Discrete manufacturing in SAP PP is lot-based production using production orders. You plan with MRP, convert to orders, stage components, execute operations, confirm work, post GI/GR, and settle costs per order. Success hinges on clean master data (Material, BOM, Routing, Work Center, Production Version) and a few key config touchpoints (order types, scheduling, confirmations, backflush, costing).
What “Discrete” Means in SAP
“Discrete” manufacturing produces distinct units—assemblies, machines, electronics, tools—built in batches or lots. Each lot is controlled by a production order that captures its instructions (BOM and routing), reservations, costs, and history. You can split, rework, scrap, hold, and analyze variance per order, which makes discrete ideal when:
- Products vary by configuration or options
- Engineering changes happen frequently
- Serial or unit-level traceability matters
- Finance needs order-level performance
Examples:
- Industrial pump assembly with multiple options (motor size, materials)
- Electronics with serial numbers and firmware loading/testing steps
- Custom machinery with frequent engineering change notices (ECNs)
Core Process Flow (End-to-End)
- Plan demand with MRP or forecasting. MRP creates planned orders.
- Convert a planned order to a production order (or create one directly).
- Release the order and print/dispatch shop papers or use digital worklists.
- Stage components (pick lists, reservations, WM/EWM tasks).
- Execute operations on work centers (labor, machine time, external processing).
- Confirm operations (partial/final), backflush components if applicable.
- Post goods issue (261) for consumed components (auto via backflush or manual).
- Post goods receipt (101) to stock, optionally triggering QM inspection (04).
- Settle the order to the material (or WBS, cost center), analyzing variances.
S/4HANA note: Production Versions are mandatory and drive which BOM/routing the order uses. Get them right.
The Master Data You Need (and Why)
1) Material Master (MM01/MM02)
- MRP views (MRP type, lot sizing, special procurement, strategy group) determine planning behavior.
- Work Scheduling view stores key PP settings (e.g., production scheduling profile, in-house production time, scheduling margins).
- Accounting/Costing views define valuation class and standard price, which tie into variance analysis.
- QM view (if used) enables inspection type 04 for GR from production.
2) Bill of Materials (BOM) (CS01/CS02)
- Lists the components and their usage (base qty, scrap, alternative items).
- Supports alternative BOMs for different designs or plants.
- Can include phantoms, by-products, and co-products (less common in discrete, but possible).
3) Routing (CA01/CA02)
- Sequence of operations with control keys (internal, external, milestone confirmation, automatic GR, etc.).
- Sets work centers, standard times, inspection characteristics, and reference to PRTs (tools, documents).
- May include alternative sequences (parallel, skip, rework) for flexibility.
4) Work Centers (CR01/CR02)
- Represent machines/lines/labor groups with capacity, cost center, and activity types (setup, machine, labor).
- Hold backflush flags, queue/wait times, and key scheduling parameters.
5) Production Version (C223)
- Ties Material + BOM + Routing (and lot-size validity) together.
- Used by MRP and order creation to select the correct process variant.
- In S/4HANA, this is non-negotiable—govern them like critical master data (owners, change process, versioning).
Configuration That Actually Matters
Paths vary by release; below are the common concepts administrators align in SPRO.
- Order Types & Number Ranges
- Define production order types (e.g., PP01 for make-to-stock, PP02 for rework) and assign number ranges and status profiles.
- Use specific order types for rework or external processing if you want separate controls and reporting.
- Order Type–Dependent Parameters (classic: OPL8)
- Control scheduling (lead time vs. finite), routing/BOM selection, capacity requirements, goods movement defaults, and release/printing behavior.
- Decide if orders are automatically released upon creation or require manual checks.
- Confirmation Parameters (e.g., OPK4)
- Set whether confirmations are milestone vs. operation, allow partial confirmations, enforce reason codes for scrap/rework, and whether to post GI/GR automatically at confirmation.
- Keep these practical—overly strict settings slow the floor; overly lax settings ruin data quality.
- Backflush & Automatic Goods Movements
- You can enable backflush in material, work center, or routing operation.
- Many plants set backflush at the work center to keep control near the line, then override at operation when needed.
- Scheduling Profiles & Production Scheduling Profile
- Profiles can auto release, auto print, auto generate capacity requirements, and lock certain manual changes.
- Assign the production scheduling profile in the material so every order behaves consistently.
- Control Keys
- Determine how operations behave: need confirmations, allow external processing, post automatic GR, trigger QM, etc.
- Keep a short, well-documented set; too many keys confuse planners.
- Costing/Settlement
- Link work center activity types to cost centers (e.g., machine hour, labor hour).
- Define settlement profiles and variance categories so Finance gets clean order-level cost signals.
Execution Scenarios (Concrete Examples)
Example A: Assembling an Industrial Pump (Make-to-Stock)
- Context: Stable demand, occasional engineering changes, serial reporting.
- Master Data:
- Material PUMP-1000 with strategy group 40 (MTS), MRP type PD.
- BOM includes motor, housing, impeller, gasket kit; some items flagged for backflush.
- Routing with 6 operations: machine housing, assemble, torque, electrical test, paint, final test.
- Work centers for machining, assembly, test; activity types setup/machine/labor.
- Production Version PV1 valid for lots 1–999.
- Process:
- MRP proposes planned orders. Planner converts to production orders and releases.
- WM creates pick tasks against order reservations; line-side staging completes.
- Operators confirm operations (milestone) and backflush standard components.
- Tester records yield; GR 101 posts to FG. QM 04 triggers inspection where required.
- Order settlement posts variances to material; Finance reviews labor/machine deltas.
Example B: Custom Variant of the Pump (Make-to-Order with VC)
- Context: Customer needs a high-temperature seal and stainless hardware.
- Master Data: Variant configuration drives BOM selection (alt items) and routing options (skip paint).
- Process: Sales order triggers make-to-order planned order → production order with configured BOM.
- Execution: Same operations but with extra inspection. All costs and variances settle to the sales order item (or material, depending on setup).
- Outcome: Order-level costing highlights the marginal impact of the special seal kit and stainless hardware.
Example C: Rework Order
- Context: 5 units failed final leak test.
- Process: Create rework production order referencing the original material/serials; routing contains rework steps (diagnose, reseal, retest).
- Accounting: Costs are collected on the rework order and settled per policy (material or cost center).
- Benefit: Keeps yield and quality reporting transparent without polluting the main order.
Integration Touchpoints You Shouldn’t Ignore
- MM/Procurement: Component availability and purchase requisitions originate from MRP. Subcontracting components can be staged to vendors and consumed at GR using standard movements (543).
- QM: Inspection type 04 for GR from production; operation characteristics for in-process checks. Certificates and usage decisions flow naturally.
- WM/EWM: Order reservations drive pick tasks. In EWM, use staging strategies (e.g., pick parts to a PSA), monitor open tasks, and backflush from the floor using RF or Fiori.
- CO/Controlling: Activity rates (machine/labor) from KP26, cost centers from KS01, and settlement rules ensure clean variance analysis per order.
- Serial Numbers/Equipment: For traceability, enable serial numbers; convert to Equipment if the unit becomes an asset in PM/CS.
S/4HANA Notes (What’s Different vs ECC)
- Production Versions are required and are used by MRP and order creation—no more “loose” BOM/routing selection.
- Fiori apps (e.g., Manage Production Orders, Monitor Work Center Schedules) make dispatching and confirmations simpler but the classic CO transactions still exist for power users.
- Embedded EWM staging/backflush integrates tightly with production orders via PSA and consumption posting.
- MATDOC (universal inventory line item) modernizes postings; your MIGO/GI/GR still work as expected, but reporting is faster and more consistent.
Tips for a Smooth Rollout
- Own the Production Version lifecycle. Define who creates/approves versions, how alternatives map to plants/lot sizes, and how you retire them.
- Keep control keys simple. A minimal, well-documented set reduces errors.
- Decide where backflush lives. Work center-level backflush with operation overrides gives flexibility without chaos.
- Right-size confirmations. Milestone confirmations + automatic GI/GR can cut admin by half while retaining data quality.
- Pilot one product family. Validate staging (WM/EWM), confirmation, GI/GR, and settlement. Fix before scaling.
Quick Reference: Helpful Transactions
- Planning & Orders: MD04 (Stock/Req), MD01/MD02 (MRP), CO01/02/03 (Prod. orders), MF50 is for REM (not discrete).
- Master Data: MM01/02 (Material), CS01/02 (BOM), CA01/02 (Routing), CR01/02 (Work Center), C223 (Production Version).
- Execution: CO11N/CO15 (Confirm), MIGO (GI/GR), MB52/MB51 equivalents now use Fiori or stock reports; QA32 (QM results).
- Costing/Settlement: KKAX/KKS2/KKAO (variance/settlement—exact code set varies by release), S_ALR* reports, Fiori analytics tiles.
Wrap-Up
SAP PP Discrete shines when you care about lot-level control and per-order costs. The formula is straightforward: clean master data, lean order/confirmation settings, disciplined staging and backflush, and clear settlement rules. Start with one representative assembly, build out production versions, validate BOM/routing/work center data, and tune OPL8/OPK4 parameters to match how your shop floor actually works. Do that, and discrete manufacturing becomes both predictable for planners and transparent for Finance—exactly what you want from S/4HANA.
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The author, Ray Hornbrook, has over 19 years of SAP functional and technical experience. Ray started his career in SAP as a MM/PP Subject Matter Expert (SME) for a SAP implementation in 1998 and is now a Senior Level SAP Consultant. Since Ray has worked both sides of SAP, business end user and IT professional, he is able to communicate effectively with both IT and Business team members. Having a background as an SAP business end user has helped Ray greatly in his consulting career. The business background helps him better communicate with the business members of the team. As well as helping bridge gaps in communication between the IT and Business team members.
To find out more about Ray Hornbrook please check out his LinkedIn profile by clicking HERE.
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