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182 CHAPTER 6 The Production Process

In Chapter 1, we introduced a simplifi ed production process. We repro-
duce this process in Figure 6-1. The process is triggered by a request for pro-
duction. The request is authorized, which allows the warehouse to issue the
raw materials. Production uses these materials to manufacture the requested
goods, which are then moved to storage.

Figure 6-1: A basic production process

In this chapter, we discuss the production process in detail. GBI utilizes
a make-to-stock production strategy. Further, it employs a discrete production
process to make the different types of bicycles in specifi ed quantities or lots.
We begin our discussion by identifying the master data related to the
production process. We then examine the specifi c process steps in detail. We
conclude by considering reporting as it relates to production. The major orga-
nizational data relevant to production are client, company code, plant, and
storage location. We already have discussed all of these data in previous chap-
ters. Consequently, we will not cover them in this chapter.

MASTER DATA

The master data relevant to production are bills of material, work centers,
product routings, material master, and production resource tools. Let’s look at
each of these more closely.

BILL OF MATERIALS

A bill of materials (BOM) identifi es the components that are necessary to
produce a material. In discreet and repetitive manufacturing, the BOM is a
complete list of all the materials, both raw materials and semifi nished goods,
that are needed to produce a specifi ed quantity of the material. In process
industries, such as chemicals, oil and gas, and beverages, the BOM is often
referred to as a formula or recipe, and it includes a list of ingredients needed to
create a specifi ed quantity of the product. In this book, we will limit our discus-
sion to discrete manufacturing.
A BOM is a hierarchical depiction of the materials needed to produce a
fi nished good or semifi nished good (see Figure 6-2). BOMs range from very
simple to very complex, depending on the material. For example, a BOM
for a ball-point pen consists of only a half dozen or so materials or items.

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