The secret to success in the exciting, dynamic sector of manufacturing is effective production planning. That’s where SAP Production Planning (PP) comes into play! SAP PP was once just a basic planning tool, but it has grown into a revolutionary, AI-powered component of the S/4HANA suite. It is now essential for any manufacturer that uses SAP systems.
The SAP Enterprise Resource Planning (ERP) system’s dynamic module facilitates a seamless and effective production process. With SAP PP, you can plan resources, anticipate demand, and guarantee on-time product delivery.
This article explores the fundamentals of SAP PP, its unique characteristics and advantages, the key master data, and the process flow. Get ready to learn about SAP PP!
What Is Production Planning In SAP?
A fundamental component of SAP ERP and S/4HANA is production planning (PP). As the name implies, the manufacturing process is the main focus of SAP PP. From capacity planning and production execution to demand planning and materials management, it is made to assist the whole production process.
The SAP PP (Production Planning) module is an essential part of the SAP ERP system. This module is specifically designed to unify all of a firm’s production-related data and operations into a single cohesive unit. It is beneficial for businesses of all sizes and across various industries. The SAP PP module helps manage production processes by handling financial, operational, and human resource data related to production. Additionally, it logs and tracks actual and projected production costs as well as the production process flows.
Why Is SAP Used For Production Planning?
Whether you are a major organization or a small firm, employing SAP PP can help you remain successful in the highly competitive business environment of today. Here are some reasons for using SAP for production planning:
- Improved Visibility
Transparency in production processes is essential for enterprises to enhance their operations and make informed decisions. With SAP PP’s better operations transparency, businesses can monitor and analyze production data in real-time. This data may contain particulars on material availability, capacity utilisation, production orders, and other topics. It may help your business identify difficulties, streamline manufacturing procedures, and make data-driven choices.
- Better Handling of Resources
SAP PP helps businesses make the best use of all of their resources, including personnel, machinery, and supplies. Furthermore, it guarantees that resource limitations won’t cause disruptions to manufacturing processes. Your organizations can optimize resource utilization to reduce expenses and increase production with SAP PP.
- Simplified Processes
To create a more efficient, end-to-end manufacturing process, SAP PP interfaces with other SAP modules, including Materials Management (MM) and Sales and Distribution (SD). This guarantees the timely completion of manufacturing and synchronization of all processes. Your organizations may automate procedures and get rid of redundancies with SAP PP, which will speed up and improve production processes.
Key Features Of SAP ERP Production Planning
Master Data Management
Management of master data components such as routing, work centers, Bill of Materials (BOM), and material master.
Basis for planning and managing production.
Demand Management
Use of historical data, sales orders, and client requirements to generate and manage demand projections.
Helps determine production amounts and schedules.
Material Requirements Planning (MRP)
Computes material needs using the production schedule.
Considers dependency requirements, safety stock, and lead times to establish quantity and timing of material requirements.
Capacity Planning
Control over work centers and equipment capacity.
Plans production orders, sets work center capabilities, and distributes workloads to maximize resource usage.
SAP ERP Production Planning Cycle
- Planning
Typically, budgeted sales plans are used to inform production planning. To achieve sales requirements within the parameters of manufacturing cycle times, planning is based on the sales plan. Demand for the Product is recorded as planned independent requirements (PIRs) through demand management. The material requirement planning (MRP) process uses this demand management data as an input. Using master data, such as the Bill of Material (BOM) and the actual plant stocks available, MRP verifies the availability of different raw materials utilized for manufacturing at different stages.
Purchase requisitions are made for materials that are obtained outside and planned orders are made for materials that are produced internally in the event of a shortfall. These buy requisitions and planned orders start the production cycle’s procurement and execution, respectively. Capacity leveling is necessary to prevent capacity bottlenecks since MRP operates with limitless capacities.
- Execution
These planned orders are transformed into production orders and, utilizing master data such as routings, are scheduled in line with the production schedules. The production supervisor releases production orders on the shop floor, and to determine whether any components are missing, material availability checks can also be performed. Based on the actions recorded in the routing, where master data such as the work center is indicated against each operation in the routing, production is carried out.
Upon completion of manufacturing, orders are verified, material consumption and revenue movements are recorded under the respective orders, and the orders are finalized. Consequently, the material is placed in the specified storage location and the order is marked with Delivered (DLV) status. At the month’s end, controlling personnel often need to set the production order to a technically completed state before finalizing orders to calculate production variances.
SAP ERP Production Planning Sub-Modules & Their Functionality
Manufacturing Types
- Process Industries
- Involves batch-oriented manufacturing procedures and activities.
- Primary application sectors include food, pharmaceutical, and chemical industries.
- Repetitive Manufacturing (REM)
- Utilized mostly in the automotive sector for production flow frameworks and serial production planning.
- Discrete Manufacturing
- Involves production of distinct items such as automotive parts, consumer electronics, and machinery.
- Characterized by the production of single or small batches with a focus on individual orders.
Sub-modules and Planning Components
- Material Requirements Planning (MRP)
- Focuses on planning for material requirements.
- Ensures that materials are always available when needed.
- Shop Floor Control (SFC)
- Integrates management and tracking with production and manufacturing planning.
- Helps in monitoring and controlling production processes on the shop floor.
- Long-term Planning
- Assists businesses with long-term production planning.
- Useful for annual or rolling quarterly planning, requiring analysis of future requirements.
Master Data In SAP ERP Production Planning
Think about an industrial floor humming with activity as raw materials are turned into final goods. So how does SAP PP manage to maintain the seamless operation of this intricate process? Master data holds the key to the solution.
In SAP PP, master data serves as the stable foundation for your business. The following are the five main areas you should be aware of:
- Material Master
This extensive database contains information about every resource your business works with, from raw materials to completed goods. Purchases, sales, inventory control, and production scheduling all make use of it.
- Bill of Materials
Consider the BOM to be your product’s formula. It lists all of the parts and the precise amounts of each that are required for assembly, with room for variance.
- Work Center/ Resources
These stand for the actual sites or equipment groups where production takes place. For precise cost calculations, capacity planning, and scheduling, work center data is essential.
- Routing/ Master Recipe
The production procedure for every work center is specified in detail via routings. To guarantee efficiency and consistency, they outline the systems and work schedules needed for each process.
- Production Version
You can make production versions of your items to reflect changes as they happen. To guarantee that production reflects the most recent design, each version links to a distinct BOM and routing.
Summary
The production planning feature in SAP significantly enhances operations and planning for manufacturers of all sizes. Without SAP Production Planning, manufacturing firms cannot achieve their production planning objectives. This feature facilitates the procurement process, manages short-term orders while ensuring quality, and provides a comprehensive overview of future needs for long-term planning.
