Chapter 5: The Production Process
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Outline
 A Basic Production Process
 Role of Enterprise Systems in the Production Process
 Exercise Using Simulated SAP
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Basic Production Process
 Definition
 Plan to produce
 Design to produce (customizable products)
 Engineer to produce (highly specialized)
 Key concepts and assumptions
 Conceptual Framework
 Physical flow
 Data and Document Flow
 Information Flow
 NO Financial Impact
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Key Concepts and Assumptions
 Production processes and strategies
 Assembling vs. manufacturing
 Discrete vs. process manufacturing
 Make-to-stock vs. make-to-order
 Master Data in the Production Process
 What were master data in procurement and fulfillment?
 Bill of Material
 Work Centers
 Product Routing
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Production Processes and Strategies
 Assembling vs. manufacturing
 Components vs. raw materials
 Components: nuts, bolts, wheels -> skateboard
 Raw materials: plastic pellets -> plastic plate
 Discrete vs. process manufacturing
 Discrete
 Distinct items (countable)
 Pencil, computer, coffee cup, skateboard
 Component parts generally identifiable
 Process manufacturing
 Oil, chemicals, beverages
 Cannot be easily disassembled
 Formulation needed (recipe) vs. bill of material
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Production Processes and Strategies
 Make-to-order vs. make-to-stock
 Make-to-order
 Process triggered by response to customer order
 Make-to-stock
 Process triggered by need to increase inventory
 SSB characteristics
 Discrete
 From components
 Make to stock
 Material type: assembled product (vs. trading good)
 Standard skateboard (vs. entry level skateboard)
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Bill of Material (BOM)
 Identifies components needed to make one unit of finished
product
 Result of the product design process which leads to an
engineering drawing
 SSB BOM for standard skateboard (next slide)
 Multiple levels of BOM
 A component may have its own components
 Example: components of the standard truck assembly
 Which components could be manufactured from raw
material?
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Engineering Drawing of the Standard
Skateboard
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Bill of Material
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Work Center
 Where the work of assembling the product occurs
 One or more tasks are completed in each work center
 SSB Work centers
 WC# 200: Material staging
 WC# 230: Final assembly
 WC# 300 Packing and inspection
 SSB “Plant” includes
 Front office space
 Warehouse - storage area
 Loading and unloading docks
 Shop floor – production area
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SSB Plant Layout
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Product Routing
 Define the steps or operations needed to produce the
product
 For each operation
 Work center
 Time needed (for some unit of measure, such as “each”)
 Materials used
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Product Routing for Standard Skateboard
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Production capacity
 Number of skateboards per unit of time (hour, day)
 Approximately 50 per day (8 hours)
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Operation
Number
Operation Name
Time (minutes) per unit Time needed for 50 SB
(or operation)
(minutes)
10
20
30
40
50
60
Stage Material
Assemble SB
Inspect Deck
Pack in Packing Box
Final Inspection
Move to Storage
Total Time
5 per 50
6 per SB
1 per SB
1 per SB
1 per SB
5 per 50
5
300
50
50
50
5
460 = 7.66 hours
Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Conceptual Framework
 Physical Flow
 Document and Data Flow
 Planned Order
 Production Order
 Material Withdrawal Slip
 Goods Receipt Document
 Information Flow
 Instance-level Information
 Process-level Information
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Physical Flow
 What is the trigger?
 What are the steps?
 What is the purpose of each step?
 Who is involved in each step?
 How is communication and coordination accomplished
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A Basic Production Process
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Planned Order
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Production Order – Initial State
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Production Order – Completed State
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Material Withdrawal Slip
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Goods Receipt Document
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Role of Enterprise Systems in the
Production Process
 Execute the Process
 Request Production
 Authorize Production
 Issue Raw Materials to Production Order
 Create (Assemble) Products
 Receive Finished Goods into Storage
 Capture and Store Process Data
 Monitor the Process
 Instance-Level Information Flow
 Process-Level Information Flow
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Information Flow
 Instance level information




What is the status of a particular planned order
Has it been approved?
Have the skateboards been produced?
What step in the process is the order in?
 Process level information
 What is the average time needed to make a skateboard?
 What is the average time taken to complete each step in the routing?
 What percent of the production orders are completed on time? What
percent are delayed?
 What is the cause of the delays in completing production orders?
 What percent of the skateboards fail final inspection and have to be
scrapped? Why do they fail?
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ES in the Production– Process
Execution and Capture and Store
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Creating a Planned Order in SAP
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Goods Issue for Production Order in SAP
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Production Confirmation in SAP
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Goods Receipt for Production Order in SAP
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
ES in Production – Monitor
 Instance level
 Inventory status report
 Stock requirements list
 Drill down to a production order
 Process level
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Stock Requirements List in SAP
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Production Order Status in SAP
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Process Level Information
 Average time to produce a skateboard
 Average time to produce an order (of 50)
 How many on time? How many delayed?
 Reasons for delay
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Magal and Word | Essentials of Business Processes and Information Systems | © 2009
Process Level Information
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009
Exercise Using Simulated SAP
 The exercises will take you through the following steps that
have been discussed in this chapter:
 Create a planned order
 Convert the planned order to a production order
 Issue materials to the production order
 Confirm production
 Move finished materials to inventory
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Magal and Word ! Essentials of Business Processes and Information Systems | © 2009