This post focusses on one of the value creation process – Production and key elements of production master data: Bill of Material, Product Routing and Work Center.
In a brief the entire Production Process can be summarized as following:
Generally Production is either of two types: Make to Stock and Make to Order. If the company produces Make to Stock, the production is triggered when inventory and warehouse report of low inventory, and if company produces Make to Order, the trigger is a customer order.
This trigger leads to Planned Order that converts to a Production Order. This conversion results from the Optimization of Production process to achieve high efficiencies. The Production Order contains all the information to produce the finished good. As the Production Order also includes the Bill of Materials for the production, which can detect insufficient raw material/semi-finished goods and further trigger procurement/production processes respectively.
Items mentioned in Bill of Material are received from inventory with a Goods Issue and similarly, produced goods are stored in inventory as Finished/Semi-finished with a Good Receipt. Finally the process ends with Conform Production Order that records the cost occurred in the production to compare with Planned Order and determine the actual worth of the product produced.