Refinement industries such as Metal and Paper are strongly customer-oriented, and the increasing competition in these industries means that improving customer service takes high priority. One of the ways in which this can be achieved is to agree on a reliable delivery date with customers when they place a sales order. The medium-term forecasting of resource schedules weighs up optimal Customer Service with the economical operation of the machines. You plan in advance the times at which certain product groups should be produced at a specific plant, in order to optimize the resource load and minimize setup costs, as well as the costs for specific resources.

The product structure in refinement industries is multi-level, and has several steps. In certain industries such as steel, semifinished goods can also be sold. Multiple end items are derived from a single initial material, the bill of material (BOM) contains only a small number of components (usually only one), and intermediate products and finished goods are described by characteristics without being pegged to a single customer or order. Production is mostly make-to-order at end-item level, and make-to-stock at the level of semifinished goods.

Refinement industries use characteristics to describe and identify products and semifinished goods. Master data is reduced by collecting similar objects in one set of master data and assigning the corresponding differences to separate characteristics. You require a production process model (PPM) to reduce master data, and enter all specific data in the characteristics. Characteristics enable you to track individual pieces such as jumbo reels, coils, and so on. The characteristics of intermediate products are process-dependent, and are therefore unknown at sales order entry.

1. You create a sales order in the R/3 System using the application component Sales and Distribution.
2. An ATP check is then performed in the APO System. During this process, the system checks whether the product is in stock. If not, a material shortage exists. For more detailed information, see Availability Checking with Reference to Production Planning.
3. A material shortage triggers a ‘produce’ decision, and requirements are transferred to the PP/DS component.
4. PP/DS then determines feasible availability dates, and creates temporary planned orders, thereby taking lot sizes and blocks on resources into account. The dates determined are displayed in the APO System.
5. You save the sales order in the R/3 System.
6. The sales order is transferred to APO, and all temporary planned orders are converted to permanent planned orders.
7. CDP does not support planned orders in the R/3 System. You can specify that only the planned orders, which are intended to be converted into production orders or process orders, are transferred from the APO System to the R/3 System. You can set this in PP/DS customizing in the activity Maintain Global Parameters and Defaults. During transfer these planned orders are automatically created in the R/3 System as production orders or process orders.
8. The production order is confirmed in the R/3 System, either simultaneously, or at a later point in time. When you confirm the production order, the R/3 System generates a goods receipt.
9. You post the goods receipt in the R/3 System. This causes the order for the receipt to be reduced and the stock to be increased in the R/3 System, while the order for the receipt is reduced and the stock is increased in APO synchronously.