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Author's profile photo Varsha Hadkar

Discovering SAP’s Grouping, Pegging, and Distribution(GPD) – Grouping

Welcome to my first SAP blog, been in the SAP arena for more than a decade now.

This is the first in a series of three blogs, in which we break down a few of the key insights on Grouping from SAP’s Grouping, pegging and distribution (GPD) function.

GPD Overview –

The GPD system was developed primarily to meet the needs of the aerospace and defence (A&D) industrial industries. It is essentially an extension of standard functionality in a project-based production environment, highly connected to SAP’s Project Systems.

SAP’s GPD feature is an inventory process that moves parts and their associated costs between contracts by automatically assigning and re-assigning materials to contracts.

Grouping –

Business Rationale:

  • A&D corporations participating in project oriented manufacturing approach needs the visibility to recognise cost against the requiring contracts on the receipt/payment of purchased material. The possibility of merging requirements in MRP from multiple contracts / plants and fulfilling these from common established replenishment orders, these companies need project finance control of material and logistical flexibility to improve efficiency.
  • Typical SAP core functionality has project and plant stock, however neither of them supports the A&D environment thoroughly.
  • Therefore, the invention of GPD to bridge the gap between finance management and logistical flexibility for project inventory.

Grouping Strategy:

  • Grouping in simple terms is assembling / grouping common requirements (demands) all together, and procure / produce in grouped lot sizes. Material is then owned by the group.
  • For common inventory management and MRP, one will integrate material requirements from several work breakdown structures (WBS) elements (for different projects or plants) into one or more grouping WBS elements (MRP). This results in a higher efficiency to produce / procure materials and lower costs.
  • When deciding grouping strategy it is crucial to consider parameters such as which materials should be incorporated or eliminated, programs, contract type, plant etc.
  • Another key aspect is understanding and clearly defining plant and project inventories will influence grouping strategy.

Grouping Approach:

  • Single group – All materials are assigned to group WBS element. No group to group transfer is required. If you do not use automatic requirements grouping, other option is to maintain and assign individual WBS element to group WBS element manually using transaction codes GRM3 or GRM4.

Single%20group

Single group

  • Nested group – These are narrower groups meaning fewer assigned WBS for high-level assemblies. Execute transaction code GRM5 to assign plant and MRP groups to the grouping WBS element. Execute transaction code GRM6 to detect any inconsistencies in the assignment.

Nested%20group

Nested group

Process Flow:

  • Define how the individual materials are to be planned: with individual project planning, with requirements grouping or as collective requirements in plant stock.
  • Define MRP groups for materials through SPRO->IMG activity->maintain all MRP areas in MRP customising.
  • Select MRP groups for which you want to activate requirements grouping by setting the grouping indicator through SPRO->IMG activity->Activate requirements grouping for individual project planning in customising for MRP.
  • Maintain the MRP data in material master.

Reference SAP Notes:

In conclusion, GPD provides enterprise visibility across plants and group WBS elements with the ability to combine requirements from multiple contracts in MRP and fulfil them from a single consolidated replenishment order. The Grouping Strategy is the cornerstone to GPD’s ability to provide a better solution.

Thank you for taking the time to read this article. Please share your thoughts and opinions.

In the next blog of this series, we will see the Pegging approach – Discovering SAP’s Grouping, Pegging, and Distribution(GPD) – Pegging | SAP Blogs

See you there!!

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      2 Comments
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      Author's profile photo Kanda Balasubramanian
      Kanda Balasubramanian

      Hi Varsha,

      Nicely written!

      As mentioned in the note 2933435, GPD is a deprecated component in SAP S/4HANA and Project Manufacturing Management and Optimization (PMMO) is the successor. Conceptually, Grouping, Pegging and Distribution apply to PMMO as well. The Pegging data structure is however different and more granular compared to GPD.

      Thanks, Kanda

      Author's profile photo Varsha Hadkar
      Varsha Hadkar
      Blog Post Author

      Hi Kanda,

      Thank you for your reply.

      Note 2933435  is quite insightful and I am also keeping an eye on the sunset date.

      Regards

      Varsha