Understanding from the Manufacturing Floor: Real-World Examples of Production, Sales, and Procurement Patterns and Their SAP Design
June 2026
Introduction
This document is a guide that explains “what kind of business processes occur on the manufacturing floor” through concrete examples of products and industries, and connects this understanding to how these processes are realized in SAP.
Each business pattern includes an “Example” box that explains the pattern using a concrete manufacturer’s industry, product, and business scenario. The business flow is shown as a “Step Table” so that the operation (T-Code) for each process can be seen at a glance.
Chapter 1 Production Strategy Fundamentals — “When to Make It” Changes the Business Process
What Is a Production Strategy
A production strategy (Production Strategy) is a concept that shows “the relationship between the timing of the order and the timing of production.” The answer to the question “do you make it in advance, or make it after the order comes in” is, in itself, the production strategy. SAP controls this through the planning strategy in the material master, and when the production strategy changes, the way MRP behaves, the way inventory is held, and the way orders are linked all change fundamentally.
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MTS: Make-to-Stock (見込生産)
A style of “making it and putting it on the shelf before the order arrives.” Suited to products with stable demand and few variants. The inventory risk is borne by the company.
▶ Example: A Beverage Maker’s Canned Coffee Production (300,000 units/month)
◆ Product: 500ml canned coffee (Black / Slightly Sweet / Café Latte — 3 varieties)
◆ “We expect 300,000 units of Slightly Sweet to sell next month because it’s summer” → produced in advance → stored in the warehouse
◆ When an order comes in from a convenience store chain, stock is checked → shipped the same day
◆ SAP Business Flow
| Step | Process | T-Code |
| ① | Register the planned quantity of 300,000 units for next month | MD61 |
| ② | Run MRP → automatically generate production orders / purchase requisitions | MD01N |
| ③ | Register the sales order, check ATP (Stock 300,000 units ≥ Order 5,000 units → reservation OK) | VA01 |
| ④ | Process the shipment | VL01N |
| ⑤ | Issue the invoice | VF01 |
◆ SAP Configuration: Material master planning strategy “10 (Make-to-Stock)” / MRP type “PD”
◆ Key Point: Demand forecast accuracy is the key to inventory levels. The risk of loss from unsold, scrapped inventory falls on the manufacturer.
ATO: Assemble-to-Order (受注組立)
A style in which “components and semi-finished products are made in advance, but final product assembly is performed only after the order arrives.” No finished-goods inventory is held; component inventory is used to respond to a variety of combinations.
▶ Example: A PC Maker’s Assemble-to-Order Process (Corporate Laptop PCs)
◆ Product: Corporate laptop PCs (customer selects CPU / memory / SSD capacity)
◆ Common components (motherboard, LCD, chassis) → produced in advance based on forecast and held in stock
◆ CPU (i5/i7), memory (16/32GB), SSD (256/512GB) → held in forecast-based stock
◆ Finished-product patterns total 2×2×2=8 combinations → no finished-goods inventory is held
◆ Flow when a customer orders “Core i7 / 32GB / 512GB × 100 units”
| Step | Process | T-Code |
| ① | Register the sales order (select i7, 32GB, 512GB on the configuration tab) | VA01 |
| ② | Variant Configuration automatically explodes the BOM → component allocation | Automatic |
| ③ | Order any shortfall components (MRP run) | MD01N |
| ④ | Issue the assembly production order | CO01 |
| ⑤ | Enter the confirmation for assembling 100 units | CO11N |
| ⑥ | Receive the finished goods into stock | MB31 |
| ⑦ | Ship the goods | VL01N |
| ⑧ | Issue the invoice | VF01 |
◆ SAP Configuration: Variant Configuration (CT04/CL02/CU41) + Semi-finished product with planning strategy 70
CTO: Configure-to-Order (受注構成)
An advanced form of ATO. A form in which the number of module combinations is enormous (hundreds to tens of thousands), representing a level of variety at which holding finished-goods inventory is impossible.
▶ Example: An Industrial Inverter Maker’s Order Response
◆ Product: General-purpose inverter (factory motor control device)
◆ Selection axes: 15 output-capacity levels × 3 voltage types × 4 communication protocols × 2 enclosure types = 360 combinations
◆ Finished-goods inventory is impossible → after the order is confirmed, the BOM is dynamically finalized and manufacturing begins
◆ When a customer orders 10 units of “3.7kW / 3-phase 200V / EtherNet/IP / outdoor waterproof”
| Step | Process | T-Code |
| ① | Register the sales order (select each characteristic value on the configuration tab) | VA01 |
| ② | The Variant Configuration engine automatically determines the BOM and routing | Automatic |
| ③ | MRP explosion → order unique components (3.7kW transformer, EtherNet/IP board, etc.) | MD01N |
| ④ | Issue the production order | CO01 |
| ⑤ | Assembly and testing | CO11N |
| ⑥ | Shipment and invoicing | VL01N/VF01 |
◆ SAP Configuration: CT04 (characteristic definition) → CL02 (class) → CU41 (configuration profile)
MTO: Make-to-Order (受注生産)
A form in which manufacturing begins only after the order arrives. Costs are collected by order, making it possible to grasp profitability on an order-by-order basis.
▶ Example: A Press Die Maker’s Make-to-Order Production (Automotive Door Panel Molds)
◆ Product: Press mold for automotive body panels (approx. 200 million yen per set)
◆ Zero inventory. After the order, material procurement → rough machining outsourced → in-house finishing → trial pressing → delivery
◆ Order-to-Delivery Flow
| Step | Process | T-Code |
| ① | Register the sales order (Customer = automaker / Amount = 200,000 thousand yen) | VA01 |
| ② | MRP explosion → automatically generate production orders / purchase requisitions | MD01N |
| ③ | Order special steel (SKD11) from a steel trading company (account assignment: sales order E) | ME21N |
| ④ | Provide material to a subcontractor and request rough-machining work | ME21N (subcontracting) |
| ⑤ | Receive the subcontracted goods | MIGO |
| ⑥ | Enter the confirmation for in-house precision grinding, EDM, and assembly/adjustment | CO11N |
| ⑦ | Trial pressing inspection → confirm OK | QA11/QA32 |
| ⑧ | Receive the finished goods into stock (sales-order special stock) | MB31 |
| ⑨ | Shipment | VL01N |
| ⑩ | Issue the invoice (200,000 thousand yen) | VF01 |
◆ SAP Configuration: Planning strategy “20 (Make-to-Order)” / Sales-order special stock (E stock)
◆ Order-based profitability: KKA2 allows “planned cost vs. actual cost” to be analyzed for each mold
ETO: Engineer-to-Order (個別設計受注)
A form of “making it starting from the design drawings.” For each order, the entire process of design → procurement → manufacturing is carried out. SAP PS’s WBS management is central to this.
▶ Example: A Chemical Plant Construction Company’s EPC Order (24-Month Construction Period / Order Value 3 Billion Yen)
◆ Order content: A complete ethanol production plant (from basic design through trial operation)
◆ Without applying a monthly percentage-of-completion basis, 3 billion yen would be recognized all at once in the closing month, distorting the financial statements
◆ Design Phase (Months 1–6 after order)
| Step | Process | T-Code |
| ① | Receive the customer’s specifications → create the process flow and equipment list | — |
| ② | Create the WBS (4 phases: design / procurement / construction / trial operation) | CJ01 |
| ③ | Register the budget | CJ30 |
| ④ | Link the WBS elements to the sales order document | VA01 |
◆ Procurement–Construction Phase (Months 3–20)
| Step | Process | T-Code |
| ① | Order custom tanks and pumps from specialist manufacturers (Q-stock management) | ME21N |
| ② | Materials arrive → posted to project stock (Q stock) | MIGO (101Q) |
| ③ | Collect the man-hours for construction work (subcontracted) into the WBS | CN25 |
| ④ | Monthly: WBS settlement (transfer work-in-progress to construction cost) | CJ88 |
| ⑤ | Monthly: Revenue recognition under the percentage-of-completion method (3 billion yen × completion %) | VF44 |
◆ Handover Phase (Months 22–24)
| Step | Process | T-Code |
| ① | Trial operation complete → customer acceptance | — |
| ② | Issue the final invoice (remaining balance) | VF01 |
| ③ | Final WBS settlement (bring work-in-progress balance to zero) | CJ88 |
◆ SAP Configuration: PS (WBS) + SD sales order integration + DIP (DP90) progress billing + VF44 revenue recognition
Chapter 2 Sales Business Patterns (SD Scenarios)
2-1 Order & Fulfillment Type Patterns
SD-101: Stock Sales of Make-to-Stock Products
The most basic pattern. If stock is available, shipment can be committed on the same day the order is received. Suited to mass-produced products with stable demand.
▶ Example: An Industrial Screw Maker (M6×20mm Hex Bolts, 100,000 units/month)
| Step | Process | T-Code |
| ① | Register the sales order (10,000 units) | VA01 |
| ② | Check ATP (Stock 50,000 units → reservation OK) | Automatic |
| ③ | Create the delivery document, picking, and actual goods issue | VL01N |
| ④ | Issue the invoice | VF01 |
◆ SAP Configuration: Item category TAN / Planning strategy 10 / Schedule line category CP
SD-102: Sales of Make-to-Order Products
Because manufacturing begins only after the order arrives, inventory is zero, but the manufacturing lead time is added to the delivery date.
▶ Example: A Specialty Bearing Maker (Customer-Specified Bore Diameter and Precision Grade)
◆ A special item with an inner diameter of φ47.00mm (standard is φ47mm) → no stock; grinding is performed after the order is received
| Step | Process | T-Code |
| ① | Register the sales order (special item, planning strategy 20) | VA01 |
| ② | Run MRP → automatically generate the production order | MD01N |
| ③ | Enter the confirmation for machining (turning, grinding, heat treatment) | CO11N |
| ④ | Quality inspection | QA11/QA32 |
| ⑤ | Receive the finished goods into stock (into sales-order special stock) | MB31 |
| ⑥ | Shipment (from sales-order special stock) | VL01N |
| ⑦ | Issue the invoice | VF01 |
◆ Key Point: Sales-order special stock cannot be diverted to other orders. It can be checked by sales-order number using MB53.
SD-103: Scheduling Agreement (Forecast and Firm)
Commonly seen in the automotive and electronics industries. A form in which the customer first notifies an “approximate quantity forecast” for a 3-month period, and the firm order arrives just before delivery.
▶ Example: An Automotive Rubber Hose Maker (Tier 2 → Tier 1)
◆ Forecast: 12,000 units in July / 11,500 units in August / 12,200 units in September (notified monthly by Tier 1)
◆ Firm order: On June 25, a firm instruction arrives for “3,000 units for the first week of July, to be delivered on July 2”
| Step | Process | T-Code |
| ① | Register the forecast quantity as a planned independent requirement | MD61 |
| ② | Run MRP → procure materials in advance (based on the forecast) | MD01N |
| ③ | Receive the firm call-off (automatically imported via EDI/IDoc) | IDoc/VA01 |
| ④ | Finalize the shipment lot → picking | VL01N |
| ⑤ | Delivery and invoicing | VF01 |
◆ SAP Configuration: Quantity contract (VA41) + call-off (referenced from VA01)
SD-205: Third-Party Drop Shipment
A form in which the company holds no inventory of its own; when a customer order is received, the supplier is instructed to ship directly to the customer. Common among trading companies.
▶ Example: An Industrial Equipment Trading Company’s Drop-Ship Transaction (Overseas Pump Maker → Domestic Factory)
◆ The company itself holds zero inventory. Upon receiving the order, it instructs the overseas pump maker to ship directly to the customer’s factory.
| Step | Process | T-Code |
| ① | Register the sales order (item category TAS) | VA01 |
| ② | Automatically generate a purchase order from the sales order (Vendor = pump maker, Ship-to = customer factory) | ME21N (automatic) |
| ③ | The vendor ships directly to the customer’s factory (statistical goods receipt processing) | MIGO (statistical) |
| ④ | Issue the sales invoice | VF01 |
| ⑤ | Verify the purchasing invoice | MIRO |
◆ SAP Configuration: Item category “TAS (third-party order)” / Schedule line category “CS”
2-2 Pricing & Contract Patterns
SD-302: Rebate Processing
▶ Example: An Electronic Components Maker’s Rebate Agreement (Over 100 million yen annually → 2% returned the following March)
◆ Challenge: With spreadsheet management, “how much rebate liability has accrued this period” is unclear on a monthly basis
| Step | Process | T-Code |
| ① | Register the rebate agreement (2% rate, applicable period, applicable customer) | VBO1 |
| ② | Each time an invoice is issued, 2% is automatically accrued as a rebate payable liability | VF01 (automatic) |
| ③ | Period-end: settle the rebate (issue a credit memo) | VB(D) |
| ④ | Process the payout to the customer | — |
◆ Benefit: The outstanding rebate liability balance can be tracked in real time in FI (no spreadsheet management needed)
2-3 Special Transaction Patterns
SD-601: Paid Supply Sales
A pattern in which the company “formally sells” its own material to a subcontractor and then “purchases” the finished processed product back from the subcontractor. Ownership of the material remains with the company.
▶ Example: A Sheet-Metal Press Maker’s Paid Supply (SPCC Steel Sheet → Welding Factory → Product Buyback)
| Step | Process | T-Code |
| ① | Register the paid-supply sales order (material “shipped” to the subcontractor’s warehouse) | VA01 |
| ② | Ship the material to the subcontractor’s warehouse (a formal sale; ownership remains with the company) | VL01N |
| ③ | The subcontractor performs welding and painting | — |
| ④ | Place a subcontracting purchase order (for the processing fee) | ME21N |
| ⑤ | Receive the processed goods | MIGO |
| ⑥ | Verify the invoice for the processing fee | MIRO |
| ⑦ | Net-settle the material cost against the processing fee (offset payment) | F110 |
◆ Key Point: Even after the material is handed over to the subcontractor, ownership remains with the company (tracked as supplied-material stock)
Chapter 3 Production Business Patterns (PP Scenarios)
3-1 Production Planning Patterns
PP-101: Make-to-Stock (MTS)
▶ Example: A Plastic Container Maker’s Mass-Production Line (PET Bottle Caps, 5 Million Units/Month)
| Step | Process | T-Code |
| ① | Register the production plan of 5 million units for next month | MD61 |
| ② | Run MRP (automatically generate raw material purchase requisitions and production orders) | MD01N |
| ③ | Convert the purchase requisition into a purchase order (or order automatically) | ME21N/ME59N |
| ④ | Enter the production confirmation (molded quantity, defect quantity) | CO11N |
| ⑤ | Receive the finished goods into stock (into the company’s own warehouse) | MB31 (101) |
◆ SAP Configuration: Planning strategy 10 / MRP type PD / Lot size HB (weekly grouping)
PP-102: Make-to-Order (MTO)
▶ Example: A Custom Sheet-Metal Enclosure Maker (Control Panel Enclosures, Customer-Specified Size and Color)
◆ Product: Steel enclosure for a control panel (600H×400W×200D mm, color: RAL7035)
| Step | Process | T-Code |
| ① | Register the sales order (planning strategy 20) → delivery date automatically calculated (5 days sheet-metal work + 3 days painting = 8 days) | VA01 |
| ② | Run MRP → automatically generate the production order | MD01N |
| ③ | BOM explosion (SPCC steel sheet, paint, mounting hardware) → generate purchase requisitions | Automatic |
| ④ | Enter the confirmation for sheet-metal processing | CO11N (operation 10) |
| ⑤ | Enter the confirmation for painting | CO11N (operation 20) |
| ⑥ | Receive the finished goods into stock (sales-order special stock, movement type 101E) | MB31 |
| ⑦ | Shipment (from sales-order special stock) | VL01N |
| ⑧ | Issue the invoice | VF01 |
◆ Stock linked to “Sales Order 1234” can be checked using MB53. It cannot be diverted to other orders.
3-2 Production Execution Patterns
PP-201: Issuing and Managing Production Orders
▶ Example: A Press Parts Processing Company’s Process Management (Automotive Brackets, 4 Operations)
◆ Routing composition: Pressing → Deburring → Heat Treatment (subcontracted) → Visual Inspection
| Step | Process | T-Code |
| ① | Create the production order (BOM explosion, linked to the routing) | CO01 |
| ② | Release the production order (material reservation, capacity check) | CO02 |
| ③ | Enter the confirmation for operation 10, press processing (0.5 min/unit) | CO11N |
| ④ | Enter the confirmation for operation 20, deburring (1.2 min/unit) | CO11N |
| ⑤ | Order and supply the heat treatment (operation 30) to a subcontractor | ME21N/MIGO (541) |
| ⑥ | Receive the subcontracted goods (heat treated) | MIGO (goods receipt) |
| ⑦ | Enter the confirmation for operation 40, visual inspection (0.3 min/unit) | CO11N |
| ⑧ | Receive the finished goods into stock | MB31 |
◆ Capacity Planning: Use CM01 to check the load (%) of each work center → if overloaded, respond by subcontracting or overtime
PP-203: Rework (Reprocessing of Defective Products)
▶ Example: An Electronic Board Assembly Plant’s Response to Solder Defects (15 out of 200 boards, a 7.5% defect rate)
| Step | Process | T-Code |
| ① | Move the defective items to QA stock | MIGO (344) |
| ② | Determine whether the item can be repaired (“repairable” → perform rework) | QA11 |
| ③ | Create a dedicated rework production order | CO01 |
| ④ | Enter the confirmation for the solder correction work | CO11N |
| ⑤ | Return the item to normal stock as an accepted item | MB31 |
| ⑥ | (If scrapped) Process the scrapping → the scrap loss is automatically posted to FI | MIGO (551) |
◆ Cost Tracking: Original production order cost + rework order cost = the actual cost of this board
3-3 Outsourcing Patterns
PP-302: Process Outsourcing (Only a Specific Process Is Outsourced)
▶ Example: A Machining Company’s Surface-Treatment Outsourcing (Aluminum Precision Parts → Anodizing)
◆ Because anodizing requires equipment the company does not have in-house, the work is outsourced to A Surface Treatment Co., Ltd.
| Step | Process | T-Code |
| ① | Create the production order (set routing operation 30 to “subcontracted”) | CO01 |
| ② | Release the production order → a subcontracting purchase order is generated automatically | CO02→ME21N (automatic) |
| ③ | Ship the unprocessed items to the subcontractor’s warehouse (ownership remains with the company) | MIGO (541) |
| ④ | Anodizing is completed at the subcontractor → goods receipt | MIGO (101) |
| ⑤ | Three-way match for the subcontracting fee (order, receipt, invoice) | MIRO |
| ⑥ | In-house assembly process → receive the finished goods into stock | CO11N/MB31 |
◆ Key Point: Even after the 541 goods issue, ownership of the stock remains with the company. If it is lost at the subcontractor, the inventory discrepancy is booked to the company.
Chapter 4 Purchasing & Inventory Management Patterns (MM Scenarios)
4-1 Ordering & Procurement Patterns
MM-101: MRP Automatic Ordering
▶ Example: A Food Packaging Machine Maker’s Parts Procurement (Stainless Steel Bolts M8×25, 50,000 Units Used per Year)
◆ MRP Parameters: Safety stock 2,000 units / Lead time 7 days / Fixed lot size in units of 1,000
| Step | Process | T-Code |
| ① | Run MRP (automatically scheduled for Monday morning at 7:00) | MD01N (automatic) |
| ② | Automatically calculate “Stock 1,500 units / Safety stock 2,000 units → shortfall → order 1,000 units” | Automatic |
| ③ | Automatically generate the purchase requisition (PR) | Automatic |
| ④ | The purchaser reviews and approves it | ME57 |
| ⑤ | Create the purchase order (or convert automatically) | ME21N/ME59N |
| ⑥ | Goods receipt and invoice verification | MIGO/MIRO |
◆ Benefit: No need to individually manage 1,000 screw part numbers. “Forgotten purchases” and “excess inventory” are structurally reduced.
MM-502: Automatic Invoice Verification (ERS)
▶ Example: An Automotive Parts Maker’s ERS Operation (Automating Invoice Verification for Several Hundred Invoices per Month)
◆ Challenge: Previously, manual three-way matching (order, receipt, invoice) took more than 30 hours per month
| Step | Process | T-Code |
| ① | Complete the goods receipt | MIGO |
| ② | Run ERS: the payment amount is automatically determined from the receipt quantity × order unit price | MRRL |
| ③ | Automatic payment (the confirmed amount is automatically transferred on the specified date) | F110 |
◆ Vendor Benefit: Zero effort spent creating and sending invoices. Payment is assured.
◆ Setup Requirements: Enable the ERS flag in the purchasing info record (ME11) + set the ERS flag on the vendor master
4-2 Inventory Management Patterns
MM-603: Batch (Lot) Management
▶ Example: A Pharmaceutical Raw-Material Maker’s Batch Traceability (API, GMP-Compliant)
◆ Why It Is Needed: “A quality issue is found in tablets made using API batch XYZ-06 → the recall destinations must be identified within a few hours”
| Step | Process | T-Code |
| ① | Enter the batch number, manufacturing date, and expiration date at goods receipt | MIGO (goods receipt) |
| ② | Record which batch was used when materials are issued | CO11N (batch specified) |
| ③ | When a problem batch is found: instantly look up where the batch was used | MB56 |
| ④ | Identify where it was used (production order number → shipping destination) → create the recall target list | MB51/MB56 |
◆ Effect: The shipping destinations of all products that used batch XYZ-06 can be identified within a few hours (a manual process would take several days)
MM-701: Vendor Consignment Inventory Management
▶ Example: An Assembly Maker’s Use of Consignment Stock (Silicone Grease: The Vendor Brings Stock into the Company’s Own Warehouse)
◆ Mechanism: The vendor delivers 100 units → payment is made only for the amount used (no payment obligation at the time of delivery)
| Step | Process | T-Code |
| ① | The vendor delivers 100 units into the company’s own warehouse → registered as consignment stock | MIGO (101K) |
| ② | Issue to the production line (the payment obligation arises only at the point of issue) | MIGO (201K) |
| ③ | Monthly: settle based on issued quantity × unit price | MRKO |
| ④ | Invoice verification and payment | MIRO/F110 |
◆ Effect: 100 units are held in stock while payment is made only for the amount used, minimizing cash outflow.
Chapter 5 Quality Management Patterns (QM Scenarios)
5-1 Incoming Inspection (QM-101)
▶ Example: A Plastic Injection Molding Plant’s Raw Material Inspection (ABS Resin Pellets, Fluidity and Moisture-Content Testing)
| Step | Process | T-Code |
| ① | Goods receipt → an inspection lot is automatically created and automatically moved to QA stock | MIGO (101) |
| ② | Enter the inspection results (MFR value and moisture content entered as measured values) | QA11 |
| ③ | Accept the lot → release it to normal stock | QA32→MIGO (343, automatic) |
| ④ | (If rejected) return the goods | MIGO (122) |
◆ Issuing to the production line is not possible before an acceptance decision is made (system-controlled)
5-2 In-Process Inspection (QM-201)
▶ Example: An Intermediate Inspection of a Precision Lathe Part (Stainless Precision Shaft φ20h6, Tolerance ±0.008mm)
◆ Process: Rough turning → 【Intermediate Inspection】 → Finishing → Grinding → 【Final Inspection】 → Stock Receipt
| Step | Process | T-Code |
| ① | Enter the confirmation for operation 10 (rough turning) → an inspection lot is generated automatically | CO11N |
| ② | Enter the outer-diameter measurement value (φ20.005mm → within tolerance) | QA11 |
| ③ | Accept the lot → operation 20 (finishing) is unlocked | QA32 |
| ④ | (If rejected) operation 20 cannot proceed → decide on rework or scrap | — |
5-3 Pre-Shipment Inspection (QM-202)
▶ Example: An Automotive Parts Maker’s 100% Pre-Shipment Inspection (Brake Calipers, a Safety Component)
| Step | Process | T-Code |
| ① | Move the completed items to QA stock for inspection | MB31→QA stock |
| ② | Visual inspection (scratches, burrs, chips) + 20-point dimensional measurement | QA11 |
| ③ | Accept the lot → move to shippable status | QA32 |
| ④ | (If rejected) VL01N cannot be executed (system-controlled) | — |
| ⑤ | Shipment | VL01N |
◆ Key Point: A mechanism in which the delivery document cannot be created without an acceptance decision, preventing “shipping without inspection.”
Chapter 6 Combining Business Patterns — Comprehensive Scenarios
Four scenarios are presented below showing “the overall picture of a real manufacturing company’s business flow” formed by combining multiple patterns.
Scenario A: Selling Mass-Produced Consumables as Stock to a Major Supermarket
Company image: A dishwashing detergent maker (20 million bottles/year)
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Key Point: From automatic order intake via EDI, to automatic ordering via MRP, consolidated billing via VF04, and automatic payment via F110, manual intervention can be minimized — a classic example of “the automation of repetitive transactions that SAP is best at.”
Scenario B: Receiving an Order for a Custom-Spec Product and Exporting It Overseas
Company image: A precision machined parts maker (specializing in make-to-order production)
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Key Point: Each order has a different item number and specification. Managing the profitability of each order (planned cost vs. actual cost) via CO-PC makes it visible which projects are profitable.
Scenario C: Supplying Automotive Parts in Installments Based on Forecast and Firm Orders
Company image: An automotive Tier 2 supplier (stamped and welded parts)
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Key Point: Managing the gap between forecast and firm orders is a critical practical challenge. Careful configuration of the planned-independent-requirement adjustment factor (e.g., forecast × 0.8) and safety stock is required.
Scenario D: Constructing a Large Plant via Engineer-to-Order (ETO)
Company image: A plant engineering company
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Key Point: Monthly revenue recognition under the percentage-of-completion (POC) method is the most critical financial task. If VF44 and CJ88 are not executed monthly, 3 billion yen will be recognized all at once at period-end.
Chapter 7 Where SAP Excels and Struggles, by Business Pattern
Areas Where SAP Is Overwhelmingly Strong
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Automation of high-volume repetitive transactions: At mass-production manufacturers where the same pattern of sales orders, purchase orders, and invoices flows through at a scale of 1,000 transactions per day, the combination of MRP automatic ordering, consolidated billing via VF04, and automatic payment via F110 can reduce manual intervention to nearly zero.
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Three-way matching (automated precision management for P2P): Three-way matching among the purchase order (ME21N), goods receipt (MIGO), and invoice (MIRO) automatically detects discrepancies in amount and quantity and holds payment. A small team can manage the verification of several hundred invoices per month.
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Real-time inventory visibility: The moment a MIGO entry is made, the company-wide inventory database is updated. “How much of what is at Factory A” and “which sales order it is allocated to” can be checked instantly.
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Full automation of financial postings: Journal entries are automatically generated for every event — goods receipt, goods issue, invoicing, and payment. With zero manual entry or spreadsheet transcription, the effort required for the monthly close is dramatically reduced.
Areas Where SAP Struggles (Countermeasures Required)
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Frequent design changes (ETO / MTO): A new BOM and routing must be created or changed for every order, and if the engineering change management (ECM) design is flawed, confusion results. An integrated design with SAP DMS/PLM is required.
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Non-standard discounting and negotiation: Discounting that depends on individual judgment is difficult to control through SAP’s condition management. A design that controls this through price-change management with an approval workflow (VK11 + Fiori approvals) is required.
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MTS with unstable demand forecasts: Running MRP against a low-accuracy sales forecast causes excess inventory and stockouts to occur simultaneously. Careful configuration of safety stock and buffers is required.
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Poorly maintained master data: An outdated BOM, an unregistered routing, or an incorrect MRP type on the material master — deficiencies like these mean the benefits of automation cannot be realized. “Master data quality is the single most important prerequisite for an SAP implementation.”
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