SAP Production orders

A production order defines a specific manufacturing job: the material and quantity to produce, the components to consume (from the BOM), and the operations to perform (from the routing). It is released to the shop floor, materials are issued to it, operations are confirmed, and the finished goods are received into stock.

• Create & release (often from a planned order via MRP).
• Goods issue of components to the order.
• Confirmation of operations (times, yields).
• Goods receipt of finished product into stock.
• Settlement of order costs.

One point about where orders come from, since it decides how many decisions a planner makes. Most production orders are converted from planned orders that MRP created, so the quantity and dates were calculated rather than chosen. Creating one directly is the exception, for a one-off or an urgent job, and it bypasses the netting that MRP did, which means it can double up on supply already planned.

An order carries a set of statuses, and reading them answers most questions about why something cannot be done.

CRTD, created. It exists and nothing can be posted against it. Components are planned rather than reserved.

REL, released. Now goods can be issued, operations confirmed and the finished item received. Releasing is the moment the order becomes executable, and "the order will not accept a goods issue" is nearly always an order that was never released.

PCNF and CNF, partially and fully confirmed. Set as operations are confirmed, and they drive what remains to be done.

DLV, delivered, once the finished quantity has been received into stock.

TECO, technically complete. Production is finished, no further confirmations are expected, and remaining reservations and capacity requirements are removed. It does not close the order financially.

CLSD, closed. Costs settled and nothing further can post. This is the financial end, and the gap between TECO and CLSD is where cost sits on orders nobody looks at.

Alongside these sit user statuses, which a business defines for its own workflow, and system statuses such as DLFL for deletion flag.

Half an hour, and it makes the lifecycle concrete rather than a list.

1. Convert a planned order into a production order with CO01, or create one directly. Read the status: CRTD.
2. Try to issue a component. Refused, because the order is not released.
3. Release it with CO02. Status becomes REL, and the component reservations become live.
4. Issue the components with MIGO, movement type 261. Cost begins accumulating on the order.
5. Confirm the operations with CO11N, entering the yield and the times. Status moves to PCNF then CNF.
6. Receive the finished goods, movement type 101 against the order. Status DLV, and stock of the finished material rises at its standard cost.
7. Technically complete the order, then settle it at period end. The difference between what it should have cost and what it did becomes a variance.

Step seven is where PP meets controlling, and an order that stops at step six is cost sitting in the wrong place. See MRP for what created the planned order.

Production orders integrate PP with MM (component issues, finished-goods receipt), CO (order costs and settlement, variance analysis), and QM (in-process inspection). They are where planning becomes physical production and where manufacturing cost is captured. Process industries use process orders analogously.

The order is also an account assignment object, which is what makes it a cost collector rather than only a work instruction. Component issues, activity confirmations and overhead all post to it, and settlement moves the result to stock and to variance accounts. That is why an unsettled order distorts both production reporting and the general ledger. See the production system for where this runs.

• Automatic or manual release. Automatic on creation is efficient and removes the checkpoint where somebody confirms the order is genuinely wanted.
• Backflushing components. Consuming components automatically on confirmation is far less work and hides errors until a stock count finds them.
• Milestone confirmation. Confirming one key operation and letting the earlier ones follow, which suits long routings and gives up detail.
• Who technically completes and settles. Production usually does the first and finance the second, and orders stall in between when neither owns it.

A production order is a cost object, and the difference between two numbers on it is what manufacturing accounting is about.

Planned cost is calculated when the order is created, from the bill of materials at component prices and the routing at activity rates. It is what the order should cost.

Actual cost accumulates as it runs: components issued at their valuation, activities confirmed at their rates, overhead applied by the costing sheet.

The credit comes when the finished goods are received into stock, valued at the material's standard price.

The order therefore ends holding a difference, and that is the variance. Settlement moves it off the order at period end, to profitability analysis or to finance.

Variances are categorised, which is what makes them useful. Quantity variance means more or fewer components were used than planned. Price variance means they cost differently. Resource usage means different activities were consumed. Scrap is its own category. Together they answer whether a product cost more because the process was inefficient or because inputs were expensive, and those are different conversations.

An order left unsettled holds all of this indefinitely, which is why the unsettled order list is the first report to run in any PP review.

A production order is one of several execution documents, and using the wrong one means fighting the system for the life of the implementation.

Production orders suit discrete manufacturing: distinct units assembled from components, each order a batch of a countable thing.

Process orders suit process manufacturing: chemicals, food, pharmaceuticals. They use master recipes rather than routings, carry process instructions for the shop floor, and integrate with batch management and quality as a matter of course rather than as an option.

Repetitive manufacturing uses run schedules rather than individual orders, for a line producing the same thing continuously. Confirmation is by backflush against a period rather than per order, which removes an enormous amount of transactional overhead.

Kanban replaces orders entirely for high-volume replenishment, signalling need by container rather than by document.

The choice follows the plant. A line making one product continuously does not want an order per batch; a job shop making bespoke items does. Implementing production orders where repetitive was right produces a plant drowning in documents, and that is a design error rather than a configuration one.

• Order not released, cannot execute.
• Missing component goods issue, wrong consumption/costs.
• Order not settled, costs stuck on the order.

• Orders technically complete and never settled. The most common finding in a PP review.
• Confirmations entered days later. Stock and cost are both wrong until they are.
• Deleting an order with postings against it. See the routing for what supplied its operations, and sales orders for make-to-order demand.

• Order type chosen by habit rather than by manufacturing mode. Production orders in a repetitive plant produce a document burden nobody needs.

Running an order through is straightforward, and configuring order types, confirmation and settlement so production cost lands correctly is the part you do in the course.

The report worth running on any PP system you inherit is orders technically complete and not settled. It takes a minute, it is nearly always non-empty, and it tells you how much production cost is sitting where finance cannot see it.