Discrete vs Repetitive vs Process Manufacturing in the Food industry 07.02.

2014
1. Business situation As a new (or existing) SAP customer, it is not easy to know all the details of the different manufacturing flows of SAP. Regarding your history or the knowledge of your integrator, you are usually focused on one flow without being sure its optimal for your company. We will try in this article to help you making the right choice but also understanding the impact of this choice on other departments (replenishment, finance, controlling, quality, etc.). SAP has foreseen three Manufacturing flows: Repetitive Manufacturing, Discrete Manufacturing and Process Manufacturing. You can use all of them in the Food industry, individually or combining them on different work centers. Repetitive Manufacturing is a time based flow and Discrete and Process are orders-based flow. Important remark: the choice of one Manufacturing flow has only influence on the Shop Floor department, less on Production Planning. It means you can use all SAP Planning Tools (like Demand Management, Long Term Planning, SCM-APO with Demand Planning and Supply Network Planning) for each manufacturing flow.

2 Best Practice in the Food Industry 2.1 Repetitive Manufacturing (REM) REM is usually known as the easiest flow for producing in SAP. Production Planning creates planned orders and they are never converted into Production orders. There is thus no release of production orders, nor reservation for raw material, nor costing by orders. There is also no finite scheduling of the orders. Typically, packaging production lines are using REM when bulk product is available, usually in silos (sugar industry for example). The same finished product remains unchanged on the line over a long period. Products are not manufactured in individually lots (lot is typically one shift). Routings tend to be very simple (one operation or at least, one work center), idem for the Bill-Of-Material (one or two levels maximum). The semi-finished products are processed immediately, without being put into an interim storage location. Raw materials are usually put in a staging storage location and are backflushed at the goods receipt of the finished product. As there is no reservation for raw material, the Shop Floor must know what to put on the production line. There is no confirmation, or if needed, they are less detailed, and the recording of actual data is very simplified. As there are no production orders, costing is done on cost collector level. A cost collector can be seen as an open order for a specific combination of finished product/product version which collects all costs and revenues for a long period of time (or indefinitely). Each time we produce the finished product/product version, revenues and costs (via backflush and confirmation) are posted on this CO-objects. Cost follow up is really simple in REM, usually too simple for complex production. As components are consumed anonymously from the staging storage location during the backflush, traceability reporting is possible, but only through the batch number of the finished product. It means if you produce during one shift the same finished product with the same batch ID, you will be able to find back all components consumed during the shift (no more detail). The Batch Management cockpit and traceability reports can be used, not based on the production order, but on the batch ID of the finished product. In a REM flow, it is also possible to produce without any planned order. It can be a flexible advantage for

companies working in 3 shifts but where planning administration is not available during the night for example. But it means also that the shop floor can produce what it wants, without following the planning. Usually, there is no Quality Control in SAP in a REM process. REM can be used for make-to-stock or make-to-order even we see it usually in MTS business. In summary, Shop Floor execution is done without Production orders in REM. It is very useful for small packaging production units where a simple and easy tool is needed for end-users (Shop Floor and Planning), where bulk product is available and where cost follow up and quality control are not required. 2.2 Order Based Manufacturing 2.2.1 Discrete Manufacturing Discrete Manufacturing is an order-based production for product lines where there is frequent switching from one product to another. Finished products are typically manufactured in individual lots and the sequence on the work centers can vary between different finished products. Bills of material and routings are more complex. Semi-finished products are usually put into an interim storage location prior to further processing. In this flow, planned orders are transformed by the Planning into Production Orders. These orders are scheduled on the production line and released to make the reservations of the components. Production lines are thus replenished via the Production Orders. Backflush is possible in discrete manufacturing but often the actual quantities of components are issued by production order. Confirmations are usually based on actual quantities (labor, machine, energy, etc.). As routings are more complex, confirmation can be done at operation level and entered in the system by the different Shop Floor teams. Costing is done by Production Orders. It is possible to have a detailed controlling for each order by comparing plan and actual figures. Quality Management can be involved in the Shop Floor process via the Production Orders. Usually Discrete Manufacturing is not used in the Food Industry even some exceptions exist. 2.2.2 Process Manufacturing Process Manufacturing (or PP-PI) was designed by SAP for batch-oriented industries like chemical, pharmaceutical, food and beverage. The same functionalities are available as for Discrete Manufacturing but, in PP-PI, once the output is produced, it cannot be distilled back to its basic components (typical for the food industry). We talk about recipe (not routing) and resource instead of workcenter. Recipes have phases instead of operations, which hold the work centers in a sequence of production. All the scheduling happens at the phase level. Furthermore recipes contain the formula (BOM) in them through the use of production versions. The recipe gives thus immediately the ingredients. Quality Management is also directly linked to the recipe and QM information can be given to the Shop Floor operators when executing the operation.

2.2.3 How to choose between Discrete Manufacturing and Process Manufacturing.

http://www.delawareconsulting.com/FAST-Food/production_detail.aspx?Title=Manufacturing_in_the_Food_industry MAKE-TO-STOCK Production - Discrete Manufacturing (MTS) https://help.sap.com/bp_bl604/BBLibrary/HTML/145_EN_US.htm Example: