Make to Stock

• Make-to-stock production is implemented if you produce stock without waiting for

sales orders to arrive because you want to deliver your customers immediately
with materials from that stock later on. You might even want to build stock without
having sales orders, if you predict that there might be customer demand in the
near future.
• Make-to-stock strategies are usually associated with a lot-size key or a rounding
value. For example, you may want to produce the entire amount for the whole
month once in a month only, or you may want to produce for the exact PIR
quantity.
• In Planning Strategy 10, only PIR quantity is considered for MRP run and sales
orders are completely ignored. PIR is reduced when you deliver the stock to the
customer. PIR has requirement type LSF.
• In Planning Strategy 40, Max of 2 (PIR and sales orders) are considered for MRP
and PIR is reduced as soon as sales orders are entered. PIR has requirement
type VSF.

Make to Order

• You do not want to produce finished products until you receive a sales order from
the customer.
• PIR are not considered in MTO, and only sales orders are considered in MRP.
• You produce sales order stock and can deliver to the specific customer only
unlike in MTS scenario.
• Planning strategy (20) is widely used for make to order process and strategy 25
is used for MTO with variant where customer asks for variants in products.

This document is regarding various Manufacturing Process in SAP PP .

Along with the technical differences within all process.

Based on different nature of products and complexity, there are 3 types of manufacturing process followed in
SAP PP:

• Discrete Industry
 • Process Industry
• Repetitive Industry

There are 2 methods of manufacturing in SAP PP:

• Make to stock ( MTS )

• Make to order ( MTO )

Discrete Industry Manufacturing Process

In discrete scenario, the manufacturing process is based on production orders. Discrete manufacturing is
characterized by requirements that occur on an irregular basis and a workshop-oriented process. Basically the
demand and supply varies time to time in this scenario.

Discrete manufacturing forms an industry type where in the products which are manufactured can be
easily assembled and dis-assembled. They can be reworked upon easily to a large extent. You can say making
pumps, engines, cars, airplanes.

Facts in Discrete Process:

• Production based on the production orders

• Planning and manufacturing depends on production orders.
• Products change frequently.
• Production is carried out on different production lines (scattered- discrete).
• Product costing and settlement is done through production orders.
• Planned orders are stock type later converted into production orders.
• Production orders are required.
• Materials will be issued always with reference to production orders.
• Master Data includes work center , Production version , Routing and BOMs.

Industry Type: Mechanical engineering, Consumer goods, electronics, and many more

Process Industry Manufacturing Process

The component Production Planning for Process Industries (PP-PI) provides an integrated planning tool for
batch-oriented process manufacturing. It

is primarily designed for the chemical, pharmaceutical, food and beverage industries as well as the batch-
oriented electronics industry.

Facts in Process Industry:

• Batch oriented process manufacturing.

• Process order based manufacturing. You copy the process described in a master recipe and adjust it to
the actual production run.
• It is primarily designed for the chemical, pharmaceutical, food and beverage industries as well as the
batch-oriented electronics industry.
• The integrated planning of production, waste disposal, and transport activities within a plant.
• Master Data includes Master Recipes and resources.
• Process Management: In this area, you coordinate the communication between PP-PI and process
control during the execution of a process order.

Process Manufacturing can be used in Continuous production, discontinuous production, Regulated

production as well as Process-oriented filling

Industry Type: Chemical, Pharma, Poultry, Dairy and many more.

Steps in Discrete / Process Industry with MTS / MTO Scenario:

 Discrete / Process with MTS scenario Discrete / process with MTO scenario

Create Planned independent requirements Create Customer Independent Requirement

– MD61 / Sales Order – MD81 / VA01

Check the Demand management – MD04 Check the Demand management – MD04

Run MRP – MD01N Run MRP – MD01N

Convert planned orders to Production Convert planned orders to Production

orders or create production order manually orders or create production order manually
– MD04 / CO01 – MD04 / COR1

Release Production order – CO02 Release Production order – COR2

Goods Issue to Production order – MIGO Goods Issue to Production order – MIGO

Confirmation of production order – CO11N Confirmation of production order – COR6N

Goods Receipt against Production order – Goods Receipt against Production order –
MIGO MIGO

Teco of Production order – CO02 Teco of Production order – COR2

Overhead calculation – KGI2 Overhead calculation – KGI2

WIP calculation – KKAO / KKAX WIP calculation – KKAO / KKAX

Variance calculation – KKS1 / KKS2 Variance calculation – KKS1 / KKS2

Settlement of Production order – KO88 / Settlement of Production order – KO88 /

CO88 CO88

Close Production order – CO02 Close Production order – COR2

Repetitive manufacturing Process

Company manufactures product in large numbers and production is quantity based and period based not order
based.You can use repetitive manufacturing as either make-to-stock REM or make-to-order REM such as in the
automotive industry.

Repetitive manufacturing form an industry type where in the products manufactured can be discrete
manufactured or process industry type, produced repetitively or continuously in production lines. This forms the
continuous production scenario.

Facts in Repetitive Manufacturing:

• Production is based on the planned orders.

• Planning and manufacturing is based on period wise.
• Normally single products being manufactured for a longer period of time.
• Normally production are carried out on a single production line (repetitively).
• Product costing and settlement is done through product cost collector.
• Planned orders are known as Run schedule quantities. Means quantity which is being manufactured in a
certain period.
• Planned orders are sufficient to carry out production at shop floor area.
• Master data includes production version, product cost collector and rate routing.
• Materials will be issued anonymously to production lines means without reference to planned orders.
• Creation and revision of production quantities on a period and quantity basis (reduction in individual lot
and order-specific processing).
 • Reduction in the production control effort and simpler back flushing (with the option of using the full
scope of the PP functionality).
• Repetitive manufacturing is mainly used for the production scenarios with high product stability, high
repetition rates, and low product complexity.

Industry Type: Mechanical engineering, Consumer goods, electronics, and many more

Process steps in REM

• Create necessary Material master, BOM, Rate Routing, Production version, Product cost collector.
• Then do standard costing run for all materials and release – CK11N / CK40N and preliminary costing run
for product cost collectors – MF30 / KKF6N
• Create demand or PIR – MD61 or create demand forecast in planning table – MF50
• After run the MRP with help of the MD01N for finished material , MRP element is RS and order type is
PE or From planning table we can directly create planned orders
• Check stock Requirement analysis – MD04
• Backflush through planned order or finished material – MFBF
• Planned Orders and RS quantities will be reduced as per period set in REM Profile

Differences between Discrete, Process and repetitive Process

Process point of view:

Discrete Process Process Industry Repetitive Industry

Discrete manufacturing forms Process manufacturing You produce the same or

an industry type where in the forms an industry type similar products over a
products which are where in the products which lengthy period of time.
manufactured can be easily are manufactured cannot be You do not manufacture in
assembled and dis- easily assembled and dis- individually defined lots.
assembled. They can be assembled. It is impossible Instead, a total quantity is
reworked upon easily to a to be reworked upon these produced over a certain
large extent. Eg: making products. Eg: making period at a certain rate per
pumps, engines, cars, chemicals, medicine, Paper, part-period. Your products
airplanes. Steel etc. always follow the same
sequence through the
machines and work
centers in production.

Routing tend to be simple

and do not vary much.

Used in both MTS and MTO Used in both MTS and MTO Used in both MTS and
scenarios scenarios MTO scenarios

Order based Production ( Order based Production ( Period based Production (

Production in individual Production in individual with certain Quantities per
Production order ) Process order )
 period) – Lean
Manufacturing

Product change frequently Product change frequently Steady flow without much
changes

Semi-finished Products often Semi-finished Products Semi-finished Products

put in interim storage often put in interim storage often directly processed in
to interim storage

Dependent components Dependent components Components staged with

staged with respect to staged with respect to respect to Production
Production orders Process Orders versions in lines
periodically

Backflush possible Backflush possible Period based Backflush

Order based cost controlling – Order based cost Period based cost
Main cost object is production controlling- Main cost object controlling – Main cost
order is process order object is Material

Technical point of view:

Discrete Process Process Industry Repetitive Industry

PRT availability check – Yes PRT availability check – No PRT availability check –
Yes

Order splitting – yes Order splitting – No NA

Trigger point – Yes Trigger point – No NA

Order Approval process – No Order Approval process – NA

yes

Process management – No Process management – yes NA

Digital signature – No Digital signature – Yes NA

Material Quantity calculation – Material Quantity calculation NA

No – Yes

Active Ingredient – No Active Ingredient – Yes Active Ingredient – No

Change-over from one Change-over from one Change-over from one

product to another – frequent product to another – product to another – No
frequent

Order-related production Order-related production Order-related production –

No ( it’s based on planned
orders)

Master data point of view:

 Discrete Process Process Process Repetitive Process

Master data used : Master Data Used: Master Data Used :

material master Material master Material master

BOM BOM BOM

WorkCentre Resources Production line

Routing Master recipe Rate Routing

Production version Production version PRT

PRT PRT – Not available Production version

Product cost collector

REM Profile

Line Hierarchy

Operations that can be automated in SAP Manufacturing Process

Operations which can be Pre-requisites Control data

automated

Print Order Release Production / Production scheduling

Process Order Profile

WM Transfer order Release Production / Production scheduling

Process Order Profile

Post Goods Issue / confirmation Material master

Backflush
Work center

Routing

BOM

Confirm Operations Milestone Operation control key

PDC entry PDC interfaces

MES or third party systems Idocs from MES or Third

party systems

Post Goods Receipt confirmation Production scheduling

profile

Operation control key

 Rework order / special Status confirmation Trigger points
Instructions / work flows

Scheduling methods in Discrete, Process and Repetitive Industry

Scheduling methods in Discrete and Process Industry:

1) Basic dates scheduling

2) Lead time scheduling

Scheduling methods in Repetitive manufacturing:

1) Detailed Planning

2) Sequencing / Takt based scheduling

Different MRP techniques used in SAP PP:

Manual reorder point planning

Automatic reorder point planning

Forecast-based planning

Material requirements planning with forecasts for unplanned consumption

Master production scheduling (MPS)

Demand-driven replenishment

Conclusion : Based on the above parameters we can differentiate all the above mentioned manufacturing
processes.
 Database Factor of SAP S/4HANA and SAP ECC
SAP S/4HANA can run only on the HANA database. This is completely different from SAP ECC. SAP ECC can run on Oracle,
IBM DB2 etc. SAP S/4HANA leverages on SAP HANA’s in-memory capabilities and design principles.

• The HANA in-memory database reads data faster than traditional databases which fetch data from the hard disk. This is because
data is read from memory, i.e., data resides in the main memory RAM (though Write happens in hard disk).

• HANA’s column based tables enable faster access (since only affected columns need to be read in a query), better compression
(because only distinct values are compared to rows), parallel processing (different columns can be easily processed parallely)

• OLTP and OLAP capabilities are available in the same system. They offer real time reporting and predictive analysis.

• There will be no aggregate (total), index, and history tables in SAP S4HANA. This is due to dynamic aggregate creations on the
fly based on line item tables.

Single Source of Truth and SAP S/4HANA Universal

Journal
SAP S/4HANA combines data structures of different components such as FI , AA , CO , CO-PA and ML into a single line item
table. This table is ACDOCA, also known as the Universal Journal. The presence of the universal journal eliminates several
aggregate and index tables. Now, data insertions occur into a single table instead of several tables. Hence reducing the data foot
print by a huge margin.

In addition, the MATDOC, the new line item for inventory management, eliminates 26+ tables. Material documents are stored in
MATDOC but not in MKPF or MSEG tables.

New Functional Capabilities

New functional capabilities are available to work with SAP S4H and the HANA in-memory computing. A few examples are
Central Finance, SAP Cash Management, and SAP BPC Optimized for SAP S/4HANA. However, these require additional
licenses.

Addition of standalone solutions to SAP S/4HANA

Core
 Some standalone SAP Solutions are now available as a part of the SAP S/4HANA core. Two common examples are SAP
Transportation Management and SAP Extended Warehouse management.

Unison of CO and FI
In SAP ECC, we could observe FI GL accounts mapped to CO primary cost elements. However, in SAP S/4HANA, the universal
journal uses only one field to store both GL accounts and cost elements. Cost elements (both primary and secondary) are now GL
accounts. Hence, a relevant cost element category is used when they are created and maintained (in FS00). Reconciliation (as in
case of CO to FI) is not needed now. Therefore, period end closings will be faster.

Introduction of a New GL in SAP S 4HANA

SAP S/4HANA is technically similar to the new GL of SAP ECC. This is beacuase of it’s data structure. Customers using the
classic GL need not use the document split or the parallel ledger. However, the new GL’s functionality (Parallel ledger) is a
prerequisite for new Asset accounting.

Account based CO-PA vs Costing based CO-PA

Account based CO-PA is now the default option. The costing based CO-PA is now available as an option. However, both options
can also be run simultaneously. Please use http://scn.sap.com/docs/DOC-65828 for more details.

What about Custom Code?

In SAP S/4HANA, custom code read operations redirect to compatibility views due to a special setting at the database interface
level (i.e invisible to source code). Therefore, custom reports work without any disruptions.

Business Partners and Material Number Extensions

In SAP S/4HANA, Customer and vendor master data need to be integrated/migrated as Business Partner. Customer-vendor
integration (CVI) is a mandatory step to run business with SAP S/4HANA.

One key difference between SAP ECC and SAP S/4HANA is that the Material number can now be 40 characters instead of the
existing 18 in SAP ECC. This is an optional feature. Therefore, impacts of this extension on interfaces, custom coding, and other
SAP applications must be evaluated. This must be done before switching to 40 characters. You can refer to note number 2267140
for more details.

New Credit Management System

There is a new credit management system in SAP S/4HANA by the name of FSCM-CR. It is the credit management of Financial
supply chain management. It replaces SAP ECC’s FI-AR-CR. FSCM-CR is built on a distributed architecture. This allows
interfaces with external credit rating agencies. Traditional SAP ECC’s FI-AR-CR credit control setting requires high degree of
manual work. In addition, FSCM-CR has valuable advanced features like

• Automatic risk scoring & credit limit calculations with a credit rule engine

• Automatic update to master data based on the approval of credit limit

• Work flow for credit events

SD Data Model Changes

There are changes among data models in pricing and condition techniques. For example, the new PRCD_ELEMENTS table with
extended fields replaces the the existing KONV table. Please refer to note 2267308 for more details.

Live Material Requirement Planning (MRP)

In SAP ECC, MRP runs occur through batch jobs during off peak hours. However, there is no need of batch jobs in SAP
S/4HANA. In SAP S/4HANA, MRP runs can occur in real time by leveraging the power of SAP HANA.

One key point of difference between SAP S/4HANA and SAP ECC is that while MRP can be only be run on plant and MRP area
level, it cannot be run on the the storage location level in SAP S/4HANA. In SAP ECC, storage locations can either be excluded
from MRP or they can be planned separately. For SAP S/4HANA, SAP recommends usage of MRP area with MRP type for
scenarios at storage location level. In addition, MRP with subcontracting has been simplified in SAP S/4HANA.

Global Trade Services for Foreign Trade

GTS (Global trade services) in SAP S/4HANA replaces the foreign trade functionality in SAP ECC. A few of the features in GTS
w.r.t foreign trade are

• SPL (Sanctioned party list) screening.

• Automated embargo check. A process which requires manual effort in SAP ECC.

• Automatic & Simplified license checks in SAP S/4HANA. License checks in SAP ECC were complex and required a lot of
manual effort.

• Automatic import/export declaration

Material Ledger Mandate

In SAP S/4HANA, activation of the material ledger (ML) is mandatory. ML valuates inventory in multiple currencies.
Traditionally, in SAP ERP, a single currency valuates the inventory. In SAP S/4HANA, ML allows valuation in two additional
currencies. This is essentially helpful for global organizations operating in different countries. They tend to valuate their
inventories in multiple currencies.

Revenue Accounting and Reporting

SAP S/4HANA’s Revenue Accounting and Reporting (RAR) replaces SAP ECC SD Revenue Recognition. This is due to new
accounting standards released jointly by the Financial Accounting Standards Board (FASB) and the International Accounting
Standards Board (IASB). The new guideline is also in IFRS 15.

SAP ECC’s SD Revenue Recognition is based on Generally Accepted Accounting Principles (US-GAAP), International
Accounting Standards (IAS)/Financial Reporting Standards (FRS). Therefore, it provides the option of recognizing revenue based
 on an event (like Goods issue, proof of delivery ) or over a period of time (based on specific set of dates) apart from the standard
way of realizing revenue on billing.

The new standard introduces a 5 step model.

• Identify the contract

• Separate performance obligations

• Determine transaction price

• Allocate transaction price

• Recognize revenue

Revenue Accounting and Reporting (RAR) in SAP S/4HANA accounts for fundamental changes with IFRS 15. Moreover, it also
meets the requirements of parallel accounting and cost recognition.

Customer Rebates
Settlement management through Condition Contracts in SAP S/4HANA replaces customer rebates through existing SD rebate
processing in SAP ECC.

Output Management
SAP S/4HANA’s Business rule framework plus (BRF +) replaces SAP ECC’s message determination with the NAST table. In
addition, the target architecture is based on Adobe Document Server and Adobe forms only. Please use OSS note 2228611 for
more details.

Extended Warehouse management

SAP’s new application for warehouse management, EWM replaces the existing WM module. There will be 2 options

• Native integration i.e inbuilt in SAP S/4HANA

• Side car approach for decentralized deployment

Some Advantages of EWM over WM

• Complex warehouse processing through Process oriented storage control (POSC)

• Improved (easily customisable) RF functionality

• Value added service like kitting

• Enhanced wave & replenishment processes

• Labour management

User interface
A key difference between S4H and ECC is that SAP Fiori is the new user interface in S4H to offer a rich and intuitive user
experience.

You can now understand that there are some significant changes in SAP S/4HANA. Therefore, IT leaders should understand the
functional and technical differences and build their best business use case on why their firm should move to S/4HANA.

Having completed a variety of SAP and SAP S/4HANA projects across multiple industry verticals, Kaar Technologies can help
you with this process. With KTern – our all-in-one product to automate and manage ECC to S/4HANA System Conversions, we
can ensure that you complete the transition with the right effort, timeline, and total cost of conversion.

https://blogs.sap.com/2018/10/27/sap-s4hana-vs-ecc-mrp-essential-changes/

SAP ECC SAP S4 HANA

1 In SAP ECC, MRP runs occur through batch jobs In S4 Hana no need of batch jobs in SAP S/4HANA. In
during off peak hours. SAP S/4HANA, MRP runs can occur in real time by
leveraging the power of SAP HANA.
2 MRP Area:-You have to activate the MRP activate MRP Area:-MRP area is active by default cannot be
MRP area in customizing for MRP(OM01) deactivate.
3 In SAP ERP, the sourcing logic is defined at The SAP S/4HANA system calculates material
different places with an asymmetrical shortages, then the lot size, and then it determines
definition for purchasing and manufacturing. the sourcing of supply. The sourcing determines
whether the required

4 If Sourcing determines several valid source of The Basic Idea Of this simplification is reduced a set of
supply it will prefer. possible source of supply Following types source of
supply
1.Production Version Over delivery schedule. 1.Sourcing For Purchasing
2.Delivery schedule over purchasing contract. 2.Sourcing For Manufacturing
3.Purchasing contract over purchasing info
records.
5 T-codes:-MD01/MD02/MD03 T-codes:-MD01N

Operations and Phases

Master recipes use a phase, which works in the same manner as operations do in routing for discrete manufacturing.
It’s easier to maintain detailed levels working at the phase level in the master recipe because you can manage and
incorporate more production details, including process management.

In the master recipe, you assign activities such as production duration or labor hours at the phase level and not at
the operation level. Hence, the confirmation of a process order is recorded for a phase and not an operation. You
also assign a resource (work center) at the operation level. The phases below the operation then adopt the resource
that you assigned at the operation level. The system assigns the standard values and activities (controlled by a
control key in the resource) as active at the phase level and not at the operation level. The sum total of standard
values at a phase is in fact the total time required to process the operation. The system assigns the components of
the BOM (materials list) to phases and not to operations. You can, however, integrate in-process quality inspections
of QM either at the operation level or phase level.

To create a phase below an operation, you need to select the Phase checkbox in the Operations tab, which then
automatically copies the resource from the operation. At the same time, when defining a phase, you also have to
assign the superior operation so that the system knows which specific phase relates to which operation.

You can maintain the relationships among various phases as start-finish, finishstart, finishfinish, or start-start. The
phases can work either in parallel or in overlapping sequences. In the Operations tab of the master recipe, you can
access the phase relationship screen for phases by selecting the phases and choosing GotoRelationships.

You assign individual control recipe destinations at the phase level and assign the process instructions in the
respective phases of the master recipe. If you’ve defined the scope of generation in the configuration of the process
instructions, it reduces the data maintenance efforts at the master recipe level. Alternatively, you can maintain the
desired process instruction details either in the master recipe or in the process order. For process instructions that
have characteristic values based on a material, you need to assign them at the master recipe level. To assign process
instructions to the phases in the Operations tab of the master recipe, use the menu path, GotoProcess
ManagementProcess Instructions.

Figure 7.5 shows the Operations tab of the master recipe, in which the Operation is 0010. Enter the Resource “ZSFG”
at the operation level, and the system automatically copies it in all of the phase below it. The phase is 0020 and is
denoted by the Phase Indicator checkbox. When you define an operation as a phase, you also have to define the
Sup. Operation, which, for this example, is 0010 (the operation).