As they mature, companies begin considering automating functions in an effort to bring greater organizational efficiencies to their business processes, especially as process owners get used to performing their routine business transactions in SAP ERP. Automating processes usually combines two or more business transactions and therefore eliminates the need to perform manual transactional steps. Two such common manufacturing production processes within the SAP ERP system that can be deployed in order to cut down on the number of manual production steps are SAP Backflushing and SAP Automatic Goods Receipt functions.
Before we discuss how SAP backflushing or the SAP Automatic Goods Receipt function can optimize business processes, let us first quickly look at the four business processes that process owners involved in production execution routinely perform:
- Production Order: Determine which type to create and issue.
- Goods Issue: Occurs when the materials required to produce a product are sent from the storage location where they're kept.
- Confirmation: The production supervisor records the actual quantity of the product that has been produced.
- Goods Receipt: The production supervisor delivers the produced good to the semi-finished or finished goods storage locations. The warehouse person enters the "goods receipt" in the system, indicating that the goods have been delivered.
Backflushing provides the option to perform Goods Issuance automatically (step 2, above), as soon as the person overseeing production records confirms that the product has been produced (step 3). When this happens, the process owner is able to perform two business transactions in at once. Once production has been confirmed, the process owner utilizes backflushing to automatically update and record the quantity of the materials used in producing the order as well as their associated financial values under the Cost of Goods Manufactured (COGM).
Automatic Goods Receipt
The Automatic Goods Receipt function in SAP enables the production supervisor to perform Goods Receipt automatically (step 4, above) on recording Confirmation (step 3). The Automatic Goods Receipt functionality finds greater usage when several intermediate production steps are involved in the manufacturing process, such as in the discrete manufacturing industries, and business process requires intermediate storage of semi-finished or finished goods.
Depending on the level of automation that a company wants, it can implement one or both of these automated functionalities. Implementing both automated functionalities reduces the manual transactional steps from four to two, thus bringing greater organizational efficiency to the entire production execution process.
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.