Santosh Karkhanis

Manufacturing is a complex process. Some companies make a few products, while most make a variety of products. Each uses a variety of processes, machinery, equipment, labor skills and material. All these must be organized efficiently for better profitability. Goods must be manufactured at right quality and quantity at right time and must be delivered at right place.
A good Production Planning System must answer four questions:
• What are we going to make?
• What does it take to make it?
• What do we have?
• What do we need?

Priority and Capacity of a firm must be balanced. Production Planning System must perform this task.
Normally Production Planning System has five major levels.
• Strategic Business Plan.
• Production Plan (Sales and Operation Plan: SOP).
• Master Production Schedule.
• Materials Requirement Plan (MRP).
• Purchasing and Production Activity Control.

Each level varies in purpose, time span and level of detail.
• The Strategic Business Plan is a statement of major goals and objectives the company expects to achieve over next two to ten years.
• The Production Plan gives quantities of each product group that must be produced each period.
• Master Production Schedule is the plan for individual end items. Production Plan limits the Master Production Schedule.
• Materials Requirement Plan is the plan of components required to make the end items planned in Master Production Schedule. Master Production Schedule drives Materials Requirement Plan.
• Purchasing and Production Activity Control is the implementation of the Production Plan.

It is necessary that the whole Production Planning System is integrated and changes at any level must affect immediately the other levels.
Normally the total number of components required in any firm run in thousands. Also demand changes daily in this ever-changing world. New sales orders come in, some get cancelled, there may be break downs at production floor, there may be late or early delivery from suppliers. It is difficult to keep track of all these changes manually. There is tendency to keep safety stock to take care of this.
An effective computerized Production Planning System can keep track of all the changes. There is no need to keep high safety stock. The money blocked in the excessive safety stock can be released. At the same time, opportunity costs due to stock-outs can be minimized.
SAP R/3 Production Planning (PP) module is one of the effective computerized production planning systems available. Click Here to know about PP module of SAP R/3

SAP R/3 'PP' Module

SAP R/3 has highly integrated Production Planning System. The PP module is divided into two Sub-modules, 'PP-PI' and 'Production General'.

PP-PI sub-module is designed for process industries like Oil and Gas.

Production Planning module of SAP takes care of Master data needed like Bill Of Materials, Routings and Work Centers and stores it in one separate component.

Various stages of planning system can be planned by using components like

·                     Sales and Operation Planning

·                     Long Term Planning

·                     Demand Management

·                     Materials Requirement Planning

SAP has distinguished various styles of production like Kanban, Repetitive Manufacturing and Production Order processing. It can take care of various planning strategies like 'Make-to-stock', 'make-to-order', 'planning without final assembly' etc.

SAP R/3 PP module can also plan Capacity. The capacity Planning sub-module is taking into account various capacities like pooled capacity etc.

Production Orders reporting has flexibility of confirming orders with or without backflush. The material can be staged to production site from the Warehouse after releasing order. Costing can be triggered automatically by integrating the module with Cost Accounting Module.

Integration with other modules like Material management, Financial Accounting, Cost Accounting, Human Resources & Development, Sales and Distribution etc adds on to reliability of the production planning system in SAP R/3. The system is a real time system. The changes in demand (cancelled or added sales order etc) and supply (high/low rejection, early/late supply from supplier, breakdown of facilities etc) are reflected in real time and the production controller can react fast to these changes.

SAP R/3 PP module is a very effective tool for production planning. As is gives many alternatives, it must be configured correctly to utilized optimum potential. The person configuring the system MUST have through understanding of the business needs as well as 'PP' and other modules of SAP R/3.

If you like to know more about Production Planning Module of SAP R/3, send me a mail on This e-mail address is being protected from spambots. You need JavaScript enabled to view it