SAP Business One Standard Manufacturing Functionality

Manufacturing Business Software | SAP Business One

Featuring bills of material, production orders, MRP, serial numbers and more

SAP Business One delivers integrated manufacturing and production functionality right out of the box. The production functionality is fully integrated into SAP Business One’s inventory, financial, and material requirements planning (MRP) features, giving end-to-end visibility of the production process from sales order to finished goods.

Key Features and Functionality

Bills of Materials (BOMs): Standard and disassembly production orders for finished goods or intermediate items use the components assigned to the BOMs for the parent item.  You can create multilevel BOMs and produce graphical indented-bill reports with batch and serial controlled items.

Production orders: You can create standard, special, and disassembly production orders allow manual or backflush issue of components. Special production orders are on the fly without a BOM.  Financial accounts and stock balances for work in progress are updated in real time as components are issued to the production order. SAP Business One allows you to over- and under-issue production orders, and it calculates the variance at the product order level.

Want to jump right to the latest videos on SAP Business One manufacturing software covering Production, Inventory and Purchasing?  Check out the SAP Business One Demos and Videos page.

Explore the built-in process for production orders in SAP Business One, for a software designed with the small and midsize manufacturer in mind.

Drive production demand in two ways:  From a Sales Order or from the MRP

Driving production demand from a Sales Order

Clicking on a drill-down arrow shows you the component items within the BOM. SAP Business One can automatically create a production order from a sales order, or you can create it manually. Alerts can notify you when orders are still open and need to be produced.

Driving production demand from the MRP

SAP Business One MRP Wizard Display full image

A wizard helps you plan and optimize future material requirements and then both manage and execute purchasing and manufacturing recommendations and exceptions. The MRP wizard helps reduce costs by considering both minimum order quantities and order multiples helping users take advantage of, say, purchase pricing breaks or standard production batch sizes. To make the appropriate recommendations, SAP Business One considers various supply and demand sources, including existing stock levels, planned production orders, open purchase orders, actual sales orders, forecasted orders, master data like BOMs, and planning data like lead times and minimum stock levels.

Exceptionally clear MRP results, recommendations, and exceptions screens allow you to sort, filter, and drill down through MRP pegging information to actual receipts and requirements (forecasts or sales orders) and edit, individual purchase order line quantities.

Setting Up Bill of Materials

SAP Business One Bill of Materials Display full image

Purchasing or Operations team members who regularly set up your bill of materials and inventory items can use the standard functionality through the Item Master.  You can define BOMs with multiple levels, including all sub-assemblies and raw materials that are required to assemble and produce the finished product.  Define line items as items, resources, or include text, and group line items based on process flow.  The basic types of BOMs are:

Create Production Order

SAP Business One can automatically create production orders based on sales orders, forecasts, and stocking rules. You can also create purchase orders on the fly, using the different BOM types as templates and linking them back to sales orders for tracking in make-to-order environments.

SAP B1 Production Order Display full image

Release Items to the Production Order

Component items can be issued manually or using the automatic backflush, creating real-time WIP and variance postings. Once the production order has been initiated, the software changes the status to Released, allowing a partial or full completion report of the production order or cancellation.

Receive Items from Production

As you receive the product from production, the finished product is created. SAP Business One automatically updates inventory, reconciling the finished product with its components. This can be done individually or for a group of production orders completed at one time.

Review Costs

Once the finished product is created, the updated summary tab shows:

Review Resource Capacity

Within SAP Business One you can manage and plan resource time and production capacity.  You can capture machine, labor or other types of resources with associated costs in the Resource Master Data, and can linked to fixed assets and employee data.  Capture time per Resource Units.  Accounts to be used are defined in advanced account determination. 

Resource Capacity allows a view of capacities by different types.  This visibility of available capacity helps you to avoid bottlenecks and optimize production plan. Resource costs are included in the final product cost.

SAP Business One production capacity Display full image

Complete the Production Process

Once manufacturing is complete, the production order summary tab sums up the order details, components total cost, the finished goods cost and whether there is any variance between them when you use standard cost method.  A production order may have one of the following statuses:

SAP Business One finished goods production order Display full image


Standard reports for production, as well as Crystal Reports for building your own views and reports is available.

Want to explore more content on SAP Business One manufacturing business software?

All of the above functionality comes within SAP Business One and is designed with the small/midsize manufacturer in mind.  If you need more than what comes out-of-the-box you can explore certified add-ons for deeper functionality.

When you need an ERP system for your manufacturing business, contact Aether Consulting, 8369 Windstone Ct., Goodrich, Michigan 48438.