SAP Production Planning: Core Concepts and Processes
SAP PP Organizational Structure
- Client: An independent environment in the system.
- Company Code: Smallest organizational unit for which you can maintain a legal set of books.
- Plant: Operating area or branch within a company, such as a manufacturing, distribution, purchasing, or maintenance facility.
- Storage Location: An organizational unit allowing differentiation between various stocks of a material in a plant.
- Work Center Locations (Master Data): An organizational unit defining where and when an operation is performed. It has available capacity, and activities are valuated by charge rates determined by cost centers and activity types. These can be machines, people, production lines, or groups of tradespeople.
BOM and Routing Management
Variant BOM
Groups together several BOMs that describe different objects (e.g., products) with a high proportion of identical parts.
Routings
Routings enable you to plan the production of materials and serve as a template for production orders and run schedules. They are used as a basis for product costing and consist of a series of sequential steps (operations) that define: What, Where, When, and How.
Work Centers
A location within a plant where value-added work is performed. They represent people, machines, or assembly lines and are used to define capacities (Labor, Machine, Output, Emissions). Capacities are used in Capacity Requirements Planning (CRP), detailed scheduling, and costing. They capture data including Basic Data, Costing Data, Personnel Data, Capacity Planning, and Default Data.
Sales and Operations Planning (S&OP)
A flexible forecasting and planning tool consisting of three steps: Sales Plan, Production Plan, and Rough Cut Capacity Plan.
Demand Management
The result of Demand Management is the Demand Program, generated from independent requirements, including Planned IR (forecast) and Customer IR (orders).
Material Requirements Planning (MRP)
In MRP, the system calculates net requirements while considering available warehouse stock and scheduled receipts. All levels of the bill of material are planned, resulting in a detailed production or purchasing plan. The 5 logical steps are: Net Requirements Calculation, Lot Size Calculation, Procurement Type, Scheduling, and BOM Explosion.
Procurement Types
- External: Purchase Requisition, Purchase Order, Schedule Line.
- Internal: Planned Order, Production Order, Process Order.
MRP Types
Materials are planned using MRP or Consumption-Based planning:
- MRP: VB (Reorder-Point), VV (Forecast Based), RP (Replenishment).
- Consumption Based: PD (MRP), VSD (Seasonal MRP).
Scheduling and Release
Scheduling
Calculates production dates and capacity requirements for all operations. It determines routing, operation-specific timelines, and material consumption points based on the Material Master, Scheduling Margin Key (Floats), Work Center formulas, and standard inter-operation times.
Release Processes
- Header Level: Entire order and all operations are released (REL status).
- Operation Level: Individual operations are released (PREL status). The order only reaches REL status once the final operation is released.
The time between scheduling and releasing an order is used for company-level checks and preparation.
Production Execution
Availability Check
An automatic or manual check to determine if components, production resources, or capacities are available. It generates an availability log and displays missing parts or unverified reservations.
Shop Floor Documents
Printed upon release of the production order, including operation-based, component-based, PRT, and multi-purpose lists.
Material Withdrawal (Goods Issue)
When a production order is created, it references a BOM to reserve components. Upon release, materials are withdrawn from inventory, reservations are updated, and actual costs are assigned to the order.
Confirmations
Used to monitor and track the progression of an order. Exact confirmation shortly after completion of an operation is essential for realistic production planning.
Goods Receipt (FG)
Acceptance of confirmed output into stock. This updates stock quantity, stock value, and the production order. Three documents are created: Material, Accounting, and Controlling.
Order Settlement and Analysis
Order Settlement
Settles actual costs incurred to one or more receiver cost objects using a settlement profile and structure. The settlement rule is automatically assigned upon order creation.
Cost Analysis Reporting
Used to calculate and analyze planned, target, and actual costs, as well as variances.