Sap production planning


Published on

SAP Production Planning

Published in: Software, Technology, Business
1 Comment
  • For SAP online training register at
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Sap production planning

  1. 1. When you create a sales order the after taking the MRP run through transaction MD02 ,your sales order will confirm into planned order. Planned order will have 2 scenarios: 1) If you want to acquire the particular material from vendor then the Purchase requisitions will be generated. 2) If you want to produce the material then the planned order will be converted into production order. ((Converting Planned Orders into Production Orders For in-house production, the planned order is converted into a production order. The components required for production are contained as items in the planned order and are transferred directly to the production order when the planned order is converted. When planned orders are converted into production orders, the dependent requirements of the components are automatically converted into reservations. Operation data and production resources and tools data is taken as usual from the routing of the material to be produced. The selection of the routing is described in more detail in the SAP Documentation entitled, PP Production Orders. If, when converting the planned order, you change the requirements quantity, or the order finish date, a planning file entry is automatically created which causes the material and its components to be planned with the regenerative planning procedure in the next planning run.
  2. 2. Two possibilities exist for converting planned orders into production orders:  individual conversion  collective conversion )) When the PP user will enter the sales forecast in the transaction MC94 then the same will be transferred to demand management and after running MD02 ,it will start appearing in MD04 in the form of VSF. When you create a sales order then the VSF will be consumed by your sales order and hence the same process of planned order will start. Details: 1. From SD, via ATP and TOR (Transfer of requirements), the requirements from SD are transferred to planning module. The requirements transfer will be activated in your schedule line category in SD. Schedule Line category activation for ATP and TOR is mandatory while Requirements class is the one to be activated first to have this feature active and integrated between SD and PP. Requirement class is the one that works like LIVER from configuration. This requirements class is determined from MRP Strategy Group assigned to material master. MRP strategy group tells the system how to plan the material in which situation. Say make to order scenario, how the requirements form SO have to be transferred to PP etc. 2. Assuming that yours is Make To Order scenario, you have to run MD50. Before that you have to ensure that for that material, all MRP views are maintained in material master. On the other hand, if yours is Make To Stock, you can run MRP via MD02 3. Yes ; you can run MRP against sales order. Pre-Requisites:- The configuration and master data must be maintained according to the scenarion for MRP strategy "Make to Order (MTO)", in Material Master --> MRP-3 view. Execution:- Trx. MD50. (( Types of Demands in an Organization
  3. 3. The following are the various types of demands: A) Planned independent Demand or Forecasted Demand: An organization runs on external demands (visualized demands or forecasted demands) for its products. When you talk of a product that is usually stocked and delivered to the customer from their, it is a typical case of made-to-stock scenario. Since the sales are from inventory, a company has to pile up only a certain quantity enough to satisfy the demand, such type of organizations therefore forecast their future demands based on historical sales, current market popularity of the product, various environmental factors, seasons, etc. Production from such planned independent requirement is a usual characteristic of a made-to-stock scenario. SAP also offers tools for forecasting the future demand using the historical data and playing various other fators on it. SOP (Sales and operation Planning) is one such tool in SAP, where you can forecast future demand using past historical information for a pre-selected organizational structure, for example, you could have the system pull in the historical information for a given organizational segment llike Sales oragnization, Sales Division, Distribution Channel, Material or for a Sales office, Sales division, Material group. The forecast carried out the sales information from specially defined sales information structure can be used as planned independent demand for production over the forecasted period. B) Demand from Sales order or Customer orders On the other hand, you could also have the demand coming in from sales orders and the production is initiated thereafter, such scenarios are typical make-to-order. Manfuacturing after an Order is booked is carried out for products of high value or for products whose design is supplied by the customer or as specified/requested by a customer. For Example, Manufacturing of Jewelry, Aircrafts, Special Purpose Pumps. Note that Made-to-Order can also be initiated for a typical Made-to-Stock Product, in cases where a special customer places a huge order and the manufacturing is triggered separately for them. You should not be amazed to come across a product, which is manufactured as both MTS and MTO. All the above cases are typical make-to-order and such demands come in through sales orders.
  4. 4. Note - The Sales orders demand coming in for a made-to-stock material is fulfilled using the existing stock, whereas the sales order created for a make-to-order material can never be satisfied using any existing inventory as the inventory created for the material would have been produced for fulfilling other customer orders Difference between Made-to-order and Made-to-stock Made-to-stock Scenario: If a material is defined as a made-to-stock material, i.e., materials which are not marked with any strategy types or strategy groups in the SAP material master MRP 3 view or materials which are marked with collective requirements in the MRP 4 screen, the system calculates the material requirements through the use of a pretty simple algorithm; where it takes into account the stock in the storage locations, the receipts expected for the materials through purchase or production and the incoming demands. In a made-to-stock scenario, the incoming customer requests are fulfilled from the inventory. The made-to-stock products are normally the consumer products or products which have a monopoly market and are sold out of the existing inventory. Such products are developed and produced continuously over the years till the product comes to the end of its life cycle. In such scenarios, the shop floor or the production team never knows, for whom the product is being produced. The customer demands and the market situations can only be forecasted and used as a basis for future production. In SAP the forecasted quantity is evidently used in a form of planned-independent-requirement. Made-to-stock production quantities are entered in SAP through the use of “Planned independent requirements” (transaction code MD61) which are subsequently planned by SAP MRP run. The planned independent requirements can be entered manually or the requirement can be pulled in from forecast or it can be pulled in from the sales and operation information structures (information structures which carry the sales information at levels defined by the organization). Made-to-order Scenario: In cases where the material is defined as made-to-order, i.e., materials which are marked with a made-to-order strategy in the MRP 3 view of the SAP material master and marked with individual requirements in MRP 4 view, the system calculates the material requirements through the use of an algorithm which takes in to consideration the receipts expected for the material through purchase or production and the incoming sales order demands. Here the system does not take into account the storage location stock of the material (since the stock in the storage location for the material is always tagged for a customer order and cannot be used anywhere else).
  5. 5. In a made-to-stock scenario, the incoming customer requests are accepted and produced thereafter and ultimately delivered to the very customer. The example of such a scenario can be high end products like jewelry or high end equipments or very costly product. These products are normally configured by the customer and the order is produced according to the customer requirements or by the design provided by the customer. The Sales order is created or configured according to the customer requirements and passed on to the production team. In such a scenario, the tracking of the sales order from its creation to planning to production to inventorying to delivery can be easily tracked unlike in made-to-stock scenarios, where the incoming sales orders are not tracked in the plant, but are fulfilled by the existing stocks. Integration of PP with SD 1. Availability check 2.Variant configuration. 3. Make to order scenario 1. Whenever you create a delivery with reference to a sales order, goods movement takes place in the bacgground. eg. In case of standard sales order, you create an outbound goods delivery to the customer. Here movement 601 takes place. This movement is configured in MM. Also, this movement hits some G/L account in FI. Every such movement of good s hits some G/L account. 2. The accounts posting in FI is done with reference to the billing documents (invoice, debit note, credit note etc) created in SD. Thus this is a link between SD and FI 3. Tax determination: In case of a tax determination also, there is a direct link between SD and MM SD Integration points with other modules
  6. 6. SD module is highly integrated with the other modules in SAP. Sales Order – Integration Points Module •Availability Check - MM •Credit Check - FI •Costing - CO/ MM •Tax Determination - FI •Transfer of Requirements - PP/ MM Delivery & Goods Issue – Integration Points Module •Availability Check - MM •Credit Check - FI •Reduces stock - MM •Reduces Inventory $ - FI/ CO •Requirement Eliminated - PP/ MM Billing - Integration Points Module •Debit A/R - FI/ CO •Credit Revenue - FI/ CO •Updates G/ L - FI/ CO (Tax, discounts, surcharges, etc.) •Milestone Billing - PS
  7. 7. Return Delivery & Credit Memo - Integration Points Module •Increases Inventory - MM •Updates G/ L - FI •Credit Memo - FI •Adjustment to A/R - FI •Reduces Revenue – FI)) ((Planned orders are results of running MRP. Shortages of materials that are set to internal procurement will create planned orders, which can be converted into production orders. Production orders are like "hard copies", they cannot be adjusted by MRP anymore. Well that's for a discrete environment, not sure about repetitive manufacturing. One we firm the planned order changes will be not reflected in the subsequent MRP, correct. e.g. BOM change. New components will not be recommended for firm planned order. I'm assuming when you ask about when to use planned vs production orders you are asking when to use Repetitive Mfg (with PE planned orders) vs Discrete Mfg (with production orders). We use both and while we're not perfect in our approach yet we are gaining a better appreciation for the two. For repetitive, the planning is much simpler, you basically run MRP against your demand and you get planned orders. You can change and firm these manually or you can use time fence strategies, and you can have multiple operations running through multiple work centres. They are very simple to maintain and use. Repetitive is normally run against shorter lead time build, where we don't need a high level of control. If we have the option we go with Repetitive. Where we want a better level of control we go with discrete. Planned (LA) orders are created from a run of MRP against your demand. These are converted to production orders, released, and processed. There is a lot more control (and work) with this order type than we see with Repetitive planned orders. We can link documents to the order, we can change the routing and the BOM on the order, and we have better visibility of
  8. 8. the individual orders while they are in manufacturing. Costing is against the order as opposed to Repetitive where the costs (and variances) are seen against the cost collector. After everything is complete, you still have a record against the build. The order stays intact, though it may be complete and closed, you still the retain history )) ((Material Requirements Planning in the Logistics Chain Implementation Options The main function of material requirements planning is to guarantee material availability, that is, it is used to procure or produce the requirement quantities on time both for internal purposes and for sales and distribution. This process involves the monitoring of stocks and, in particular, the automatic creation of procurement proposals forpurchasing and production. Process Flow requirements from the market. sales forecast. The result is the independent requirement, that is, the requirement for the finished product, tradable assemblies, trading goods and replacement parts. This result triggers material requirements planning. procurement quantities and dates as well as plans the corresponding procurement elements. The procurement element in the planning run is the planned order or, for external procurement, the purchase requisition. Both procurement elements are internal planning elements that can be changed, rescheduled or deleted at any time. -house, the system also calculates the dependent requirements, that is, the quantity of components required to produce the finished product or the assembly, by exploding the BOM. If a material shortage exists, planned orders are created at every BOM level to cover requirements. en converts these planned procurement elements into exact procurement elements: production orders for in-house production and purchase orders for external procurement. progress of the order for materials produced in-house is controlled by using the production order. The production order contains its own scheduling procedures, capacity planning and status management. Cost accounting is also carried out via the individual production order.
  9. 9. purchasing procedure. In this case, you must have chosen suitable vendors or you must have drawn up outline agreements. in stock and are managed by Inventory Management. Various functions in the SAP System are planned, controlled and coordinated centrally for several areas. MRP Procedures Use The aim of material requirements planning is to tailor available capacities and receipts on time to suit requirements quantities. You can use MRP or consumption-based planning for this. A special form of MRP is master production scheduling. Features Material requirements planning is carried out using current and future sales figures. The planned and the exact requirements quantities trigger the net requirements calculation. InMaster production scheduling, finished products and important assemblies, so- called master schedule items, are planned separately and with extra attention. Only the master schedule items are planned in this planning run. The system creates dependent requirements for the BOM level directly below the planning level. It does not, however, plan levels below this. Consumption-Based Planning uses past consumption data (historical data) to calculate future requirements with the help of the material forecast or statistical planning procedures. The net requirements calculation is not hereby triggered by an
  10. 10. independent or dependent requirement, but is triggered either when stock levels fall below a reorder point or by forecast requirements. ))