Streamline your sales order workflow for Production

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Welcome to the SAP Business One, Production Process Overview demo. The production module in SAP Business-One is useful for companies that manufacture finished goods or sell items in bundles. In a bill of material, you identify a top-level item, also called finished material or parent, and its components, also called child items. With the production order, you bring everything together to produce the parent from its components. There are 4 types of bills of materials to consider. Sales BOM: This type of bill of material is only used in sales documents and represents a bundle of items. These items are sold together but the component quantities can vary. Assembly BOM: Like the Sales BOM but the component quantities do not appear on the document and quantities cannot be modified. Template BOM: This BOM has no restrictions. Once you select the parent item, all its children appear. You can delete, add, or duplicate rows and make any modification as necessary Production BOM: This BOM is used in the production order document. The parent item is the finished goods, and the child items are the components, resources like labour or machinery, and routings. This demo will focus on the Production BOMs. The first step is to establish the bill of material for the finished product. A bill of material, or BOM, is a centralized source of information containing a list of items and resources used to manufacture a product and the instructions on how to do so. In our example we can see the bill of material for our printer has 5 components, 3 resources and will go through 3 routes: setup, production, and quality. The components represent the materials and inventory items that need to be used to manufacture the finished product. These components can be raw materials, or they can be semi-finished goods that have their own unique bills of material that require a sub-assembly. Phantom items can also be used to represent sub-tree of items and instead of repeating the same lines on all BOMs that use it, a Phantom can represent these grouping of items. The resource master data represents labor hours, machine capacity or any other means that are needed during production. Resources have capacities associated to them to indicate the availability of the resource by date. For example, how many hours of labor is available on a certain day, by shift and by number of employees working? Labour type resources can be associated to employee master data and machine type resource can be associated to fixed assets. Routes on a BOM indicate the different steps that the production order needs to go through to complete the finished good. The route sequence indicates the precise order in which the routing stages must be performed during the production process. Waiting days can be defined between stages, and have the system calculate start and end date of each stage on the production order. A production order can be created standalone, directly from a sales order for make to order items, or can be created from the MRP recommendation. For more information on the MRP please watch the Production and MRP video. We will create a stand-alone production order from the Production Module, Production Order. First step is to enter the finished good that needs to be produced. Notice that all the components, resources and routes are populated. It is possible at this point to add or remove anything from the body. Next, enter the quantity of finished goods. Provide a date when this finished product will be needed. Add the production order. This increases the ordered quantity of the inventory of the finished good and creates a commitment on the components and resources. If a component does not have enough in stock to complete the production order, you can create a purchase request or purchase order directly from the line of the component. Or if the component is a make product with its own bill of material you can create a Production Order for the subassembly. Notice that the availability of the resources has also been updated to indicate how much time is still available from that resource. If the routes have waiting times, you can schedule forward or backward to help determine when a route needs to start by and finish to get the finished product completed on-time. The status of a newly created production order is “In planning”, to start executing the production order change the status to released. The production order can generate a travelling document that can follow the process from start to finish on the shop floor. As routes and instructions are being completed by the production team, components and resource hours can be issued to the production order to capture the work in progress. There are two methods of issuing to a production order: manual and backflush. If an item is set to manually issue components, the operator needs to indicate how much of a component and resource cycles was used. If a component is batch or serial controlled, they must be issued manually as you need to confirm which tracking number was issued. If an item is set to backflush, SAP will automatically issue the components to the production order when the finished good is reported for completion. Components and resources can be issued all at once or can be issued by route. Let’s issue the first route. Modify the quantities of the components or resources if the quantity used differs from the BOM. When the components are issued to the production order, a journal entry is created that removes them from inventory and debits the work in progress GL account and credits the inventory GL account. On the summary tab of the production order, we can see how the costs are starting to incur on the production and the current variance. Continue issuing the manual components to the production order until the product is complete. Once the product is complete, receive the finished goods from the production order. If the finished good is serialized or batch managed assign a serial or batch. This can be manually entered or can be generated by the system. It is possible to receive products from production, but reject them if they didn't pass the quality control. It is recommended to receive them into a different warehouse so that they can be disassembled or scrapped depending on your internal processes. Posting the receipt from production issues the components that are set to backflush to the production order and removes them from inventory. The posting also clears all of the Work In Progress and posts it to the finished goods inventory account. It is possible to receive more from the production order than what is planned. Once all the finished goods has been received from production the production order should be closed. If there is any remaining variance on the production order, the closing of the production order will move the variance to the work in progress variance account. The finished product is now ready to be sold or used as a component in another production order. Throughout the Production Process we have added many documents, the SAP relationship map can be viewed from any of the documents to see the complete flow of the transactions and allows an overview of where a particular order is within the process. There are many variations and iterations on the production process including sub-assemblies, receiving of by products, dis-assemblies, repair production orders and much more. To discuss your business requirements and how SAP BusinessOne can improve your Production Process visit our website .aclaros.com. We look forward to connecting!