Co-Production in SAP IBP

[ShindeSonal]

Co-Product and By-Product:

A Co-Product is a product that is produced in parallel with other products but have high value. The system creates a separate order item in the production order for each co-product. This means that it is possible to display actual costs at co-product level.

A By-Product is a product that is produced in parallel with other products. The system does not create a separate order item for each by-product. The material valuation of a by-product is always based on the price specified by price control in the material master.

SAP IBP solution does not distinguish between Co-Product and By-Products

How to Setup Co-Production in IBP?

SAP IBP Master Data Setup:

Production Source Header:

In the Production Source Header MDT update the Source Type as ‘C’ for Co-Product FG100-CO. C indicates Co-production.

One Source ID ‘1010_FG100_PV1’ is assigned to Finished Product FG100 and Co-Product FG100-CO

Production Source Item:

Below is the master data setup for the Production source item.

SG100 is the semifinished material with a source ID ‘1010_FG100_PV1’. RM100 and RM200 are the raw materials with a source ID ‘1010_SG100_PV1’

Resource Location:

Below are the resources available at location 1010 which is production plant. Capacity Supply can keep it blank since capacity supply time series indication is marked as "X"

Production Source Resource:

Below are the resources used by source ID

Capacity updated for each resource in IBP:

Supply Chain Network:

Network setup for Co-Product Scenario.

Input:

Independent Demand at Finished Good (FG100) and Co-Product (FG100-CO)

Finite Heuristic Output:

Net demand is calculated for finished product FG100 based on the independent demand at the same product.

However Net demand is not calculated for co-product FG100-CO. The heuristics that support co-production don't plan a production event just to satisfy net demand for a co-product. Demand for a co-product is satisfied only from stock. 

Optimizer Output:

The optimizer supports co-production and calculates a cost-optimal production plan. It considers production costs, stock holding costs, and costs incurred for not satisfying demands for all output products, that is, both main and co-products.

Independent Demand at Finished Good (FG100) and Co-Product (FG100-CO) at DC-1000

System has calculated net demand for FG100 till W13 since it has independent demand till W13 only at DC- 1000.However, it has calculated Net demand till W15 at plant 1010 is due to co-product independent demand.

Optimizer has calculated Net demand for co-product FG100-CO at DC due to co-product independent demand.

In W15 we have independent demand only for co-product FG100-CO and system has generated production receipt.

//Setup initial cost Production Cost, Transportation cost, Non Delivery Cost, Inventory holding Cost

I hope this blog was helpful to understand the setup. Thank you.