EXERCISE 10

Make-To-Order Production of a Configurable Packaging MachinePurpose The IDES Engineering Corporation (IEC) is a design office that makes and sells packaging machines. The requirements for the machines are specified by the customer. The manufacture of the assemblies is then subcontracted to an external supplier. IEC carries out the order processing, assembly, and delivery of the packaging machine.

Process Flow 1. You create a sales order for the packaging machine ordered by the customer.

Creating the Sales Order

2. The material component requirements are determined through MRP, which generates the necessary purchase requisitions.

Executing Sales Order Planning

3. The master data of the purchase requisitions are used to automatically generate a purchase order.

Generating the Purchase Order Automatically

4. You enter the goods received from the vendor in the goods receipt.

Entering the Goods Receipt

5. You check the results of the configuration before releasing the production order.

Releasing the Production Order

6. You confirm the time worked on the order and the quantities required.

Confirming the Production Order

7. The shipping activities begin when you create the outbound delivery and post the goods issue.

Creating the Outbound Delivery

8. You can now invoice the customer for the delivered machine.

Creating the Invoice

9. You enter the incoming payment, when the customer has paid the invoice.

Entering the Incoming Payment

10. You determine any plan/actual variances that may have occurred and analyze the causes.

Calculating Variances

11. You now settle the variances on your production order to Profitability Analysis and to the material.

Executing Settlement

12. You analyze the data using various criteria.

Analyzing the Contribution Margin

13. As you have already agreed the conditions with the vendor, the incoming invoice is automatically generated by the system.

Automatically Generating the Invoice Receipt

14. You can now enter the outgoing payment.

Entering the Outgoing Payment

Creating a Sales Order Usage The customer, Candid Corporation, orders a packaging machine. On the basis of this purchase order, you create a sales order. You enter the customer's specifications for the machine.

Procedure 1. Choose Processes Sales Order Create.

2. Enter the following data:

Field Data

Sold-to party CANDID

Service / Material PM-1000

Order quantity 1

3. Choose .

The Characteristic Value Assignment screen appears.

4. Enter the following data:

Field Data

Diameter 8

Length 80

Seal Stamp Machine 1

Machine color 02

Machine power 500

5. Choose .

You now need to specify the requirements of the seal stamp machine.

6. Enter the following data:

Field Data

-> Sealing length 45

-> Sealing width 24

7. Choose .

8. On the Create Standard Order: Overview screen, choose . (***PRINT THIS PAGE AND TURN IN***)

The system generates a sales order and issues an order number.

9. Make a note of the order number displayed in the status line.

Result When you create the sales order, the system automatically generates a production order for the assembly of the machine.

Executing Sales Order Planning Usage You use material requirements planning (MRP) to determine the material components you need and to create the purchase requisitions for procurement. In practice, you would generally do this in a background job after regular working hours. In this process, however, you plan online to ensure that you can display the results immediately.

Prerequisites You have created the sales order.

Procedure 1. Choose Sales Order Planning Execute.

2. Enter the following data:

Field Data

Sales order Your sales order number

Sales ord. item 10

3. Choose twice.

4. Choose Materials.

The Planning Result: Overview screen appears.

5. Select material PM-1310, then choose Selected results.

On the Planning Result: Individual Lines screen, you can see that a purchase requisition (PurRqs) has been generated for this material component.

Generating the Purchase Order Automatically Usage As the purchasing clerk for IEC, you now order the required components. These components are to be procured from Grablin International Corp., based on the entries in the source list.

Prerequisites You have executed sales order planning.

Procedure 1. Choose Purchase Order Generate Automatically.

2. Enter the following data:

Field Data

Sales order Your sales order number

Sales order item 10

3. Choose .

You now see the purchase order number for the components of your sales order.

4. Note this purchase order number. (***PRINT THIS PAGE AND TURN IN***)

Entering the Goods Receipt Usage Grablin International Corp. has delivered the goods specified in the purchase order. You now enter the goods receipt for the delivery.

Prerequisites You have created a purchase order.

Procedure 1. Choose Goods Receipt Enter.

2. Enter the following data:

Field Data

Input field to the right of Purchase order Your purchase order number

3. Choose .

The system copies the purchase order data into the goods receipt document.

4. Select OK for all of your items. ***NOTE: You must scroll down to view all items. Only 2 items will appear on the screen. To scroll down, you can click on the upside-down triangle to move one at a time, the upside-down traingle with a line will page-down, and the upside-down triangle with two bars will go to the last entry. If you do not select all items, you will not calculate the proper amount.

5. Choose Post. (***PRINT THIS PAGE AND TURN IN***)

Releasing the Production Order Usage Once you have checked the configuration, you can release the production order.

Prerequisites You have created the sales order, which automatically triggered the creation of the production order.

Procedure 1. Choose Production Order Release.

2. Enter the following data:

Field Data

Sales order Your sales order number

3. Choose .

You now see an overview of the production order, including all of its operations and material components.

The configuration selected the following components:

Component Material short text

PM-1101 Paper machine (green)

PM-1200 Seal Stamp Machine

PM-1303 Drive_500

PM-1310 Gears

4. Select the Order field of your production order, then choose Order.

5. Make a note of the production order number.

6. Choose .

The system has now released the production order.

7. Choose . (***PRINT THIS PAGE AND TURN IN***)

Confirming the Production Order Usage You can now confirm the production order. To make this easier, we have assigned a milestone to the final operation. This ensures that the system automatically confirms all of the preceding operations.

Prerequisites You have already released the production order.

Procedure 1. Choose Production Order Confirm.

2. Enter the following data:

Field Data

Order Number of the generated production order

Oper./act. 50

Setup 2.5

Labor 3.5

*NOTE: This function is a little tricky. I have found that entering the setup and labor

hours at this point would allow you to post the hours properly. On the original worksheet, posting the hours occur later.

3. Choose .

The system transfers the yield to be confirmed and defaults the planned activity (the planned hours worked on the order) as actual activity (the actual hours worked on the order) in the Confirmation column.

4. Choose .

Result You have now backflushed the material components, confirmed all operations, and posted the goods receipt for the packaging machine into the sales order stock.

The packaging machine is now held in the warehouse, ready for shipment.

Creating the Outbound Delivery Usage Creating the outbound delivery marks the beginning of the shipping activities. To simplify matters, you post the goods issue as soon as you have created the outbound delivery. The sales order stock is reduced by the quantity delivered.

Prerequisites You have already confirmed the production order, thereby posting the completed machine into sales order stock.

Procedure 1. Choose Outbound Delivery Create.

2. Enter the following data:

Field Data

Order Your sales order number

3. Choose .

4. Choose Post goods issue. (***PRINT PAGE AND TURN IN***)

The system creates an outbound delivery.

5. Make a note of the outbound delivery number displayed in the status line.

Creating the Invoice Usage The customer is now invoiced for the packaging machine.

Prerequisites You have already posted the goods issue for the outbound delivery.

Procedure 1. Choose Invoice Create.

2. Enter the following data:

Field Data

Document Your outbound delivery number

3. Choose .

The Create Invoice (F2): Overview of Billing Items screen appears. To calculate the gross amount for the incoming payment, add the net value to the tax amount. Make a note of the result.

4. Choose . (***PRINT PAGE AND TURN IN***)

Entering the Incoming Payment Usage The customer, Candid Corporation, pays for the packaging machine.

Prerequisites You have created the invoice.

Procedure 1. Choose Incoming Payment Enter.

If you are calling up this transaction for the first time during this session, the Incoming Payments Fast Entry: Header Data appears. Enter today's date as the posting date and the document date, then choose Enter payments.

2. Enter the following data:

Field Data

Customer CANDID

Amount The gross amount (129320)

3. Choose Process open items.

4. Position your cursor on the gross amount of the item to be cleared, then choose Items.

The amount of the activated item is assigned to the paid amount. (***PRINT PAGE AND TURN IN***)

5. Choose .

The system confirms the posting.

Calculating Variances Usage Variance calculation determines the difference between the planned and actual costs. When you billed the sales order, only the planned values of the production order could be transferred to Profitability Analysis as actual values. Variance calculation enables you to transfer the true actual values.

Prerequisites You have created a production order.

Procedure 1. Choose Controlling Calculate Variances.

2. Enter the following data:

Field Data

Order Number of your production order

Period Current period (for example, 01 for January)

All target cost vsns Select

Test run Deselect

3. Choose .

You see the results of the variance calculation.

Executing Settlement Usage When you bill the sales order, the system automatically transfers the planned costs of the production order to Profitability Analysis and Financial Accounting. The actual costs are calculated using variance calculation. You can then analyze the true profitability of the production order in Profitability Analysis and valuate the material with actual costs in Financial Accounting.

Prerequisites You have executed variance calculation.

Procedure 1. Choose Controlling Execute Settlement.

2. Enter the following data:

Field Data

Order Number of your production order

Settlement period Current period (for example, 01 for January)

Test run Deselect

3. Choose .

You see the basic data of the settlement.

4. To display the detail list, choose . (***PRINT PAGE AND TURN IN***)

The settlement receivers are the profitability segment and the material.

Analyzing the Contribution Margin Usage You can now determine the profitability of the sales order and analyze the variances on the production order.

Prerequisites You have posted the billing documents and settled the variances on the production order to Profitability Analysis.

Procedure 1. Choose Controlling Analyze Contribution Margin.

2. Enter the following data:

Field Data

Fiscal year Current year

From period Current period

To period Current period

3. Choose .

You now see multi-level contribution margin accounting for your sales order. The revenues, costs of goods manufactured (COGM), and sales and administration costs were transferred to Profitability Analysis from the billing document. The production variances were transferred when you settled the production order.

Automatically Generating the Incoming Invoice Usage We have defined fixed conditions with Grablin International Corp., so the vendor does not need to send its own invoice. The debits to the vendor are determined automatically from the prices in the purchase order and the quantity delivered. The system generates an accounting document.

Prerequisites You have entered the goods receipt for the purchase order.

Procedure 1. Choose Invoice Receipt Generate Automatically.

2. Enter the following data:

Field Data

Purchasing document Your purchase order number

3. Choose . (***PRINT PAGE AND TURN IN***)

You now see the log of the evaluated receipt settlement.

Entering the Outgoing Payment Usage You clear the payables arising from the automatically generated invoice receipt, and post the outgoing payment in accounts payable accounting.

Prerequisites The invoice receipt has been generated automatically.

Procedure 1. Choose Outgoing Payment Enter.

2. Enter the following data:

Field Date

Document date Today’s date

Posting date Today’s date

Bank data: Account 113100

Amount 57165

Open item selection: Account Grablin

3. Choose Process open items.

4. Double-click on the gross amount of the item to be cleared.

The amount of the activated item is assigned to the amount to be paid.

As defined in the payment conditions, the system automatically deducts a cash discount of 3% from the invoiced amount.

5. Choose . (***PRINT PAGE AND TURN IN***)