Lesson 3 of 6
Work centers
9 min
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A work center is where an operation is done: a machine, a line, a test bench or a team. SAP Learning describes it as the master record that supplies data for scheduling, capacity planning and costing. Each routing operation points to a work center, and the work center decides how long the operation takes, how much capacity it uses and what it costs.
| Work center (plant 1710) | Represents | Activities confirmed | Cost center |
|---|---|---|---|
| WIND-10 | Stator winding machine | Setup hours, machine hours (MACHHR) | 17101104 Detroit Machining |
| ASSY-10 | Alternator assembly line | Setup hours, labor hours (ASSYHR) | 17101101 Detroit Assembly |
| TEST-10 | End-of-line test bench | Machine hours (MACHHR) | 17101104 Detroit Machining |
Contoso's work centers for the alternator. Names are introduced for this course.
Basic data and the standard value key
The work center's standard value key defines which standard values an operation at this work center carries: for example setup time, machine time and labor time, each with a unit such as minutes or hours. Up to six standard values are possible. The routing then fills in the numbers per operation; the work center only defines the meaning.
Capacity and scheduling
On the capacity side, the work center has one or more capacity categories (machine, labor) with an available capacity: working hours per day, number of individual capacities, and a utilization percentage. Formulas combine the operation's standard values with the order quantity to calculate execution time and capacity requirements. If the formula for machine time is "standard value times quantity divided by base quantity", a routing value of 30 minutes of assembly labor per alternator becomes 50 hours for an order of 100.
- Routing operationStandard values: setup 30 min, machine 10 min per piece (WIND-10)
- Work center formulasDuration and capacity requirement calculated for the order quantity
- SchedulingOperation dates from duration plus queue and move times
- Capacity loadRequirement compared with available capacity per day
- CostingActivity quantities × activity price of the cost center
The cost center link
On the costing tab, the work center is assigned to one cost center at a time (time-dependent), and each standard value is linked to an activity type with a formula that calculates the activity quantity. Controlling plans an activity price per activity type for that cost center and fiscal year. When the order is costed or confirmed, activity quantity times activity price gives the cost; the order is debited and the cost center credited.
Capacity data is only as useful as it is honest. If ASSY-10 is maintained with two shifts of eight hours at 100% utilization, but the line really runs about 85% after breaks and changeovers, every capacity evaluation shows free time that does not exist, and orders scheduled to the minute will slip. Ask the production supervisor for real shift patterns and a realistic utilization, and keep the factory calendar for plant 1710 current with holidays and planned shutdowns.
What would you do?
Dan notices that the alternator's new cost estimate is $25 lower than last year, and the routing has not changed. Which explanation should you check first?
| Activity type | Sender cost center | Price (fiscal year) | Per CMC-ALT-100 | Cost |
|---|---|---|---|---|
| ASSYHR assembly labor | 17101101 Detroit Assembly | $52 per hour | 0.5 h | $26.00 |
| MACHHR machine time | 17101104 Detroit Machining | $96 per hour | 0.25 h | $24.00 |
How the routing's standard values become the $50 of labor and machine cost in the $150 standard cost of CMC-ALT-100.
- Work centers supply data for scheduling, capacity planning and costing.
- The standard value key defines up to six standard values; routings hold their numbers.
- Formulas turn standard values and quantity into durations, capacity requirements and activity quantities.
- Each work center links to one cost center at a time; activity prices come from controlling.
Check your understanding · not graded
Lesson check
1. What does the standard value key on a work center define?
2. How many cost centers can a work center be assigned to at one time?
3. Where do the numbers for setup and machine time per operation come from?
4. An operation shows zero cost in the cost estimate. Which is a likely cause?