SAP Production Planning: A Workshop That Provides An Overview of The SAP R/3 Production Planning (PP) Module

SAP Production Planning
A workshop that provides an overview of the

SAP R/3 Production Planning (PP) module
SD
Sales &
Distribution
FI
Financial
Accounting
CO
MM
Controlling
Materials
Mgmt.
AM
PP
Production
Planning
Fixed Assets
Mgmt.
R/3
Client / Server
QA
Quality
PS
Project
System
Assurance
PM
OC
Plant Maintenance
HR
Human
Resources
IS
Office &
Communication
Industry
Solutions
Agenda
Review of Materials Management
PP Organization
The MRP II Concept in SAP
Bills of Material
ECM
Work Centers
Routings
Material Requirements Planning
Agenda (Contd)
Processing Planning Results
Production Order Management
Capacity Planning and Leveling
Product Cost
The Production Cycle
Sales and Operations Planning
Master Planning and Demand Management
Master Production Scheduling
Review of MM Organization
The SAP Enterprise Model
You must map your business into the

flexible SAP enterprise model
First stage in most projects
The model has a profound effect on the

functionality available
Physical and logical units of an

organization
Multiple views of an organization

(financial & sales views)
Your
Business
SAP
Enterprise
Model
Material Management Organization
Company
Purchasing
Organization
Purchasing
Group
A plant can be a physical plant

or a logical section of a plant
Storage locations are areas where

materials are stored within a plant
A purchasing organization can buy

for a number of plants
A purchasing group is a sub-set

of a purchasing organization
Plant
Storage
Locations
Acme Products Organization Example
Company
Plant
0001
0001
USA
USA
Plant
Plant11
0002
0002
Storage Location
Plant
Plant22
0003
0003
0001
0001
0002
0002
Plant
Plant33
0003
0003
0001
0001
0002
0002
0003
0003
Organizational Structures in R/3

Levels
Views
Group
Cost accounting
External logistics
Controlling areas
Purchasing
organizations
Sales organizations
Accounts
Company codes
Internal logistics
(MRP/Production)
Valuation areas
Plants
Inventory management
Storage locations/batches/special stocks
SAP R/3 Integration Model

Sales Order
Customer
Customer
Shipment
Credit Limit
Sales Forecast / Plan
Production
Production
Planning
Planning
Material Availability Check
Sales
Sales&&
Distribution
Distribution
Transfer of Requirements
Goods Issue to SO
Invoice
Production Order
Production Order Receipt
Production Cost
Accounting Document
Materials
Materials
Management
Management
Goods Receipt
Accounts Payable
Invoice Receipt
Purchase Order
Receivable Accounts / Cash Receipt
Finance
Finance&&
Controlling
Controlling
Vendor
Vendor
Material Master Data

Material Type
e.g. Raw material, semi-finished good, service, trading good, finished product
Controls access security
Determines how material is procured
Controls how material movements affect financial accounts
Linked to material number ranges
Controls what fields appear on what screens
Industry Sector
Controls what fields appear on what screens
Unit of Measure
e.g. Piece, box, crate, pallet
Different parts of the business can measure quantities in different units
Multi-Lingual Texts
Material Master Data

Material Master
General Data
Data applicable
throughout the client
e.g.
Material number
Sales Specific Data
Plant Specific Data
Data dependent on sales

organization and
distribution channel
Data relevant
for planning and
production
e.g.
e.g.
St. Loc. Specific Data

Data referring to storage
and inventory management
e.g.
Quantities
Description
Delivering plant
MRP profile
Special stock
Units of measure
Sales text
Production costs
Weight
Sales units
Planning data
Warehouse
attributes
Volume
Shipping data
Valuation
Product hierarchy
Division
Material Types in the Standard SAP

Material Type
DIEN
ERSA
FERT
HALB
HAWA
HIBE
LEER
NLAG
ROH
VERP
WETT
PROD
Description
Service
Spare Part
Finished Product
Semi-finished Product
Trading Good
Operating Supply
Empty Containers
Non stock Item
Raw Material
Packaging
Competitor Product
Production Resources/ Tools
Master Data Views
Finance
Engineering
Design
Master data is a key piece

of information in the system
Master data can be seen from

a number of views
Each view can correspond

to an SAP module
Each view has a number

of information screens
Each view belongs to an org unit within the

business
One product may have multiple plant and

sales views, one for each plant or sales
area
Sales
Product
Data
Production
Purchasing
Stock
Examples of How Data is Used

Controls which
General Ledger
Account is updated
Material description
used in reporting
Finance
Controls customer
ordering rules
for material
Sales
Product
Data
Production
Data used to
calculate MRP
lead times
Engineering
Design
Purchasing
Texts copied
to purchase orders
Stock
Maintains stock levels

by plant, storage
location, and batch
Production Planning
Production Planning Basic Data

Routings
Materials
Production
Facilities
Work Centers
PP Basic Data
Inspection
Plans
Production
Resources/Tools
Capacities
Bills of Material
F06010
Production Planning Functionality

PP-BD
Basic Data for Production
Products, Production Processes

and Resource Requirements
PP-SOP
Sales and
Operations Planning
Coordination and planning of production activities
PP-MRP
Material
Requirements Planning
Generation of order proposals based on

requirements defined by PP-SOP
PP-CRP
Capacity Requirements
Planning
Provides overviews from rough-cut through

to detailed shop floor planning
PP-SFC
Production Order Control
Generates data used for processing orders,

e.g., dates, costs and resources
PP-PC
Product Costing
Controls production costing
PP-IS
Shop Floor
Information System
Monitoring / analyzing on-going production

activities / data
The MRP II Concept in SAP
Planning Levels in SAP R/3
MRP Overview
Material Master MRP/MPS Views

Replenishment
Replenishment
Planning
Planning
MRP
MRP11
Planning
PlanningData
Data
Sales
SalesDemand
Demand
MRP
MRP22
Forecast/Reqmts
Forecast/Reqmts
MRP/MPS
MRP/MPS
MRP
MRP33
Consumption
ConsumptionData
Data
Work
Work
Scheduling
Scheduling11
Work
Work
Scheduling
Scheduling22
Production
Production
Control
Control
Material Master MRP I Key Fields

Basic, General, and Lot Size Data
Procurement Type indicates if the material is externally procured, or produced

internally or both.
Special Procurement identifies special planning rules which may be used for in-house
production or external procurement
MRP Type determines how the material is planned such as MRP, MPS, or consumption
based planning
Material Lead Time identifies for material planning the planned delivery days or inhouse production days
Lot Size determines which lot-sizing procedure the system uses to

calculate order quantities
Material Master MRP 1Key Fields

Scheduling Parameters (continued)
Planning Time Fence: defines a period during which MRP/MPS will not automatically
add or reschedule orders
Scheduling Margin: controls the release period, opening period for a material and
scheduling floats for production
Release period is the number of working days in the release period
Opening period is the number of working days between the order creation and
planned start date
Order floats allows for safety margin before and after production
Planned Delivery: lead-time for purchased material
In-house Production: lead-time for manufactured material
GR Processing Time: goods receipt processing time

Example: dock-to-stock time
Material Master MRP 2 Key Fields
Availability Check indicates whether the system generates individual or summarized

requirements for sales orders for this material and for planning, which MRP items the system
includes in the availability check.
Mat./PPC Status is used to limit the useablity of materials for certain activities such as,
purchasing, bills of material
MRP List vs Stock Requirements List
MRP
Planning
Result
Last planning
run results
Current Stock,
Rqmts, Balances,
planned Receipts,
Issues
MRP
MRP
Planning
Planning
Process
Process
Stock Requirements
List uses current data
The MRP List displays the result of the last planning run
The Stock Requirements List displays the most up-to-date stock and
requirements situation
Requirement Types
MPS LEVEL PARTS

Independent Requirements
Planned Independent Requirements:

Are used for the anonymous (Non-order-specific) planning of production or
procurement (eg. demand forecast)
Customer Independent Requirements:

Are sales orders on the system. Sales Orders are generally copied directly into
the PP system from the SD system, but they can also be entered manually
MRP LEVEL PARTS

Dependent Requirements
Are directly related to or derived from the BOM structure for other items or end
products. They are automatically generated during MRP
The Planning Concept in SAP

SOP
Sales
Plan
MPS
Planned
Independent
Requirements
Offset
Customer Independent
Requirements
MRP
Demand ie
Requirements
Requirements (Orders) from

SD Module
Keep Balanced
Planned Orders
Production
Plan
Order Proposals
Production Orders
Purchase
Requisitions
Order proposals, planned orders etc are created and adjusted by running the MRP or MPS programs.
MPS and MRP

Independent Requirements:
Sales Orders & Planned
BOM explosion
Timings
Quantity Requirements
Start
Finish
July
1
July
5
Order Proposal
Dependent Requirements:
From BOM explosion
Resource Requirements
Labor
Machinery
Raw
Materials
Stock Requirements
List
Bills of Material
Bills of Material
Simple BOM
Simple BOM representing

single material
Variant BOM
Similar materials
represented
by variants on one BOM
Multiple BOM
BOM representing a material

which can be made up of
multiple compositions
e.g.
different
components
and quantities
Bill of Material Validity
Area of Validity The same Bill of Material can be allocated to several plants.
Before you can allocate the BOM to a different plant, the material must exist at
the new plant, the unit of issue on the BOM item must be the same.
Validity Period (Valid from/to dates)
Becomes effective with the valid from date
The validity date is determined by the system automatically to be either the next effective
from date, or 12/31/1999.
A
B
C
B
D
X----------------------------------------------------------->>>>
from 1/1/95
from 12/31/95
to 12/30/95
to 12/31/99
BOM Scrap Data
Assembly Scrap yield or process scrap resulting from the assembly of components into
a finished or sub-assembly. It is used for calculating material used in an assembly. MRP
increases the material requirements for all components contained in the assembly.
Example: Quantity to produce 1000 units with a 1% assembly scrap = 10 units
Component Scrap considers component loss before the component is used in an

assembly. For example, shrinkage during storage. The scrap refers only to the component
in the assembly. When the BOM is exploded, MRP increases the quantity of the
component.
Example: Component Qty of 1000 units with a 5% component scrap would need 1050 units
required.
Operation Scrap scrap resulting from inter-operation scrap during an inspection

process that is not sent ahead to the next operation. When you enter operation scrap, you
must also set the operation net indicator which determines that the operation scrap is
calculated exclusive of the assembly scrap.
Bill of Material Glossary
BOM Category categorizes BOMs to represent different objects; for example:
Material BOM -- structure of products manufactured

Equipment BOM -- structure of equipment for plant maintenance
Document BOM -- structure of documents such as drawings (3.0)
BOM Group is a collective number for all BOMs in a group which allows for one or several similar
products to be decribed under one number.
All Alternatives of a multiple Bill of Material

All variants of a variant Bill of Material
BOM Usage special view of the BOM which represents a specific area of the company in which the
BOM is used; for example, Engineering, Production, Costing, Sales, Plant Maintenance. The BOM
Usage allows different views to exist without separate BOMs for each usage.
Technical Type the system distinguishes BOMs according to whether they represent product
variants or production alternatives. If you create a variant for the BOM, the system marks it as a Variant
Bill . If there is more than one alternative for a material, the system marks the BOM as a Multiple Bill.
Bill of Material Glossary
BOM Validity Bills of Material are valid over an area and effectivity period.
Area of Validity -- identifies which plants the BOM has been allocated to
Validity Period -- identifies the from and to effectivity dates. The default to date is 12/31/9999
Item Category When you enter a new Bill of Material item, an item category must be assigned.
It has important control functions such as:
Screen selection
Specific processing, such as material number required, negative values supported.
The Item Category cannot be changed once set. It must be deleted and re-added.
Sizes are maintained for variable-size items
Item categories include:
Stock Items -- material in stock as a component

Non-stock Items -- material not stocked - with or without a material number
Variable-size -- system calculates the quantity required using formulas
PM Structure Item -- used with plant maintenance equipment
Document Item -- used with Document BOMs
Sub-Items are typically used to represent different installation points for partial
quantities of an item.
In assembling resistors on a printed circuit board, the installation points are described.
There is no logic related to sub-items
BOM Structure
Plant Assignment
Validity Period
Release Indicator
BOM Header
Stock Items
Non-stock Items
Variable Size Items
Document Items
Text Items
Item 10
Item 20
Item 30
Sub Item 10
Sub Item 20
Additional component details

e.g.
installation points
for components
BOM Structure
Product
Product
Component
Component11
Component
Component22
Component
Component33
Component
Component
31
31
Component
Component
32
32
Components:
Stock material By-product
Non-stock material
Document
Variable-sized item
Part
Text item Class
Scrap/waste
(assembly)
(assembly)
Component
Component
33
33
Variant Bills of Material

Bike with
Blue Frame
Bike with
Red Frame
Bike with
Black Frame
Blue Frame/Fork
Assembly
Red Frame/Fork
Assembly
Black Frame/Fork
Assembly
Handlebar
Assembly
Gear Assembly
Qty. for variant 1

Qty. for variant 2
Blue Frame
Red Frame
Chrome Forks
Black Frame
Several similar products are represented in one bill of material
Multiple BOM
Production Variants
Blue Paint
Solvent
Alt 1 - Lot Size 1 to 100

Pigment 1
Water
Qty. for alternative 1

One material but with different combinations of

component material based on production method
Pigment 2
A finished product can be manufactured using different methods of

production with different components or component quantities
BOM Reporting
BOM explosion
Single-level Bill of Material
Multi-level Bill of Material
Summarized Bill of Material
Component Where used
Single-level Where used
Multi-level Where used
Summarized Where used
Print
BOM Recursiveness
E1
E1
K1
K1
K2
K2
B3
B3
E1
E1
K3
K3
Engineering Change Management
Changes to object types can be made without history which only records the
maintenance change after.
Change to object types can also be made with history which is made with
reference to a Change Master.
Changes become effective on a defined date
Changes are documented before and after the change
Changes are documented in a Change Master Record
Engineering Change Management Change Master
Change
M aster
Record
Object Types:
Sub-Types:
Task Lists
Bills of M aterial
Documents
Info
Inspection
Plans
Std Routings
Ref Oper Sets
Equip Rtngs
M ater'l BO M s
Equip BOM s
Documents
in DM S
Q uality
M anagement

Change Number X
(Master Record)
Changes possible for:
Material
BOM
Routing
Document
Change Number Master Record X

Change No.
Date
Reason for Change
Status
Object
00000001
00000002
00000003
00000004
01/01/95
02/01/95
03/01/95
04/01/95
Obsolescence
Substitute
Address Change
Safety Council
Valid
Material
Blocked
BOM
Valid Document
Valid
Routing
Processing Object Types using Change Masters

Create a
Change Master
Define which objects will be controlled by the change master

Process Change Master assignment
Describe reason for the change
Change the
Change Master
Process a Date Shift which moves the BOM validity date
Apply Change
Number to
Objects
Maintain BOMs and Routings with reference
Reporting of
Change Objects
to a change No.
Reference object using change No.
Work Centers
Work Centers
Capacity
Requirements
Planning
Machines
Cost
Center
Assembly
Line
Work
Centers
Production
Line
People
Costing
Scheduling,
Execution Times
Work Centers and Routings

Routing
Work Center W1
Assembly
Cost Center 100

Operation 10
Work Center W1
Assembly
Operation 20
Cost Center 100
Work Center W2
Finishing
Operation 30
Cost Center
Centre 200
Work Center Category
Work centers are allocated to different work center categories
The work center category is used to control the field and screen selection
for work centers during work center maintenance.
Work Center Category
Screen View
Statistical Work center
Basic Data
Production Work Center
Basic Data
Default Values
Capacity Values
Scheduling
Cost Center Assignment
Cost Center Assignment to Work Center

for Operation Costing
Cost Center
Set Up $70.00
Activity Rates
Mach $60.00
Labor $80.00
Overhead $70.00
Set Up (SET)
Work Center
with Activities
during production
Machine (MACH)
Labor (LAB)
Routing with standard values

Oper 0010
Oper 0020
Oper 0030
Oper 0040
Use of Formulas in Work Centers

Work Center Schedule
Work Center
Formulas
Work Center Capacity
Set up Formula
Machine Time Formula
Teardown Formula
Operation Std Values

Set up 1.0 hrs
Machine 5.5 hrs
Routing with standard values

Oper 0010
Oper 0020
Teardown .5 hrs
Oper 0030
Oper 0040
Available Capacity at a Work Center

1 hr
Planned
Downtime
Break
Time
1 hr
8 hrs
7 hrs
6 hrs
Working
Hours
Working
Hours less
Breaks
Productive
Working
Hours
Routings
Production Master Data
Material Type
BOM
BOM
Groups
Groups
Materials
Materials
and
andPRTs
PRTs
Routing
Routing
Groups
Groups
Cost
Cost
Centers
Centers
W/C Category
Item Category
Bills
Billsofof
Material
Material
Components
Allocated to
Operations
Routings
Routings
Work
Work
Centers
Centers
Routing Structure Views
Routing
Process
Resource Tool
(PRT)
Materials
Components
BOM
Operation 10
Operation 20
Work Centre:
PP-ASSEM
Control Key:
- Time Tkts
- Costing
Operation 30
Operation Text:
Pre-assemble
frame
Std Values:
Lab:10 mins
Mach:10 mins
Operation
Operation types
(Main) operation
Sub-operation
Sub-operation
HierarchyCosting
Completion confirmations
Scheduling always takes place on the
(main) operation level
The control key defines whether completion confirmations and

costing are carried out on the (main) operation level, or on the
sub-operation level.
Indicator:
group operation
combined operation
sub-operation level
(main) operation
Operation / Sub-operation
Schedule at Operation Level
Operation
Operation
0010
0010
Capacity Planning & Costing

possible at Sub Operation Level Level
Sub
SubOperation
Operation
0010
0010/ /10
10
atatWork
Center
Work CenterA1
A1
Sub
SubOperation
Operation
0010
0010/ /20
20
atatWork
Center
Work CenterA2
A2
Sub
SubOperation
Operation
0010
0010/ /30
30
atatWork
Center
Work CenterA3
A3
Operation
Operation
0020
0020
Useful when processing for operation 0010

occurs over multiple work centers
Sequence Categories
Standard Seq 0000
Material
Material
02
02
Routing
Routing
Group
Group01
01
03
03
Oper
Oper10
10
Alternate Seq 0001
Oper
Oper10
10
Branch
operations
Oper
Oper15
15
Oper
Oper20
20
Oper
Oper30
30
Oper
Oper40
40
Return
Operations
Oper
Oper20
20
Parallel Seq 0002
Oper
Oper50
50
Oper
Oper40
40
Oper
Oper60
60
Oper
Oper50
50
Routing Types
Standard Routing
10
20
N
Material
Reference Routing
10
20
R 1
Reference Operation Sets

Oper
Oper0010
0010
Oper
Oper0020
0020
Oper
Oper0022
0022
Reference Operation
Set X
Oper
Oper0024
0024
Oper
Oper0026
0026
Reference Operation
Set Y
Oper
Oper0030
0030
Oper
Oper0040
0040
Oper
Oper0045
0045
Oper
Oper0050
0050
Reference Operation
Set Z
Material Allocation
Product
Routing
BOM
Op. 10
Op. 10
Op. 20
Op. 30
Op. 30
Material-Routing Allocations
Material
Routing
Group
Routing
Group
Counter
01
02
01
02
A routing alterative can be allocated to several materials.

A material in a plant can be allocated to several alternatives.
Routing Default Values
Material
Material
Master
Master
Base Unit of Measure

Planner Group
Short Text
Routing
Routing
Work
Work
Center
Center
Control Key
Standard Values
Activities
Standards Text Key
HR data
External Processing
Oper
Oper0010
0010
Oper
Oper0020
0020
Purch
PurchReqn
Reqn
Purch
PurchOrd
Ord
Routing data copied to order

including quantities and dates
Purchasing creates P.O.
Vendor
VendorProc
Proc
Goods
GoodsRec
Rec
Oper
Oper0040
0040
Oper
Oper0050
0050
At goods receipt, the operation

is confirmed
Operation Lead Time
Float Before
Oper 0010
Oper 0020
Oper 0030
Float After
Operation Lead Time

Queue | Setup | Process | Teardown | Wait | Move
Interoperation
Time
Execution Time
Interoperation
Time
Routing Operation Sequences

Standard
Routing represents a standard

sequence defining production
procedure
Parallel
Routing includes processes which

can be performed simultaneously
to achieve time efficiencies
Split
Routing includes processes which

can/must be split across a number
of work centers
Overlapped
Routing defines process where one

operation is to overlap with the
following operation
Parallel Operation Sequences

Op. 20
Op. 10
Op. 20
Op. 30
Op. 90
Op. 40
Special form of overlapping

Positioning the parallel sequence at the beginning or end of an operation
Usage:
for example in the chemical industry for analytical processes
which run parallel to the production process
Material Requirements Planning
MRP Features
Net requirements
calculation
Lot sizing
MRP
Internal production
and external purchasing
Forecasting
Order scheduling
and generation
Bill of Material
Explosion
MRP Overview
Overview Purchased Items

MRP
Purchasing
Warehouse
management
system
Master data
Goods receipt
Invoice receipt
Inventory management
Valuation
Invoice
verification
Goods
issue
Transfer
posting
Accounting
Material
Batches
Vendors
Customers
:
MRP: Stochastic Planning
Forecasted
Future Consumption
Stock
Past
Consumption
Planned
Orders
Time
Today
MRP: Reorder Point Planning
Stock
Reorder Point
Safety Stock
Time
Order Date
Delivery Date
Forward Scheduling for External Procurement
Forward scheduling used for reorder point material
Release
Order Date
Purchasing
Process Time
Today
Desired Delivery Date
Vendor Planned Delivery

Time
Goods Receipt
Process Time
Net Change Planning

Daily Accumulation:
Planned Individual
Requirements
Sales Orders
Coverage calculation per requirement date
Entries
from
Planning
File
Warehouse
Stock
Open Order Proposals
Reservations
Order
Proposal
Shortages
MRP Prerequisites
PLANT LEVEL
Activated for MRP
MATERIAL LEVEL
Valid MRP Type
Valid Material Status
Material MRP Views Maintained

MRP Controller
Planned Lead Time
MRP Group
Lot Size Data
Material Master MRP 3 Key Fields

Consumption Mode: controls consumption of planned independent requirements by

customer requirements
Selections: backward, forward, or both
Consumption Periods Backward/Forward: specifies the number of periods of forward

or backward consumption
Used in conjunction with consumption mode
Storage Location MRP
MRP Indicator: determines whether or not requirements, for a specific storage location,
are planned separately from the overall plan
Reorder Level: used for storage location MRP
Replenishment Quantity: used for storage location MRP
MRP Types
VB
Manual Reorder Point Planning:

MRP produces order proposals when stock falls below a reorder point. The reorder point
and safety stock levels are entered manually
VM
Automatic Reorder Point Planning:

The reorder point and safety stock level are calculated based on the forecast results
VV
Forecast Planning
The latest forecast is copied as requirements which are used to create order proposals
PD
Deterministic Planning
MRP produces order proposal(s) to match the exact quantity of the requirements based on
independent and dependent demands
M0

Similar to PD but used for master schedule items
Lot Sizing
Static
Periodic
Optimum (Cost )
Lot for Lot
Daily Lot size
Part period balancing
Fixed Lot size
Weekly Lot size
Least unit cost procedure
Replenish up to
maximum stock
level
Monthly Lot size
Dynamic Lot size creation
Flexible period
Groff reorder procedure
Lot size according

to planning calen.
MRP: Static Lot Sizing

Lot for Lot Order Quantity:
Shortage Quantity
Ordered Quantity
Fixed Lot Size:

If
Material
Fixed Order
Quantity
Order
Order =
Fixed Order
Quantity
Shortage
Quantity
If
Shortage Quantity
>
Fixed Order Quantity
Replenishment up to Maximum Stock Level:

Order
Quantity
Stock required to achieve

maximum stock level set in
the material master
Order
Order
Carrying Out the Planning Run

Total Planning All materials in a given plant
All materials are reviewed by MRP regardless of activity
Only the materials in a plant that have undergone a change relevant

to planning since the last planning run (net change planning)
Planning Interval Limiting the MRP Planning Interval

example:
100 days
Planned requirements and
supply order receipts
Time
MRP Planning Horizon
Planning Run Options for Automatic

Creation of Requisitions and Delivery Schedules
MRP Control Parameter: determine whether or not MRP will automatically create
requisitions or delivery schedules
Options are:
Do not automatically create. Only create planned order
Automatically create within the opening period
Automatically create for the entire planning horizon
Opening Period Parameter: allows the user to take advantage of MRPs automatic
creation features while retaining control over the number of open purchasing documents
MRP List
MRP Controller
Group of Materials
for which controller
is responsible
Controllers MRP
Listing
MRP Order Proposals

and Planner Messages
from MRP Planning run.
Planner can drill down
to review material
movement activity
Goods Issues
Goods Receipt
Stock Overview
The Stock Overview shows the stock position for all locations within a
Company/Plant/Storage Location/Batch for all dispositions of material
Unrestricted
Total Company
Plant US01 Total
100
SLoc 0001Total
Batch 01 Total
Batch 02 Total
75
45
30
SLoc 0001Total
25
Quality Ins
Reserved
100
20
20
15
On Order ...
15
Stock Requirements List
Date
MRP Element Supply/Demand
Ref
EM
Quantity
01/01 STOCK
01/08 ORDER
Sales Order
25
01/15 PL ORD
1000
120
05
100
02/01 -----------------------------------------------------> Planning Time Fence
Stock Requirements List brings together all the supply orders, independent
and dependent demands and stock balances for the material. MRP makes
order proposals to balance the supply/demand position for the material
Available
100
75
175
Single Item Planning
Single-level, Single-Item Planning
Planning carried out for a single item on a BOM. Dependent requirements are only
created for materials on the next lower level
Multi-level, Single-Item Planning
Planning carried out for the complete BOM structure of a material
Backward Scheduling for External Procurement
MRP determines the basic scheduling dates using backward scheduling
If the release date lies in the past, the system automatically switches to
forward scheduling
Calculated Order
Release Date
Desired Delivery Date
Purchasing
Process Time
MRP Planning
Date -- today
Vendor Planned Delivery

Time
MRP Planning Lead Time
Goods Receipt
Process Time
Future Requirement
Date
Backward Scheduling for In-house Production
MRP determines the basic scheduling dates using backward scheduling
If the release date lies in the past, the system automatically

swithches to forward scheduling
Order
Release
Date
Order
Start
Date
Order Release
Process Time
MRP Planning
Date -- today
Order
Finish
Date
In-house
Production Time
MRP Planning Lead Time
Goods Receipt
Process Time
Future
Requirement
Date
Multi-Level Planning Structure

Customer Requirements
E1
= Demand
= Supply
Level 0
Planned Orders
Dependent Requirements
B1
R1
Planned Orders
B2
Planned Orders
Planned Orders
Dependent
Requirements
Dependent
Requirements
Level 1
R2
Planned Orders
R3
Planned Orders
Level 2
Processing Planning Results
Order Proposals: Planned Orders
Production
Order
Procurement Type is
In-house Production
Planned
PlannedOrder
Order
MRP
Order
OrderQty
Qty
Order
Date
Order Date
Capacity
CapacityReqts.
Reqts.
Resource
Reqts.
Resource Reqts.
MRP
Controller
Planning for In-house Production

Planning Run
MRP Controller
Manual
Creation
Auto
Creation
Auto Change/ Delete

if situation changes
Manual changes/
deletion
Planned
Planned
Order
Order
Collective Conversion
into Production Order
Individual Conversion
into Production Order
Production
Order
Production
Order Release
Planning for External Procurement

Planning Run
Auto Creation
MRP Controller
Planned Order
Manual Creation
Manual Change/
Deletion
Auto Change or Delete
Convert Planned Orders

to Requisitions
Auto Creation
Auto Change/Deletion
Purchase
Requisition
Purchasing Group
Manual Creation
Manual Change/Deletion
Purchase Order
Auto Creation
Auto Change/Deletion
Create PO via Requisition

Manual Creation
Delivery
Schedule
Manual Change/Deletion
Link to Scheduling Agreements

MRP
MRPPlanning
PlanningRun
Run
Source List
Quota
QuotaArrangement
Arrangement
External
ExternalSupplier
Supplier
MRP Supplier
from Source List
Scheduling Agreement
Schedule
Agreement
Schedule
Agreement
Lines
Created
Lines Created
Distribution Function
Total Requirement of 250 units for the week
50 Units
50 Units
50 Units
50 Units
50 Units
Several planned orders are created for partial quantities of the dependent
requirement quantity
The planned orders are scheduled for various dates within the
run time of the production order
A daily provisioning of partial quantities distributed over the run time

of the order is possible
Models a continuous flow process
Sales and Operations Planning Functions
SOP specifies sales quantities for the long and intermediate term to roughly
assess the feasibility of sales and operation plans
Sales and Operations Planning at the Product Group or F/G level
Materials may be planned together in Product Groups
Sales quantities are determined for future periods
Production quantities are then determined on the basis of sales
Sales and Operations Planning Planning Levels
MRP II is concerned with integrating individual plans within a supply chain
Profitability Analysis Revenue and Sales Plans
Sales and Operations Planning Sales and Production Plans
Master Planning Demand Program and Master Schedule
Material Requirements Planning Dependent Requirements and

Procurement Plan
Sales and Operations Planning Steps
Step 1 Sales Planning of Future Sales Quantities
Copy in from Sales Information System or Profitability Analysis
Automatic forecast based on historical factors
Manual entry of sales quantities
Step 2 Production Planning
Synchronize production plan with sales plan
Stock level equal to zero
Specify a target days supply by period
Specify a target stock level by period
Enter planning data manually
Sales and Operations Planning Steps
Step 3 Disaggregation of Planning Values
Determine the sales and production quantities of product group members
Modify the disaggregated sales planning data and create a production plan for each
member
Step 4 Transfer of Planning Values to MRP
Pass the planned sales and production quantities as independent requirements to

demand management
If product group data is transferred, the system automatically disaggregates the

planning data to the finished product level
Sales and Operations Planning Product Groups
A Product Group brings together materials according to some criteria such as similar
type or manufacturing process.
Link material master data with product groups
Materials and product groups can be members of more than one group for different
planning scenarios
Assignment of members from different plants to the same product group for cross-plant
planning
A product group may have a different unit of measure from its members e.g. aggregate
in cartons vs pieces
Proportional factors for disaggregation - how the product group quantitiy is distributed
to its members
Supports production versions for a material or group
Supports multi-level product group hierarchy
Graphical support of one or more levels
Sales and Operations Planning The Planning Table
Sales and Production Planning is carried out using a Planning Table which
shows the stock level that results from the sales and operations planning for
both materials and product groups
The Planning Table is divided into:
Sales Quantities
Production Quantities
Target Days Supply and Target Stock Levels
Sales and Operations Planning Creating a Sales Plan
Manual Data Entry and Distribution Functions
Copying Data from Sales Information System
Planned order, invoiced or delivery quantities
The planning data is aggregated across all materials in the group
Copying from Profitability Analysis
Entered directly into the Planning Table as a % or qty
Quantity and performance measures
Copying the Forecast
Aggregates the consumption values for all the materials in the product group
Sales and Operations Planning Creating a Production Plan
Determine the quantities to produce to meet the sales plan
Synchronize to the Sales Plan the system copies the sales quantities into
the production quantities
Zero Stock Level Use existing stock to cover sales quantities. When used
up, production quantities will synchronize with the sales quantities
Target Stock Level The system determines production quantities based on

sales and target stock levels
Target Days Supply Coverage is expressed in days
Sales and Operations Planning Disaggregation
Functionality is based on proportionality factors of product group members
The result of disaggregation is the sales plan of its members
Strategy parameters are used to create the production plan from the sales
plan on to a product group member
Disaggregation can be carried out for the product group or for selected
members only
Master Planning and Demand Management

Transferring Data to Demand Management
Transfer a single-level product group (multiple) or individual material (single)
Independent Requirements Parameters
Specify Requirements Type
Version Number
Limit scope of the time period
Master Planning
Demand Management
Planning and Consumption Strategies
Specification of Requirement Quantities

and Delivery Dates
Planning for Master Schedule Items
Planning Time Fence
Interactive MPS

Copy from
Sales Plan
Manual Planned
Independent
Requirements
Copy from
Prodn Plan
Copy from
Forecast
Demand Management
Demand Program
MRP/MPS
Copy from
Orig Plan
Sales
Demand from
Sales Orders
Planning and Consumption Strategies

Consumption
Strategy
Example/
Strategy Description
Planning
Reqmt Type
Sales Order
Requirement
Sales Order Strategy
Make to Stock
Bike Accessory - shelf item -- plan using planned

independent requirements.
LSF
KSL
Sale from Stock
Planning with
Final Assembly
Custom Product - planned independent reqmts at

F/G level, S.Os consume planned ind reqmts
VSF
KSV
Sales Order with

Consumption
Planning without
Final Assembly
Auto -- assemble to a customer order, stop preproduction at sub-assembly level. F/A Pull
VSE
KEV
Indep cust order with

consumption
Planning with
Planning Material
Bike, plan common sub-assemblies using a Planing BOM. Planned ind reqmts drive material.
S.O initiates final assembly.
VSEF
KEVV
Ind cust order with

plan material
Planning at
Assembly Level
PC - computer with options. Plan at subassembly

level, finished item. Mixed MRP indicator.
VSFB
Production by
Lot Size
Catalog Item - Combine several cust orders into a

single lot, depending on date.
KL
Sales Order mfr by lot
Make to Order
Production
Custom product - prodn planned by sales order,

may settle prod order to sales order.
KE
Ind cust order w/o

consumption
VSF
Demand Management
Planning Strategy Make-to Stock
Make product for stock in expectation of customer sales
Plan using planned independent requirements for anonymous make-to-stock

production.
Use Net or Gross Requirements Planning
Net Requirements -- includes warehouse stock, planned issues and receipts
Gross Requirements -- excludes warehouse stock. Just includes planned and

open orders
Example is a shelf stock item such as a bike accessory light
Planning Requirement Type is LSF - make to stock which is used in the

planned independent requirements transaction
Sales Order Requirement is KSL - which is sale from stock
Strategy: Make-To-Stock Production

Example: Common shelf items such as a bike accessory (light)
Sale from stock
Planning
Warehouse Stock
Finished Product
Production Push
Planning Strategy Planning with Final Assembly
Make product in expectation of customer sales
Plan using planned independent requirements at finished goods level to drive

demand to long lead time components
Typically there is a longer lead time to produce than the customer is

willing to wait for
Sales orders consume the planned independent requirement quantities
Planned quantities that are not consumed by sales orders result in excess
stock
Example is a long lead time custom product
Planning Requirement Type is VSF planning with final assembly
Sales Order Requirement is KSV which is sales order with consumption
Strategy: Planning with Final Assembly

Example: Custom furniture such as a cherry table
Final
Assembly
to Sales Order
Sales Order
Purchase
Planning
Warehouse Stock
Finished Product
Produce
MRP without reference to sales order
Planned Independent
Requirements
Production Push
Planning Strategy Planning Without Final Assembly
Final assembly is initiated by the customer sales order
Stop production at sub-assembly level
Final assembly pull
Example is automobile assembled with unique combination of features (subassemblies)
Planning Requirement Type is VSE -- planning without final assembly
Sales Order Requirement is KEV -- independent customer order with

consumption
Strategy: Planning Without Final Assembly

Example: Option oriented product such as a car
Planning
Assembly when
Sales Order
Scheduled
Sales Order
Warehouse Stock
Finished Product
Purchase
Planned Independent
Requirements
Produce
Stop at level
Warehouse Stock
Assembly 01
Final Assembly Pull
Warehouse Stock
Assembly 02
Production Push
Planning Strategy Planning with Planning Material
Planned independent requirements of Planning Material initiate procurement

of the planning bill components
Sales orders for the final assembly create planned orders of the finished
product and reduce planning quantities for the planning material
Possible to plan a family of products from forecast placed on the planning bill.
The planning bill details, through percentages, the quantity required for
common parts
Example is a bike with common sub-assemblies used in many finished items
Planning Requirement Type is VSEF -- planning with planning material
Sales Order Requirement is KEVV -- independent customer order with

planning material
Strategy: Planning with Planning Material

Example: Bikes with the same features except for the color
Sales Order
Purchase
Warehouse Stock
Assembly 01
Final Assembly Pull
Planning
Material
Customer Stock
Finished Product
Produce
Planning
Planned Independent
Requirements
Note: Percentages drive lower level
demands for sub assemblies
Warehouse Stock
Assembly 02
Production Push
Planning Strategy Planning at (Sub)Assembly Level
Used if forecasts are more reliable at the sub-assembly level. (hour-glass)
Sales orders received initiate an explosion of the finished product level
Resulting dependent requirements consume the planning quantities of the

finished product
Must maintain the Mixed MRP Indicator in the Material Master MRP2 View for
sub-assembly planning. Maintain the consumption indicator in the item screen
of demand management
Example is a PC where the forecast for individual features is more accurate

than forecasts for the completed PCs
Planning Requirement Type is VSFB -- planning at assembly level
Strategy: Planning At Assembly Level

Example: A PC with a large number of end item configurations
Sales Order
Warehouse Stock
Finished Product
Common Sub Assembly

Brake Assembly
Warehouse Stock
Assembly 02
Final Assembly Pull
Planning
Warehouse Stock
Assembly 03
Production Push
Strategy: Production by Lot Size

Example: Combine customer orders for the same item
Sales Order
Production by Lot Size Pull
Warehouse Stock
Finished Product
Planning Strategy Make to Order Production
Sales orders are planned according to sales order number
Produced quantities for each sales order are managed individually
Production and procurement costs are managed in either a settlement order or

a project
Example is a custom product with a unique structure such that it only applies
to a particular customers order
Sales Requirement Type is KE -- independent customer order without

consumption
Strategy: Make-To-Order Production

Example: New machinery
Sales Order
Production by Lot Size Pull
Warehouse Stock
Finished Product
Consumption Logic
Customer requirements consume planning requirements directly before or after it
Consumption mode is either determined in the material master record or

in the configuration menu of demand management
Consumption mode determines either -Backward consumption requirements directly before the sales order
Forward consumption requirements directly after the sales order
Both types are allowed the system looks for the next closest planning requirements
If no consumption periods exist, then you can only consume requirements planned
on the same day.
Example -- Forward Consumption

Planned Requirements
01/07 01/14 01/21 01/28

0
0
0
100
25 -------^
Example -- Backward Consumption

01/07 01/14 01/21 01/28
Planned Requirements
0
100 0
100
^----- 25
Production Order Management
Elements of a Production Order

Order
OrderHeader
Header
---------------------------------------------------------- Settlement Rule
Settlement Rule
Planned/Actual Costs
Planned/Actual Costs
Operation Sequence
Operation Sequence
Operation
Operation 0020
0020
---------------------------------------------------------- Work
Operation
0010
WorkCenter
Center
Operation
0010
Control
Info
----------------------------- Control Info
----------------------------- Work
Center
Operation
Operation
Times
Work
CenterTimes
Control Information
Control Information
Operation Times
Operation Times
Material
Materialatat0010
0010
----------------------------------------------------------Material
atat0010
Number
Material
0010
Material
Material
Number
----------------------------- Quantity
-----------------------------Quantity
Material
Number
Date
Material
Number
Date
Quantity
Quantity
Date
Date
Production Order Header
Order
OrderHeader
Header
Main
MainView
View
Order
OrderHeader
Header
Master
MasterData
Data
Order Type
Order Number
Production Order Quantity
Production Order Date
For Routing
For Bill of Material
For Costing
Order
OrderHeader
Header
Allocation
Allocation Data
Data
Order
OrderHeader
Header
Acct
AcctAssignment
Assignment
For Plant
MRP Controller
Settlement
Rates
Order
OrderHeader
Header
Order
OrderMonitoring
Monitoring
Date
Quantity
Production Order Operation

Operation
Operation
Overview
Overview
Operation Sequence
Work Center
Control Key
Text
Status
Operation
Operation
General
GeneralView
View
Operation
Operation
Standard
StandardValues
Values
Operation
Operation
Dates
Dates
Base Quantity
Standard Times (Setup, Machine, Labor)
Operation
Operation
Overlap/Split
Overlap/Split
Dates per time element
Splitting Default Values

Overlap Default Values
Continuous Flow Production
Production Order Component
Component
Component
Overview
Overview
Material Number
Requirement Quantity
Requirement Date
Component
Component
General
GeneralData
Data
Operation
Operation
Long
LongText
Text
Reservation
Item Category
Bulk Material Indicator
Text Key
Production Order
Production Order
Bill of
Material
A
B
Material: A, Qty: 100 PCS

Schd Type: B
Basic dates: Start/Finish
Components Operations
0010 B 1 0010 PHNASM00
0020 C 1 0020
0030
0040
User fields:
General text data
Quantity data
Value data
Date fields
Routing
0010 PHNASM00
0020
0030
0040
Work Center
PHNASM00
Std Values:
Setup: 005
Prodn: 075
TDown: 005
Select
Routing
Select
BOM
Print Shop
Floor Papers
Schedule
Times & Dates
Confirmation Slip
Release
Order
Actual
Labor
Create
Order
Confirm
Completion
Issue
Materials to
Order
Production
Order
Calculate
Capacity
Check
Availability
Calculate
Planned Costs
Create
Required
Purchases
Purchase
Requisitions
Goods
Issue
Calculate
Actual Costs
Receive complete
goods into stock
Goods
Receipt
Production Order Cycle Status

CRT
REL
CREATED
RELEASED
. BOM and RTG

selected
. Completion Confirmation possible
. Lead Time
Scheduling
. Shop paper printed
. Reservations
created for
components
. Availability Check
possible, at or
before release
. Capacity Reqmts
for Work Centers
. Material issues
after oper release
CNF
DISPATCHED
CONFIRMED
. Capacity Leveling
possible for oper
. Actual Production
usage and time
captured
.
(MILE)
. Planned Order
costs created (PRC)
. Settlement Rule
Determined (SETC)
DSPT
DLV
DELIVERED
COMP
COMPLETE
. Goods Receipt . Actual costs

delivered
settled to
cost objects
Milestone operation
Production Order Creation

Manual
Order Creation
Order Proposal
MRP Conversion
Determine
Order Type
Routing
Selection
Alternate Sequence Assignments

One operation is required
Changes are allowed

before order release
Lead Time
Scheduling
Bill of Material
Selection
Enter start or finish date

depending on scheduling direction
Component Overrides
Material Reservations
Item Categories
Production Order Release

Production Order
Ready for Release
Order release is carried out manually
Material Availability
Check
Uses checking rules defined in configuration
Order or
Operation Release
Shop Paper
Printing Possible
On-line or in background
Pick List, Confirmation Slips,...
Material
Withdrawals Possible
Net
Available
Stock on
Hand
Reservation
for
Planned Order
for
150 Units
50 Units
200 Units
150
100
300
Requirement
for 50 Units
are Available
Dependent
Requirement
for
200 Units
100
00

Stock on
Hand
Reservation
for
Planned Order
for
150 Units
50 Units
200 Units
06/01/95
Today
Net
300
100
Requirement
for 150 Units
not Available
Dependent
Requirement
for
200 Units
Goods Movement for a Production Order

Reservation
Planned Goods Issue
Material 1
Production
Unplanned Goods Issue
Material 2
Goods Issue
Consumption of
Material 1 and 2
Goods
receipt of
Material 3
Goods issues only apply to stock items
Goods Issue Results

Material
Usage
Statistics
Update
Reservations
Goods Issue
Posting
Cost Object
Allocation
G/L Account
Update
Accounting
Material
Document
Completion Confirmations
Confirm
Confirm
Operation
Operation0010
0010
Activities
Activities
Production
ProductionOrder
Order
Operations
Operations
0010
0010- -Assemble
AssembleBoard
Board
0020
0020- -Assemble
AssembleCase
Case
0030
0030- -Assemble
Assembleunit
unit
0040
0040- -Final
FinalTest
Test
Partial or Final Confirmation

Single or Collective Confirmation
Milestone Confirmation
Reduction of Capacity Requirements
Determination of Actual Costs
Confirm
Confirm
Operation
Operation0020
0020
Activities
Activities
Milestone
Confirm
Confirm
Operation
Operation0030
0030
Activities
Activities
Confirm
Confirm
Operation
Operation0040
0040
Activities
Activities
Confirmation Data
Quantity
Yield
Scrap Quantity
Scrap Reason
Dates
Start date
Finish date
Work Center
Personnel Number
Qualification
Wage Group
Wage Type
Labor
Capacity
Capacity Planning
Master
Master
Data
Data
Material
Material
MRP
MRPRequirements
Requirements
Capacity
CapacityRequirements
Requirements
BOM
BOM
Routes
Routes
Capacity
CapacityEvaluation
Evaluation
Work
Work
Center
Center
Work
WorkCenter
CenterCapacity
Capacity
Capacity Leveling
to adjust capacity
periods
Standard Values
Tables
Formulas
Formulas
for
for
Scheduling
Scheduling
and
and
Capacity
Capacity
Reqmts
Reqmts
Operation
Std
StdValues
Values
Work Center
Formula
FormulaKey
Key
Formula
Formula
Constants
Constants
Set
Setupup.5.5hrs
hrs
Proc 5.5 hrs
Proc 5.5 hrs
Teardown
Teardown.5.5hrs
hrs
No.
No.Splits
Splits
Formulas
Formulas
Setup
Setup| |Process
Process| |T/D
T/D
Capacity
Capacity
Requirements
Requirements
Capacity Scheduling
Material Master Lead Time
Float Before
Oper 0010
Oper 0020
Oper 0030
Float After
Operation Lead Time

Interoperation
Time
Execution Time
Interoperation
Time
Lead Time Reduction Measures
Float Before
Reduce
Float Time
Float Before

(2)
(1)
(6)
(1)
(2) (2)
Use Minimum
Queue Time
Queue
(1)
Set up
(1)
Use Minimum
Move Time
Optional Splitting
or Overlapping
Split Process
Split Process
T Down
(1)
Float After
Wait
(1)
Move
(1)
Reduce
Float Time
Float After
Standard Formulas
Operation Time is ....
Queue Time + Execution Time + Wait Time

Queue Time specified in the operation
Execution Time = Setup + Proc Time * Lot Size/Base Qty
Wait Time specified in the operation
Work Center Hierarchy

Plant 1
Plant 2
Production
Fabrication
Assembly
Fabrication
Mach=16 hrs
Labor=18 hrs
Production
Assm
Line 1
Work
Center 1
Assm
Line 2
Work
Center 2
Mach = 10 hrs Mach = 6 hrs

Labor = 8 hrs Labor = 10 hrs
Product Costing
Costing Integration
PP
CO
PP-PC
Product Costing
SD
Sales &
Distribution
Financial
Accounting
CO
MM
PP-MRP
Mat. Requirements
Planning
Controlling
Materials
Mgmt.
AM
PP
Production
Planning
PP-BD
Basic Data
PP-IS
Shop Floor Info
System
PP-CRP
Capacity Planning
PP-SFC
Production Activity
Cntrl.
Fixed Assets
Mgmt.
R/3
Client / Server
QA
Quality
Assurance
PM
Plant Main-
PP-MPS
Demand Management
CO-PC
Product Cost Acctg.
FI
tenance
HR
Human
Resources
PS
CO-PA
Profitability Analysis
Project
System
OC
Office &
Communication
IS
Industry
Solutions
CO-PA
Profit Centers
CO-OPA
Orders
CO-CCA
Cost Center
Accounting
Costing and Organizational Structures

Client
Chart of
accounts
GKR
Company
code PP01
Valuation
area PP01
Plant PP01
Valuation
area PP02
Plant PP02
Company
code 0001
Valuation
area PP03
Plant PP03
Controlling
area 0001
Controlling
area PP01
Valuation
area 0001
Plant 0001
Company
code 0002
Costing Modules for Different Types of Companies

Manufacturers
Make-to-stock production
Process manufacturing
Make-to-order production
Stock order
Sales order (small batch prod.)
Continuous flow production

Process manuf. (cycl. structures)
Manuf. acc. to a sales order

Plant construction
Cost. Obj Controlling

Make-to-stock

Process Costing

Make-to-order
Product
Production
Product
Period
Unit
Order/
costing
order
costing
costing
costing
project
costing
costing
Service
Costing
Trade
Costing
Logistics and Cost Accounting

Logistics
Materials management
Production planning
Material requirements planning
Production orders
Capacity planning
Cost Accounting
Cost elements
Cost centers
CO orders
Pricing
Valuation
Cost object controlling:
Preliminary and standard costing
Final costing
Profitability analysis
Controlling
Master Data for Costing

Material Master Record
Costing View Product Costing Indicator, Costing Lot Size, Overhead Group
Accounting View Valuation Class, Category, Price Control
Bills of Material Materials required to make the product
Cost Center Accounting data
Work Center Standard Value key and Efficiency Rate
ROH-1
Routing Relevancy to Costing Indicator
Price Control S
Material Price $3.00
Bill of Material
Item 10
Item 20
ROH-1
HALB-1
Costs for Cost Roll-up

Item 10
Item 20
2 pc * $3.00/pc
= $6.00
3 pc * $34,000/pc = $102.00
Qty 2 pcs
Qty 3 pcs
HALB-1
Price Control S
Cost 1
$4.00
Cost 2
3.00
Cost 3
17.00
Cost 4
8.00
Cost 5
2.00
Cost Components
Cost components are defined in Product Costing Customizing
Each costing variant (standard cost, current cost, ...) points to a cost component layout
There can be up to 40 cost components in a cost component layout
For each cost component identify which costs are rolled up to the next higher level
Component Cost Layout
Cost Component
Raw Materials
Component
Cost1 Layout
01
Cost Component 2
Cost Component
3
Cost Component
1
Cost Component
4
Cost Component
2
Production 3
Cost Component
Cost Component
5
Cost Component
4
Cost Component
6
Cost Component
5
Cost Component
7
Cost Component
6
..
Cost Component
7
.
.
Cost Component 15
.
Cost Component 15
02
Production
Overhead-Material
Raw Materials
OverheadProduction
Overhead-Material
Overhead-Admin
Overhead-Production
Overhead-Sales
Overhead-Admin
External Processing
Overhead-Sales
External Processing
Miscellaneous
Miscellaneous
The Production Order and Inventory Accounting

A Production Order collects all costs associated with making an inventoriable item. The order
picks up costs through the manufacturing process from the Bill of Material and the Routing.
Production Order
Bill
of
Material
Routing
Order: 73
Type: PP01
Plant: LR001
Sys Status:
CRT REL CNF DLV SETC
Quantities:
Total Produced:
100 Tons
Scrap:
.001
Confirmed:
100 Tons
Dates:
Schedule 09/15/95
Confirmed 09/16/95
STATUS:
Created, Released,
Confirmed, Delivered,
Settled
Costing Production Orders

Preliminary
Order Costing
Planned Order Costs are
calculated from target
input quantities according
to BOM and Routing
Standard Price for R/M
Planned Activity Prices
Planned Overhead Rates
Simultaneous
Order Costing
Final
Order Costing
Actual material and

activities used & confirmed
Invoices for external
activities
Overhead Calculated Rates
Order confirmed complete

Quantities delivered have
been posted
Last operation confirmed
complete
Calculating Production Costs

Work center
Routing
Formula constants
Standard values
General standard
values
Cost
Center
Formula
Activity type
Activity price
Actual time/quantity
Costs
Overhead Costing
Direct material costs
Indirect material costs

Direct production costs
Indirect production costs
Material costs
=
+
=
Production costs
=
Manufacturing costs
Indirect management
costs
Costing
sheet
Indirect sales costs
Cost of goods sold
The Costing Sheet

Calculation basis
Cost element
Origin
Overhead
Percentage rates
Planned/actual
Dependencies
Order type/category
Plant
Company code
Business area
Overhead key
Credit
Cost element
Origin
Object
Cost center
Order
Make-to-Order Production
Order
Individual customer requirements
Production memo
Delivery
Goods issue
Invoice
Reduction
of
sales order
stock
Material
requirements planning
Production
Sales order
stock
Target
Actual
Cost Objects with Make-to-Order Production
Objects of integrated R/3 modules

reflected uniquely
Material number (MM)
Production order, operation (PP)
Sales order (SD)
Project item (PS)
Network (PS)
CO order (CO)
Basic General Functions for Cost Object Controlling

Master data
Cost object, cost object hierarchy
Internal/external numbering system
Preliminary costing
Costing items
Automatic valuation
Planning aids (revalue, copy, reference)
Cost component structure
Simultaneous costing
Actual quantity used * price
Overheads
Actual yield
Calculation of target costs
Variances according to category
Work in progress
Analysis of actual product costs

Closed periods
Settlement to stock (at standard price)
Settlement to profitability analysis (variances)
Controlling
Summarization using classifiable characteristics
Selection using classifiable characteristics
Cost object analysis
Cost Roll-up
Costs for assemblies in the low-level code with the highest number are calculated first
Upper level is production costs at this production level
Lower level is costs of all material components processed at this production level
Total costs are the sum of the costs for the upper and lower level costs
Finished
Product
Cost Component Split - Total

Material
Internal Activity
External Activity
Overhead
Cost Component Split - Upper Level

Internal Activity
External Activity
Overhead
Cost Component Split - Lower Level

Material
Semi-Finished
Product
Raw
Material
Internal Activity
External Activity
Overhead
Cost Component Split - Total

Material
Internal Activity
External Activity
Cost Component Split - Upper Level

Material
Overhead
MPS Functions
Separate Planning Run for Master Schedule Items
During an MPS run, only master schedule items are planned

Dependent requirements are created for the BOM level directly below the planning level
Levels below the master schedule items are not planned
Changes can be made to the master plan without effecting lower BOM levels
Supply orders are reviewed for timing and quantity to match requirements
Allows for daily planning without a negative impact on system performance
MPS Item
Assembly 1
MPS level
Assembly 2
MRP level
Planning Time Fence
Protects the master plan from automatic changes to the master schedule
During a planning run, no automatic change proposals are made within the
planning time fence which is determined for each item in the Material Master.
The system calculates the planning time fence starting from the planning date
Order Proposals are Fixed
Planning Date
Automatic Order Proposals
Planning Time Fence
MPS Procedure
Create
CreatePlanned
Planned
Independent
Independent
Requirements
Requirements
Using Demand Management
Carry
Carryout
out
Separate
SeparateMPS
MPS
Planning
Run
Planning Run
Proposal Changes within Planning Time Fence

System Creates Order Proposals Outside PTF
Make
MakeChanges
ChangesUsing
Using
Interactive
MPS
Interactive MPS
Fine tune MPS Items within

Planning Time Fence
Start
StartMRP
MRPRun
Run
for
Lower
Levels
for Lower Levels
Carry-out MRP
Planning Run Types
Regenerative Planning all master schedule items are planned for a plant.
It is generally used during initial start-up to insure all items are planned or
when heavy maintenance causes most items to be re-planned.
Net Change Planning only master schedule items which have undergone a
change to the supply/demand balance, such as warehouse receipts and
issues, are re-planned. It is common to run net change MPS daily.
Net Change Planning in the Planning Horizon shortens the period over
which MPS plans to the planning horizon, which is set in Customizing. It is
typically set to the length of time of the longest lead time item. This means
that only those master schedule items which have undergone a relevant
change within the planning horizon are planned.
External Procurement of Master Schedule Items
Creation Indicator for Purchase Requisitions

Planned orders only
Purchase requisitions Only
Purchase requisitions within the Opening Period and planned orders outside
The Opening Period is the time required for converting planned orders into purchase
requisitions. It is subtracted from the order start date of the order. It is defined within
the Scheduling Margin in Customizing and is assigned to an item in the Material Master.
Creation Indicator for Delivery Schedules

Used to control if delivery schedules are to be created for master schedule items
Requires that a Scheduling Agreement exist
The supplier must exist in the Source List
Single-Item, Multi-Level Planning for MPS Items
Useful to check the effect of MPS on subsequent BOM levels
In this planning, the BOM for the master schedule item is exploded and dependent
requirements are created for assemblies and components.
If necessary, processing can be stopped at every level of planning to check the

planning result. The planning result can be displayed before saving. Any changes
will effect subsequent planning results. Processing can be continued without stopping
at any point.
stopping points to
review planning
result
Interactive MPS
In interactive planning, you can change the quantities and the dates of planned orders
and check the result in a simulative planning run.
It is useful in adjusting dates of planned orders inside the planning time fence
All changes are simulative until it is saved
Carrying out Interactive MPS
Carry out the MRP calculation (Planning->MRP Calculation). The system carries out net
requirements and lot sizing the same way as for automatic planning.
Carry out the ATP calculation (GoTo->Calculate ATP quantity). The Available to Promise
is the uncommitted portion of the inventory or planned production.
Change or Enter Change Proposals (Change ord proposal or Create ord proposal). The
fixing indicator is set in the Fixed field to indicate that the order proposal is fixed. Orders
can also be deleted (Edit->Del order proposal)
Carry out Reschedule Check (Planning->Rescheduling check) to schedule the order
Display Period Totals - to show weekly and monthly period displays in column format
Firming Planned Orders
The system does not plan new order proposals within the planning time fence. Instead,
new requirements needed within the planning time fence are scheduled at the end of the
planning time fence, depending on the fixing type.
Order Proposals are Fixed
Planning Date
Automatic Order Proposals
Planning Time Fence
During the next planning run, the system places all order proposals that crossed over
the planning time fence at the PTF. The master scheduler needs to fix or firm these
order proposals to the correct date inside the PTF. Once fixed, the system will not change.
Orders can be firmed collectively (Planned orders->firm) through selection of MRP controller,
material, run schedule, production version, or planning id.
Availability Check
Inward movement
of goods
Stock
Purchase
Order
Purchase
Requisition
Planned
Order
Other factors to
take into account:
Safety stock
Stock in transfer
Replenishment lead time
Blocked stock in QA
Delivery
Outward movement
of goods
Sales
Order
Reservation

SAP Production Planning: A Workshop That Provides An Overview of The SAP R/3 Production Planning (PP) Module

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SAP Production Planning

A workshop that provides an overview of the

Review of Materials Management

The MRP II Concept in SAP

Material Requirements Planning

Processing Planning Results

Production Order Management

Capacity Planning and Leveling

The Production Cycle

Sales and Operations Planning

Master Planning and Demand Management

Master Production Scheduling

The SAP Enterprise Model

You must map your business into the

First stage in most projects

The model has a profound effect on the

Physical and logical units of an

Multiple views of an organization

Material Management Organization

A plant can be a physical plant

Storage locations are areas where

A purchasing organization can buy

A purchasing group is a sub-set

Acme Products Organization Example

Organizational Structures in R/3

SAP R/3 Integration Model

Material Availability Check

Receivable Accounts / Cash Receipt

Material Master Data

Material Master Data

Sales Specific Data

Plant Specific Data

Data dependent on sales

St. Loc. Specific Data

Material Types in the Standard SAP

Master Data Views

Master data is a key piece

Master data can be seen from

Each view can correspond

Each view has a number

Each view belongs to an org unit within the

One product may have multiple plant and

Examples of How Data is Used

Maintains stock levels

Production Planning Basic Data

Production Planning Functionality

Basic Data for Production

Products, Production Processes

Coordination and planning of production activities

Generation of order proposals based on

Provides overviews from rough-cut through

Production Order Control

Generates data used for processing orders,

Controls production costing

Monitoring / analyzing on-going production

The MRP II Concept in SAP

Planning Levels in SAP R/3

Material Master MRP/MPS Views