Optimizing Production Efficiency Through Shared Operations
Manufacturing industries such as steel, paper, textile, tools, and special-purpose machinery often face a common challenge: multiple products or production orders require identical manufacturing operations. Running these operations separately can increase setup time, machine downtime, and production costs.
To address this challenge functionality of Combined Production Orders enables manufacturers to consolidate identical operations or even entire production orders into a single executable production process.
This blog explains the concept of Combined Production Orders, business benefits, prerequisites, process flow, key constraints and important operation considerations.
What is a Combined Production Order?
A Combined Production Order allows manufacturers to combine entire production orders or selected sequences of common operations from multiple original production orders into one consolidated production order.
The combined order becomes the execution order on the shop floor, while costs and production quantities are ultimately distributed back to the original production orders.
The functionality is particularly useful in industries where multiple products share the same processing steps, such as: Melting, Casting, Rolling, Heat Treatment, Dyeing, Cutting etc.
Instead of repeatedly setting up machines for same operation, manufacturers can execute multiple production orders together in one efficient production run.
Business Benefits of Combined Production Orders
1. Reduces Setup and Changeover Time
Combining orders reduces the number of machine setup changes required between production runs. This results in lower setup labor costs, reduced machine downtime and higher production throughput.
2. Better Machine Utilization
Machines spend more time producing and less time idle during changeovers. This results in improved overall equipment effectiveness (OEE), higher capacity utilization, reduced non-productive time.
3. Improved Product Consistency
Executing similar operations together can reduce process variability. This results in improved product quality, more stable production conditions, and reduced operational variation.
Combined Production Order vs. Collective Production Order
These two functionalities are supported in S/4HANA Cloud Public Edition, but it is important to highlight the differences between the two as they serve very different purposes.
|
Aspect |
Combined Production Order |
Collective Production Order |
|
Purpose |
Consolidates similar operations |
Links multi-level manufacturing orders |
|
Focus |
Production execution efficiency |
BOM-driven dependent production |
|
Typical Use Case |
Shared machine operations |
Direct production of subassemblies |
|
Warehouse Posting |
Finished goods posted separately to original orders |
Subassemblies may bypass warehouse |
|
Relationship Between Orders |
Independent orders combined operationally |
Orders linked across BOM hierarchy |
Thus, the Key differences are:
- Collective Orders are used when subassemblies are produced directly for superior orders without intermediate warehousing
- Combined Orders are used to optimize production execution by consolidating common operations.
Key Prerequisites for Combined Production Orders
Note: This is not an exhaustive list. Always refer to SAP Help documentation for the complete set of prerequisites and restrictions.
1. Scope Item 7TO Must Be Activated
The scope item: 7TO – Production Order Combination must be activated in SAP S/4HANA Cloud Public Edition.
Quick Validation: In the Manage Production Orders app, verify that the Combine Order action is available.
2. Materials Must Support In-House Production
In the Material Master (MRP 2 view), procurement type must be:
- E- In-House Production, or
- X- Both Procurement Types
Combined Production Orders are only applicable for in-house manufacturing.
3. Orders Must Use Event-Based Costing
Combined Production Orders require event-based WIP and variance posting.
4. Unit of Measure Compatibility
The unit of measure across orders must either be identical or be convertible using alternative units of measure
Two Ways to Combine Production Orders
System provides two approaches to combine orders
1. Combining Entire Orders
Multiple production orders with identical operation sequences are merged into one combined production order. Typically used when the entire production flow is common across products.
To combine complete production orders, the following conditions must be met:
- Orders must belong to the same plant
- Orders must contain material numbers at header level
- Production Order must be in Created status
2. Combining Selected Operations
Only specific common operations across production orders are combined. Typically, useful when only a portion of the manufacturing process is shared
To combine operations from different orders:
- Operations must belong to the same plant
- Operations must use the same work center
- Operations must use identical control keys
- Operation sequences must match
- No gaps allowed in operation numbering i.e. one cannot combine operations 0010 and 0030 if operation 0020 exists between them.
Configuration Requirements
SSCUI 102004 – Define Production Order Types
Verify order type YBOC – Production Order Processing Combination Order is available. This order type is delivered by SAP Best Practices for S/4HANA Cloud Public Edition.
- RA (Result Analysis) Key and EB (Event Based) Processing Key for Order Type
SSCUI 102431 – Define Order Type Dependent Parameters
For Plant + Order Type YBOC ensure the Cost Accounting Settings:
- RA Key/ EB Processing Key = RSEWB
- Distribution Rule =
- PP5 – Production Full Settlement, or
- PP6 – Production Full Settlement (GR Quantity)
These settings enable event-based WIP and variance posting.
End-to-End Process Flow
This section covers end to end process flow from supply chain and manufacturing perspective, highlighting key elements in each step.
Step 1 – Create Standard Production Orders
Standard Production Orders (Order Type – YBM1: Make To Stock Production Order) are created manually or via conversion of Planning Proposals
Example Scenario
|
Order |
Quantity |
Planned End Date |
|
1000862 |
10 PC |
05-June |
|
1000863 |
15 PC |
12-June |
Order Information
Order#: 1000862
Order #: 1000863
Input Components
Order#: 1000862
In this example 1 unit each of raw material components is used for producing 1 PC of output material. Thus, 10 units of each raw material is used to produce 10 pc of output product.
Order #: 1000863
Similarly in this example, 1 unit each of raw material components is used for producing 1 PC of output material. Thus, 15 units of each raw material is used to produce 15 pc of output product.
Operations & Processing Time
|
Order |
Setup Time |
Processing Time |
|
1000862 |
30 min |
10 min |
|
1000863 |
30 min |
15 min |
Order#: 1000862
In this example input materials go through four operations to make the output product. It takes setup time of 30 mins and processing time of 1 min/ unit produced, thus the processing time of 10 mins per operation.
Order#: 1000863
Similarly, in this example input materials go through four operations to make the output product. It takes setup time of 30 mins and processing time of 1 min/ unit produced, thus the processing time of 15 mins per operation.
Step 2 – Create Combined Production Order
This step does the following:
- Creates a new combined order (Type: YBOC)
- Copies eligible operations into the combined order
- Deactivates those operations in the original orders
- Removes their capacity requirements from the original orders
- Transfers component reservations into the combined order
- The original orders still exist and remain traceable
The action to Combine orders is performed in the app Manage Production Orders.
Select the eligible production orders -> Choose Combine Order -> Select Create Combined Order or Create Combined Operations -> Choose a leading/ reference order -> Combined order created
In this example we are combining the complete order via Create Combined Order action
Select eligible production orders & choose combine order action
Select standard orders 1000862 and 1000863 and choose Combine Order -> Create Combined Order
Choose a leading/ reference order
Leading/ reference order is used for defaulting values in the combined order.
Here 1000862 is selected as the leading order
Combined Order is created
The outcome of the above action is the creation of Combined Order. In this example combined order 2000182 is created. Note the different number range for combined order and also the Combination Indicator = “Combined by Order (H)”
Quantity and Planned End Date
Quantity of the combined order is 25 EA (sum of the quantity from the original orders)
Planned End Date: 5th June (taken from leading order and scheduled backwards)
Order Items
Order Items section shows the original orders combined to create combined order.
Original orders 1000862 and 1000863 combined
Input Components
Component quantities are aggregated from original order and requirement dates are rescheduled based on the combined order.
Operations and Processing Time
At operation level, setup time is taken from the leading order (i.e. take once from the leading order) and the processing time is the sum of individual orders.
In this example Setup Time is 30 mins and processing time is 25 mins
Step 3 – Stage Materials for Production
Material staging for production is performed via Stage Materials for Production app. It is performed against the combined production order, and not the original order.
Step 4 – Release Production Order
Release is performed on the combined order. When the combined order is released, original production orders are automatically released.
Step 5 – Pick Components for Production Order
Component picking is executed with reference to the combined order. This is typically done using Pick Components for Production Order app.
Step 6 – Confirm Production Operations
Production confirmations are primarily executed at the combined order level.
Apps Used
|
App |
Usage |
|
Confirm Production Operation |
Used for all operations except the last |
|
Confirm Production Order Operation |
Used for the last operation and quantity distribution |
Confirm Production Operation is a Fiori app and is used for confirming the Yield and the Setup and Processing time.
Confirm Production Order Operation is a GUI app and is used for confirming Yield, Setup & Processing time and Quantity Distribution.
Quantity Distribution is required to distribute combined order yield to the original orders. This ensures accurate inventory assignment, variance allocation and order-level traceability.
When the yield quantity is equal to the combined order total quantity, quantity distribution automatically happens but still needs to be confirmed. Whan the yield quantity is different from the combined order total quantity; distribution must be done manually.
Step 7 – Post Goods Receipt
Goods Receipt is posted against the individual original production orders, not the combined order, as combined order is primarily an execution-oriented object rather than a financial ownership object. Thus, inventory needs to be traced to individual orders for batch and serial number traceability. Further, for accurate product costing, WIP settlement, Variance calculation and financial traceability need to happen at the individual order level.
Goods Receipt is done using Post Goods Receipt for Production Order app.
Goods Receipt: Order #: 1000862
Goods Receipt: Order #: 1000863
Allowed changes after Combined Order created
One of the common questions comes regarding what can be changed in Combined Order and Original Order once the Combined Order is created. This section highlights what changes are possible in each order.
Changes Allowed in Combined Order
While the combined order is in Created status:
|
Change Type |
Allowed? |
|
Change Dates |
Yes |
|
Change Quantities |
No |
|
Change Combined Operations |
Generally, No |
|
Change Components |
Yes |
|
Add Original Orders |
Yes |
|
Remove Original Orders |
Yes (minimum two orders must remain) |
|
Cancel Combined Order |
Yes |
Changes Allowed in Original Order
|
Change Type |
Allowed? |
|
Change Dates |
Yes |
|
Change Quantities |
Yes |
|
Change Non-Combined Operations |
Yes |
|
Change Combined Operations |
No |
|
Change Non-Combined Components |
Yes |
Combined operations become deactivated in the original orders and are controlled through the combined order.
Product Costing in Combined Order scenario
Understanding product costing is critical when implementing Combined Production Orders. A Combined Production Order is primarily used for operation execution optimization. Therefore, following considerations are critical:
- Costs collected at the combined order level must ultimately be distributed back to the original production orders
- Proper settlement logic is essential
- Event-based costing configuration becomes extremely important
Incorrect costing configuration can lead to:
- Incorrect WIP calculation
- Improper variance allocation
- Financial reconciliation issues
A deeper discussion on costing and settlement behavior deserves a dedicated topic of its own and would be covered in a separate blog.
Summary
Combined Production Orders in SAP S/4HANA Cloud Public Edition provide manufacturers with a powerful capability to optimize production execution where multiple orders share common operations.
By reducing setup time, improving machine utilization, and streamlining operational execution, organizations can achieve significant manufacturing efficiency gains.
However, successful implementation requires careful attention to:
- Operational prerequisites
- Costing configuration
- Order eligibility rules
- Yield distribution logic
- Financial settlement behavior
When implemented correctly, Combined Production Orders can significantly improve shop floor efficiency while maintaining accurate order-level traceability and costing.
