Discrete Make-to-Stock: Planned Order, Production Order, Goods Issue (261), Confirmation, Goods Receipt (101) and Settlement

Business scenario

MRP proposed 100 EA of FG-2000 (bracket assembly) to replenish stock. The planner converts the proposal into a production order, the line builds the assemblies from 100 EA of RM-1000, and controlling settles the order at period end.

All companies, numbers and documents are fictional demo data.

Step-by-step flow

1. 01

   MRP proposes a planned order open in twin

   Planned order 45678 proposes 100 EA of FG-2000. It is only a plan — nothing can be produced against it yet.

   A planned order belongs to planning. MRP can reschedule or delete it on the next run, so it carries no costs and cannot be executed.

2. 02

   Convert to a production order open in twin

   The planner converts it (CO40). Production order 1000001 copies the BOM and routing and reserves 100 EA of RM-1000.

   The production order is the executable object: it reserves components, schedules the work center and collects actual costs.

3. 03

   Release the order open in twin

   The order is released (status REL). Components can now be issued and work can be confirmed.

   Goods movements and confirmations are not allowed against an order that has only been created (status CRTD).

4. 04

   Components are needed at the line open in twin

   The line is ready to build. How should the 100 EA of RM-1000 be taken out of stock?

   Only then do material costs land on the order, where they can be compared with the planned cost and the value of the finished goods.

5. 05

   Costs on the wrong object open in twin

   Issuing to a cost center expenses the components. The order shows no material cost, so it looks far cheaper than it is.

   The order would later credit inventory with the full standard value of the finished goods while carrying almost no cost, producing a large false favourable variance — and the reservation stays open.

6. 06

   Issue components to the order (261) open in twin

   RM-1000 at 1000/0002: 300 → 200 EA. ₹1,00,000 of material cost is charged to the order.

   Actual material cost on the order is what variance calculation later compares with plan.

7. 07

   Confirm the work (CO11N) open in twin

   The operator confirms 100 EA yield and 55 machine hours — 5 more than planned. ₹22,000 of activity cost is charged.

   Confirmed activities move conversion cost onto the order; the yield quantity drives the expected goods receipt.

8. 08

   Receive the finished goods (101) open in twin

   FG-2000 at 1000/0001: 40 → 140 EA, valued at standard price — ₹1,20,000 is credited to the order.

   Stock of the finished good rises, and the order is credited with its standard value — the counterpart of the costs debited so far.

9. 09

   Settle the order open in twin

   Debits ₹1,22,000 − credits ₹1,20,000 = ₹2,000 variance, settled to the material. The order balance is zero.

   An order must end with a zero balance. The variance is reported, not hidden in inventory, because standard price keeps the finished good's value fixed.

10. 10

    Production cycle complete open in twin

    Planned order → production order → 261 → confirmation → 101 → settlement. Components down 100, finished goods up 100.

    This is the backbone every other PP variant changes: backflush automates the 261, repetitive manufacturing removes the order, process orders swap the routing for a recipe.

SAP documents

Stock impact

Accounting impact

Movement type

• 261GI for orderReversal: 262
• 101GR for orderReversal: 102

Turns a planning proposal into an executable order, consumes components, records the work and receives the finished product into stock, with every cost collected on the order and settled at period end.

Transactions & Fiori apps

Configuration

• Order type (OPJH) and order-type-dependent parameters (OPL8)

  Configuration dependent

  Control number ranges, settlement profile, costing variants and whether release is automatic.

• Availability check at release (OPJK)

  Configuration dependent

  Whether missing components block release, and which scope of check applies.

• Confirmation parameters (OPK4)

  Configuration dependent

  Tolerances, whether to backflush and whether to post goods receipt automatically on confirmation.

• Account determination GBB/VBR, GBB/AUF and PRD

  Configuration dependent

  Consumption for orders, factory output on receipt and price differences at settlement.

• Settlement profile and variance keys

  Configuration dependent

  Decide where variances go and which variance categories are calculated.

Prerequisites

• Material master with MRP and work scheduling views, procurement type E (in-house)
• Bill of material and routing (or a production version linking them)
• Work center with a cost center and activity types
• Activity prices planned for the period (KP26)
• Standard cost estimate released for the finished good
• Order type and settlement profile configured for the plant

Master data

Material master (MRP, work scheduling, costing views)

Procurement type, lot size, production storage location and standard price.

Bill of material

Components and quantities copied into the order and reserved.

Routing

Operations, work centers and standard times copied into the order.

Work center

Capacity, cost center and activity types used to cost confirmations.

Production version

Which BOM and routing combination to use; mandatory in S/4HANA.

Organizational structure

• Company code 1000
• Plant 1000
• Storage locations 0002 (components) and 0001 (finished goods)
• Work center ASSY-01

Tables

Integration

• MMComponents leave inventory with 261; the finished good enters with 101. MRP reads stock and requirements from inventory management.
• COThe order is a cost object: it collects material and activity costs, is compared with plan and is settled.
• FIGoods movements post to inventory, consumption and factory-output accounts; settlement posts the variance.
• SDSales demand is one of the requirements that MRP turns into planned orders.

Common errors

• “Components cannot be issued to the order”

  Likely causes: Order not released; Not enough stock in the production storage location; Reservation already fully withdrawn; Component deleted from the order

  Where to look: Order status · Stock overview (MMBE) for the production storage location · Order component overview

• “Confirmation posts no activity cost”

  Likely causes: No activity price planned for the period; Activity type not linked to the work center's cost center; Standard values missing on the operation

  Where to look: KP26 activity prices · Work center costing data · Routing operation standard values

• “Order cannot be settled”

  Likely causes: No settlement rule; Order not delivered or technically complete; Variance calculation not run; Missing price-difference account

  Where to look: Order settlement rule · Order status · KKS2 log · Account determination for PRD

• “Large unexpected variance on a production order”

  Likely causes: Components issued to the wrong order or to a cost center; Confirmed times far above standard; Standard cost estimate outdated; Goods receipt quantity short of what was consumed

  Where to look: Order cost analysis · Material documents for the order · Confirmations · Current standard cost estimate

Troubleshooting

Something went wrong? Work through these checks in order. They are diagnostic questions, not configuration instructions — confirm changes with your system owner.

1. CHECK 1

   Order cannot be created or converted

   • Does the material have a valid production version?
   • Is there an order type for this plant?
   • Can the routing be selected for the order quantity and date?

2. CHECK 2

   Goods movements blocked

   • Is the order released?
   • Is there stock in the production storage location?
   • Is the posting period open?

3. CHECK 3

   Costs look wrong

   • Were all components issued against this order?
   • Are activity prices maintained?
   • Is the standard cost estimate current?

4. CHECK 4

   Settlement fails

   • Is there a settlement rule?
   • Has variance calculation been run?
   • Is the price-difference account (PRD) determined?

Interview questions

• What is the difference between a planned order and a production order?

  A planned order is MRP's proposal: it can be changed or deleted by the next MRP run, carries no costs and cannot be executed. A production order is the executable document: it copies the BOM and routing, reserves components, schedules capacity, collects actual costs and must be settled. Converting with CO40 or CO41 replaces the planned order with the production order.

• Which postings does a production order typically receive over its life?

  Debits from component issues (261) and confirmed activities, plus overhead if a costing sheet is used; a credit from the goods receipt of the finished product (101) at standard price. Whatever balance remains at period end is the variance, which settlement moves to a price-difference account (for a standard-price material) or to another receiver defined in the settlement rule.

• Why does the goods receipt credit the order at standard price rather than at the actual cost?

  Because the finished good is valuated at standard price. Keeping inventory at standard means the difference between what the order actually cost and the standard value stays on the order as a variance, where it can be analysed by category (quantity, price, resource-usage) and then settled.

• What does order status REL change, and what does CNF mean?

  REL (released) allows goods movements and confirmations against the order; before release, with status CRTD, they are not allowed. CNF means the order has been fully (finally) confirmed; PCNF is partially confirmed. DLV means fully delivered, and TECO marks it technically complete so no further logistics activity is expected.

• Why must components be issued to the order and not to a cost center?

  Because the order is the cost object for the product. Issuing to a cost center would charge period costs instead, leave the reservation open and make the order look cheaper than it was, distorting variances and product costs.

Quiz

Related processes

• 261 · 262261 GI to Order
• FlowMRP Run
• 261 · 101Backflush

References

• SAP SE — SAP Help Portal: Production Planning and Control (PP) (source)
• SAP SE — SAP Help Portal: Production Orders (source)
• SAP SE — SAP Help Portal: Order Confirmation (source)
• SAP SE — SAP Help Portal: Product Cost by Order (source)

Explanations are original. They summarize standard behaviour; always validate against your system's release and configuration.

Version history