Introduction to SAP Production Planning

SAP Production Planning is one of the most important modules of SAP. It deals with processes such as material planning, capacity planning, production planning, goods movement, and billing of the goods. It is the process of meeting the demand and manufacturing capacity of an organization. SAP Production Planning helps an organization schedule the procurement and manufacturing of products. It is fully integrated with other modules of SAP such as SAP Material Management, Quality Management, FICO, and Plant Maintenance.

Introduction to SAP Production Planning
19th Sep, 2019
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In this SAP PP Tutorial, you will learn about SAP Production Planning which is one of the most important modules of SAP. Further, this SAP PP tutorial deals with processes such as material planning, capacity planning, production planning, goods movement, and billing of the goods. It is the process of meeting the demand and manufacturing capacity of an organization. SAP Production Planning helps an organization schedule the procurement and manufacturing of products. It is fully integrated with other modules of SAP such as SAP Material Management, Quality Management, FICO, and Plant Maintenance.

Before moving further, let us see the topics covered in this SAP PP tutorial:

Sub-modules of SAP PP

We will start off this SAP PP tutorial by learning the SAP PP sub-modules. In this SAP PP tutorial, let’s talk about two different production industry within the SAP PP module which are:

  1. Discrete Production
  2. Repetitive Production

Discrete Production: Discrete production is an industry where the production of materials keeps on changing according to the order, and their costs are also calculated accordingly.

Repetitive Production: Repetitive production is an industry where the materials produced do not change for a long period of time. Products are produced according to the total quantity and not according to the individual orders.

Organizational Structure of SAP PP

In this SAP PP Tutorial, we will learn about an organization that is formed of various levels and multiple units. These units follow a regular hierarchy. This SAP PP tutorial will deal with each of the units that has a special function that constitutes together to describe the structure of an organization. The organizational structure of SAP Production Planning comprises the location of manufacturing plants and the location of storage areas within the plant.

Organizational Structure of SAP PP

  1. Company code: A company code is a smallest unit in an organization that comes under the client level. It has an independent accounting unit that maintains its own profit, loss, and balance statement.
  2. Plant: A plant is a unit within a company that is responsible for the production of goods and making them available for the company. A plant unit consists of a manufacturing facility and a warehouse.
  3. Storage location: A storage location is a unit within a company that is used to store material stock and goods available in a plant. A plant can have multiple storage locations where all the data related to the storage location are stored.

Integration of SAP PP with Other Modules

In this SAP PP Tutorial, lets learn about the SAP PP integration with various modules of SAP to perform production planning and control the activities related to production.

Following are the relationships between SAP PP and other modules:

SAP MM and SAP PP

  • The relationship between SAP MM and SAP PP deals with auto goods receipt and the movement of goods.
  • It also deals with the creation of planning/booking for the production order.
  • This relationship is used to raise purchase orders with MRP run.
  • It helps manage quotations from different vendors and then select the appropriate vendor.

SAP SD and SAP PP

  • Their relationship is used to keep the organization updated on the availability of the material.
  • This relationship helps perform requirement types and MRP run.
  • It is used to manage the operation and bill of materials components.

SAP FICO and SAP PP

  • Their relationship maintains the price updation in material master data.
  • It is used to define the activity type in the cost center.
  • It is also used to assign the activity type to the work center.
  • It is used to perform cost estimation.
  • It is used to control the cost of production.
  • It is used for posting account activities that are related to the material request, goods movement, etc.

SAP Project System and SAP PP

  • Their relationship is used to assign planning activities to WBS in the project.
  • It is used for running material requirement planning at the project level.
  • It is used to attach the component to the network that is planned at the plant level and is reserved as plant stock.

SAP Quality Management and SAP PP

  • Their relationship is used to inspect Type 03 for repetitive and discrete manufacturing.

It is used to inspect Type 04 for both repetitive and discrete manufacturing.

Master Data

This SAP PP tutorial will help you learn about the Master data that consists of the complete objects in SAP PP module. SAP PP Module comprises five master data.

Following are the five master data of SAP PP module:

  1. Material Master
  2. Work Center
  3. Bill of Materials
  4. Routing
  5. Product Version

Material master: All materials having common traits are assembled together, and they are allocated to a material type. It helps differentiate the materials and manage them systematically. Material master is used in storing different types of materials, such as raw material and finished products. It identifies a product on the basis of goods issue or goods receipt, purchase material, MRP, and production confirmation.

Work center: Work center comprises the master data which is related to the production operations of a product. Following are the production operations that take place within a work center of an organization:

  • Capacity planning: Capacity planning is used to evaluate the requirements for the current and future capacity of products stored within the work center.
  • Production costing: Production costing is used to calculate the cost of a product according to its respective formulas.
  • Scheduling: Operations in production order are scheduled as per operating times in the work center.

Bill of materials: Bill of materials is a complete list of materials according to the quantity that is required for the production of a product. It is used for material requirement planning for a product.

Also, you can create superbills to manage the list of all essential materials required to produce different variants of a product.

Characteristics of bill of materials:

  • Either multiple levels or a single level of bill of materials can be created.
  • The type of bill of materials depends on the production method, size, and validity dates.
  • 99 bill of materials can be created as per the material type.
  • Bill of materials can be used for the material available in SAP PP module, and equipment bill of materials can be used in the SAP Plant Maintenance module.

Routing: There are multiple activities or methods that are involved in the production of a product. Routing is nothing but a sequence of methods or activities that are predefined for the production. These activities or methods are carried out in the work center. Routing is also used to calculate the labor time, machine time, and production cost.

Features of routing are as follows:

  • It is compulsory to first define the work center before creating routing.
  • A single routing group can be used for multiple materials.
  • It is used for the scheduling of raw and finished products.
  • It is used to evaluate the cost of operation for a finished product.

Product version: Product version is the successor version of an old product with new features inherited into it. The product version is developed according to market demand and its changing trends. It is developed using routing data and bill of materials.

There can be multiple versions of a product according to the demand, time, and various manufacturing processes for production.

Product version

Demand Management

In this SAP PP tutorial, we will further discuss about the demand management which is used to estimate the delivery dates and requirements for a product. Under the SAP PP module, demand management uses planned independent requirements (PIRs) to get their input for product planning.

In demand management, different planning strategies are used to determine different planning methods.

Following are two planning strategies:

  • Make to stock
  • Make to order

Make to stock: Make to stock is used to evaluate the future demand for a product and accordingly produce the product without having the actual sales order.

Make to order: The make to order strategy is used to produce a product only after getting the order for a particular product. As soon as the customer places an order, the production of a product gets started.

Production Planning Cycle

Now, this SAP PP tutorial will deal with the production planning in SAP PP module. In SAP PP module, production planning consists of multiple levels that are required to evaluate the product and execute the production of it. Production planning is carried out on the basis of the sales chart of a product. The sales chart gives an overview of the demand for the product that helps an organization analyze and make its decisions accordingly. After the analysis of the demand and the need for a product, the organization should start its production in order to meet its customer needs. The production of a product consists of multiple levels. They are as follows:

  1. Planned independent requirement (PIR)
  2. MPS/MRP running
  3. Capacity planning and capacity leveling
  4. Production orders
  5. Product confirmation
    • Auto goods receipt
    • Auto goods issue
  6. Production order closed/settled

Production Planning Cycle

  1. Planned independent requirement (PIR): Planned independent requirement (PIR) is used to execute the demand management in a SAP PP module. Planned independent requirement is used to give the input for production planning. Planning an independent requirement is used to define the planning strategy that has been discussed above in demand management.
  2. MPS/MRP running: MPS/MRP running is a mechanism that is used to fill the gap between supply and demand of a product on time. Issue and receipt are part of the MRP elements. Issue is an MRP element that includes order reservations, sales orders, stock transfer orders, PIRs, etc. and receipt is an MRP element that is used to generate the receipt against production orders, purchase orders, purchase requisition, etc.
  3. Capacity planning and capacity leveling: Capacity planning is used to maintain the balance of the workload at the work center. It is used to calculate the production capacity of a product according to the requirements of the product and its availability. Capacity leveling is used to evaluate the production planning process. Capacity leveling is carried out using the thorough planning capacity and its requirements in the future.
  4. Production orders: Production orders consist of information related to the material required for production, location of the plant where the production is carried out, date and time of produced products, and the quantity of goods that will be required for the production of a product. It is also used to define the components and operational sequences that are used for production.
  5. Product confirmation: After receiving the production order, the availability of materials is checked with the inventory system, and then the production begins. The production confirmation is done using the following steps:
    • Auto goods receipt: Goods receipts are generated automatically when the material is produced as per the production order and gets stored at the respective storage locations.
    • Auto goods issue: Goods issue occurs when an order comes for production and when the required material for the production is consumed as per the production order. After the consumption of the required material, the system decreases the components in the inventory system.
  6. Production order closed/settled: The production order gets closed completely when the product is delivered to the respective organization/person. It also gets closed in scenarios where you do not need any further production of the product; therefore, in such situations, the product gets technically completed.

Conclusion of SAP PP Module

Through this SAP PP tutorial, we get to know that in this technology-driven world, the SAP PP module is in huge demand as all business organizations need the SAP PP module to manage the demand and requirements of their product in an efficient manner. The SAP PP module helps organizations remain updated about the demand and quantity of their products.

Once you are done with SAP PP tutorial, you can check out the list of different SAP Courses by Intellipaat. Now, further you can check out the list of sap-pp-interview-questions prepared by the experts, that will help you to go through any interview. And if you are interested to become a certified SAP consultant, you can get an end to end SAP MM Certification. You can post all your queries at the Intellipaat community platform.

 

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