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Previous Next Contents Index Navigation Glossary Library http://erpstuff.com/ http://www.erpmanager.net/community/forum/30.html Item and Bill of Material Attributes Planning recommendations are created based on many different bill of material and item attributes. Shrinkage rates, component yield and safety stock are some examples of attributes that affect the outcome of the planning process. There are various bill of material and item attributes that you can use to adjust the planning recommendations so that they conform to your manufacturing policies. Standard Bills and Routings Only For planned orders, only standard bills and routings are planned. Alternate bills or routings are not considered. For a discrete job, you may specify an alternate bill and/or routing. The planning process sees component requirements of the alternate routing for that job. Phantom Bills of Material A phantom bill (also known as a phantom assembly) describes a normally non-stocked assembly or subassembly. One purpose of a phantom bill of material is to allow you to manufacture and stock the assembly when necessary. You can use phantoms, for example, to build and stock occasional spares for field service requirements. When you implement planned orders for the parent of the phantom, Oracle Work in Process blows through the phantom and creates requirements for its components, ignoring any on-hand quantities of the phantom. Typically you set the lead time of the phantom to zero to avoid any additional lead time offset for the components. Oracle Master Scheduling/MRP and Supply Chain Planning uses the bill of material attribute to determine a phantom. Instead of passing the parent's planned orders to the phantom, netting the phantom and passing requirements to the phantom's components, the engine blows through the phantom to create component planned orders. Using the bill of material attribute to determine phantoms has two advantages: it allows for more flexibility, since a component can be a phantom in one bill and not another, and it makes treatment of phantoms in Oracle Master Scheduling/MRP consistent with Oracle Work in Process. Manufactured or Purchased Three item attributes are evaluated to determine if planned orders are generated and implemented into discrete jobs, repetitive schedules, or purchase requisitions. Supply Chain Planning users can supplement and refine this behavior with sourcing rules and bills of distribution. See: Sourcing Rules and Bills of Distribution. Make or Buy This item attribute determines how the item is planned. The planning process looks at the Make or Buy item attribute to determine whether to generate component requirements. The attribute can have a value of Make or Buy and is directly related to the Build in WIP and Purchasable item attributes. When implementing orders via the Planner Workbench, the make or buy attribute is used as the default for the type of planned order you can implement, either purchased or manufactured. Build in WIP This item attribute establishes if the item can be manufactured. Purchasable This item attribute allows you to establish whether the item can be placed on purchase orders or requisitions. The following table illustrates the impact of these item attributes on the planning process: Build Make in or Buy WIP Make Yes Purchasable Planning Recommendation No Plan manufactured planned orders when needed and pass down component demand. You can only implement discrete jobs or repetitive schedules for this item. Purchase orders or requistions cannot be created. Plan manufactured planned orders when necessary and pass down component demand. When implementing planning recommendations you have the option to implement a manufactured order (default) or a purchase Make Yes Yes requistion. Buy No Yes Plan purchase requisitons when needed and do not pass down component demand. You can only implement purchase requistions for this item. Discrete jobs or repetitive schedules cannot be created. Plan purchase requistions when needed and do not pass down component demand. When implementing planning recommendations you have the option to implement a purchase requistion (default) or a manufactured order. Buy Yes Yes Table 1 - 28. Item Attributes (Page 2 of 2) Bulk Items Bulk items are those you issue in bulk to work in process, to cover a period of time, or to fill a fixed size container. Normally, you do not issue these items to specific discrete jobs or repetitive schedules. You might designate an item as Bulk for many reasons. Perhaps it is not cost effective to transact these items for each individual job or schedule. Or, a bulk item might be easier to manage if you place a large quantity in a central floor stock location. For example, bulk items might be nuts, bolts, and other hardware used in the manufacturing process. You issue quantities of 10,000, for instance, to a floor stock location using the account issue transaction provided by Oracle Inventory. Work in process obtains the hardware from floor stock when needed. By making this hardware available in floor stock, and not pushing or pulling it to each job or schedule, you can save the cost of performing additional transactions. The planning process creates planned demand for bulk items by exploding their usage on a bill of material. It creates recommendations to replenish bulk material based on these demands and considering any on-hand inventory for the item. Note that when you issue the material to the floor stock location, it is no longer seen as available supply. During the planning cycle, the need for bulk items according to the material plan rise and fall based on the timing of issues from nettable subinventories to the expense account. Suggestion: Designate a general ledger expense account as Floor stock. Periodically issue large quantities of bulk items to this account. Shrinkage Rate For a particular inventory item, you can define a shrinkage rate to describe expected scrap or other loss. Using this factor, the planning process creates additional demand for shrinkage requirements for the item to compensate for the loss and maintain supply. For example, if you have a demand of 100 and a discrete job for 60, the planning process would suggest a planned order for 40 to meet the net requirements, assuming no shrinkage rate exists. With a shrinkage rate of .2 (20%), Oracle Master Scheduling/MRP and Supply Chain Planning assumes you lose 20% of any current discrete jobs and 20% of any suggested planned orders. In this example, since you have a discrete job for 60, assume you lose 20% of that discrete job, or 60 times 20%, or 12 units. The net supply from the discrete job is 48. Since you have a total demand of 100 and supply of 48, you have a net requirement of 52 units. Instead of suggesting a planned order for 52, the planning process has to consider that 20% of that planned order is also lost to shrinkage. The planning process creates additional demand called shrinkage demand to create an increased suggested planned order to provide for the lost supply. The planning process inflates the planned order of 52 by dividing 52 by (1 - .2) = 65. With the a shrinkage rate of .2, the planning process would result in: Component Yield Component yield is the percentage of a component on a bill of material that survives the manufacturing process. A yield factor of 0.90 indicates that only 90% of the usage quantity of the component on the bill actually survives to be incorporated into the finished assembly. To account for the loss, the planning process inflates the demand quantities for the component (similar in concept to shrink factor). To increase demand, the usage quantity is divided by the yield factor. For example, when you define the component usage quantity as 2 and the component yield as 0.90, the usage is recalculated as 2 divided by 0.90, or 2.22. Safety Stock Safety stock is a quantity of stock you plan to remain in inventory to protect against fluctuations in demand or supply. Safety stock is sometimes referred to as overplanning, forecast, or a market hedge. In the context of master scheduling, safety stock refers to additional inventory planned as protection against forecast errors or short term changes in the backlog. You can specify safety stock days together with safety stock percent as item attributes in Oracle Inventory. You establish the default use of safety stock calculation when you define your planning parameters. You can override this option for individual material plans when you generate an MRP or MPS using the Launch window. See: Defining Planning Parameters and Launching the Planning Process. When launching the planning process, you can choose whether to calculate safety stock when generating suggested planned orders and repetitive schedules in the Plan Options window. If you choose to run the planning process with the safety stock option, Oracle Master Scheduling/MRP looks at each item to determine the method of safety stock calculation. You can define safety stock methods for each item using in Oracle Inventory. See: Entering and Reloading Item Safety Stocks. MRP Planned Percent If you choose a safety stock method of MRP planned percent for an item, safety stock is dynamically calculated during the planning process. For discretely manufactured items, the safety stock quantity is dynamically calculated by multiplying the safety stock percentage you define by the average of gross requirements for a period of time defined by the safety stock days. For repetitively manufactured items, the planning process multiplies the percentage you define by the average daily demand for a given repetitive planning period. The planning process recalculates the safety stock quantity for each repetitive period in the planning horizon. Inventory Methods Oracle Inventory provides several different methods for calculating safety stock. See: Entering and Reloading Item Safety Stocks. The following methods are available within Oracle Inventory for calculating safety stock and are used during the planning process if your safety stock method is Non-MRP planned: Mean absolute deviation Calculate safety stock as the mean absolute deviation (MAD). (MAD) User-defined percentage Calculate safety stock using the percentage you define times the average monthly demand. User-defined quantity Use a fixed safety stock quantity you define. Safety stock quantities generated in Oracle Inventory according to effectivity dates are included in planning. Instead of manually changing the user-defined safety stock quantity each time a change is needed, the user can now set effectivity dates for when a change in quantity takes place. Lot Expirations For items under lot control, you can define the shelf life of lots that controls when the lot expires. The planning process tracks lots and their expiration dates. If the expiration date for a lot occurs before the lot is used to satisfy gross requirements, the unused portion of the lot as expired is considered. An expired lot gross requirement is created to offset any remaining portion of the expired inventory lot. For example, the following item has a quantity on hand of 300 that consists of 3 lots of 100 each, due to expire on days 5, 10, and 15 respectively. The item has gross requirements of 150 on day 4 and 50 on day 12. The plan would look as follows: Beginning QOH = 300 Demand Type Quantity Projected QOH Day 4 Day 10 Day 12 Gross requirement 150 Lot expiration 50 150 100 50 Gross requirement 50 Table 1 - 29. Lot Expiration MRP Plan (Page 1 of 1) Only 50 units from the second inventory lot were used before they were due to expire on Day 10. Therefore, a gross requirement with a type of lot expiration to offset the quantity of the inventory lot that is projected to expire is created. Bill of material Engineering bill of materials by Jon Clancy, CIRAS An engineering bill of materials (BOM) is often compared to a cake recipe. Both identify and list the components of a finished product. While the cake recipe identifies ingredients such as flour, sugar, and eggs, the BOM identifies and lists all raw materials, subassemblies, and even intangibles that contribute to the costs of manufacturing a product. While a recipe and a BOM are similar, the consequences of inaccuracy are not. The wrong ingredient in a cake recipe may create a "flop" that ends up in the garbage, a loss, but one that could be resolved in a matter of hours by baking a second cake. Producing product with a wrong component in an engineering BOM is not so easily resolved. It can negatively impact your company's performance through       incorrect costing of product, inaccurate inventory levels, accounting variances, customer returns, production of out-of-spec units, Potential product liability claims. An accurate engineering BOM is a prerequisite to developing other operating systems. It's a "building block," a central source of information that supports product costing, inventory control, and engineering documentation. A bill of materials may be in a tree form, or more typically in a printed document indented to the lowest level required to accurately describe all material and subassemblies of the parent (or level one) product (Table 1). Whether you utilize the tree or indented method, the key to understanding BOMs is their leveled structure with a "bottoms up" or "goes into" organization. For example, level three components always "go into" level two components, level two components always "go into" the parent (or level one) finished product. However, not all components at a given level require a supporting or lower level. If a sub-assembly at level two is a purchased part, there is no need for a lower, or supporting level (For example, PN1547662009 [I] Control). Conversely, if a level two component is fabricated in-house, all materials that "go into" the level two component must be identified and listed at a lower or supporting level (For example, PN14644-38389 [AA] Precipitator Assembly). The BOM should be considered an engineering document that accurately identifies and lists the components required to produce a given product at a given revision level. BOMs can be designed to reflect varying degrees of complexity, depending upon the company needs. Utilized as a basic engineering document, the minimal requirements for BOM information should include        structure level, part number, revision level, quantity required, unit of measure, description, and make or buy indicator. BOM's may be single or multi-level, depending upon company inventory and marketing policies. BOMs can be enhanced to include costing information by including labor and material costs in each lower level component and adding these costs from the bottom to the parent level. Application of overhead rates will then provide fully burdened manufacturing costs. Caution must be exercised when converting engineering BOMs to cost BOMs. Labor and material standards on cost BOMs are an estimate, and provide an accounting standard for the fiscal year. Consequently, they are a reference that must be adjusted by both labor and material variances to obtain actual costs. The accuracy of BOMs is paramount when considering a switch to computerized MRP systems. Basic guidelines for BOM structure include:   Each part number must be uniqueÄno duplication allowed. Part number identification system must be compatible with software. For example, some software requires numeric identification only.   Units of measure on BOM must be as purchased. For example, if purchased in feet, express usage in feet. Material use must be adjusted for predictable shrinkage. The engineering BOM and routing sheets are two of the most important documents associated with the manufacturing process. The importance of maintaining accuracy cannot be overemphasized when considering the substantial impact that they have on product costing, inventory, and production management. Table 1: Level Part # 1 ..2 ..2 ....3 ....3 ....3 ..2 ....3 ....3 ....3 ....3 Revision Quantity Unit Description Parent 1 1 4 4 1 2 2 2 8 2 Ea Ea Ea Ea Ea Ea Ea Ea Ea Ea Ea Field Adapter Control Moisture Tester Enclosure Machine Screw Encapsulant Element Housing Machine Screw Precipitator Make/buy Make Buy Make Buy Buy Buy Buy Buy Buy Buy 16844-23003 B 15476-62009 J 16763-87001 C 18701-19302 B 12000-14273 D 09000-16001 F 14644-38389 AA 52010-48007 E 57002-55100 E 98002-66600 D 12000-14267 G Precipitator Assy. Make CIRAS News, Vol. 32, No. 1, Fall 1997 Back to the table of contents. Planning In sap there is specific transaction flow for a particular Manufacturing Process. It all depends upon the requirement of client and process. Here is the basic flow of transactions which is req. for creating master data, planning and order processing… The Made TO Order Cycle: The sale department passes on the Made to order-Sales Order to the Material department so that material requirement is analyzed. This is done in SAP by carrying on an MRP Run for all the levels of the product BOM. This MRP Run would create Planned Orders for the shortages. Here the planned orders for fert sub assemblies, Components etc, are created. This planned orders for materials produced in house are converted in to Production order and planned orders for materials procured from outside are converted in to Purchase order. The creation of Production order through the planned orders will convert all the dependant requirements in to dependant reservations. assemblies are The dates of production or purchase are decided through the total replenishment time mentioned in the material master, If it is, in-house production, then the Route times precede over the total replenishment time entered in the material master. And the availability of all the components is ruled by the availability checking rules and by availability checking scopes. Thus whenever the system declares a product to be ready or available by a date it implies that the system has checked the availability of the material with respect to the Ware house stock, in coming stock (Receipts) and all other planned orders already existing for the product or material. In the Made to order production, sales order produced for Fert and Sub converted in to production order during MRP run. The production orders created have a specific quantity, specific Basic start date and a specific Basic Finish Date, a set of operations and a set of component attached from the BOM. In course of production the quantities produced in the operation for an order should be confirmed so that the current status of work is available in real time situation. The components required for production are issued to the production order through goods issue by a movement type 261 and the issue is always made to the reservations or to the order, thereby clearing the reservations. Issues of unplanned components are made as new items issue and not as order issue. The quantities, for an order which are produced completely are the put in to stock i.e. a Goods Receipt is done. Thus the made to order cycle starts with the sales orders and converting them to Production Orders through MRP Run and there off confirming produced quantities for an order and finally putting the order in to stock. The Cycle of Made to order: Steps: MTO Scenario 1. Material Creation (Made To order Material with major changes of: Item Category: 0004-make to order/assem.,or 0001-make to order) 2. Routing Creation 3. Creation of BOM 4. Sales order 5. Production order Scheduling, Costing, Release and Save 6. Production order Quantity confirmations for operations, Parallel task of material issue to order or to reservations (261) 7. Fully Produced Production Quantities will be put into stock (GR) 8. Delivery against sales order 9. Invoicing. The Made To Stock Cycle The Made to stock scenario will start from Demand Management here we can create Planed independent requirements manually or by using data from SOP. After MRP run system will create planned orders which we can convert to Production order As the Stocks produced there off are not customer stock or the stock is not attached to any specific customer. Further confirmations are done and issues of material are carried out to the production order. Finally the production is put in to stock (GR). Here at any point of time a sales order might come in and delivery to the customer is done from the existing stock. Production Master Data The Production Master Data consists of Material Master, Bill of Material, Work Center, Route, and Production Line Design. The Material Master is created first for all components involved in making the Final product. Then these components are put in a product relationship i.e. a list of materials required to make the final product are put in a hierarchy, this is called a Bill of Material. The next task is to identify the work centers required to produce the product; if the work centers are already created then they can be readily put in a sequence, which would be a sequence of work centers required to produce the product. This sequence of work centers one after the other (in the sequence of work to be done) is called a Route The Cycle of Made to stock: Steps: MTS Scenario 1. Material Creation (Made To Stock Material with major changes of: Item Category: NORM) 2. Creation of BOM 3. Route Creation 4. Demand requirements 5. MRP Run 6. Creation/conversion of Production order (Made To stock), Scheduling, Costing, Release and Save 7. Production order Quantity confirmations for operations, Parallel task of material Issue to order or to reservations (261) 8. Fully Produced Production Quantities will be put into stock (GR) 9. Sales order Creation 10. Delivery against sales order 11. Invoicing. Example:MTO: Make to Order The production and Procurement will only happen with reference to Sales Orders. Until unless there is no Sales Order there will not be any Procurement/production. Planning strategy used is 20. With little variation in the Business requirement Planning Strategy 50 can also termed as MTO. In material master in MRP3 view maintain the MTO Strategy group like 20, 50 etc MTO: Make to Stock With this Business Process, the main aim is to supply to the customer immediately there is a demand and this can be done by supplying from the Stock. You will keep the products as stock.. Planning Strategy: 10 & 11. Both these strategies will not consider Sales Orders. But strategy 40 can also be termed as MTS; here with this Sales Orders will also be taken into account to smoothen the production. Overview of Material Requirements Planning Material requirements planning (MRP) calculates net requirements from gross requirements by evaluating: o o o o o o the master schedule bills of material scheduled receipts on-hand inventory balances lead times order modifiers It then plans replenishments by creating a set of recommendations to release or reschedule orders for material based on net material requirements. These planned recommendations are stated in: o o discrete quantities, with due dates repetitive build rates, with first and last unit start dates Oracle Master Scheduling/MRP and Supply Chain Planning assumes infinite capacity is available to meet the material requirements plan. However, you can use capacity planning to verify that sufficient capacity exists to support your material plan. Supply Chain Planning users can also generate distribution requirements plans (DRP) and manage their material requirements across multiple, interdependent organizations. See: Material and Distribution Requirements Planning. Overview of Planning Logic Oracle Master Scheduling/MRP and Supply Chain Planning provide many different item and plan level attributes that give you the flexibility for generating material and distribution requirements plans that satisfy your business needs. The planning process calculates net material requirements from: o o o o o o the master schedule bills of material scheduled receipts on-hand inventory balances lead times order modifiers The purpose of the planning process is to derive an MPS, DRP or MRP that meets schedule dates while maintaining inventory levels within your "material" policies. You can validate a material plan against available capacity using rough cut capacity planning (RCCP) or detailed capacity requirements planning (CRP). You can create multiple MPSs, MRPs or DRPs for simulation purposes and for testing different business scenarios. If you use the Memory-based Planning Engine, you can simulate changes to any MPS or MRP. Supply Chain planning logic is further described in Overview of Supply Chain Planning Logic Sub Contracting Cycle (1) You have a material that can be procured externally, and you have maintained BOM with components. Any waste generated and received during subcontracting process can be maintained as component with negative quantity. (2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Record for Subcontract category for material and subcontractor. (3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material remains under your ownership, system does not make any value entry. But quantity is shown as "Material Provided to Vendor" (4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting by-products. There are three events, so three accounting entries are generated: DR FG Stock/ SC By-Product Stock CR Change in Stock (FG/ SC By-Product ) (for finished goods received) DR Subcontracting Charges CR GR/IR Clg (for moneys payable to Subcontractor) DR Consumption (Components) CR Change in Stock (FG/ SC By-Product ) (material provided to Vendor is now charged to expense) (5) You do the IV for SC Invoice, and the process is complete. Process of Subcontract in MM Sub-contract business process: You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor . Vendor shall process the item / use the item provided & supply the final item. SAP process: 1.Create the finished goods material code. 2.Maintain the BOM for the material. 3.Create PO with item category as "L" . 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. 6.MIRO to account for vendor's invoice for the service charge& material used by him. Can anybody tell me how a process has to be given to subcontracting? Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ? Vijay The following process to be followed for subcontracting. 1. Item code(material master) to be created at the stage of before dyeing. 2. Item code(material master) to be created after Dyeing as subcontracted item.(F30) 3. Bill of material to becreated for the material(2) calling for material(1) 4. Inforecord and source list to be created for material(2) with the corresponding vendor 5. PO to be released for material (2) 6.Along with PO the material(1) to be issued to vendor 7.On receipt of material when GR is made the stock with vendor will get updated. B.N.Rao How to Create a Subcontract Order? To create a subcontract order, proceed as follows: Enter the material you want to order and the item category for subcontracting (L) in the order item. Press ENTER to display the screen for component processing. Enter the components that the vendor requires to manufacture the product. Please note: – You do not need to enter the date required for the components. This date is proposed by the system when you press ENTER. It is calculated as follows: Delivery date of the item - Planned delivery time – If you do not want the quantity of the components to be changed if the order quantity of the end product is altered, set the indicator Fixed quantity (column F). – You can determine whether the components are available on the date required by selecting Edit -> Availability check. If you entered a bill of material as the material in the subcontract order, the components are created automatically. If you want to determine the components in the bill of material at a later date (for example, if the bill of material is subsequently changed), choose Item -> Component -> New BOM explosion. The existing components are deleted and redetermined in the bill of material. Save the purchase order. When you print the purchase order, the components are printed per order item. What is Backflushing? Can anyone tell me what is backflushing for? When is it use? Back flushing is nothing but automatic goods issue. System will automatically posts the goods issue when you confirm the operations.You have no need to make manual issue. It will reduce the effort. Backflushing is automatic accounting (Goods issues - 261 mvt) of material consumed for production, at the time of confirmation. Eg. When a 4 wheeler automobile is rolled out from assy line, 4 wheels & Tyres are deemed to be consumed and issued to production order automatically by way of backflushing by the system. Assy line picks the material from stores/ Assy line and use. No Physical issue & Manual posting ( Goods Issue) by Stores. Backflush is used for material which are a must and having fixed relationship. This can be configured in MRP2 Screen,Work centre, Routing and production order. Each has some special function. If you configure this in routing or production order you have no need to activate this in MRP2 or Work center screen. MRP2 Screen defines whether material components are backflushed are to be made at the work center. When we do the back flush the backlogs are being created for the BOM components and we are getting the message "Backlogs from backflush were created or changed" - its just an informative message. Do you think this has got something to do with the negative postings ? Backlogs are created due to different reasons. This message tells that "there is no sufficient stocks for the bom component/not able to backflush all the material due to plant data locked etc" at the time of backflushing the BOM Material and hence the Post-processing list is created that you have to Re-process for stock updation of each material. To avoid this you can confirm the following things. 1.Ensure that suffecicient stock is available in the backflushing locations of each materail. 2.To prevent the generation of "post-processing list" you can block the BOM from getting backflushed if sufficient stock is not available in specified location for the BOM COMPONENTS. To do this change the "REM profile" to "002"in MRP4 view for the BOM MATERIAL.(if the profile is not available you can crate it through SPRO). 3. To clear the existing Backlog use transcation MF47 and re-process(be ensure that required stocks is available for each bom component)