enterprise structure of sap production planning

Plant
A plant is an organizational unit within the logistics component. You can classify
a plant from the point of view of production, procurement, maintenance, warehou
and planning. For example, the plant can be a manufacturing site, a head
office, or a distribution center within a company. It organizes the tasks for the
production logistics, and it can be a physical production site or the logical grouping
of several sites in which materials are produced or goods and services are provided
Different production locations are mapped with the plant in the SAP ERP
system. At the plant level, you can perform the following tasks:

>>> _x0002_ Managing inventory

>>> _x0002_ Evaluating and performing physical inventory of stocks
>>> _x0002_ Managing demand
>>> _x0002_ Planning production
>>> _x0002_ Executing and controlling production
>>> _x0002_ Performing material requirements planning (MRP)
In the organizational structure of the SAP ERP system, you can assign only one
company code to a plant. However, you can assign multiple plants to the same
company code.
To create a new plant or to make changes to the existing
(Transaction SPRO) menu path>>> Enterprise Structure >
Logistics General >>>_x0002_ Define, Copy, Delete, Chec
available).
After the creation of the plant, the next step is to assign the plant to the company
code. A plant can only be assigned to one company code, and you can assign multip
plants to the same company code. It’s mandatory to assign a plant to a company
code.

Assign Plant to Company Code,

To make a plant–company code assignment, follow the configuration menu path,
Enterprise Structure _x0002_ Assignment _x0002_ Logistics – General _x0002_ Ass
Company Code, or use Transaction OX18

Storage Location
A storage location is the physical or virtual storage site for the materials
of physical storage locations include raw materials store, components st
returned goods store, finished goods store, and so on, whereas the virtu
location can be self-defined and may be a scrap yard or a production sho
which semifinished goods are temporarily stored.
 You can even treat storage tanks or silos for storing bulk chemicals, oils,
as storage locations in the system. However, the limitation is that a stor
in the SAP ERP system doesn’t have the provision to define the maximum
storage capacity of an individual tank or silo. This provision is available in
ERP Warehouse Management (WM).
You can create as many storage locations as needed within a plant, but y
assign a storage location to one plant only.
To create a new storage location or to make changes to the existing sto
follow the configuration (Transaction SPRO) menu path>>> Enterprise
_x0002_ Definition >>>_x0002_ Materials Management >>>>_x0002_ M
use Transaction OX09

Material Requirements Planning Controllers

An MRP controller can be an individual role or group of roles, performing the
same task. For example, if three people in a company manage the packaging
materials procurement, then it makes sense to define one MRP controller for this.
The MRP controller is primarily responsible for attending to the requirements of
 materials. When defining the MRP controller, focus must remain on making sure
it’s defined based on responsibility, role, or area of working, instead of individuals.
For example, you may have one MRP controller who is responsible for raw
materials only, while another one may be for packaging material. You may have
an MRP controller who is only responsible for managing consumables.
The MRP controller is assigned in the MRP 1 view of the material master.
When you select the relevant MRP type in the material master by indicating

that planning will be done on the material, the system prompts you to enter
the MRP controller. Again, the MRP controller should be based on position or
responsibility rather than on the person. Later, when you run several reports,
you’ll be able to use the MRP controller as a selection criterion, among others.
To configure the MRP controller in SAP ERP, follow the co
SPRO) menu path>>>> Production>>> _x0002_ Material R
Data>>> Define MRP Controllers.

Note
MRP controllers are extensively used by both production and procurement departments
and the corresponding PP and MM components, respectively. MRP controllers for procurement
may be raw materials, packaging materials, consumables, or spare parts. MRP
controllers for production may be finished goods, semifinished goods, or assemblies.
The two teams (PP and MM) must coordinate in finalizing production and procurement
MRP controllers because the bifurcation of PP and MM MRP controllers (including its
transaction code) isn’t obvious. It’s best to mutually agree and make them available in
the system.

Capacity Planners
A capacity planner or capacity planner group is responsible for evaluating the current
work center’s or resource’s capacity and, if needed, also performing the
capacity leveling. When you create a new work center, you also have to assign the
person responsible in a specific field. The capacity planner can also handle the
role of person responsible for the work center. For example, it may make sense to
combine all of the packing units of similar products as one capacity planner if the
same person is responsible for it. If a company produces 10 different sizes of
tomato ketchup—from a packet to a gallon size—and the same capacity planner is
responsible for ensuring that various machines’ capacities for each packing size
are available, then you can simply agree to have one capacity planner in the SAP
ERP system, together with its code.
The capacity planners are assigned in the capacity header data of the work center
(resource). Then, in all the capacity evaluation and leveling reports, the capacity
planner is available as the selection criterion for the planner to choose from and
enables the system to display only relevant information.
To create a capacity planner, follow the configuration (Transaction SPRO
path>>>Production >>>_x0002_ Capacity Planning>>> Master Data >>>
Capacity Planner

Production Schedulers
A production scheduler is responsible for ensuring that production execution and
operation takes place per the production plan. The production scheduler immediately
attends or takes immediate remedial action, where necessary. To define a
production scheduler, follow the configuration (Transaction SPRO) menu path,
Production _x0002_ Shop Floor Control _x0002_ Define Production Scheduler, or use
Transaction OPJ9

Production Planning in SAP ERP

Production planning is the core of any manufacturing process. SAP ERP helps you
set up and streamline your specific process to maximize efficiency in the workplace
when working with different types of manufacturing
Actually, you’ll find that the SAP ERP system is made up of several different compo
in addition to PP ,

sap fi
sap co
sap mm
sap sd
 sap wm
sap qm
sap pm
sap ps
sap hcm

In general, the entire process of production planning and control starts when
you forecast the demand of a product and prepare a sales plan. The sales plan is
synchronized with a production plan to take the project realities into account,
such as capacity constraints. Various simulated models are considered, and the
finalized production plan becomes the basis of MRP. Materials planning helps
the production and the procurement planners know when to procure and produce
a material for its eventual availability and dispatch to the customer. The
production execution accounts for and records each production detail, including
generation of scrap, co-products, or by-products, if any. Quality checks in the
production processes ensure minimal customer returns or other rejections. The
produced product is sold to a customer, and the production plan continues to be
a monitoring barometer against the sales plan.
Of course, this information is great for providing a bird’s-eye view of the production
planning process. We’ll help you understand how the individual objects you
have to work with in the SAP system help streamline and manage your business
processes in the following sections.
PP includes the following types and tools:

_x0002_ Master data

This includes the material master, work centers, resources, production lines,
routings, master recipe, rate routing, bill of materials (BOM), and production
version.
Sales and operations planning (S&OP)
You can use standard S&OP or flexible planning to forecast sales and production
plans to meet customers’ requirements for products.

_x0002_ Production Planning

This includes material forecasting, SAP Demand Management, Long-Term
Planning (LTP), and Master Production Scheduling (MPS).
_x0002_ Material requirements planning (MRP)
This attends to standard and unique customers’ requirements via various planning
and production methods.
_x0002_ Discrete manufacturing or shop floor control (SFC)
Production orders processing, goods issuances and receipts, and confirmations
are used for complex manufacturing processes in which there may be a need
for intermediate or interim storage.
_x0002_ Process manufacturing or Production Planning for Process Industries (PP-PI)
Process orders processing, Process Management, material quantity calculation,
goods issuances and receipts, and confirmations are used for production processes
of liquid-based or flow-based materials.
_x0002_ Repetitive manufacturing (REM)
This adopts the lean manufacturing principle in which generally the production
process is not only simple but also consistent over a considerable period of
time.
_x0002_ Capacity requirements planning (CRP)
This consists of capacity evaluation and capacity leveling. Capacity evaluation
reflects the load and overload at work centers/resources, whereas capacity leveling
helps the planner optimize the production processes.
_x0002_ Product Costing (CO-PC)
This completely integrates with PP and is responsible for ensuring all production-
related costs are accounted for, including overheads, variances, and work
in process (WIP).
_x0002_ Kanban
This production type replenishes stocks based on a pull system by using Kanban
cards. Kanban works well for both in-house produced materials and outside
procured materials.
_x0002_ Distribution resource planning (DRP)
This enables planning the demand of products at distribution centers.
_x0002_ Reporting
A large number of information systems and standard and flexible analysis
reporting options are available in PP.

In the following sections, we’ll cover the features and characteristics of various
production types as well as important business processes in production planning
and control.

Characteristics of Production Types

A production type characterizes the frequency, complexity, or stability with which
a product is produced in the production process. When implementing an SAP
ERP system, one of the very first decisions a company makes is which production
type to implement to reflect the complexity (or simplicity) of the production process.
For example, if the production process is relatively simple with a linear production
line involving one operation and one work center, then it makes sense to
implement the REM production type to enable the company to benefit from lean
manufacturing. Similarly, the process manufacturing production type is more
suited to scenarios in which the product is generally in liquid form and flows or
where the manufacturing process is generally continuous. The discrete manufacturing
production type is used where the production process is order based,
involves special procurement types, or when products are stored in interim storage
locations between the production processes. Kanban is a demand-driven production
type in which the demand triggers the replenishment and initiates the
supply process. This production type enables minimal involvement of the Inventory
Management function.
 We discuss each of the main production types in the following sections. While
this book will primarily cover discrete, process, and repetitive production types,
this sections also briefly covers engineer-to-order (ETO) and Kanban to provide a
comprehensive look at production types.

1.. Discrete Manufacturing

The discrete manufacturing production type, which is also known as shop floor
production, describes the production of a product on the basis of production
orders. Discrete manufacturing is implemented where the products change frequently,
the demand pattern is irregular, and production is workshop oriented in
character. A range of master data is required for discrete manufacturing; the most
important are the material, BOM, work center, and routing.

Example
In steel rerolling mills, the entire production process passes through five different production
steps. However, customers can place orders based on a different level of the
processed good. Hence, the company has to produce and also store a semifinished good
at each production step to meet its customer’s demand.

The production process in discrete manufacturing starts when a production order

is created and processed. A production order can either be created manually or by
converting a planned order that the system generated after running MRP. A production
order is a request to the production department to produce the product at
a specific time and in a specific quantity. It specifies the work centers and material
components that are required for production. The creation of a production order
automatically creates reservations for the required material components. Purchase
requisitions are created for externally procured material components and
services, and capacity requirements are created for the work centers at which
each operation of the order will be executed.

Discrete Manufacturing P
01..order creation>>02...scheduling >>03...availablity check>>> 04…capacity requirement pl
07..material withdrawal >> 08..confirmation>>>09..goods receipts>> 10..order settlement..1

Production orders are released on the release date as long as the required materials
and capacity are available. The production order-related documents (known as
shop floor papers) are printed to prepare for production execution. The capacity
situation is evaluated, and any required capacity leveling is carried out in any
phase of production order processing, although this is usually ensured before the
actual production starts.
The components required to produce the products are issued with reference to
the production order, the product is produced on the basis of the production
order, and the finished quantity is confirmed with reference to the production
order. The product is put into a storage location, and the goods receipt is posted.
Finally, the settlement of the production order is ensured.

2.. Process Manufacturing

Process manufacturing is the batch-oriented and recipe-oriented production of
products or co-products in the process industry. Manufacturing can be in the
form of continuous production, discontinuous production, or regulated production.
In continuous production, the product is continuously produced, raw material
is continuously supplied to the production line, and the plant and machinery are
in continuous operation. An example of this is fertilizer manufacturing, where
the production process is continuous, starting with production of ammonia from
natural gas (methane) and continuing until the final urea/fertilizer is produced.
The process may find an interim storage in the form of bulk urea being stored in
the warehouse before the bagging process starts.
In discontinuous production, the products aren’t produced in a continuous process.
Instead, the material components are provided and weighed out as required for
each step of the production process. Its greater application is found in industries
such as food processing.

Regulated production is used if the product quality requirements are very stringent
and specific industry standards must be met. This type of production is generally
followed in pharmaceutical or cosmetics manufacturing. In regulated production,
orders can be created only with approved recipes. If changes need to be made to
master recipes, these are subject to master data change administration procedures.

The central master data elements in process manufacturing are the material, the
BOM, the resource, and the master recipe.
The business process in process manufacturing starts when a process order is created
and processed in accordance with a master recipe. A process order is a
request to the production department to produce a product at a specific time and
in a specific quantity. It specifies the resource and material components that are
required for production.
A process order can be created either manually or when a planned order that was
created in the PP process is converted. The creation of a process order automatically
creates reservations for the required material components. The system automatically
creates purchase requisitions for externally procured material components
and services, and capacity requirements are created for the resources at
which the order will be executed. Process orders are released on the release date,
provided the required materials and capacity are available. At the time of release,
you can run an automatic batch-determination process for components that are
subject to a Batch Management requirement. The relevant documents in the process
order can be printed to prepare for the execution of the process order.

The capacity situation is evaluated, and any required capacity leveling can be carried
out in any phase of the process order processing, although this is usually
ensured before the actual production commences.
The actual production can now begin, with or without the use of Process Management.
If you implement Process Management to execute a process order, this
serves as the interface between the SAP ERP system and process control. The flexible
structure of this interface makes it possible to connect automated, semiautomated,
and manually controlled plant and equipment to the production process
Process Management makes extensive use of the classification system, which is
cross-component.
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