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ERP 2.50:Functional Documentation/Production Management



Production Management is the ability to provide process manufacturers with the means to plan and schedule, track and analyze, and direct and operate their procedures.

It is concerned with the making the quantities of each product group that need to be produced in each period. It can be broken down into three areas: The desired inventory levels. The resource of equipment, labor, and material needed in each period. The availability of the resources needed.

Production planners have to create a plan to satisfy market demand within the resources available to the company. This will involve determining the resources needed to meet the market demand, comparing the results to the resources available, and devising a plan to balance the requirements and availability. The process of determining the resources required and comparing them to the available resources is a capacity management problem. For effective planning, there is a balance between priority and capacity. Along with the market and financial plans, the production plan is concerned with implementing the strategic business plan.

From a functional user´s perspective the Production Management module can be divided into four areas. The main one is the MANUFACTURING itself that involves most of the windows. Then there is the COST MANAGEMENT, with the cost centres, indirect costs, standard costs and production costs. The third area is the MAINTENANCE and lastly the QUALITY CONTROLS. The last two can even be used without using the manufacturing windows.

Process Plan

A sequence of events which organizes the manufacturing of one or many products. The same product can be produced using a variety of process plans. However, normally each product has one process plan.

A Process Plan can be decomposed into the following:


The setup for a process plan consists of:

Section: A list of different areas of manufacturing that exist in a company

Work Center: A coordinated group of machines processes and toolset processes setup in order to organize the completion of a task. The work center is often composed of a number of machines and workers capable of doing the same work. The machines will normally be similar so there are no differences in the kind of work the machines can do or the capacity of each.

Activity: Required actions using toolsets toward the purpose of completing a task.

Toolset: A group of objects (tools) for use in activities. Examples of toolsets are a saw and a mold. Each toolset is categorized by toolset type and for safety reasons includes a maximum times of use limit.

Machine: Devices used in the company manufacturing process. The machines can be grouped by category. The categories are used for the maintenance module. The definition of each machine can include the purchase date and the lifespan. It is also possible to define the desired maintenance for each machine.

Cost Center: Part of the organization that does not produce direct profits and adds to the cost of running a company. Examples include R&D departments, marketing departments, help desks and customer service centers. Although not always demonstrably profitable, a cost center typically adds to revenue indirectly or fulfils some other corporate mandate. Money spent on R&D, for example, may yield innovations that will be profitable in the future.

Periodic Quality Control: Control tests that ensure the quality of the product.

Indirect Cost: Activities that production is dependant on but are not directly involved in the manufacturing process I.E. Marketing, Maintenance.

Quality Control Point: Taken for measures taken during the production and a Maintenance module

Work Incidence: Listing of issues and accidents that occur during the work day.

Work Requirement

Work Requirement determines the amount of work that needs to be done in a specified period of time. Planning for the work requirement involves examining the resources required to meet the process plan and finding ways of making the capacity (labor and equipment and material) available. The process plan will not be implemented unless the company has sufficient capacity to fill the demand. Consequently, Work Requirement planning links the various production priority schedules to manufacturing resources.

Work Effort

This window as it is one of the more important. The production runs are defined in this window, including the real quantities of used and produced products, the time needed and the pace at which the work is done. If the workforce changes pace, perhaps producing more in a given time then the capacity will be altered. When the work effort is validated the stocks of the products are updated.

Quality Control

Assists the planner in locating and editing errors within the project. The reports catalog operator comments. They should check for completeness, consistency and provide constructive quality management input. Quality control reports need to be run periodically through the lifecycle of the process plan.

Periodic Quality Control Data

Typically a business creates a General Specification for each product. A Quality Level needs to be specified in the General Specification. Subsequently product designers are able to build that quality level into the products produced. Quality can be measured by the following dimensions: Performance (Reliability, Durability, Maintainability), Features, Conformance, Warranty, Service, Aesthetics, Perceived Quality and Price.

Internal Consumption

Material consumption for a specific project or for an internal use which has no sale associated with it.

Maintenance Plan

A good maintenance plan provides an organized and disciplined approach ensuring a high level of manufacturing system availability. It also ensures that the system operates as efficiently and safely as intended. The scope of a maintenance plan includes the overall manufacturing system and it’s interaction with other ongoing activities, particularly production scheduling.

A maintenance procedure using Openbravo ERP would be this:

Maintenance Order

An instruction indicating specific tools, machines, or devices that need maintenance before performing any production activities.

Maintenance, repair and operational supplies (MROs) Items used in production that do not become part of the product. These include hand tools, spare parts, lubricants and cleaning supplies.

Insert Maintenances

Insert maintenance tasks or routines are required to ensure the correct maintenance of individual equipment in terms of maintenance intervals.

Production Costing

Production costs are calculated based on the cost of the used products costs and the costs defined in the cost centers. The cost is calculated for each Process Plans Operation or Work Efforts Production Run. To calculate the cost of a produced product unit, the total cost of the cost centers and the cost of used products on the Operation or Production Run is summed up. Once it is calculated the total cost this is distributed through the produced products on that Operation or Production Run.

Cost Center costs

In Cost Centers can be defined 4 types of costs. Employee, Machine, Indirect Cost and a Generic cost in the version.All 4 types are summed up when the cost of the cost center is being calculated. The costs are defined based on different Cost UOMs:

per Hour
the cost is calculated multiplying the cost amount by the number of hours spent in the Operation.
per Kilogram
the cost is calculated multiplying the cost amount by the total produced kilograms in the Operation. The weight of a product in Kilograms is defined in the Product window.
per Produced Units
the cost is calculated multiplying the cost amount by the number of produced units in the Operation.
this unit is only available for Indirect Cost items, and adds the percentage amount to the calculated Operation cost, including the cost of the used products.

Standard Cost

The Standard Cost is calculated based on the definition of the Process Plan. The cost of the raw materials is taken from the provided budget, if no budget is provided or the product is not present in the budget it is taken the price defined in the default purchase price list. Production time of the Operation for per Hour based costs is the defined Cost Center Use Time.

Production Costs

Production Costs are calculated based on the real data inserted in the Work Efforts. In this case the cost of the used products (raw materials and intermediary products) is taken from the calculated average cost. Raw materials average cost shall be calculated before calculating the Production Cost. Production time is taken from the Cost Center Use defined in the Production Run.

Pending Production Reports

Pending Production Reports list all the orders due to be executed. They have a variety of uses. They can be used to estimate cost for a pending production or to clarify whether the Production (Process) Plan will achieve the overall business goals of the company. On a more specific level the user will be able to determine at a glance the number of products ordered or on-hand.

Production Run Status Report

For a given product in production, the report shows the status of each work requirement and each phase of a work requirement, in terms of: quantity required, done and left to be done. Each phase of a work requirement is displayed as a work effort. Other information included in the report details the speed at which the work is being done, a refund quantity and whether the phase is closed I.E. the required quantity has been built.

Production Management Process Model

General View1


Detail View


Production Management Example

A Production Planner needs to create a production plan for 400 bicycles. He must decide how to accomplish the task. He defines each of the components parts in the process: wheels, frame, gears, handlebars, etc... and defines the activities that are required to assemble these components I.E. How to add the handlebars to the Frame. The planner then uses these component definitions to Define a Process Plan. Essentially this is a guide for the bike detailing the quantities of components needed I.E. 14*10mm ball bearings are required in the bottom bracket of each assembled bicycle. He then inputs the work requirement which lists all the required component quantities for all 400 bicycles.

The Production Manager is aware of the resources available to him. His team comprises of 10 people, they work from 9am – 5pm and on average each member of the team can assemble a bike and have it inspected in 1 hour. He can enter these parameters into the Work Effort, and at the end of each day update the quantity of bicycles that have been assembled by using the Validate Work Effort functionality. If his team have made 80, the Work Requirement will automatically be updated to show that 320 bicycles are left to be made. Inventory available will also be updated automatically.

The completed bicycles can now be sent to the warehouse, and soon off to the customer. The Production Manager can track the quality of his teams work by generating a pending work requirement report. The Production Manager has the ability to adjust the Work Effort. He may decide to increase or decrease the time and labor depending if the schedule is being met. After making changes he will again need to Validate the Work Effort to make the necessary changes to the inventory and work requirement.

In addition, before the project starts, the planner can use Standard Costing project costs, and Real Costing to see what the project actually costs.

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