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 System Activities When a Manufacturing Order Is Created Locate this document in the navigation structure

When you create a production order with quantity structure or a process order, the system carries out the following activities based on the settings you make in Customizing:

1. The system selects the quantity structure

  • If you are using production orders, the system transfers a routing and a BOM for the material. In Customizing for Production you can specify the following depending on the order type:

  • Which selection ID is used to find the routing

  • Which BOM application is used to find the BOM

You can also define a unique assignment to a BOM usage for a material, and specify a selection priority to be used to select BOMs with different usages. This selection priority is used when a material has multiple BOMs with different usages (such as production or engineering). The BOM can also be selected through a production version.

You can also work without a BOM by manually adding the required components to the operations.

Each operation in the routing specifies whether the operation is relevant to costing. You can check whether the operation of a routing is relevant to costing in the control key of the operation and in the detailed screen of the operation.

The system only selects routings that are valid at the time of transfer. The transfer date is found as follows:

  • If you have specified the basic start date of the order, the system uses this date as the transfer date for the routing.

  • If you have specified the basic finish date of the order, the system calculates the transfer date from the basic finish date minus the in-house production time (lot-size independent) as defined in the material master record.

You can also create a production order with a quantity structure but without a routing (such as to perform unplanned rework). In this case an operation will be generated automatically when you create an order. You can manually assign material components and production resources to this operation.

Each BOM item in the BOM specifies whether the BOM item is relevant to costing. You can check whether the BOM item is relevant to costing in the detailed screen of the BOM item.

The explosion date of the BOM is found as follows:

  • If the production order was created from a planned order, the explosion date is taken from the planned order.

  • If the production order was created manually, the system does the following:

  • If you entered a basic start date when you created the order, the system takes this date as the BOM explosion date.

  • If you entered a basic finish date when you created the order, the system finds the explosion date by deducting the in-house production time (lot-size independent) defined in the material master record from the basic finish date.

You can also create a production order with a quantity structure but without a BOM.

You can make changes to the BOM and routing in the order itself. These changes are included in the preliminary cost estimate of the production order.

If you are using process orders, the system transfers a master recipe and the associated material list. In the master recipe, the phases are relevant to costing but not the operations. If the material list contains co-products, you add further co-products. You cannot delete any co-products from the material list. To see whether a material component is relevant to costing, go to the detailed screen of the material display.

2. The system schedules the order

Scheduling determines the production dates and the capacity requirements. The planned costs are distributed by period.

Scheduling uses the basic dates. The basic dates can be the order finish date or the order start date. These dates are either transferred from the planned order or you enter them in the header screen of the production order.

The dates are relevant to Cost Object Controlling in that the planned costs are distributed by period. The planned costs for the operation are written to the periods in which the operation is carried out in each case. Distribution is carried out according to calendar days.

If you intend to calculate variances by period, you should make sure that the actual costs match the planned costs.

Example Example

Operation 010 begins on June 29 and finishes on July 6, so two days fall within period 6 and six days fall within period 7.

The planned costs for operation 010 are USD 100.

In the 6th period, planned costs of USD 25 are updated. In the 7th period, planned costs of USD 75 are updated.

End of the example.

3. The system generates the settlement rule

The standard system requires the actual costs for the production order to be allocated to the material (stock account). When you create a production order, the system assigns a settlement rule to it.

– Production order was created on the basis of a planned order:

The account assignment will be transferred from the planned order (such as material, sales order item, or WBS element).

– Production was created directly:

The costs will be assigned to the material to be produced. This settlement rule can be changed but not deleted.

4. The system generates the characteristics for classification (if necessary)

Note Note

For summarization, you only need classification if you want to use user-defined characteristics. In this case you summarize the data with an order hierarchy.

The system performs the classification if classification is active in Customizing for Product Cost by Order under   Preliminary Costing   Production Orders   or   Process Orders   Check Order Types for Production Orders   or for Process Orders (PP and CO).

If you want to use an order hierarchy, read the Implementation Guide (IMG) of Product Cost Controlling under   Information System   Cost Object Controlling   Settings for Summarized Analysis / Order Selection   Order Hierarchy and Selection with Classification   .

If you don’t need user-defined characteristics, you can summarize production orders with quantity structure and process orders with a summarization hierarchy .

In this case you do not need classification.

SAP recommends the use of a summarization hierarchy.

You can view the summarized data in the Product Cost Controlling Information System .

End of the note.

5. The system calculates the planned costs for the order

The system calculates the planned costs for the order if you have selected the corresponding option in Customizing for Product Cost by Order under   Preliminary Costing   Production Orders   or   Process Orders   Define Default Values for Order Types (PP and CO).  

The system creates the cost estimate on the basis of the quantity structure copied into the order (this quantity structure may also have been modified). If data in the routing or BOM or in the affected work centers changes after the order is created, such changes are not reflected in the production order.

The preliminary cost estimate for the production order is created on the basis of the information in the order. Differences found by comparing the planned costs in the order against the target costs in the standard cost estimate for the material are often the result of different selection methods for the BOMs and the routing.

These differences can be analyzed in variance calculation. These are the planning variances that you can calculate with target cost version 2.

See also:

For information on settlement, refer to the following section:

Settlement in Product Cost by Order or Period

For information on generating characteristics for classification, see the documentation Product Cost Controlling Information System .

For information on determining the quantity structure, refer to the document PP Production Planning and in the Implementation Guides for Production and Product Cost Planning .