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SAP Controlling Tip: Understanding Process versus Production Orders

JJordan400ResizedTip 50 from 100 Things You Should Know About Controlling with SAP (2nd Edition) by John Jordan:

Process orders provide you with extra functionality, such as phases and process instructions for process industries. 

If you use production orders, the system transfers a routing and a bill of material (BOM) into the master data of the order header. If you’re manufacturing on the basis of process orders, the system uses the master recipe and associated materials list. The difference occurs because process industries manufacture in phases, converting initial liquid batches into consumable batches, which are then bottled and packaged.

While there are no costing differences between process and production orders, there are differences in terminology and production functionality. Let’s discuss the differences between process and production orders.

You can display a process order with Transaction COR3 or by going to:

Logistics • Production – Process • Process Order • Display

Click the Operations button to display the process order operation overview. 

A process order contains operations that are divided into phases. A phase is a self-contained work step that defines the detail of one part of the production process using the primarily resource of the operation. A resource is equivalent in concept to a work center, and is assigned to a cost center. The cost center assigns activity types to the resource.

In process manufacturing, only phases are costed, no operations. A phase is assigned to a superordinate operation and contains standard values for activities, which are used to determine dates, capacity requirements, and costs. The Relevant to Costing indicator in the phase must be selected.

For each operation or phase you plan, materials are required for the execution of each step. Raw materials and semi-finished products that enter the production process debit the manufacturing order as they are withdrawn from inventory.

  • Intra materials (material type INTRA are temporary and only exist between production phases. Intra materials appear in the material lists as items of category M, but are not costed. If the process is interrupted because of a malfunction, however, an intra material may have to be put into inventory. In this case, it’s valuated with a price in the material master.
  • Remaining materials are represented as by-products. A by-product is an incidental output of a joint process. You enter a by-product with a negative quantity in the materials list of a primary product or process material. For by-products, you don’t select the Co-Product indicator in the material master or in the BOM.
  • Circulating materials (such as catalysts) can be both a process input and a process output. You can specify in the material list whether the costs for a circulating material should be taking into account. The system selects a price for the circulating material from the material master. If the circulating material is flagged as relevant to costing, the material costs appear in the itemization twice: once with a plus sign and once with a minus sign. The balance is the material input cost.

If the materials list contains co-products, you can add additional co-products. You cannot, however, delete co-products from the materials list. To see if a material component is relevant to costing, go form the materials list to the detail screen for the material. All co-products (both leading co-products and non-leading co-products) are items with a negative quantity. Leading co-products are called primary products.

You can maintain process instructions (PI) for phases by clicking the operations button in the heading screen of a process order, selecting a phase, and choosing Operation • Process Instruction Overview from the menu bar. 

Keep reading in Things You Should Know About Controlling with SAP (2nd Edition)

 

 

 

 

 

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Tuesday, 15 October 2019