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198 CHAPTER 6 The Production Process

Figure 6-17: Elements of the request production step

discussed earlier in this chapter. If the company has adopted a make-to-order
strategy, then the receipt of a customer order (fulfi llment process) will trigger
the need to produce the materials. If the company has adopted a make-to-
stock strategy, then production is triggered by the material planning process,
which is concerned with ensuring that suffi cient quantities of materials are
always available. Other processes may also trigger production. For example,
project management, which involves the building of complex products such as
an aircraft, may trigger the production of a component part. Although requests
for production are typically triggered from another process, they can also be
created manually when there is a need to produce materials independent of
other requirements. In our GBI scenario, the request for production is created
manually based on a review of inventory levels.
Regardless of the source of the trigger, the outcome of this step is a
planned order, which is a formal request for production that indicates what
materials are needed, how many units are needed, and when they are needed.
It is similar to a purchase requisition (discussed in Chapter 4) in that it does
not become a commitment until someone acts on the request.

Data

Various organizational data, master data, and user-specifi ed data are included
in a planned order. The key data are listed in Figure 6-18. The individual mak-
ing the request specifi es which materials are needed, how many, and when they
are needed. At this point the ERP system automatically incorporates both the
master data related to the materials and the bill of material in the planned
order. The system uses these data, along with confi guration options specifi ed
in the system, to calculate additional data, such as order dates and material
availability. If the planned order was created by another process, then the user-
specifi ed data explained above are provided by the process that created the
planned order.

Tasks
The only task in this step is to create the planned order. Planned orders remain
in the system until they are acted upon by the authorized person in the com-
pany, typically the production manager. The production manager can reject
the order, modify it, combine it with other orders, or authorize the production.
For our purposes we will assume that he or she authorizes the production. We
discuss authorizing production in the next section.

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