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Author's profile photo Maya Chowdhury

Make-to-Stock Production Strategies with SAP S/4HANA

At this point, most companies will know about “just-in-time” (JIT) programming. With JIT, a business could utilize instruments and resources just when it needs to so that it doesn’t need to stockpile these costly raw materials or have machines running when not necessary. How much more efficient could a business be if it could do that with its products? Make-to-Stock is an attempt to bring the JIT mindset to production. Typically, companies will create new stock to meet customer demand, ramping up production in anticipation of user demand. With Make-to-Stock, a company can develop a plan to prepare for this increase in demand when it comes. Some of the essential make-to-stock (MTS) planning procedures are what we cover in this post.

Planning Strategy 10: Net Requirements Planning

Net Requirements Planning only takes into account the Planned Independent Requirements (PIRs) when doing its planning. While sales orders are still displayed in the planning sheet, they will be ignored for the planning itself. Net Requirements Planning is ideal for seasonal or rotating products with a high season and a low season. It’s used in mass manufacturing industries and is best suited to repetitive production cycles. For independent requirements, it should use the LSF requirements type. For customer requirements, it should use the KSL requirements type. The downside of this planning method is that it fails to predict demand based on customer sales. A spike in sales would be ignored completely.

Planning Strategy 11: Gross Requirements Planning

Continuous production cycles, such as those in pig-iron or steel billet industries, use Gross Requirements Planning for their methodology. The on-hand stock doesn’t count towards the final production value in this planning method. The company puts out that amount of product every cycle without fail. Setting the Mixed MRP field to 2 within the MRP3 view is required for planners. Like Net Requirements Planning, sales values do not affect the production cycle. Independent requirements would use the BSF requirement type. Customer requirements would use KSL as the requirement type.

Planning Strategy 40: Final Assembly

Most companies use Final Assembly as their chosen planning strategy as in bookie software. It also incorporates sales figures into its algorithm to accurately predict the amount of production the company would need for the next sales cycle. Incoming sales consume the existing PIRs so that the prediction uses those sales figures to adjust the final production numbers. Independent requirements should have the VSK (planning with final assembly) type. Customer requirements should be KSV (sales order with consumption). Additionally, you don’t need to have an Availability check in MRP3. This field is redundant to the calculation.

Planning Strategy 30: Planning by Lot Size

Lot-size planning is based solely on sales orders and scheduling agreements. Unfortunately, sales orders don’t give a complete picture of on-hand stock or other pertinent PIRs, making it a complex planning mechanism for many businesses. Without these PIRs, the planning process is both simplified and sometimes wildly unreliable. Independent requirements should have the LSF (MTS production) type. Customer requirements should be KL (sales order manufactured by lot size).

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