A production order process is one of the most crucial components in SAP production planning. It outlines the sequence of operations, components required, materials to be processed, the production location and time, as well as how the order costs will be settled.
Production orders are generated from the material requirement planning department and passed onto the shop floor control, where order-relevant data is added to complete the order processing. Here’s more about the best practices for production order confirmations in SAP below.
What are the uses of production orders in SAP?
Typically, production orders help control production and cost accounting. The production order document generated is used to specify:
- When production will occur
- The products that must be produced
- The cost of production
- If there’s the capacity to process the order
How to Create a Production Order
Production orders can be created manually (without prior requests) or automatically. If the latter, a planned order is converted to a production order to initiate the production process. This happens when there’s a shortage of materials in the internal procurement department, creating planned orders.
You can’t use planned orders to declare production; they must be converted into production orders (hard copies) for execution. Newly created production orders are referred to as CRTD (created) and once they’re created, planned orders are deleted from the system.
When using this route, the order begins from the planned order number, i.e., Code (from logistics)- Production-production control-order-create production order. Once the planned order is converted to a production order, the planned order is removed from the system.
If there’s no planned order, the order creation process begins from the production stage, i.e., production-production control-order-create order.
What Happens When a Production Order is Created?
Once a production order is confirmed or released, the type of order is defined in the SAP PP system and issued to the shop floor control department to initiate the production process. A confirmation document is generated, the document number is updated in the system and the goods required for its execution are then released. When users create a production order, the following actions are carried out:
- Routing: A routing process is selected. Routing defines the list of activities or operations required to execute the order. It also outlines the sequence of such activities, activity times the and machine used to perform them.
- Bill of materials: This is a list that shows the components and the quantities required to produce the finished product. It’s helpful in material planning and consumption, as well as product costing.
- Reservations are made for the stock items required in the bill of materials
- Capacity requirements for the work centers are assessed
- The planned costs for the orders are generated
- Purchase requisitions made for non-stock items and those sourced from external parties
- A settlement rule is generated
How a Production Order is Released
In this step, the production order is ready for execution on the shop floor. When it’s released, it initiates the following activities:
- A batch number is created if the product is a batch-managed item
- Capacity requirements are assessed, depending on the configuration settings
- The components are organised in batches
- The in-process inspection is activated and lot creation generated
- Shop floor papers are printed and confirmed
- Goods used are recorded
How to Execute the Production Order
Various activities are initiated during the execution of a production order. First, the materials are requested from the store for production. They can be raw materials or semifinished goods, depending on the nature of production. The materials are then issued against the production order either manually or automatically.
Next, the production activities begin, and the production order is confirmed upon completion. This step also accounts for the activity cost based on the routing process outlined for the finished product.
Then, delivery tolerances are made, accounting for any excesses. If the finished product is quality-related, a confirmation of the production order initiates the inspection process. The quality department uses the data collected during this stage to record quality results.
Upon completion of the production order, a technical completion status is set. This step initiates the process of calculating variances during production and changes the order status to TECO. At this stage, there’s no more movement of goods against the production order. Also, the order is no longer available in MRP (Material Requirement Planning) and is removed from the stock list.
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