Production Planning Document - Main 601r46

SAP Production Planning and Control resides in the Logistics area together with other logistic application such as Materials Management, Sales and Distribution and Quality Management. SAP PP module is also integrated with these modules and all modules in the SAP system for providing real-time operations.

SAP Production Planning Details The definition of production planning in the SAP system is the systematic scheduling of workers, materials and machines by using lead times, time standards, delivery dates, workloads and similar data for the purpose of producing products efficiently and economically and meeting desired deliver dates. The SAP Production Planning module is divided into these sub-modules, where the most significant sub-module is Basic Data (PP-BD). PP-BD oversees the master data for the bills of material, routings and work centers and stores it in a separate component. Various stages of the planning system can be accomplished using components such as sales and operations planning (SOP), long-term planning demand management and material requirements planning (MRP), along with the costing and capacity calculation.

Supply Chain of Production Planning Process The supply chain is triggered by customer demand, a sales order. Once the sales order is received, the plant runs the Material Requirements Planning (MRP). Depending on the material type, the MRP controller determines whether the material is produced in house or purchased by a vendor. In the production phase, the plant will hire a sub-contractor if some items need to be produced externally. The finished goods will be confirmed and a goods receipt (or GR) will be posted. The goods are then stocked in a warehouse. The last steps include shipping and delivering of the finished goods to the customer. Organizational Element in SAP The organizational elements of the SAP manufacturing business process include company code, plant and storage location. • Company Code – The company code is the smallest organizational unit for which a selfcontained set of s can be created. The company code provides data for generating balance sheets and profit-loss statements. The set of can be created for the purpose of external reporting

• Plant – A plant is the location of the operations within a company. It is where either materials are produced, or goods and services are provided. A plant can only belong to one company code. • Storage Location – The storage location is where goods are physically stored. One production plant can have several storage locations. Master Data in SAP Production Planning The basic data used for SAP Production Planning and Control includes Materials, Bill of Material (BOM), Work Center, Routing, Cost Center and Activity Type. • Material Master – The material master record contains information of all of the materials that a company produces, procures, stores, and sells. Each department has its own set of material master records. For example, data that relates to sales is stored in the sales view, and data that relates to material planning is stored in the MRP view. A view may extend to more than one screen. This data is then used according to the department’s responsibility and needs. • Bill of Material (BOM) – The data stored in the bill of material together with routing and work center are used in the production planning and production execution process. The bill of material is a complete list of the components that make up a product or an assembly. It also contains the description, material number, quantity and unit of measure of each component. • Work Center – The work center is where a particular operation takes place. It represents a machine, a human or a group of humans. Routing or activity occurs in a work center. • Routing – The routing is the sequence of process steps required to manufacture a part or assembly. It is subdivided into activities and is defined for each semi-finished product or finished part. Production Planning and Execution Two main processes in SAP Production Planning and Control are planning and production execution. The production planning process is triggered by Sales and Operation Planning (SOP) and a sales order from Sales and Distribution module. Following the planning process is the manufacturing process. All processes end with an order settlement, monitored by Controlling (CO). • Sales and Operation Planning (SOP) is a flexible forecasting and planning tool with which sales, production, and other supply chain targets can be set on the basis of historical, existing, and/or estimated future data. When the planning is started in SOP, the system will create the production plan. • Master Production Scheduling (MPS) is the planning of production (usually end item production) to satisfy current and forecast orders. After the MPS is performed, the planned data

will then be sent to the demand program for further development of the lower product component planning levels by running MRP. • Material Requirements Planning (MRP) is a generic term for procedures in materials planning that take into and plan every future requirement during the creation of procurement proposals such as independent requirements and dependent requirements. MRP analyzes the demand from sales orders and forecasts. If stock is needed, then a planned order is created to trigger the procurement of a plant material. In order to replenish the stock, it is necessary to convert the planned order to a production order if it is a manufacturing item, or convert to a purchase requisition if it is a purchased item. In the production execution process, the planned order is converted into the production order. Production orders are used to control and monitor production within a factory and as a controlling instrument for cost ing. The production order displays: what and how much is to be produced (including duration), when production is to be execute, what is required for production, which method of production to be used, the capacities required, and the production costs. Order release takes place when the production order is executed. Goods issue takes place after the production order is released. In this step components or raw materials are withdrawn from the storage location and sent to production. Completion confirmation takes place when the product is completed. After the final manufacturing process is completed, the goods receipt to stock is posted. After the entire process has been completed, the production cost will be transferred to the controlling object.