Production Order for Raw Materials

[Former Member]

Hello Experts,

We are a Engineering manufacturing company.

We are receiving Steel Plates for manufacturing our semi finished and finished products at Main Stores

We Issue the steel plates to CNC machine for Cutting Purpose.

So We transfer material Main Store to CNC Machine (A Logical Store created in SAP)

Than CNC Technician cut the material and produce the steel plate pieces as per the drawings size and shapes provided to him.

During this process there is process scrap generated which is approx 10% of transferred material.

Please suggest how we can capture this scrap in SAP?

Can we prepare Production Order for Raw Materials and at final confirmation we receive scrap with steel plate pieces.

Or is there any other way to capture this production as well as scrap generation process in SAP.

At present it is GAP in our SAP system

Please suggest solution.

Best Regards,

Vishal Kadia

[JeevanSagar]

If your "scrap" has any value for example if you resell it or use it another process, you can consider by-product or co-product concept.

[Former Member]

Hello Jeevan,

Yes we are selling this scrap.

Best Regards,

Vishal Kadia

[svs_sap]

Hi Vishal,

Find remarks on your questions below

Raw material - steel plate - say material number - A

after cut - semi finish or finish in your case - material number - B

Your Bill of material

B (Parent) - 1 No

   |-  A (child item) - quantity 10 Kg

Please suggest how we can capture this scrap in SAP?

In cutting 10% if scrap is fixed in your case, in which you have 2 types of scrap generated during steel plate cut.

1. operation scrap - which is burning out of plate due to cutting - say 2%

You can maintain this in BOM for the component A (you get component detail screen in SAP)

2.Component scrap - which is fixed - plate left out at edges or center which is not usable - say 8%

This you can maintain in BOM  for component A.

Both these scraps quantity will be considered to calculate the required quantity of plate during production order.

Say for material B production order is 1 No for which component A (which is steel plate) quantity will be calculated as A = 10 + (2% of 10 (it depends on net indicator in bom)) + (8%of 10)

This is one approach.

If you do not want to maintain this, then during production order confirmation always you can calculate and enter scrap 10% in confirmation screen.

Can we prepare Production Order for Raw Materials and at final confirmation we receive scrap with steel plate pieces.
Or is there any other way to capture this production as well as scrap generation process in SAP.

You have to create production order for material B in above example.

This can be addressed very well in SAP and can not be a GAP.

Check above solution and provide feedback.

Best regards,

Sharat

[Former Member]

Hello Sharat,

First of All Thanks for your guidance.

In our case Steel Plates after cutting it is also a Raw Material.

In this case I will have configure BoM & Production Order for Raw Material. Please correct me if I am wrong.

Please reply.

Best Regards,

Vishal Kadia

[svs_sap]

Hi Vishal,

Even though you call it as raw material, i suggest you to consider it as semi finished item, because you are adding some value as you are performing operation.

Hope you want to capture operation cost and material cost for this material, so it is as good as semi finished material only for which you are doing production activities.

Why you want to maintain BOM and routing for raw material? If you are maintaining these master data and creating production order means you are adding some value to this, so this is called as semi finished material not as raw material in true sense.

And regarding if you are selling scrap then either maintain material A as specified in above example as either by product or co product so you can get that scrap quantity in stock and you can sell it.

Best regards,

Sharat