SAP PP Tutorial – Learn SAP Production Planning Module

SAP PP Tutorial – Free SAP PP training tutorials for beginners and

professionals, learn SAP production planning module course with real time
implementation scenarios step by step.

SAP PP is one of the core module of SAP r/3 system that contains master
data, configurations and transaction data for completion of plan to
production process. It prepares a detailed planning for achieving the
production goals and helps in recording, tracking of all production &
manufacturing process.

SAP PP module can be integrated with other SAP modules like SAP SD (Sales
& distribution), SAP MM (Material Management), SAP LE (logistics execution),
SAP QM (Quality Management), SAP PM (Production Planning), SAP
FICO (Financial Accounting) and with various modules as per organizational
requirements.

SAP PP Sub-modules

The important sub module of SAP production planning are

1. Sales & Operational Planning

2. Long Term Planning

3. Demand Management

4. Material Requirement Planning

5. Capacity Requirement Planning

6. Shop Floor Control

7. Information System

Long Term Planning (LTP) : – It provides the detailed examination of

planning scenarios that replicate production, purchasing and costing
implication.

Demand Management (DM): – SAP DM is used to control the require

quantity and delivery dates for finished products based on the demand.

Material Requirement Planning : – MRP provides the detailed information

of material availability that ensures the sufficient stock available for
production.
Capacity Requirement Planning : – CRP enables the smooth process of
manufacturing.

Information System : – Information system helps in posting the data

automatically to SAP reporting in real time.

Important Functions of SAP PP Module

 Production planning creates schedules for the machines and checks

with the plant maintenance to make sure that no repairs are
scheduled.

 Determines which material is required, the quantity required and by

when it is required for production.

 Reducing wastage of materials, production costs.

SAP PP Tutorial 2024

SAP PP – Organizational Structure

1. Define Company

2. Define company Code

3. Assign company code to company

4. Maintain controlling area

5. Define plant

6. Assign plant to company code

7. Define purchase organization

8. Assign purchase organization to company code

9. Assign purchase organization to plant

10. Maintain storage location

SAP PP tutorials

1. Introduction to SAP Production Planning (PP) .

2. Master Data in SAP PP.

3. Production Types in SAP PP.

4. What is MRP?
 5. How MRP Works in SAP?

6. What are Production Orders?

7. BOM (Bills of Material)

8. Work Center in SAP PP

9. What is Routing in SAP PP?

10. Product Groups

11. Production Versions

12. Sales and Operations Planning in SAP PP.

13. What is Standard SOP in SAP?

14. How to Create a Product Group in SAP?

15. Demand Management.

16. Planned Strategies.

17. What are Planned Orders?

18. Convert a Planned Order to a Production Order.

19. Capacity Requirement Planning.

20. Production Order Cycle in SAP PP.

Continue to read our free SAP PP tutorials that explains step by step with real
time production planning implementation scenarios.

How to Define Company in SAP (Group Company)

How to Define Company in SAP

The definition of company in SAP systems is optional. Company is an

independent organizational element which is required to consolidate two are
more company codes data at country level or segment level or continental
level. Under group company, you generate consolidated financial statements
as per requirements of an organization.

Example: – Reliance Group, Wipro group, etc.

How to create company in SAP

You can define company in SAP by using:-

  Transaction code: – “OX15“

 Navigation: – SPRO – SAP Reference IMG – Enterprise Structure –

Definition – Financial Accounting – Define Company.

Step 1 : Enter Transaction code “OX15” in the SAP commend field as shown
below image and enter to continue.

Step 2: On change view “Internal trading partners”: overview screen, click

on “New Entries” button to define company in SAP

Step 3 : On “New Entries screen, update the following details.

 Company: – Enter a key that identifies company group in SAP. In our

case we have updated “TKART” for creation of new company.

 Company Name: – In this field you need to updated full descriptive

name of company.

 Name of company 2:- If second name of company available, update

here or keep it as blank.

Detailed Information

 Street: – Enter street name of company located

 Postal code: – Enter postal pin code

 City: – Update city name, in our case we have updated “Bangalore”

 Country: – Here you need to updated country key. e.g. for India – IN,
For United State – US, etc.
  Language key: – By default our language is English, so language key
is “EN”

 Currency: – Enter currency key in which transactions are being

maintained for the group company. It is called as home currency or
local currency.

Note:- You can choose keys from the list for City, Language and Currency by
pressing F4 key from your keyboard.

Step 4: After updating all the required details, click on save button to save
the company details. Now you are prompted for customizing request, click on
new entries button to create new customizing request.
Now update description of customizing request and press enter to continue.
Here we have updated description as SAP FICO configuration.

Successfully we have created company in SAP FICO.

What is Company Code? & How to Define Company Code in SAP

In this SAP tutorials we will learn what is company code in SAP and how to
define company code “TK01″(TK Software limited) step by step using
recommended configuration settings.

What is Company Code in SAP

Company code is an independent organizational unit which is registered

under companies act 1956. Under company code you can generate
individual financial statements like profit & loss account and balance sheets.

 The definition of company code in SAP is mandatory.

 It is mandatory to create at least one company code for implementing

the SAP financial accounting module.

You can define company code in SAP by using navigation method or

transaction code.

 Navigation: – SPRO – IMG – Enterprise Structure – Definition – Financial

Accounting – Edit Copy, Delete, Check company code

 Transaction code: – OX02

 Database Table: – T880

How to define company code in SAP

Step 1) Enter transaction code “OX02” in the SAP commend field and enter
to continue.
Step 2) On change view “Company Code”: Overview screen, displays with
the list of company codes with their names. Click on “New Entries” button to
create new company code as per organizational requirements.

Step 3) On new entries company code screen, update the following details.

 Company code: – Enter 4 digits alphanumeric code that identifies

company in SAP

 Company name: – Update the name of the company

 City: – Enter the name of city in which the company is

located. spaceman slot

 Country: – Enter the name of country. Press F4 for possible entries and
you can select the code from the list.

 Currency: – This currency is also called as home currency or local

currency.

 Language: – Our default language key: English (EN).

Step 4) After updating all the required details, click on save button to save
the configured data.

Now the system prompts the another screen to update the full address of
company. Update all the required address details of company and press enter
to save the data.
Step 5) Now you get the transport request number, save the request. slot
garansi kekalahan
Successfully company code “TK01” is created in SAP system. Continue to
learn how to assign company code to company in SAP.

How to Assign Company Code to Company in SAP

How to Assign Company Code to Company in SAP

In this SAP tutorial you will learn procedure to assign company code to
company in SAP. After successfully creation of company code and company
in SAP, you need to assign company code company in SAP system.

Why Assignment

The link between company and company code in SAP is established through
a assignment of company code to company.

Configuration steps

You can assign by using one of the navigation method or transaction code.

 Navigation: – SPRO – IMG – Enterprise Structure – Assignment

– Financial Accounting – Assign company code to company

 Transaction code : – OX16

Step 1) Enter Transaction code “OX16” in the SAP command field and press
enter to continue.

Step 2) On change view “Assign company code -> Company”:Overview

screen, click on position button and give your company code key. Now your
company code displays at the window.
Step 3) Now update your company key “TKART” in the given field.

Step 4) After assignment of company code to company, click on save button

and save the configured data.
Successfully we have assigned company code “TK01” to company code
“TKART” in SAP systems.

Maintain Controlling Area Settings in SAP CO

The following SAP CO tutorials guides you how to maintain controlling area
settings step by step. The controlling area settings enables the configuration
of standard hierarchy, profit center reporting currency type, Valuation views
ALE distribution method and controlling indicators.

How to maintain Controlling area Settings

The settings for controlling area in SAP CO can be configured by using the
following navigation method.

Transaction code: – SPRO

SAP IMG Path: – SPRO >> SAP Reference IMG >> Controlling >> Profit
Center Accounting >> Basic Settings >> Control Area Settings >> Maintain
Controlling Area Settings.

Step 1: – Enter SAP transaction code “SPRO” in the command field and
enter.
Step 2: – From customizing execute project screen, choose SAP Reference
IMG.
Step 3: – On SAP Customizing implementation guide tree structure, follow
the path Controlling – Profit Center accounting – basic settings and click on
maintain controlling area settings.

Step 4: – Now update SAP controlling area as “TK01” in the given field CO
area and click on continue option.
Step 5: – On change view EC-PCA controlling area settings overview screen,
update the following details.

1. Standard Hierarchy: – Enter the standard_hierarchy key.

2. PCtr Local Currency Type: – Update the currency for profit center
reporting. Here we have updated as 20 (Controlling area currency)

3. Profit Center Local Currency: – Update profit center local currency as

INR.

4. Valuation View : – Update the valuation option form the given list (i.e.
Legal Valuation/ Group Valuation / Profit Center Valuation)

5. ALE distribution method: – Choose Application Link Enabling (ALE)

under given options and possible entries are (No distribution to other
system/ Centralized profit center accounting / profit center
decentralized or local).
After maintaining all the settings for controlling area, click on save button
and save the configured data.

Successfully we have maintained controlling area settings in SAP. Continue

to read how to define profit center standard hierarchy in controlling area.

How to Define Plant in SAP | What is Plant?

What is Plant in SAP?

In SAP, Plant is an independent, physical and highest organizational unit in

MM module. It can be operational unit or manufacturing unit or a sales
branch of an organization. From material management view, plant can be
defined as a location that holds valued stock.

Plant is responsible for planning, procurement, distribution of goods &

services to customers or other resources of an organization under one
company code.

How to Create Plant in SAP

In our previous training tutorials, we have learned how to define valuation
level in SAP. In this SAP tutorial you will learn how to define plant in SAP.

Pla
Name
nt

TKB TKBL – Bangalore

L Plant

TKU
TKUS – US Plant
S

You can create plant by using one of the following navigation method.

 Transaction code: – OX10

 Menu_Path: – SPRO > IMG > Enterprise Structure > Definition >
Logistics – General – Define, copy, delete, check plant.

Step 1) Enter T_Code “OX10” in the command and click on execute.

Step 2) On change view plants overview screen, click on new entries button
to define new plant code as per the organizational requirements.
Step 3) On new entries screen, update the following details.

1. Plant: – Enter the four digits key that identifies the plant in SAP

2. Name: – Update the descriptive name of a plant.

After updating plant code and description, click on address button to update
the address of plant.

Step 4) Now update all the required and mandatory details in the address
screen.

Click on save button, choose customizing request and save the configured
plant details.
Now click on next entry button (F8) and similarly create another plant TKUS
with required details.

Successfully we have created new plant in SAP.

SAP MM How to Assign Plant to Company Code

In this SAP MM tutorial, you will learn how to assign plant to company code
in SAP step by step using transaction code “OX18”.

How to assign plant to company code in SAP

The link between plant and company code in SAP is established through the
assignment of plant to company code. A plant can only belong to one
company code.

Configuration

Transaction
OX18
code

SAP Menu SPRO > IMG > Enterprise Structure > Assignment >
 Path Logistics – General > Assign plant – company code.

Step 1 : – Execute t-code “OX18” in command field from SAP easy access
screen.

Step 2 : – On change view “Assignment plant – company code” overview

screen, choose new entries button for assignment of company code to plant
in SAP.
Step 3 : – On new entries overview added entries screen, update the
following details.

 CoCd : – Update the company code “TK01”.

 Plnt : – Update the plant key “TKBL” for assigning to company code.

After maintaining all the required details, choose save icon and save the
configured assignment details in SAP. Now you are prompted for customizing
request number, choose request and save the configured data.

SAP MM- How to Define Purchase Organization in SAP

Purchase Organization is the highest level of organizational unit in SAP MM, it

is responsible for procurement of materials and services from an external
vendor or internal plant. The different types of purchasing organizations in
SAP are

 Plant specific or local purchase organization

 Cross plant purchase organization

 Cross company code purchase organization

 Central purchase organization at company code level.

 Reference Purchase organization

 Standard purchase organization

One purchasing organization can be assigned to only one company code, but
one company code can have one or more purchase organizations in
SAP.Cross company code purchase organization can be assigned at plant
level only.

How to create purchase organization in SAP

In this SAP MM tutorials, you will learn how to define purchase organizations
in SAP step by step.

Purch.Organiza
Description
tion

TK Software Purchase
TKPO
Organization

You can maintain purchase organization in sap by using one of the following
navigation method.

 Transaction code: – OX08

 Menu Path: – SPRO -> SAP Customizing Implementation Guide –>

Enterprise Structure -> Definition –> Materials Management ->
Maintain Purchase Organization.

Step 1) Enter T_code “OX08” in command field and enter.

Step 2) On change view purchase organizations overview screen, click on
new entries button to define new purchase organization as per company
requirements.

Step 3) On new entries purchasing organization screen, update the following

details.

1. Purch.Organization: – Enter the key that identifies the purchase

organization in SAP.

2. Purch.Org.Descr: – Update the detailed description of purchase

organization.

Step 4) After creating the purchase organization as per the company

requirement, click on save button.
Now choose the customizing request and click on continue option to save the
configured organization data.

Successfully we have created purchase organization in SAP systems.

SAP MM – Assign Purchase Organization to Company Code

How to Assign Purchase Organization to Company Code

In this SAP MM tutorial, you will learn how to assign purchase organization to
company code in SAP step by step using transaction code OX01. The
purchase organization can be assigned to one company code, this is
company specific purchasing.

Configuration steps

Navigation

SAP R/3 Role

Assign purchase organization to company code
Menu

Transaction
OX01
code

SPRO > IMG > Enterprise Structure > Assignment >

SAP Menu
Material Management > Assign purchase organization to
Path
company code.
Step 1 : – Execute t-code “SPRO” in command field from SAP easy access
screen.

Step 2 : – Choose SAP reference IMG.

Step 3 : – Follow the navigation enterprise structure – Assignment – Material

management and choose img activity Assign purchase organization to
company code.
Step 4 : – On change view “Assign Purchasing Organization -> company
code” overview screen, choose position button and enter purchase
organization key in given field and press enter. So the purchase organization
key display on top of the screen and you can assign assign company code to
it.

Step 5 : – Now enter the company code “TK01” in the given field for
assigning to purchasing organization “TKPO”.
After assigning company code to purchase organization, choose save icon or
press ctrl+s to save the configured details.

Successfully we have assigned purchase organization to company code in

SAP MM.

SAP MM – Assign Purchasing Organization to Plant

How to assign purchasing organization to plant in SAP

In this SAP MM Tutorial, you will learn how to assign purchasing organization
to plant in SAP step by step using transaction code OX17. The link between
purchasing organization and plant is established through the assignment of
plant to purchasing organization in SAP.

Refer below step by step configuration steps of assignment of purchase

organization to plant.

Configuration values

POr
Description Plnt Description
g

TKP TK TKB TKBL-Bangalore

O Softwre.Purch.Org L Plant

TKP TK TKU
TKBL- US Plant
O Softwre.Purch.Org S

Navigation

Transaction
OX17
code

SPRO > IMG > Enterprise Structure > Assignment >

SAP Menu
Material Management > Assign Purchasing organization
Path
to Plant.

Step 1 : – Execute t-code “OX17” in command field from SAP easy access
screen.
Step 2 : – On change view “Assign purchase organization to plant” overview
screen, choose new entries button for assignment configuration screen.

Step 3 : – On new entries assignment screen, update the following details.

 POrg : – Enter the purchase organization key in the field POrg for
assigning to plant.

 Plnt : – Update the required plant key in the field Plnt.

After assigning the required details, press enter to continue and choose save
icon and save the configured details.

Successfully we have assigned purchasing organization to plant in SAP MM.

How to Maintain Storage Location in SAP

What is Storage Location in SAP?

Storage location is the sub-division of plant where the stocks are physically
stored and maintained within a plant. Each storage location can have its own
address within a plant.
  It is required to maintain at least one storage location for one plant.

 One plant can have number of storage locations.

How to define storage location in SAP

You can configure storage location by using one of the following navigation
method.

 Transaction code: – OX09

 Menu path: – SPRO > IMG > Enterprise Structure > Definition >
Material management > Maintain Storage Location.

Step 1) Enter T-code “OX09” in the SAP command field and enter.

Step 2) Now you are prompted to enter the plant key, update the plant code
in the given work area field as shown below and press enter to continue.
Step 3) On change view “storage locations” overview screen, click on new
entries button to define the new storage locations as per requirements.

Step 4) On new entries storage location screen, update the following details.

1. SLoc: – Enter the four digits key that identifies the storage location in
SAP.

2. Description: – Update the description of storage location.

Step 5) Now select the storage location key and click on address of storage
location in the dialogue structure.

On change view addresses of storage locations overview screen, click on new

entries button to update a number for the storage location address.
Update the number in the field No, you can update up to three characters.
After updating No, press enter to continue and you are directed to another
screen for the entry of secondary information.

Update the required details like details address with telephone no, city, etc.
After updating all the required details, click on save button and save the
configured storage location details.

Successfully we have maintained storage location in SAP systems.

Introduction to SAP Production Planning (PP)

Overview of SAP Production Planning

SAP Production Planning (PP) is a crucial component of the SAP ERP system
that helps businesses plan and manage their production processes
effectively. It integrates with other SAP modules like Materials
Management (MM), Sales and Distribution (SD), and Controlling (CO),
providing a seamless flow of information that helps maintain efficient
production lines and inventory management.

The primary role of SAP PP is to ensure that production runs smoothly and
materials are available when needed, enabling businesses to meet their
manufacturing demands efficiently. This includes activities such as Material
Requirements Planning (MRP), Bill of Materials (BOM) Management,
and Production Orders. SAP PP is used by manufacturers across different
industries, from electronics to automotive, due to its versatility and powerful
features.

Key Features of SAP PP

SAP PP offers a range of features that help streamline production:

1. Material Requirements Planning (MRP): MRP ensures material

availability for production and helps in efficient inventory
management.

2. Bill of Materials (BOM): A structured list of components required to

produce a finished product.

3. Production Orders: Helps in creating and managing production

orders, detailing the quantity of products to be produced and the
operations required.

4. Routing: Defines the sequence of operations needed to manufacture a

product, detailing the work centers and machine times required.

5. Work Centers: Locations within production where specific operations

take place, such as machines or production lines.
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These features enable companies to have better control and visibility over
their production processes, helping them make informed decisions about
manufacturing schedules, materials, and costs.

Basic Navigation in SAP PP

For beginners, navigating SAP can be overwhelming. Here are some basics
that will help you get started with SAP PP:

 SAP Easy Access Screen: This is the default landing page where you
can access different functions and Tcodes (Transaction Codes) in SAP.
You can use the navigation bar to find specific functions related to
Production Planning.

 Transaction Codes (Tcodes): Tcodes are shortcuts used in SAP to

perform specific tasks. In SAP PP, some common Tcodes are:
  MD01: Run MRP for materials.

 CO01: Create a production order.

 CS01: Create a Bill of Materials (BOM).

Introduction to Tcodes in SAP PP

Transaction Codes (Tcodes) are an integral part of working with SAP PP,
allowing users to quickly access functions and execute tasks without
navigating through the menus. Here are some commonly used Tcodes in SAP
PP:

1. CS01/CS02/CS03: To create, modify, and display a Bill of Materials

(BOM).

2. CR01/CR02/CR03: To create, change, and display Work Centers.

3. CA01/CA02/CA03: For creating, modifying, and displaying Routing.

4. CO01/CO02/CO03: For managing Production Orders.

These Tcodes help to simplify workflows and make the process faster by
directly taking users to the desired function.

Integration with Other SAP Modules

SAP PP does not work in isolation; it integrates deeply with other SAP
modules to facilitate the seamless flow of data and ensure effective planning
and execution. Some key integrations include:

 Materials Management (MM): SAP PP uses material data from MM

to plan production activities. MM helps with inventory management,
procurement, and stock levels, which are essential for effective
production planning.

 Sales and Distribution (SD): Sales orders from SAP SD influence

production planning in SAP PP. For example, customer orders may
trigger MRP runs to ensure enough materials are available to fulfill
demand.

 Controlling (CO): Costing data from SAP CO is used to determine the

cost of production, helping businesses track profitability and make
cost-effective decisions.

Benefits of SAP Production Planning

  Optimized Production Scheduling: SAP PP helps businesses plan
production schedules to avoid downtime and ensure the availability of
necessary resources.

 Improved Inventory Management: With effective MRP, companies

can ensure they have the right materials in the right quantity,
minimizing excess inventory and reducing costs.

 Cost Efficiency: By linking production orders to the Controlling

(CO) module, SAP PP provides insights into production costs, helping in
budgeting and cost control.

Conclusion

SAP Production Planning is an essential part of managing a manufacturing

process effectively. By providing tools for planning, managing resources, and
integrating with other key modules, SAP PP helps manufacturers maintain a
streamlined production flow, ensuring that products are produced on time
and within budget.

Whether you are just starting out or are an advanced user, understanding
the basics of SAP PP and its role in the broader SAP ecosystem will help you
make the most of this powerful module.

Master Data in SAP PP (Production Planning)

Master Data in SAP PP is a critical component for effective production

planning and management. This introduction will help you understand the
foundational elements of master data, including Bill of Materials (BOM), Work
Centers, Routing, and Material Master, which are essential for achieving
accurate and efficient production processes.

Introduction to Master Data in SAP PP

Master data forms the foundation of production planning in SAP PP. It

includes all the core information needed to produce products, from materials
to routing and work centers. Master data is essential because it provides the
baseline information required for planning, production execution, and
costing, ensuring accuracy and efficiency throughout the production process.

The key components of master data in SAP PP are:

1. Bill of Materials (BOM)

2. Work Centers
 3. Routing

4. Material Master

Each of these components plays a critical role in defining how products are
manufactured and helps maintain consistency and control in the production
process.

Master Data in SAP PP (Production Planning)

1. Bill of Materials (BOM) Management

Concept of BOM

A Bill of Materials (BOM) is a structured list of components (raw materials,

assemblies, sub-assemblies) required to manufacture a finished product. It is
a crucial part of the production process, as it defines the structure of the
product and lists all necessary items and quantities.

For example, to manufacture a bicycle, the BOM will include components like
the frame, wheels, pedals, and chain, specifying the quantity of each item
required.

Key Tcodes for BOM Management

  CS01: Create BOM

 CS02: Change BOM

 CS03: Display BOM

These Tcodes are used to create, modify, and view BOMs in SAP PP. A step-
by-step guide can help beginners understand how to navigate these Tcodes
and effectively manage BOMs for different production scenarios.

2. Work Center Management

Work Center Overview

A Work Center is a physical location or resource within the manufacturing

process where specific production activities take place. It could be a
machine, a production line, or even a group of workers performing a
particular task. Work centers are important because they define where
production activities are performed and play a key role in capacity planning
and costing.

Key Tcodes for Work Center Management

 CR01: Create Work Center

 CR02: Change Work Center

 CR03: Display Work Center

Work centers are assigned to routing, and they include details like available
capacity, costing data, and scheduling information. This helps in ensuring
that production operations are allocated to the appropriate work centers
based on availability and capacity.

3. Routing and Production Versions

Routing Overview

Routing defines the sequence of operations required to manufacture a

product. It details the specific steps, work centers, and tools involved in the
production process. Routing is essential for defining the workflow and
scheduling operations efficiently.

For example, the production of a bicycle may involve steps such as welding
the frame, assembling the wheels, and applying paint. Routing will document
each of these operations, specifying the work centers and time required for
each.
Key Tcodes for Routing Management

 CA01: Create Routing

 CA02: Change Routing

 CA03: Display Routing

Routing also integrates with work centers and BOMs to ensure that the entire
production process is well defined, from raw materials to finished products.

4. Material Master

Material Master Overview

The Material Master is the central repository for information related to

materials used in production. It contains details like material type,
description, unit of measure, procurement type, and production planning
parameters. The material master is used across various SAP modules,
making it a crucial piece of master data.

In SAP PP, material masters are important for defining production-specific

data, such as MRP type, production versions, and BOM assignments.

Key Tcodes for Material Master Management

 MM01: Create Material Master

 MM02: Change Material Master

 MM03: Display Material Master

By managing the material master effectively, businesses can ensure that the
right materials are available at the right time and in the right quantities,
leading to efficient production planning and reduced stockouts or excess
inventory.

5. Product Version

Product Version Overview

Product Version is a key component in SAP PP master data that defines

different versions of a product. When a product undergoes changes in design
or production processes, multiple versions of that product may exist. Product
Version helps in managing these variations, ensuring that the correct version
of a product is used during production. It plays a crucial role in enabling
efficient production planning, especially for products with multiple variations.
Product Versions are particularly useful in scenarios where a product evolves
over time, or when different customers have specific requirements for the
same product. By utilizing Product Versions, manufacturers can maintain
flexibility and ensure consistency in production.

Key Tcodes for Product Version Management

 C223: Maintain Product Versions

This Tcode allows users to manage different product versions effectively,

ensuring that production orders reflect the correct specifications of the
product being manufactured.

Importance of Master Data in SAP PP

Master data is critical in SAP PP as it ensures that all production processes

are carried out accurately and consistently. It serves as the backbone for:

 Efficient Production Planning: Accurate master data ensures that

production plans are realistic and achievable.

 Cost Control: By using well-defined work centers and routings,

businesses can track and control production costs effectively.

 Inventory Management: BOMs and material masters ensure that the

correct quantities of materials are procured and used, reducing waste
and optimizing inventory.

Conclusion

Master data in SAP PP is fundamental to the success of any manufacturing

operation. By effectively managing BOMs, work centers, routings, and
material masters, businesses can ensure efficient production, minimize
errors, and maintain cost control.

Understanding these components and knowing how to use the relevant

Tcodes will empower both beginners and advanced users to work effectively
with SAP PP.

Production Types in SAP PP ( Production Planning )

In this SAP tutorial, you will Learn about the three main production types in
SAP Production Planning (PP): Discrete Manufacturing, Process
Manufacturing, and Repetitive Manufacturing. Understand their features,
suitable industries, and how to choose the right production type for your
business needs.
Production Planning (PP) in SAP supports different types of production
processes to meet various manufacturing requirements. Understanding these
production types is essential for effectively planning, scheduling, and
managing production activities based on the unique requirements of different
industries.

Introduction to Production Types in SAP PP

In SAP PP, the main production types include:

1. Discrete Manufacturing

2. Process Manufacturing

3. Repetitive Manufacturing (REM)

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Each of these production types has its unique characteristics and is used in
specific scenarios. In this tutorial, we will cover the details of each production
type, including their features, processes, and relevant SAP transaction codes
(Tcodes).

1. Discrete Manufacturing

Overview of Discrete Manufacturing

Discrete Manufacturing is characterized by the production of distinct

items, such as cars, electronic devices, or machinery. The production process
is typically order-based, and the final product can be counted and identified
as separate units. Each product unit may have different specifications, and it
is often easier to reverse or modify the production process.

Discrete manufacturing is commonly used in industries such as automotive,

electronics, and machinery manufacturing.
Key Features

 Production is based on individual orders.

 Products can be identified as separate units.

 Easier to modify or reverse production orders.

 Bills of Materials (BOM) and Routings are key elements of the process.

Key Tcodes for Discrete Manufacturing

 CO01: Create Production Order

 CO02: Change Production Order

 CO03: Display Production Order

These Tcodes are used to manage production orders, which define the
specific steps, materials, and work centers involved in manufacturing a
product.

2. Process Manufacturing

Overview of Process Manufacturing

Process Manufacturing is used for products that are produced by mixing,

refining, or chemical processing. It is used for goods that cannot be easily
disassembled into their basic components, and the production is typically
continuous or batch-based. Process manufacturing is common in industries
such as chemicals, pharmaceuticals, food, and beverages.

In SAP PP, process manufacturing is managed through Process Orders,

which are similar to production orders but are specifically designed to handle
the complexities of process-based production.

Key Features

 Production is often continuous or based on batches.

 The final product cannot be easily broken down into its components.

 Uses Recipes instead of Routings to define the production process.

 Co-products and by-products are common.

Key Tcodes for Process Manufacturing

 COR1: Create Process Order

  COR2: Change Process Order

 COR3: Display Process Order

These Tcodes help manage process orders, which specify the resources,
operations, and materials required to complete the production process.

3. Repetitive Manufacturing (REM)

Overview of Repetitive Manufacturing

Repetitive Manufacturing (REM) is used for products that are produced

on a regular basis, often in high volumes. It is suited for environments where
the same product is produced over a long period, and production is based on
periods or quantities rather than individual orders. REM is commonly used in
industries such as consumer goods and automotive parts manufacturing.

In REM, the production process is simplified by reducing the need for detailed
production orders. Instead, production is driven by planned orders and
demand management.

Key Features

 Production is based on quantities or periods rather than individual

orders.

 Simplified production process with fewer documentation requirements.

 Uses Production Versions to determine the appropriate production

line or method.

 Backflushing is used to automate inventory postings.

Key Tcodes for Repetitive Manufacturing

 MF50: Planning Table for Repetitive Manufacturing

 MFBF: Backflush

These Tcodes are used to manage the production schedule and automate
inventory postings, ensuring that materials are consumed and goods are
received automatically during production.

Choosing the Right Production Type

Summary of Manufacturing Industry Types

The manufacturing industry can be broadly classified into Discrete

Manufacturing and Process Manufacturing. Discrete manufacturing
involves producing products that can be disassembled into their original
components, while process manufacturing involves transforming raw
ingredients into new products using special processes. The table below
summarizes the characteristics and suitable industries for each production
type.

The choice of production type in SAP PP depends on the nature of the

product being manufactured and the specific requirements of the business.
Here is a summary to help you determine which production type may be
suitable for your needs:

Production
Suitable Industries Key Characteristics
Type

Discrete Automotive, Order-based, distinct

Manufacturing Electronics units, BOM, Routing

Process Chemicals, Batch-based, continuous,

Manufacturing Pharmaceuticals Recipes, Co-products

High-volume, period-
Repetitive Consumer Goods,
based, Production
Manufacturing Automotive Parts
Versions

Conclusion

Understanding the different production types in SAP PP is crucial for selecting

the right approach to meet your manufacturing requirements. Whether you
are dealing with individual, distinct items in Discrete Manufacturing,
continuous production in Process Manufacturing, or high-volume
production in Repetitive Manufacturing, SAP PP provides the tools needed
to manage these processes effectively.

By leveraging the appropriate production type and using the relevant Tcodes,
businesses can optimize their production planning, reduce costs, and ensure
timely delivery of products.

What is MRP in SAP PP?

What is MRP in SAP PP?

Material Requirement Planning (MRP) is a powerful SAP functionality

designed to ensure efficient material availability. It integrates with Materials
Management (MM), Sales and Distribution (SD), and Production
Planning (PP) to streamline material requirements for businesses. MRP
ensures the right materials are available in the right quantity, at the right
time.

Why is MRP Essential?

MRP
Business Impact
Functionality

Customer Order Ensures on-time delivery by aligning material

Fulfillment availability with order requirements.

Demand Combines historical data, open orders, and

Forecasting planned requirements to anticipate needs.

Efficient Stock Avoids overstocking or understocking of raw

Management materials and finished goods.

How Does MRP in SAP PP Work?

1. Total Demand Calculation:

o Sources: Open sales orders, planned independent requirements

(PIRs), and manual forecasts.

o Example: A company estimates it will need 1,000 units for the

upcoming month.

2. Stock Availability Check:

o Evaluates existing stock, open purchase requisitions (PRs), and

planned purchase orders (POs).

o Determines shortages based on current inventory and scheduled

receipts.

3. Shortage Handling:

o For finished goods: Generates planned orders for production.

 o For raw materials: Creates purchase requisitions for
procurement.

MRP Calculation Example

Let’s illustrate with an example.

Unit
Category
s

1,00
Total Demand
0

Stock
500
Availability

Planned
300
Receipts

Shortage 200

Scenario: Order Fulfillment

A customer orders 150 units for delivery on October 20th, 2024. Here’s how
MRP ensures fulfillment:

Step Action Taken Status

Shortage:
Check Stock 100 units available.
50

Check Planned Open PO for 60 units, delivery on

Stock OK.
Receipts October 18th.

Confirm delivery of 150 units on

Final Decision Fulfilled.
October 20th.
Key Formula in MRP

Shortage=Total Demand−Available Stock−Planned Receipts\text{Shortage}

= \text{Total Demand} - \text{Available Stock} - \text{Planned Receipts}

Example:

 Total Demand: 1,000 units

 Available Stock: 500 units

 Planned Receipts: 300 units

 Shortage: 1,000−(500+300)=2001,000 – (500 + 300) = 200 units

SAP T-Codes for MRP Operations

T-
Function
Code

Run MRP for all materials at the

MD01
plant level.

Run MRP for a specific material in a

MD02
plant.

MD04 Stock/Requirements List.

MD05 MRP List (Static).

Legacy and Evolution

SAP introduced MRP over 25 years ago, making it a cornerstone of material

planning systems. With advancements like MRP Live, the process is now
faster and more responsive to real-time changes.

In the next post, we’ll explore How MRP Integrates with SAP Systems for
dynamic demand planning and stock management.

How MRP Works in SAP: A Step-by-Step Guide

 Material Requirement Planning (MRP) in SAP ensures efficient material
availability by calculating demand and addressing shortages. MRP
consolidates data from open sales orders, planned independent requirements
(PIRs), and forecasts to determine total demand.

It then performs a stock availability check, factoring in current inventory and

planned receipts like purchase requisitions and orders. If shortages are
identified, SAP generates planned orders for in-house production or purchase
requisitions for external procurement, ensuring timely fulfillment of customer
demands.

Parameter/Tool Description

Defines how materials are planned (e.g.,

MRP Type
consumption-based or demand-based).

Determines the quantity of material to procure or

Lot Size
produce in each planning cycle.

Planning Specifies the time period for which materials are

Horizons planned.

MD01 (Plant-
Executes MRP for all materials within a plant.
Wide Run)

MD02 (Specific
Runs MRP for a specific material within a plant.
Material)

MD05 (Static Displays a snapshot of MRP results at the time of

Reporting) execution.

MD04 (Dynamic Shows real-time updates of stock and requirement

Reporting) lists.

Leverages SAP HANA for real-time MRP runs,

MRP Live enhancing performance and reducing execution
times.
 Parameter/Tool Description

Minimizes costs, avoids stockouts, streamlines

Benefits
operations, and ensures customer satisfaction.

How MRP Works in SAP?

Step 1: Demand Calculation

MRP calculates total demand by consolidating multiple sources.

Sources of Demand

 Open Sales Orders: Customer-placed orders.

 Planned Independent Requirements (PIRs): Forecasts based on

historical or expected trends.

 Manual Forecasting: Demand estimates calculated outside the

system.

Example Demand
Calculation

Customer orders: 600

units

Forecasted demand: 400

units

Total Demand: 1,000

units

Step 2: Stock Availability Check

SAP evaluates available stock and considers incoming supplies to determine

if there are shortages.

Stock Sources

 Available Stock: Current inventory in hand.

  Planned Receipts:

o Purchase Requisitions (PRs): Orders placed but not yet

received.

o Purchase Orders (POs): Confirmed supplier orders.

Example Stock
Check

Available Stock: 500

units

Planned Receipts: 300

units

Total Supply: 800

units

Step 3: Handling Shortages

If total demand exceeds available stock and planned receipts, the system
identifies shortages and plans accordingly.

Shortage Scenarios

1. Finished Goods Shortages:

o Generates Planned Orders for in-house production.

2. Raw Material Shortages:

o Creates Purchase Requisitions for procurement.

Example Shortage
Calculation

Total Demand: 1,000 units

Total Supply: 800 units

 Example Shortage
Calculation

Shortage: 200 units

Step 4: MRP Execution

SAP provides specific T-Codes for running MRP, each with its own scope and
functionality.

T-
Function
Code

Execute MRP for all materials at the

MD01
plant.

MD02 Execute MRP for a specific material.

Display Stock/Requirement List

MD04
(dynamic).

MD05 Display MRP List (static results).

Dynamic vs. Static Reporting

 Stock/Requirement List (MD04): Updates dynamically based on

real-time data.

 MRP List (MD05): Captures a snapshot of MRP results at the time of

execution.

Step 5: Addressing Shortages

MRP suggests actions based on the type of shortage and material involved.

Types of Shortages

1. In-House Production:

o The system generates Planned Orders.

 2. External Procurement:

o The system generates Purchase Requisitions (PRs).

MRP Calculation Formula

The system determines shortages using the following formula:

Shortage=Total Demand−(Available Stock+Planned Receipts)\
text{Shortage} = \text{Total Demand} – (\text{Available Stock} + \
text{Planned Receipts})

Example Calculation

Total Demand: 1,000

units

Available Stock: 500

units

Planned Receipts: 300

units

Shortage: 200 units

MRP Workflow Example

Scenario: Order Fulfillment

A customer places an order for 150 units with a delivery date of October
20th, 2024.

Step Action Taken Status

Shortage:
Check Stock 100 units available.
50

Check Planned Open PO for 60 units, delivery on

Stock OK.
Receipts October 18th.
 Step Action Taken Status

Confirm delivery of 150 units on

Final Decision Fulfilled.
October 20th.

Conclusion

MRP is a robust tool in SAP for ensuring material availability and efficient
planning. By calculating demand, checking stock, and addressing shortages,
it helps organizations meet customer needs while optimizing inventory
levels.

In the next blog, we’ll explore SAP Availability Checks and how they
influence the MRP process. Stay tuned!

What are Production Orders in SAP PP?

Production Orders in SAP PP are a central component of the

manufacturing process in the SAP Production Planning (PP) module. They
serve as detailed instructions for producing a specific quantity of a material
within a defined timeframe. Understanding how to create, process, and
manage production orders is essential for both beginners and advanced SAP
users involved in production planning and execution.

Introduction to Production Orders in SAP PP

This SAP PP tutorial provides a professional and detailed guide on Production

Orders in SAP PP, covering the entire lifecycle from creation to completion. It
includes step-by-step instructions on using key transaction codes and
explains essential concepts like Goods Issue with practical examples.

1. Production Order Lifecycle

1.1 Overview of the Production Order Lifecycle

The Production Order Lifecycle in SAP PP encompasses all the phases a

production order goes through, from its initial creation to final completion.
Managing this lifecycle effectively ensures that manufacturing processes are
planned, executed, and monitored efficiently.
🔍 Expand🔗 New Tab

Key Phases:

 Creation: Defining the production order with all necessary details.

 Release: Authorizing the order for production execution.

 Goods Issue: Issuing raw materials and components required for

production.

 Execution: Carrying out the production activities.

 Confirmation: Recording the completion of production operations.

 Goods Receipt: Receiving the finished goods into inventory.

 Settlement and Closure: Calculating costs and closing the order.

1.2 Stages of a Production Order

Stage 1: Creation

 Define Material and Quantity: Specify the material to be produced

and the quantity.

 Assign BOM and Routing: Link the Bill of Materials (BOM) and
routing to the order.

Stage 2: Release
  Authorize Production: Release the order to permit production
activities.

 Enable Goods Movements: Allow posting of goods issues and

receipts.

Stage 3: Goods Issue

 Issue Components: Withdraw raw materials and components from

inventory.

 Update Inventory: Reduce stock levels of issued materials.

Stage 4: Execution

 Perform Operations: Execute production operations as per the

routing.

 Utilize Work Centers: Use designated machines and labor.

Stage 5: Confirmation

 Record Progress: Confirm completed operations and quantities.

 Capture Actual Data: Log actual times, quantities, and activities.

Stage 6: Goods Receipt

 Receive Finished Goods: Post the produced goods into inventory.

 Update Order Status: Reflect production completion.

Stage 7: Settlement and Closure

 Settle Costs: Allocate costs to cost centers or profitability segments.

 Close Order: Mark the order as complete to prevent further changes.

2. Creation and Processing of Production Orders

SAP PP provides specific transaction codes for managing production orders.

The primary transactions are CO01 (Create), CO02 (Change),
and CO03 (Display).

2.1 CO01: Create Production Order

Purpose:
  To create a new production order with detailed instructions for
production.

Example Scenario:

 You need to produce 100 units of Material FG-100 at Plant 1100.

Step-by-Step Guide:

1. Access Transaction CO01

o Enter CO01 in the SAP command field and press Enter.

2. Enter Initial Order Data

o Order Type: Use PP01 for standard production orders.

o Material: Enter FG-100.

o Plant: Enter 1100.

3. Set Quantity and Dates

o Total Quantity: Enter 100 units.

o Basic Start Date: Enter the planned start date (e.g., 2024-11-
25).

o Basic Finish Date: Enter the planned end date (e.g., 2024-11-
30).

4. Review BOM and Routing

o BOM Explosion: Ensure components are correctly listed.

o Routing Selection: Confirm operations are assigned.

5. Schedule the Order

o Choose scheduling parameters (e.g., backward or forward

scheduling).

o Click on Dates/Qtys to verify scheduled dates.

6. Save the Production Order

o Click the Save icon or press Ctrl+S.

o The system generates a production order number

(e.g., 10001234).
Notes:

 Ensure all master data (material, BOM, routing) is accurately

maintained.

 The order cannot be released if mandatory data is missing.

2.2 CO02: Change Production Order

Purpose:

 To modify details of an existing production order.

Common Changes:

 Adjusting production quantities.

 Changing production dates.

 Modifying components or operations.

Step-by-Step Guide:

1. Access Transaction CO02

o Enter CO02 in the SAP command field and press Enter.

2. Enter Production Order Number

o Input the order number (e.g., 10001234) and press Enter.

3. Navigate to the Relevant Tab

o Header: Change order header details.

o Operations: Modify operations or work centers.

o Components: Adjust component quantities or replacements.

4. Make Necessary Changes

o For example, change the total quantity from 100 to 120 units.

5. Save the Changes

o Click the Save icon or press Ctrl+S.

Notes:

 Changes may be restricted after certain statuses (e.g., after

confirmation).
  Verify that changes are feasible within the production schedule.

2.3 CO03: Display Production Order

Purpose:

 To view production order details without the ability to modify them.

Step-by-Step Guide:

1. Access Transaction CO03

o Enter CO03 in the SAP command field and press Enter.

2. Enter Production Order Number

o Input the order number (e.g., 10001234) and press Enter.

3. Review Order Information

o Order Header: View overall order data.

o Operations: See the list of operations and their statuses.

o Components: Check required materials and quantities.

o Costs: Review planned versus actual costs.

4. Exit Display Mode

o Click the Back button or press F3 to exit.

Notes:

 Use CO03 for auditing purposes or to provide information to other

departments.

 Display mode ensures data integrity by preventing unauthorized

changes.

3. Goods Movement in Production

Goods movements are essential to reflect the flow of materials in

production. Goods Issue (GI) is particularly important as it records the
consumption of components for production orders.

3.1 Goods Issue (GI) Concept

Definition:
  Goods Issue is the process of withdrawing materials from inventory for
use in production.

 It reduces inventory levels and assigns material costs to the production

order.

Importance:

 Inventory Accuracy: Maintains correct stock levels.

 Cost Allocation: Ensures material costs are accurately captured.

 Production Tracking: Reflects actual consumption of materials.

Types of Goods Issue:

 Manual Goods Issue: Performed manually via transactions like MIGO.

 Automatic Goods Issue (Backflushing): Occurs automatically

during operation confirmation.

3.2 Processing Goods Issue Using MIGO

Purpose:

 To manually post the goods issue of components to a production order.

Example Scenario:

 Issue Component RM-200 to Production Order 10001234 for 200

units.

Step-by-Step Guide:

1. Access Transaction MIGO

o Enter MIGO in the SAP command field and press Enter.

2. Select Goods Issue

o In the Transaction field, select Goods Issue.

o In the Reference field, choose Order.

3. Enter Reference Details

o Order: Enter 10001234.

o Press Enter to retrieve order information.

4. Verify and Edit Item Details

 o Material: Confirm RM-200 is listed.

o Quantity: Ensure the quantity is 200 units.

o Storage Location: Enter the location from which the material is

issued.

o Movement Type: Confirm it is 261 (Goods Issue for Order).

5. Check Document

o Click on Check to validate the data for errors.

6. Post the Goods Issue

o Click the Post button or press Ctrl+S.

o A material document number is generated confirming the

posting.

Notes:

 Ensure sufficient stock is available in the specified storage location.

 Any discrepancies in quantities or materials should be resolved before

posting.

Impact of Goods Issue:

 Inventory Update: Reduces stock of the issued material.

 Cost Posting: Allocates material costs to the production order.

 MRP Update: Adjusts material requirements planning data.

4. Conclusion

Managing Production Orders in SAP PP is vital for efficient manufacturing

operations. This tutorial provided a comprehensive guide on the lifecycle of
production orders, including creation, modification, and goods movement
processes. By mastering these concepts and transaction codes, users can
ensure accurate production planning, execution, and cost management.

Key Takeaways:

 Understanding the Lifecycle: Familiarity with each stage ensures

effective production control.
  Transaction Proficiency: Using CO01, CO02, CO03, and MIGO
efficiently is essential for daily operations.

 Accurate Goods Movements: Proper handling of goods issues

maintains inventory accuracy and cost control.

 Real-World Application: Practical examples aid in applying concepts

to actual business scenarios.

5. Further Reading and Resources

 SAP Help Portal: Official documentation on SAP PP functionalities.

 SAP Learning Hub: Access to training courses and learning materials.

 Production Planning with SAP S/4HANA: Books and guides on

advanced planning techniques.

 SAP Community Network: Forums for discussions with SAP

professionals.

For any questions or assistance with production orders in SAP PP, please
contact your system administrator or SAP support team.

What is Bill of Materials (BOM) in SAP PP?

The Bill of Materials (BOM) is a vital component of SAP Production

Planning (PP), serving as the foundation for manufacturing processes. A BOM
is essentially a structured list of all materials, components, and assemblies
needed to produce a finished product. It supports various business functions
such as production, costing, sales, and maintenance.

Bill of Materials (BOM) in SAP PP

1. Definition: BOM outlines the structure of a product by detailing its

components and their quantities.

2. Components of a BOM:

o Material: Raw materials, semi-finished goods, or finished

products.

o Assembly: Group of components assembled together.

 o Sub-Assembly: Intermediate assembly used in a larger
assembly.

3. Applications: BOMs support production planning, inventory control,

cost estimation, and order processing.

Steps to Create a Material BOM

You can create a BOM using Transaction Code: CS01 or through the SAP
Easy Access Menu. Here’s a structured summary:

🔍 Expand🔗 New Tab

Step Action Details

1. Access via SAP Navigate to the

Navigation Menu: Logistics → BOM creation
Step Action Details

Production → Master Data →

BOM → Material BOM → screen.
Create, or use CS01.

Specify the material number

2. Enter Links the BOM to a
for which the BOM is created.
Material specific material.
Use F4 Help if needed.

BOMs can be
3. Specify Define the Plant where the allocated to
Plant BOM is applicable. additional plants as
required.

Usage determines
Choose the BOM usage type the application area
4. Select
(e.g., Production, Engineering, and defines the
BOM Usage
Universal). range of item
statuses.

Controls the time

5. Define Enter Valid From and Valid period during which
Validity To dates. the BOM is
effective.

For simple BOMs, leave this Defaults

6. Set
field blank. Enter alternative to Alternative
Alternatives
codes for multiple BOMs. 01 if left blank.

Enables version
7. Specify
Optional: Add a change number control and allows
Change
to track modifications. tracking of
Number
changes.

8. Add On the Item Overview, Details all the items

Components specify the material numbers, included in the
quantities, and units for each
 Step Action Details

component. BOM.

Ensures the BOM

aligns with
9. Set Use the Segmentation feature
segmentation
Segmentati for stock or requirement
strategies during
on segmentation values.
planning and
production.

10. Save Review and confirm entries, Finalizes the BOM

BOM then save the BOM. details.

Types of BOMs

Type Description Example

Lists only the direct A bicycle’s single-level BOM

Single-
components of a includes wheels, gears, and
Level BOM
product. brakes.

A brake assembly includes

Includes sub-components
Multi- levers, pads, and calipers,
and sub-assemblies,
Level BOM which are part of a bicycle’s
forming a hierarchy.
multi-level BOM.

Manages variations of a
Variant A bicycle with different
product within a single
BOM frame colors or sizes.
BOM.

Logical grouping of
Phantom A kit of bolts and nuts
materials that simplifies
Assemblie included as part of a larger
the structure but isn’t
s assembly.
stocked physically.
 Type Description Example

Represents different
Manufacturing a product
Alternativ production methods or
using steel in one plant and
e BOM material substitutions for
aluminum in another.
the same product.

Key Applications of BOM Usage

Usage Type Purpose Notes

Used during product

Engineering/ Not used in MRP runs
design to list components
Design or production orders.
for approval.

Lists components
Used in manufacturing
Production required for
processes and MRP runs.
production orders.

Used in assembling
Sales & Defines materials needed
products for specific
Distribution for sales orders.
customer orders.

Details spare parts and Helps streamline

Plant
components required for maintenance
Maintenance
maintenance tasks. processes.

Applies across multiple Versatile but requires

Universal business functions (e.g., broad planning and
production, sales). integration.

Advanced Concepts
 Concept Description Example/Use Case

Engineering Tracks BOM A new version of a

Change modifications with product design requires
Management change numbers and ECM to manage changes
(ECM) validity dates. in the BOM.

BOMs where a
Chemical processes
Recursive component appears
where part of the output
BOM within its own
is recycled as input.
structure.

Links BOM components Ensures components are

to specific stock or planned based on
Segmentation
requirement segments stock/requirement
for advanced planning. segmentation strategy.

Production Processes Involving BOMs

1. Material Requirements Planning (MRP):

o BOMs are exploded to calculate material needs.

o Helps determine procurement proposals (planned orders or

purchase requisitions).

2. Production Orders:

o BOM components are listed in production orders.

o Tracks material allocation and consumption during production.

Sample Multi-Level BOM Structure: Mountain Bike

Lev Quanti Uni

Material Description
el ty t

0 MTB-1000 Mountain Bike 1 EA

 Lev Quanti Uni
Material Description
el ty t

1 FRAME-200 Aluminum Frame 1 EA

WHEEL-
1 Wheel Set 2 EA
700C

1 BRAKE-SET Brake Assembly 1 SET

2 BRAKE-LEV Brake Lever 2 EA

2 BRAKE-CAL Brake Caliper 2 EA

Gear System (21-

1 GEAR-21SP 1 EA
Speed)

1 SEAT-STD Standard Seat 1 EA

Reporting and Analysis

Transaction
Report Description
Code

BOM Explosion Displays all components and sub-

CS12
Report components in a BOM.

Where-Used Shows all BOMs that include a

CS15
List specific component.

BOM Compares two BOMs to highlight

CS14
Comparison differences.

Conclusion
BOMs in SAP PP are indispensable for managing production planning, cost
control, and inventory. By understanding basic and advanced concepts, such
as segmentation, ECM, and recursive BOMs, businesses can improve
efficiency, reduce errors, and streamline manufacturing operations. BOM
management is essential for ensuring accurate material planning, production
execution, and cross-functional integration.

Work Center in SAP PP

A Work Center in SAP PP is a location where production operations are

performed, such as a machine, labor process, or combination of both. It is
assigned to a plant and categorized based on its application, like production,
maintenance, or quality inspection.

Work centers define capacities (working hours), costing (activity tracking),

and scheduling (operation timelines). Features like backflush automate
goods issuance, while indicators like finite scheduling manage resource
constraints.

For example, in gearbox assembly, machining, lathe, and assembly lines are
work centers. They ensure efficient scheduling, cost control, and resource
utilization in manufacturing processes

Creating a Work Center in SAP PP

You can create a work center using Transaction Code: CR01 or navigate
via:

Logistics ➤ Production ➤ Master Data ➤ Work Centers ➤ Create.

🔍 Expand🔗 New Tab

Key Fields for Creation

Field Description

Plant Specifies the plant where the work center is located.

Work
An 8-digit alphanumeric unique name for the work center.
Center
 Field Description

Determines the application areas where the work center

Category
can be used.

Work Center Master Data Views

A work center contains several tabs with important fields for defining
operations and activities.

1. Basic Data View

The Basic Data View in a work center provides the foundational details
about its setup and usage in production.

It includes the work center description, specifying its purpose (e.g.,

assembly or machining). The plant field identifies where the work center is
located, while the Production Supply Area (PSA) ensures efficient
material flow by acting as interim storage for components. Features like Task
List Usage link the work center to specific operations, and
the Backflush function automates goods issuance, streamlining material
consumption in production.

Field Description

Specifies the work center details (e.g., Assembly of

Description
Gearbox).

Production Interim storage area on the shop floor for

Supply Area components temporarily stored before production.

Task List Determines the task lists (e.g., routings) where the
Usage work center can be used.

Automates goods issue to production orders,

Backflush
reducing manual effort.

2. Default Values View

The Default Values View defines operation-specific defaults that
streamline production planning.

The Control Key governs how operations are processed, including

scheduling, capacity requirements, and costing. It also manages external
processing and confirmation activities. The Standard Text Key allows
preconfigured text to be used in operations, saving time during
documentation. These fields ensure consistency and efficiency by
automating repetitive tasks and controlling essential operation parameters,
making them critical for smooth production order execution.

Field Description

Controls scheduling, capacity requirements, costing,

Control Key
external processing, and confirmation.

Standard Assigns predefined text to operations for quick and

Text Key consistent documentation.

3. Capacities View

The Capacities View outlines the work center’s available capacity, breaks,
and utilization rates, essential for resource planning.

It includes fields like the Factory Calendar, which defines working days and
holidays, and Capacity Utilization, which measures actual output against
potential. Parameters such as Start Time, End Time, and Break
Lengths help calculate the operating time. For grouped resources,
the Number of Capacities consolidates individual capacities. This view
ensures optimal resource allocation and provides a clear understanding of a
work center’s operational limits.

Field Description

Factory Specifies working days and holidays for scheduling

Calendar production orders.

Capacity Measures actual output against potential output.

 Field Description

Utilization

Number of Defines individual capacities (e.g., 5 machines

Capacities grouped into one work center).

Formula Examples:

Formu
Description
la

Production: Setup
sap001
Time

Production: Machine
sap002
Time

Production: Labor
sap003
Time

4. Scheduling View

The Scheduling View determines the start and end times for operations
performed at the work center. It uses formulas to calculate setup, processing,
and teardown times, ensuring accurate scheduling of tasks. Fields
like Queue Time define the waiting period before an operation begins. For
instance, manual operations like quality testing can have reduced scheduling
time if additional resources are allocated. This view optimizes workflow by
balancing resource availability with operation timelines, ensuring minimal
delays and efficient task execution.
 Field Description

Processing Calculated using formulas for setup, processing, and

Time teardown times.

Queue Time Time an order waits before processing.

Business Case: If two workers are assigned to test gearboxes instead of

one, the time is halved while the capacity remains the same.

5. Costing View

The Costing View integrates the work center with SAP Controlling (CO) for
cost tracking. Each work center is linked to a Cost Center, where production
costs are accumulated. Activity Types, such as setup or labor, describe the
nature of activities and their measurement units (e.g., hours or pieces).
Formulas calculate costs based on these activities. For example, the cost of
machine operation or labor is computed per activity performed. This view
enables precise cost allocation, ensuring accurate financial control over
production processes.

Field Description

Cost Organizational unit where the costs for production activities

Center are accumulated.

Activity Describes the type of activity performed at the work center

Type (e.g., setup, labor, machine operation).

Formula Defines how costs are calculated based on activity types.

Formula Examples:

Formu
Description
la

sap004 Maintenance
 Formu
Description
la

Time

Setup
sap005
Requirements

Key Features of Work Centers

Feature Description

Finite Scheduling Ensures work center capacity is considered

Indicator during scheduling.

Permits exceeding available capacity by a

Overload
defined percentage.

Long-Term Planning Enables the use of work centers in long-term

Indicator planning simulations.

Conclusion

Work centers in SAP PP are critical for defining operational capabilities and
resources in production processes. They ensure accurate scheduling,
capacity planning, and cost allocation. By leveraging views like Basic Data,
Capacities, Scheduling, and Costing, businesses can efficiently manage their
production workflows while optimizing resource utilization.

What is Routing in SAP PP?

Routing in SAP PP defines the sequence of operations and processes

required to manufacture a product. It outlines key details like operations,
work centers, times for each task, required materials, and tools. Routing is
crucial for efficient production planning, scheduling, and costing.
Key Elements of Routing in SAP PP?

Routing in SAP PP includes several critical elements that define the

production process. These elements ensure smooth execution by specifying
tasks, locations, timeframes, materials, and tools required for manufacturing.
The table below summarizes the key elements, providing an overview of
their roles in routing.

Element Description

Defines tasks like machining, drilling, or assembly. Each

Operations
operation is identified by a unique number (e.g., 0010).

Work Specifies where operations are performed, such as

Centers assembly lines or machines.

Production Includes setup time, machine time, and labor time,

Times crucial for scheduling and costing.

Lists the components required for each operation,

Materials
ensuring precise material allocation.

Specifies tools like molds or fixtures used during

Tools (PRT)
production.

Routing Creation in SAP PP

Creating a routing in SAP PP involves defining the processes and resources

required for production. You can use Transaction Code CA01 or navigate
through Logistics ➤ Production ➤ Master Data ➤ Routings ➤ Standard
Routings ➤ Create. The table below highlights the fields required for
creating a routing.
🔍 Expand🔗 New Tab

Field Description

Material
The material for which the routing is created.
Number

Plant Specifies the production plant.

Key Date The date from which the routing is valid.

Group A unique identifier for routing.

Group Differentiates multiple routings for the same material or

Counter production process.
Routing Status and Lot Size

Routing status controls its usability for production and costing, while lot sizes
specify the quantity range for which a routing is valid. These parameters are
critical for ensuring routing relevance to specific production scenarios, as
shown in the table below.

Status Usage

Created Not usable in production orders.

Released for Usable in production orders but not for

Order costing.

Released for Usable for costing but not in production

Costing orders.

Released Usable for both production orders and

(General) costing.

Lot size defines the minimum and maximum quantities for which a routing is
valid. For example:

Group Lot Size Lot Size

Material Group
Counter From To

Gear 500000
1 1 500
Assembly 01

Gear 500000
2 501 1000
Assembly 01

Scheduling and Overlapping

Routing incorporates scheduling to determine operation start and end times

while managing capacity and resource allocation. Overlapping allows the
next operation to begin before the current one finishes, optimizing lead
times. The table below highlights key scheduling parameters.
 Scheduling
Description
Parameter

Setup Time Time required to prepare machines for production.

Time an order waits at the work center before being

Queue Time
processed.

Time needed to transfer materials between

Move Time
operations.

Allows the next operation to begin before the current

Overlapping
one finishes, reducing overall lead time.

Control Key and Component Allocation

The control key determines how operations are processed and managed in
production. It controls parameters like scheduling, costing, and external
processing. Components from the Bill of Materials (BOM) are allocated to
specific operations in routing. This ensures materials are consumed only
when required.

Control Key
Function
Parameter

Determines if scheduling is performed on the

Scheduling
work center.

Capacity Defines if capacity is calculated for the

Requirements operation.

Automatic Goods Posts goods receipt automatically after

Receipt confirmation.

External Indicates that the operation is subcontracted to

Processing an external vendor.
Example: Routing at SuperGears

At SuperGears, the production of gearboxes involves several operations:

machining, drilling, and assembly. Each step is assigned to a specific work
center, such as an assembly line.

Operati Work Setup Machine Labor

on Center Time Time Time

Machinin
CM_MACH 30 mins 2 hrs 1 hr
g

Drilling CM_DRILL 20 mins 1.5 hrs 0.5 hrs

Assembl
CM_ASSY 10 mins 3 hrs 1.5 hrs
y

By assigning tools and allocating BOM components, routing ensures smooth

execution of production tasks. Overlapping operations further reduce lead
times, improving overall efficiency.

Routing in SAP PP provides a comprehensive framework for defining

production processes, ensuring precise scheduling, efficient material
consumption, and accurate cost tracking. It is an indispensable tool for
streamlined manufacturing.

What is a Product Group in SAP PP?

A Product Group in SAP PP is a collection of similar materials or other

product groups organized for long-term production planning. It simplifies
planning processes by grouping items that share components, resources, and
capacities. Product groups can be either single-level, containing only
materials, or multi-level, comprising several product groups that cascade
down to individual materials.

For example, a product group for “iPhone X” might include various variants
differing in color or specifications. Planning at the product group level
aggregates requirements, streamlining operations and reducing complexity.
Types of Product Groups

Product groups in SAP PP are classified as Single-Level or Multi-

Level based on their structure.

1. A single-level product group directly includes materials with

proportional factors for planning, such as variants of “iPhone X.”

2. A multi-level product group hierarchically combines multiple product

groups, like grouping “iPhone X” and “iPhone 11” under a broader
“iPhone” product group.

Type Description Example

Contains materials directly as

Variants of “iPhone X”
Single members. Each material is
grouped together under a
-Level assigned a proportional
single product group.
factor for planning.

Groups multiple product Various iPhone models

groups to form a hierarchy. grouped under the “iPhone”
Multi-
The lowest level always product group, with sub-
Level
contains materials as groups for “iPhone X” and
members. “iPhone 11.”

Creating a Product Group

A product group can be created using Transaction Code MC84 or by

navigating to:
Logistics ➤ Production ➤ SOP ➤ Product Group ➤ Create.
🔍 Expand🔗 New Tab

Field Description

Product Group
A unique identifier for the product group.
Name

Specifies the plant where the product group is

Plant
applicable.

Base Unit of
The unit used for planning, such as EA (Each) or KG.
Measure

Defines whether the product group consists of

Members
materials or other product groups.
Once created, the system allows users to assign member materials with
proportional factors, either manually or automatically based on historical
data. For example:

Proportional
Material
Factor (%)

CM_GEARBOX 50

CM_GEARBOX_
50
01

Proportional factors determine how each material contributes to the product

group’s overall demand or capacity.

Planning at the Product Group Level

Product groups are critical for Rough-Cut Capacity Planning (RCCP), used
to estimate the resources and capacities needed to meet long-term
production goals. Plans can be created at the product group level
using Transaction Code MC81 or by navigating to:
Logistics ➤ Production ➤ SOP ➤ Planning ➤ For Product Group ➤
Create.

Plan Type Description

Forecasts future sales volumes, which can be created

Sales Plan
manually or derived from historical data.

Aligns production output with the sales plan. Production

Productio
plans can meet sales requirements, target stock levels, or
n Plan
target days’ supply.

For instance, a sales plan for June 2022 to December 2022 can include
projected monthly sales for each variant. A production plan can then
synchronize production with sales requirements or target inventory levels.

Automating Proportional Factors

SAP provides options to calculate proportional factors based on historical
data. Users can navigate to:
Logistics ➤ Production ➤ SOP ➤ Product Group ➤ Calculate
Proportional Factors.

Alternatively, proportional factors can be distributed manually using Edit ➤

Distribute Proportional Factors.

Example: SuperGears Product Group

At SuperGears AG, the “Constant Mesh Gearbox” is a main product group.

This group includes variants like CM_GEARBOX and CM_GEARBOX_01, each
contributing equally (50%) to the group’s planning. A sales plan for the
product group aggregates demand, simplifying forecasting and capacity
planning.

Projected Target Stock Production

Month
Sales (EA) Level (EA) Plan (EA)

June
1000 1000 2000
2022

July
1200 1000 2200
2022

The production plan aligns with the sales plan while maintaining a target
stock level of 1000 EA.

Benefits of Using Product Groups

 Simplified Planning: Groups similar materials, reducing the

complexity of forecasting and capacity estimation.

 Resource Optimization: Aggregates requirements, allowing efficient

allocation of resources and capacities.

 Long-Term Focus: Supports rough-cut capacity planning, aligning

production with sales trends over extended periods.

 Flexible Structure: Enables multi-level grouping for detailed planning

across product ranges.
By leveraging product groups, organizations can streamline their planning
processes, ensuring efficient resource use and accurate forecasting across
production cycles.

What are Production Versions in SAP PP?

Production Versions in SAP PP is a unique combination of a Bill of

Materials (BOM) and routing (or task list) used to manufacture a material. It
defines the specific production technique for a material and is essential for
managing multiple manufacturing methods, lot sizes, and production
conditions. Production versions streamline production planning by linking
materials to their corresponding BOM and routing.

Key Features of Production Versions in SAP PP

1. Version Identification: Each production version is identified by a

unique alphanumeric key, up to four characters long, and is specific to
a material and plant. For example, the production version “PV01”
might represent a specific heat treatment process for gearbox
assembly.

2. Validity Period: The validity of a production version is defined

by Valid From and Valid To dates. The system defaults to the current
date for Valid From and “31.12.9999” for Valid To, ensuring the
production version is active throughout the defined period.

3. Lot Sizes: Production versions specify minimum and maximum lot

sizes for which they are applicable. For instance:

o A furnace with a capacity of up to 500 pieces will have a

production version with a lot size of 1 to 500.

o Another production version will cover lot sizes from 501 to 1000
for larger furnaces.
🔍 Expand🔗 New Tab

Production Lot Size Lot Size

Description
Version From To

For small furnace

PV01 1 500
operations.

For large furnace

PV02 501 1000
operations.

Components of a Production Version

Routing and Task List Type:

The routing assigned to a production version specifies the operations
required to manufacture the material. Depending on the manufacturing type,
different task list types are used:

 Discrete Manufacturing: Standard routing.

 Repetitive Manufacturing: Rate routing.

 Process Industries: Master recipe.

Task List
Usage
Type

For discrete
Routing (N)
manufacturing.

Rate For repetitive

Routing manufacturing.

Master
For process industries.
Recipe

BOM Assignment:

Each production version is linked to a specific BOM for the material.

The Alternate BOM and BOM Usage fields define the exact BOM applicable
for the production version.

Field Description

Alternate
Specifies the alternative BOM for the material.
BOM

Indicates where the BOM is applied (e.g., production,

BOM Usage
costing).

Production Line:

In repetitive manufacturing, the Production Line field specifies the work

center or line hierarchy used for production. It represents the capacity
available for manufacturing.
REM Allowed:

This indicator determines if the production version is valid for repetitive

manufacturing.

Creating a Production Version

A production version can be created using Transaction Code C223 (Mass

Processing) or through the MRP4 view in the material master (Transaction
Code MM02). Key steps include:

1. Entering the version key, description, plant, and validity dates.

2. Assigning the BOM and routing, along with task list type and group
details.

3. Specifying lot size ranges, ensuring alignment with production

capacity.
Production Version Migration for BOM

SAP provides a migration tool for creating production versions for existing
BOMs using Transaction Code SE38 and the
program CS_BOM_PRODVER_MIGRATION. Users can run the program in
simulation or actual mode to generate production versions automatically for
materials with multiple BOMs or alternate BOMs.

Business Use Case: SuperGears

At SuperGears AG, two furnaces are used for heat treatment:

 A small furnace for lot sizes of 1–500 pieces (PV01).

 A large furnace for 501–1000 pieces (PV02).

By defining separate production versions for each furnace, SuperGears

ensures efficient utilization of resources and production techniques based on
lot size.

Benefits of Production Versions in SAP PP

 Flexibility: Supports multiple manufacturing methods for the same

material.

 Precision: Links BOM and routing to specific lot sizes and production
conditions.

 Efficiency: Simplifies production planning and reduces errors by

clearly defining valid production processes.

 Repetitive Manufacturing Support: Integrates seamlessly with

repetitive manufacturing processes using the REM indicator.

Production versions play a critical role in SAP PP, ensuring the right resources
and processes are applied for each production scenario.

Sales and Operations Planning in SAP PP

Sales and Operations Planning in SAP PP is a core business process that

serves as a bridge between strategic business objectives and operational
execution. In SAP, S&OP facilitates demand and supply alignment while
ensuring profitability, efficiency, and customer satisfaction. With over a
decade of experience in SAP Production Planning (SAP PP), I can attest to the
transformative role of S&OP in streamlining manufacturing and supply chain
operations.

Definition of Sales and Operations Planning in SAP PP

APICS defines S&OP as the process of setting the overall level of

manufacturing output (production plan) and other related activities to satisfy
sales forecasts and planned levels of demand. It ensures alignment with
overarching business goals such as profitability, customer satisfaction, lead
time competitiveness, and resource optimization.

In SAP, S&OP provides an integrated framework for:

 Strategic Business Alignment: Connecting the annual business plan

with operational execution.

 Cross-functional Collaboration: Enabling seamless communication

between sales, marketing, production, and supply chain functions.

Core Components of S&OP in SAP

1. Demand Management:

o Historical Data Analysis: SAP utilizes past data to predict

future sales trends.

o Forecasting Tools: Robust forecasting features in SAP support

accurate demand planning.

o Collaborative Demand Planning: Involves inputs from sales

and marketing teams to align with business objectives.

2. Supply Chain Management:

 o Resource Allocation: SAP optimizes resources such as
inventory, labor, and machinery for production planning.

o Capacity Planning: Balances supply chain capabilities with

forecasted demand.

o Production Plan Realism: SAP ensures production schedules

are achievable and cost-effective.

3. Economic Review and Innovation:

o Scenario Analysis: SAP S&OP tools enable simulations to

analyze potential outcomes based on market conditions.

o Strategic Innovation: Helps incorporate new product

introductions and market strategies into planning.

4. Operations Alignment:

o Cross-functional Coordination: Aligns production schedules,

inventory management, and distribution with business goals.

o Key Performance Indicators (KPIs): Tracks metrics such as

lead time, backlog, and production efficiency to measure
operational success.

How S&OP Works in SAP PP

Sales and Operations Planning in SAP PP module enables businesses to

consolidate inputs from multiple sources and produce actionable plans. The
process includes:

1. Data Consolidation:

o Collects data from sales forecasts, inventory levels, production

capacities, and supplier lead times.

o Integrates data from other SAP modules like SAP SD (Sales and
Distribution) and SAP MM (Materials Management).

2. Demand and Supply Matching:

o Analyzes demand and supply trends to ensure alignment.

o Uses tools like Demand Planning (DP) and Advanced Planning

and Optimization (APO) for precision.
 3. Scenario Planning:

o Enables organizations to simulate various demand and supply

scenarios.

o Helps decision-makers choose the most cost-effective and

customer-centric plan.

4. Execution and Monitoring:

o Links strategic S&OP decisions to the factory floor using SAP’s

Production Planning and Detailed Scheduling (PP/DS) tools.

o Monitors execution through real-time reporting and analytics.

Key Benefits of S&OP in SAP

Key Benefit Description

Strategic
Facilitates medium- and long-term planning,
Decision-
aligning operations with business objectives.
Making

Ensures production meets market demand

Demand-Supply
effectively, avoiding overstocking or
Balance
underproduction.

Customer-
Increases customer satisfaction by optimizing lead
Centric
times and improving service levels.
Approach

Resource Minimizes waste through effective use of inventory,

Optimization production capacity, and labor resources.

Identifies inefficiencies, enabling cost reduction

Cost Control through optimized production and supply chain
operations.

Business Agility Allows the organization to respond quickly to

market fluctuations, demand changes, and
 Key Benefit Description

production constraints.

Practical Example of S&OP in SAP

Scenario: A manufacturing company wants to introduce a new product line

while maintaining existing production schedules.

1. Demand Analysis: Using SAP’s forecasting tools, the company

identifies expected demand for the new product.

2. Supply Planning: SAP evaluates the availability of raw materials,

production capacity, and labor.

3. Scenario Simulation: Various scenarios are simulated to assess the

impact of the new product on existing operations.

4. Plan Execution: A production plan is finalized and linked to SAP PP/DS

for execution.

5. Monitoring: Real-time data tracking ensures the plan is on schedule

and within budget.

Conclusion

Sales and Operations Planning (S&OP) is an indispensable process for any

organization aiming to align its strategic goals with operational capabilities.
In SAP, S&OP provides a robust framework for achieving this alignment while
improving efficiency, reducing costs, and enhancing customer satisfaction.

What is Standard SOP in SAP?

Standard SOP in SAP is a preconfigured solution in SAP that uses an

information structure called S076. This Standard SOP helps companies plan
their production efficiently by breaking down the planning into different
levels. The planning begins at a product group level and is then dis-
aggregated down to the individual materials level. This is why it’s often
referred to as level-by-level planning.

In simpler terms, Standard SOP helps you plan production for larger groups
of products first and then gets into details about each specific product.
What is an Information Structure?

In SAP, an information structure is like a table that stores data from

different business functions such as sales, purchasing, production, etc.
This stored data can be used for planning and for various types of analysis.

An information structure in SAP consists of three main parts:

1. Period Unit:

o This defines the time period for planning, such as weekly,

monthly, or yearly. It determines how often you want to plan or
review your data.

2. Characteristics:

o Characteristics are the parameters that you use for planning.

You can plan at different levels such as sales organization,
division, purchasing organization, plant, or material.

o For example, you might want to plan production for a

specific plant or for a specific product category.

3. Key Figures:

o Key figures are numerical values that represent important

business data, like sales history, production quantities,
inventory levels, etc.

o These numbers help you understand how well your business is

doing and make future production plans accordingly.

1. Introduction to SAP Production Planning (PP) .

2. Master Data in SAP PP.

3. Sales and Operations Planning in SAP PP.

How Standard SOP Works

 Level-by-Level Planning: Standard SOP allows you to start planning

at the product group level, which means you look at all similar
products together first.
  After that, you disaggregate or break down the plan to focus on each
individual product or material.

This approach helps you get a clear overview of production at a broader level
first and then move into the specifics, making it more organized and
efficient.

Understanding the Information Structure S076 in SAP

This screenshot provides a view of Info Structure S076, which is used

for Standard Sales and Operations Planning (SOP). It shows various
characteristics and key figures that are part of this structure.

1. Info Structure (S076):

o The Info Structure is a table containing important data used for

planning. In this case, S076 is the standard info structure used
for Sales and Operations Planning.

o It is associated with Sales & Operations Planning and

is active, meaning it is available for use.

2. Application (01):

o The Application field indicates the area where the information

structure is used. In this example, 01 typically refers to a general
application within Sales & Operations Planning.

3. Characteristics:

o Characteristics are used to define the parameters for

planning. In the screenshot, the following characteristics are
available:

 Prod.group/material: Represents the product group or

material that is being planned.

 Plant: The plant where production or inventory is being

managed.

 Production Version: Specifies the version of the

production process being used.

o These characteristics help determine how the data will be

segmented and analyzed during planning.
 4. Key Figures:

o Key Figures represent the numeric values that are essential

for analysis. In the screenshot, we see:

 Sales: The number of units sold, which provides data for

demand planning.

 Production: The number of units produced, indicating

manufacturing output.

 Stock Level: The current level of inventory available.

 Target Stock Level: The desired level of stock that should

be maintained to meet demand effectively.

o Each of these key figures is associated with a Unit (typically in

days, weeks, or months) that helps in understanding the time
dimension of the data.

5. Planning Possible:

o This checkbox is marked, meaning that planning can be

performed using this information structure.

How This Fits into Standard SOP

 Level-by-Level Planning: The S076 info structure helps with level-

by-level planning, starting from product groups and drilling down
to individual materials.

 Data Utilization: It draws data from different fields like sales,

production, and inventory levels, making it easier for planners to
create accurate production plans.

 Key Characteristics and Figures: The combination

of characteristics and key figures allows planners to:

o Segment data (using characteristics like Plant and Product

Group).

o Use key figures to perform calculations and make decisions

regarding production and stock management.
Example Scenario

Let’s say you work in a manufacturing company and want to use Standard
SOP for production planning:

🔍 Expand🔗 New Tab

 You might want to plan production at a specific plant for a product

group like electronic gadgets.

 Using S076, you can enter sales data and current stock levels.

 The system will use characteristics such as

the plant and material to focus the planning process.

 The key figures like target stock level and production will help you
determine how much of each product you need to produce to meet
demand.

This way, S076 helps you gain a clear picture of the production needs and
helps in making informed decisions regarding demand and supply.

How to Create a Product Group in SAP?

A product group in SAP is used to group similar materials or other product
groups to simplify production planning, especially in the long term. Product
groups can be of two types:

1. Single Level Product Group: Contains only materials as members.

2. Multi-Level Product Group: Contains other product groups, building

a hierarchical relationship. The lowest level in the hierarchy always
contains materials.

How to Create a Product Group in SAP?

A product group is a useful tool for organizing similar materials or other

product groups, which simplifies production planning in a long-term planning
period. There are two types of product groups in SAP:

1. Single-Level Product Group: Contains only materials as members.

2. Multi-Level Product Group: Contains other product groups, forming

a hierarchical relationship. The lowest level in this hierarchy always
contains materials.

For example, a product group called iPhone X could contain different

variants of the iPhone with varying colors and features, which would
represent a single-level product group. In contrast, grouping multiple
iPhone models into a larger product group forms a multi-level product
group.

At the fictional SuperGears AG, product groups are used for planning and
forecasting production, capacity, resources, and budgeting.

Here is a step-by-step guide on how to create a product group in SAP:

Steps to Create a Product Group in SAP

1. Accessing the Product Group Creation Screen

o You can create a product group by navigating through:

 Logistics ➤ Production ➤ SOP ➤ Product Group ➤

Create.

o Alternatively, use Transaction Code MC84 to open the product

group creation screen directly.
🔍 Expand🔗 New Tab

1. Entering Initial Product Group Details

o On the initial screen, enter the following details:

 Product Group Name: Assign a unique name to identify

the product group, such as Constant Mesh Gear Box.

 Description: Provide a description to help identify the

purpose of the product group.

 Plant: Specify the plant where this product group will be

used.

 Base Unit of Measure: Define the unit of measure for the

product group (e.g., pieces or kilograms).

 Member Elements: Decide if the members of the product

group will be materials or product groups.
🔍 Expand🔗 New Tab

1. Assigning Materials to the Product Group

o After providing the basic details and pressing Enter, you will see
the screen where you need to specify the materials that belong
to this product group.

o Enter the material codes for the materials you want to include
in the group. You will also need to define the proportional
factor for each material.

o For instance, if you include two materials—

CM_GEARBOX and CM_GEARBOX_01—you could assign each
a proportional factor of 50%. This means each material will
contribute 50% to the overall product group production plan.

2. Visualizing the Product Group Hierarchy

o You can click on the Hierarchy Graphic button to see a visual

representation of the product group and its members. This allows
you to easily understand the structure of the group and its
constituent materials or sub-groups.
🔍 Expand🔗 New Tab

1. Calculating Proportional Factors

o The system also allows you to automatically calculate

proportional factors based on historical data.

o To do this, use the following navigation:

 Logistics ➤ Production ➤ SOP ➤ Product Group ➤

Calculate Proportional Factors.

o Alternatively, you can use Transaction Code MC8L to

automatically calculate the proportional factors.

o You can also choose More ➤ Edit ➤ Distribute Proportional

Factors if you prefer to adjust the proportional factors manually
for each material or product group.
🔍 Expand🔗 New Tab

Conclusion

Creating a product group in SAP is a crucial step for simplifying production

planning for similar products. Whether you need a single-level product
group for similar materials or a multi-level product group for grouping
multiple product groups, this tool helps streamline planning and enhance
efficiency. By specifying the key parameters, such as materials and
proportional factors, you can ensure that production aligns with demand
forecasts and available resources, making the entire planning process more
efficient and goal-oriented.

What is Demand Management in SAP PP?

Demand management in SAP PP is a crucial planning tool that enables

businesses to forecast and manage material demands efficiently. It
bridges Sales and Operations Planning (S&OP) and Material
Requirements Planning (MRP) by determining quantities and delivery
timelines for finished goods or assemblies. Inputs from S&OP feed into
demand management, which in turn provides outputs to Master
Production Scheduling (MPS) and MRP.

Components of Demand Management in SAP PP

Demand management operates using two primary components, which form

the basis for production planning and scheduling:

Component Description

Planned Forecasted demands for materials or product

Independent groups created manually or derived from S&OP.
Requirements Used mainly in Make-to-Stock
(PIRs) (MTS) scenarios.

Actual customer demands in the form of sales

Customer
orders or scheduling agreements. Used
Requirements
in Make-to-Order (MTO) scenarios.

This table highlights the distinction between forecasted demands (PIRs) and
actual demands (customer requirements), helping organizations differentiate
between production strategies like MTS and MTO.

Planned Independent Requirements (PIRs)

PIRs are demand forecasts for materials or product groups and include
desired quantities, planning horizons, and requirement dates. They can be
defined in daily, weekly, or monthly buckets and are crucial for long-term
production planning. PIRs can be created manually or transferred from S&OP.

Field Description

Desired Specifies the quantity required during the planning

Quantity period.

Period Defines the time bucket (e.g., daily, weekly, monthly)

Indicator for demand.
 Field Description

Requirement
Indicates when the demand is needed.
Date

Planning
Specifies the range of dates for which PIRs are valid.
Horizon

Creating Planned Independent Requirements (PIRs)

To create a Planned Independent Requirement (PIR) in SAP, navigate

to: Logistics ➤ Production ➤ Demand Management ➤ Planned
Independent Requirements ➤ Create, or use Transaction Code MD61.

🔍 Expand🔗 New Tab

Enter the material or product group, plant, planning horizon, and planning
period (daily, weekly, or monthly). PIRs include desired quantity, period
indicator, requirement date, and planned quantity. Existing PIRs from S&OP
can be reviewed and split into smaller buckets via the Schedule Lines view.

Scheduling PIRs

PIRs can be created in monthly buckets but may need to be split into weekly
or daily schedules for better accuracy. This ensures realistic demand
representation and alignment with production capacities.

PIR
Period Schedule Lines
Quantity

June Week 1: 250, Week 2:

1000
2022 250, etc.

July Week 1: 300, Week 2:

1200
2022 300, etc.

The table illustrates how a monthly PIR (e.g., 1000 units for June) can be split
into weekly schedule lines, enabling precise demand planning. This
breakdown is essential for aligning production with actual operational
timelines.

Customer Requirements

Customer requirements represent actual customer demand received

as sales orders or scheduling agreements. These requirements are
entered directly into the system using Transaction Code MD81 and are
used primarily in Make-to-Order (MTO) scenarios.

Requirement
Description Scenario
Type

Forecasted demand for materials or Make-to-

PIR (MD61)
product groups. Stock (MTS)

Customer Actual demand from customers in Make-to-

Orders sales orders or agreements. Order (MTO)
This table differentiates PIRs and customer orders, showing how each aligns
with different production strategies (MTS vs. MTO). PIRs forecast general
demand, while customer orders drive specific, customer-focused production.

Splitting and Adjusting PIRs

PIRs created in broader time buckets (e.g., monthly) can be split into smaller
buckets for better alignment with production schedules.

Original Period Split Period Resulting Quantities

June 2022 Weeks 1, 2, 3, 4 Week 1: 250, Week 2:

(Monthly) (Weekly) 250, etc.

This table demonstrates how monthly PIRs can be divided into weekly or
daily schedules. Such granular adjustments ensure production is planned
with precision, reducing inventory and meeting operational needs effectively.

Conclusion

Demand management in SAP PP is pivotal for balancing supply with

demand. By leveraging Planned Independent Requirements (PIRs) for
forecasted demand and Customer Requirements for actual orders,
businesses can optimize production strategies like Make-to-Stock
(MTS) and Make-to-Order (MTO). Properly scheduled and split PIRs further
ensure alignment with real-world capacities and timelines, enabling
streamlined production planning.

Planned Strategies in SAP PP

Planning strategies in SAP PP define the approach to planning and

manufacturing a material. They determine how materials are produced,
whether based on forecasts (Make-to-Stock) or customer requirements
(Make-to-Order). These strategies govern the interaction between sales
and production, influencing how independent requirements are consumed by
sales orders and how warehouse stock is utilized during the Material
Requirements Planning (MRP) run.

Different Planned Strategies in SAP PP?

Planning strategies are categorized based on the production approach:

Planning
Description Examples
Type

Production is based on forecasts and

Make-to- Strategies
inventory is used to fulfill customer
Stock (MTS) 10, 40
orders.

Make-to- Production is triggered by customer Strategies

Order (MTO) orders and is unique to each sales order. 20, 50

Assembly- Combines MTS and MTO; sub-

Strategies
to-Order assemblies are forecasted, and final
81, 82
(ATO) assembly is done upon order receipt.

This table provides a clear differentiation between the types of planning

strategies, aligning them with business scenarios. For instance, MTS works
well for standard products, while MTO suits customized orders.

Make-to-Stock Strategies

In Make-to-Stock (MTS), production is initiated based on planned

independent requirements (PIRs), and customer orders are fulfilled from
inventory.

Strateg
Key Features
y

Pure MTS; customer orders don’t influence production plans.

Strateg
PIRs drive production, and stock is consumed during
y 10
delivery.

Strateg MTS with final assembly; customer orders consume PIRs,

y 40 enabling dynamic planning adjustments.
🔍 Expand🔗 New Tab

For Strategy 10, production is based entirely on forecasts. For instance, if

the PIRs for a month total 300 units and the stock is 200, a planned order for
100 units will be generated to cover the shortfall. In contrast, Strategy
40 adjusts PIRs dynamically based on customer orders, ensuring demand
flexibility.

Make-to-Order Strategies

In Make-to-Order (MTO), production is initiated only after receiving

customer orders. Each sales order creates specific stock and requirements.
 Strateg
Key Features
y

Strateg Each sales order is unique; production is directly linked to

y 20 the sales order. Stock is displayed as sales order stock.

Strateg PIRs drive the procurement of components, but final

y 50 assembly is triggered only after receiving a sales order.

For example, in Strategy 20, sales orders generate planned orders directly
tied to the requirement. Once goods are produced, the stock is assigned to
the sales order instead of being added to unrestricted inventory. Strategy
50 ensures that lower-level components are prepared in advance, while the
final assembly is postponed until a customer order arrives, reducing lead
times for customized products.

Planning with Final Assembly (Strategy 40)

Strategy 40 is widely used in industries that require flexible production

planning. Customer orders consume PIRs, dynamically adjusting demand. For
instance, if 300 units are forecasted but only 250 are ordered, the extra 50
units are added to stock. Conversely, if demand exceeds the forecast, the
system generates additional planned orders.
🔍 Expand🔗 New Tab

Scenario Action

Demand <
Excess stock is retained in inventory.
Forecast

Demand > New planned orders are created to meet additional

Forecast demand.

This approach enables businesses to react quickly to customer needs while

maintaining efficient stock levels.

Benefits of Planning Strategies

Planning strategies in SAP PP enable businesses to tailor production

processes to their operational requirements. Key benefits include:

1. Flexibility: Supports both standardized (MTS) and customized (MTO)

production.
 2. Efficiency: Optimizes stock utilization and reduces lead times.

3. Scalability: Combines multiple strategies for complex manufacturing

scenarios.

For example, a company may use MTO (Strategy 50) for final assembly
while adopting MTS (Strategy 10) for sub-assemblies, balancing
customization with production efficiency.

Planning strategies are the backbone of demand management in SAP PP,

ensuring seamless integration between sales and production processes. They
provide a structured approach to meeting both forecasted and customer-
driven demands, enhancing operational agility and accuracy.

What are Planned Orders in SAP PP?

Planned orders are essential components of SAP Production Planning (PP).

They represent procurement proposals generated during the Material
Requirements Planning (MRP) process or created manually to meet material
requirements for in-house production. This guide provides an in-depth
understanding of planned orders, including their creation, functionality, and
usage in production planning.

In this SAP PP tutorial, you will learn about Planned Orders in SAP PP,
their creation, scheduling, components overview, and conversion for efficient
production planning. Simplify material management and ensure accurate
manufacturing execution

What is a Planned Order in SAP PP?

A planned order in SAP PP is a request for the procurement or production

of materials. It includes details such as:

 Material: The product to be produced.

 Quantity: The amount to be produced.

 Production Dates: Planned start and end dates.

Key Characteristics
 1. Procurement Proposal: Planned orders are not directly executable
for production but must be converted into production orders for
discrete and process industries.

2. Repetitive Manufacturing: In repetitive manufacturing, planned

orders with the PE Run-Schedule Quantity order type are directly used
for production execution and cannot be converted to production orders.

Planned Order Creation

Planned orders can be created automatically by MRP or manually by the user.

1. Manual Creation

To create a planned order manually:

 Navigate to Logistics ➤ Production ➤ MRP ➤ Planned Order ➤

Create or use Transaction Code MD11.

 Specify a planned order profile, which defines parameters like order

type, procurement type, and account assignment category.
🔍 Expand🔗 New Tab

Order Types Table

Procuremen Special Account

Profi Procureme
t Proposal Procureme Assignmen
le nt Type
Type nt Type t Category

Standard
In-house
KB purchase Standard General
procurement
order

Individual Special
External Customer-
KD customer customer
procurement specific
order orders

LA Stock order External Standard General

 Procuremen Special Account
Profi Procureme
t Proposal Procureme Assignmen
le nt Type
Type nt Type t Category

procurement

Structure of a Planned Order

Planned orders are divided into three key views: Header, Assignment,
and Master Data.

1. Header View

The header contains three main sections:

 Quantities: Specifies order quantity and scrap quantity.

 Dates/Times:

o Basic Dates: Calculated using in-house production time.

Accuracy is to the day.

o Production Dates: Calculated via lead time scheduling with

accuracy to minutes/seconds, based on routing times like setup,
processing, and queue times.

o Opening Date: Defines the buffer period for converting planned

orders to production orders.

o Goods Receipt (GR) Processing Time: Includes the time for

inspecting and storing materials after production.
🔍 Expand🔗 New Tab

2. Assignment View

Details responsibilities and account assignments:

 Responsibility: Includes the MRP controller, production supervisor,

and purchasing group.

 Account Assignment:
 o Specifies the cost object, such as a cost center or sales order.

o Indicates special stock types like consignment stock or WBS

elements in an engineer-to-order scenario.

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3. Master Data View

Displays data from the material master and BOM:

 Material Master: Includes MRP-relevant fields like procurement type

and lead time.

 Bill of Material (BOM): Exploded based on the production version

specified in the planned order.
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Scheduling a Planned Order in SAP PP

Scheduling a planned order calculates production dates and times based on

routing. If basic scheduling was executed during the MRP run, you can
manually schedule or reschedule the order by selecting the Schedule
Planned Order option. The system applies lead time scheduling to
determine accurate production dates and times, considering routing
elements like setup, processing, and queue times.

Rescheduling is also possible if the order had been previously scheduled

manually or during an MRP lead time scheduling run, ensuring the latest
production dates are calculated

Conclusion

Planned orders in SAP PP are foundational for bridging the gap between
material planning and production execution. Whether generated manually or
automatically through MRP, they provide flexibility and precision in
production planning.
Understanding their structure, creation, and management ensures smooth
production processes and optimal material utilization. Proper configuration,
such as defining order profiles and firming strategies, enhances their
effectiveness in diverse manufacturing environments.

How to Convert a Planned Order to a Production Order in SAP?

In SAP Production Planning (PP), converting a planned order to a

production order is a critical step in transitioning from planning to
execution. Planned orders, which are procurement proposals generated
during Material Requirements Planning (MRP), represent a blueprint for
production. To begin manufacturing, these planned orders must be converted
into production orders, which serve as actionable instructions for shop floor
operations.

This PP tutorial explores the various methods available in SAP PP for

converting planned orders to production orders, providing step-by-step
guidance to help streamline your production processes and ensure accurate
data transfer.

Conversion Methods

SAP PP provides multiple ways to convert a planned order into a production

order:

1. Stock Requirement List Conversion

The Stock Requirement List Conversion method in SAP PP is a

streamlined process used to convert planned orders into production orders
directly from the Stock Requirement List. This real-time planning tool
provides a comprehensive view of all supply and demand elements for a
material, including planned orders, production orders, purchase requisitions,
and inventory levels.

Key Features

 Real-Time Integration: Updates dynamically to reflect the current

status of supply and demand.

 Direct Conversion: Allows users to select and convert planned orders

into production orders with minimal steps.
  Data Consistency: Automatically copies all relevant details from the
planned order to the production order, such as material, quantity, and
production dates.

How it Works Step by Step.

1. Navigate to the Stock Requirement List and locate the desired

planned order.

2. Double-click the planned order and click the Prod. Ord. button to
initiate conversion.

3. All planned order details, including material, quantity, and production

dates, are automatically copied to the production order.

4. The system stores the planned order number in the production order to
maintain a 1:1 relationship.

5. Note: Once converted, the planned order is permanently deleted from

the system and cannot be accessed via transaction
codes MD04, MD12, or MD13, or in the PLAF table.

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2. Individual Conversion

1. Navigate to: Logistics ➤ Production ➤ MRP ➤ Planned Order ➤

Convert to Production Order ➤ Individual Conversion or
use Transaction Code CO40.

2. Enter the planned order number and specify the production order type.
 3. Partial Conversion: If only a portion of the planned order quantity
needs conversion, activate the Partial Conversion indicator.

4. Click Continue and save the production order to generate a

production order number.

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3. Collective Conversion

1. Navigate to: Logistics ➤ Production ➤ MRP ➤ Planned Order ➤

Convert to Production Order ➤ Collective Conversion or
use Transaction Code CO41.

2. On the initial screen, specify selection parameters such as:

o Planning plant

o MRP controller

o Opening date
🔍 Expand🔗 New Tab

3. The system displays a list of planned orders, showing key details like
material, order quantity, and production dates.

4. The MRP controller can:

o Manually select planned orders

o Use the Select All button for batch selection

5. Click the Convert button to finalize the conversion. Production order

numbers are updated for the converted orders.

Summary

Converting planned orders into production orders is a vital step in SAP PP for
initiating manufacturing processes. Whether performed individually or
collectively, SAP offers flexible methods to accommodate production needs.
The ability to copy planned order details into production orders ensures data
consistency, streamlining production planning and execution.

What Is Capacity Requirement Planning (CRP) SAP PP ?

Capacity Requirement Planning (CRP) is a vital process in SAP Production
Planning (PP) that ensures work centers have the necessary capacity to meet
production demands. By evaluating and optimizing work center capacities,
CRP helps organizations identify underload or overload situations and resolve
bottlenecks to maintain smooth production workflows.

What Is Capacity Requirement Planning (CRP)?

CRP is performed after the Material Requirements Planning (MRP) run to

assess and balance the load across work centers. It involves:

1. Capacity Evaluation: Checking if a work center has sufficient

capacity to handle all planned production orders based on scheduled
dates.

2. Capacity Leveling: Adjusting order schedules or quantities to

distribute workloads evenly and prevent overloads.

The ultimate goal of CRP is to optimize the utilization of work center

capacities while minimizing production delays.

Key Components of Capacity Requirement Planning

1. Available Capacity

The available capacity of a work center is the foundation for capacity

planning. It is calculated based on several factors maintained in
the Capacity View of the work center master data:

1. Operating Time: Start and end times of work center operations.

2. Break Durations: Scheduled breaks that reduce effective working

hours.

3. Capacity Utilization: The percentage of time a work center is

effectively used.

4. Individual Capacities: The number of units (e.g., machines or

employees) available to perform operations.

The factory calendar assigned to a work center determines the working

days. If a specific calendar is not assigned, the system uses the plant’s
factory calendar. Organizations can also define capacity intervals for specific
time periods to account for seasonal or shift-based variations.

2. Capacity Evaluation

This process involves analyzing the capacity situation of a work center to

ensure it can meet the requirements of all planned orders. The system
compares the total load from production orders, planned orders, and other
requirements with the available capacity. If a work center is overloaded,
adjustments must be made to avoid production delays.

3. Capacity Leveling

Capacity leveling distributes the workload in a linear or balanced fashion

across the available time periods of a work center. This process ensures:

 Overloaded work centers are relieved by rescheduling orders or

reducing order quantities.

 Underutilized work centers are optimized to handle more workload.

Capacity leveling can be performed manually or automatically in SAP,

depending on the complexity of the production scenario.

Transactions Codes for Capacity Evaluation

SAP offers several transactions to evaluate capacity at a detailed level:

 CM01 (Load): Displays the load on the work center, showing planned
and actual capacity requirements.

 CM02 (Orders): Lists the orders contributing to the capacity load,

providing order-specific details.

 CM03 (Pool): Displays capacity requirements for a group or pool of

work centers.

 CM04 (Backlog): Highlights overdue orders that have exceeded their

scheduled dates.

 CM05 (Overload): Focuses on identifying and managing capacity

overload situations.
Example: Calculating Available Capacity

Imagine a factory operates three shifts from 6:00 AM to 6:00 AM the next
day, with a total break of 2 hours and 15 minutes. If the factory calendar
specifies 5 working days per week:

1. Operating Time: 24 hours/day – 2.25 hours (breaks) = 21.75

hours/day.

2. Capacity Utilization: If utilization is 90%, effective capacity = 21.75

× 90% = 19.575 hours/day.

3. Number of Capacities: If the work center has 3 machines, total

capacity = 19.575 × 3 = 58.725 hours/day.

Benefits of Capacity Requirement Planning

1. Optimal Utilization: Maximizes work center efficiency and minimizes

idle time.

2. Bottleneck Resolution: Identifies and mitigates overload situations.

3. Improved Scheduling: Aligns production schedules with available

resources.

4. Enhanced Planning Accuracy: Provides data-driven insights for

better production management.

By leveraging tools for capacity evaluation and leveling, organizations can

ensure their production processes are efficient, timely, and aligned with
business goals.

Production Order Cycle in SAP PP

The Production Order Cycle in SAP PP represents the series of steps

involved in managing and executing a production order, from creation to
completion. It ensures efficient production planning and control while
optimizing resource utilization and maintaining data accuracy.

Production Order Cycle in SAP PP

🔍 Expand🔗 New Tab

1. Order Creation

At this stage, the production order is created based on planned orders, sales
orders, or other triggers. Key activities include:

 Availability Check: Ensures required materials, components, and

resources (e.g., machines and tools) are available.

 Machine Reservation: Reserves the necessary work center resources

to prevent scheduling conflicts.

Objective: To create a foundation for executing production while ensuring all

resources are accounted for.

2. Order Release

Once the production order is reviewed and approved, it is released for

execution. This step activates subsequent processes and enables shop floor
activities. Key activities include:

 Print Order: Generates production documentation (e.g., job cards or

instructions).

 Material Staging: Ensures all components and materials required for

production are staged at the designated locations.

Objective: To prepare the order and materials for execution on the shop
floor.

3. Component Issue
This step involves issuing components or materials to the production order.
The system reduces inventory quantities as materials are consumed.
Methods include:

 Manual Issue: Materials are manually issued to the order by posting

goods movement.

 Automatic Issue (Backflush): Materials are automatically deducted

from inventory based on predefined rules during production
confirmation.

Objective: To ensure the production process has all necessary inputs.

4. Order Confirmation

At this stage, production is confirmed upon completion of tasks at each

operation. Key activities include:

 Work-In-Process (WIP) Calculation: Tracks partially completed

goods to evaluate progress and costs.

Objective: To confirm production progress and calculate associated costs

accurately.

5. Goods Receipt

Once production is complete, the finished goods are received into inventory.
Key activities include:

 Variance Calculation: Compares planned costs with actual

production costs.

 Order Settlement: Allocates costs to appropriate cost centers or

accounts.

 Order Archiving: Closes and archives the production order after

settlement.

Objective: To finalize production and record the finished product in

inventory.

Summary of the Production Order Cycle

 Stage Key Activities Objective

Order Availability check, machine Prepare resources

Creation reservation for production

Authorize and
Order
Print order, material staging prepare for
Release
execution

Component Manual/automatic material Provide required

Issue issue inputs to production

Order Confirm production, calculate Track progress and

Confirmation WIP costs

Record finished goods, Finalize production

Goods
variance calculation, and update
Receipt
settlement inventory

This structured cycle ensures seamless coordination between planning,

execution, and reporting, making production management efficient and
transparent for users.