By looking at combined order and collective order terms, people may feel that both are similar together, but the truth is both are completely different from each other and having their own functionality and limitations.
Let me explain about the functionality and where use and why we use these two functionalities.
Combined order: This functionality mainly using in paper, steel, and text tile industries. If business still using ECC, they need to have add-on industry solution Discrete Industries & Mill Products (DIMP) which is shown below.
But now it is out of box functionality in S/4 HANA with certain limitations. Please refer below blog for limitations
Business may have same operations with similar components in their routing for different products so they combine the identical operations from different products and can execute the production in same time. This kind of business process can be mapped in SAP through combined order so that we can combine the individual production orders which are having identical operations into one production. By using this functionality, business can reduce their set up time.
In-spite of having several benefits, the standard functionality of the WIP batch is not supported when you are working with combined orders.
Collective order: It is also called as direct production. This functionality mainly using in discrete industry.
If the business consumes their lower-level manufactured product stock for their higher-level product manufacturing without posting to warehouse, we can use this functionality to map business process in SAP.
In this scenario, system automatically create the production order for below semi finished material while creating the production order for FG material so that you will link between Lower-level production orders with higher level production order. It is out of box functionality in ECC and S/4 HANA as well. We can release, schedule, costing simultaneously for higher-level and lower-level product.
Even though we have several benefits, collective order functionality having limitations that collective order cannot be created for components that have one of the following indicators set:
Alternative item with strategy 2
Alternative item with usage probability 0
Hope this blog gives you more clarity on features, where we use and why use these combined order and collective order. Detailed explanation of Master data set up, configuration set up, process execution will be posted soon for both functionalities.
Thank you. Always welcoming your feedback and suggestions.