferred to the order.
 The bill of materials is exploded and the items in the bill of materials are transferred to
the order.
 Reservations are generated for stock items in the bill of material.
 The planned costs for the order are generated.
 Availability check for the components.
 Purchase requisitions are generated for items procured externally and externally
processed operations.
 Generation of Settlement Rule.

The MRP will no longer make automatic adjustments to production orders.

How to Release SAP Production Order

The release production order process is an important business process, which

confirms that the order is ready to be worked on the shop floor. In this process,
the production supervisor releases the production orders (shop floor orders) for
execution.

During the release the following functionalities will be taken place:

 If the produced material is a batch-managed Item, it will be goods receipt-based batch

number.
 Availability check for the components will be done. This depends on the configuration
settings.
 Batch determination for the components – If the backflush is enabled for the
components.
 In-process inspection lot creation – If the In-Process Inspection has been activated.
 Printing shop floor papers.
 Confirmation.
 Consumption recording.

How to Execute and Close SAP Production Order

During production order execution, the below activities take place:

 Material Request from Store – The production order will have a list of components that
are required to carry out the production. There, the materials can be semi-finished
goods or raw materials.
 Consumption of Components – Once the components are received from the stores,
those will be issued against the production order. This can be done manually or
automatically.
 Confirmation of Production Activities – Production order is confirmed when the
production activities are completed. This will create inventory in the system. This
 process will also capture the activity costs based on the routing given for the produced
component.
 Delivery Tolerances – tolerances can be maintained in the production order so that
excess quantities produced can be captured.
 QM Integration – If the produced material is quality-related, confirmation of the
production order will create an inspection lot in the system. This will then be used by
the quality department to record the quality results.
 Technical Completion – Once the production order is complete, we need to set the
technical complete status for the order. This makes the production order available for
settlement and variance calculations.

SAP Planned Order is an important component in the production and planning

module in SAP. The planned order is considered as a procurement proposal in
SAP. This means it is an intermediate state of a demand or procurement request.

When production demand is entered in SAP, material requirement planning

(MRP) is run. The result of MRP is the procurement proposals. For materials that
are produced internally, MRP creates planned orders and for materials that are
procured from external sources, MRP creates purchasing requisitions.

As mentioned above, MRP created planned orders for components based on the
procurement type maintained in the material master. There are four procurement
types in SAP.

1. E – Inhouse production
2. F – External procurement
3. X – Both procurement types
4. No procurement

For materials that are indicated as E or X in the material master, MRP creates
planned orders. Materials that are indicated as “X”, can be produced in-house, or
can be procured externally.

SAP Planned Order Creation

SAP Planned Orders can be created, changed, and displayed from the transaction
codes MD11, MD12, and MD13. SAP has the option of creating a planned order
manually. For that, we can use the transaction code MD11. Below are the
contents of a planned order:

1. Planned order number – This is a unique number that is allocated for the planned order,
and it is used to identify the planned order. This number will be determined from a
number range that is defined in the configuration. When the planned order number
range is depleted, MRP will not create new planned orders. We can define a number
range for manually created planned orders separately.
2. Order quantity – Based on the production demand, SAP creates a planned order, and
the order quantity will be based on the production demand. Based on the material
master parameters, production demand can be split among multiple planned orders.
3. Basic dates – Basic production start and end dates will be determined by the system
based on the MRP parameters.
4. Production plant – The plant in which the planned order is created.
5. Production version – This is the production version that has been picked for the
planned order. This is important because the bill of material (BOM) will be picked for
the planned order based on the version.
6. Planned order firming indicator – Based on the MRP parameters, the planned order
number will change when MRP is executed. If we want to prevent MRP from changing
the planned order, we can firm the planned order by selecting this indicator.
7. Component overview – This shows the components in the planned order. This is based
on the bill of material. The production version determines which BOM is applied for the
planned order.
8. Sales order – If the planned order is created for a make-to-order scenario where
a sales order creates demand in the system, the relevant sales order number will be
available in the planned order.

SAP Planned Order Conversion

The SAP Planned Order can be converted into production orders or purchase
requisitions based on the requirement. If a planned order is converted into a
production order, the content of the planned order will be copied to the
production order.

Transaction code MD16 can be used to view planned orders created for a
material.

SAP batch determination is a key feature of SAP software to automatically

suggest a batch of materials that are to be used in a business process. For
example, batch determination can be used to automatically suggest the batch of
finished goods that need to be issued to a customer or raw materials that should
be consumed in the production process. Manufacturing and distribution
companies almost always manage their stock in batches. Hence, SAP batch
determination is a mission critical functionality that they require from SAP ERP
and SAP S/4HANA.

Batch is an object in SAP which is used in materials management, sales and

distribution, and production planning modules. When it comes to production and
planning batch plays a pivotal role. There are products which are managed and
produced in batches. Their individual batches have their own characteristics. For
example, expiry date. When manufactured goods have its own characteristics or
properties, we can use SAP batches to manage those material stocks more
efficiently.

Batch management is a concept that is used to maintain these specific properties

of the batches. SAP batch determination is the process by which batches are
selected from the system based on the properties of the batches.

When it comes to production and planning, SAP batch determination is used to

decide which batches of the materials are going to be used or consumed with in
the manufacturing process. As an example, if the materials have a specific expiry
date, we might need to consume those material before times run out. So, we can
use methods such as first in first out (FIFO), where the batches which were
produced first will be consumed first.
Prerequisites for SAP Batch Determination

SAP batch determination process has several configurations that must be done,
and there is master and transactional data which must be maintained. Before
starting batch determination, we need to setup the following activities:

1. Batch management needs to be setup in configuration. Batch can be made unique at

material, plant, or client level. As an example, if the batch is unique at client level, two
materials in the same client cannot have the same batch number.
2. Batch management must be enabled in the material master. Without this master data,
material will not be picked during batch determination.
3. Materials must be classified. Material must be created with the classification view in
the material master. Batch class need to be assigned to the material. This will be used
in the batch determination process. Batch class is defined in SAP with type 023. In this
batch class, we must assign the characteristics of the batches. These characteristics
will be used to save the information about the batches. Later we can use this
information for the batch determination process.
4. Number range for the batches must be defined. Batch umber consist of ten characters.
We can define internal or external number ranges for the batches.

SAP Batch Determination Configuration

There are several configurations which must be carried out to enable batch
determination.

Define Condition Tables

This is first configuration that must be done. Follow the below IMG path to create
condition tables.

IMG -> Logistic General -> Batch Management -> Batch Determination & Check ->
Condition tables -> Define Production Order Condition Tables

There are pre-configured condition tables in SAP. We can use these for our
process. Condition tables will have many fields which we can use. These fields
represent how the batches are searched in the system.

Define Access Sequence

Next, we need to define the access sequence. Purpose of having an access

sequence is that it allows the strategy type to read the condition tables in
sequential method. Access sequence can be created by following the below IMG
menu path:

SAP IMG -> Logistic General -> Batch Management -> Batch Determination &
Check -> Access sequences -> Define Production Order Access sequences
There are several access sequences available in SAP by default. We can use
these or create a new access sequence if required. In the access sequence we
need to enter the condition table that we selected in the previous step. There can
be more than one condition tables in the access sequence.

Define Strategy Type

Strategy type determined what type of conditions and criteria are used with the
batch determination process. Strategy types can be defined by following the
below SAP IMG path.

SAP IMG -> Logistic General -> Batch Management -> Batch Determination &
Check -> Strategy types -> Define Production Order strategy types

In the strategy type we need to assign the search class, sort rule and the access
sequence. Search class is used to search for batches according to the
characteristics that we want. Search class is not assigned to the material. We
need to create another class that will be assigned to the material. This batch
class will have the characteristics of the batch and when the batch is created,
those characteristic values will be populated.

Sort sequence is used to define the sorting method for each characteristic. We
can select sorting methods such as ascending or descending. Sort sequence can
be created by following the below IMG path.

SAP IMG -> Logistic General -> Batch Management -> Batch Determination &
Check -> Define sort rules -> Create sort sequence

Define Batch Search Procedure

Batch search procedure has the method in which batches will be searched. We
can define the search procedure by following the below SAP IMG path.

SAP IMG -> Logistic General -> Batch Management -> Batch Determination &
Check -> Batch search procedure definition -> Define production order search
procedure

Batch Search Procedure Allocation

This is the final configuration in the batch determination process. The search
procedure which we created must be assigned to the movement type. When this
allocation is done, when we trigger that movement, we can use the automatic
batch determination for those materials with that specific movement.

Follow the below menu path for allocating the search procedure:
SAP IMG -> Logistic General -> Batch Management -> Batch Determination &
Check -> Batch search procedure allocation and check activation -> Allocate IM
search procedure

As an example, we can assign the search procedure that we created to

movement type 261 which is the goods issue movement. When we are issuing
materials to a production order, we can use the batch determination if this is
activated. Like wise we can assign the search procedure to multiple movements.

Similarly, if we allocate the search procedure to movement type 311, it will allow
us to use batch determination during location-to-location stock transfers. This is
important function in the material management module. Similarly, when the
deliveries are picked, we can use batch determination to select which batches
need to be delivered.

This completes the SAP batch determination tutorial.

Welcome to the free SAP Repetitive Manufacturing (REM) tutorial, a part of our
free SAP PP Training course. Here, we will explain what is REM in SAP, its key
features, and its processes.

SAP Repetitive Manufacturing (REM) is one of the types of manufacturing

processes supported by SAP. For each industry, there is a manufacturing process
that is more suitable than the other. Factors such as production rates, consumer
demands, and product complexity have an influence when selecting the
manufacturing process.

The commonly used manufacturing processes are:

1. Discrete manufacturing
2. Repetitive manufacturing
3. Process manufacturing

SAP Repetitive Manufacturing (REM) method is used in industries where the

production is quantity-based and not order-based. Another main aspect of
repetitive manufacturing is that the production is based on time such as months
or years. Examples of industries that use SAP repetitive manufacturing are:

 Electronics
 Automobiles

Let’s take a device like a mobile phone, for example. Once the design is finalized,
its production will be done in mass quantities. The production is not order-based,
the focus is to produce a quantity within a specific period. In this example, the
time period or planning horizon can be prior to the release of the new model. So,
the manufacturing will be quantity and time-based.
Another key aspect of repetitive manufacturing in SAP is that products have a
steady sequence of activities. This means that the routing is simple and there are
not many routing variations. Below are some key differences and similarities
between discrete manufacturing and repetitive manufacturing.

Discrete Manufacturing Repetitive manufactur

Order-based production Quantity and period-based productio

A steady flow of similar products wit

Frequent product changes
changes

Both make-to-order and make-to-stock production methods can be Both make-to-order and make-to-stoc
utilized methods can be utilized

Backflushing is done order-based. Backflushing happens at the

Period-based backflushing.
confirmation of individual orders.

Order-based cost controlling Period-based cost controlling

High product complexity Low product complexity

SAP Repetitive Manufacturing Process

SAP facilitates both Make-To-Order (MTO) and Make-To-Stock (MTS) repetitive

manufacturing methods:

 MTS: Production is done without any reference to an order. Planned independent

requirements are used to create demand in the system. When sale orders are received,
those will be fulfilled by the warehouse stock.
 MTO: This is known as sales order-based production. Each production order will have a
reference to the sale order. Stocks are maintained with the sale order assignment.

Master Data for Repetitive Manufacturing in SAP

Several master data objects need to be maintained to perform repetitive

manufacturing in SAP.

1. Material master – In the material master, we need to maintain the repetitive

manufacturing profile and the production version.
2. Bill of material (BOM) – Material BOM needs to be created.
3. Work center – Production lines have to be mapped as work centers.
4. Routing – In repetitive manufacturing, rate routing is used. There can be one or more
operations.
Other than these master data, we need to define the product cost collector. Next,
we can learn how the master data related to repetitive manufacturing is set up in
SAP.

SAP Repetitive Manufacturing Profile

The Repetitive Manufacturing (REM) profile is the key to a successful setup of

REM in SAP. The REM profile controls the way how REM is carried out in the
system. This can be set up by following the below SAP configuration path or using
the transaction code OSPT. Existing REM profiles can be changed from
transaction code OSP2.

IMG -> Logistics -> Production -> Repetitive Manufacturing -> Control -
> Create repetitive manufacturing profile using assistant.

The REM profile contains the below information:

1. REM production types: Production type selection is the initial step of setting up the
profile. We need to select whether MTO or MTS production method is used.
2. Reporting points: This is defined to record consumption details such as work in
progress and stock management during inventory management. This is somewhat like
a milestone operation used in discrete manufacturing.
3. Automatic goods movement: Determines whether goods movement or backflush needs
to happen during reporting point confirmation.
4. Activities posting: Determines whether the activities need to be posted to a product
cost controller at the time of backflush.
5. Firming plan orders: This option will make sure that the plan orders are not changed by
the MRP run.
6. Automatic stock determination: By defining the automatic stock determination
procedure, the system will suggest the available stocks for consumption.
7. Batch determination procedure: If the material is batch-managed, we can define a
batch determination procedure and assign it to the REM profile. Then the system will
suggest batches based on the defined criteria.
8. Movement types for postings: We can define the movement types to be used for
different postings. The system will suggest the default movement types. For
example, 261 is the movement type for goods issue. If there are many customized
movement types to be used, we can maintain those in the REM profile.

The REM profile is assigned in the material master MRP 4 tab.

Production Version

SAP Production version is a combination of BOM and routing. In REM, rate routing
is used. The production version is maintained in the MRP 4 tab of the material
master. Under the planning data section in the production version, we can select
rate routing and then give the routing group.

Under the bill of material (BOM) section, we can give the alternative BOM
number that applies to the production version. This is important to ensure the
correct BOM during MRP.
Bill of Material

REM requires a Bill of Materials to be maintained. We can have several

alternative BOMs and they need to be assigned to the correct production
versions.

Rate Routing

Rate routing is specially used in REM. Rate routing enables a production rate to
be maintained operation-wise. It has the same structure as routing and can be
created from the transaction code CA21.

Product Cost Collector

The SAP order settlement can be done in two ways:

1. Order related
2. Product related

Order-related settlement is done when the product range is flexible and when the
cost is managed in individual production lots. In the product-related settlement,
the settlement is done based on the cost of the product cost collector.

A product cost controller is used in SAP REM to capture the actual costs. During
production confirmations, the cost controller will collect the costs related to the
goods movement performed and the settlement will happen periodically.
SAP Repetitive Manufacturing Process Flow

Basic Repetitive Manufacturing Process in SAP

The above diagram consists of the basic steps followed during a REM process in
SAP. Production requirements will be captured based on the MTS or MTO
scenario. Next, the production planning and line loading will be done. Line loading
or allocating the work centers will be based on the capacity. Then the production
lists, which have the materials, quantities, and dates, will be handed over to the
shop floor. Based on the requirement, methods like Kanban will be used to handle
material staging. The next stage is the production and confirmation of the final
order. The REM process will end when the cost captured through the cost
collector is settled.
This concludes the tutorial on repetitive manufacturing. In summary, we have
studied the key features of SAP Repetitive Manufacturing (REM), master data in
REM, and the REM process.

Did you like this tutorial? Have any questions or comments? We would love to
hear your feedback in the comments section below. It’d be a big help for us, and
hopefully, it’s something we can address for you in the improvement of our free
SAP PP tutorials.

Welcome to the SAP Backflushing in Repetitive Manufacturing (REM) tutorial,

a part of the SAP PP training course. SAP backflushing is an essential concept
when it comes to production planning and execution in SAP software.
Backflushing is the automatic goods issue that happens during the production
order confirmation. In SAP, the goods issue movement type is 261 and when this
movement is carried out, materials will be consumed by the production order.

As an example, let’s consider manufacturing a car. To produce the finished goods,

which is a car, let’s assume that we need tires and a chassis. By using the
concept of backflushing, we can issue the tires and chassis at the point of
confirming the finished goods production order. This is very useful in high-volume
industries because separate goods issuances are not required.

Given below are some of the master data elements that can be used to control
the backflush activity in SAP.

Material Master

To enable backflushing for a material, we can maintain the backflush indicator in

the material master. The backflush indicator can be found in the MRP 2 tab of
the material master. This field has three input options.

1. Always backflush – When the always backflush indicator is set, the material will
always be considered for backflush.
2. Work Center decides whether to backflush – We can maintain the backflush indicator
in the work center. By selecting this option, backflush will be enabled based on the
values maintained in the work center.
3. Blank – Backflush is not required for the material.

Work Center

We can maintain the backflush indicator in the work center. It is maintained in

the basic data tab. When this indicator is set, task lists operations that have this
work center will trigger the backflush during the confirmation. Work centers can
be created from transaction code CR01.
Bill of Material (BOM)

The Bill of Materials or BOM must be maintained to create the link between the
header material and the components. This link will be copied to the production
order and during the order confirmation, which is useful in identifying the
backflushing components. If the BOM is not available, we can add the
components manually to the production order and then set the backflush
indicator in the component overview screen, if it is not maintained in the material
master. The BOM can be created from transaction code CS01.

Routing

Routing is the sequence of activities that need to be performed during

production. During production order confirmation, by-default backflushing will
happen during the confirmation of the first routing operation in the sequence.
When we create routing, we can decide the operation counter where the
backflushing needs to happen. This gives control over the backflushing of
components and is matched with physical goods issuances on the shop floor.

SAP Backflushing in REM

Repetitive Manufacturing (REM) is a manufacturing methodology that is used to

produce products in large volumes. High stability, low product complexity, and
fixed operations are some of the common features of the products that undergo a
REM process. Cars and electronics are some examples of industries that use the
REM method.

The concept of SAP backflush in repetitive manufacturing is similar to the above-

mentioned process that we discussed. But there are some key differences when it
comes to the pre-requisites that need to be maintained.

Repetitive manufacturing is a period and quantity-based process. During REM,

backflushing can be configured in a way so that it can be done at the end of a
certain period. For example, this period can be the end of a shift or at the end of
the day. This setting is controlled by the REM profile. To define the REM profile,
follow the below IMG path:

IMG -> Production -> Repetitive manufacturing -> Create repetitive manufacturing
profile using assistant.

We can create the REM profile using the profile assistant or we can define it
manually. When it comes to backflushing, there are two options that we can
select in the REM profile.

1. Separated Backflush – Goods receipt and goods issues are done as separate activities.
This means that we can decide whether to do the goods issue later or immediately.
 This is useful for products with large BOMs, and we can improve the system
performance by selecting this option.
2. No Separated Backflush – Here, goods issue and receipt happen simultaneously.

There are more settings that we can select in the REM profile that is related to
backflushing. These include:

 Reducing the production quantities at backflush – This setting determines which plan
orders, or the run schedule quantities, are reduced during backflushing. Run schedule
quantity is a type of plan order created in SAP for materials that have the REM indicator
activated in the material master and the production version is maintained. Run schedule
quantities are not required to be released or converted into production orders.
 Recreate planned orders at backflush reversal – When a backflush is reversed, this
setting determines how the system creates the planned orders which were previously
reduced due to backflush. There are several options available.
1. No planned order creation – plan orders will not be created based on the backflush
reverse quantity.
2. Create planned orders for the reversed GR quantity – Plan orders will be created
based on the goods receipt reversal quantity.
3. Create planned orders with asynchronous MRP – The MRP is executed immediately
after the reversal and based on the requirements, planned orders will be created.

Order confirmation in REM is performed by using the transaction code MFBF. Plan
orders are used in REM for production confirmation. Follow the below menu path:

SAP Menu -> Logistics -> Production -> Repetitive manufacturing -> Data entry ->
Repetitive manufacturing confirmation

Repetitive manufacturing can be carried out for both make-to-order (MTO) and
make-to-stock (MTS) production methods. To facilitate both production methods,
the confirmation program has two tabs allocated for each method. The key
difference between the two is that the MTO process is dependent on a sales order
demand whereas MTS has no such dependency. MTS will be based on a planned
independent requirement.

SAP Backflushing in REM During Order Confirmation

There are three confirmation types available in the confirmation program MFBF.
Settings maintained in the REM profile will have higher priority than the settings
in MFBF. If we have maintained goods issue in the REM profile, goods issue will
happen irrespective of the below settings:

1. Assembly backflush – Both goods issue and goods receipt will happen during the
confirmation. This is a commonly used setting in REM. The material document will be
created and it will have two entries for the goods receipt and goods issue. This is
available for both MTO and MTS scenarios.
2. Component backflush – Goods issue will happen during the confirmation, but the goods
receipt and activity postings will not happen. This option is only available for the MTS
scenario.
3. Activity backflush – Here, only the activity backflush will happen. Goods receipt or
goods issue will not happen. This option is only available for the MTS scenario.
Reporting Point Backflush in SAP

Reporting point backflush is used in REM to view the work in progress of a

product. This is similar to the milestone operations that we use in discrete
manufacturing. In the REM profile, we can maintain whether reporting point
backflush is mandatory or optional.

SAP Backflushing in REM Movement Types

There are different movement types used in REM for goods issue and goods
receipt. It also varies between the MTO and MTS production scenarios. The
movement types used are governed by the REM profile. While creating the REM
profile, we can maintain the movement types.

Below are the default movement types used.

 MTS production
 261 – Goods Issue
 131 – Goods receipt
 MTO production
 572 E – Goods Issue
 571 E – Goods receipt

This concludes the SAP backflushing in repetitive manufacturing (REM) tutorial.

SAP material staging is the process of issuing raw materials or semi-finished

goods from the production or the goods receipt storage location to the assembly
or manufacturing storage location. This applies to all manufacturing
methodologies. Material staging in SAP is one of the key concepts under
production and planning. It is used in Repetitive Manufacturing (REM), which is
one of the main production methodologies in SAP that focuses on manufacturing
goods in large volumes and within a predefined period.

Material staging is predominantly a location-to-location material transfer that can

be planned and managed. Material staging ensures continuous material
availability for production. The movement type used for location-to-location stock
transfer is 311 in SAP.

When material staging is properly executed, stocks at the replenishment storage

location will reduce and the stocks at the issuing storage location will increase
via stock transfer. Material staging in repetitive manufacturing (REM) can be
handled in several methods. We will discuss each of these methods in detail
throughout the later sections.

1. Pull list.
2. Kanban.
3. Storage location MRP.
“Pull list” is an alternative term used for material staging. From the pull list, we
can get a list of materials that are in shortage to carry out the production and the
pull list can be used to trigger the stock transfer. We can use Kanban and storage
location MRP as the pull list to get the material shortage details.

REM or Repetitive Manufacturing is a time-conscious process. Because of this,

material staging in REM is carried out based on a time interval. For example, this
time interval can be the end of a shift, the end of the day, or by the end of the
week. The make-to-order REM is done based on plan orders and in this scenario,
we can execute material staging based on the plan order.

SAP Material Staging Process

Material Staging Pull List

The first step of SAP material staging using pull lists is the evaluation of the
current stock situation. To check this, execute the transaction code MF63 or
follow the below SAP menu path:

Logistics -> Production -> Repetitive Manufacturing -> Material Staging -> Pull List
– Current Situation

Once the transaction is entered, there are lots of selection options available. The
most important selection options are the plant and the selection horizon for the
requirements. The selection horizon determines the period under evaluation, and
it will limit the shortage quantities for that period. To minimize the execution time
of the program, it is better to enter more selection criteria such as the production
line or the plan order. Once the program is executed, it will show the shortage
quantities for the selected period.

Trigger Replenishment

This is the second step of the material staging based on pull lists. Follow the
below SAP menu path to execute the program or use the transaction code MF60:

Logistics -> Production -> Repetitive Manufacturing -> Material Staging -> Pull List
– Trigger Replenishment

By executing this program, we can do the stock transfer from the replenishment
storage location to the issuing storage location. The selection screen in MF60 is
similar to the current stock evaluation program MF63. Once the selection is
given, we can view the details below.

 Material – Based on the time horizon, materials that have a staging requirement will be
picked.
 Issue storage location – This is the production storage location that is entered in
the BOM. It is the location where the stock will be transferred from the replenishment
location. To enter the production storage location in the BOM, execute transaction
code CS01/CS02, select the material code and click the “item” button. Then click on
the status/long text tab and maintain the values.
 Net Requirement Quantity – Based on the time horizon given, the required quantity of
the materials will be populated in this field. If we execute the program by giving a plan
order, the required quantity will be picked based on the component assignment in the
plan order.
 Available stock – This is the currently available stock in the production storage
location.
 Quantity staged – Net requirement quantity minus the available stock will give the
quantity that needs to be staged. This quantity needs to be transferred from the
replenishment location to the production location.
 Replenishment storage location – This is a location in your warehouse where the
material stocks are stored. The system can detect the replenishment location
automatically if we have activated it in the global settings.

To perform the material staging, select a line and click on the “stage” button. The
system will display a message and the staging traffic light will become green.

During material staging, the location-to-location material transfer will happen.

Due to this goods movement, a material document will be created in the system.
We can view the material document generated from MB03 or MB51 transaction
codes.

There will be two entries in the material document with the plus and minus signs
along with the 311 movement. The plus and minus signs represent the material
receipt and material issues from the storage locations. Once done, production
storage location stock will increase based on the staged quantity, and
replenishment location stock will decrease. The stock overview of the storage
locations can be viewed from MMBE or MB52 reports in SAP.

Kanban in Material Staging

As mentioned earlier, we use pull lists to identify the materials that have
shortages and then trigger the stock transfers. We can use Kanban or storage
location MRP as the pull list.

Kanban is a pull system-based production type that can be used to evaluate the
stocks and trigger replenishment. Kanban is a demand-driven process but unlike
other production methods, demand is generated only when it is required. This
eliminates the time-consuming material requirement planning. During the Kanban
process, demand will trigger the replenishment as well as the supply process.
Kanban can be used for in-house produced materials as well as externally
procured materials. We can use Kanban to trigger material staging during REM.
When the stock at a production location is getting low, we can set up a Kanban
strategy to pull stocks from a replenishment location.
Storage Location MRP

Storage location MRP can also be used as a pull list to generate replenishment
stocks when the production location stocks are reduced. Generally, MRP is
carried out at the plant level, in which all storage locations belonging to the plant
are considered during requirement planning. In storage location planning, we
have the option to select which locations need to be considered during the MRP
run. This gives more control over the stocks in the storage location and
requirement proposal generation. Storage location MRP indicator is maintained in
the MRP 4 screen of the material master. There are three input options, namely:

1. Blank – Storage location stocks planned at plant level.

2. 1 – Storage location stock is excluded from MRP.
3. 2- Storage location stock planned separately.

In addition to these options, we can use a special procurement type such

as 40 which is for stock transfer, combined with the storage location MRP
indicator 2. The special procurement type can be maintained in the MRP 4 screen
of the material master. Using these options enables us to set a reorder point and
then execute a stock transfer from a storage location (e.g., replenishment
location) when the stock quantity falls below the reorder point in another storage
location (e.g., production issue location).

By executing the above processes, we can use storage location MRP as a pull list
during material staging to replenish stocks.

SAP Material Staging or “Pull List” is one of the key concepts in optimizing
production and planning. This concludes the SAP Material Staging tutorial.

SAP Production and Planning (SAP PP) module has multiple tables that can be
accessed to view the data. Knowing SAP PP tables is useful when working in the
PP module of SAP. These tables can be viewed using the transaction
codes SE16 or SE16N. SAP PP tables can be segregated according to the
master data and transactional data which are handled through the PP module.

SAP PP Tables for Master Data

Main master data objects that belong to SAP PP are:

1. Bill of Materials (BOM)

2. Work Centers
3. Routing
4. Production Versions

BOM Tables

Table Description
STKO BOM HEADER

STPO BOM ITEM

STAS BOMS ITEM SELECTION

STPN BOM FOLLOW UP CONTROL

STPU BOM SUB ITEM

STZU PERMANENT BOM DATA

PLMZ ALLOCATION OF BOM – ITEMS TO OPERATIONS

MAST MATERIAL TO BOM LINK

KDST SALES ORDER TO BOM LINK – USED TO VIEW SALES ORDER BOM DATA

Work Center Tables

Table Description

CRHD WORK CENTER HEADER

CRHH WORK CENTER HIERARCHY

CRHS HIERARCHY STRUCTURE

CRTX TEXT FOR THE WORK CENTER OR PRODUCTION RESOURCE/TOOL

CRCO ASSIGNMENT OF WORK CENTER TO COST CENTER

KAKO CAPACITY HEADER SEGMENT

CRCA WORK CENTER CAPACITY ALLOCATION

TC24 PERSON RESPONSIBLE FOR THE WORK CENTER

Routing Tables

Table Description

MAPL ALLOCATION OF TASK LISTS TO MATERIALS

PLAS TASK LIST: SELECTION OF OPERATIONS/ACTIVITIES

PLFH TASK LIST: PRODUCTION RESOURCES/TOOLS

PLFL TASK LIST: SEQUENCES

PLKO TASK LIST: HEADER

PLKZ TASK LIST: MAIN HEADER

PLPH PHASES/SUBOPERATIONS

PLPO TASK LIST OPERATION/ACTIVITY (THIS CONTAINS SMV)

PLPR LOG COLLECTOR FOR TASK LISTS

PLMZ ALLOCATION OF BOM ITEMS TO OPERATIONS

SAP PP Tables for Transactional Data

Other than the above master data tables, there are tables that belong to
transactional data such as production orders, planned orders, and reservations.
MRP tables also fall on the PP domain. Let us look at some of the important tables
which are important to know when executing production and planning-related
transactions.

Production Version Tables

Table Description

MKAL PRODUCTION VERSIONS OF MATERIALS

Production Order Tables

Table Description

AUFK PRODUCTION ORDER HEADERS

AFIH MAINTENANCE ORDER HEADER

AUFM GOODS MOVEMENT FOR PRODUCTION ORDER

AFKO ORDER HEADER DATA PP ORDERS

AFPO ORDER ITEM

RESB ORDER COMPONENTS

AFVC ORDER OPERATIONS

AFVV QUANTITIES/DATES/VALUES IN THE OPERATION

AFVU USER FIELDS OF THE OPERATION

AFFL WORK ORDER SEQUENCE

AFFH PRT ASSIGNMENT DATA FOR THE WORK ORDER (ROUTING)

JSTO STATUS PROFILE

JEST OBJECT STATUS

TJ02T SYSTEM STATUS TEXT

AFRU ORDER COMPLETION CONFIRMATIONS

Planned Order Tables

Table Description

PLAF PLANNED ORDER DETAILS

MRP Tables

Table Description
MDKP MRP DOCUMENT HEADER DATA

MDTB MRP ABLE STRUCTURE

PLSC PLANNING SCENARIOS

MDFD MRP FIRMING DATES

MDVM PLANNING FILE ENTRIES

PBVPV MATERIAL INDEX FOR CONSUMPTION OF PLANNING

REUL MATERIAL STOCK TRANSFER RESERVATION INDEX

SAFK RUN SCHEDULE MASTER DATA

Planned Independent Requirement Tables

Table Description

PBIM INDEPENDENT REQUIREMENTS FOR MATERIAL

PBED INDEPENDENT REQUIREMENT DATA

PBHI INDEPENDENT REQUIREMENT HISTORY

PBIV INDEPENDENT REQUIREMENT INDEX

PBIC INDEPENDENT REQUIREMENT INDEX FOR CUSTOMER REQ.

Capacity Planning Tables

Table Description

KBKO HEADER RECORD FOR CAPACITY REQUIREMENTS

KBED CAPACITY REQUIREMENTS RECORDS

KBEZ ADDITIONAL DATA FOR TABLE KBED (FOR INDIVIDUAL CAPACITIES/SPLITS)

Reservation Tables

Table Description

RESB MATERIAL RESERVATIONS

RKPF HEADER

KANBAN Tables

Table Description

PKPS KANBAN IDENTIFICATION, CONTROL CYCLE

PKHD KANBAN CONTROL CYCLE (HEADER DATA)

PKER ERROR LOG FOR KANBAN CONTAINERS

Production Version is a master data object in SAP that belongs to the production
and planning (PP) module. SAP production version is a combination of a bill of
material and routing. Bill of Materials (BOM) consists of the components and the
consumption of those components which are required to manufacture a
product. Routing of the material consists of the activities that need to be done
to manufacture a product.

For a given product, there can be different components that can be used to
manufacture. When there are such substitute components, it is possible to create
an alternative BOM in SAP. There can be multiple alternative BOMs for a given
product. Like multiple BOMs, there can be different methods or tasks which can
be used to manufacture a product. These different methods or sequences of
activities can be maintained as alternative routings or routing groups.

SAP production version is used to group these different combinations of BOM and
routings so that depending on the material availability and the resources,
production can be carried out for those materials. Production versions can be
maintained through the material master or using the production version mass
maintenance transaction C223. In SAP S/4HANA, the production version is a
mandatory PP master data. Let us look at how the SAP production version is
created:

1. Execute the transaction MM02 to view the material master.

2. Select the MRP 4 tab.
3. Click on the production versions button.

When creating a new production version, follow the below steps.

1. Give the production version number, a description of the version, and the
validity period. The validity period is useful to control how long the version can
be used in production order. Once the validity period expires, that production
version cannot be used in production order.
2. Select the production version and click on the “Details” button.
3. Now we need to give the routing. To select the appropriate routing for the
version,
1. Select the task list type N in detailed planning.
2. Give the routing group. The group is generated when the routing is created
from CA01.
3. Give the group counter. This is also generated from CA01.
4. Next, we can give the alternative BOM number that we need to associate with
this SAP production version.
5. Once the above data is entered, click on the “Check” button. This will check
whether there are any inconsistencies in the selected routing group and
alternative BOM. If everything is correct, a green light indicator will be shown.
6. Save the material master.
SAP production version creation is now complete. After the MRP run, planned
orders will be created for the internally produced items. If there is a production
version maintained, it will be picked to the planned order by default. If there are
multiple versions and if we want to assign a different version for the plan order, it
is possible to do so. When the plan order is converted into a production order, the
production version in the plan order will be copied to the production order. By
carrying out the function “read PP master data” in the production order, we can
change the production version.

For mass maintenance of the production version, we can use the transaction
code C223. The details which need to be entered in this transaction are like the
above details that we discussed. By using the above-mentioned methods, we can
create a production version is SAP.

SAP Factory Calendar is a configuration that defines which days are working days
for a specific plant. SAP factory calendars can be configured by following the
below menu path in SAP or by executing the transaction SCAL.

IMG -> SAP NetWeaver -> General Settings -> Maintain Calendar

Steps to Define a Factory Calendar

There are three steps when defining the factory calendar:

1. Public Holidays
2. Holiday Calendar
3. Factory Calendar

Public Holiday

Public holidays are the statutory holidays in the calendar. These days can vary
depending on the country and region. Most of the common holidays are pre-
defined in SAP and we can use those. If there are any additional holidays, we can
define them by going into the public holiday definition. When defining a public
holiday, there are several options available.

1. Fixed date
2. Fixed day from the date
3. Distance to easter
4. Easter Sunday
5. Floating public holiday

The fixed date is used to define holidays that are fixed on a particular date, e.g.,
Christmas day. When defining a fixed holiday, we need to only give the month and
the date within the month. When this holiday is assigned to a calendar, the fixed
holiday will remain unchanged throughout the calendar validity period.
If a public holiday falls on a fixed weekday from a particular date, we can use the
second option “fixed-day from date”. If a public holiday has a fixed distance to
Easter Sunday, we can use the “distance to Easter” option. If the holiday is Easter
Sunday, then we can use the “Easter Sunday” option. If there is no specific rule
for the holiday, we can use the last option which is “floating public holiday”. For
floating holidays, we need to define the month and date for every year because
the date will change each year.

There are several other inputs that we can give during holiday definition.

 Sort criteria
 Religion
 Public holiday class
 Short holiday name
 Long holiday name

Holiday Calendar

After defining the public holidays, we can define a holiday calendar. This is kind
of a grouping for the holidays. When defining the holiday calendar, the below
inputs must be entered:

 Calendar ID – Unique ID which is used to identify the holiday calendar.

 Calendar name – Give a name for the calendar.
 Validity period – A validity period must be given for each holiday calendar.
 Assignment of public holidays – Assign the public holidays that we defined in the
previous step.

When the holiday calendar is already assigned to a factory calendar, the “used in
factory calendar” indicator will be set against the holiday calendar.

SAP Factory Calendar

The final step of the calendar definition process is to create the SAP factory
calendar. Below are the inputs that need to be given:

 Factory calendar ID – Unique ID used to identify the factory calendar.

 Factory calendar name – A name can be given for the calendar.
 Validity period – Validity period must be defined.
 Holiday calendar ID – Enter the holiday calendar ID that is relevant to the factory
calendar. This will assign the public holidays in the holiday calendar to the factory
calendar.
 Workdays – Define the days which are considered as workdays in the week.
 Special rules – If there are any additional holidays that we need to assign only for this
factory calendar, we can set those up as special rules.

Once the factory calendar is defined, it can be assigned to the plant code. This
marks the completion of factory calendar creation in SAP.
AP Bill of Material (BOM) is an important master data that belongs to the
production and planning module in SAP. There are multiple tables in SAP that
store the BOM-related information. Below are the transparent tables belonging to
BOM.

SAP BOM Tables

Table Description

STKO BOM HEADER

STPO BOM ITEM

STAS BOM ITEM SELECTION

STPN BOM FOLLOW-UP CONTROL

STPU BOM SUB-ITEM

STZU PERMANENT BOM DATA

PLMZ ALLOCATION OF BOM – ITEMS TO OPERATIONS

MAST MATERIAL TO BOM LINK

KDST SALES ORDER TO BOM LINK – USED TO VIEW SO BOM DATA

STKO, STPO, and MAST are the main tables in BOM. Let’s check the key
information stored in each of these tables.

STKO Table in SAP BOM

The BOM is divided into two main sections when data is stored. First, we have the
header data which is stored in the STKO table. Then, there is the item data which
is stored in the STPO table. Key information in the STKO table are:
 BOM Category – This field defines the type of BOM. There can be different BOM types
such as material BOM, Order BOM, Equipment BOM, etc.
 Bill of Material Number – This number is used to maintain the relationship between the
BOM tables. BOM number to material link is only maintained in the MAST table and the
other tables are linked with the material from this BOM number.
 Alternative BOM – If there are alternative BOMs created for a material, the alternative
BOM number will be stored in this field.
 Valid From – This is the ‘valid from’ date for the BOM. The BOM will not be exploded in
MRP for the days that don’t fall within the validity period.
 Created On – Displays the date on which the BOM was created.
 Created By – Displays the SAP username which was used to create the BOM.
 Base Unit of Measure – The base unit of measure for the material.
 Base Quantity – Represents the base quantity of the BOM. This determines how the
component consumptions are entered for each BOM item.
 Created in Plant – The plant where the BOM was created.

STPO Table

Item details of a BOM are stored in the STPO table. Below is the key information
stored in the STPO table:

 BOM Category
 Bill of Material Number
 Valid From
 Deletion Indicator
 Item Category
 Item Number
 Component UoM – This is the unit of measurement for the component. If there are
alternative units of measures, we can maintain those here.
 Component Quantity – This is the component consumption quantity. Depending on the
base quantity, consumptions must be entered.
 Component Scrap % – If there is a scrap percentage maintained in the BOM, it will be
stored in this field. This value will be considered during the MRP run.
 Operation Scrap in %
 Production Relevant – If the BOM is production relevant, this indicator will be set.
 Relevancy to Costing – If the BOM is costing relevant, this indicator will be set.

MAST Table

The MAST is a key table in BOM. This table contains the material to the BOM link.
The other tables contain the information in relation to the “Bill of Material
number”. In the MAST table, the bill of material number is linked to the material
code. Below is the key information stored in the MAST table.

 Material – Material code that the BOM represents.

 Plant
 BOM Usage
 Bill of Material
 Alternative BOM
 From Lot Size
 To Lot Size
 Created On
 Created By

AP Safety Stock is used to manage unexpected or unplanned requirements of

stocks. It is common in certain industries that unexpected stock requirements
arise due to different situations such as unexpected wastage, damages,
environmental issues, manufacturing process issues, increased demands, etc.

SAP provides a method to handle such situations by maintaining a safety stock.

The safety stock is maintained in the material master. If we go to the MRP
2 view of the material master, we can find the settings for the safety stock.

There are two types of safety stocks in SAP:

1. Absolute Safety Stock

2. Safety Days’ Supply

During the material requirement planning (MRP), the existing stocks available for
the material are considered. If there are stocks available, demand is fulfilled
using the stocks first, and then, if there is a balance requirement, the relevant
procurement proposals will be created. If we have maintained a safety stock, it
will be omitted from the net requirement calculations. This is done so because
the purpose of the safety stock is to cover unforeseen material shortages and
high demands.

The Safety Days’ Supply is also maintained in the MRP 2 view of the material
master. If this is maintained, the system plans the receipt of the goods in advance
by the time period specified as the safety time. When the goods receipt date is
calculated by the system, it will consider the safety days and bring back the
receipt date of the procurement proposals. In doing so, the system will also
consider the factory calendar to determine the working days.

In order for SAP to consider the safety time, the safety time indicator must be set
in the material master MRP 2 view. There are three settings for this indicator.

1. Ignores safety time

2. Safety time for independent requirements
3. Safety time for all requirements

We can set up a safety time period profile in customizing. The profile can be used
to maintain the safety time in days and the safety time as a fraction. Follow the
below path to set up the safety time profile.

SAP IMG -> Production -> Material Requirement Planning -> Planning -> MRP
Calculation -> Define Period Profile for Safety Time
SAP Safety Stock Availability

There can be certain scenarios where planned orders are created for small
quantities which can be otherwise covered by the safety stock. In this situation,
we can give a percentage of the safety stock that can be used to cover the small
requirement quantities.

When this percentage is maintained, the system will check the safety stock
defined, and then based on the percentage maintained, it will calculate the
possible quantity that can be allocated from the safety stock. If the demand
quantity is lower or equal to this amount, SAP will allocate the quantity from the
safety stock and new procurement proposals will not be created.

Follow the below configuration path to maintain the safety stock availability
percentage. Give the required value and save.

SAP IMG -> Production -> Material Requirement Planning -> Planning -> MRP
Calculation -> Stocks -> Define Safety Stocks Availability.

This completes the safety stock maintenance process in SAP.

SAP Special Procurement Type is a parameter in a material master record that

tells the SAP system to procure that material using a special procurement
process. Before we dive deeper into the specifics of the special procurement
processes in SAP, let’s first understand what is included in the usual SAP
procurement process. The SAP procurement is the process of obtaining material
and services from external suppliers.

The SAP procurement process consists of several steps.

1. Determination of requirements
2. Determinations of the source of supply
3. Vendor selection
4. Purchase order processing
5. Purchase order monitoring
6. Goods receipt
7. Invoice verification
8. Payment processing

This is the standard procurement process. SAP provides several other methods of
procurement. These are called special procurement types or processes. There are
mainly three special procurement types in SAP:

1. Stock transfer with stock transport order (STO)

2. Subcontracting
3. Vendor consignment

Now, let us look at each of these special procurement scenarios in detail.

SAP Stock Transport Order

SAP Stock Transport Order or commonly known as STO is a special

procurement type that happens through a stock transfer between two plants
within a company. Goods are procured and delivered within the company. The
plant which has a requirement for the materials will place an order to the
supplying plant. The supplying plant will deliver the materials against the STO
placed. This process involves both inventory management and purchasing in the
receiving plant.

Below are the steps in a stock transport order scenario:

1. The receiving plant will create an STO. This will be done by the purchasing department.
2. The supplying plant will get the STO and the requirement for the materials. The
supplying plant will do a goods issue against the STO. When the goods issue is done,
the stock is considered a special stock. This stock is called a “stock in transit” and it
will be managed by the receiving plant.
3. Goods receipt is done at the receiving plant with reference to the STO. The stock will
be transferred from the stock in transit location to the goods receipt location in the
receiving plant.

The STO process can be subdivided into:

1. Intercompany STO – STO process between plants in different company codes.

2. Intracompany STO – STO process between plants in the same company code.

SAP provides the below standard methods for the STO:

1. One-step stock transfer. For this method, we need to use movement type 301.
2. Two-step stock transfer. For this method, movement type 303 will be used by the
supplying plant and movement type 305 will be used by the receiving plant. Goods
issue and goods receipt will happen separately and will be recorded separately in SAP.
3. Stock transport order without delivery in two steps. In this process, the delivery
document and billing are not done.
4. Stock transport order with delivery in one step. The receiving plant will create the
goods issue document and shipment details with movement type 647 and the goods
receipt document with movement type 101 in one step.
5. Stock transport order with delivery in two steps.

Using the above methods, we can perform an STO process in SAP. To perform a
stock transfer, the necessary configuration must be done. Follow the below menu
path to carry out the configurations.

SAP IMG -> Material Management -> Purchasing -> Purchase Order -> Set Up
Stock Transport Order

The below settings must be done in the above configuration path:

1. Define shipping data for plants

2. Create checking rule
3. Define checking rule
4. Assign delivery type to check rule

Subcontracting in SAP Special Procurement Type

Subcontracting is a special procurement process where a company purchase

materials from an external supplier. But in this process, the company will provide
some or all the components to the external supplier or subcontractor to
manufacture the materials.

Below are the steps in the subcontracting process:

1. Subcontracting purchase order is raised. This purchase order will have the finished
product which needs to be manufactured and will also list down the materials provided
for the subcontractor.
2. Components are provided to the subcontractor. In SAP, this process will be handled as
a transfer posting. The stock will be shown under the company storage location even
though it is not physically available. This stock is managed as a special stock called
“stock of material provided to vendor”.
3. The subcontractor will deliver the materials to the company. A goods receipt will be
done against the subcontracting purchase order. When the receipt of the goods is
posted, material stocks that were maintained as stock of materials provided to the
vendor will also be posted.
4. Finally, the payment will be processed against the invoice.

Subcontracting can be done for raw materials, semi-finished goods, and finish
goods. It is also possible to perform an operation subcontracting. Operation
subcontracting is a scenario where you subcontract one or more operations in
your manufacturing process.

To perform subcontracting for a material, SAP special procurement type 30 must

be maintained in the material master MRP 2 view.

SAP Vendor Consignment

When a vendor supplies you with materials that you are not required to pay
immediately, it is called vendor consignment. The vendor remains the owner of
the stocks and when you remove a quantity from the consignment store, a liability
arises for the vendor. Consignment withdrawals are settled in agreed periods with
the vendor.

Before you procure material for a vendor as a consignment, the material price
needs to be agreed upon with the vendor. This price information will be stored in
a consignment information record. Once the information record is created, we can
post a consignment stock in SAP.

SAP vendor consignment process is included in the below steps.

1. Consignment order is created in SAP. This is the formal request to the vendor to
provide consignment stocks.
2. When the vendor delivers the materials, the receipt of the goods with reference to the
consignment order will be posted. The delivered material stocks will be managed as a
special stock called “consignment stock”. Payment will not be processed at the goods
receipt point because, in the consignment process, payment will be generated once the
stocks are withdrawn.
3. When the goods issue is posted, liability arises against the vendor.
4. Consignment liabilities need to be settled in agreed periods with the vendor. These
liabilities are settled with a credit memo. SAP provides special programs to do this
settlement.

This concludes the tutorial about the SAP Special Procurement Type.

Material classification in SAP is used to identify materials which have similar

properties and constructs. This is called as variant configuration in SAP. This
method reduces the number of material masters created for materials which has
similar properties. Material classification can also be used maintain the material
characteristics which describes the material separately so that we can maintain
the material master and maintain its characteristic values separately.

For example, if we consider the car manufacturing process, color of a car can be
considered as a characteristic of a car. We can maintain the material master for
the car and create a material classification. Then we can create and assign the
color as a characteristic to the material class.

Material Classification in SAP

Material classes are created and assigned to the material master. Material
classification system in SAP mainly consists of classes and characteristics.
Characteristics are used to capture the attributes of a material or an object.
Below steps are used in SAP to define classes and assign it to the material
master.

1. Create characteristics for each of the properties of the material.

2. Create a class. There are several class types available in SAP. For material
classes we use the type 001. Below are some of the other class types available in
SAP.

 002 Equipment Class

 003 Functional Location
 005 Inspection Characteristics
 006 Inspection Methods
 007 Code Groups
 008 Selected Sets
 009 Production Resources and Tools
 010 Vendor Class
 011 Customer Class
 018 Task List Class
 019 Work Center Class
 023 Batch Class

3. Link the characteristics and the class.

4. Assign the class to the material master.

SAP Characteristics

Characteristics are used to describe the attributes and properties of a material.

The properties can be quantitative or qualitative. For example, color is a
qualitative characteristic while density, viscosity are quantitative characteristics
of a material. Characteristics in SAP can be created with the transaction
code CT04. Below are some of the key information entered during the
characteristic definition.

1. Characteristic name – Name is used to uniquely identify the characteristic.

2. Description – Description of the characteristic.
3. Status – Status of the characteristic. There are three statuses. In preparation, locked
and released.
4. Data type – This is the data type of the characteristic. It can be numeric, char or date
time format.
5. Number of chars – This is the number of characters the characteristic can contain.
6. Decimal places – If the data type is numeric then we can give the decimal places.
7. Entry Required – If the user has to record a value for the characteristic or if you want to
make the recording mandatory, we can use this indicator.
8. Values – In the values tab we can give different values that should be displayed by
default. Then the user can select the value which is required.
9. Restrictions – We can restrict the usage of the characteristic in classes. Eg:- If we
want enable the characteristic to be used in only material classes, we can indicate
that in the restrictions tab.

Create Class and Assign Characteristic in SAP

Once the characteristics are created, the next step is to create a class and
assign the characteristics. As mentioned earlier there are many class types
available in SAP. Classes can be created, changed, and displayed from the
transaction codes CL01, CL02 and CL03. Below are the details which are
maintained in a class.

1. Class Name – This is the name of the class. We can use the name to uniquely identify
the class.
2. Class type – Based on the requirement, select the class type. For material classes
select the type 001.
3. Valid from – Date from which the class is valid.
4. Description – Description of the class
5. Char – In the char tab, we can maintain the characteristic which belongs to the class.
Characteristic properties will be copied to the class.

We can’t assign the same characteristic to the same class and class type for
more than once. However, we can assign the same characteristic to different
classes of the same class type or different class types unless the characteristic
is not restricted.

Assign Class to SAP Material Master

Final step of the material classification process is to assign the created classes
to the material master. We can then update the characteristic values which are
unique for that material. To add the class to the material master, the
classification tab should be available. If the classification tab is not available, we
can create it from the transaction code MM01. If the classification tab is already
created, we can use the transaction code MM02 to add the class to the material
master.

Once the class is entered, save the material master. We can use the same
classification process if we want to use variant configuration. There are advance
functions of classifications such as precondition, actions, and selection
conditions. These are also known as object dependencies. This enables the users
to maintain logical dependencies and grouping of characteristics with each other.

We can also use the transaction code CL24N to assign classes to a material.
This transaction is dedicated for class assignment and processing.

Finding Objects in an SAP Class

Once the characteristic values are assigned in the material master, we can
search for those from the transaction CL30N. This is useful to identify the objects
which has a specific class assigned and the value assigned. Follow the below
steps to find the objects.

1. Enter the class name and the class type and enter.
2. This will bring the characteristics assigned to that class.
3. Enter the characteristic value that you want to search. Then click on the “find in initial
class” button.

Now the system will bring up the objects which match the search results. There
are several other options available in this view such as directly navigate to the
material master edit mode and update the material, view the stock situation of
the material, and save the current layout settings. This search function can be
used for any class type, which is useful if material classification is enabled
in SAP.

This concludes the material classification maintenance process in SAP.

Let’s discuss the main SAP MRP reports that are available out of the box with SAP
ERP and SAP S/4HANA. Material requirement planning (MRP) is one of the key
functions of the production and planning module. Based on the production
requirements given, the system perform quantity calculations of materials using
the master data such as Bill of Material and material master. MRP is carried out
with MRP related objects such as plant, material and MRP area. MRP also enables
capacity planning and long-term planning. Long term planning enables the
organizations to run a simulation with their forecasted demands and get an idea
on how it will affect the capacity availability. There are several SAP MRP related
reports available.

SAP MRP reports consolidate all the information related to MRP and provide an
output in a presentable manner. These reports are useful for the production
planners, MRP planner or MRP controllers. Before we look at MRP report we need
to check another report which has an important information for the production
planners.

Stock Overview Report – MB52

Stock overview report is critical for MRP because material stocks have direct
impact on the MRP run. Due to this we can consider the stock overview report as
a MRP related report. By executing the transaction code MMBE, we can execute
the stock report. As input fields, it offers material, plant, storage location. If the
material is batch managed, we can give the batch as the input and get the
desired output. If we want to view the stocks of multiple materials, we can use
the transaction code MB52 which is the warehouse stock report.

We can also view the special stocks from this report. Example for special stocks
are sales order stocks and consignment stocks.

Stock Requirement List – MD04

To evaluate the planning situation, SAP provides two types of reports/lists. These
are the stock requirement list and MRP list available via the transaction MD04.
MRP lists shows the planning situation after the last MRP run. Stock requirement
list shows the current planning situation. Current planning situation is a more
updated planning result because after the last MRP run, many changes can
happen to the planning related outputs. These changes can be stock related
updates, demand changes and changes in procurement proposals. So, the stock
requirement list is vital to get the current planning status. SAP provides the
option to compare the two lists.

The stock requirement list describes and list down all the MRP related elements.
Examples for MRP related elements are plan orders, production orders, purchase
requisitions, purchase orders, reservations etc. Other than above elements, it
considers the available stock of the materials also. Furthermore, stock
requirement list displays the safety stocks. It provides an option for the users to
display or change the elements if required. Stock requirement list provide below
functions also.

1. Display the exception messages

2. Provide the stock available dates
3. Details views
4. Order report
5. Summary view

In addition to the above functions, stock requirement list also provides the facility
to create procurement proposals such as production orders and purchase
orders. Planned orders can be converted to production orders or purchase
requisitions. Purchase requisitions can be converted into purchase orders from
the stock requirement list.

Exception messages

Exception messages are thrown by the system when it detects alerts during the
planning run. For each of the MRP elements in the stock requirement list,
exception messages will be displayed if there are any.

Header details of the stock requirement list

We can click the “Header data” icon in the stock requirement list and view all the
parameters which has been used during the planning process. These parameters
are available in the material master. Since the stock requirement list provide the
visibility of this data, there is no need to visit the material master.

Order report

Order report function is available for MRP elements such as the production order.
There is a traffic light notification system available which displays color green if
the stock situation is satisfactory. If the planner or MRP controller must take
immediate action, it will display it with a red color traffic light.

Stock statistics

Stock requirement list provide the function of viewing the stocks of the material
from the same screen. It provides a comprehensive view of the stock overview.

Stock Requirement List Collective Display – MD07

We can trigger a report which is like the MD04 stock requirement list but with
multiple materials. This is called as the collective display of the stock
requirement list. We can call this report from the transaction code MD07.

Stock Requirements Pegging – MD04P

Stock requirements pegging report can be called through the transaction

code MD04P. When we execute MRP, bill of materials of the materials which gets
captured to the planning run will get exploded. Based on the BOM structure, the
demand of the finish goods or semi finish goods we drill down the below levels of
the BOM components.

Using the MRP report MD04P, we can analyze these pegged requirements. Like
the stock requirement list, we can execute this report by giving a material and a
plant. Then it will give a details output on the procurement elements created for
the given material and how the demand has pegged from other materials.

If we want to analyze multiple materials, we can go to the collective view

of MD04P. Here it provides a variety of selection screen input options to select
the material list to analyze.

Individual Display of MRP List – MD05

MRP list provide a snapshot of the stock situation after the last MRP run. We can
call the MRP list from the transaction MD05. This display will show the stocks
available, open requisitions, open purchase orders and the reservations.

Multilevel Order Report – MD4C

Multilevel order report can be called from the transaction code MD4C. This is
also an important report which we can use to analyze the stock requirements.
There are several selection options available such as sales order, production
order and PI order. We can use this report to analyze in detail about the MRP
elements.

We have discussed the major SAP MRP reports which are available. This
concludes this tutorial on SAP MRP reports.

SAP COOIS report is one of the most important report which is used in the
production and planning module in SAP. SAP COOIS report can be used as single
data source to view all the production related information. As its name suggest,
the report can be accessed via the transaction COOIS.

Production and planning (PP) is a key module in SAP which handles all the
manufacturing related activities. SAP manufacturing supports different
manufacturing methods such as discrete manufacturing, process manufacturing
and repetitive manufacturing.

At the end of a production process, it is important to have comprehensive reports

to get the production and planning related information. This is important because,
data in the reports are important to take decisions regarding the manufacturing
process. Based on this information, manufacturing organization can take key
decisions to make their production processes more efficient.
Structure of SAP COOIS Report

We can use the COOIS report to view details about production elements. There
are two main production related element. These are the planned
orders and production orders. Planned order is the preliminary state of the
production order. At the planned order level, production is not yet confirmed thus
plan orders can be changed if required. Once the plan order is completed, it is
then converted to production order. Once a production order is created, it
indicates that the production process can be initiated.

We can use SAP COOIS report to view details about the planned orders and
production orders. There are lots of information which we can get in day-to-day
basis on these elements. To make this information user friendly and easily
understood, COOIS report is segregated into “Lists”.

Each of these lists display key information related to production orders and plan
orders. Some of the useful lists in COOIS are,

1. Order headers
2. Components
3. Automatic goods movements
4. Documented goods movements
5. Operations
6. Confirmation

There are several other lists available which can be used. Next, we will look at
the different information available in each of the above-mentioned lists.

Order Headers

As the name suggests, “order header” list can be used to view the header level
information about the plan orders or the production orders. Header level
information includes the production/plan order number, the material of the order,
order quantity, confirmed quantity, delivered quantity etc. The list is useful to get
a summarized view of the orders. Since COOIS is a ALV report, we can easily
extract this information to an excel document for further analysis.

Components

We create production orders for materials which must be manufactured. When

manufacturing a material, we need additional materials. We call these as
components. Components can be raw materials, semi-finished good or finished
goods. If we want to view the components of a production order, we can use the
component view. In this view we can see the information such as component
material, requirement date, required quantity, withdrawn quantity, etc.
Automatic Goods Movements

When the production process in complete, we confirm the production orders.

When the confirmation is done, we issue the components of the production order.
Issuances of components against a production order reduces the inventory in
the system for those components. Also, it creates finance entries since material
consumption occurs. These issuances can be done automatically if the master
data is setup in a way to facilitate it. If there are such automatic goods issuances
happen against a production order, we can use the automatic goods
movement list to view those. Like goods issuances there can be other automatic
goods movements triggered during production order confirmation. All those can
be viewed from this list.

Documented Goods Movements

Other than the automatic goods movements, there can be goods movements
which are done during confirmation of an order. E.g. – receipt of by-products.
Such goods movements can be viewed from the documented goods movements
list. It will display the automatic goods movements also.

Operations

This is a key view in SAP COOIS report. Production orders can consist with one
or more operations based on the complexity of the product that is being
manufactured. These operations are called a routing operation. Routing is a
sequence of operations which are performed during the manufacturing process.
From the operations list, we can view the multiple operations, work centers,
operation quantities, the confirmed quantities etc. This is important when
calculating the daily outputs for each operation.

Confirmations

This list can be used to view the confirmations done against the production order.
Confirmation details can be found in detail in this view.

Customizing a List

All the lists that we discussed up to now are pre-configured lists in SAP. If we
want to view several of the above lists in a single screen, that is possible with a
simple configuration. E.g., let’s assume that we want to view the order header
information and documented goods movement in a single screen.

To achieve the above requirement, follow the below SPRO menu path.

SPRO -> Production -> Shop Floor Control -> Information System -> Define Profiles
for ALV-Layout-Based Object Overview
Next click on “New Entries” to create and save an overall profile which contains
the order header and the documented goods movements. Give the item numbers
based on the sequence in which the lists should be displayed in the screen.

Once this is done, the configuration part is complete. Now in COOIS transaction,
select the “Object Overview” list. In the profiles, we can find the profile which we
configured. Select the profile and enter the selection parameters for the report.
Once we execute SAP COOIS report, we can view the order headers and the
documented goods movements list in the single screen. This is useful in a
situation where a detail analysis is required for the order. Similarly, we can create
multiple profiles in configuration by combining different lists and use them as and
when required.

SAP COOIS report is used in discrete manufacturing. For Process

Manufacturing, COOISPI report can be used to view the production related
information. Structure of the COOISPI report is like of the COOIS report. This
completes the brief introduction about the SAP COOIS report and its
functionalities.

SAP number ranges are used to enable assignment of unique numbers to identify
different master data and transactional data objects in SAP. Number ranges is a
simple but important concept in SAP that is central to how SAP software works.

In SAP, there are many objects defined for each module. As an example, if we
take the production and planning module, plan orders and production
orders are key objects. In Plant
Maintenance, equipment, notifications, maintenance plans are some of the
objects. If we take the Material
Management module, material master, purchase orders are some of the key
objects. From the sales side, sales orders and sold to party are some examples
with number range object assignments. These objects are uniquely identified
using a number.

This number is selected from an SAP number range. We define number ranges for
each object and a unique number from this number range will be assigned for the
object. When transactions are carried out in SAP for each of these objects,
system allocates a number for the data.

Types of SAP Number Ranges

There are two types of number ranges:

1. Internal SAP number ranges – In internal number ranges, system selects the next
available number from the number range allocated for the object automatically. For
objects such as production orders, purchase orders we use these type of number
ranges.
2. External SAP number ranges – When external number ranges are used, the person who
is creating the object must enter the number. The number which is entered must be
 within the number range allocated for the object. System will popup a message if the
number given is invalid. For objects such as equipment, material numbers, we use
external number ranges usually. Deciding whether to use internal or external number
range solely depends on the business requirements and the practicality of using it.

SAP Number Range Maintenance

We will use the production order number ranges as an example for the balance of
the document. To create production order related number ranger, follow the
below SPRO path or directly call the transaction CO82.

SAP IMG -> Production -> Shopfloor Control -> Master Data -> Order -> Define
number ranges for orders

When we go into this screen, we can see the number range object which is
relevant for production orders. It is AUFTRAG. Number range is always bound to
the number range object. In this screen we have three options.

1. Display Intervals
2. Edit Intervals
3. Set NR Status

By selecting the “Display intervals” option we can see all the number ranges
which are created under the AUFTRAG object. All the number ranges defined here
can be assigned against different production order types which we have defined.

From the “Edit intervals” option we can edit the number ranges which are already
defined. If the number range is already in use, it is not possible to edit because it
will lead into inconsistencies. The third option is to “Set NR status”. This field
represents the last number which has been assigned from the number range.
After defining the number range, we can set the NR status manually. When this is
set, the system will start assigning the numbers starting from the number that is
maintained under the number range status. Maintaining this is not mandatory. It
depends on the business requirements.

How to Create SAP Number Range

To create a new number range, click on Goto -> Groups -> Change. This will
direct to a new screen where all the number range groups defined are listed with
the order types assigned for each group. On the top we can see the unassigned
order types.

SAP Number Range Group

To create a new number range group, click on the “Create group” button. This will
open a screen where you need to enter the group name and the number range
that needs to be linked to the group. Number range consists of from number and
to number. Range should be given in a manner where inconsistencies are not
generated. Once the range is given, we can save the number range group. If the
number range is external, then there is a checkbox with the label “External”.
When this is selected, the number range will be considered as an external number
range. As explained earlier, if the number range is external system will not assign
the number automatically. It must be given by the user.

Once we save the group, next we can assign the order types to the group. For this
we need to click on the “assign elements to group” button. After assigning the
element to the group we can save the element. After doing this we can create a
production order and check if the correct number is assigned from the number
range group.

Transaction SNRO for SAP Number Ranges

Transaction SNRO can be used to maintain SAP number range objects.

Advantage of this transaction is that we can maintain number ranges against any
element irrespective of the module that element belongs to. When we
execute SNRO, we can see a field to enter the object name. As discussed earlier,
if we know the object name, we can directly input it here. If we enter AUFTRAG,
we can see all the production order related number ranges defined.

Custom Number Ranges

In addition to this, we can also define a custom number range object. Custom
number range objects are mainly used for customizations done in SAP. This
reduces the complexity of assigning numbers in the customized programs.

To create a custom number range object, give the object name and click on the
“Create” button. This will open a screen where you need to enter the object name
and the length. We can enter a buffer value also. Sometimes we see that certain
numbers in the number range are skipped. This is due to the buffer value
maintained in the number range.

We can also give a warning percentage. The objective of this is that, when the
number range is nearing its exhausting point, system will check the available
numbers quantity with the waring percentage. If the available numbers quantity
falls below the percentage, system will issue a waring message. This early
warning method is useful specially for number ranges linked with material
requirement planning.

Conclusion

We have discussed the objective of maintaining number ranges and how to use
the number ranges in production orders. This concludes the article on SAP
number ranges.