Learning SAP: PP

Ronald S. Lau, Ph.D.

HKUST ISOM

Learning Objectives

Create the basic master data required for production planning and
management
Describe the production planning and execution process

Material Master

Material master

Used by all SAP logistics applications (SD, MM, PP)

Control whether a material is sold, purchased, or manufactured

Views must be maintained when using PP applications:

Basic data view contains general data such as material number,

description, etc., that is applicable to the entire organization and
is stored in the client level
MRP view contains plant-specific data used in the planning of
materials for production or procurement
Work scheduling view contains plant-specific data used in the
scheduling of materials for production

Bill of Material

Bill of materials (BOM)

Structured list of the components that make up a product or

assembly, together with the quantity and unit of measure

Low level code

Automatically assigned to each material when creating a BOM

Determine the sequence in which materials are planned
Determine product costing (i.e., how costs are rolled up)
Take into account that a material may be used in multiple
products and on multiple production levels of one product

Example: Bicycles List of Components

Frame

Pedal kit

Brake kit

Front wheel

Front rim
Front tire
Front tube

Saddle

Post
Seat
Clip

Handle bar

Bell
Clasp
Handle

Rear wheel

Rear rim
Rear tire
Rear tube
Gear
5

Single Level vs. Multi Level BOM

Single-Level

Finished Bike
Single-Level

Single-Level

Single-Level

Single-Level

Rear
Wheel

Front
Wheel

Handle
Bars

Saddle

Rear
Rim

Front
Rim

Bell

Bell

Rear
Tire

Front
Tire

Clasp

Clasp

Tube

Tube

Handle
Bar

Handle
Bar

Frame

Pedal

Multi-Level BOM

Brake

Gear

BOM for material P-109

Use the material BOM

browser to display a
product structure [CSMB]

Work Center

A work center is where an operation or activity is carried

out within a plant

Basic data

Default values

Capacity data

Scheduling
data

Costing and
HR data

Name and description

Standard control key (e.g., setup and labor parameters)
Control key (data defaulted to the operation in the routing)
Wage data
Available capacity
Formula keys control how the available capacity at the work center
is calculated
Basis for scheduling
Queue and move time
Formula keys which capacity is used for scheduling and calculation
Cost center
Activity types
Formula keys
9

10

Routings

Basic information:

What: Operations to be performed

How: Instructions and sequence of operations
Where: Work centers involved
When: Timing of operations

11

Example: Bicycle's Routings

Operation
Work Center

Plant

Description
Control Key

Activity Type

Time and Unit of Measure

12

Routings and BOM

Routing

BOM

Oper. 10

Front Wheel

Oper. 20

Rear Wheel

Oper. 30

Frame

Products arrive at the

beginning of the operation
to which they are assigned
Op.
10

Saddle

Front
Wheel

Oper. 40

Handle Bars

Oper. 50

Rear
Wheel

Pedals

Frame

Pedals

Op.
20
Saddle

Op.
30
Handle
Bars

Time

Component assignment in routing

13

Routings for material P-109

14

Common Production Processes

Make-to-stock

Make-to-order

Customized items produced to meet specific customer orders

Assemble-to-order

Items produced in anticipation of orders

Mass production system for standardized products

Final product assembled from standard components

Common production planning questions:

How much of each product should be produced?

What quantities of raw materials should be ordered?
When should raw materials be ordered?
15

Why an Integrated System is Needed for

Production Planning and Management?

Enhanced data sharing

Minimized inventory

Marketing does not share data with production (sales

promotions and large, unexpected orders)
Key to effective supply chain planning and management

True inventory status

Real-time data on actual sales

Better accounting and control data

Raw material and labor costs

Actual vs. standard costs comparison

16

Production Planning and Execution Process

Purchase
Order
Purchase
Requisition

Convert Production
Proposal
Schedule
Procurement
and Release
Process
Run MPS
Goods
w/MRP
Issue

Sales Order
Entry

Receipt of
Payment

Check
Availability

Production
Process
Quality

Sales Order
Pick Inspection
Process Materials

Completion
Confirmation

Order
Settlement

Invoice
Customer

Goods
Receipt

Invoice
Receipt

Payment
to Vendor

Goods
Receipt

Post Goods
Issue
17

Process Integration: SD-PP-MM

Purchase
Order
Purchase
Requisition

Convert Production
Proposal
Schedule
Procurement
and Release
Process
Run MPS
Goods
w/MRP
Issue

Sales Order
Entry

Receipt of
Payment

Check
Availability

Production
Process
Quality

Sales Order
Pick Inspection
Process Materials

Completion
Confirmation

Order
Settlement

Invoice
Customer

Goods
Receipt

Invoice
Receipt

Payment
to Vendor

Goods
Receipt

Post Goods
Issue
18