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Former Member

can any one know about make to order & make to stock

Hi Genius

my questions is what is make to order and what is make to stock. Can any one know about this give me with examples.

thanks in advance

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6 Answers

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    Former Member
    Sep 11, 2007 at 06:41 AM
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    Former Member
    Sep 11, 2007 at 06:44 AM

    make-to-order production with cost management using a sales order, all costs and revenues involved for an order item are assigned collectively to the item. The costs are allocated to profitability analysis using a particular settlement rule which the system automatically proposes. You can change the proposal manually.

    Prerequisites

    Make-to-order production is controlled by the requirements type. The requirements type is determined on the basis of the MRP group and the strategy group in the material master record.

    Up to Release 3.0, the requirements type is determined on the basis of the item category. For this reason, special item categories are used up to Release 3.0 for controlling make-to-order production. To make a material to order with cost management using a sales order, you must maintain the following fields in the material master:

    Screen

    Field

    MRP 1

    MRP Group

    MRP 2

    Strategy Group

    In addition, a plant must be assigned for make-to-order items in the sales order.

    Example

    Variant Configuration

    make-to-stock strategy, if:

    The materials are not segregated. In other words, they are not assigned to specific sales orders.

    Costs need to be tracked at material level, and not at sales order level.

    You should always use make-to-stock production if you produce stock independently of orders because you want to provide your customers immediately with goods from that stock later on. You might even want to produce goods without having sales orders, if you expect that there might be customer demand in the future. This means that make-to-stock strategies can support a very close customer-vendor relationship because your objective here is to provide your customers with goods from your stock as quickly as possible. Returns that have passed quality inspection and other unexpected goods receipts can be used for other sales orders.

    This does not mean that you have unreasonably high stock levels. You can avoid them by doing one of the following:

    Create a production plan in advance (in Demand Management) to plan your stock.

    If you make use of this option, you may also want to decide whether sales orders exceeding your plan are to affect production or not.

    Receive sales orders relatively early on (using scheduling agreements, for example).

    Process Flow

    You can automate the planning stage by passing the results of the forecast, flexible planning, or SOP directly to Demand Management. For more information, see Transfer to Demand Management in the R/3 Library under Sales and Operations Planning (PP-SOP).

    In a make-to-stock environment, smoothing of production can be an important feature. This means irregular requirements flow resulting from different customer requirements quantities can be smoothed and simply produced to stock.

    Make-to-stock strategies are usually combined with a lot-size key or a rounding value. For instance, you may want to produce the entire amount for the whole month once a month only, or you may want to produce full pallets only. In the following sample scenarios, the lot-size key is always EX for easier understanding.

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    Former Member
    Sep 11, 2007 at 06:48 AM

    Hi Nagewar,

    Make-to-order:

    Make-to-order processing takes place when inventory is not generally stoked but instead the firm wants until an order hass been placed and then produces just what has been ordered.

    Ex: In this case, a deluxe motorcycle gas tank that must be produced form an unpainted tank, paint and gas cap. These are two processes that must be completed in the production -


    paint the tank and when tank is dry, attach the gas cap.

    The BOM are needed to create a given product. The routing information gives what processes need to be carried out in what order and even how long each process should take. All this information together can be used to determine what the total cost of the product and determining the profitability of the product.

    A—Creation of materials:---

    T code: MM01

    Ex; 1400-7—1xx

    Enter material, ind. Sector and material type.

    Select the org. levels plant, stor. Location, sales org, DC, Warehoused no, storage type.

    Repeat the same process for all components.

    B—Creation of BOM:--

    T code: CS01

    C—Set up routing:--

    T code: CA02

    D—pricing conditions:--

    T code: VK11

    E—purchasing materials:--

    Create a purchasing order req. for components from vendor.

    Create PO: ME21

    F—Receiving materials:--

    GR:- MIGO

    Go through MMBE then u will get stock available or not.

    Process:

    1. creating a sales order for product not kept in the inventory. This will atomically generated the relevant production order.

    2. we assume production is done ahead of \schedule. After production is completed you will confirm production order as fully completed .

    3. Newly determine the availability of sales order.

    4. shipment

    5. TO for delivery

    6. Billing

    7. Payments

    Req. Class: Its a global control parameter for avalability check. It controls rerq. consumption strategy and req. planning strategy.

    11-- order req.

    21-- delivery req.

    41-- order/delivery req.

    Req. type:- It specifies features of require,ment class. It is one of the controling feature in TOR

    In TOR we can assign req. type to req. class.

    Make-To-Stock Production:

    Purpose

    We describe the planning of a product for make-to-stock production. After requirements planning, you analyze the stock situation and convert a planned order into a production order. You also enter a sales order that is not relevant to the planning. The production order is then released and saved. After the material withdrawals and confirmation of the operations, you analyze the production variances. The sales order is delivered and settled.

    Process Flow

    1. Planning a Product

    T.code: MD61

    Demand Production Planning  Production Logistics Create Planned Independent Requirements Management

    2. Creating a Sales Order

    T.code: VA01

     Order  Sales  Sales and Distribution Logistics Create

    3. Executing Multi-Level Requirements Planning

    T.code: MD02

    Single Item - Multi-LevelFrom the MRP node, choose Planning

    4. Converting the Planned Order into a Production Order

    Tcode: MD04

    From the MRP node, choose

    Stock/Reqmts listEvaluations

    5. Withdrawing the Material for the Production Order

    T.code: MB1A

    MaterialsLogistics Goods Issue Goods Movement  Inventory Management Management

    6. Confirming the Production Order

    T.code: CO11N

     Production Logistics Time Ticket For Operation  Enter  Confirmation Production Control

    7. Creating a Delivery

    T.code: VL01N

     Sales and Distribution Logistics  Single Document  Create  Outbound Delivery Shipping and Transportation With Reference to Sales Order

    8. Creating a Billing Document

    T.code: VF01

     Billing document  Billing  Sales Logistics Create

    Reward points if u helpful

    Cheers,

    Govind.

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    Former Member
    Sep 11, 2007 at 06:50 AM

    Hi,

    Make to order : Take the example of some chemicals. The customer will give the specification of the ingrediants, according to the specification the company procure the raw materials used, and manufactre it and deliver to the customer. Make to order will not be kept in stock. The stock will be raised with reference to the sales order.

    Make to stock :

    The company will manufacture the goods and keep it in stock assuming that there will be demand. Take the example of Maruti car.

    This is a very siple explanation. There are a lot of differences technically. Hope you are clear with the concept.

    Prase

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    Former Member
    Sep 11, 2007 at 07:54 AM

    Dear nag nageshwar,

    A small search on SDN SD forum will help you to answer your query.

    I will suggest you to visit http://sap-img.com/sap-sd.htm. It will give you the overview of SAP SD module.

    Moreover there is a separate section of FAQs with answers which will help you in great deal.

    Hope this helps you.

    Do award points if you found them useful.

    Regards,

    Rakesh

    P.S. you can send me a mail at my mail id rakeshsinghchauhan@gmail.com for any specific details

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    Former Member
    Sep 11, 2007 at 08:00 AM

    make to stock is that stock which can be used by delivery or sales ppl to use for any order. it means it is for unrestricted use. stock is entered with 561 type in MB1C. where as make to order is that stock which is manufactured and stocked for a perticular customer / order and cannot be used for any other order or requirement. stock is entered with 561 E type in MB1C. Hope this answers your question.

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