The overall manufacturing planning process is comprised of:
The forecast values and requirements from the sales information system and
costing/profitability analysis are inputs to the Sales and Operations Planning
(SOP) phase in which independent requirements are determined.
Master Schedule items (those items that greatly influence profits or
consume critical resources ) are planned. Planning the master schedule items
separately leads to a reduction in stock levels and improved delivery
Materials requirements planning (MRP) is the final step in the planning
process. The output of MRP is either a planned production order, a purchase
requisition, or a planned purchase order.
The overall manufacturing execution process is comprised of:
Production orders are released
Materials are issued
Completion confirmations are performed
Goods are received into stock.
The manufacturing process affects capacity, costing inventory, reporting,
The five primary phases are:
Sales and operations planning
Master production planning
Materials requirements planning
Production order execution
Sales and Operations Planning (SOP)
The forecast values and/or requirements from customer order management,
sales information system, and controlling are inputs to the sales and operations
The main steps in sales and operations planning are:
Creating a sales and production plan--Methods
Forecast of consumption
Copying data from financial modules
Copying data from the sales information system
transferring product group
Disaggregating the planning values
Transferring the planning values to demand management
There are four ways to create a production plan in the system.
Based on sales
Based on target inventory
Based on current days of sales supply
Based on running down the inventory to zero (Just in Time or Kanban)
Demand management links top-level requirements planning (SOP) with materials
planning (MPS and MRP)
Demand Management determines the requirements dates and quatities for
important assemblies and specifies the strategies for planning and producing or
procuring finished products.
The result of Demand Management is the demand program
The demand program distinguishes planned independent requirements and
customer independent requirements
The requirements can then be transferred to MPS or directly to MRP
depending on the MRP type selected in the material master of the material.
MPS Master Production Scheduling
The independent requirements from Demand Management initiate the master
scheduling process for MPS designated items
The master production schedule is the anticipated build schedule (high
The purpose of MPS and MRP is to guarantee availablility
The MPS run results in planned orders for the master schedule items and
dependent requirements for the level directly below the MPS items.
MPS = Finished goods level only
MRP Materials Requirements Planning
In material requirements planning (MRP), the system calculates the net
requirements while considering available warehouse stock and scheduled
receipts from purchasing and production.
The uses of MRP are as follows:
MRP is used to plan the on time production or procurement of the required
quantities for both internal consumption and customer demand.
This process involves monitoring stock levels and automatically creating
order proposals for purchasing and production.
For materials produced in-house, the dependent requirements of teh
conponenets are determined during BOM explosion.
BOM explosion is the process by which the system calculates the componenets
or assemblies required to produce the material.
MRP requires exact requirement quantities, which allows you to work with
particularly low safety stocks.
The output of MRP is either a planned production order, a purchase
requisition, or a planned purchase order.
A planned order can be converted to a production order (for materials
produced in-house) or a purchase requisition for procured materials.
Manufacturing Execution is intitated by releasing each production order to
the shop floor.
Production Orders: Contents
Production orders are used:
To control and monitor production within a factory
As a controlling instrument for cost accounting
The production order displays:
what and how much is to be produced (including duration)
when production is to be executed
what is required for production (components, resources)
which method of production to be used
the capacities required e.g. machine, labor
Production Order Execution Process
Production orders go through a series of steps including:
Production order release
Goods issue (issuing the components or raw materials)
Completion confirmation confirming that the final material is complete
Goods receipt (receiving the finished good back into inventory)