Manufacturing companies create finished products from various materials, modules and supplied components. This is why production planning and control(PPC) is the central pillar of every industrial company.
We distinguish between two different components: Production planning deals (as the name suggests) with the short or medium-term planning of production processes. Production control, on the other hand, deals with the control and release of orders on the basis of this planning.
With the help of the PPS module in the Enterprise Resource Planning (ERP) system, we want to achieve the following goals in particular:
- Higher product quality
- More information transparency
- Reduced throughput time
- Greater adherence to deadlines
- More flexibility in production
- Lower stock levels
- Higher and uniform capacity utilization
1. discrete versus process-oriented production
In production, we distinguish between discrete and process manufacturing. The fundamental differences relate to the production level. Administrative tasks (financial accounting, controlling, etc.) are very similar in discrete and process-oriented production.
Discrete manufacturing
If we manufacture products that can be defined and counted, such as pencils, wrenches, electric razors or combine harvesters, then we speak of discrete manufacturing. The relationships between the parts and preliminary products used and the end product are precisely defined. This makes production planning very clear in this case. We can precisely specify the quantity and quality of raw materials and parts required to manufacture a certain number of products. Production times and production processes have also already been determined – provided, of course, that the processes run smoothly.
Process-oriented manufacturing:
If we manufacture a product as part of a continuous process (e.g. through fermentation or fermentation), then we speak of process-oriented manufacturing. This is often the case in the food industry. This type of production is primarily concerned with procedural processes and chemical reactions such as heating, mixing, separating and synthesizing. In process manufacturing, neither the quantity of input materials nor the quantity of end products can be precisely predicted.
Co-products are also frequently generated. This means that in addition to the manufactured end product, materials are produced that have a certain value and should therefore not be considered waste (e.g. firewood in furniture production). We have to plan for the creation and utilization of these additional products. This further increases the complexity of the product planning process.
Instead of parts lists and work plans, we use manufacturer specifications, process descriptions and recipes for process production.
The focus of this production-related ERP reader is on discrete manufacturing, which can be divided into series and make-to-order production.
2. production planning and control
Am Anfang der Produktion stehen Produktionsplanung und -steuerung. Beginnen wir zunächst mit der Produktionsplanung. Sie umfasst folgende Bereiche:
- Production program planning
- Material requirements planning (quantity planning)
- Capacity requirements planning
The production program determines which products are manufactured and in what quantities. The scheduling of production processes also falls under this area.
Material requirements planning, also known as quantity planning, is in turn based on the production program. It develops the planning further and derives the primary requirements (end products) and the additional requirements (e.g. spare parts). As part of the material requirements plan, we then determine the quantity of raw materials, components and assemblies that we need to realize the production plan. We also refer to this as BOM explosion.
Capacity requirements planning ensures that the production orders defined in the material requirements plan can also be implemented. This is where we ensure that sufficient capacities (machines and employees) are available in the relevant time periods.
In the production control phase, we then implement the production planning specifications. In doing so, we have to take into account any disruptive events by adapting production planning to changing situations. Production control is often regarded as the actual core of production management. We can also break this phase down further. It includes:
- Order initiation
- Order monitoring
The order initiation includes:
- Workshop order release after availability check
- Work document creation
- Distribution of work
We understand order monitoring to mean
- Production data acquisition, order progress recording
- Deadline, quantity and quality monitoring
- Capacity monitoring
3. master data in production
Produktions-Stammdaten sind wichtige Grunddaten in der betrieblichen Datenerfassung. Sie bilden die Grundstruktur für die Prozesse der Produktionsplanung und -steuerung. Bei Stammdaten unterscheiden wir drei verschiedene Ausprägungen:
- Parts lists
- Work plans
- Workplaces (capacities)
3.1 Parts lists:
Parts lists describe the individual components of a product. They provide information on which and how many components are required to manufacture the product.
Typical elements of a bill of materials are, for example:
- General information (e.g. material or administrative data)
- Part number
- Required number
- Structural design
In addition to the simple parts list, we can also create more complex forms. We usually differentiate between:
- Bill of material
- Variant parts list
- Multiple parts list
Bill of material:
A material BOM consists of a BOM header and individual items. The header contains data relating to the entire material BOM, e.g. administrative data. The BOM items – there can be any number of them – provide information relating to the parts or assemblies of a product.
Variant parts list:
We use a variant BOM when we want to combine several different products that have a high proportion of common components. In this case, we can create a single bill of materials for several product variants. This reduces the complexity of our planning. Variant manufacturers in particular work with such parts lists.
Multiple parts list:
Multiple BOMs are used when we can manufacture a product from different combinations of components. In this case, we summarize the BOMs of all production variants in one document. We therefore have several BOMs for one product (in contrast to the variant BOM).
Special case order BOM
In order-related production (e.g. in special machine construction), we cannot anticipate all possible BOM items. In this case, we therefore do not create a maximum BOM, but an order BOM. This allows us to make customer-specific adjustments, i.e. deleting or adding items is no problem.
Material parts lists in detail
Material BOMs can be structured in different ways. We distinguish between three basic types:
- Quantity overview bill of materials (also: quantity bill of materials)
- Structure parts list
- Modular parts list
In ERP systems, this distinction usually refers to the display on the screen or the printed version. ERP software usually only saves BOM information in a single form – the modular BOM.
Quantity overview parts list:
A quantity overview BOM is the simplest form of BOM. Its advantage is its high level of clarity: it lists all the required components of a product, including quantities, one below the other.
The disadvantage of this type of BOM is that the structure of the product is not recognizable. It is therefore not possible to tell from the BOM how the parts of the product are connected. We only know what parts are installed and how many of them there are.
An example of a quantity bill of materials:
Structure parts list:
A structured BOM (in contrast to a quantity BOM) shows the entire manufacturing structure of a product in consecutive order. This is done via a level or stage structure. If we extend a quantity BOM with additional columns for each level of the production process, we obtain a structured BOM.
An example of a structured parts list:
Modular parts list:
An assembly BOM represents each assembly in the form of another BOM. We are therefore dealing with a hierarchical group of individual parts lists. The top BOM names all parts and assemblies, the subordinate BOMs describe the components of the assemblies.
The advantage of this form is its clarity. This advantage is particularly important for complex products.
An example of a modular parts list:
Which departments need parts lists and why?
Normally, it is the task of the design department to generate parts lists and make them available to the rest of the company. The areas and departments that work with parts lists include, for example:
- Construction
- Work preparation
- Quality assurance
- Purchasing
- Calculation
- Material disposition
- Warehouse
Work preparation requires parts lists to create work plans. Most other departments tend to use them for orders or cost calculations.
3.2 Work plans:
Work plans (also known as production plans ) play a major role in the manufacturing industry. They are often created in work preparation and, unlike production plans, refer to workstations.
A work plan is used to describe production processes. It consists of a header and a list of work processes. The header – the title of the plan, so to speak – contains the data relating to the work plan as a whole. It is written there:
- what is to be manufactured
- what it consists of
- what dimensions it has
The individual work processes are listed below – arranged according to production steps.
You can find out more:
- how to produce what is in the head (e.g. milling, turning)
- at which workplaces this should take place
- which tools and how much time are required
The routing can also contain further information, e.g. the weight of the product or the wage group. Used as a template for the make-to-order or series production order.
Example of a routing: 
A routing therefore not only defines the operations for manufacturing a product or component – it also describes their sequence. We can assign the required resources (e.g. materials or drawings) to each operation. The defined processes usually run one after the other. However, a parallel process is also possible. The level of detail in the routing depends on the type of production. For example, series production requires a higher level of detail than a make-to-order production order
3.3 Workplaces:
In an ERP system, a work center, also known as capacity, refers to the place where work is carried out. Each work center is assigned to a cost center and thus linked to cost accounting. We can link several individual work centers to form work center hierarchies.
We assign a capacity category (e.g. machine capacity or personnel capacity) to each work center. There can be several available capacities for each capacity category. We can calculate the standard available capacity as follows: On the basis of a shift program, we determine the shift duration in the first step. We subtract the break times from this. We can then assume this standard capacity for each working day.
Change management:
We can manage changes to master data in the change management of an ERP system. If we modify parts lists or work plans , for example, all changes are documented in full. The status before and after the change is saved in the ERP system.
4. detailed planning
Die Grobplanung berücksichtigt Parameter wie z. B. die Kapazität des Produktionssystems oder des Werkes. Aus dieser übergeordneten Vorgabe erstellen wir im nächsten Schritt, der Feinplanung, produzierbare Auftragsreihenfolgen. Feinplanungs-Module moderner ERP-Systemen erlauben dabei ein rasches Umplanen, sollten sich die Nachfragesituation oder die Kapazitäten ändern. Bei der genauen Festlegung der Fertigungsfolgen müssen wir einige Regeln festlegen (vgl. Gronau, a.a.O., S. 231):
- Assignment based on the plant master data (Which product can we manufacture on which resource, in which time and at what cost?)
- Transitions between batches (e.g. light to dark based on individual production characteristics)
- Set-up costs for the individual systems
5. planning and control in series production
Unter Serienfertigung verstehen wir die anonyme Massenproduktion gegen ein Lager. Das heißt, die Kunden sind uns weitgehend unbekannt. Jede produzierte Einheit kommt anschließend in ein Lager, bis sie abgerufen wird. Beispiele für Serienfertigung sind die Automobil- und die Elektronikbranche. Die Planung und Steuerung der Serienfertigung können wir im Wesentlichen in folgende Punkte zergliedern:
- Production program planning
- Material requirements planning
- Scheduling and capacity planning
- Production control
Production program planning is primarily concerned with deriving a medium planning horizon and supplementing forecast data. To do this, we compile the existing customer orders into a rough production plan.
In material requirements planning, which is based on production program planning, we determine which materials must be available on which date and in which quantity. We then generate order proposals and provide them with a start and end date(scheduling). Capacity planning provides the planner with an overview of capacity utilization – from rough to detailed planning. We can also carry out a capacity comparison in the ERP system. Finally, the task of production control is to convert the planning specifications from material requirements planning into concrete production plans.
We can also mention product cost accounting and production controlling here. Product cost accounting primarily includes costing with and without quantity structure, sample and simulation costing and price updating. The task of production controlling is to monitor the profitability of the capital tied up in production.
6. planning and control in make-to-order production
Kundenindividuelle Auftragsformen (also Einzelfertigung) gewinnen zunehmend an Bedeutung. Einer der Gründe: die Nachfrage nach komplexen Investitionsgütern steigt. Typische Beispiele für Einzelfertigung sind Anlagen-, Schiffs- und Flugzeugbau.
In contrast to series production, the technical documents (drawings, parts lists, work plans) for individual production are not yet available or only incompletely available when the order is placed. They are only created after consultation with the customer. Design during production means that the overall structure of the order is only fully known at the end of the project. We therefore cannot simply transfer the scheduling and capacity planning of series production, which takes place at BOM and routing level.
Instead, we create a work breakdown structure (WBS) as early as possible for individual production orders. A WBS breaks down the project object – i.e. the order – into phases, phase steps and activities. Such a project typically has long lead times, a strict schedule and a large number of technologically interdependent activities. The project tasks include all planning and implementation activities required to realize the work breakdown structure.
The WBS is the central tool for planning and tracking a make-to-order production order. All specific project tasks or subtasks form individual WBS elements. We refer to elements at the lowest level as work packages or activities – they cannot be broken down into further subtasks. With a network, however, we can display WBS elements over time.
We also have to prepare material requirements planning on a project-related basis and, for example, initiate the ordering of materials with long delivery times in good time. The same applies to project planning in the narrower sense (which ends with budget planning) and to project management. We must not view the costs, resources and deadlines of a make-to-order project in isolation.
7. quality management in production
The term quality management (QM) covers all organizational measures that serve to ensure and improve product and process quality. This essentially includes
- Quality planning tasks
- Quality inspection tasks
- Problem management
- Preparation of quality certificates
- Quality improvement tasks
In production, it is becoming increasingly common for one person to perform both production and testing tasks. We must therefore include testing and other quality assurance measures in the production control work plans and also regard them as production tasks. Quality management in production includes
- Quality and inspection planning
- Test processing
- Quality control
Quality and inspection planning
Inspection planning takes place in the production planning phase. It is essentially derived from the customer orders. Analogous to the work plan, we create an inspection plan and assign it to the material to be inspected. The material is in turn named in the inspection plan header. The main categories of the inspection plan are
- Test plan header
- Test procedure (1, 2, etc.)
- Test equipment
- Test characteristic
Exemplary structure of a test plan:
In addition, we have to define a test method and create so-called catalogs. These catalogs are intended to ensure that similar test results and defects are always described in the same way.
Test processing
We can break down the test procedure into the following parts:
- Test impulse
- Testing (batch or continuous)
- Quality evaluation (graphically supported)
An ERP system evaluates all the results of the individual inspection characteristics and uses them to determine quality indicators. The result of the inspection is a usage decision, e.g. the release or blocking of a lot.
Problem management
Quality notifications allow us to use the ERP system as a tool for problem management and quality control. If a quality-relevant event is reported, the system can carry out an error analysis, calculate the costs caused by the error and suggest suitable remedial measures.
8. maintenance
Manufacturing companies are using increasingly complex and diverse production systems. In particular, the degree of automation and interlinking of systems has risen sharply over the last 20 years. Malfunctions today therefore have far-reaching and costly consequences. The demands on maintenance are growing accordingly.
Maintenance is therefore not only a relevant competitive factor, but also a comprehensive management task. Those responsible must increase the availability of production facilities by reducing downtimes and outages.
The main tasks of maintenance are the inspection, servicing and repair of operating equipment. Other tasks include analyzing weak points and improving the functionality of equipment.
Central maintenance measures:
Examples of inspection:
- Check
- Fairs
- Assess
Examples of maintenance:
- Lubricate
- Cleaning
- Adjust
Example of repair:
- Replace
- Touch up
If maintenance is carried out via an ERP system, we must first record and organize all technical equipment. We also need to collect data on the service life of the recorded assets. There are various structuring options for this in the ERP system. Asset management can be carried out according to functional or location-related aspects, for example. Planning, execution and subsequent evaluation of the maintenance processes are possible for each inventoried object, but also for functional units that consist of several objects.
Important goals that we should achieve through the use of maintenance software are:
- Rapid retrieval of all relevant information
- Ensuring system availability and cost-effectiveness
- Reduction of downtimes and idle times
- Continuous planning, control and analysis
- Recording of all repairs and faults
- Change logs (history)
- Key figures and visualizations
9. cooperation between development and production
Manufacturing companies produce and market products. The prerequisite for this is the development of these products. The development area (R&D) is therefore also an important pillar of the company. It is upstream of production, but of course has a close relationship with it. Cooperation between product development and production planning is often very demanding – both in organizational and technical terms.
Parts lists, work plans and order information are stored in the ERP system database, but they are not created there. For the most part, this happens in the departments that belong to the Development department.
Their systems must therefore be integrated so that the collaboration between Development and Production runs smoothly:
- CAD (computer-aided design system)
- PDM (product management system) and
- ERP system
A classic scenario (now threatened with extinction) looks like this:
- The design department creates parts lists in Excel.
- An employee in the work preparation department then enters this parts list data manually into the ERP system.
This is no longer up to date. Manual data transfer is too time-consuming and error-prone. By linking CAD, PDM and ERP, we can automatically transfer data from an IT system. Drawings from the CAD system that are created in the design department are thus also available at the production site, for example, or can be viewed by the service field service. The development department also benefits: For example, if developers want to access purchased parts data on the CAD system, they can simply use the ERP system. This avoids redundancies in parts data (duplicates) and makes processes faster and more reliable.
10 ERP and Industry 4.0
The term Industry 4.0 stands for the fourth industrial revolution, which is based on the digitalization of the economy and society.
Brief historical review
The three previous industrial revolutions always brought huge advances in productivity. The same is hoped for from Industry 4.0 , which has already begun.
- Industrial revolution: mechanization of production processes through the use of steam and water power (18th century)
- Industrial revolution: use of electricity to automate production processes (assembly line work); emergence of mass production (19th century)
- Industrial revolution: electronics and computerization (20th century)
Industry 4.0 refers to industrial production processes in which state-of-the-art digital information and communication technologies are integral components. The vision is of largely self-organized production in which people, machines, products and logistics interact automatically with each other. As a result, production tailored precisely to individual customer requirements will become the new manufacturing standard. In this context, we often speak of smart production or the “smart factory“ or smart production or the “smart factory”.
Modern ERP systems will play a key role in the Industry 4.0 revolution. They will be responsible for monitoring all commercial and technical data relating to smart production. Internal and external data sources as well as data volumes will increase dramatically. A key challenge is therefore to prepare the data in the ERP system in such a way that it is manageable for the user.
Seamless integration of a wide variety of machines with the ERP system used will also be required. ERP systems of the Industry 4.0 era must therefore be based on a flexible software architecture that works easily with other IT systems.
ERP solutions are becoming the central control center through which the networked information flows of the entire company are controlled. Access via mobile devices is increasing rapidly. As a result of this trend, future-proof ERP systems must naturally display information in a user-friendly way on notebooks, tablets and smartphones.
However, Industry 4.0 is not just a technical challenge. Smart production will only succeed if industrial companies also properly adapt their organizational structures and corporate cultures to the new technological possibilities.
