Businesses are always looking for new and creative ways to increase output, cut expenses, and stay ahead of the competition. Let us introduce SAP Production Planning (PP), a powerful module that automates and optimizes manufacturing processes inside the SAP ERP system.

We’ll look at how automating several production processes using SAP Production Planning can transform your manufacturing operations in this blog. 

 

Glimpse about SAP and its importance 

Every ERP software supports every business process through its own modules, which improve analytics visibility and facilitate the full cycle of operations for each module’s unique process. With more than 40 years of experience in developing custom business solutions tailored to your company’s requirements, SAP is one such participant in the ERP market.  

SAP is crucial for businesses due to its ability to integrate various functions into a single platform, ensuring data consistency and seamless operations. 

The core business modules offered by the SAP ERP software are:  

How Does Production Planning Really Work? 

The practice of coordinating demand with pre- and post-production operations is known as production planning. The goal of this approach is to more efficiently offer an appropriate strategy for the planned production processes.

The SAP PP module tracks and records the entire process of manufacturing activity by considering the projected and actual expenses, goods movements from the conversion of raw materials to semi-finished commodities, and a lot more activities that are streamlined under this module. The PP module is integrated along with the SD, MM, QM, FICO & PM modules of SAP. 

The process of production planning aligns the company’s manufacturing capacity with demand to achieve its output target. In addition to helping with the creation of production and procurement schedules for both completed goods and raw materials, it also records and tracks manufacturing process specifics, allowing for the comparison of projected and actual costs. Additionally, it will monitor the flow of commodities from raw materials to semi-finished or final goods.

 

Key Objectives of the Production Planning Module 

The following are the key Objectives of the SAP Production Planning Module 

Production of Quality Products: It is crucial to make sure that goods fulfill the necessary quality requirements. By offering tools for thorough planning and monitoring of production processes, SAP PP contributes to the maintenance of high-quality production by quickly recognizing and resolving problems. 

Maximum Utilization of Resources: In order to attain the highest levels of production and efficiency, the module maximizes the use of all available resources, including labor, materials, and machinery. Cost reductions and improved resource management result from this. 

Economy at Production Time: SAP PP optimizes process flows, cuts waste, and boosts efficiency to help minimize production costs. This methodical approach to economics guarantees that production processes are economical without sacrificing quality. 

Optimum Inventory Level Maintenance: Retaining the proper amount of merchandise on hand is essential to preventing overstock and stockout scenarios. In order to guarantee that resources are available when needed, without excessive stockpiling, SAP PP helps with inventory planning and management. 

Ensure Smooth Flow of Operation: Reaching production goals and deadlines depends on a smooth production process. SAP PP is used to manage different production tasks, guaranteeing a seamless and continuous flow of work from beginning to end. 

Prime Objects of SAP PP’s Material Master 

The Bill of Materials, material master, routing, and work center are the main components of SAP PP. Ensuring that information such as production orders, material type, planning needs, product issues, and goods receipts are included in master data is one of the modules key features.

Let’s examine each prime object in the material master of SAP PP in more depth. 

Material master data of SAP PP 

• Material Requirement Planning (MRP) 

• Bill of Materials (BOM) 

• Work Center 

• Routing 

• Production version 

Material Requirement Planning (MRP) 

A Material Master is an organization’s core master data that comprises information on a material’s sourcing, manufacturing, quality, sales, and financial data.  

In an SAP PP material master, the following levels of data will be maintained: 

• Client Level or general data 

• Plant Level 

• Storage Location Level 

• Valuation Level 

Bill of Materials (BOM) 

The Bill of Materials master data is connected to material requirement planning and gives a list of components needed to manufacture the product. A Bill of Materials is a document that specifies how much of each component is needed to create or deliver a finished product. It can also comprise the numerous activities and step-by-step instructions required to finish a production process. The component is chosen based on the information in the planning order.  

The following are characteristics of BOM: 

• A single-level or multiple-level Bill of Materials can be created. 

• The size, validity dates, and manufacturing process all influence the kind of BOM. 

• Based on the material type, you can produce up to 99 Bills of Materials. 

• You can use the Bill of material document to find the materials available in the PP module. 

Work Center 

The work center contains master data for product routing. It comprises information on scheduling, capacity planning, and production costs. The work center is where all production operations take place.  

This can be used to monitor the actions listed below. 

Scheduling – You can plan activities in Production order according to operating times in Routing and formulae specified in the work center. 

Production Costing – You may also examine the production costing based on the formulae listed in the work area. The work center is related to the cost center and determines the cost of operation in the manufacturing sequence. 

Capacity Planning – It stores the existing capacity and future capacity requirements. 

Routing 

Routing describes the order of actions carried out in the work center. Routing is critical in estimating production costs, machine time, and labor time.  

The following are routing’s main features: 

• To construct routing, the work center must first be defined. 

• A single routing group can handle many materials. 

• Routing is used for raw and final product operation scheduling and budgeting. 

• Routing is used to compute the cost of operation for a final product. 

Production version 

It serves as a link to determine the manufacturing procedure. For various manufacturing processes, there may be one or more production versions of the product. 

 

Production Planning Cycle 

The Production Planning cycle contains two processes: 

• Planning  

• Execution 

Planning Process: 

The sales plan and the demand for the specific product are the basis for planning. In this situation, demand management will take over and PIRs (planned independent requirement) will be generated. 

These will serve as the foundation for MRPs, and in the event of a material shortage or unavailability, purchase requisitions for products sourced externally and planned orders for in-house materials will be created.  

Execution Process: 

Planned orders are turned into production orders, which are subsequently planned, material availability is verified, and production is completed in accordance with the routing master data. 

Order delivery confirmations are completed as part of a routine procedure following production completion. 

 

• Planning Independent Requirement (PIR)

• Demand Management

• Material Requirement Planning (MRP)

• Capacity Planning & Levelling

• Production Orders

• Production Order Confirmation

• Production Order Close

Planning Independent Requirement (PIR) 

-> Planned Independent Requirements (PIRs) drive the production planning process by incorporating a planned volume of items and a material date or a planned quantity divided over a time period. PIR versions can be managed by setting some numbers to active and others to inactive. 

-> PIRs outline the material master planning approach, establishing planning methodologies like make-to-order and make-to-stock. In Make-to-Stock environments, PIRs are used when stock is created based on predictions rather than sales orders. 

Demand Management 

-> Demand Management estimates required quantities and delivery dates for completed products and critical assemblies using Planned Independent Requirements (PIRs) and customer needs. 

-> A product’s planning strategy outlines the industrial procedures for planning and manufacturing, which can be achieved through two methods: 

• Make-to-Stock: The production of items in the absence of sales orders, i.e., the stock is produced independently of orders. 

• Make-to-Order: This method is used to produce material for a single sales order or line item. 

Material Requirement Planning (MRP) 

-> Material Requirement Planning (MRP) identifies shortfalls and generates the necessary purchase items by computing net requirements and creating planned orders for in-house manufactured goods, as well as buy requisitions for raw materials. 

-> MRP also manages time, explodes the Bill of Materials (BOM), calculates production dates in scheduled orders, and prepares BOM-level procurement bids. 

Capacity Planning & Levelling  

-> Capacity Planning is used to identify constraints at work centers and adjust orders to prevent bottlenecks. It establishes capacity needs based on MRP, which operates under the assumption of limitless capacity and plans without considering capacity restrictions. 

-> To build a constrained production plan, capacity must be levelled at each work center using a planning table, ensuring that the production plan aligns with actual capacity limitations. 

Production Orders 

-> MRP generates “Planned Orders,” which must be translated into Production Orders to complete the process. Unlike Planned Orders, Production Orders are firmed receipt elements that remain unaffected by subsequent MRP runs. 

-> A Production Order is a document detailing the material to be produced, the quantities, BOM components, and routing operating data for the work center. It is issued for execution, and material availability checks can be performed to identify any missing components. 

Production Order Confirmation 

-> During physical manufacturing on the shop floor, component materials are automatically updated using the backflush methodology for confirmation. Material reception is also completed instantly via the operation Control key in Routing. Manual Goods Issue and receipt can be handled individually rather than through auto goods movement. Any unsuccessful goods movements due to component shortages can be reprocessed manually. 

-> Activity expenses such as machine and labor costs are continuously updated in the production order during confirmation. After final confirmation and Goods Receipt, the order is marked as CNF (Confirmed) and DLV (Delivered). If confirmation is incorrect, it can be canceled and re-posted with the correct data. 

Production Order Close  

-> The order should be technically finished once the manufacturing order is fully supplied or if there is no intention to execute it further.  

-> When an order receives TECO (Technically Completed Order) status, it is removed from the stock/requirement list along with its dependent resources and is no longer evaluated in the material requirement planning process. 

 

Importance of SAP Production Planning 

SAP Production Planning (PP) is crucial for several reasons: 

• Resource Utilization: SAP PP helps in optimizing the use of resources such as materials, machinery, and labor, ensuring that production processes are streamlined and cost-effective. 
• Production Scheduling: It provides tools for precise scheduling and planning of production activities, helping to meet deadlines and avoid delays. 
• Cost Control: By providing detailed insights into production costs, SAP PP aids in controlling and reducing operational expenses. 

Final Thoughts 

The SAP Production Planning (PP) module is essential for companies who want to match supply with demand and simplify their manufacturing operations. This powerful tool helps companies manage production schedules, inventory levels, and supply chain operations efficiently. By integrating real-time data, SAP PP ensures that businesses can quickly adapt to demand changes and improve production accuracy.

For those interested in maximizing the benefits of the SAP Production Planning module, our team of experts is ready to help.

We offer specialized support to ensure that SAP PP is implemented and optimized to fit your business needs. Contact us to learn how SAP PP can enhance your production processes and drive success. 

 

FAQ’s

1. What is SAP Production Planning (PP)?  

SAP Production Planning (PP) is a module within SAP ERP that helps manage and control production processes, including planning, scheduling, and controlling the manufacturing of products. 

2. What benefits can businesses expect from automating production activities with SAP PP?  

Businesses can expect increased efficiency, reduced lead times, lower production costs, improved inventory management, and better alignment with demand. 

3. How does SAP PP automate production activities?  

SAP PP automates production activities by simplifying processes such as material requirements planning, production order processing, and inventory management. 

4. What is Material Requirement Planning (MRP) in SAP PP?  

MRP is a process in SAP PP that calculates material needs based on production schedules, sales orders, and inventory levels to ensure timely availability of materials.