How do I know which production type will best support my manufacturing processes?
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Deciding which production type to implement in SAP ERP that can best serve a company's business needs can go a long way in ensuring greater return on investment of SAP ERP. Implementing the most applicable production type of SAP ERP enables a company to benefit from all the features and functionality that come with the specific production type, thus saving the time and efforts in custom-development or programming.
A production type is the category that supports the steps involved in manufacturing a specific type of product. Each production type in SAP ERP comes with its own set of features or characteristics that strive to meet a company's business needs without extensive ABAP programming. A vast majority of industries use one or more of the following production types to cater to their business processes:
- Discrete manufacturing, also known as Shop Floor Control (SFC)
- Process manufacturing, also known as Production Planning for Process Industries (PP-PI)
- Repetitive manufacturing (REM)
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Products such as aircraft, cars, pumps and rolls of steel involve complex manufacturing steps or processes and require intermediate storage among various manufacturing steps. These are better managed with discrete manufacturing (SFC). Products such as fertilizers, chemicals, pharmaceuticals or beverages require continuous production process (without interruption) or require extensive utilization of batch management. Process manufacturing (PP-PI) is a better production type for these types of products. Products that can be produced relatively easily and without extraneous costs, and require little in the way of data recording requirements, can be handled using the repetitive manufacturing (REM) production type.
Figure 1 lists some of the important characteristics of each production type and how SAP ERP supports them. When reading this table, ask yourself if your current production processes consist of the characteristics listed in the first left-hand column. If so, check the next three columns to the right to see which production type -- SFC, PP-PI or REM -- support it. For example, the production characteristic "active ingredient management" is in frequent use in the process industries, but has little or no use in discrete or repetitive manufacturing. SAP ERP for PP-PI supports active ingredient management. Companies using active ingredient management in their production process will find implementing PP-PI benefits them, as then they are immediately able to use active ingredient management functionality without resorting to any custom-developed solution.
|Charactertistics of production type||Discrete Manufacturing (SFC)||Process Manufacturing (PP-PI)||Repetitive Manufacturing (REM)|
|Product stability / complexity||Complex production process with intermediate storages||Complex production process and generally without bulk intermediate storage (mostly continuous-flow and liquid-based production)||High-volume or mass production, highly stable and without any production complexities|
|Production flow||Order-based and with intermediate storage||Order-based and mostly used in producing materials that flow, such as liquids, (or that can't disassemble)||Lean (simple) manufacturing|
|Change-over from one product to another||Frequent||Frequent||Infrequent|
|Make-to-stock and make-to-order production method||Supported||Supported||Supported|
|Batch management||Yes||Yes (extensive utilization)||Yes|
|Active ingredient management||Not available||Available||Not available|
|Material quantity calculation||Not possible||Possible||Not possible|
|Completion confirmation (backflush)||For individual operations or orders||For individual operations or orders||Period-based confirmation with backflush|
|Order-related production||Yes (production order)||Yes (process order)||No (planned orders)|
|Production-based||Lot size-based production||Lot sized-based production||Period- and quantity-based production|
|Cost object controlling||Order-based costing||Order-based costing||Period-based costing (using product cost collector)|
|Process management||Yes (process integration)||Yes (process management)||No (operational method sheet)|
Figure 1: Characteristics of discrete, process and repetitive manufacturing types
A fourth production type, Kanban, finds greater use in automobile industry where the demand source sends a card (known as Kanban) to the supply source to replenish the material quantity. SAP ERP also supports the Kanban production type.
It is prudent to evaluate the business processes in production and then select the most relevant production type to implement in SAP ERP that meets the company's business needs.
About the author:
Jawad Akhtar is the author of the SAP PRESS book Production Planning and Control with SAP ERP. He is the head of SAP delivery in AbacusConsulting, where he focuses on logistics and SCM issues.
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