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Production Planning Production Planning is a part of PP Module, which offers the information for planning materials required to be pro... thumbnail 1 summary

Production Planning

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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Sales and Operational Planning

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