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Questions: Definitions of Planning components in ECC Production Planning review.
Answer: SAP Production Plannning & Execution is divided into 2 areas that is Planning & Execution, and for the Planing area illustration in SCM240 are:
• Sales & Operations Planning (SOP) - SAP Sales & Operations Planning (S&OP) is a process within SAP's Supply Chain Management (SCM) that helps companies align their supply chain with market demand to improve business performance. I• It's a cyclical process, typically monthly, that brings together various departments like sales, marketing, product development, manufacturing, procurement, and finance to achieve a consensus plan for balancing supply and demand.
• This collaborative approach aims to optimize resources, maximize revenue and profit, and improve overall supply chain resilience.
• SOP is important for Planning for Factory, Capacity & Production Line Expansion which can be 3 to 5 years plan for some industries for longer-term decision planning purpose.
• Demand Management (DM) - In SAP, Demand Management is a crucial function within the Production Planning (PP) module that focuses on forecasting and planning for the production and procurement of finished goods. It acts as a bridge between sales and production, ensuring that manufacturing aligns with anticipated customer demand. The core of Demand Management involves managing Planned Independent Requirements (PIRs) and Customer Independent Requirements (CIRs) to optimize inventory and resource utilization.• Materials Requirement Planning MRP) - In SAP, MRP (Material Requirements Planning) is a system designed to plan and manage the procurement and production of materials needed to meet customer demand and production schedules. It helps determine when and how much of each material is needed, considering factors like sales orders, forecasts, current inventory, and production plans. Essentially, MRP ensures that the right materials are available at the right time, minimizing shortages and optimizing inventory levels.
• Long-Term Planning (LTP) - In SAP, Long-Term Planning (LTP) is a simulation of the Material Requirements Planning (MRP) process, used to assess future capacity, material needs, and vendor capabilities without affecting actual planning data. It allows businesses to proactively plan production, purchasing, and capacity needs by simulating scenarios based on sales forecasts and other factors.
• Master Production Scheduling (MPS) - In SAP, Master Production Scheduling (MPS) is a crucial planning process focused on high-level production planning for key items, like finished products and important assemblies, that significantly impact profitability or require substantial resources. It's a separate planning process that precedes Material Requirements Planning (MRP) and helps determine when and how much of these key items should be produced.
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Questions: Review of Strategy "10".
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Answer: In SAP, Strategy "10" is a Make-to-Stock (MTS) Strategy which contain the following Characteristics:
• Material Master Setting: The Strategy is assigned to the Finished Product.• PIR is allowed for the Material.• PIR Consumption Control: The PIR is not consumed by the incoming Sales Order and like-wise the Sales Order will not consume the PIR.• MRP Run: Finished Product stocks are considered in the MRP run, Sales Order will be displayed in MD04 but not calculated (display only), and MRP run do not consider the Sales Order in Planning.• PIR Reduction Control: The Sales Order will reduce the PIR.
• Suitable for: In SAP, planning strategy 10, also known as Net Requirements Planning, is particularly useful for industries involved in mass production of standardized products where production is driven by a production plan rather than individual sales orders. It's commonly used in make-to-stock scenarios, especially in industries with repetitive manufacturing processes.
https://froggysap.blogspot.com/2010/02/sap-what-is-5-what-is-strategy-10.html
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Questions: Review of Strategy "30".
• Concept: SAP planning strategy 30, also known as "Production by Lot Size," is a mixed make-to-stock (MTS) and make-to-order (MTO) strategy. It allows for both planned production based on lot sizes and production triggered by sales orders. This strategy is useful when a company produces for stock but also needs to accommodate specific customer requirements or smaller sales orders.
• Material Master setting: Assign strategy 30 to the Finished Product.
• Combined PIR and Sales Order Planning: Planning is done based on both planned independent requirements (PIRs) and customer requirements (sales orders).
• Lot Sizing Procedure: Typically use Periodic Lot-sizing rule like Weekly or Monthly Lot-sizing to combine the requirements of Sales Order and PIR into a Single Production.• Suitable for: dThis strategy is particularly useful for industries that produce in batches for stock for many smaller customer will small requirements but also need to fulfill custom orders that comes with larger quantities.
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Questions: Review of Strategy "40".
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• Concept: SAP Make-to-Order strategy 40, also known as "Planning with Final Assembly," is a production strategy that combines features of both make-to-stock and make-to-order approaches. It focuses on reacting flexibly to customer demand by triggering production based on planned independent requirements (PIRs) while also considering and consuming those requirements with incoming sales orders. This means that while you produce based on a forecast, you also adjust your production plan to meet actual sales orders.
• Hybrid Approach: Strategy 40 is not purely make-to-stock or make-to-order. It leverages both, using a forecast to initiate production and then adjusting the plan to incorporate sales orders. Regardless, it is primarly an MTS strategy scenario.
• Final Assembly Triggered by PIRs: Production of the finished product, including final assembly, is initiated by planned independent requirements (PIRs) set in Demand Management.
• Sales Orders Consume PIRs: When a sales order is created, it consumes the corresponding PIR. If the sales order quantity exceeds the PIR, the system generates a new planned order in the next MRP run to cover the difference.• Sales Orders Reduce PIRs: Based on the Consumption Mode (MRP4 view setting), the MTS Sales Order will consume the PIR.
• Flexibility and Responsiveness: This strategy allows for quick adjustments to changes in demand, as the system can accommodate both forecast-based production and customer-specific requirements.• Suitable for: This is the most widely used strategy, Products with a modular design where the final assembly is customizable but components can be standardized are well-suited for strategy 40
See the following Blog post:
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Questions: Review of Strategy "70".
• Concept: SAP planning strategy 70, also known as "planning at the assembly level," is used for make-to-order production scenarios where sub-assemblies are planned and produced in advance of finished goods orders. This strategy allows for forecasting and planning of common sub-assemblies that are used in multiple finished products, while still allowing finished products to be produced based on specific customer orders.
• Sub-Assembly Planning: Strategy 70 focuses on planning and producing sub-assemblies based on forecasts or planned independent requirements (PIRs) rather than directly reacting to sales orders.
• Strategy for the Finished Product: Can be either MTS or MTO.
• Consumption of PIRs: The planned independent requirements (PIRs) for the sub-assemblies are consumed by the production orders created for the finished goods, not by the sales orders directly.• Flexibility: This strategy allows for flexibility in responding to customer demands by having a stock of common sub-assemblies available while still allowing for customized finished products.
• Suitable for: Strategy 70 is particularly useful when there are multiple variants of a finished product that share common sub-assemblies; in this case it is difficult to manage PIR at the finished product level and more practical to manage PIR at the Sub-Assemby level.
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Questions: Review of Strategy "20".
Answer: In SAP, Strategy "20" is a Make-to-Order (MTO) Strategy which contain the following Characteristics:
• Concept: SAP planning strategy 20, also known as "Make-to-Order Production," is a production planning strategy where goods are produced specifically in response to a customer sales order, rather than being produced based on forecasts. This strategy is characterized by production being triggered solely by a sales order, no planned independent requirements (PIRs) are used, and typically no finished goods inventory is held.• Order-drivern Production: Production is initiated only when a sales order is received. No production planning is done in advance based on forecasts.• No Forecasting: Unlike other strategies, planning strategy 20 does not utilize planned independent requirements (PIRs) for the finished product.• No Finished Goods Inventory: Generally, no finished goods are held in stock. The product is produced specifically for the sales order and delivered upon completion. However, if after the MTO stocks are completed and the Customer cancel the MTO sales Order; then the MTO stocks can be transferred to "Common Stocks" to sell to MTS customers if applicable.• Individualized Production: The production process can be tailored to meet specific customer requirements, including customized products. This means that the MTO production order is cross-reference to the MTO sales order.• Material Master Setting: The strategy is defined in the material master record (MRP 3 view) for the finished product.• Individual/Collective Indicator: The individual/collective indicator on the component materials in the BOM or in the MRP 4 view determines whether they are procured for a specific sales order (Individual/Collector indicator set to "1") or as part of a collective requirement (stock) (Individual/Collector indicator set to "2").
• Suitable for: This strategy is ideal for situations with low and unpredictable demand, highly customized products, expensive products, and slow-moving items.
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Question: What is the purpose of % Share of Safety Stock set in the configuration for the Plant & MRP Group combination ?
Answer: In SAP, "share of safety stock" refers to the portion of safety stock that is available for planning purposes, meaning it can be used to cover requirements during the MRP (Material Requirements Planning) process. By default, SAP does not consider safety stock for planning. However, you can configure a "Shared Safety Stock" (SSS) percentage in the MRP group, which determines what portion of the safety stock is included in planning calculations.
• The concept of Shared Safety Stock (SSS) allows you to define a percentage of the safety stock that should be considered available for planning.• For example, if you set the SSS to 50%, then half of the safety stock will be treated as regular stock and can be used to cover requirements.
• You can configure the Shared Safety Stock percentage in the MRP group (transaction OPPR).• Also set the Safety Stocks to materials in the material master (MRP 2 view).
• The purpose of Shared Safety Stock is to provide a way to balance the need for safety stock to buffer against uncertainties with the need to utilize available stock for meeting demand.• By allowing a portion of the safety stock to be used for planning, you can potentially reduce the need to hold as much safety stock, which can free up capital and storage space.• It's important to set the Shared Safety Stock percentage appropriately based on the specific business needs and risk tolerance.
• If a material has a safety stock of 100 units and the Shared Safety Stock is set to 50%, then the system will consider 50 units of the safety stock as available for planning.• If there is a requirement for 120 units of the material, the system will use the 50 units of shared safety stock and create a planned order for the remaining 70 units.
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Question: Demonstrate Dynamic Safety Stock Calculations (or Range of Coverage) ?
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Answer: In SAP, dynamic safety stock is a method for calculating safety stock levels that adjusts to fluctuating demand, rather than using a static figure. It uses a coverage profile to determine safety stock based on average daily requirements and a target period, helping to maintain appropriate stock levels despite variations in demand.
• Coverage Profile: The core of dynamic safety stock is the coverage profile, which is maintained in the material master's MRP (Material Requirements Planning) settings.• Average Daily Requirements: The system calculates the average daily requirement for a material based on historical or planned demand.• Target Period: The coverage profile also defines the target period (e.g., number of days or weeks) for which the safety stock should be maintained.• Calculation: The dynamic safety stock is calculated by multiplying the average daily requirement by the target period.Example:
• If the average daily requirement is 10 units and the target period is 5 days, the dynamic safety stock would be 50 units.• If demand increases and the average daily requirement becomes 15 units, the dynamic safety stock will automatically adjust to 75 units.
Benefits:
• Improved responsiveness to demand fluctuations: Dynamic safety stock ensures that safety stock levels are appropriate for current demand patterns.• Reduced inventory costs: By avoiding overstocking, dynamic safety stock helps to minimize inventory holding costs.• Enhanced customer service: Maintaining sufficient safety stock helps to avoid stockouts and improve customer satisfaction.• Better inventory planning: Dynamic safety stock provides a more accurate and responsive approach to inventory planning.
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Question: Why did the system reduce the PIR when Goods Issue using movement type 201 ?
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Answer: In SAP, a goods issue reduces planned independent requirements (PIRs) when it consumes materials against a sales order or production order, particularly in make-to-stock scenarios. This reduction ensures that the PIRs, which represent anticipated demand, are adjusted to reflect actual consumption, preventing over- or under-production.
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Question: The Planning Calendar's effect on Lot Size determination in MRP run ?
Answer: In SAP, a Planning Calendar can be used with a Period lot-sizing procedure to group requirements within defined periods for procurement. The lot size, when using a planning calendar, is determined by the periods specified in the calendar, rather than fixed lot sizes or other standard lot-sizing procedures. This allows for more flexible lot sizing based on specific scheduling needs or vendor delivery schedules.
Here's a more detailed explanation:1. Planning Calendar and Period Lot Sizing:
• The planning calendar allows you to define flexible periods for grouping requirements.• These periods can be based on days, weeks, months, or freely definable periods defined in the calendar.• The period lot-sizing procedure then groups all requirements falling within a period into a single lot.
• You can assign a planning calendar to a material in the material master (MRP2 view).• When MRP is run, it will use the periods defined in the planning calendar to determine the lot sizes for • procurement proposals.• This means that instead of fixed lot sizes or other procedures, the system will group requirements based on the calendar's periods.
• Imagine a vendor delivers only on Mondays and Tuesdays.• You can create a planning calendar that defines periods from Monday to Tuesday each week.• When using a period lot-sizing procedure with this calendar, all requirements for that material will be grouped into lots based on these Monday-Tuesday periods.
• Flexibility: Adapts lot sizing to specific scheduling needs and vendor constraints.• Reduced Order Costs: May reduce order frequency by grouping requirements into larger lots based on the calendar.• Improved Scheduling: Aligns procurement with delivery schedules and production planning.
• In the material master, you would typically set the lot-sizing procedure to "P" (period lot size) and the lot-size indicator to "K" (planning calendar) when using a planning calendar.• This tells SAP to use the periods defined in the assigned planning calendar to determine the lot sizes.
Click below to Blog Posts for SAP screen setup and demo for Plannd Calendar Period Lot Sizing:
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Question: How to setup for Planning Table view of the Production Schedule for Discrete Manufacturing for Planned Production Orders ?
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Answer: In SAP, a planning table is a tool used in repetitive and flow manufacturing for planning and controlling production quantities, particularly in a period-oriented manner. It provides a visual overview of production lines and materials by period and quantity, allowing planners to check production quantities, monitor capacity, and manage product availability. Although it is primarily designed for Repetitive Planned Orders, the Planner can also use the Planning Table for prodution schedules for Descrete Manufacturing Planned Production Orders.
Click below to view steps to setup Planning Table to view Production Order for Discrete Manufacturing (for Planned Production Orders):--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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