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Material scrap accounting in production line  –scrap other than Assembly, Component and operational scrap in SAP.

Introduction:

We always here about production efficiency, optimized utilization of materials, improve production techniques in manufacturing and wants measure the scrap generation in automotive industries to put a better target for production efficiency. In this blog, i am discussing only business scenario, and can be mapped in SAP in different ways and is already mapped in many projects based on requirement. It is an attempt to explain the process which i come across in many automotive industries which uses discrete manufacturing.

Usually in automotive industry scrap of materials is measured in scrap reports, PPM (Parts per Million) level reports etc. In this document, I am discussing the scrap generated in the production line only. And an attempt made to describe other scenarios of scrap in automotive industry. Hope this sharing helps.

SAP Standard functionality for Scrap:

Component scrap is used in MRP to determine the input quantity of the components. When you produce an assembly with this component, the system has to increase the component quantity to enable you to reach the required lot size. You can enter component scrap in the BOM item or in the material master. When exploding the BOM, the system increases the input quantity of the components by the scrap quantity calculated.

Assembly scrap takes into account all faults that occur when the individual components of an assembly are assembled (in production). This entry is ignored in BOMs if the material is not an assembly in the current BOM. The system automatically sets the Assembly indicator in a BOM (component overview) for components that have their own BOM. We can maintain assembly scrap in the material master record, not in BOM maintenance.

Operation scrap is the quantity of one component to be processed in an operation. This value enables you to plan material requirements and determine excess consumption more precisely.

These options are used if we can predict scrap quantity exactly or predefined nature.

Scenarios:

We are building an assembly. For example, we take example of Engine assembly. To do an engine assembly we need more than 100 components either A, B or C category. To assemble an Engine, if we can name some of components like, we need Engine, Flywheel, Coupling plate, Engine Exhaust, Radiator and Fan assembly, Oil cooler which are sub assemblies in turn. Some of these sub assemblies can be in house made; some are bought out from supplier.

Most of the times, we will come to know the defects in the sub assembly during engine assembly, or after assembly during testing of engine etc. And these sub assemblies or parts of sub assemblies are of high cost and needs to be accounted or debited to vendor if not worked as desired.

How to address this scenario in such cases? How we can measure this? How we can report it and document it? How to take action on supplier and return the material?

How and when we capture this in SAP?

We use production orders in discrete manufacturing and each assembly and sub assemblies are defined in multiple level of BOMs and used in production orders. In assembly manufacturing like example given above of Engine, always it is reality that many damaged parts are expected and has to be replaced during assembly as the line of assembly lead time will be very less.

In assembly line usually bulk consumed materials like hardware like bolts, nuts etc are not impact in terms of value and will be rejected in bulk if found in line. But A or B category items which are high value then how to scrap these items and how to replace and what to do about these high value items?

Usually these items are moved to non conformance review storage location or some companies call it as quarantine area, and this we can do during production order confirmation through operation wise confirmation, so we can capture at what level of operation the components got rejected. This will be done by doing the goods movement with 531 movement type in production order confirmation, or this can be done independently in goods issue transaction in MB1A transaction with reference to order etc.

Once the goods moved to NC review location, then this can be thoroughly checked by quality department and further actions will be captured through quality notifications, or by posting material documents with reason for rejection etc.

Reports

Many reports can be generated with this data captured wither in custom developments or by introducing the field in standard reports through user exits if available. With respect to the movement type and storage location we can generate report for quantity, value, you can capture this rejection quantity and consider it for PPM reports etc.

Many questions are asked on this in forum, and this scenario is mapped in many projects by many consultants. But i feel this gives input to people who may not be aware of the scenario. Any SAP screen or transactions are not discussed on detail because there are multiple ways to map the scenario in SAP.

Thank you for SAP SDN Forum to allow to share some of findings and i feel this blog will help to few people who are in search of business scenario in SAP, or beginning in SAP process mapping, or example.

Best regards,

Sharat

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2 Comments

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  1. Senthil Kumar Akash Sampath

    Hi Sharat,

    Thanks for sharing. Sure, this could be an useful reference. Appreciating the efforts.

    First three parts are well narrated. Last two parts could be refined.

    Keep up the good work and contributions to the community.

    Thanks again & Best Wishes,

    Senthil

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    1. Sharat Sugur Post author

      Hi Senthil,

      Thank you for your encouraging comments and suggestion.

      I definitely look into provide more insight to last two parts. I like your answers given to the discussions, really more inputs are provided to the deepest extent to reach the solution.

      Regards,

      Sharat

      (0) 

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