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Production Planning is a part of PP Module, which offers the information for planning materials required to be produced or procured. In planning process, production requirements are originated from Sales Forecast or from direct sales orders in certain cases which, in turn, is transferred to Production Planning via Demand Management in the form of Planned Independent Requirements.
Demand Management
is a function in SAP PP module that serves the purpose of matching production
plan (supply) with the sales targets (demand). In other words the function of
demand management is to determine the requirement quantities and delivery dates
for the end products (finished products) that a company produces.
The result of demand management is
the demand program (Demand program provides the information that helps to
decide when the finished goods should be produced along with the quantities so
that customer demand could be met at all times. Demand management can be done
manually or based on previous planning results such as sales planning, SOP, and
forecast. Demand plan may also get affected from Direct
Customer Requirements i.e. Sales orders.
In SAP,
the demand program created via Demand Management is saved in a table called
Planned Independent Requirement (PIRs). PIR is a planned requirement quantity
for a finished product in a period of time. It is based on demand created via
the sales forecast and not on the sales orders. The PIRs, in turn, are consumed
by the incoming sales orders, depending upon the planning strategy used.
The creation of demand program also requires the definition of a
planning strategy for a product. With the help of planning strategies, the SAP
system decides if the production is triggered by Sales Orders (Make to Order
production) or or if it is not triggered by sales orders (make-to-stock production).You
can have sales orders and stock orders in the demand program. If the production
time is long in relation to the standard market delivery time, you can produce
the product or certain assemblies before there are sales orders. In this case,
sales quantities are planned, for example, with the aid of a sales forecast.
The
PIRs (demand program) become the input for the MRP run. MRP run calculates the
quantities and planned dates for the materials as well as operations and
phases, thus generating the capacities plan. The result of this process could
be evaluated in the Stock/Requirements List for materials requirements, and
Capacity Loads for capacity requirements. Provided that materials and
capacities are available, production can be executed.
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