Why standard SAP PP is your best friend ?
SAP conceptualized and developed the most amazing Production Planning (SAP PP) product in the market. The product offers wide range of solutions for functions from Production Planning to Order Execution. Not to mention the incredible integration with other business functions like Sales & Distribution, Material Management, Finance & Controlling, Plant Maintenance, Quality Management etc. However it is quite common to see:
- Excel tools for Planning/Reporting etc
- External tools integrated with SAP for various purposes
- Users struggling to make best use of SAP PP standard product
- Non-optimal Inventory levels
Its probably a good idea to revisit the SAP PP solution you’re using. SAP PP is much more than order execution or backflush. In this blog I would highlight the main sub modules of SAP PP and how you can make the best use of these modules:
- Sales & Operation Planning (SOP): As the name suggests SOP can be used for Sales forecast and Production Planning. Historical, existing or estimated future data can be used to predict Sales, Production and thus components for medium to long term planning. Rough-cut planning can also be carried out to determine the amounts of the capacities and other resources required to meet these targets.
- Material Requirement Planning (MRP) : The importance of MRP cannot be emphasized enough. Do I need to mention ERP evolved from MRP with a motive of optimizing manufacturing process & inventory levels and integration with other business functions. It is of utmost importance to use correct MRP parameters & settings to achieve optimal Inventory levels, high customer satisfaction etc.
- Capacity Requirements Planning: This is another area which is extremely underutilized and underestimated. SAP’s Capacity Planning looks bit complex and chaotic at first. SAP has offered tons of transactions in this area however most of them doesn’t look good or even useful to the business. However I strongly vouch for CM25 for capacity planning. Start using CM25 for planning capacities or you can also consider other capacity planning tools from SAP offered as Consulting solutions.
- Order Execution: This is unarguably the most popular sub-module of SAP PP. A range of solutions like Discrete Manufacturing, Repetitive Manufacturing and Process Industry can be used as per business needs to control and monitor end-to-end production processes.
- Kanban : Based on Pull principle, Kanban can be used to replenish materials only when components or semi-finished assemblies are needed for production of higher level assemblies. Kanban can be used to replenish materials in small batches with low lead time. This results in optimized inventory levels and avoid overflow of components on the shop floor.
I would like to reiterate that SAP PP products are best of the breed and many of the sub modules are mostly underutilized. It is better to use SAP standard products instead of using external tools be it excel tools or other software integrated with SAP. Using Standard SAP PP offers additional benefits like
- Reduced/optimized Inventory levels leading to cost saving
- Saving on maintenance cost for other software
- Simplified architecture/Landscape due to less integration with external system
If you are looking for a solution which is not delivered in standard SAP PP then you might want to check SAP Consulting Solutions. SAP also delivers a wide range of Add-on tools which operate in Plug & Play mode and work seamlessly with your existing implementation.
Lastly, SAP does realize the vacuums in standard ERP products and is constantly releasing new products and tools with every release of S/4HANA suite to fill existing voids and also launching new and innovative products including new UX with Fiori Apps.
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That's a splendid piece of writing. I do appreciate expressing the importance of standard tools usage. I'm 100% with you that most SAP ERP implementations are underutilized and offer vast potential of improvement.
We could enhance the integration model that you have described towards strategic budgeting in CO-PA and towards simulative long-term planning. I especially value the latter as it allows you to analyze what-if scenarios and project stock levels and build purchasing budget as well as CO activities budges - all with standard SAP ERP tools, no cloud, no IBP, no SAC...
The only sad thing is that this functionalities rely heavily on LIS, which is being phased out of S/4HANA. So here our integration goes down the drain... and honestly there is no alternative offered yet.
Thanks a lot!
I agree there are many more advantages of using standard SAP which I have missed in this article.
Great! I think the same way as you and Dominik that all the functionality is very rarely used. I'd also like to add my other unsung hero. Master data. Basically the material master rules the world. 😉
Usually master data isn't set up to take advantage of things like planning. Yes, and there are other things besides the material master, like BOM, recipe, and many other pieces that need to be used for PP to work effectively.
You actually inspired me to write another blog. Pls check
One thing I would like to know on CM25 screen on green and blue blockd shown for capacity does it need to sperately configured or in standrd it is achievable? In standard I didn’t find it was shown with red and blue.
The colors of the supply elements (planned orders, production orders, process orders, maintenance orders, etc.) are set by SAP. They can be configured to different colors but that's not necessary.
By default SAP differentiates planned elements from scheduled elements by color. So for example, in discrete PP the planned orders are green and the production orders are blue/red. The blue represents the duration of the operation's "Setup" segment and the red represents the duration of the "processing" segment.
This is a very good article Himanshu. What a shame that most clients don't user SAP's PP module correctly! I think we are like-minded in this. I'm following this article now.
Nice post. Yes many companies are using external tools ( mostly excel with macros ) to do capacity planning.
SAP being very suitable to enhance according company's needs, we have created a cockpit, we trigger MRP from there and sort results according our sorting logic defined in a Z table. Mark planned orders as fixed.
And we have also used CM25 user exits to add new fields to screen. And now our client do not use Excel anymore. So yes, SAP PP is indeed powerful and SAP ERP is very extendible. Therefore pointless too do it in excel. Whatever can be done in excel can be done with SAP Abap, without moving data to 3rd party and back.
this is the reason because I wrote about PP Basic - https://www.amazon.com.br/Guia-pr%C3%A1tico-SAP-Planejamento-Produ%C3%A7%C3%A3o-ebook/dp/B07QPKTR45/ref=sr_1_1?__mk_pt_BR=%C3%85M%C3%85%C5%BD%C3%95%C3%91&dchild=1&keywords=jarlei&qid=1607465941&sr=8-1
Kanban, JIT, VC, CRP, LTP, Heijunka, there are a lot of things in PP that we can use natively, not just regarding sub-modules but also in the master data, like Alternative BOM, alternative Routing, Production version, Safety stock, SOP with holt-winters algorithm, a different types of production that we can put together (PPDIS, PPREM, PPPI). But the first step is to know the possibilities.
Have you any documents that explain how to use CM25 (process orders dispatching) ?