Glossary

Absorption costing
Method of analyzing full costs, that is, without
dividing costs into fixed and variable portions.
All costs of production are treated as product
costs.

Activity
A production step or a service rendered to a cost
center, for use in internal cost activity allocation.
Activities are categorized by activity types,
which are assigned values to be used as charge
rates, based on internal management decisions.

Activity-based costing (ABC)

A cost accounting system that accumulates costs
based on activities performed and then uses cost
drivers to allocate these costs to products or
other bases, such as customers, markets, or
projects.

Actual costs
All the costs actually accruing to an object
during a particular accounting period. Actual
costs are updated when stock is issued for an
order, confirmations as well as other postings
are made to an order, for example, a goods
receipt for external procurement.

Adjusted standard costing

States what it would cost to manufacture a
product at the time of costing (which can be
carried out as required) in comparison to the
planned cost of goods manufactured using the
standard cost estimate. Changes in quantities
and values form the basis.

Assembly
Group of components of a product which form a
technically coherent whole in the production
process. A product defined as an assembly can
be used again as a component in another
assembly.

Assembly order

Automatic cost estimate

Is a cost estimate calculated on the basis of
BOMs and routings.

Automatic reorder point planning

Special procedure in consumption-based
planning. If available stock falls below the
reorder point (also known as the reorder level),
an entry is made in the MRP planning file
indicating that the material is to be included in
the next planning run. Then during the next
planning run, an order proposal is created. The
reorder point and the safety stock level are
automatically determined by the forecast
program.

Available capacity
Performance or "ability to execute" of a capacity
within a specified period. The available capacity
is specified by the following values:

work start and finish times

duration of breaks

performance efficiency rate in percent (labor

utilization rate)

number of individual capacities within one

defined capacity.

Backflush
Automatic posting of a goods issue for
components some time after their actual physical
issue for use in an order. The goods issue
posting of backflushed components is carried
out when operations are confirmed during
production.

Backward scheduling
Type of scheduling in which the operations of an
order are scheduled backwards starting from the
order due date. The scheduled start and finish of
the order are determined via this scheduling
type.

Request to assemble pre-manufactured parts

and assemblies to finished products according to
an existing sales order.

Glossary-1

Glossary

Basic dates
The opening date, the planned start date and the
planned finish date can all be described as basic
dates. They are calculated in material
requirements planning.

Batch
A quantity of a material produced during a
given production run. The main characteristic of
a batch is its homogeneity.
In Materials Management (MM) a batch is a
subset of the total quantity of a material held in
stock, which is managed separately from other
subsets of the same material.
Examples of batches are: different production
lots (such as paints, dyes, wallpapers, and
pharmaceutical products), delivery lots, or
quality grades of a material. A production lot
can consist of one or more batches.

Bill of material
A complete, formally structured list which make
up the components of a product or assembly.
The list contains the object number of each
component, together with the quantity and unit
of measure. Bills of material (BOMs) contain
important basic data used in many
organizational areas, such as:

material requirements planning

provision of materials for production

product costing

BOM where-used
List showing in which assemblies a material is
used, and in what quantity. This means that you
approach bill of material data bottom-up instead
of top-down. The following options are
available:

single-level where-used list

multi-level where-used list

summarized where-used list

Glossary-2

The third option shows the cumulative

quantities of material used in all levels of the
assembly added together.

BOM explosion
Function for determining all the components of a
bill of material and listing them. You can
explode a BOM to show the structure of the
product or to show the total quantity of each
component. For multiple BOMs, you can define
a procedure for automatically determining the
correct alternative BOM for a given area of the
company (BOM application).

BOM status
Used to control processing of a BOM in different
application areas.

BOM usage
The BOM usage controls which item status
indicators can be used in BOMs. The usage
allows you to

maintain separate bills of material for

different organizational areas within your
company, such as engineering/design and
production.

maintain one bill of material for all

organizational areas within your company.

Bottleneck work center

A bottleneck work center is defined in capacity
requirements planning for purposes of capacity
(finite) scheduling. Proceeding from this work
center, forward and backward scheduling are
carried out.

By-product
Product which is manufactured at the time that
another product (main product) is produced.

Capacity
Capacity refers to the ability to produce output
per time period. Capacities are differentiated
according to capacity category. Capacities can be
allocated to work centers or resources.

Glossary

Capacity category

Class

A description which classifies a capacity at a

work center. A capacity category can only exist
once at each work center. However, capacities at
different work centers can have the same
capacity category.

A group of similar objects described by means of

characteristics which they have in common.
Examples of objects are:

Capacity requirements
Specifies how much capacity output is required
for individual orders at a specific time. Output is
subdivided into capacity categories. Capacity
categories are allocated to work centers.
Capacity requirements can be caused by:

work orders (for example, production or

maintenance orders)

planned orders from MRP

Capacity requirements planning (CRP)

Capacity requirements planning is a tool for
determining available capacity and capacity
requirements, and for carrying out capacity
leveling. Capacity requirements planning
supports:

materials

batches

documents

Class hierarchy
The class hierarchy serves to define a multi-level
search path via classes. If you search within a
class and a subordinate class is found, the search
is continued in the subordinate class.

Classification
The assignment of objects to a class. When an
object is assigned to a class, values for the object
are assigned to the characteristics belonging to
the class.

Configuration
See Variant configuration.

rough-cut planning

Client

production rate planning

detailed planning

Legally and organizationally independent unit

on the highest level of the R/3 System, for
example, a group or corporation.

Capacity scheduling

Consumption (master planning/MRP)

See Finite scheduling.

Number used to uniquely identify a change

master record. All changes made with reference
to a change number are controlled and logged
by the change master record.

Consumption refers to the comparison of

planned independent requirement quantities
with the requirement quantities from sales
orders. Depending on the requirements type, the
quantity of planned independent requirements
is reduced by the quantity from incoming sales
orders.

Characteristic

Consumption-based planning

Change number

A property of an object, e.g. length, color or

weight, used to describe and distinguish the
object.

Characteristic value assignment

Entry of a value or values for the characteristics
of an object.

Generic term for the procedure within MRP for

which stock requirements and past consumption
values play a central role. Consumption-based
planning is further divided into the following
procedures:

reorder point planning

forecast-based planning

Glossary-3

Glossary

Continuous flow production

Cost component

A manufacturing type within the PP System, in

which operations are completely overlapped.
Operations with short execution times are
extended to match the longest operation. The
longest operation determines the duration.
Queue times occur in the operations which have
been extended.

A group of cost origins. Cost origins such as

activity types or cost elements are assigned to
the appropriate cost components. The costing
results are saved under these cost components.

Control key
Key which determines how an operation or suboperation is to be processed in functions such as
orders, costing or capacity planning. The
following are examples of processing types for
operations and sub-operations which are
managed by a control key:

external processing

completion confirmation

printing

scheduling

costing

Co-product
A valuable material generated during a
production run together with other valuable
materials. In contrast to a by-product, a coproduct can be planned and monitored for costs.

Cost breakdown
Contains the data for creating a detailed
overview of the cost origins of a costing. Here,
the individual documents are maintained, along
with their costs for the materials used. The data
includes:

production cost centers

activity standard rates stored

external activities

overhead rates

Cost collector
Internal order created by the system or entered
manually that collects the actual costs incurred
for a material or run schedule header.

Glossary-4

Cost component split

The manufacturing costs and variances for a
semi-finished product or a finished product are
split into cost components and stored in the
system.

Cost element
Criteria for classifying all of the costs arising in a
company code. Whenever costs are posted, they
must be assigned to a specific cost element.
There are primary cost elements (for goods and
services procured externally) and secondary cost
elements (for internal activities).

Cost object
A unit of output resulting from the value-added
process to which costs are assigned according to
how they are incurred. Cost objects can be
products and materials, production or process
orders, maintenance orders, networks and WBS
elements, or run schedule headers .

Cost object controlling

Area of cost accounting which transfers costs for
cost objects directly from cost element
accounting (unit costs) or using a costing
method (costing) from cost center accounting
and displays them for each cost object for the
total accounting period, or for each unit of a cost
object.

Cost origin
The original source of an activity before its cost
is allocated to other cost objects or a series of
cost objects.

Cost rollup
Rollup of the costs of the semi-finished products
which go into the finished product. The costing
becomes a multi-level costing, and is carried out
beginning with the largest low-level code from
bottom to top, thus taking into account the costs

Glossary

which were already calculated in the level

above.

Engineering change management

Describes all costings of an order in the R/3

System including order settlement. These
costings come in the form of preliminary
costings and actual costings. The values can then
be analyzed in product costing analysis.

System enabling you to document changes to

BOMs, routings and plans. First, change master
records are created, each identified by a unique
change number. All changes to BOMs, routings
and inspection plans which are made using a
change number are documented. The system
records what is changed and when the change
comes into effect.

Demand management

Execution time

Costing, simultaneous

The purpose of demand management is to

determine requirement quantities and
requirement dates for finished products and
important assemblies. Demand management
specifies the strategy to be used for planning
and producing/procuring a particular finished
product. The result of demand management is
the demand program. The demand program can
either be carried out manually or it can be
carried out by using previous planning results
(sales plan, aggregate production plan, forecast,
for example).

The execution time refers to the sum of setup

time, processing time and teardown time of an
operation.

Final confirmation
A final confirmation is the confirmation of an
operation after it has been completed.

Finite scheduling
Scheduling type within capacity planning that
takes account of the capacity loads which
already exist. Finite scheduling calculates the
start and finish dates for operations in the order.

Demand program
The demand program contains the requirement
quantities and dates for finished products and
main assemblies in the form of planned
independent requirements.

Float

Dependent requirements

Float before production

Planned material requirements which are caused

by the production of higher-level assemblies. In
the MRP procedure, dependent requirements
are automatically created for components
necessary to the production of a planned order.

Dual MRP
Special procedure in material requirements
planning and a sub-category of mixed
requirements planning. For materials planned
using this method, the net requirements quantity
is not planned. It is, however, displayed in the
stock/requirements situation for information
purposes only. Only the gross requirement
quantities are planned.

A time reserve which allows you to start an

order or operation at a later date without
incurring a delay in scheduling.

Number of days planned by scheduling as a

time buffer between the basic start date and the
scheduled start date of an order.

Forecast
Estimation of the future values in a time series.
In the SAP System, the forecast is carried out
using a number of different procedures
including first-order and second-order
exponential smoothing as well as
straightforward average models.

Glossary-5

Glossary

Forecast model
A model used to predict a time series. The
following forecast models exist:

constant model

trend model

seasonal model

seasonal trend model

calculated by adding together the execution time

plus the interoperation time.

Independent requirements
See Planned independent requirements

Individual capacity

Requirements recorded in the system which

have resulted from a forecast run.

To achieve more detailed planning of resources

and commitments, you can subdivide capacities
into individual capacities (for example,
individual machines) for which you can
maintain available capacities. You can allocate or
dispatch capacity requirements to these
individual capacities in the planning table.

Forecast-based planning

Input/output diagram

Special procedure in consumption-based

planning, which is based on future requirements
predictions calculated by the forecast. As in
automatic reorder point planning, forecast
values for future requirements are determined
by the integrated forecasting program. The
contrast to reorder point planning, however,
these values then form the basis of the planning
run and the quantity required is planned
according to schedule.

Graphic display of incoming orders and orders

on hand at a work center.

Forecast requirements

the incoming orders correspond to the

cumulated capacity requirements over the
time axis.

the available capacity is cumulated over the

time axis.

the orders on hand correspond to the

requirements confirmed as completed over
the time axis.

Forward scheduling
Scheduling form in which the operations of an
order are scheduled forward starting from the
planned start date. Via this scheduling type, the
scheduled start and the scheduled finish date of
the order are calculated.

Full costs
All manufacturing costs - direct materials, direct
labor, and both variable and fixed overhead that make up part of the cost of a finished unit of
product.

Gantt chart
You can use a Gantt chart to display and change
a schedule for a particular time period.

In-house production time

The time which is required to produce the
material internally. The in-house production
time is independent of the order quantity and is

Glossary-6

Inspection
Activities such as measuring, examining, testing,
gauging one or more characteristics of a product
or service and comparing these with specified
requirements to determine conformity.

Interoperation time
Time containing the following elements:

the move time from one operation to the

next

the wait time after the execution of the

operation

the queue time (operation float)

the floats before and after production (order

floats)

Glossary

Inventory costing
Costing procedure which determines how semifinished and finished products are valuated
before the balance sheet is prepared.

Item category
Used to identify different types of BOM items.
Examples of BOM item categories:

stock item

non-stock item

variable-size item

The item category has an effect on the following:

screen sequence

field selection

default values

material entry

material requirements planning

sub-items

Just-in-Time (JIT)
An operations management philosophy whose
dual objectives are to reduce waste and to
increase productivity. Operationally, JIT
minimizes inventory at all levels, materials are
purchased "just in time" for their use in a
subsequent stage of the manufacturing process.

Kanban
A method of Just-in-Time production that uses
standard containers or lot sizes with a single
card attached to each. It is a pull system in
which work centers signal with a card that they
wish to withdraw parts from feeding operations
or suppliers.

Lead time
The period between the earliest start and the
latest finish of an order or operation. The lead
time of an operation is made up of the queue
time, execution time and wait time. The lead
time of an order is made up of execution times

and transit times of the operations as well as the

order floats before and after production.

Lead time scheduling

Lead time scheduling calculates the exact
production dates and creates capacity
requirements.

Lead time scheduling via the routing

Lead time scheduling is normally carried
out using the routing. In this case, it
calculates the start and finish dates and
times of the individual operations.

Lead time scheduling via the material

master
Within MRP, lead time scheduling can be
carried out using the times specified in the
material master. In this case, it calculates
the production start and finish dates, but
does not calculate any capacity
requirements.

Lot
A quantity that is received to stock or produced
in one production run, and which has the same
production costs and specifications.

Lot-sizing procedure
Procedure in material requirements planning
which is used to calculate the order and
production quantities (lot sizes). The lot-sizing
procedures are divided into three groups:

static lot-sizing procedures

period lot-sizing procedures

optimum lot-sizing procedures

Low-level code
The lowest level that a material appears in any
product structure of the firm. The low-level code
controls the sequence in which the materials are
planned during an MRP run: first all the
materials with low-level code 0 are planned,
then all materials with low-level code 1, and so
on. The lower the code, the higher the number
that is allocated to the material.

Glossary-7

Glossary

Make-to-order production
Type of production in which a product is
normally made only once, although it or a
similar product may be made again in the
future. Examples include ships, construction
projects, and specialized or heavy machinery.
The distinguishing feature of this type of
production in the R/3 System is that the cost of
goods manufactured is collected on a sales order
item or an internal order and settled to
profitability analysis.

Manual cost estimate

A costing based on manually entered costs or on
costs calculated in unit costing.

planning at assembly level

production by lot size for sales or stock

orders

make-to-order production

Master production scheduling (MPS)

In master production scheduling, the parts or
products which greatly influence company
profits or which take up critical resources are
planned with special attention. Master schedule
items are marked with the MRP procedure for
master production scheduling.

Master recipe
Manual MRP
Procedure in material requirements planning in
which the MRP controller must create the order
proposals manually.

Manufacturing costs
Consist of direct manufacturing costs (direct
labor costs), production overhead costs and
special direct costs. They are part of the cost of
goods manufactured.

Marginal costs
The manufacturing costs that vary according to
activity. Variable costs include direct materials,
direct labor, and the variable portion of
overhead.

Master plan
Specifications of production quantities for a
specific period. The production quantities can
either be entered as planned orders or as
production orders.

A recipe describing the production of materials

in one production run. The master recipe
contains detailed information on the use of a
process at a specific plant. It is the basis of the
process order.

Master schedule item

Master schedule items are critical finished
products or important assemblies which play a
major part in total turnover or which dominate
the production process due to their complexity.
Special planning tools exist for the planning of
master schedule items.

Material costs
Consist of direct material costs and material
overhead costs. They are part of product costs.

Material overhead costs

In traditional absorption costing, the costs
incurred for

procurement

Master planning

verification

Planning includes all activities in demand

management for creating the master plan. The
following strategies are available for planning:

storage

acceptance

make-to-stock production

planning with final assembly

planning without final assembly

Glossary-8

of materials.

Glossary

Material requirements planning (MRP)

Modified standard cost estimate

Generic term for procedures in requirements

planning which take into account and plan every
future requirement during the creation of order
proposals (independent requirements,
dependent requirements, and so on).

The modified standard cost estimate is a costing

type which calculates the cost of goods
manufactured for a product in the course of a
planning period. It differs from the standard
cost estimate in that it uses the quantity
structure, which has changed during the
planning period, as the basis of its calculation.

Midpoint scheduling
Scheduling on the basis of a certain operation or
activity (midpoint operation/activity) in the
order. Since this operation is in the "center",
other operations have to work towards it. This
could be, for example, an operation at bottleneck
work center at which the order is to be carried
out by a certain date, for reasons of setup time
optimization.

Milestone
A milestone is an activity of special significance.
Milestones are used in production orders or
projects. In a project, a milestone can be used to
monitor particular partial events or the
completion of particular processing phases. In
the Project system, milestones are used for
earned value analysis, as release stop indicators,
and to trigger predefined functions and
workflow tasks.

Milestone confirmation
A type of completion confirmation, where
several operations in a processing sequence are
automatically confirmed. An operation is
marked as a milestone operation via its control
key. If you confirm an operation which is
marked as a milestone, the system automatically
confirms all preceding operations. If several
operations are marked as milestones, they must
be confirmed in the order in which they appear
in the processing sequence. The system confirms
all operations up to the preceding milestone.
Operations which have already been confirmed
manually are not affected by milestone
confirmations.

Minimum send-ahead quantity

The minimum quantity of the material which
must be sent ahead to the next work center if
two operations overlap.

Move time
The time needed to move a material from one
work center to another. The move time is part of
the interoperation time.

Moving average price

Price that changes in consequence of goods
movements and the entry of invoices and which
is used for valuating a material. The moving
average price is calculated by dividing the value
of the material by the quantity of the material in
stock. It is recalculated automatically by the
system after each goods movement or invoice
entry.

MRP controller
The person responsible for a group of materials
in a plant or company. A material involved in
material requirements planning must be
allocated to a MRP controller.

MRP list
Display of the results of an MRP planning run
for a material. The MRP list shows, for example,
initial stock, all receipts and issues on the time
axis, as well as the direct source of the
requirements listed.

MRP procedure
Procedure which specifies how planning is
carried out for a material. Every material which
takes part in materials planning is allocated a
planning procedure. This then determines how
the material is planned, for example, according
to the manual reorder point planning.

MRP run
See Planning run.

Glossary-9

Glossary

MRP type
Indicator which provides information on how
the requirements for a material should be
planned.

define the objects to be displayed in an object

overview, as well as the layout of the object
overview lines.

Opening period (for planned order)

Multi-level BOM
BOM reporting function which lists all
assemblies and other components in a product.
Assemblies within the BOM are immediately
followed by the items they contain. These items
are set in from the left margin and are given an
ascending level number to show where they
occur in the structure.

Number of working days between the date that

the order is created and the planned start date.
This time is available for the MRP controller to
convert a planned order into a purchase
requisition or a production order.

Operating facilities
All facilities used during production, such as:

means of production (machines, plants)

further production resources, such as tools

or inspection equipment

means of transport

The assignment of an object to more than one

class.

warehousing facilities

property and buildings

Net change planning

energy and waste disposal facilities

Multiple BOM
Comprises a number of bills of material,
allowing you to record different combinations of
materials (alternatives) for the same product.

Multiple classification

Materials planning run, in which only the

materials are planned which have undergone a
change relevant to materials planning since the
last planning run.

Net requirements calculation

Check carried out by the system to determine
whether the forecast requirements are covered
by planned receipts from the purchasing
department or by production. If the forecast
requirements are not covered then the system
will generate an order proposal.

Operating time
The time that a capacity, such as a machine,
works effectively. The operating time is made up
of the actual working time, the breaks and the
rate of capacity utilization.

Operation
An operation/activity describes a workstep in a
routing, inspection plan, network or work order.
Types of operations can be:

operations in a routing allocated to a

production order

operations in a recipe allocated to a process

order

inspection operations in an inspection plan

maintenance operations in a task list

Object overview

inspection operations in an inspection plan

Output list for data from routings, inspection

plans, networks etc. In Customizing, you can

activities in a network

Network
A network contains instructions on how to carry
out activities in a specific way, in a specific order
and within a specific time period. The basic
elements of a network are activities and
relationships. In the R/3 System, networks are
realized as activity-on-node structures.

Glossary-10

Glossary

Order
Describes a task which is to be carried out within
a company. The order specifies:

interruption. This is done taking into account the

minimum send-ahead quantity and the
minimum overlap time.

which task is to be carried out

Partial confirmation

when the task is to be carried out

A partial confirmation is the confirmation of an

operation which is still being processed.

what is needed to carry out the task

how the order costs are to be settled

Order category
A technical classification criterion for orders.
The order category determines the SAP
application to which an order belongs, and
controls the functions with which an order can
be processed.

Order proposal
MRP element which is generated in material
requirements planning if a material shortage
occurs. Order proposals are saved in the system
in the form of planned orders, purchase
requisitions or delivery schedules.

Order settlement
Complete or partial crediting of an order. The
costs which have accrued to an order are debited
to one or several accounting objects belonging to
financial or managerial accounting.

Order type
Differentiates orders according to their purpose.
Examples of order types include

production orders

maintenance orders

marketing orders

capital expenditure orders

Pegging of requirements
Evaluation which displays the source
requirements or the source order proposal of a
particular MRP element. This evaluation is used
to check which planned independent
requirements are endangered if certain order
proposals are canceled or if dates or quantities in
the order proposal are changed.

Performance efficiency rate

The ratio of target duration to actual time
attained when working at a work center. It can
be defined for a single person or for several
persons as well as for a department or a whole
factory. The performance efficiency rate is
always defined for one work center. The
standard times used by capacity planning and
product costing are affected by this performance
efficiency rate.

Phantom assembly
The phantom assembly is a logical grouping of
materials. These materials are grouped together
in an assembly from the engineering/design
point of view and are also managed together.
From the production point of view, however,
these materials are not assembled. The
components of the phantom assembly are
directly assembled in the higher-level assembly.

Planned costs

Overlapping
A means of reducing the lead time by starting
the next operation before the current operation is
finished. The system calculates the operation
start and finish dates in such a way that the
overlapped operations can be processed without

Costs anticipated to be incurred for a certain

undertaking. In cost planning, you can plan
these costs in accordance with certain planning
methods. You can compare the actual costs of an
undertaking to the planned costs in order to
calculate and subsequently analyze variances.

Glossary-11

Glossary

Planned delivery time

Planning run

Number of days required to procure the material

via external procurement.

Execution of materials planning for all materials

or assemblies which have the necessary entries
in the planning file.

Planned independent requirements

A non-allocated independent requirement that is
created for an anonymous party. The planned
independent requirement contains one
requirement quantity and one requirement date.
Planned independent requirements are used for
planning future sales quantities irrespective of
actual orders. The term "planning requirements"
is also used in this context.

Planned lot size

Lot-size value which the system uses as a default
during costing. The non-proportional costs refer
to this value.

Planned order
Order proposal which is automatically created
by material requirements planning or which is
manually created by the MRP controller.

Planning file
File that contains a list of all the materials for
which a change relevant to requirements
planning has occurred. If such a change has
taken place, the entry in the planning file is
carried out automatically. Each material in this
file containing the corresponding planning is
included in the next planning run.

Planning table
Layout of the run-schedule quantities in
repetitive manufacturing and the production
plan in sales and operations planning. The SAP
system contains a tabular and a graphical
planning table.

Planning time fence

Defined period in which no automatic changes
are carried out to the master plan during
material requirements planning. Within the
planning time fence no new planned orders are
created automatically and already existing
planned orders are not changed automatically
by the system.

Plant
A plant is a unit within a company that
produces or makes available goods and renders
services.

Pooled capacity
Capacity whose availability is used by several
work centers conjointly. An example of a pooled
capacity is a group of setup personnel who carry
out setups for many work centers in common.

PPC planning calendar

Planning file entry
Material entry in the planning file. Each material
that has an entry in the planning file will take
part in the next planning run. The system creates
the entry automatically when a material has
been changed in a way that is relevant to
materials planning (change of the BOM or a
stock change, for example).

The planning calendar defines flexible period

lengths at plant level for demand management
and material requirements planning.

With PPC planning calendars, you can, for

example, define flexible procurement dates
for determining period lot sizes.

In the stock/requirements list and in the

MRP list, MRP elements can be grouped
together into period tables according to the
specifications in the PPC planning calendar.

In demand management, flexible planning

periods can be maintained for creating
planned independent requirements.

Planning requirements
See Planned independent requirements.

Glossary-12

Glossary

Preliminary costing
Determining the planned costs of a product, a
step carried out before the product is included in
the demand program. It serves as the basis for
determining prices in make-to-order.

Process order
An order describing the production of materials
in a production run or the output of a service
such as a cleanout. The process order is
generated from the master recipe and contains
all the information specified during process
planning.

Processing time
The time needed to process a material in an
operation. The processing time is dependent on
the order quantity, and does not contain a setup
or teardown time. Together with these, it forms
the execution time.

Product costing
Non-order-related costing based on bills of
material and routings. Product costing is used
for the following:

determining the production costs of an

assembly with alternatives for showing the
costs of semi-finished products or for
making a detailed estimate of the cost
components down to their lowest
production level

comparing the costs of different production

alternatives

calculating prices for quotations and

customer orders

stock valuation

as a basis for variance calculation for

production orders

Production order
An order for the production department to
produce a material. A production order
contains, for example, operations, material
components, production resources/tools, and
costing data.

Production overhead costs

Costs originating in production which can only
be assigned indirectly to a cost object such as:

operating supplies

supervisor salaries

energy costs

imputed depreciation

imputed interest

Production plan
Production plans are created in the planning
table of Sales and Operations Planning (SOP).
Production targets can be set for materials,
product groups and/or characteristic values
from an information structure, and derived from
sales targets or using self-defined or standard
macros.
It is possible to set production quotas at one
level and disaggregate them to the next level
down (for example, product group to material),
or vice versa; that is, to set production quotas at
one level and aggregate them to the next level
up (for example, material to product group).
The planning horizon is divided up into a
number of periods (either days, weeks, months,
or posting periods); thus, planning figures are
viewed and stored in the periods to which they
relate. The production quantities planned in
Sales and Operations Planning can be passed on
to Demand Management.

Production resource/tool
Resources or tools needed to carry out
operations at work centers. Production
resources/tools can be:

a set of manufacturing instructions

the tools used to manufacture something

measurement or calibration instruments

NC programs

drawings

jigs and fixtures

Glossary-13

Glossary

Production version

Reorder point

The production version determines the various

production techniques that can be used to
produce a material; it specifies

If this quantity is exceeded, then an entry is

automatically set in the MRP planning file for
this material. The term "reorder level" is often
used as a synonym.

the BOM alternative for a BOM explosion

the task list type, the task list group, and the
group counter for the allocation to task lists

lot-size restrictions

Quality management
All activities and objectives that relate to quality.
For example, quality management includes all
activities relating to quality planning, quality
inspection, quality control, and quality
assurance.

Queue time
Time between the finish of the move time and
the start of the execution time. The queue time is
a float which can be used to compensate for
delays in the production process. It can be
maintained in the work center or in the
operation.

Rate routing
A routing which can be used in repetitive
manufacturing for planning production
quantities/volumes. You can define the
production quantity and a fixed reference point
for each operation in a rate routing and thus
determine the production rate.

Reference operation set

Describes a frequently used operation sequence.
A reference operation set is not allocated to a
material. By copying reference operation sets or
by referencing them, you can reduce the time
and work needed to create a routing or an
inspection plan.

Regenerative planning
Carrying out material requirements planning,
whereby all materials are included in the
planning run.

Glossary-14

Reorder point planning

Special procedure in materials planning. If the
stock at reorder point is greater than the
warehouse stock, an order proposal is created by
materials planning. A difference is made
between:

automatic reorder point planning

manual reorder point planning

Repetitive manufacturing
Components that can be used in repetitive
production for production planning and control.
Using repetitive manufacturing, you can;

create and process run schedules based on

periods and quantities

reduce the effort required for production

control and simplify backflushing

Reporting point
Reporting points are used in repetitive
manufacturing. For example, a production
process may consist of 10 operations at 10
different work centers. You may want to make 2
of these work centers reporting points. The
reporting point is used for interim confirmations
and backflushes.

Requirements plan
The requirements plan is used in the system to
record the demand program. The demand
program contains the required quantities and
dates for main assemblies and finished products
in the form of planned independent
requirements.

Revision level
Period of time during which the plant or part
thereof is temporarily shut down, so that
maintenance tasks can be carried out.

Glossary

Rework order

Sales and Operations Planning (SOP)

An order used to correct defects in products

after completion of the manufacturing process.

Sales and Operations Planning (SOP) is a flexible

forecasting and planning tool with which sales,
production, and other operational targets can be
set on the basis of historical, existing, and/or
estimated future data. Capacity planning can
also be carried out to determine the amounts of
the capacities required to meet these targets.

Rough-cut capacity planning (RCCP)

The process of converting the master production
schedule into requirements for key resources,
including labor, machines, and other resources
used.

Sales plan
Routing
A type of "task list" containing one or several
sequences of operations used to manufacture a
product. In order to minimize data entry, a
routing can access reference routings containing
general information. Examples of routings are:

maintenance instructions

maintenance routings

reference operations sets

production routings

A production routing describes the sequence of

processing steps required to produce a material
or provide a service without reference to an
order. The main parts of a routing are the
routing header, operations, material allocations,
production resources/tools and inspection
characteristics.

Specification of sales quantities for future

periods. The sales plan determines the sales
potential. In other words, it specifies how many
of each of the end products or of each of the
product groups can be sold. The sales plan is the
starting point for demand management and
Master Production Scheduling.

Scheduling
In scheduling, the system calculates the start and
finish dates of orders or of operations within an
order. Scheduling is carried out in the following
two ways:

MRP: The in-house production times and

the delivery times specified in the material
master record are taken into account during
scheduling.

Capacity planning: scheduling is carried out

via the routing and the production order. A
distinction is made between lead time
scheduling, where the capacity loads are
not taken into account, and finite
scheduling, where the capacity loads are
taken into account.

Run schedule
Schedule in repetitive manufacturing for the
production of finished products or semi-finished
products which are produced on a repetitive
basis over a longer period.

The following scheduling types exist:

forward scheduling: scheduling starting

from the start date backward scheduling:
scheduling starting from the finish date

midpoint scheduling: combined forward

and backward scheduling starting from any
midpoint operation in an order

network scheduling: scheduling of

networked structures, in which the
earliest/latest dates for carrying out the
activities are determined and the capacity
requirements and the floats are calculated.

Safety stock
Quantity of stock held to satisfy unexpectedly
high requirements in the stocking-up period.
The purpose of the safety stock is to prevent a
material shortage from occurring. In order to
determine the safety stock level, you must first
specify the risk of a material shortage and also
the desired service level. Usually the safety stock
will not be used in production.

Glossary-15

Glossary

Sequence

Service order

Sequence of operations that are sorted according

to operation number. By defining various
sequences in routings or inspection plans, you
can create structures that are similar to
networks, but less complex. The following
sequence categories are distinguished in
routings:

Means with which you can carry out the

following in the area of call management:

standard sequence

alternative sequence

parallel sequence

Service management
R/3 application module with which service
tasks can be processed. Service management
basically includes the following functions:

structuring and managing technical objects

for which service tasks are to be performed
(for example, technical systems or
machines)

plan specific service tasks with regard to the

usage of materials and resources, and the
placement of personnel

monitor the performance of service tasks

enter and settle costs resulting from service

tasks

Settlement
Full or partial allocation of calculated costs from
an order or cost collector to a material or other
settlement receiver.

Setup time
Time required to prepare a work center for the
operations that are to be carried out there. The
setup time is part of the execution time.

Shift definition

management of data for warranties and

business partners

entry of service requests

planning and performance of service tasks

requested

The start, finish and break times of a shift are

determined in the shift definition. The shift
definition is valid for all routings. Shift
definitions reduce the work involved in
determining available capacity when working
hours change because they are maintained
centrally.

billing of costs arising from the service tasks

Shift sequence

monitoring of service processing to ensure

compliance to deadlines and to agreed
response times

Service notification
Means of entering and managing notifications
for customer service. In a service notification
you describe the condition of a service object,
request the service tasks required and document
the work carried out. Depending on the tasks
requested, you can create a

A shift sequence contains a sequence of shifts

defined for several work centers for a specific
period of time. The central maintenance of shift
sequences reduces the work involved in
changing the order of shift definitions.

Shop floor papers

Documents required for carrying out a work
order. They include the following:

operation control ticket

job ticket

service order (PM)

pick list

sales order (SD)

time ticket

from a service notification

confirmation slip

Glossary-16

Glossary

Simulation
A function in capacity planning used to carry
out capacity leveling. Via this function you can
simulate changes without having them written
to the data base. The following data can be
changed:

dates

the available capacity

work centers or resources

the order status

Single-level BOM
The quantity of all components which can be
used to represent one or more assemblies.

Standard price
Constant price with which a material is
valuated, without considering goods movements
and invoice entries.

Standard product
Product involving a large number of variants.
The product is represented by a bill of material.
The BOM of a standard product contains both
components that are used in all variants and
selectable components. Components can be
selected on the basis of the values you assign to
the configuration parameters (characteristics of a
class that is allocated to the product) and the
object dependencies you allocate to the product.
When you configure the product, the assigned
values are automatically checked for consistency
and completeness.

Splitting
Splitting is a form of scheduling during which
an operation is divided into several processing
steps that are carried out at the same time. An
operation can be split, for example,

Statistical process control (SPC)

if it is processed simultaneously at several

machines

Stock item

if it is carried out by several people

The application of statistical techniques to

control processes.

A material used as a component in a bill of

material, which is kept in stock. Before you can
enter a stock item, a material master must exist
for the material concerned.

Standard BOM
Bill of material created for a standard object. A
standard BOM is not maintained at the plant
level. The components of a standard BOM
represent object-independent structures which
repeat themselves and can be allocated to the
activities in a project-independent standard
network. Standard BOMs are simple BOMs: that
is to say, you cannot create either variants or
alternatives for a standard BOM.

Stock/requirements list
Up-to-date overview of a material's stock
situation. The overview is generated via a
function which includes all current and relevant
data (production orders, sales orders, and so on)
on a particular stock. Therefore, it always shows
the most up-to-date availability situation for a
material as opposed to the MRP list which
reflects the stock/requirements situation at the
time of the last planning run.

Standard cost estimate

The most important type of costing in product
costing and the basis for profit planning or
variance-oriented product cost controlling. It is
usually created once at the beginning of a fiscal
year or a new season for all products. The
standard cost estimate calculates the standard
price for semi-finished and finished products
and is relevant to the valuation of materials with
standard price control.

Storage location
An organizational unit that allows the
differentiation of material stocks within a plant.

Glossary-17

Glossary

Sub-item
Subdivision of a BOM item.
The difference between one sub-item and
another is the installation point. A sub-item has
no control function in the bill of material. It can
be used to help create company-specific
assembly programs.

Sub-operation
A sub-operation is subordinate to an operation.
Sub-operations are used, for example, to allocate
persons and machines to an operation for which
several persons or machines are needed at the
same time. A sub-operation can be costed, but it
cannot be scheduled. There are, for example, the
following types of sub-operations:

sub-operations of operations in PP routings

sub-operations of operations in maintenance

routings

Summarized BOM
Analysis of a BOM showing a complete list of all
the explosion levels of assemblies and other
components contained in a product. Assemblies
or other parts which are used more than once
are added together. The system multiplies this
with the required quantity and displays it as one
item. Displaying the assemblies as components
is optional.

Task list
Describes the worksteps necessary to produce a
material or perform an activity without
reference to an order. Essential objects of a task
list are header, operations, material component
allocations, production resources/tools and
inspection characteristics.
Together with specific dates and quantities, task
list data forms an important part of the order.
The following task list types exist in the R/3
System: routings, reference operation sets, rate
routings, inspection plans, maintenance task
lists, standard networks, and master recipes.

Glossary-18

Teardown time
The time needed to restore a work center to its
normal state after the operations have been
processed. The teardown time is part of the
execution time.

Trigger point
Trigger points are used to trigger certain
functions (for example, operation release,
insertion of reference operation sets) when the
status of an operation changes. A trigger point
can be assigned to an operation in a routing or
an order. The user specifies conditions in a
trigger point. The specified function is only
carried out if these conditions are met.

Valuation area
The valuation area is the organizational level at
which material stocks are valuated and stored. It
is either the company code or the plant, depending on how the system is set up.

Valuation strategy
Strategy for the valuation of materials, internal
activities and external activites in costing. The
valuation strategy depends on the costing variant (a key determining how a cost estimate is
created and valuated) and the valuation variant
(key that determines what prices are selected to
valuate the quantity structure in product costing
or the costing items in unit costing).

Variable costs
Portion of the total costs that varies depending
on the operating rate and the lot size.

Variable-size item quantity

Quantity of the variable-size item, which the
system calculates using the sizes and, if appropriate, a defined formula. The variable-size part
quantity is used as a basis for calculating raw
material requirements.

Variant BOM
Combination of a number of bills of material
which enables you to describe a product, or
several products which have a large proportion
of identical parts, at once.

Glossary

Variant configuration
You can use variant configuration to describe
complex products that are manufactured in a
large number of variants (for example, cars). All
these variants are defined as one variant
product. The variant product has a bill of
material, containing all the components that can
be used in at least one variant of the product,
and a routing, containing all the operations that
can be used to manufacture at least one variant
of the product.
Characteristics are assigned to the variant
product. You use these characteristics to
describe an individual variant. Object
dependencies ensure that the correct
components are selected from the BOMs and the
correct operations are selected from the routing.

Wait time
The time which must pass before a material can
be processed in the next operation. Example: the
time necessary for cooling a material after it has
been annealed. The process-related wait time
forms part of the lead time of the operation.

Where-used list
List showing in which assemblies a material is
used, and in what quantity. This means that you
approach data in bills of material from the
"bottom up". The following options are
available:

The work breakdown structure can be displayed

according to phases, functions and objects.

Work center
A work center is an organizational unit where a
workstep is carried out, producing an output.
The work center defines where and by whom an
operation is to be carried out. A cost center is
assigned to each work center in a work center
master record. The work center has a particular
available capacity. The activities performed at or
by the work center are valuated by charge rates,
which are determined by cost centers and
activity types. Work centers can be:

machines

people

production lines

groups of craftsmen

Work center hierarchy

A structure within work center management in
which work centers and their relationships to
one another are represented in levels. Work
center hierarchies are used in capacity planning
for cumulating available and required capacities.
Furthermore, they can be used to search for
work centers.

Work order

single-level where-used list

multi-level where-used list

An order which specifies a task to be carried out

within the company. The term "work order" is a
generic term for the following order types:

summarized where-used list

production order

process order

inspection order

maintenance order

The third option shows the cumulative

quantities of material used in all levels of the
assembly, all added together.

Work breakdown structure

A work breakdown structure (WBS) is a model
of a project containing a hierarachic representation of the actions and activities to be carried out
in a project. The work breakdown structure
enables you to have an overview of the project.

network

Glossary-19