SAP Production Planning Overview

A workshop that provides an overview of the

SAP R/3 Production Planning and Control (PP) module

SAP PP Overview 1
 Course Contents

Introduction
Organizational Structure
Production
# Master Data
Planning
# Planning Levels
Control
# Production Orders
Integration with other modules

SAP PP Overview 2
 Target Group

Audience: All departments with a fundamental knowledge of SAP

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Manufacturing Methods / Manufacturing
Strategies

Methods of Manufacturing
Repetitive Manufacturing
Discrete Manufacturing
Process Manufacturing
Projects

Manufacturing Strategies
Engineer to Order
Make to Order
Assemble to Order
Make to Stock

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Lead Times for Manufacturing Strategies

DLT Delivery Lead Time

Design Purchase Manufacture Assemble Ship ETO

DLT

Inventory Manufacture Assemble Ship MTO

DLT

Manufacture Inventory Assemble Ship ATO

DLT

Manufacture Assemble Inventory Ship MTS

DLT

Response Time to customer is shortest for MTS.

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 Organization structure

Client 1000 SSML

Controlling Area - 1000

Company - SSML

Purchase Organizations Plants Sales Organizations

Cost Center Cost center

Profit center
Production Maintenance

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 Production Planning and Control
Master Data

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 Master Data in PP

Material Master
Bill of Material
Work Center
Routing
Production Resources and Tools

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 Master Data in PP
Material Master

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 Material Master

The material master contains information on all the materials that a

company procures, produces, stores, and sells.

The material master is used by all modules in the SAP.

Different departments in a company work with the same material, so data in

a material master record is subdivided in the form of user departments.

A minimum of five fields need to be maintained in the Material Master to

create a material Material Number, Material Type, Industry Sector, Material
Description and Base Unit of Measure.

In PP the material master is used for maintaining data relating to MRP,

Forecasting and Work Scheduling.

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 User departments

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Material Types in Standard SAP

Material Type Description

FERT Finished Product

HALB Semi Finished Product
ROH Raw Material
ERSA Spare Part
HAWA Trading Goods
HIBE Operating Supply
LEER Empty Containers
NLAG Non stock Item
VERP Packaging
WETT Competitor Product
PROD Production Resources/ Tools

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 MRP Views

MRP 1 contains data relating to MRP Type, Lot Size and MRP Controller.
MRP 2 contains data relating to Procurement Type, Special Procurement
Type, Lead Time and Scheduling Margin Key.
MRP 3 contains data relating to Planning Strategy, Consumption Mode and
Availability Check.
MRP 4 contains data relating to Production Versions, BOM Selection Method
during MRP run and Repetitive Manufacturing.
Work Scheduling contains data related to Set-up Time, Processing Time,
Delivery Tolerances, etc.
Forecasting contains data as to how the material consumption took place
during the last few periods and on the basis of certain formulae, projections
for the future are made.

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Material Master MRP Key Fields
Basic, General, and Lot Size Data

Procurement Type indicates if the material is externally procured,

or produced internally or both.
Special Procurement identifies special planning rules which may
be used for in-house production or external procurement
MRP Type determines how the material is planned such as MRP,
MPS, or consumption based planning
Lot Size determines which lot-sizing procedure the system uses to
calculate order quantities
MRP Controller is the person who is responsible for planning of
the material

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Material Master MRP Key Fields
Scheduling Parameters
Planning Time Fence: defines a period during which MRP/MPS will
not automatically add or reschedule orders
Scheduling Margin Key: controls the release period, opening period
for a material and scheduling floats for production
Release period is the number of working days taken to release a
production order
Opening period is the number of working days taken to convert
a planned order into a production order
Order floats allows for safety margin before and after production
Planned Delivery Time: lead-time for purchased material
In-house Production Time: lead-time for manufactured material
GR Processing Time: goods receipt processing time
Example: dock-to-stock time

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 Material Master MRP Key Fields

Availability Check indicates whether the system generates individual

or summarized requirements for sales orders for this material and for
planning, which MRP items the system includes in the availability
check.

Plant Specific Material Status is used to limit the usability of materials

for certain activities such as, purchasing, bills of material, etc.

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 Master Data in PP
Bill Of Materials (BOM)

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Bill of Materials

A bill of material is a complete, formally structured list of the

components required to produce the product or assembly.

The BOM contains the material number of each component,

together with the quantity , unit of measure and item category of
component.

BOMs are used in product costing and materials requirement

planning.

BOMs are also called List of Ingredients or Recipe List.

The material for which the BOM is created is called the header and
it can contain one or more items below it.

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BOM Structure

Assembly BOM Header

BOM Items
Component 1 Component 2 Component 3
(assembly)

Component Component Component

31 32 33

Note: BOM items are also known as BOM components.

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 BOM Technical Types

Variant BOM
Simple BOM

Alternative 1

Alternative 2

Multiple BOM
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Variant BOM
Bike color T Shirt

Red color T Shirt

Black Color T Shirt

Blue Color Fabric

Red Color fabric

Black Color Fabric Buttons Labels

Qty. for variant 1

Qty. for variant 2
Blue Collar

Red Collar

Dyed yarn
Black Collar

Several similar products are represented in one bill of material

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 Multiple BOM

Alt 1 - Lot Size 1 to 100

Alt 2 - Lot Size 101 to 500
T Shirt

Buttons Gassed
Labels Mercerized fabric

Qty. for alternative 1 alternative 1

Qty. for alternative 2

Plain Fabric

alternative 2

The same product can be manufactured using different methods of

production or with different components or component quantities

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 Master Data in PP
Work Centers

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 Work Centers

A work center is a place where production operations are performed.

Machines, machine groups
Employees, groups of employees

Work centers are used in task list operations (routings) and integrated with
Human Resource Management System .

A work center is always created with respect to a plant.

To each work center a work center category is assigned, that determines

which data can be maintained in the work center.

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 Work Center Category

Machine

Person

Processing Unit
Production Line

Machine Group

Statistical Work Center

Zone

Station

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 Work Center Views
Name and description
Basic Data Standard value key
Performance efficiency rate

Default Values Control key

Standard text key
for Task Lists
Wage data

Costing Data and Cost center

HR System Data Activity types
Formula key

Capacity category
Scheduling Data Interoperation times
Formula key

Available capacity
Capacity Data Formula key
Utilization
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 Master Data in PP
Routings

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 Routings
Definition:
A routing describes the processing steps required
to produce a material or provide a service .
Routings are also called task lists.
A routing is always created with reference to
material and a plant.

Examples:
Work steps - Op 10 - Pre-Assembly ...
Op 20 - Assembly ...
Op 30 - Inspection ...
Op 40 - Packaging ...
Op 50 - Delivery ...

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 Routing Structure

A routing is composed of a header and one or more sequences.

The header contains data that are valid for the whole routing.

A sequence is a series of operations.

Operations describe individual process steps, which are carried out during
production.

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 Operations in a Routing
Material
Operation 20
Routing Operation 10
Group
Work center
Routing Texts
Control data
Times
Material
Components

PRTs
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Use of Routings
Production/Assembly Scheduling

Order Times
Control data
RTG.
Texts 10 20 .... N
BOM Op 10
PRTs
Material t
Quality Start date Finish date

Capacity Planning Costing

C
Work center
a
p
Op. 10
a Manufacturing Costs
Op. 20
c Manufacturing Overheads
i
t
Machine Labor
y t t
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Master Data Costing Relationship

Work Center Routing

Formula Constants Standard Values

Cost
Center
Activity
Type Formula

Activity Price Actual

Time/Quantity

Costs

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 Production Planning and Control
Planning Levels

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 Planning Levels in SAP R/3

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 Planning Levels
Sales and Operations Planning

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 Sales and Operations Planning

SOP specifies sales quantities for the long and intermediate term to roughly
assess the feasibility of sales and operation plans

Sales and Operations Planning at the Product Group or F/G level

Materials may be planned together in Product Groups
Sales quantities are determined for future periods
Production quantities are then determined on the basis of sales

The data from SOP is then disaggregated and then transferred to the next
planning level i.e. Demand Management

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 Planning Levels
Demand Management

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Demand Management

Copy from Copy from Copy from Copy from

Sales Plan Production Plan Forecast Original Plan

Manual Planned Sales

Independent Demand Management Demand from
Requirements Demand Program Sales Orders

MRP/MPS

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Demand and Supply Elements

Demand Elements Supply Elements

Sales Orders Planned Orders

Planned Independent Production Orders

Requirements
Purchase Requisitions
Dependant
Requirements Purchase Orders

Reservations Warehouse Stock

Safety Stock

Demand Elements are also called requirements or issues, while Supply Elements
are also called receipts.
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Requirement Types

Independent Requirements
Planned Independent Requirements:
Are used for the anonymous (Non-order-specific) planning
of production or procurement (E.g. demand forecast)
Customer Independent Requirements:
Are sales orders on the system. Sales Orders are generally
copied directly into the PP system from the SD system, but
they can also be entered manually
Dependent Requirements
Are directly related to or derived from the BOM structure for
other items or end products. They are automatically
generated during MRP

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Planning Strategy Make-to-Stock
Make product for stock in expectation of customer sales.
Plan using planned independent requirements for anonymous
make-to-stock production.

Use Net or Gross Requirements Planning

Net Requirements -- includes warehouse stock, planned
issues and receipts
Gross Requirements -- excludes warehouse stock. Just
includes planned and open orders

Example is a shelf stock item such as an emergency lamp.

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Strategy: Make-To-Stock Production

Example: Common shelf items such as a emergency lamp

Sale from stock Planning

Warehouse Stock
Finished Product

Production Push

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Planning Strategy Make-to-Order
Production
Sales orders trigger the production process.
Produced quantities for each sales order are managed individually.
Production and procurement costs are settled either to a sales order or a
project.

Example is a custom product with a unique structure such that it only

applies to a particular customer order.

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Strategy: Make-To-Order Production
Example: New machinery

Sales Order Warehouse Stock

Finished Product

Production by Lot Size Pull

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Consumption Logic
Customer requirements consume planned independent requirements directly before or after it.
Consumption mode is either determined in the material master record or
in the configuration menu of demand management
Consumption mode determines either --
Backward consumption requirements directly before the sales order
Forward consumption requirements directly after the sales order
Both types are allowed the system looks for the next closest planning requirements
If no consumption periods exist, then you can only consume requirements planned
on the same day.
Example -- Forward Consumption
01/07 01/14 01/21 01/28
Planned Requirements 0 0 0 100
Customer Requirements 25 -------^

Example -- Backward Consumption

01/07 01/14 01/21 01/28
Planned Requirements 0 100 0 100
Customer Requirements ^----- 25

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 Planning Levels
Material Requirements Planning

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 Functions of MRP

To guarantee material availability.

It is used to procure or produce the requirement quantities on time
both for internal purposes and for sales and distribution.
Monitoring of stocks, creation of order proposals for purchasing and
production.
Determines any shortages and create the appropriate procurement
elements.
Create messages that inform the MRP controller of critical parts and
exceptional situations so that the MRP controller can quickly
reprocess the results of the automatic planning run in the specific area
with problems.

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 MRP Controller

The MRP controller is responsible for specifying the type, quantity

and time of the requirements.
He must also calculate when and for what quantity an order
proposal has to be created to cover these requirements.
He is provided with the information on stocks, stock reservation
and stock on order to calculate quantities and he needs all the
information on lead times and procurement times to calculate
dates.
The MRP controller determines a suitable MRP and lot-sizing
procedure for material to determine procurement proposals.

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MRP Types
VB Manual Reorder Point Planning:
MRP produces order proposals when stock falls below a reorder point.
The reorder point and safety stock levels are entered manually

VM Automatic Reorder Point Planning:

The reorder point and safety stock level are calculated based on the
forecast results

PD Deterministic Planning
MRP produces order proposal(s) to match the exact quantity of the
requirements based on independent and dependent demands

M0 Master Production Scheduling

Similar to PD but used for master schedule items

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MRP: Reorder Point Planning

Stock

Reorder Point

Safety Stock

Time
Order Date Delivery Date

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Lot Sizing

Static Periodic Optimum

Lot for Lot Daily Lot size Part period balancing

Fixed Lot size Weekly Lot size Least unit cost procedure

Replenish up to Monthly Lot size Dynamic Lot size creation

maximum stock
level Flexible period Groff reorder procedure

Lot size according

to planning
calendar.

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 Planning File

The planning file contains a list of all materials relevant to the planning run.
This means that as soon as a material master record is created with MRP
data and a valid MRP type, this material is then automatically included in the
planning file.
Before running MRP, the MRP controller has to ensure that the planning file
has been set up and includes all materials relevant to MRP.

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MRP Prerequisites

PLANT LEVEL Activated for MRP

MATERIAL LEVEL Valid MRP Type

Valid Material Status

Material MRP Views

Maintained
MRP Controller
Planned Lead Time
MRP Group
Lot Size Data

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MRP Features
Net requirements
calculation

Lot sizing

MRP Internal production

and external
purchasing
Forecasting

Order scheduling Bill of Material

and generation Explosion

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MRP Control Parameters

Whether or not MRP will automatically create purchase

requisitions, planned orders or delivery schedules.

Whether an MRP list will be created or not after the MRP run.
Whether the planning data will be adopted or whether the BOM will
be re-exploded.

Whether basic date scheduling or lead time scheduling will be

carried out.

Whether or not unchanged components are to be planned.

Whether results are to be displayed before they are saved.
Whether MRP is to be run in the simulation mode.

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The MRP Run
Independent Requirements: BOM explosion
Sales Orders & Planned Dependent Requirements:
Independent Requirements From BOM explosion

Quantity Requirements Timings Resource Requirements

Start Finish
1 2 3 4 5 6 7 July July Raw
1 5 Labor Machinery Materials

Order Proposal
Stock Requirements
List / MRP List

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MRP List
MRP Order Proposals
Group of Materials and Planner Messages
Controllers MRP
MRP Controller for which controller from MRP Planning run.
Listing
is responsible
Planner can drill down
to review material
movement activity

Goods Issues Goods Receipt

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 Production Planning and Control
Production Orders

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 Production Order - Definition

Production orders are used to control the production activity within a

company.
A production order defines
Which material is to be produced
At which location i.e. work center.
At what time (when to produce ?)
How much work (quantity) is required.
Which resources are to be used and
How the order costs are to be settled.

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 Functions of a Production Order

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 The Production Cycle

1. Order Request
2. Order Creation
3. Availability Check
4. Machine Reservation
5. Order Release
6. Print Shop Floor Papers
7. Material Staging
8. Order Processing
9. Confirmations
10. Goods Receipt
11. Calculate Variances
12. Order Settlement
13. Archiving / Deletion

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 Production Order Creation
Manual Order Proposal
Order Creation MRP Conversion

Determine
Order Type

Routing At least one operation is required

Selection
Changes are allowed
before order release
Lead Time Enter start or finish date
Scheduling depending on scheduling direction

Bill of Material Components

Selection Material Reservations
Item Categories

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Backward Scheduling for In-house
Production
MRP determines the basic scheduling dates using backward scheduling
If the release date lies in the past, the system automatically
switches to forward scheduling
Order Order Order
Release Start Finish
Date Date Date

Order Release In-house Goods Receipt

Process Time Production Time Process Time

Future
MRP Planning MRP Planning Lead Time Requirement
Date -- today Date

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 Production Order Release
Production Order Order release is carried out manually
Ready for Release

Material Availability
Check Uses checking rules defined in configuration

Order or
Operation Release

Shop Paper On-line or in background

Printing Possible Pick List, Confirmation Slips,...

Material
Withdrawals Possible

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 Material Availability Check

Stock on Reservation Planned Order Dependent

Hand for for Requirement
for
150 Units 50 Units 200 Units 200 Units

Net
Available 150 100 300 100

Requirement
for 50 Units
are Available

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Goods Movement for a Production
Order
Reservation

Planned Goods Issue

Material 1 Production

Unplanned Goods Issue

Material 2
Goods
Consumption of receipt of
Material 1 and 2 Material 3
Goods Issue

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 Back flushing

A goods issue has to be posted for every material that is withdrawn

during order processing. This can occur at the following times:
Directly as the goods are issued
When the operation is confirmed, the materials allocated to the
operation have the goods issue posted. This is known as
backflushing.

Whether a material can be backflushed is decided in three different

places. These are the master records of:
The Routing
The Material Master
The Work Center

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 Backflushing (cont..)

If the Backflush indicator is set in the routing, the material is always

backflushed regardless of what is entered in the material master
record.

If not set the indicator in the routing, whether the material is

backflushed or not depends on how you set the indicator in the
material master record.
Set indicator for backflushing in material master
Always backflush
Work Center decides whether to backflush

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 Confirmation Data

Yield
Scrap Quantity
Quantity
Scrap Reason

Start date
Dates Finish date

Work Center
Labor Personnel Number
Qualification
Wage Group
Wage Type

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 Production Order Status
CRT REL CNF DLV COMP

CREATED RELEASED CONFIRMED DELIVERED COMPLETE

. BOM and RTG . Completion Conf- .. Actual Production . Goods Receipt . Actual costs
selected irmation possible usage and time delivered settled to
captured cost objects
. Lead Time . Shop paper printed
Scheduling .Milestone operation
(MILE)
. Reservations . Availability Check
created for possible, at or
components before release

. Capacity Reqmts . Material issues

for Work Centers after oper release

. Planned Order
costs created (PRC)

. Settlement Rule
Determined (SETC)

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 Order Settlement

When a production order is settled, the actual costs incurred for the order are
settled to one or more receiver cost-objects (for example, to the account for
the material produced or to a sales order). Offsetting entries are generated
automatically to credit the production order:
If the costs for the production order are settled to a material account, the
order is credited each time material is delivered to stock. The material
stock account is debited accordingly.
If the costs for the production order are settled to another receiver (for
example to a sales order), the order is credited automatically at the time
of settlement. The cost-objects are debited accordingly.

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Production Planning Summary

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 Integration with other modules

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Integration of PP with other modules
Material Availability Check
Sales Order
Customer Shipment Sales & Transfer of Requirements

Credit Limit
Distribution Goods Issue to SO

Invoice
Sales Forecast / Plan

Production Order
Production Production Order Receipt
Materials
Planning Management
Production Cost Accounting Document

Inspection

Purchase Order

Invoice Receipt

Goods Receipt
Quality
Quality
Management

Finance & Accounts Payable

Vendor
Receivable Accounts / Cash Receipt Controlling

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