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Introduction to SAP PP (Production Planning)

Updated: Feb 1, 2022

SAP PP (Production Planning) Introduction-

SAP PP is one of the important module in SAP ERP System and works in integration with other SAP modules such as Sales and distribution(SD) , Material management(MM), Financial management (FICO), Plant maintain ace (PM) and Logistics Execution(LE).

Proper planning of all the production related processes plays very important role in for any business or company to be successful because it will have direct impact on the cost and revenue of the company. Production planning will help to maximize the profits by improving the process flow, reduce inventory cost ,optimize use of equipment’s and resources.

Production planning process lines up the demand and manufacturing capacity of the business to meet the production goal of the business. It helps to create production and procurement schedules for finished as well as raw materials it also helps for keeping details of manufacturing processes and they are recorded and tracked to check what the planned and actual cost is. It will also track the movement of goods from raw materials to semi-finished or finished product.

Organization structure-

Organization structure is very simple and business needs to have plant and storage location to carry out production planning, processes and goods movement activities.

Master data –

1) Material master data- Information of materials stored in different views and used by all (Sales, Purchasing, Finance, Production planning) as central source of information.

2) Bill of Material (BOM) - Bill of material is the information of material with its components and their quantities require manufacturing together as assembly or sub assembly.

3) Work Center- Work center stores data for Scheduling, capacity and costing , it is basically machines or group of machines utilized for production.

4) Routing- Routing records sequence of operation performed at Work center and  used for capturing or tracking machine cost , labor cost and others for calculation of standard cost of the material.

5) Production version- It forms a link to determine the manufacturing process. There can be different or multiple Production versions for different process for manufacturing of the product.

Production Planning Cycle-

Production planning consist of two processes –

1) Planning-

Planning is based on sales plan and demand of the particular product. In this case the demand management will come into picture and PIR (Planned independent requirement) will generate and this will become basis for MRP and in case of material shortage or unavailability purchase requisitions are created for external sourced product and planned orders will create for in house materials.

There are two methods of production planning-

Make to Stock: Production of goods without any sales orders and stock is produced and kept

                    ready in the plant.

Make to Order: In this case the production of material is done on the basis of specific sales

                   order means after having the order of particular material in hand the

                  production will start.

2) Execution-

Planned orders are converted into production orders and production is carried out as per the routing master data , orders are scheduled and material availability checked then orders are released. After the completion of production the order confirmations done after confirmation of order delivery carries out as regular process.

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