SAP Production Planning – Basic Planning Approaches

Excerpt from First Steps in SAP® Production Processes (PP) by Björn Weber.

In this chapter I will present the basic planning approaches used in the SAP system. I will also present the most important planning strategies and outline the example used in subsequent chapters.
2.1 Planning Approaches
MRP II (manufacturing resource planning) is a planning concept that is a further development of material requirements planning (MRP). In this concept, based on the quantity calculation, pre-ceding and subsequent planning steps have been defined to enable an integrated production planning.
Thus, sales and operations planning and demand program planning for defining primary requirements quantities (known as “independent requirements”) have been placed before material requirements planning, while scheduling with consideration of limited capacities for detailed planning has been added after MRP. The diagram below (see Figure 2.1) shows all phases of the MRP II concept that I will address in more detail below.

Figure 2.1: Planning phases of the MRP II concept

Sales and operations planning involves itemizing the quantity of planned sales of products and spare parts. It can take place at an aggregated level (e.g., for product groups) or based on individual materials. During operations planning, rough-cut planning profiles are used to create loads for the sales figures deter-mined in order to estimate the feasibility of the planning. These profiles reflect the resource requirements at aggregated level and enable an initial analysis of feasibility. The results can lead to input being checked with the sales department.

The requirement figures that have been subject to this plausibility check are then handed over to the demand management organization. Here, the requirements, which were previously available at aggregated level (based on time and hierarchy), are broken down. The planned independent requirements now available at material level are compared with any existing specific sales orders. The planning strategy defined for this material also determines how this comparison is performed and in what period (see Chapter 2.2).

From the independent, planned, and customer requirements, material requirements planning determines the quantities of assemblies, components, standard parts, and raw materials required. The dates for which the quantities are required are also calculated. These requirements are compared with existing stocks and any expected stock receipts in order to calculate any material quantity that needs to be procured. If, during lead time scheduling, receipt elements are created and the requirements for these elements cannot be covered in time, this is where the second feasibility check level comes in to play. For example, the MRP controller can check whether the lead time can be reduced and, if this is not possible, can initiate an adjustment of the in-dependent requirements to this bottleneck.

Before the production department starts to implement the planning, the MRP controller can plan capacity requirements. To do so, he compares the capacity requirements created at the re-sources with the available capacity. If the result shows a capacity overload situation, he can use a planning table to perform specific sequencing against the limited capacity available and thus resolve the overload.

Shop floor control monitors and corrects production execution. This includes creating and releasing production orders, printing production documents, and reporting production progress. This last activity is particularly relevant for the MRP controllers, as they use the reports to determine whether production is progressing according to plan or whether an adjustment is required.

As you can see, the MRP II concept is divided into phases that do include internal check loops but that are connected only by an aligned forwarding of values. When IT systems were first developed, and processor performance and storage were seriously restricted, this structure had the immense advantage that every phase could be considered and modeled in isolation. Thus, the limited complexity enabled the programming of systems that could calculate solutions within a finite time. As a result, the MRP II concept established itself in most corporate programs.

Keep reading in First Steps in the SAP Production Processes (PP) by Björn Weber.

For manufacturing companies, effective and efficient production planning processes are crucial to success. In this book, you will learn the basics of production planning in SAP ERP. Review the details surrounding Material Requirements Planning (MRP II) and the principles of Engineer-to-Order, Make-to-Order, Assemble-to-Order, and Make-to-Stock scenarios. The book is illustrated with numerous SAP screenshots and provides a detailed example of an effective make-to-stock strategy. Identify which master data is involved in the planning processes and how it is structured. Trace material requirements planning and its process flow using detailed examples from the field. Gain an understanding of the importance of production orders for lot-related production and which functions they perform. Finally, learn how to implement capacity sequencing using capacity leveling in SAP ERP.

– Compact handbook for discrete production in SAP
– Processes in SAP PP explained clearly and understandably
– Comprehensive example with numerous screenshots
– Master data, resource planning and production orders in context

Author Björn Weber is a production planner at RÖHM GmbH, the leading global chucking tool manufacturer. He is responsible for planning organization and control, process development, and continuous optimization of production activities. As a graduate mechanical engineer, Björn has sound theoretical and practical knowledge of the PP module, in addition to related MM, SD, and APO modules. He has expert knowledge of process analysis, capacity requirements planning and capacity evaluation, user training, and lean and change management. As an author, it is particularly important to Björn to present PP fundamentals in a practical manner and to empower readers to understand and investigate the power of SAP PP functionality.