There are times when using By-Product/Co-Product functionality is mandatory, or else be ready to pay significant consequences in managing your manufacturing operations using related SAP ECC functionality.
By-Product/Co-Product is manufacturing functionality where a single PP-PI/PP (Incl.PP-REM) order reflects that fact, and when attempting to produce inventory for a single material, the manufacturing process unintentionally or intentionally produces an inventory of other materials. This option to use is strictly a finance decision since both options behave the same on the logistics side.
The key of when to use this functionality is dependent on what is physically produced and inventoried, by the manufacturing process. To effectively use SAP to support related business processes, is imperative that the manufacturing master data and related functionality reflects this reality. There is nothing like hands-on experience to truly appreciate the negative implication of employing workaround solutions to avoid working with By & Co-Products. These negative implications quickly manifest in Capacity Evaluation, Material Requirement Planning for Short-Term, Medium-Term and Long-Term Time Horizon, as well as in Detailed Production Scheduling and Component Staging. This all leads to a lot of guessing and/or the development of standalone tools to reduce the solution gap.
The following illustration is being used to explain the importance of using By/Co-Product functionality in SAP to reflect what is occurring in the manufacturing process.
What can we observe between the Co-Product solution versus using separate planned orders for each product produced from a single manufacturing run?
The goal of any organization is to be best in class which is a key reason for implementing ERP systems like SAP. With such a significant investment, the information it provides should align with how things work at the manufacturing site. When to use By-Product \/Co-Product should not even be a debate. Looking at the illustration of solution 1 and solution 2 where the volumes are the same (Fat chance in reality), it can be clearly seen that why the totals for Required Capacity, Component Requirement, Planned Output, their daily timings are significantly different. The point is that solution 2 is not an option when the physical manufacturing process is truly producing By/Co-Products.Tags: Co-Product, Demand, ERP, Inventory, Manufacturing Process, Planning, SAP, Supply chain