A Journey Through the World of SAP S/4HANA Production Planning and Manufacturing – Part 1

A Journey Through the World of SAP S/4HANA Production Planning and Manufacturing - Part 1

As the world gets more complex and there is an impactful growth of digital information which led to more complex business processes and software solutions, SAP had to keep up with this evolution.

With innovative technologies as Artificial Intelligence, Machine Learning, and Advanced Analytics, SAP was able to make a better ERP product and presented an SAP S/4HANA solution. Not a new version of R/3, but SAP’s next-generation Business Suite, with a new architecture. With Embedded Analytics, 360◦ Cockpits and Analytical Views, Role-based applications, Digital Assistant and Mobile UX (for device-independent use), and Machine Learning, SAP S/4HANA drives to add instant value with simplicity.

Through these posts, we will guide you through a journey of SAP S/4HANA PP starting with an overview of master data relevant for production planning.

Master Data in Production Planning

The foundation of SAP S/4HANA is the organizational structure. All other master data and configuration are built on the organizational structure.

Master Data Objects in Production Planning

Master data has the main detailed objects of the SAP Production and Planning module and, by definition, contains data that remains unchanged for a lengthy period. Materials, Bills of Material (BOM), Work centers and Routings are the main master data objects in manufacturing. Or, when we talk about the pharmaceutical industry, the master data objects for process industries (PP-PI) take additional relevance: BOM, resources, master recipes and production versions. Master data is what determines the relationship between the production materials and its production process.

The material master is where the information about the materials that a company procures, manufactures, stores and sells is set up. A record in the material master is the central source of data on materials. Raw materials, components, semi-finished or finished products are maintained in the material master. Materials can have different views depending on their functionality once master data is used for different departments, and it is important to distinguish relevant fields for each functionality.

A bill of materials (BOM) is a structured list of components or raw materials used to manufacture a product. It consists of a header material, where the base quantity specifies the finished product quantity, and items (components), whose quantities are based on the header quantity. It is integrated with the material master. When a production or process order is created, the BOM is automatically copied to it.

The work center or resource can be defined as the location where an operation is executed. It can be a single or multiple machines, as well as people, tools, or even an intermediate storage area. Each production operation must be executed in one and only one work center.

We can build a resource network in S/4HANA, by defining predecessor and successor relationships, defining the physical links between resources such as processing units of a line (e.g., vessels, reactors). This resource network describes the flow of materials through a line or plant.

Routings and master recipes are both task lists, and they define the operational steps required to produce a product and the sequence of its operations. They can be defined as the template for production or process orders. In the routing or master recipe, it is defined where the work is to be done, how long it will take, which materials are needed, and which tools are required. When a production order is created, the routing is automatically copied to it. When a process order is created, the master recipe is automatically carried over, according to the valid production version. They are also the basis for planning and product costing.

The master recipe allows subdividing operations into phases. Phases can be sequential, parallel, or overlapping, and the BOM components are assigned to phases in the master recipe. A production version determines which alternative BOM is used together with which task list/master recipe to produce a material. For one material, one can have several production versions for various validity periods and lot-size ranges.

Editing master recipes, BOMs and production versions in the pharmaceutical industry is a complex process in which various specialist areas are involved and including strict approval procedures. To meet those requirements, the system offers different options to manage changes to production versions, master recipes and bills of materials. This includes the use of change master records and engineering change order numbers, allowing to record and track changes to individual fields within change documents.

What Next?

In the next post of this series on Production Planning, we will describe Material Requirements Planning in more detail. The key message here is that SAP S/4HANA Production Planning and Manufacturing enables you to keep up with the digital transformation that the world is facing. You can transform your business with a flexible, innovative tool, that provides real-time metrics through all business processes and uses technologies such as Machine Learning, Big Data and IoT (Internet of Things).

Digital transformation requires a team experienced in SAP S/4HANA, which is why Avoras helps you take your business further. Stay connected if you want to know more about this topic and follow this journey throughout SAP S/4HANA PP and Manufacturing.