Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

8.2 Processor-Oriented Master and Order Data Management

Intended learning outcomes: Produce an overview on processes, technology, and resources. Present the process train: a processor-oriented production structure. Disclose lot control in inventory management.


In Section 1.2, the product structure, production structure, and process plan were each “attached” to a product. This conventional, assembly-oriented arrangement it is not suitable for the process industry. The process industry requires extended business objects that essentially reflect an order structure with various possible products. This section introduces some new business objects and extensions to objects already discussed. Detailed modeling of these business objects is discussed in Section 17.4.


8.2.1 Processes, Technology, and Resources

In the process industry, product design simultaneously means the design of processes. There is no clear separation between these two steps, as is the case for mechanical production, for example. Product design is based entirely on the knowledge of the technologies that can be used in production processes. In mechanical production, there are technologies and machines for cutting, milling, electroerosion, and other operations, but the technologies involved in the process industry utilize biological, chemical, or physical reactions.

The object technology describes process-independent properties and conditions, that is, all the knowledge contained in a given technology. 

The object process, on the other hand, describes the possible input, the effect of the process, and the resulting output independently of a given technology.

See also Section 17.4.1. A process may be implemented using different tech­no­logies, and, conversely, a technology may be used in various processes.

The object process with technology describes the technique that can be implemented during the actual production process.

It is this business object in logistics that ultimately appears in the production structure as a basic manufacturing step.

Resources are all the things that are identified, utilized, and produced in a value-adding process. The term is used in a generalized way here, that is, to represent products, materials, capacities (including personnel), facilities, energy, and so on.

One peculiarity of the process industry is that all resources are regarded as being of equal priority. Thus, materials are no more important than capacity or production equipment. This is reflected in the fact that a production structure is expressed solely in terms of resources, and all the possible types of resources are described in greater detail by appropriate specialization. Figure 8.2.1.1 shows the business object resource as a generalization of the business object item in Figure 1.2.2.1 and the business objects discussed in Section 1.2.4.

Fig. 8.2.1.1        Processor-oriented master data: examples of resources.

As the business object item is a specialization of the object resource, an assembly is a specialization of the object intermediate product. A product is a specialization of a producible resource, and a component is a speciali­zation of a consumable resourceCapacity, as described in Section 1.2.4, is also shown as a further specialization of the object resource. Capacity can mean employees or automated equipment, such as machines and reactors. The latter resources are grouped with tools, devices, and the like, under the term production equipment. They describe the investment in physical plant that is required for the manufacturing process. A further resource is energy, such as electricity, steam, and so on. These resources can also be described as items. They are often produced as by-products.


8.2.2 The Process Train: A Processor-Oriented Production Structure

In the process industries, the conventional production structure consisting of bills of material and routing sheets (see Sections 1.2.2 and 1.2.3) has been replaced today, as mentioned above. Close examination of the new structure in current use reveals it to be a more generalized form of the conventional bill of material and routing sheet concept. See also [TaBo00], p. 178 ff., [Loos95]; and [Sche95b].

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Figure 8.2.2.1 shows, as an example, a typical production structure in chocolate production.

Fig. 8.2.2.1        A process train, here in chocolate production.

The first stage of processing consists of rolling the raw material between rollers, conching[note 803], and filling. The resources consumed during rolling are the cocoa mass, the machines required, and power. This stage results in an intermediate product, in this case a chocolate mass that is subsequently used for further processing. The by-product is broken chocolate.

The second stage consists of the processes of producing the flavored mass, filling, and packa­ging. The primary product is the packed, semifinished, flavored product (again a cho­colate mass). By-products such as broken chocolate and energy (heat, steam) are also produced. In addition to the material used, the consumed resources include capacity and equipment.

Figure 8.2.2.2 represents the process train concept in a formalized way. This structure is the basic concept behind the data management of both master data objects and order objects in the process industries.

Fig. 8.2.2.2        Process train (formalized) with stages and basic manufacturing steps.

A process train is a representation of the flow of materials through a process industry manufacturing system that shows equipment and inventories ([APIC16]). 

The term process unit stands for the (production) equipment that performs a basic manufacturing step, or operation, such as mixing or packaging.

Resources such as incoming and outgoing items, capacity, and production equipment are allocated to the basic manufacturing steps.

A process stage is a combination of (generally successive) process units.

In Figure 8.2.2.2, several (generally successive) stages are combined into process trains. In­ventories in intermediate stores decouple the scheduling of sequential stages within a process train. However, if there is an intermediate product between two successive manu­facturing steps of a stage, it is “only” a flow resource, which cannot nor should not be stored.

Processor-oriented production structure and production model are other terms used for process train. 

Recipe or formula is the term commonly used to describe the content of a processor-oriented production structure[note 804]. 

A processor-oriented order structure is a processor-oriented production structure associated with a specific (production) order, in which quantities and dates are specified.

The process train thus defined can be regarded as an extension of the production structure underlying the process plan shown in Figure 1.2.3.3, but without showing the individual time periods that make up the lead time along the time axis.

As is every production structure, a process train may be the object of cost estimating. The corresponding processor-oriented order structure will then be the object of job-order costing. One special feature of such a calculation is that the costs incurred are distributed among the various resources produced, that is, primary and by-products. In the simplest case, this involves allocating a predetermined percentage to each resource produced by the production structure.


Example: Process train in chocolate production
The following animation illustrates the process of manufacturing chocolate. The entire process is divided into three stages, each separated by a storage step. This allows the schedules to be set up individually for each stage and permits the selection of technologically and economically appropriate processing volumes for the individual stages.
(Sincere thanks go to Chocosuisse - www.chocosuisse.ch - for providing both comprehensive information and photographs).



8.2.3 Lot Control in Inventory Management

As mentioned in Section 8.1.3, many process industries require a lot traceability for the ingredients used in a product to satisfy the governing regulations. This requirement is most frequently met by assigning an identification number to every lot, batch, or charge that is produced or procured. The batch thus becomes an object in the company. In the production of by-products, products that are produced at the same time using the same resources may be given the same identification.

Lot control establishes production batch identification for each resource taking the following steps:
  1. Each batch is given a lot number or batch identification, or batch ID, at the time that it is produced. The batch ID is also recorded as a “completed resource transaction” and entered as a receipt into stock. Apart from the batch ID, the attributes of this object include resource identification, quantity moved, order ID, position of the process in the order structure, and transaction date.
  2. The physical inventory of a particular resource consists of the batches described in step 1 minus any quantities already issued from these batches in accordance with step 3.
  3. The batch identification for an issue from stock is determined by allocating the issue to a physical inventory as per step 2. The batch ID (determined originally in step 1) assigned to this stock also becomes the batch ID for the issue from stock. The issue from stock is also a “completed resource transaction.” The attributes are then the same as those described under step 1. If the quantity issued originates from different receipts into stock, then the same number of issues from stock must be recorded, each with the associated batch ID and the corresponding quantity issued from stock. However, in many cases, the rule “same batch” is required. This prevents an issue being made up from different batches.

See Section 17.4.2 for the objects used for administering batches.



Course sections and their intended learning outcomes

  • Course 8 – The Concept for the Process Industry

    Intended learning outcomes: Produce characteristics of the process industry. Disclose processor-oriented master and order data management. Explain in detail processor-oriented resource management. Describe special features of long-term planning.

  • 8.1 Characteristics of the Process Industry

    Intended learning outcomes: Explain divergent product structures and by-products. Describe high-volume line production, flow resources and inflexible facilities. Produce an overview on large batches, lot traceability, and loops in the order structure.

  • 8.2 Processor-Oriented Master and Order Data Management

    Intended learning outcomes: Produce an overview on processes, technology, and resources. Present the process train: a processor-oriented production structure. Disclose lot control in inventory management.

  • 8.3 Processor-Oriented Resource Management

    Intended learning outcomes: Explain campaign planning. Differentiate between processor-dominated Scheduling and material-dominated scheduling. Describe a nonlinear usage quantity and a product structure with loops.

  • 8.4 Special Features of Long-Term Planning

    Intended learning outcomes: Disclose the determination of the degree of detail of the master production schedule. Describe pipeline planning across several independent locations.

  • 8.5 Summary

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  • 8.6 Keywords

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  • 8.7 Scenarios and Exercises

    Intended learning outcomes: Differentiate between batch production and continuous production. Calculate an example of manufacture of by-products. Elaborate an example of production planning in process industries.


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