SAP PP - Production Planning... Part-3/3

This article is the last of the series of three articles on Overview of SAP PP (Production Planning). Please find the link to the first one and second one here. The series covers the basic theory and concepts around Production Planning module (or Plan-to-Produce business scenario, as frequently called). Continuing our discussion with the concept of Scheduling...


MRP performs scheduling and determines the procurement and production dates depending on whether it is external procurement or in-house production.

In the case of external procurement, it takes into account internal purchase processing time, vendor lead time and goods receipt processing time.

For in-house production, two scheduling methods exist: Basic date scheduling and Lead time scheduling. In basic date scheduling, system calculates the Planned Opening Date, Order Basic Start Date and Basic Finish date. Availability date includes goods receipt processing time as well when the product is finally available. For a given availability date (or requirement date), the system performs Backward Scheduling by which system determines the basic dates. If one or more of the basic dates are in past, system switches over to Forward Scheduling started from today’s date, which is also called Today’s Scheduling and the fresh dates are calculated by the system.

Lead time scheduling is performed by reading the precise scheduled times from the routing. Capacity requirements are also created during lead time scheduling. Float before production and Float after production are taken into account. The system calculates the dates as shown below.

Again if a date is in the past, the system will go for today scheduling.

The operation segments in the routing i.e. queue, setup, process, teardown, wait and move are used to calculate the scheduled start date after determining scheduled finish date. these segments determine operation lead time as follows.

During lead-time scheduling, earliest and latest start dates (and times) are calculated for all operations. Queue time is the difference between these two. Naturally the earliest start dates do not include queue time whereas the latest start dates do include queue time.

Material Availability Check

The availability check compares component requirements with available quantities and the available quantities are committed. If production order has shortfall of material, it is assigned the system status of ‘material shortage’. At any time, we can perform availability check in the production order which determines whether the production order’s material components are available on their requirement date(s). There are several customization settings for availability check which determine the ‘scope of check’, whether availability check is to be performed automatically at order creation or release, etc. which we can not discuss in length here.

Capacity Planning

In order to manufacture our product, we have the production facilities e.g. machine, labour, transport vehicle, etc. These production facilities represent the capacity to produce and hence Available Capacity. On the other hand there is Capacity Requirement which comes from the production order, say. Capacities are defined in Work Centers from where we get information on available capacity. Scheduling data or the different production times are defined in the Routing which provides information for calculating capacity requirements. Capacity Planning is an application in SAP system where we can evaluate the capacity situation and perform leveling of capacity by dispatching operations on time scale. For this purpose, the two major features are :
  1. Tabular planning table
  2. Graphical planning table
The tabular planning table is divided into two sections : resources section and requirements section. The resources section displays the availability of capacity at the work center and the requirements section displays the capacity requirements for various jobs planned at the work center.

The graphical planning table consists of charts which appear one below the other. The upper chart displays the available capacity at the concerned work centers. The lower chart shows the capacity requirements for the production order/s. The graphical planning table helps to carry out detailed planning of capacity requirements continuously over time. We can select the operations from the lower chart and assign them to the concerned work center in the upper chart at the appropriate date / time. Also we can dispatch the already assigned operation to reallocate it on the time scale on the same work center or any other work center. Dispatching operations is the main function of capacity leveling. Midpoint scheduling is carried out after dispatching where the system starts from the operation dispatched. The system schedules backwards for the preceding operations in the order and forwards for the following operations in the order. This type of scheduling where we dispatch operations as per the capacity availability and then rescheduling is called Finite Scheduling.


Normally we post the goods issue, which is a material document from accounting perspective, as we draw the goods from the stores against a production order. There is an alternative way of doing this by way of backflushing. Backflushing is automatic posting of goods issue of components when the production order or the concerned operation for which the backflushing indicator is set. So we can automate the goods issue process wherever it is desirable.

Make-to-Order Production

We studied the process flow in case of make-to-stock production where we initiated the planning process with planned independent requirements in demand management. And here only lies the difference between make-to-stock and make-to-order production. In make-to-order production, we don’t have planned independent requirements but customer requirements, say sales orders. We are specifically talking about strategy no 20 of make-to-order production here. Against sales orders we execute the planning process which is same as mentioned above. We complete the production and fulfill the sales orders. We can see the order situation in Stock/ Requirements list and how the system has created the planned orders to fulfill the sales orders. We can analyze here the scheduling situation and capacity requirements as well and then proceed for production. The lot-for-lot sizing procedure is normally used in MRP for make-to-order production parts. Therefore MRP creates a planned order for each sales order item. The planned order quantity corresponds to the sales order item. In the earlier case we had only one segment in the MRP list and all the stocks, issues and receipts were shown in this segment. This segment is called net segment. Here in make-to-order production, we have several segments and the issue and receipt elements apply only to that particular segment. Therefore the planned order created by MRP only applies to the concerned sales order item. In this connection we have one feature in SAP: Individual/ Collective Requirements Indicator which defines the component is being produced for the same requirement as the higher-level assembly or for several requirements i.e. not for any specific requirement.

This finishes our discussion on a brief introduction to Make-to-stock and Make-to-order production. Hope you enjoyed it thoroughly!

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