A Practical Guide to Manufacturing Variances in SAP S/4HANA

2.1 Production planning and execution

The goal of any manufacturing company is to satisfy demand for products by supplying them to the customer in a timely manner. These products are constructed from various raw materials and semi-finished assemblies using special equipment and people who operate and maintain that equipment or who perform manual processes. Procedures are defined for making the product, including a list of required equipment, instructions for running the equipment, the necessary components, the quantity of each component, and when each component should be added.

2.1.1 Baking cookies

Making chocolate chip cookies is a good example of this. The main ingredients (components) of a chocolate chip cookie are flour, water, sugar, butter, and chocolate chips. The first step in the process is to mix the flour, water, sugar, and butter to make a batter. Then, the chocolate chips are added to the batter and are mixed in. The next step is to take small amounts of the mixture and place them on a cookie sheet. When the cookie sheet is full, it is placed in the oven to bake for a period of time. When baking is done, the cookies are allowed to cool, and they are placed on a plate or in a tin, ready to be eaten.

The above example requires five components plus packaging. There are six steps in the production process:

1. Create the cookie dough—use specific quantities of flour, water, sugar, and butter.

2. Mix in chocolate chips—use a specific quantity of chocolate chips.

3. Form the raw cookies on the cookie sheet.

4. Bake for a specified time.

5. Allow cookies to cool.

6. Pack cookies ready for consumption—use a cookie tin for packing.

The amount of each ingredient is important to ensure that the cookies are made correctly, and these ingredients need to be added at the proper point in the process. To determine exactly when the cookies will be ready, the timing of each step in the process must be known. The baking time is most critical; too little time or too much time in the oven will make the cookies inedible.

The quantity of ingredients on hand prior to the baking process is also important. Too little of one ingredient means that fewer cookies can be made, and you may need to buy one or more of the ingredients to make a full batch. If cookie making is an on-going process, plans have to be made to cover when and how much of each ingredient needs to be procured so that the cookie-making process is not delayed.

2.1.2 Manufacturing orders

The cookie example in Section 2.1.1 provides a very simple overview of what can occur during the manufacturing process for a single item. However, when this is translated into a manufacturing environment instead of the home environment, chocolate chip cookies are probably not the only product being made. Multiple types of cookies can be made using the same equipment and similar processes. Production times for each of the processes can be different, and additional types of manufacturing steps might be required for different type of cookie. To satisfy the demand and delivery time requirements for each type of cookie, specific batch quantities for each type must be controlled in order to optimize the use of the preparation areas and ovens. One way of doing this is to restrict the quantity of each type of cookie being made to a specific amount, and to periodically switch from making one type to another. The cookies are made in batches, and each batch indicates a specific type and quantity of cookie.

Each cookie batch represents what SAP calls a manufacturing order. A manufacturing order is a grouping of the component quantities, operating procedures, and scheduling parameters required to make a finite quantity of a product. Orders are scheduled based on customer demand or the need to maintain a certain stock level of a material. A batch of 100 cookies requires a specific amount of flour, water, sugar, butter, and chocolate chips. A batch of 1,000 cookies requires more of each of the components. Mixing time and baking time can depend on the size of the batch that is being made. If there is not enough oven space for 1,000 cookies, the baking time is extended due to capacity constraints.