Direct Production or Collective order –

Scenario Overview

(Author: N. Mohan Raj,

Infosys – Chennai )

Introduction:

This White paper explains briefly on the scenario of direct

produc on or collec ve order concept. Basically, collec ve order is
the technical term used for the Direct Produc on scenario.

Main objec ve of the document is to explain the basic concept of

collec ve order with Business examples as well as sap Process flow.
Best a empt has been made to explain key se ngs, advantages,
Disadvantages & Limita ons of collec ve order. I would also update
versions based on feedback and comments of SDN experts and
consultants on this topic accordingly in future.

Collec ve order or direct Produc on can be carried out for Discrete

Manufacturing or PP-PI. However this document limits to Discrete
Manufacturing only.

Applies to: ECC 6.0, Sap R/3 4.6

Need for Direct production or Collective order:

If subassemblies are produced directly for superior orders within a
produc on process, without physically entering the warehouse,
then it is useful to have direct produc on via collec ve orders.
Example:
1. Joining of Le door & Right door assembly in a car
2. Fi ng of Front & rear wheel assembly in cycle or Bike

Direct Production:
Direct produc on is the special type of produc on where
components are directly produced for the higher-level assembly,
without Stocked @ warehouse as normal and no goods receipt or
goods issue pos ngs are made for components that are produced
directly.
The system flags a direct produc on segment for the components
to be produced directly in the MRP list and the stock/requirements
list. When the planned order for the finished product is converted
into a produc on order, the system also converts all planned orders
for lower-level components to be produced directly into produc on
orders.
The system adapts planned orders for direct produc on to changes
in date and quan ty in the higher-level assembly, even if they are
firmed, so that the collec ve order remains consistent.
Collective order:
Collec ve order is a network where planned orders or produc on
orders are linked to each another over several produc on levels.
Each order in the collec ve order has its own order number. The
components for which separate produc on orders are created in
the collec ve order are called directly produced components.
Business scenario:
Let us understand Business scenarios where collec ve order or
Direct Produc on scenario is used before briefing the sap process
flow.
In Our professional life, we used to get below items from our
Company or in any events
a) Ball pen or Mug or Bo le embedded with Company name

b) Wrist watch or wall clock with company logo & name

c) Wallet or Bag or Sun glass embedded with Company or
sponsor

If the manufacturer uses exclusive components for producing above

finished product where he wants to control produc on with linkage
of header & child orders with no intermediate stock transfer to
warehouse, then Collec ve order process will be helpful.
Above examples are just for explana on purpose of collec ve order
in a be er way but it is not limited .You can use Collec ve order
concept in general where components has to be issued only to
Superior orders instead of warehouse as unrestricted stock .
Sap Process Flow of Collective order:
A. A. Configuration:
B. A.1 Order Type Setting:

IMG path:

Production –> Shop Floor control –> Master data –> order –> Define
order Types

Tcode: OPJH

If this indicator is set, then it means there are automa c goods

movements
between
the
produc on
orders in a
collec ve
order. When
the goods
movement
is
posted,costs
are credited from the subordinate order& costs are debited to the
superior order.
A.2. Special Procurement Key:

IMG path:

Production –> Material requirement planning –> Master data –> Define
special procurement type

Case study:

Let us take manufacturing of Ball Pen, a simple example for the

scenario of collec ve order processing.

Product structure:

1 Ball Pen (Finished Product)

1.1 Pen casing ( Halb)

1.1.1 Refill for Pen casing (ROH)

1.2 Pen Cap (Halb)

1.2.1 Slug for Pen cap (ROH)

Master Data:

1. Mul level BOM for Ball Pen & Routing

TCODE: CS12
2. Material Master:

2.1 Header Material MRP views:

TCODE: MM02

2.2 Child Material MRP views:

TCODE: MM03
Production planning & Control Cycle :

Collec ve order can be created by below 3 methods

1. Directly Produc on order with Header Material using Tcode :

CO01

2. Create Planned order ( Tcode : MD11) for Header & Convert

into Produc on order (Tcode :CO40)

3. PIR ——-> MRP —–> Planned order to Produc on order.

Let us illustrate by Method 3 with Full cycle of Material Planning &

Shop Floor Execu on.

Material Planning:

i. crea on of Planned Independent requirement (MD61 ):

ii. MRP RUN (MD02) :

iii Stock Requirement List (MD04) :

Stock requirement list for Header Material & child material :

Planned order for Header material & child material are created for the
balance required qty (17)
*** You can no ce Descrip on “Direct Produc on “& Dep req for
Header material .

iv .Order Report:

If we execute order report, we can see linkage of planned order as a

network in below screen shot.

v. Planned order :

Here is the advantage of collec ve order concept. Subordinate

planned orders are linked to superior header order which can be
seen in assignment tab of below screen shot of child planned
orders.
TCODE: MD13

vi. Conversion of planned order to produc on order :

Refer stock requirement list below once planned order of header

material is converted

Shop Floor Execution:

Real Benefits of collec ve order concept starts here. Mark ***

highlights its advantage

I. Crea on of collec ve produc on order (CO03) :

When we click read collec ve order bu on, system will display

collec ve order network @ created stage as below.
Note : Collec ve orders represent different levels of the produc on
process together as an integrated whole network. Each level
represents a prod order.
*** Refer assignment linkage of subordinate order to Leading
/superior order below

ii. Scheduling of collec ve produc on order (CO02) :

***If we schedule header superior order, it automa cally schedule

total network of collec ve order.
iii. Releasing of collec ve produc on order (CO02) :

*** Releasing the superior order results in release of all child orders
in network. Header order receives “RLNE” status – Release in
Network.

iv. Changing collec ve produc on order (CO02) :

*** We can change header order Quan ty or Scheduling Date or

both which will gets drilldown to en re network below. Read PP
master data func on for header order is allowed.

Note: Below case, we have changed order qty from 17 to 15 which

got drilled down.
v.Confirma on of collec ve produc on order (CO15 or CO11n) :

Confirma on of child order @ order level or opera on level will

result in direct Good issue to header order. Stock of subordinate
order will not be available in warehouse .Instead; child component
is directly produced for Header order.

Note that leading order will get below status when there is
confirma on or goods movement in network.

1.1. CFCO Confirma on in collec ve order

1.2. GMCO Goods movements in collec ve order

*** Check warehouse stock for the direct components which is nil.
TCODE: MB52

*** Check Material document for the direct components which

shows GI for order (261) –TCODE: MB51
vi.Final confirma on of leading order :

vii. GR of collec ve produc on order (MB31) :

Refer FInal material document & Stock overview

This concludes the complete cycle of direct produc on via

collec ve order

Limitations:
We have limita on to create collec ve order if components are
belongs to below set
Co Product or By product
Alterna ve item of strategy 2 or usage probability 0
Either Discon nued or Follow up or Intra Material

Moreover, Collec ve order cannot be created Via SAP APO.

Exception settings:
If you want to restrict direct produc on for a par cular BOM,
then you enter this in the respec ve BOM item. This entry
overwrites the entry in the material master. or
You can use the indicator “No direct produc on” in the
explosion key to switch off the direct produc on for
individual BOMs.

TCODE: CS02
Conclusion:
In general , Direct produc on is aimed at doing
Major sap business func ons such as Crea on ,Release ,scheduling
,cos ng for Finished product ,assembly & components within a
BOM structure jointly or collec vely.

Even though direct produc on or collec ve order has its unique

benefits, it has a nega ve impact of Material flow & stock inventory
indirectly. Collec ve order will not consider below points

· Plant warehouse stock of direct components.

· Anonymous Dependent requirements are not
considered.

i would be happy to include feedback and improvement points from

SDN PP experts in subsequent Versions for the benefit of Members .

Reference:

1.

http://help.sap.com/erp2005_ehp_06/helpdata/en/b1/c0500c439a11d189410000e829fbbd/co

ntent.htm?frameset=/en/a5/63198843a211d189410000e829fbbd/frameset.htm

2. http://scn.sap.com/message/7241069