Make to Order in SAP ERP
Applies to:
SAP ECC 6.0. For more information, visit the Enterprise Resource Planning homepage.
Summary
This document shall help consultants in the cross functional areas like Sales and Distribution, Production
planning and Materials Management. It is prepared to suits for Indian Make to Order Business Scenario. It
explains the various activities like Sales, Planning, External procurement, Subcontracting, Production &
Distribution.
Author: Appala Raju P
Company: Larsen & Toubro Infotech Ltd.,
Created on: 01 October 2009
Author Bio
P. AppalaRaju is now an employee of Larsen & Toubro Infotech Ltd. He has total 10 years
of experience, out of which near about 2 years experience in the area of SAP Consulting in
Procure to Pay process. He has worked various business segments like Procurement,
Design & Drawing and Plant maintenance in Engineering and Process sectors as part of
Domain experience.
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Make to Order in SAP ERP
Table of Contents
Introduction ......................................................................................................................................................... 3
Make-to-Order ................................................................................................................................................. 3
Make-to-Stock ................................................................................................................................................. 3
MTO Business Scenario - Diagrammatical Representation ........................................................................... 3
Major Steps ..................................................................................................................................................... 4
Bill of Materials ................................................................................................................................................ 4
Steps in SAP ....................................................................................................................................................... 5
Create Materials .............................................................................................................................................. 6
CIN Master data .............................................................................................................................................. 7
Create Bill of Material (BOM) .......................................................................................................................... 8
Create Routing to Finished material ............................................................................................................... 9
Create Sale Order ......................................................................................................................................... 10
Run MRP for Sale Order ............................................................................................................................... 10
View the Planned Orders Created ................................................................................................................ 11
Convert “Component” Planned Order to PR ................................................................................................. 12
Convert Semi Finished Planned Order to PR ............................................................................................... 13
Convert “Component” PR into PO ................................................................................................................ 14
Goods Receipt for Components .................................................................................................................... 15
View the Stock (sale order stock) ................................................................................................................. 16
Create Subcontract PO with Reference to Semi Finished PR ...................................................................... 17
Maintain Storage Location to the Subcontractor ........................................................................................... 17
Transfer Goods/Components to Subcontractor (Subcontractor Storage Location) ...................................... 18
Stock Overview ............................................................................................................................................. 19
Create Challan .............................................................................................................................................. 20
Receive Goods (semi finished) from Subcontractor ..................................................................................... 21
View the Stock of Components after Goods Receipt.................................................................................... 21
View the Stock of Semi-Finished after Goods Receipt ................................................................................. 22
Reconciliation of Challan............................................................................................................................... 23
Complete Challan.......................................................................................................................................... 23
Convert Finished Material Planned Order to Production Order .................................................................... 24
Goods Issue to the Production ...................................................................................................................... 25
Confirmation of Production Order ................................................................................................................. 26
Goods Receipt Against Production Order ..................................................................................................... 27
Order Settlement for Production Order ......................................................................................................... 28
Delivery of Finished Products ....................................................................................................................... 29
Related Content ................................................................................................................................................ 30
Disclaimer and Liability Notice .......................................................................................................................... 31
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Make to Order in SAP ERP
Introduction
Traditional production systems produce products and stock those as inventory until they are sold (make to
stock). In order to reduce inventory and increase the level of customization, some firms have designed their
production systems to produce a product only after it is ordered. Such systems are referred to as make-to-
order. Make-to-order systems are not appropriate for all types of products, and the make-to-order versus
make-to-stock decision must be weighted carefully.
Make-to-Order
Make-to-order production is a process in which a product is individually manufactured for a particular
customer. Stock keeping is not usually carried out for products that are made to order. The primary benefits
of this process are the ability to track the progress for the sales order and the flexibility to offer to the
customer the products to meet their specific requirements. The benefit also lies in tracking the costs incurred
in the servicing of the sales order in the manufacturing of the goods and the ability of arrive at a profitability
of the sales order.
This Business Scenario Map shows how enterprises work together to complete a make to order scenario.
The planning and manufacturing process is initiated after receiving the sales orders from the customer..
There is a constant link between the sales order and the production order. This leads to the tracking of the
progress on the customer order. The material stock is seen as customer stock.
Make-to-Stock
In make-to-stock production scenario stock is produced independently of orders because you want to provide
your customers immediately with goods from that stock later on. You might even want to produce goods
without having sales orders, if you expect that there might be customer demand in the future. This means
that make-to-stock strategies can support a very close customer-vendor relationship because your objective
here is to provide your customers with goods from your stock as quickly as possible.
MTO Business Scenario - Diagrammatical Representation
PLANT PO Vendor
1 MRP 3
Customer 2 Components
Sale Order
S1
Production
Components Subcontractor
5 SL
Final Prod
4
S3
6 Semi Finished
S2
S1, S2 & S3: Storage location for Raw material, Semi finished material & final products respectively
SL: Storage Location for Subcontracting Vendor
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Make to Order in SAP ERP
Major Steps
1 - Sales activity: Sales order is created with reference to customer order (customer PO)
2 - Planning activity: Planned orders are generated as output of Material Requirement Planning (MRP)
With reference to Sales order
3 - Ext. procurement: Required components procured externally using purchase order (PO)
4 - Subcontracting: Procured components send to the subcontracting vendor & received semi finished
product
5 - Production: Semi finished product processed internally and gives output as final
product/Assembly
6 - Delivery activity: Delivers final product/Assembly to the customer against Sale order.
Bill of Materials
Sales Assembly
Subcontracting Semi finished
External Proc Comp. 1 Comp. 2
- Components (comp.1 & comp. 2) procured externally.
- Semi finished material received from subcontracting vendor by providing components
- Assembly will be available for sales after processing semi finished material internally in
production department.
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Make to Order in SAP ERP
Steps in SAP
Create materials with required views - MM01
Maintain CIN master data - J1ID
Create Bill of Materials (BOM) - CS01
Create Routing to Finished material - CA01
Create sale order - VA01
Run MRP - MD50
View the planned orders created - MD04
Convert component planned order to PR (PR will show a/c assgn cat as M) – MD04
Convert semi finished planned order to PR (PR will show a/c assgt cat “M” & item cat. “L”) – MD04
Convert component PR into PO for external procurement - ME21N
Goods receipt with reference to sale order - MIGO
View the stock (sale order stock) - MMBE
Create subcontract PO with reference to semi finished PR - ME21N
Maintain storage location to the subcontractor - SPRO
Transfer goods to Subcontractor (movement type 311 +E) - MB1B / MIGO
Stock will be updated Subcontract storage location under Sale order stock - MMBE
Create challan - J1IFQ
Receive goods from Subcontractor with movt type 101 (543 will be taken to the component &
subcontractor storage location to be entered) - MIGO
Reconciliation of challan – J1IFQ
Complete challan – J1IF13
Convert finished material planned order to production order - MD04
Goods issue to the production with movement type 261 - MB1A / MIGO
Confirmation of Production order - CO15
Goods receipt against Production order with movement type 101 - MB31/MIGO
Order settlement for Production order - KO88
Delivery of Finished products - VL01N
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Make to Order in SAP ERP
Create Materials
Required views & important fields mentioned for each view
VALVE100 - Finished material, material type ZHAW (for sale order)
Views: Basic data1(div & mat gr), Sales, MRP1, MRP2 (proc type E), MRP3 (Strategy group 20), MRP4
(individual/collec _ ), Work scheduling, General Plant data/storage, Accounting , Costing
Key Point: Maintain Strategy Group as “20” in MRP3 view
Note: No purchasing view available for material type FERT/ZHAW
VALVESEMI100 - Semi finished material, material type HALB (for subcontracting)
Views: Basic dta1 (mat gr), Purchasing, MRP1, MRP2 (Sp. procurement as 30 & proc type X) MRP3
(consumption mode 2, availability check 02), MRP4 (individual/collec. _), Work scheduling, Plant
data/storage, Accounting, Costing & No sales views
Key Point: Maintain Special procurement as “30” in MRP2 view
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Make to Order in SAP ERP
VALVECOMP - Raw material/component (material type ROH)
Views: Basic dta1 (material group), Purchasing, MRP1, MRP2 (proc type F) MRP3 (consumption mode 2,
availability check 02), MRP4 (individual/colle _), Plant data/stor, Accounting, Costing & No sales views
VALVECOMP1 - Raw material/component (material type ROH)
Views: Basic dta1 (mat gr), Purchasing, MRP1, MRP2 (proc type F) MRP3 (consumption mode 2, availability
check 02), MRP4 (individual/colle _), Plant data/stor, Accounting, Costing & No sales views
CIN Master data
Use transaction code: J1ID
Maintain material chapter ID combination to the component & semi finished material.
Select Subcontract check box to the components
Maintain assessable value to the components
Components: - VALVECOMP & VALVECOMP1
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Make to Order in SAP ERP
Semi finished material: - VALVESEMI100
Finished material: - VALVE100
Components: VALVECOMP & VALVECOMP1
Create Bill of Material (BOM)
Use transaction code CS01
BOM1: VALVE100 – VALVESEMI100,
BOM2: VALVESEMI100 – VALVECOMP, VALVECOMP1
Key Point: Maintain item category as “L”
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Create Routing to Finished material
Use transaction code CA01
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Make to Order in SAP ERP
Create Sale Order
Use transaction code VA01
Run MRP for Sale Order
Use transaction code MD50
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View the Planned Orders Created
Use transaction code MD04
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Make to Order in SAP ERP
Note:
Total number of planned orders created = 4
Planned order 1 for VALVECOMP (component)
Planned order 2 for VALVECOMP1 (component)
Planned order 3 for VALVESEMI100 (semifinished/subcontacting material)
Planned order 4 for VALVE100 (assembly/final product)
Convert “Component” Planned Order to PR
Use transaction code MD04 (Created PR contains a/c assignment category as M)
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Convert Semi Finished Planned Order to PR
Use transaction code MD04 (Created PR contains a/c assignment cat as M & item cat as L)
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Convert “Component” PR into PO
Use transaction code ME21N for external procurement.
PO for material VALVECOMP
PO for material VALVECOMP1
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Make to Order in SAP ERP
Goods Receipt for Components
Use transaction code MIGO
Note the sale order number in item details in “where” tab
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Make to Order in SAP ERP
View the Stock (sale order stock)
Use transaction code MMBE
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Make to Order in SAP ERP
Create Subcontract PO with Reference to Semi Finished PR
Maintain Storage Location to the Subcontractor
Use transaction code SPRO
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Make to Order in SAP ERP
Transfer Goods/Components to Subcontractor (Subcontractor Storage Location)
Use transaction code MB1B with movement type 311 +E
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Make to Order in SAP ERP
Stock Overview
Stock will be updated at subcontractor storage location under sale order stock.
Transaction code MMBE
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Make to Order in SAP ERP
Create Challan
Use transaction code J1IF01
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Make to Order in SAP ERP
Receive Goods (semi finished) from Subcontractor
Use transaction code MIGO, with movement type 101 (543 will be taken to components), Subcontractor
storage location to be entered.
View the Stock of Components after Goods Receipt
Stock of componets will be consumed at subcontracting storage location when semifinished goods received
from subcontracting vendor.
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View the Stock of Semi-Finished after Goods Receipt
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Reconciliation of Challan
Use transaction code J1IFQ
Complete Challan
Use transaction code J1IF13
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Convert Finished Material Planned Order to Production Order
From planned order to Production order, transaction code MD04
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Make to Order in SAP ERP
Note that planned order (000011696) converted as production order (00000100591)
Goods Issue to the Production
Use Transaction code MB1A
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Confirmation of Production Order
Use Transaction code CO15
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Make to Order in SAP ERP
Goods Receipt Against Production Order
Use Transaction code MB31 / MIGO with movement type 101
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Order Settlement for Production Order
Use Transaction code KO88
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Delivery of Finished Products
Use Transaction code VL01N
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Make to Order in SAP ERP
Related Content
For more information, visit the Enterprise Resource Planning homepage.
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Disclaimer and Liability Notice
This document may discuss sample coding or other information that does not include SAP official interfaces and therefore is not
supported by SAP. Changes made based on this information are not supported and can be overwritten during an upgrade.
SAP will not be held liable for any damages caused by using or misusing the information, code or methods suggested in this document,
and anyone using these methods does so at his/her own risk.
SAP offers no guarantees and assumes no responsibility or liability of any type with respect to the content of this technical article or
code sample, including any liability resulting from incompatibility between the content within this document and the materials and
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document.
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