Björn Weber

First Steps in the SAP®

Production Processes (PP)
Second Edition
Björn Weber
First Steps in the SAP® Production Processes (PP). Second Edition

ISBN:
978-3-96012-330-9 (E-Pub)

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2nd Edition 2018

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Table of Contents
Cover
Title
Copyright / Imprint
Foreword
Acknowledgments
1 Production planning
1.1 Planning approaches
1.2 Planning strategies
1.3 Definition of the example
2 Design and work scheduling
2.1 Material master
2.2 Bill of material
2.3 Work center
2.4 Routing
3 Sales and Operations Planning
3.1 Product groups
3.2 Rough-cut planning profile
3.3 Standard SOP
3.4 Disaggregation and transferring requirements
3.5 Summary
4 Materials planning
4.1 Requirements
4.2 Planned orders
4.3 Material requirements planning
4.4 Evaluations
4.5 Summary
5 Shop floor control
5.1 Production order
 5.2 Scheduling
5.3 Availability check
5.4 Order release
5.5 Material withdrawal
5.6 Confirmations
5.7 Goods receipts for production orders
6 Capacity requirements planning
6.1 Capacity evaluations
6.2 Capacity leveling
7 Summary
A Transaction Overview
B About the Author
C Disclaimer
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Foreword
Dear reader,

You have decided to take a look at a tutorial about production planning in

SAP ERP. This suggests two things: firstly, that you (probably) have no
desire to wade through long, excessive books on SAP standard software;
secondly, that you are interested in production planning, either for your
studies or due to your work, and wish to find out how it is implemented in
SAP ERP.

In recent decades, production planning, just like all industrial production,

has undergone a fundamental change. Whilst the period of economic
boom was marked by long delivery times and a limited product selection,
known as a “sellers’ market,” today there is an unlimited quantity of
different offers with quick availability of just a few days, even for
customer-specific products. Today, the “buyers’ market” prevails.

Production planning has had to (and still has to!) adapt to these changing
circumstances. Previously, the correct calculation of the required quantity
of components (MRP: Material Requirements Planning), and the greatest
possible utilization of production resources were important for planning,
but today, the requirements are much higher. Naturally, the aim is still to
use resources to the best possible advantage. At the same time,
however, production—and thus also planning—must be highly flexible to
enable customer wishes to be implemented at short notice. These
contradictory objectives are linked to the expectation of high planning
reliability—i.e., delivery reliability. Planning is therefore becoming
increasingly complex and usually cannot be done without software
support. This is where the PP (Production Planning) module of SAP ERP
and other planning programs come into play. You can use these
programs to generate master production schedules that meet the
specified framework conditions and objectives and to monitor the
implementation of these schedules.

This book presents the basics of production planning in SAP ERP. In

Chapter 1, I present the planning concepts that form the basis for the PP
module and outline an example that is the basis for the process
descriptions in subsequent chapters. I not only look at Manufacturing
Resource Planning (MRP II), but also at the planning-driven classification
of products based on the order penetration point, explaining the
production approaches engineer-to-order, make-to-order, assemble-to-
order, and make-to-stock.

Building on this, Chapter 2 explains how, in the design and work

scheduling phase, the master data required for planning is created in
SAP ERP. This chapter also explains the importance of this data for
production planning and control. In Chapter 3, I show you how to forecast
sales figures in SAP ERP and, based on these figures, create a
production program. In Chapter 4, based on these explanations, you will
learn how quantity demand planning works and how it is implemented.
You will learn how the defined master data influences the planning and
how you can analyze the results yourself. Chapter 5 presents Shop Floor
Control and the production orders it uses. You will learn how these
elements are structured and what steps they undergo during the course
of production. Finally, in Chapter 6, I show you how to perform capacity
leveling in an SAP system.

My intention with this book is to offer a clear introduction to the planning

processes with SAP ERP and to help you to more easily complete the
tasks assigned to you. However, you should also look beyond the
procedure described here and try out other functions to make processes
even more effective. There is always more than one way to do
something.
Acknowledgments
This book is dedicated to anyone who looks at the world with open eyes
and is always ready for change.

Many thanks to my wife and proofreader for her patience and

understanding during the writing of this book, enabling me to focus on the
essentials of the manuscript even in times of stress.

At this point, I would also like to thank Jörg Siebert and Martin Munzel for
their extraordinary vision of packaging important SAP content into e-
books that do not have to be weighty tomes.

I hope that this book also enables many users who otherwise often take a
step back when presented with extensive technical books to look at the
wide and varied options provided by this software. The aim of this book is
to enable these users and you, dear reader, to have the confidence to
look beyond the boundaries of the well-traveled paths and to critically
ask: can we improve what we have always done—perhaps since we
introduced SAP in our company—even further? I hope that, with this
book, I can help you to make these improvements.

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aware of when you go through the examples in this book
on your own.

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activity step by step in SAP.

Finally, a note concerning the copyright: all screenshots printed in this

book are the copyright of SAP SE. All rights are reserved by SAP SE.
Copyright pertains to all SAP images in this publication. For the sake of
simplicity, we do not mention this specifically underneath every
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1 Production planning
“The wise man must be wise before, not after, the event.”
(Epicharmus, approx. 550 BC–460 BC)

In this chapter, I present the basic planning approaches used in the

SAP system. I also present the most important planning strategies
and outline the example used in subsequent chapters.
1.1 Planning approaches
MRP II (manufacturing resource planning) is a planning concept that is a
further development of material requirements planning (MRP). In this
concept, based on quantity calculation, previous and subsequent
planning steps have been defined to enable integrated production
planning.

Thus, sales and operations planning and demand program planning for
defining primary requirements quantities (known as “independent
requirements”) have been placed before material requirements planning,
while scheduling with consideration of limited capacities for detailed
planning has been added after MRP. The diagram in Figure 1.1 shows all
phases of the MRP II concept which I will address in more detail below.
Figure 1.1: Planning phases of the MRP II concept

Sales planning involves itemizing the quantity of planned sales of

products and spare parts. It can take place at an aggregated level or can
be based on individual materials. Product groups, customers, and
geographical regions are examples of possible aggregation levels. With
regard to time, the requirements can be shown in weeks, months, or
quarters. During operations planning, production quantities are created
for the determined sales figures. To ensure that the planning is as
accurate as possible, coverage ranges or production intervals can be
considered. Rough-cut planning profiles can be used to create loads to
estimate the planning feasibility. These profiles reflect the resource
requirements at aggregated level and, in conjunction with the available
capacity of the corresponding resources, enable an initial analysis of
feasibility. The results of this analysis can lead to sales targets being
reviewed with the sales department or can provide the incentive for
planning investments to increase capacities.

The requirement figures that have been subject to this plausibility check
are then handed over to the demand management organization. Here,
the requirements, which were previously available at aggregated level
(based on time and hierarchy), are broken down. You do not have to
distribute the requirements evenly; for example, you can use a
distribution based on past consumption. The planned independent
requirements now available at material level are offset against any
existing specific sales orders. The planning strategy defined for this
material also determines how this comparison is performed and in what
period (see Section 1.2).

From the independent, planned, and customer requirements, material

requirements planning determines the quantities of assemblies,
components, standard parts, and raw materials required. To enable this,
production batches are created. These planning elements have a finish
date, a lead time, and a bill of material. These values are used to
calculate the dates for which the quantities are required. These
requirements are compared with existing stocks and any expected stock
receipts in order to calculate any material quantity that needs to be
procured. If, during lead time scheduling, receipt elements are created
and the requirements for these elements cannot be covered in time, this
is documented and the MRP controller can check, for example, whether
the lead time can be reduced. If this is not possible, the controller can
initiate an adjustment of the independent requirements to the determined
bottleneck. This ensures that the second feasibility check level is
implemented here.

Before the production department starts to implement the planning, the

MRP controller can plan capacity requirements. To do so, they compare
the capacity requirements created at the resources with the available
capacity. If the result shows a capacity overload situation, they can use a
planning table to perform specific sequencing against the limited capacity
available and thus resolve the overload. Receipt dates for components
may slip beyond the requirements date. In this case, the quantity
planning may have to be repeated.

Shop Floor Control monitors and corrects production execution. This

includes creating and releasing production orders, printing production
documents, and reporting production progress. This last activity is
particularly relevant for the MRP controllers, as they use the reports to
determine whether production is progressing according to plan or
whether an adjustment is required.

As you can see, the MRP II concept is divided into phases that include
internal check loops but that are connected only by an aligned forwarding
of values. When IT systems were first developed, and processor
performance and storage were seriously restricted, this structure had the
significant advantage that every phase could be considered and modeled
in isolation. Thus, limited complexity enabled the programming of
systems that could calculate solutions within a finite time. As a result, the
MRP II concept established itself in most corporate programs.

Today, scholars involved with the topic and software companies (with
their products) try to link quantity planning and capacity requirements
planning. They use various approaches to do this:

Heuristics
Linear optimization
Complex planning tables

However, there are also further developments for simplifying planning

activities in the upstream sales and operations planning processes:

Fewer aggregation levels

Consideration of logistical capacities
Detailed requirements profiles
1.2 Planning strategies
A decisive criterion for planning is the order penetration point. On one
hand, this describes the step in the value-added chain from which the
sales order “pulls” the procurement; i.e., the point at which the customer
for whom something is being produced is clear. On the other hand, it
defines the step by which the procurement is “pushed” from preliminary
planning or forecasting; i.e., is only produced anonymously (see Figure
1.2).

Figure 1.2: Planning strategies and order penetration point

Make-to-stock is the simplest planning strategy. Here, a product is

procured and produced, including all components, based only on
preliminary planning up to the point that it arrives in the shipping
warehouse. This strategy enables good alignment of the production of all
components, as well as high utilization of production resources. It also
guarantees the shortest delivery times of all strategies. However, in
contrast to these advantages, there is a risk of over-production and
results in excess stock. Short planning can also be problematic, because
it (often) restricts the production flexibility. Any impending deficit is difficult
to prevent, and thus the expected delivery time can be difficult to achieve
or cannot be achieved at all.

The assemble-to-order strategy can, to some extent, be used to alleviate

the risk of excess stock. With this strategy, only the components are
procured or produced, based on planning. They are then only assembled
to create a finished product when a sales order is received. The level of
the desired lower stocks depends to a large extent on the proportion of
value added by the assembly. Also, the greater the number of variants for
a product, the greater the benefits of this strategy, because less value is
connected to the less frequently required variants. The prerequisite for
successful implementation of this strategy is flexible assembly that
enables customer requirements to be implemented with regard to
delivery time.

Make-to-order is an approach in which products designed and prepared

for production are only produced on customer request. As the company
generally only stores the raw materials, the delivery time using this
strategy is considerably longer than the approaches above. However, to
enable a short delivery time as required by the customer, the machines,
and the employees, must be flexible; i.e., available on demand. One
advantage of this strategy is that the stock risk is minimized.

Finally, engineer-to-order describes a concept where customers request

products that have not yet been designed when the order is placed and
that have to be produced individually. This strategy has the longest
delivery time of all the approaches presented, and results in a further
planning problem: because an ordered product has not yet been
precisely defined, it is particularly difficult to accurately plan the delivery
date.

Empirical values from similar products are usually used to help determine
the delivery time. But what about the components? They can only be
procured once the design has been completed; for example, the risk
could be too high that this time special steel is needed instead of
standard steel. This special material, or the exceptional purchased part,
represents the greatest risk for not meeting the deadline. If the materials
required are not clear until after the design, it is sometimes too late to
order the materials for punctual delivery. See Table 1.1.

Replenishment lead time Stock risk Production flexibility

Make-to-stock Not applicable High Low
Assemble-to-order Low Low Medium
Make-to-order High Not applicable High
Engineer-to-order Very high Not applicable High
Table 1.1: Advantages and disadvantages of production strategies
1.3 Definition of the example
During the course of this book, I use an example to illustrate the
individual production planning processes in the SAP system. To help you
to better understand the illustrations from the individual transactions, I will
first briefly present the example product used.

In this book, our example product is a bicycle, so we are looking at a

bicycle manufacturing company. Production is according to a make-to-
stock strategy (see Section 1.2). This means that for this salable product,
planned independent requirements that reflect the expected sales are
available from the sales department. As some of the parts of the bicycle
in our example have to be designed from the very beginning, not all
master data will have been created by the beginning of the planning.
Therefore, before production planning can take place, we have to create
the master data.

The bicycle in our example has the material designation ET-F-WT500. It

consists of a complete (CP) frame (ET-1010), produced in-house, a front
wheel (ET-1005) and a rear wheel (ET-1006), two pedals (ET-1007), the
chain (ET-1013), and the complete (CP) gears (ET-1014). The
components mentioned are all purchased from other suppliers (with the
exception of the frame). The complete bicycle frame assembly consists of
the frame (ET-1011), the fork (ET-1012), the saddle (ET-1003), and the
handlebars (ET-1004). Figure 1.3 shows the composition. The new parts
developed are:

ET-F-WT500—bicycle WT500
ET-1014—gears CP
ET-1011—frame
ET-1010—bicycle frame CP
Figure 1.3: Illustration of the example product

SAP ERP recognizes various organizational elements, of which plant is

the decisive element for production and production planning. All
processes for our example take place in plant 1200. All further relevant
master data and definitions are covered in the following chapters.
2 Design and work scheduling
During the design and work scheduling phase, you define the
master data required for subsequent production planning and
control.

In this chapter, I explain in detail the master data required for planning,
and the importance of this data. Firstly, I outline the material master and
bill of material (the design data) to create the basis for explaining the
work center and routing (the production data).
2.1 Material master
In our example (see Section 1.3), we designed a new bicycle and the
design department will now provide a more detailed design. This includes
creating the material master data and all new components for the product
in SAP ERP to enable entry of further master data.

The material master contains basic information to describe the material,

as well as parameters for controlling the company processes. It consists
of several views that group values into their areas of application (design,
sales and distribution, production, etc.). Some views are valid across the
group of companies, while others relate to specific organizational units;
for example, a plant or a purchasing organization. The sales and
distribution view contains data that is important for the sales and
distribution process, such as discount groups. These details are only
valid for the corresponding sales organization. The accounting view
contains valuation classes for correctly classifying the material for book-
keeping, for example, and these valuation classes are valid only for the
corresponding company code. Four views are interesting for production
planning:

Basic data view (across the group)

MRP view (plant-specific)
Work scheduling view (plant-specific)
Forecasting view (plant-specific)

Initially, the designer is only able to create the basic data view. The
remaining views are created and filled during the course of work
scheduling. The BASIC DATA 1 view contains basic information about the
materials (see Figure 2.1). In addition to the material number and the
material text, this information includes:

the base unit of measure ,

identification code for the design group responsible ,
 information about the weight ,
information about the size/dimensions ,
and much more.

Figure 2.1: Material master—Basic data 1 view

For our example, the designer now creates the material masters for the
complete bicycle ET-F-WT500, the new frame, the new gears, and the
new component “complete bicycle frame”. To do this, in SAP ERP,
transaction MM01 is called up: SAP MENU • LOGISTICS • PRODUCTION •
MASTER DATA • MATERIAL MASTER • MATERIAL • CREATE (GENERAL). The
following initial screen appears (see Figure 2.2):

Figure 2.2: Creating a material (initial screen)

The designer enters the material for the finished bicycle (ET-F-WT500)
and selects the industry sector for the bicycle (Mechanical
Engineering), and the material type (Finished Product).

Next, this information is confirmed by pressing “Enter”, the first basic data
view opens again (see Figure 2.1. Here, the engineering group KB1 is
selected in the LAB/OFFICE field ; PC (for “piece”) is entered in the BASE
UNIT OF MEASURE field and in the NET WEIGHT and DIMENSIONS
fields, and the values from the design documentation are adopted. On
the BASIC DATA 2 tab, the material is entered (e.g., Aluminum) for the
frame, and references to the already-stored design documentation are
created.

All other components in our example are transferred from existing

bicycles and therefore do not need to be created. The designer can only
create the bill of material when all the material masters have been
created in the SAP system.

The remaining three views are either created now and filled with standard
values that are to be made more specific later, or are set up entirely at a
later time by the work schedulers or responsible MRP controllers.
However, I will present them briefly here.

The MRP VIEW offers four tabs on which you can set all parameters for
procuring the material. The values it contains define the production
planning and control for the article. Here, for example, you enter settings
for the following criteria:

external procurement or in-house production,

planning-driven or consumption-driven materials planning,
size of the procurement batch,
individual customer production or anonymous make-to-stock
production,
safety stock, etc.

Let’s now create these views for the material ET-F-WT500 together. To
do this, we call up transaction MM01 via: SAP MENU • LOGISTICS •
PRODUCTION • MASTER DATA • MATERIAL MASTER • MATERIAL • CREATE GENERAL
MATERIAL, and enter the material number. Because the basic data for this
material has already been created, the SAP ERP system adds the data
for the industry sector and material type. In the dialog box that appears,
we select the views MRP 1, MRP 2, MRP 3, MRP 4, and Work
Scheduling by clicking the relevant button to the left of the designation.
After clicking the green checkmark to confirm our selection, in the next
dialog box we select plant 1200, and confirm again.
Figure 2.3: View selection and organizational levels

MRP profiles

MRP profiles enable users to group the settings for the

MRP view and save them as default values. When a new
material is created, the fields defined in the profile are
then filled with the default values. This simplifies the
process of creating and maintaining materials.

The transactions for maintaining the MRP profiles can be found

under: SAP MENU • LOGISTICS • PRODUCTION • MASTER DATA • MATERIAL
MASTER • PROFILE • MRP PROFILE.

When creating the MRP view, you then select the profile in the
ORGANIZATIONAL LEVELS dialog box (see Figure 2.3).
The first tab that we see now is MRP 1 (Figure 2.4). In addition to the
GENERAL DATA area, the tab contains the areas MRP PROCEDURE and LOT
SIZE DATA, where you can define parameters.

MRP TYPE is a mandatory field; because we receive planned requirement

quantities for the finished product, the material should be planned on a
consumption basis. Therefore, we select PD here. In the MRP
CONTROLLER field, to ensure that the controller responsible can
subsequently analyze the planning, we enter the relevant key, here 000.
The procurement proposal should always cover one week, and we
therefore select WB in the LOT SIZE field. We do not need any further
settings for the lot size data for our product.

When we confirm with “Enter”, the SAP ERP system checks whether we
have entered information in all mandatory fields and, if so, jumps to the
next tab. If entries are missing from mandatory fields, a warning message
or error message appears in the lower part of the SAP system window.
Figure 2.4: Material master tab—MRP 1 view

On the MRP 2 tab (see Figure 2.5), we see values in the PROCUREMENT,
SCHEDULING, and NET REQUIREMENTS CALCULATION areas.

Because we want to assemble the bicycle exclusively ourselves, in the

PROCUREMENT TYPE field we select E (the value for “own production”). We
also enter a value in the PRODUCTION STORAGE LOCATION field—the storage
location from which the components are removed and to which the
finished product is delivered (here: 0002).

Because we manufacture the material ourselves, we have to enter a

value in the IN-HOUSE PRODUCTION field; here, we select 2 days because
the average weekly production time for a bicycle of the type in our
example is two days. In the GR PROCESSING TIME field, we select 1 day.
This indicates that the stock is not available until the second day after the
end of the order. There can be various reasons for this time buffer in the
actual process flow; for example, there is a quarantine period until all
quality results are available, or time is required for the shipping
packaging to be attached. In the SCHEDULING MARGIN KEY field, we enter
000; this determines the different scheduling buffers described in more
detail in Section 5.2.

Because no safety stocks are planned for this material, no entries are
necessary here.
Figure 2.5: Material master tab—MRP 2 view

On the MRP 3 tab (see Figure 2.7), we define some settings relating to
the preliminary planning behavior. In the STRATEGY GROUP field, we select
40 (Planning with final assembly).

The strategy group controls the behavior of independent requirements—

both customer requirements and planned requirements—as well as how
they are included in the requirements planning. With the strategy
“Planning with final assembly”, both customer requirement quantities and
planned requirement quantities are considered in the requirements
planning. However, with this strategy, requirements planning attempts to
offset the two requirements against one another because the planned
requirement quantities are merely an expression of an expected
customer order. This behavior is controlled with the consumption mode
and consumption periods. The consumption mode defines the temporal
direction, starting from the customer order, in which the system searches
for planned independent requirements for consumption. The consumption
periods specify the number of days, starting from the customer order, that
the system should search in the past or in the future (see Figure 2.6)
Figure 2.6: Consumption of planned requirement

The bicycle in our example should receive weekly planned independent

requirements—they are always imported into the SAP ERP system on
Mondays. To ensure that customer orders that are to be delivered during
the week are offset only against the planned independent requirements
of that week, we enter 1 (Backward consumption only) in the CONSUMPTION
MODE field, and in the BACKWARD CONSUMPTION PERIOD field, we enter a
value of 5 days. This means that for every customer order, the system
searches backwards five days for planned requirement quantities that the
customer order quantity can be offset against (see Section 4.1).

In the AVAILABILITY CHECK field, we select 01. This parameter controls how
the ATP check (see Section 5.3) is applied to this material. For the
finished product, this check is performed from a customer order, and for a
component, from an assembly order; the setting 01 is sufficient in our
example.

The precise effects of the different settings in the AVAILABILITY CHECK field
depend on your system settings. Section 5.3 looks at the availability
check for an assembly order.
Figure 2.7: Material master tab—MRP 3 view

On the MRP 4 tab (see Figure 2.8), we do not have to enter any
information for our example because the BOM explosion and the
selection of production versions are not relevant.
Figure 2.8: Material master tab—MRP 4 view

On the WORK SCHEDULING tab (see Figure 2.9), we enter important

parameters for production execution; for example:

identification code for the production supervisor responsible,

storage location to which the material is delivered after production,
batch or serialization obligation, and
the in-house production time in days.

For our bicycle, we define the production supervisor and the production
scheduling profile here. The latter entry controls which production order
type the system proposes for this material. This saves time again later
when these orders are created (see Chapter 5).
Figure 2.9: Material master tab—Work scheduling view

Figure 2.10 shows the FORECASTING tab that contains all the data required
for performing a material forecast and that forms the basis for
consumption-driven materials planning. The most important parameters
relate to:

Forecast model
Past periods
Forecast interval

Figure 2.10: Material master tab—Forecasting view

Creating material master views for production planning

 A short video demonstration shows how you can add the MRP and
production data to the material master in the PP module
in practice: see https://espresso-tutorials.com/PP.php

Recommended reading

In his book “The SAP Material Master—a Practical

Guide”, Matthew Johnson explains in great detail how to
set up and handle the material master in an SAP system.
This book was published by Espresso Tutorials in 2013.
2.2 Bill of material
In SAP ERP, a bill of material (BOM) is a structured collection of
elements. As these elements can be very different, SAP recognizes
various categories of bill of material. It is not the type of presentation that
determines the differentiation, but the content or use of the list. In the
SAP system, the following BOM categories are available:

Material BOM
Document structure
Order BOM
Project BOM

A material BOM describes the structure of a material made from

individual components or other assemblies, and represents the most
frequently used category of BOM. A document structure structures
complex documents. For example, the documentation for a system can
consist of a manual with electrical and hydraulic circuit diagrams, as well
as technical drawings that have all been stored individually. Order BOMs
and project BOMs are usually lists of materials that are valid only for a
specific order or project respectively. They can be used to record special
features (e.g., customer-specific adjustments to the product) without
changing the fundamental BOM.

A bill of material consists of the header and one or more items. The
former contains basic information, such as the base quantity of the bill of
material or the engineering group (laboratory/office) responsible, as well
as a description of the alternative BOM and its status (active or inactive).

Every BOM item contains exactly one component. The quantity and item
category (e.g., stock item or text item) of the component required to
create the base quantity are also stored here, as well as other control
parameters required for special applications.
You can find these control parameters in the detailed view of the BOM
item. Here, on four tabs, you can enter values such as component scrap,
the removal storage location, or extended texts. You can also link
documents to the respective BOM item. These can be design drawings or
handling instructions.

Values in the material master and bill of material

Some values in the material master can also be

maintained in the BOM item; for example, component
scrap. If both fields contain entries, the value in the bill of
material takes priority over the value in the material
master.

This is always an advantage if the value is different, depending on the

use or process. In the case of component scrap, for example, when
used in a specific bill of material, the value may be higher than
average.

As described in Section 1.3, both the bicycle and the complete frame are
new materials. In the previous section, we created the material masters
and now we will define the bills of material in the ERP system. To do this,
we call up transaction CS01: SAP MENU • LOGISTICS • PRODUCTION • MASTER
DATA • BILLS OF MATERIAL • BILL OF MATERIAL • MATERIAL BOM, and enter the
material number of the bicycle (ET-F-WT500), the number of the plant
(1200), and the bill of material usage (1 for “production”). Next, start the
transaction by pressing “Enter”. In the item overview that appears, for
every BOM item, we maintain the material number of the component,
item type L for a stocked material, and the quantity required for our
example (see Figure 2.11). The ERP system reads the quantity unit
automatically from the material master data of the component once we
press “Enter”. The checkmark in the A (assembly) column shows that
there is a bill of material for this item itself—the item is therefore a further
assembly. By double-clicking the checkmark, we can go to this bill of
material. First, however, we want to look at the header data of the new
bill of material. To do this, we click the icon .

Figure 2.11: Material BOM—Item Overview

We now check that the base quantity (i.e., the number of bicycles
manufactured with the quantities of the BOM items) is exactly 1 (see
Figure 2.12), because that is what we drew up the bill of material for. We
do not restrict the batch size range valid for this bill of material any
further. In the BOM TEXT field, we enter Bicycle WT500 in the
Dresden plant and in the PLANT field, we enter 1200 for DRESDEN. We
can then save and exit the bill of material by clicking .
Figure 2.12: Material BOM—Header Overview

Group BOM

If you create a bill of material without entering a plant,

then you create a group BOM.

In production planning, however, you cannot use this bill

of material due to the missing plant reference. You must first create a
plant BOM by calling up transaction CS01 again and, this time, enter
a plant. Using the button, you can copy the group BOM into the
plant BOM so that you do not have to enter all of the information
again. If you forget to enter the plant, and thus create a group BOM,
a warning message appears in the footer of the screen, drawing your
attention to this.

Creating a bill of material

The following video shows how to set up a bill of material

in SAP PP: https://espresso-tutorials.com/PP.php.
2.3 Work center
In the context of SAP PP, the work center describes an organizational
unit in which the entire production order or its individual steps are
executed. It can be a machine or a manual work center, for example, or a
machine group or whole department. It is always assigned to a plant as
the higher level organizational unit. In SAP PP, work centers are required
in order to describe (in the routing) which employee or which operating
resource executes an operation, or where this operation takes place. The
work center is also used to link to the SAP modules CO (for cost and
activity accounting) and HR (for payroll accounting). To fulfill these
functions, the work center contains a number of parameters, as
described below.

To fulfill its functions, the work center contains a number of parameters.

You define the most important parameters when you create the work
center. The work center category (see Figure 2.13) defines, amongst
other things, the layout and the work center parameters available. Typical
work center categories in the standard SAP system include:

Machine
Machine group
Labor
Person group

Because we do not need any new work centers for the new bicycle, we
will look at the existing work center “Welding” in change mode. To do this,
we access transaction CR02 from SAP MENU • LOGISTICS • PRODUCTION •
MASTER DATA • WORK CENTERS • WORK CENTER. On the selection screen, we
enter the plant 1200 and work center ET-WC-01.

The BASIC DATA tab (see Figure 2.13) contains details about the person
responsible for the work center, the location of the work center, and the
task list type (see Section 2.4) in which the work center may be used.
The value 009 in the USAGE field means that this work center may be
used in all task list types.

The STANDARD VALUE KEY field is an important one. It defines which

activities are decisive for the production on this work center. This
information is subsequently used for scheduling, capacity requirements
calculations, and cost accounting. We can see here that the work center
is a labor work center, is permitted for All Task List Types, and
covers the three standard values Setup, Machine, and Labor.
Figure 2.13: Work center—Basic Data view

The DEFAULT VALUES tab (see Figure 2.14) contains various parameters;
for example, standard text keys for standard texts or wage types that are
automatically proposed when the routings are created in order to reduce
the effort involved in creating the master data.
Figure 2.14: Work center tab—Default Values view

On the CAPACITIES tab (see Figure 2.15), you set the category of the work
center capacity; you maintain the category via the corresponding function
from the work center or directly via transaction CR12 (see Section
6.2). When you create a new work center, after pressing “Enter” the SAP
system automatically switches to the work center capacity view.
Possible capacity categories are:

Machine
Labor
External processing

Even if a work center consists of labor, on one hand, and machines, on

the other, it is sufficient here to set only the capacity that is decisive for
planning. In our Welding work example, this is capacity category 002
(Labor). To calculate the capacity requirements from the default values,
corresponding standard formulas which the SAP system sets as default
were selected .
Figure 2.15: Work center—Capacities view

Pooled capacity

You can also include a pooled capacity so that multiple work centers
can access one personnel pool, for example.
 The work center capacity controls the available capacity of
the work center. Here, we can set a standard available
capacity or a shift capacity that varies over time . To use the shifts,
we select grouping 51. This key offers both a two-shift plan and a three-
shift plan.
In our example, the number of individual capacities (2) indicates that two
welders are assigned to this work center; the selection of CAN BE USED BY
SEVERAL OPERATIONS defines that these two people can also work on
different orders, at the same time. We can see, therefore, that each
employee works eight hours each day (not including breaks) and the
work center therefore has an available capacity of 16 hours per day. See
Figure 2.16.
Figure 2.16: Work center capacity

You can regulate how the execution time is determined using the settings
on the SCHEDULING tab (see Figure 2.17).

Capacity category

You have to enter the capacity category (in our example

002) on the SCHEDULING tab because the schedule must
be calculated for precisely one capacity category.
Furthermore, you must also have entered the category
on the CAPACITIES tab because the capacity category is a mandatory
 field; if it does not contain an entry, you cannot exit the SCHEDULING
tab.

The settings on the SCHEDULING tab (see Figure 2.17) regulate how the
execution time is determined. The capacity category must be entered
because this is the basis for the schedule calculation.

Here too, corresponding formulas must be specified for the calculation.

The values in the LOCATION GROUP and STD. QUEUE TIME fields together
make up the interoperation time to another work center. Both values have
a lower priority compared to the routing. This means that the values from
the work center are only used if no values have been maintained in the
routing.
Figure 2.17: Work center—Scheduling view

Finally, the COSTING tab (see Figure 2.18) contains the links to the
modules CO and HR. Here, the work center is assigned to a cost center
for the controlling area to which the plant is assigned. Every activity from
the standard value key is assigned to an activity type from cost and
activity accounting. You also enter the calculation rule formula. The
INCENTIVE WAGES INDICATOR checkbox is used to select those activities for
which an update to the HR module is necessary in order to calculate
wages.

Figure 2.18: Work center—Costing view

Creating a work center

In SAP PP, the work center is the central organizational unit within a
plant for executing a production order. For information
about how to create a work center, see the following
video: https://espresso-tutorials.com/PP.php.
2.4 Routing
Routings are the most important master data for production. They
describe what has to be done, where it has to be done, and in what order,
in order to produce a product. They also contain information about the
duration of the individual activities, the required employee qualifications,
and the production resources/tools required. In the SAP system, there
are four different task list types that can be differentiated using two simple
questions:

1. Is the routing material-specific or material-independent?

2. Does the routing describe production by installments or production
by lot size?

Depending on the answers to these questions, the following task list

types are available:

Standard routing—material-specific, no production by installments

Reference routing—material-independent, no production by
installments
Rate routing—material-specific, production by installments
Reference rate routing—material-independent, production by
installments

The standard routing is the most common routing type. It describes the
process flows for discrete production of exactly one material. You can
create multiple standard routings for the material in one task list group,
because different process flows can apply for certain lot size ranges. A
standard routing can also include reference routings.

A reference routing describes typical recurring and material-independent

production steps. If standard routings contain references to a reference
routing, you only have to change the reference routing to update the
standard routings for all materials. Both routing types can be merged into
task list groups and consist of sequences and operations.

For rate and reference rate routings the same applies, the difference
being that these routings are designed specifically for planning with
specific production rates; for example, 10,000 pieces per shift. The
routings are set up in the SAP system using the structure shown in
Figure 2.19.

Figure 2.19: Structure of routings

The header of a routing (see Figure 2.20) contains particular

organizational data. As a routing is plant-specific, the header contains the
plant for which the routing applies. Further values to be entered are the
task list usage, the status of the routing, and the planner group; i.e., the
key figure for the person(s) responsible for this routing.
Figure 2.20: Standard routing, header detail

Each routing consists of at least one sequence, known as the standard

sequence. This is created automatically when you create the routing. The
sequence is the linear order of processes that are executed to
manufacture a product. If production steps for a product run in parallel,
they are assigned to a parallel sequence. The parallel sequence is
always an additional “branch” of the routing and is executed in every
case. If there is an alternative to one or more of these operations, for
example, processing on a different machine, this second operation can
be stored in an alternative sequence. Both types of sequence are linked
to the standard sequence entered by the work scheduler via a
relationship. The alternative sequence is selected for an order when
required and replaces the section of the standard sequence defined by
the relationship.

The operation then contains all information for executing the production
operation: the name of the work center that executes the production step,
an activity description, and the predefined activity quantity. The standard
value key for the work center entered determines which activities are
planned and required. Each operation is also assigned a control key. This
value defines the processing in the subsequent process and controls
whether the operation is processed in-house or externally, whether it
creates capacity requirements, whether it is scheduled with all other
operations, or whether it is merely a text item.

In our bicycle example, the work scheduler now has to create a routing
for all new parts produced in-house. These are: the frame, the fork, and
the CP (= complete) frame. A routing is also required for the assembly of
the completed bicycle. Both the frame and the fork are manufactured
from aluminum pipes of different diameters. These are delivered in the
correct length and welded together on-site. The work scheduler creates
the first operation for the material ET-1011 FRAME with the work center
ET-WC-01 WELDING. The control key of the latter from the DEFAULT VALUES
tab is entered in the routing. Under DESCRIPTION, the work scheduler
names the activity to be completed (see Figure 2.21).

Figure 2.21: Standard routing, operation overview

By double-clicking the operation number, you can display the details of

the operation to enter further input (see Figure 2.22). To prepare the work
center, 30 minutes must be scheduled, and the work scheduler enters
this under SETUP. The actual processing time should be 20 minutes, and
this time is entered in the LABOR field. As the Welding work center does
not contain any machines, no machine time has to be maintained.

Figure 2.22: Operation detail, standard values

After welding, the frame has to cool down for one hour before further
steps can be executed. The work scheduler therefore enters a process-
related wait time in the routing (see Figure 2.23). This is taken into
account in the scheduling before transporting to the next work center.
Figure 2.23: Operation detail, transition values

The work scheduler repeats this procedure for all operations required to
manufacture the frame. After welding, the frame is painted with a base
coat and a color.

The work scheduler also creates further routings for the fork and the
complete frame. Bills of material for the frame and the fork must also be
created, because the designer has not been able to create these. The
bills of material can only be written once the plans have been designed
and the original material requirements defined. In addition to the
aluminum pipe sections required, the bills of material contain details
about the paint for the frame and the fork.
Because not all the items on the bill of material are required for the
welding, the work scheduler assigns the components. To do this,
transaction CA02 is called up in order to open the routing again and the
(F7) key is used, jumping to the COMPONENT ASSIGNMENT . By clicking the
buttons to the left of the line (see in Figure 2.24), the first and second
items are selected, and by clicking NEW ASSIGNMENT (or pressing the
“F5” key), the items are assigned to OPERATION 0010 ( ). In the same
way, the base coat is assigned to operation 0020 and the blue paint to
operation 0030.

Figure 2.24: Routing, component assignment

All the master data required for production planning has now been
created. The material master records with the relevant views, the bills of
material, and the work centers and routings can now be used to
determine the quantities required to cover sales order requirements or
planned requirement quantities, and to control and monitor procurement
or manufacturing. In the next chapter, we will look at how to determine
the planned requirement quantities as part of sales and operations
planning.

Creating a routing

The routings contain the most important master data for

a production order. They should be created with great
care, as you can see in the video “Creating a Routing”:
https://espresso-tutorials.com/PP.php
3 Sales and Operations Planning
Record your planned sales, plan with multiple hierarchy levels,
determine the resources required, and compare this planning to the
resources available.

With Sales and Operations Planning, SAP SE provides a standard

version of these activities. This standard version works only with product
group hierarchies and a predefined set of key figures. The layout of the
planning table is also preconfigured and can therefore be used straight
“out of the box”.

Compared to the standard version of SOP, the Flexible Planning

component offers greater freedom with regard to structuring your data,
the key figures to be planned, and the layout of the planning table. In the
following section, I outline the Sales and Operations Planning (SOP)
processes using standard SOP and explain the basic principles of these
processes. Rough-cut planning is easy to use and does not require any
extensive customizing prior to use. Based on this preliminary work, in
Chapter 4 we will be able to determine the production and procurement
quantities.
3.1 Product groups
As previously explained in Section 1.1, sales and operations planning in
SAP ERP takes place at an aggregated level. To perform this planning,
you have to define certain hierarchies which you can then use to
aggregate the sales figures. These hierarchies can be customer
hierarchies by sales region or product groups, for example. SAP ERP
also supports multiple aggregation levels. In the following section, I will
stick to product groups as the standard SOP hierarchy.

Product groups are simple data structures. They consist of a header and
components. The data in the header provides information about the
name of the product group, the designation of the product group, the
plant, and the quantity unit in which this product group is planned. In
addition to the material number, the components include the key for the
plant, the quantity unit required, and a proportional factor which describes
the distribution of the components within the product group.

To ensure that the planned quantity of the entire product group can be
distributed to the materials which belong to the product group, the
percentage ratio of each material to the overall quantity of materials must
be known to the system. There are two basic approaches for obtaining
information about this percentage ratio:

It can be estimated by sales experts for the next planning period.

It is calculated based on actual past consumption quantities.

In practice, of course, the ratio can be initially calculated from the

historical data, and then adjusted by experts according to expectations
for the future.

Product groups relevant for MRP

 When SOP is transferred to demand management, the
system checks whether a material appears in multiple
product groups and whether one product group is
marked as the one relevant for MRP. There can only be
one such product group for each material; this prevents the material
receiving requirements from multiple product groups.

You set the corresponding indicator for each component individually

in the product group.

In our example, we have developed a new bicycle. To plan the sales

figures, we add the material number to the existing product group. To do
this, we call up transaction MC86 (Change Product Group) either directly
or via the SAP menu: LOGISTICS • PRODUCTION • SOP • PRODUCT GROUP. On
the selection screen (see Figure 3.1), and we enter the name of the
product group (in our case, ET-F-W) and the plant (1200) in which the
product group is planned.

Figure 3.1: Selecting the product group

The screen in Figure 3.2 shows the previous composition of the product
group. In the upper part of the view, we can see the header data of the
product group and in the lower part, the data for the individual
components.

We can see that our product group previously comprised three bicycles
and in the last round of planning, the sales department assumed a
distribution of 40/20/40 . In this view, we add the material number of
the new bicycle (ET-F-WT500, see Figure 3.3) and then calculate the
ratio.

Figure 3.2: Presentation of the original product group

To do this, via the menu item EDIT, we select the PROPORTION CALCULATION
function. In the dialog box that opens, the system prompts us to enter the
precise period to be analyzed in order to determine the ratio. We select
the last twelve months and execute the analysis by clicking .

The SAP ERP system now uses the consumption values of the four items
in the product group to determine the actual individual material
percentages of the sales for the entire product group. For the three “old”
materials, the system shows a distribution of 35/40/25.

Our new bicycle received a percentage of “0” because we have not

posted any quantities yet. The sales department has informed us that it
expects the new bicycle to achieve a 20% market share within the
product group, with a uniform reduction in the percentages of the old
items. We therefore enter the new distribution 28/32/20/20 in the product
group (see Figure 3.3) and save it by clicking . This completes the
maintenance of the product group.
Figure 3.3: Updated product group
3.2 Rough-cut planning profile
In Section 1.1, I showed you that in the MRP II concept according to
Sales and Operations Planning, a check of the resources should
guarantee that the planning can be implemented. Also in this planning
step, the basis for the analysis is the comparison of the capacity
requirements and the available capacity. In SAP ERP, the latter is read
from the work center data (see Section 2.3). The capacity requirements,
however, are recorded using the rough-cut planning profiles.

Compared to the more detailed routings, the rough-cut planning profiles

are very simple data structures which enable us to plan on an aggregated
view. For this purpose, work center capacities, materials (usually raw
materials), production resources/tools, or direct costs are available as
planning bottlenecks to be taken into consideration. Because this
planning is rough-cut planning, in contrast to the capacity planning
discussed in Chapter 6, we do not precisely plan to the minute and
second, or to individual work centers, but rather to work center groups.

The profile consists of a simple table. The individual columns contain the
periods for which requirements are being recorded—the periods could be
workdays, for example, or calendar weeks. The rows contain all
resources that we require, across all bill of material levels, to
manufacture the material or the product group.

Task list usage

If you want to use work centers or work center groups,

make sure that the task list usage for the work centers
allows use in rough-cut planning profiles (see Section
2.3)!

We will now create a new rough-cut planning profile for our product group
ET-F-W. To do this, we call up transaction MC35 via the path: SAP MENU
• LOGISTICS • PRODUCTION • SOP • TOOLS • ROUGH-CUT PLANNING PROFILE. On
the selection screen, we enter values in the PRODUCT GROUP and PLANT
fields, and click EXECUTE (see Figure 3.4).

Figure 3.4: Rough-cut planning profile selection screen

Further rough-cut planning profiles

You use the same transaction to create rough-cut

planning profiles for materials, and for flexible planning.
Enter your data in the corresponding area of the
selection screen and use the button assigned to execute
the procedure.
A dialog box opens and we enter the general data for the profile (see
Figure 3.5). The value in the TIME SPAN field controls how many
WORKDAYS are combined for a period (i.e., into one column in the table).
The value in the BASE QUANTITY field corresponds to the base quantity
that we define resource requirements for in the table. The fields for the
selection data will already be familiar to you from the routing (see
Section 2.4) and are also filled accordingly. By clicking (continue
button), we access the actual rough-cut planning profile.

Figure 3.5: Rough-cut planning profile, general data

We now see the periods defined in the columns (see Figure 3.6); in the
individual rows we can enter the resources required for the rough-cut
planning. For our product group, these are the Assembly and Paint
shop work center groups. Double-click the field in the first column . In
the dialog box that opens , we enter a name for the resource (in our
example, Paint shop) and as resource type, we select the WORK
CENTER checkbox. In the second dialog box , which appears after we
click the green checkmark (hidden in the image), we enter the actual
work center ET-WC-02, the plant 1200, and the unit for the work H
(hour). We close all the dialog boxes by clicking and then repeat these
steps for the second work center.

Figure 3.6: Integrating a resource in a rough-cut planning profile

Because there is a period of approximately one week between the work

steps on these two work centers, we enter the capacity requirements in
hours for the paint shop in the first column, and the requirements for
assembly in the second column (see in Figure 3.7). Once we have
entered the information, we can save it by clicking .

We have now created a rough-cut planning profile that we can use to

subject the planned production quantities to a capacity analysis.
Figure 3.7: Resource requirements in a rough-cut planning profile
3.3 Standard SOP
With standard planning, SAP provides a preconfigured planning book for
planning sales and production quantities, as well as stocks.

As described in the introduction to this chapter, standard SOP uses a

simple planning table with six defined key figures. Four of these—SALES,
PRODUCTION, TARGET STOCK LEVEL, and TARGET DAY’S SUPPLY – can be
changed. The key figures WAREHOUSE STOCK and RANGE OF COVERAGE are
calculated automatically from the sales and production.

There are several options for determining the sales figures. The easiest
option would logically be to enter the planned values in the table
manually. However, the SAP system offers alternatives for generating or
transferring the data. If sales planning has already been performed in the
sales information system or in CO-PA, you can transfer the values
directly from there.

You can also have the system forecast the sales figures based on
historical data. If you decide to do this, you can select between different
forecast models: constant models, seasonal models, trend models, and
seasonal trend models (see Figure 3.10).

SAP ERP can also support you in generating the production quantities.
The standard SOP makes you decide whether to plan synchronously with
sales, or plan so that you achieve a predefined target stock level or a
target days’ supply.

Ultimately, capacity leveling allows you to display the resource

consumption for the planned production quantity and compare it with the
resources available. If there are capacity overloads, you can identify
them and take appropriate measures such as adjusting the production
quantities and improving the capacity available, seeing as the planning is
long-term.

In Section 3.1 and Section 3.2 we laid the foundations for SOP. We now
want to perform the actual planning for our product group. Because we
have the active plan scenario from the last planning cycle, we start
transaction MC82 from the menu: LOGISTICS • PRODUCTION • SOP •
PLANNING • FOR PRODUCT GROUP.

On the selection screen, we enter our product group ET-F-W and the
plant 1200, and click ACTIVE VERSION (see Figure 3.8).

Figure 3.8: Initial screen for the standard SOP

Inactive version

Standard SOP allows you to plan in multiple versions

and to check and compare these plans. To do this, you
create inactive versions; in contrast to the active version,
you can have any number of inactive versions. The
 recommendation is to use the inactive versions to test different
scenarios and then copy the approved and agreed scenarios to the
active version A00.

We are now in the planning table of standard SOP (see Figure 3.9). In
the header , we see the name of the product group, the plant, and the
version that we are performing the planning for. Below this , is the
detail area in which the planning key figures and planning periods are
displayed.

Figure 3.9: Standard SOP planning table

You can access the most important functions for planning via the menu:
EDIT • CREATE SALES PLAN and EDIT • CREATE PRODUCTN PLAN. In our
example, there is no preliminary planning that we can adopt. Therefore,
we initially use a forecast as the basis for planning.

We start the forecast via: EDIT • CREATE SALES PLAN • FORECAST… and in a
dialog box (see Figure 3.10), the system prompts us to select the model.

First, we enter the period intervals for the forecast and the historical
data. We allow SAP ERP to select the most suitable forecast model by
selecting AUTOMATIC MODEL SELECTION , under FORECAST EXECUTION. By
clicking the HISTORICAL… button at the bottom of the dialog box, we can
then display the desired number of historical values.

Figure 3.10: Forecast—model selection

The window that opens usually displays the historical consumption

values (see Figure 3.11). We can check these values for outliers (i.e.,
values that deviate significantly from the average) that have a negative
impact on our forecast. Outliers can arise due to delivery bottlenecks or
one-time large orders. Because there were no past consumption values
here, I have entered all values as corrected values so that we get a result
from the forecast.

We exit this window by clicking FORECASTING.

Figure 3.11: Forecast history

In the next step, we start the forecast. Another window appears for the
model selection (see Figure 3.12). Here we confirm the SAP system
proposal for testing by TREND AND SEASON. We also exit this window by
clicking FORECASTING or by pressing “F8”.
Figure 3.12: Forecast—parameters for automatic model selection

We now see the results of the forecast in a further dialog box (see Figure
3.13 and Figure 3.14).

The header data contains information about the evaluation of the

forecast; in our case, the basic value of the forecast 1200.400, the trend
value 15, the MAD (median of the absolute deviation) 12, and the error
total of the ex-post forecast 49. You can use these key figures to
compare two forecasts.

The details show the consumption values and the ex-post forecast
values for the past. We use these to test the forecast model on the
known values from the past and to calculate the key figures for the MAD
and ERROR TOTAL fields.

Figure 3.13: Forecast—results, ex-post forecast

If we scroll down (see Figure 3.14), we see the forecast values for the
forecast interval entered in Figure 3.10. If necessary, we can also correct
these manually by entering values in the CORR. FV column.
Figure 3.14: Forecast results

Below the details is a text line about the time series characteristic which
has changed . When we double-click this line, the procedural and error
message log for the forecast opens (see Figure 3.15). This log contains
all messages created during the program run. We close the log again,
and because we are satisfied with the results, we accept them by clicking
the green checkmark , as shown in Figure 3.14.

Figure 3.15: Forecast—procedural and error messages

The values have now been transferred to the SALES key figure. Now, to
add the production quantities, we select the menu item: EDIT • CREATE
PRODUCTN PLAN • SYNCHRONOUS TO SALES. The sales quantities are adopted
1:1 as production quantities. Our planning book now shows sales and
production figures (see Figure 3.16).

Figure 3.16: Planning table with sales and production quantities

However, we do not know yet whether this production is actually feasible,

and we therefore start the capacity evaluation by selecting the menu
item: VIEWS • CAPACITY SITUATION • ROUGH-CUT PLANNING • SHOW. Beneath
our planning table, we now see the table with the resource load. For
every resource that we have specified in the rough-cut planning profile, a
section containing the available capacity, the capacity requirements, and
the capacity load utilization is displayed, as shown in Figure 3.17.

The available capacity results from the settings that we defined for the
work center capacity (see Section 2.3). The available capacity is
determined for the monthly planning period in accordance with the work
calendar that applies for the plant.

For the capacity requirements, the rough-cut planning profile is simply

multiplied by the planned production quantity and set in the capacity load
utilization with reference to the available capacity.

If we look at the capacity load utilization, it becomes clear that, in

principle, there is sufficient capacity available at work center ET-WC-03
(paint shop). However, the assembly (work center ET-WC-02 )
cannot cope with the planned quantities due to the limited capacity
available. The capacity load utilization is at (up to) 168%. We have
multiple options for solving the problem:

The first option is to reduce the sales quantity; this is probably the
least practicable solution as it would mean a loss of sales.
An alternative would be to bring production forward to meet the
higher expected sales from the warehouse stock; however, this
solution works only for sales peaks over a limited time.
The third variant involves increasing the available capacity by setting
up a further work center or a further shift on the existing work
centers.
Figure 3.17: Planning table with resource load
3.4 Disaggregation and transferring requirements
The production figures are still in a rough breakdown in the SOP
structures. To allow you to work with these figures further in the
requirements planning, they have to be distributed via demand
management to the level of “material per plant”. In some circumstances,
a breakdown over weeks or days is also shown.

SAP ERP can also help you with this task. For the hierarchical
apportionment of the quantities, the proportional factor from the product
group is used. This allows you to transfer the quantities available at the
product group level to the level of the individual material.

As we have seen, in a product group, you can enter information for a

material in two different plants and thus effect an apportionment of
quantities over two or more plants. The best way to start this task is from
SOP with transaction MC75 (Transfer of Planning Data to Demand
Management). You can also access it via the path: SAP MENU • LOGISTICS
• PRODUCTION • SOP • DISAGGREGATION.

Temporal apportionment of planned quantities

The requirement for a temporal disaggregation is based

on the planning scenario and the production frequency.
For example, if the product is produced several times per
month, but the requirements are only transferred to the
requirements planning on a monthly basis, the requirements planning
will not be able to generate a realistic procurement proposal.

SAP ERP supports the temporal apportionment to the effect that

distribution always takes place using workdays. For a distribution of
months to weeks, this ensures that this distribution is correct, even if the
change of month does not fall precisely with the change of week. An
apportionment over days is also possible without any problem. The
factory calendar of the plant is always used, meaning that in the
disaggregation, you are not limited to a five-day week and if necessary,
you can distribute over all of the days defined as workdays in your
business.

We will now distribute our product group planning which we created in

this chapter and for which we have checked the resource situation at
material/plant level and over weeks. To do this, we call up transaction
MC75. On the selection screen, we enter our product group ET-F-W, the
plant 1200, and the plan version A00 (see Figure 3.18).

In the TRANSFER STRATEGY AND PERIOD area , we select PRODUCTION PLAN

FOR MATERIAL(S) OR PG MEMBERS AS PROPORTION OF PG. We set the transfer
period in accordance with our planning scenario. We then run the
transaction by clicking TRANSFER NOW .
Figure 3.18: Transferring planning data to demand management

Temporal apportionment within SOP

In principle, the disaggregation option is also available in

SOP. However, the planned values are then still only
components of SOP and are not visible for the material
requirements planning. I will therefore describe the
procedure with the transfer to the material requirements planning.

To verify the success of the transfer, we open the planned independent

requirements with transaction MD62 (Change Planned Independent
Requirements) via the path: LOGISTICS • PRODUCTION • MASTER PLANNING •
DEMAND MANAGEMENT • PLANNED INDEPENDENT REQUIREMENTS.

We start the transaction with our product group, the plant, and by
selecting ALL ACTIVE VERSIONS. A planning table is displayed again—the
table for demand management (see Figure 3.19).

In the header data we see the product group and planning period
selected. The detail area consists of three different tabs: TABLE, ITEMS,
and SCHEDULE LINES.

In the first columns, the TABLE tab shows the material number, the plant
or planning area, the version (column V), the active flag, and the base
quantity (column BU). These are followed by the columns for the
planning periods. These columns are dynamic and can display months,
weeks and days. A mixture of all these periods is also possible if, for
example, you want to look at two materials with different planning
periods.
Figure 3.19: Planned independent requirements, demand management table

On the ITEMS tab page, the relevant control parameters are displayed for
each material (see Figure 3.20). The requirements plan and the planned
quantity result from the demand management planning table. The
requirements type and the consumption control the behavior of the
planned independent requirements. The following values are purely
informative and are maintained in the material master:

Strategy group
MRP type
MRP group
MRP controller
Figure 3.20: Demand management items

Requirements plan

The REQUIREMENTS PLAN field offers you further

opportunity to classify the planned requirement
quantities. In the pure text field, when you create the
planned independent requirements, you can enter any
information you like. This key then identifies your requirements within
the higher-level version and is also displayed as a text for the MRP
element in the stock/requirements list (see Section 4.4).

The SCHEDULE LINES tab (see Figure 3.21) shows the demand schedule
lines created for each item. This view has a separate header area in
which the control parameters for the selected material are again
displayed. This is followed by the detail area where every schedule line is
listed with the period indicator (month, week, day), the requirements date,
and the planned quantity. The column highlighted in this detail area
allows different key figures to be displayed.

If you click the SCHEDULES LINES tab and withdrawals have already taken
place, the withdrawal quantity of the item is displayed. This is the quantity
that was offset with a requirement element (usually a customer order)
and for which a goods issue has consequently been posted. When the
goods issue is posted, the planned quantity is reduced and added as a
withdrawal quantity.

The item value is the monetary value of the planned quantity which has
been valued with the price from the accounting view of the material
master.

You can switch between the two key figures by selecting WITHDRAWAL
QUANTITY <->VALUES in the SETTINGS menu.

A further key figure that you can display in this column is the calculated
quantity. This has already been assigned to a specific requirements
element and is calculated automatically (controlled by the material master
settings in the MRP 3 view) with this element in the requirements
planning. The planned quantity itself is adjusted with the first goods issue
(see above). You can display the calculated quantity key figure via the
menu item SETTINGS • CALCULATED QUANTITY.

Below the detail area are the buttons that you can use to navigate
through the individual items .
Figure 3.21: Demand management schedule lines

Planning with a production version or serial number

You can define specific requirements for a schedule line

according to a certain production version (PVER) or serial
number. The corresponding columns are located in the
schedule line view (see Figure 3.21). You activate the
columns via the corresponding functions in the SETTINGS menu. If you
do define such specifications, they are taken into account in the
subsequent requirements planning and corresponding planned
orders are created.
Several options are available in demand management for allocating the
requirements on a time basis; for example, in the schedule line view, in
the SPLIT column, you can enter a period indicator such as the month (M),
week (W), or day format (D). Once you press the “Enter” key, SAP ERP
automatically apportions the schedule line quantity to the new periods, as
shown in Figure 3.22. Here, the planned quantity for December has been
allocated over weeks.

Figure 3.22: Demand management schedule lines allocated over weeks

3.5 Summary
In this chapter, we have learned how to process sales and operations
planning in SAP ERP. Based on the sales figures that we receive—
regardless of whether we receive them on paper, in an Excel file, or from
other SAP modules—we were able to derive a rough master production
schedule. We have checked this plan for feasibility using a rough-cut
planning profile and then transferred the production figures of the product
group to individual materials in order to then transfer them to
requirements planning as planned requirement quantities. The
subsequent requirements planning steps are covered in the next chapter.
4 Materials planning
When a requirement is recorded or created in a company, SAP ERP
plans the production and procurement of this item from the end
product to the raw material.
4.1 Requirements
Following on from the information in Chapter 2, in SAP ERP there are
also several requirements: independent requirements, dependent
requirements, and tertiary requirements. There are also additional
requirements: these should cover scrap, wear and tear, shrinkage, and
waste, and are applied to the other requirements as a percentage. In
general, however, only the independent and dependent requirements are
planned.

For each requirements type, SAP includes different MRP elements that
define the origin of the requirement in more detail, depending on the
business process. The independent requirements include the customer
requirements (CusReq), the independent requirements (IndReq), and the
forecast requirements (ForReq). In most organizations, the sales
organization records the independent requirements and makes them
available to the planning department via SAP ERP.

The dependent requirements are differentiated between dependent

requirements from planned orders (DepReq) and order reservations from
production orders (OrdRes). The DepReq arise from the existing planning
and therefore can also be changed by the material requirements
planning.
4.2 Planned orders
Planned orders are simply constructed elements of material requirements
planning (see Figure 4.1). Their most important function is to transfer
requirement quantities along the production levels. They therefore
contain, at a minimum, details of the order quantity, the basic dates, and
a bill of material . Further elements include the date for which the
material will probably be available and the code of the production plant.

Figure 4.1: Displaying a planned order, header data

The lead time for a planned order (i.e., the interval between the basic
finish date and the basic start date) results from the in-house production
time defined in the material master. From this information, the
requirements date by which the components have to be available can be
calculated. You can find this in the COMPONENT OVERVIEW of the planned
order (see in Figure 4.2).

Figure 4.2: Displaying a planned order, component overview

4.3 Material requirements planning
Material planning takes place in SAP ERP using a program that is usually
run every night. To keep the runtime of the program within acceptable
limits (something which is necessary particularly in the case of a large
number of materials), net change planning is used. It runs over the
separate planning file entry table file. During the day, a flag is set for all
materials for which planning-relevant changes take place. Consequently,
during the nightly planning run, only those materials are planned that
have a corresponding flag, and the flag is subsequently deleted.
“Planning-relevant operations” include the recording of, or change to, a
sales order; the creation of a DepReq (through the creation of a planned
order), or a change to the planning parameters in the material master.

The second important value for executing material planning is the low-
level code. This is assigned to every material and is updated as soon as
it is used as a component in a bill of material. It describes the lowest level
at which the material is integrated in all bill of material hierarchies. This
information is required in the planning run so that all materials triggering
requirements can be planned before the procurement proposals for the
material are created.

For each material, the gross requirements are initially determined as part
of the requirements calculation. In this calculation, the material quantities
from planned independent requirements, customer orders, stock transfer
orders, and/or dependent requirements are added together according to
the material master settings.

The stock calculation is the counterpart to the requirements calculation.

In the stock calculation, the applicable stock and permissible, previously-
planned receipts are determined.

When we reconcile the results from the stock calculation and

requirements calculation to one another, we get the net requirements,
and therefore refer to net requirements planning. If only the gross
requirements are used for planning, we refer to gross requirements
planning.

In the order quantity calculation, where there is a deficit situation, the lot
size settings from the material master are applied and a requirements
coverage element created. This indicates the date on which the shortage
should be compensated and with what quantity to be procured.

When the MRP run is started at night, a net requirements calculation is

performed for every material, beginning with the first of the smallest low-
level code. All requirements are subtracted from the warehouse stocks
currently available, in chronological order, and all fixed stock receipts are
added. This gives rise to a time series for the available quantities. If this
value is negative, then there is a material shortage and new resources
(= planned order) are created for this stock’s deadline in the MRP run.

A planned order is an element that specifies when a specific quantity of

the material is required to avoid a material shortage situation. It does not
state whether the components required are already available or whether
there is capacity available for manufacture. The quantity to be procured
in the planned order is determined by the lot-sizing procedure entered in
the material master and is added to the time series of available
quantities. If there is still a shortage, planned orders are created until the
shortage has been compensated.

Subsequently, in the MRP run, the other materials of this low-level code,
and then the other low-level codes, are planned. The results of these net
requirements calculations are saved in MRP lists so that the MRP
controller responsible can follow the calculation if necessary. Using these
lists, the controller can also identify and correct critical situations that
have occurred in planning.

In our example, the sales department assumes that the new bicycle will
be sold from January 2018 and has recorded planned requirement
quantities according to target forecasts (see Figure 4.3).
Figure 4.3: Stock/requirements list ET-F-WT500, independent requirements

The AVAILABLE QTY shows that a negative warehouse stock would cause a
material shortage situation from July. In material requirements planning,
SAP ERP now creates planned orders to cover the requirements in
accordance with the lot-sizing procedure set. The exact lot size has been
predefined for the bicycle; i.e., for each requirement element exactly one
resource is created. Every planned order created (see Figure 4.4)
generates dependent requirements for the components in accordance
with its lead time and bill of material.
Figure 4.4: Stock/requirements list ET-F-WT500, with planned orders

I will now present one of these components in more detail. As seen in the
STOCK/REQUIREMENTS LIST in Figure 4.5, the warehouse stock available for
the rear wheel (material ET-1006) is 200 units in mid-January 2018. The
dependent requirements are deducted from this quantity (each week) to
determine the quantity still available. As you can see in this illustration, a
material shortage does not occur until February 14.
Figure 4.5: Stock/requirements list ET-1006, dependent requirements

The rear wheel is planned with a fixed lot size, because an acceptance of
precisely 1000 units has been agreed with the supplier. Material
requirements planning therefore creates a planned order with the
corresponding quantity for every material shortage. As you can see in
Figure 4.6, this ensures that there is always a certain residual quantity in
the warehouse.
Figure 4.6: Stock/requirements list ET-1006, with planned orders

Performing Material Requirements Planning and Evaluating the

Results

The material requirements planning is the core of master

planning: it determines the number of units to be
produced across all bill of material levels. For information
about how to start material requirements planning and
then evaluate it, see the following video: https://espresso-
tutorials.com/PP.php
4.4 Evaluations
As mentioned in Section 4.3, an image of the stock/requirements
situation is created for every planned material after the material
requirements planning run—the MRP list. To display this for our bicycle
planning, you can use transactions MD05 or MD06. It makes more sense
to use the collective access to the data via transaction MD06 so that you
can see all of the materials for the bicycle at a glance. Call up the
transaction and enter MRP CONTROLLER 000 and PLANT 1200. You can
then add further filter criteria to make the search results more precise.
This allows you to exclude items that have been planned on a
consumption-driven basis by limiting the selection to MRP type PD. Click
to save your selection criteria as a default setting. Figure 4.7 illustrates
the example access to the transaction. You confirm the selection with the
“Enter” key.
Figure 4.7: Access to transaction MD06

In the window that opens, you see a list of all MRP lists that meet the
selection criteria entered. You can sort this table and search in it to make
it easier to select the materials for which you want to display the MRP
lists. To do this, in the EDIT menu, select the SEARCH function to access
the search screen. Alternatively, you can press the keyboard combination
“Ctrl” + “F”. For example, you can search for specific MRP elements.
After you run the search, the materials that meet the search criteria are
highlighted in the table. If you want to display the MRP lists for the
highlighted items, click SELECTED MRP LISTS (see Figure 4.8).
Figure 4.8: Material list in transaction MD06

In the subsequent view (see Figure 4.9), the left side of the screen shows
a list with all materials selected , and the main part of the screen shows
the requirements, stocks, and receipts directly after the net requirements
calculation . In the upper part of the window you can display
additional data. An MRP list includes data about materials planning and
exceptional situations that have occurred during this planning, as well as
data from the planning views of the material master record and
consumption data from recent months.
Figure 4.9: MRP list with material list

You can adjust this view to your own requirements. Via the menu path:
ENVIRONMENT • OWN FAVORITES • MAINTAIN, you have access to a
configuration menu (see Figure 4.10), in which you can create frequently
required transactions as Favorites. These then appear in the function bar
below the menu functions. All you have to do is select the transaction
code, an icon, and the text, and then save the view.
Figure 4.10: Creating your own favorites

If you need more detailed information about the material situation for a
specific order, select the order and activate the button next to the plant
stock (see in Figure 4.11). Instead of the material list, you now see an
order report . This report shows the bill of material with the
requirements date for the selected order, as well as the elements that
cover this requirement. These can be stocks or other receipt elements
such as planned orders or purchase requisitions. These displays also
show whether supplying the order leads to exception messages for the
components.

Figure 4.11: Order report in transaction MD06

With regard to the layout and functions, the MRP and the
requirements/stock lists are similar. It is only the data displayed that is
different. Therefore, the information presented for access to the
transaction, for the overview table in the collective access, and for the
actual list applies equally for transactions MD04 and MD07 (Current
Stock/Requirements List). The difference is that transaction MD04 always
shows the current situation, and this may have changed since the
materials planning. Therefore, if you have made changes to the planning
for an item during the working day and want to analyze the effects, you
should use transaction MD04.

Stock/requirements list for multiple materials

 With Enhancement Package 2005.2, SAP provided
additional functions for the stock/requirements list. If the
business function LOG_PP_LMAN is activated in your
SAP system, you will see additional tabs in transactions
MD04 and MD07 that you can use to call up consolidated lists. This
can be a cross-plant display of the planning situation of a material or
an overview of the planning situation for all materials of a product
group in a plant. You can adjust this function to meet your
requirements in the settings.

A further function for evaluating the current planning situation is in

transaction MD48, as shown in Figure 4.12.Here, based on the monthly
period split, you can get an overview of the situation for a material. In
addition to the number of sales orders, the level of stock, and the scope
of preliminary planning or planned orders, you can see the volume of
receipts from production orders. With this transaction you can switch to
the different elements to examine them in more detail.

Figure 4.12: Planning overview MD48

The last transaction reflects the transition to Shop Floor Control. With
transaction CO41 COLLECTIVE CONVERSION, you can select all planned
orders, based on an opening date, and convert them into production
orders in mass processing. This is by far the easiest way to create these
orders. Once you have called up the transaction, select MRP
Controller 000 and enter the current date as the latest creation date. The
subsequent list (see Figure 4.13) contains all planned orders whose
opening date has either been reached or already exceeded. By clicking
the corresponding buttons, select all orders and using the CONVERT
function, convert them into production orders.

Figure 4.13: Collective conversion of planned orders, CO41

4.5 Summary
In this chapter, I presented the most important aspects of requirements
planning in SAP ERP. Based on the planned requirement quantities for
sales and operations planning (see Chapter 3), we performed material
requirements planning for the entire structure of our bicycle. You learned
what effect the requirements have on materials planning and what the
function of planned orders is. Finally, we analyzed the materials planning
results with different tools and we created production orders. The next
chapter provides more detailed information on these elements and
explains how you can use them to control and map production.
5 Shop floor control
For the planned production to be optimally executed and monitored,
production orders have to be created. Below, I explain how these
are set up and how you can work with them effectively.
5.1 Production order
Production orders are independent elements of Shop Floor Control. They
are used to represent the production run, to print production papers, to
document the degree of processing, to record material withdrawals, and
to post the production activity required for manufacture. You can see that
the order has an important role for control. Therefore, I will firstly outline
basic principles for setting up a production order.

Just like a material master, for example, a production order consists of

different layers (see Section 2.1. It unites the routing and bill of material
master data with the header data. To prevent every change in Shop Floor
Control causing an immediate adjustment to the master data, when you
create a production order, a copy of the routing and the bill of material is
created especially for this order (see Figure 5.1). You can create
production orders from a planned order (see Section 4.4) or manually
with transaction CO01 (SAP MENU • LOGISTICS • PRODUCTION • SHOP FLOOR
CONTROL • ORDER • CREATE). You process the production orders created
with transaction CO02.
Figure 5.1: Master data interaction for a production order

The initial screen of a production order usually shows the header data.
Here, we use the example of a bicycle fork, as shown in Figure 5.2. In
particular, this data unites organizational details and control parameters
for the planned order processing. For example, basic dates are
displayed, as well as the execution dates from the first to the last activity
and the release date. These are then compared to the actual dates.
Further tabs contain, in particular, control parameters, including
parameters for goods movements, costing, and scheduling. The MRP
controller key is also defined here, as well as the bill of material and the
routing used. The header area of the screen contains basic data such as
the order number, material, plant, and order type. Below the header data
the scheduling type applied and the float (buffer) times considered are
displayed.
Here you can call up a list of the total and scrap quantities and the
number of pieces already delivered.

Figure 5.2: Order header data, fork production order

You can see the routing that is the basis for the order execution under the
OPERATION OVERVIEW (see Figure 5.3). Here, the data from the standard
routing (see Section 2.4) has been supplemented with the dates for the
lead time scheduling. Every operation of an order has a status and an
individual completion confirmation number that can be used to confirm an
activity or quantity.

Personalizing the column arrangement

 You can adapt this overview, just like many others, to meet your own
requirements by shifting the column (headers) with the
mouse and then saving the arrangement as a template.
To do this, click the symbol to the right of the column
headers.

You can switch from this view to the view of the operation details—either
double-click the operation number or click the corresponding button.

Figure 5.3: Operation overview, fork production order

The bill of material for the order is also copied and supplemented with
further data. As soon as you have assigned individual parts to an
operation, the individual requirements date for each component is
transferred from the operation—provided the system is configured in this
way. This assignment therefore has the effect of shifting the requirements
date of the component from the basic start date to the start date of the
respective operation. The order BOM documents, for example, for each
individual component, whether and how much of this material has already
been withdrawn (see Figure 5.4).

Figure 5.4: Component overview, fork production order

The easiest way to switch between these views is by clicking the buttons
in the order’s toolbar (see Figure 5.5). You can also see the most
important functions for processing the order; for example, for releasing or
scheduling it.

Figure 5.5: Toolbar in the production order

5.2 Scheduling
One of the most important functions of the production order is lead time
scheduling. Depending on the setting, scheduling is either forwards from
the basic start date of the planned order or backwards from the basic
finish date.

Forwards/backwards scheduling

The decision whether to schedule forwards or backwards

depends on the MRP procedure used.

If you use planning-driven or requirements-driven

materials planning, you calculate backwards from the requirement. In
contrast, if you use reorder point materials planning, then when you
create the order, you calculate forwards from the date of creation.

SAP ERP receives the data required for scheduling from the copied
routing, the related work centers, and the scheduling margin key
transferred from the material master to the header data.

A production order consists of a number of different dates and scheduling

parameters. I will present the most important values based on Figure 5.6.
Figure 5.6: Order and operation scheduling

Every order covers two basic dates that position the order relative to
other orders. The basic start date defines the requirement date for the
components and the basic finish date defines when production is
complete. Both dates are always created on a day basis; i.e., not for a
specific time.

The scheduled start and finish dates of the order represent dates for
production operations and are separated from the basic dates by time
buffers (referred to as “floats”). The scheduled finish is the completion
time of the last operation of the order and is separated from the basic
finish date by the float after production. The start of the first operation is
also the scheduled start and follows the basic start date by the float
before production. These dates are created taking the availability of the
required work center into account, and they stipulate a time (see again
Figure 5.2).

The production operations take place one after the other between the two
dates. Each of these operations consists of different sections that are all
planned to the precise minute; the queue time specifies the required time
from the “arrival” of an order at the work center to the start of setup. As
this float is a mean value, it is not clear whether in an individual case it is
as large as assumed. Therefore, the entry of a queue time means that in
ERP, both an earliest (without queue time) and a latest (with full queue
time) point of execution (of work) are created for every operation. The
order is then executed between these two extreme points.

Setup, processing, and tear down are the sections in which work takes
place at the work center. During setup, the work center/machine is
prepared for the order; for example, tools are provided, test equipment is
organized, and the machine program is loaded. The setup time is not
dependent on the number of units in the order. Processing describes the
period in which—as the name already indicates – the workpieces are
processed. It is dependent on the number of units produced. After
processing, the machine is stripped down and cleaned. The time required
for this is also not dependent on the number of units.

If there are special technological features that prevent immediate

transport of the goods to the next work center (e.g., time for hardened
goods to cool down or for painted parts to dry), this is a (process-related)
queue time. The last section of an operation is the transport time to the
next operation.

Let us take a more detailed look at scheduling using an order for the
production of the bicycle fork. Backwards scheduling is set for this order;
the same relationships and dependencies apply for the forwards
calculation, but in the reverse order. The result of the net requirements
calculation was that the production order must be completed on
03/23/2018. This is the basic finish date, which results from Figure
5.2 and, as an extract of the order header, also from Figure 5.7 (see ).
Because there is no float after production built into the scheduling margin
key , the scheduled end is connected to the basic finish date . In our
example, this is 03/22/2018 at 19:00. This date is also the last date of
operation 0030 , the third and final production step in this order. Before
the tear down, process, and setup operations are scheduled, a required
wait time of 120 minutes must be deducted starting from this date. This
means that the painter must set up or prepare his work center for this
order by 03/22/2018, 14:52 at the latest. Before setup, the wait time
(here, six hours) is included in the calculation. This results in an earliest
possible point of execution for the operation that is exactly zero hours
offset to the latest point of execution. Therefore, the operation can finish
at the earliest on 03/22/2018 at 12:37, and must therefore be set up
on 03/22/2018 by 08:30. The previous operation—0020 (painting with
base coat)—is aligned with this earliest possible point of execution for the
setup. This scheduling loop is repeated for every operation.
Figure 5.7: Operation overview, fork production order

The earliest possible deadline for the setup in operation 0010 (welding)
determines the scheduled start that you see in the order header. The
release date for the order is thus five working days (the number of
days specified in the RELEASE PERIOD field) before the scheduled start. It is
a control date for the release of the production orders, similar to the
opening date for the planned orders.

A production order is scheduled automatically when it is created and

when it is saved. If changes occur in the meantime and you want to
reschedule the order, you can do this by clicking the relevant symbol (see
Figure 5.5).
5.3 Availability check
The next step for the production order is the material availability check.
Using a set of rules, the system determines whether the required
components are available at the requirements date for this order.

In the available-to-promise (ATP) check (check of the guaranteeable

stock), starting with the current stock and the expected receipts up to the
requirements date, the quantities already reserved for another issue are
subtracted. The residual quantity (ATP quantity) is available for the
current order. If it is sufficient, the order receives the status “MACM”
(material confirmed). The ATP quantity is reserved so that it is identified
as “no longer available” for subsequent checks for other orders. If the
existing stock is not sufficient, the order receives the status “MSPT”
(missing material).

For the production order that we created for the fork (material ET-1012),
missing parts have been identified during the automatic check. You can
call up the MISSING PARTS OVERVIEW, shown in Figure 5.8, directly from the
message. We can see that the ATP check indicated insufficient coverage
for two components. For material ET-2001, 200 pieces were confirmed
for the requirements date. The remaining 200 pieces are initially open as
missing parts because at this point, we do not know when any new parts
will be delivered—we can see this in the COMMITTED DATE field (which
contains the entry 12/31/9999). MATERIAL ET-2011 is not available at
all on the requirements date, but the system has been able to determine
that on 04/03/2018, the entire 50 L will be available and therefore, in
this line the committed date was set to that date.
Figure 5.8: Missing parts overview, fork production

At this point, we are interested in how material ET-2011 is confirmed and

we check this component in detail again. To do this, we select the line
and click . A confirmation proposal is displayed (see Figure
5.9). In this proposal, we cannot see yet how the result arose. In the
check result, however, we see again that confirmation on the requested
delivery date is not possible; complete confirmation can only take place
on 04/03/2018, and there is only one—the complete—confirmation
proposal. If the SAP system could propose partial confirmations, these
would be displayed in this section, but this is not the case in our example.
To see the detailed information that the check was based on, in a
subsequent view, we click ATP QUANTITIES.
Figure 5.9: Confirmation proposal, paint—base coat

The AVAILABILITY OVERVIEW that now opens shows, in the ATP SITUATION
area, how the results of the check arose (see Figure 5.10). The
receipts/required quantities for the relevant MRP elements are presented
in chronological order. We already know this form from the
stock/requirements list (see Section 4.3); here, however, the CONFIRMED
and CUM. ATP QTY columns have been added. (CUM. ATP QTY indicates
the total quantity available at this point)

We see that the warehouse stock (STOCK) of 50 L has already been

confirmed for an order allocation in February; this means, however, that it
is no longer available for our current check (represented by the MRP
element SIMREQ) for 03/01/2018. The next receipt does not take place
until 04/03/2018 and supplies a quantity of 178 L due to a planned
order (PIORD). This goods receipt led to the confirmation date that was
visible on the previous screen.

Figure 5.10: Availability overview, paint: base coat

5.4 Order release
Production should take place as soon as planning and order creation are
complete. The order release is the trigger. The following activities can
only take place once this has happened:

printing of shop floor papers

posting of stock withdrawals
confirmation of operations
posting of stock receipts (into warehouse/stores)

You can execute the release interactively in the order by clicking the
corresponding button in the order header (see Figure 5.11). You see
immediately how the STATUS changes from CRTD (created) to REL
(released). All remaining open activities linked to the release (e.g.,
automatic printing) are executed when you save the order .
Figure 5.11: Order release, Header view

Alternatively, you can execute a mass release via transaction CO05N:

SAP MENU • LOGISTICS • PRODUCTION • SHOP FLOOR CONTROL• CONTROL (for
the initial screen, see Figure 5.12). Restricting the selection is particularly
helpful here. You can restrict it based on the value in the SCHEDULED
RELEASE DATE, in field . This ensures that only those orders that should
be released from a scheduling perspective are selected. The restriction to
our bicycle parts is via the production plant 1200 and the MRP controller
000 . You can refine the selection further via the system status and,
for example, select only those orders that no longer contain missing
parts. You start the transaction by pressing “F8” or by clicking .

Figure 5.12: Initial screen of the mass release of production orders, CO05N

The subsequent order list shows the orders that match our selection (see
Figure 5.13). If everything is OK and we want to release all of these
orders, we select them all by clicking the corresponding button and
then start the release by clicking the MASS PROCESSING button .
Figure 5.13: Execution of mass release of production orders
5.5 Material withdrawal
Once the order has been released, the components must be withdrawn
from the warehouse. We post this withdrawal with transaction MIGO:
SAP MENU • LOGISTICS • MATERIALS MANAGEMENT • INVENTORY MANAGEMENT •
GOODS MOVEMENT, with reference to the production order (see Figure
5.14). From the dropdown menu, we select the Goods Issue and
Order options , and in the third field, enter our order number
60003993. SAP ERP has already derived the correct movement type
261 GI FOR ORDER from our selection and displays this. We confirm the
entry of the order number by pressing “Enter” and the components of this
order are now displayed.

Figure 5.14: Recording the goods issue with transaction MIGO, initial screen

For each component of the production order, we can now adjust the
quantity and the storage location (see Figure 5.15). If we are happy with
the values entered, we select the items we want to post by placing a
checkmark in the OK field and then click POST.
Figure 5.15: Recording the goods issue, selecting the components

The posting has several effects:

The stock is reduced.

The requirements are reduced.
The actual costs are debited to the order.
A material document and an accounting document are created to
document the movement of goods.

You can also track the result of the posting in the COMPONENT OVERVIEW of
the production order (see Figure 5.16). In the corresponding columns you
can see the QUANTITY WITHDRAWN and an indicator that states whether
the item was withdrawn completely .
Figure 5.16: Production order, components withdrawn

If certain regularly required components, such as screws, are not in the

warehouse but are held in stock in the assembly work center, a material
withdrawal by means of backflushing is more useful than a posting in the
warehouse.

Backflushing

In backflushing, the posting of the material is connected

to the confirmation of the operation. When you confirm
an operation to which materials are assigned in the
component assignment (see Section 2.4), and these
materials are identified as BACKFLUSHING, a material withdrawal for the
quantity in the confirmation quantity that you entered is executed.
5.6 Confirmations
You use Confirmation to record production progress and make it
transparent for other users of the ERP system. This enables you to
monitor your production and to intervene to make corrections when
necessary. You can enter the following values in the confirmation:

quantities
activities
deadlines
HR data
work centers

The backflushing already showed that a confirmation covers more than

just the documentation of quantities and activities. For example, further
actual costs are debited to the production order based on the activities
reported. The confirmation can also trigger an automatic goods receipt
posting for the order, and this posting offsets a backflushing.

The most common form of confirmation is the time ticket, which you can
confirm using transaction CO11N (see Figure 5.17). After ending an
operation, start the transaction and in the CONFIRMATION field , enter the
confirmation number of the operation. After you press the “Enter” key
the ERP system loads the order data and you can edit the good and
scrap quantity if necessary, as well as the required activity (setup,
machine, and labor ratios) . The confirmation is executed as soon as
you save by clicking the disk icon .

Partial confirmations

You do not always have to confirm the entire operation

with the complete number of units. You can also execute
a partial confirmation of quantity and activity at the end of
 a shift or working day. This documents the current degree of
processing and is traceable for other SAP users.

Figure 5.17: Recording confirmation, CO11N

5.7 Goods receipts for production orders
In Section 5.5, we recorded the goods issue for the components. We now
have to post the goods receipt for the finished material when it arrives in
the warehouse.

To do this, we start transaction MIGO again (see Figure 5.18). This time,
however, we select the Goods Receipt and Order functions and add
our order number again. The SAP ERP system again proposes the
correct goods movement 101.

Figure 5.18: Recording the goods receipt, initial screen of transaction MIGO

Once we have confirmed the order number by pressing “Enter”, the first
line displays the target material of our production order with the order
quantity (see Figure 5.19). In the item details, we can review all the data
before clicking POST to post the goods movement.
Figure 5.19: Recording the goods receipt, completing transaction MIGO

This posting has the following effects:

The material stock is increased.

The open receipt quantity for the production order is reduced.
The production order is credited with the actual costs, and a material
document and an accounting document are created to document the
goods movement.
We call up the production order with transaction CO03 to check it and in
Figure 5.20, we can now see that the production order shows a delivered
quantity of 200 pieces. This means that the entire planned quantity has
now been delivered to the warehouse.

Figure 5.20: Production order, delivered quantity

6 Capacity requirements
planning
The service to be provided for the production—the capacity
requirement—always requires a free available capacity in order to
be executed.

In this chapter, I show you how to get an overview of your capacity load
utilization and how to plan effectively with limited capacities.
6.1 Capacity evaluations
A simple way of getting an overview of the utilization of your work centers
and machines is to compare the capacity requirements of your orders
and the existing available capacity of the work centers. In the SAP ERP
system, transactions CM01 and CM02 (SAP MENU • LOGISTICS •
PRODUCTION • CAPACITY PLANNING • EVALUATION • WORK CENTER VIEW) allow
this type of evaluation.

The capacity requirements are calculated from the standard values and
order quantity defined in the routing using the formula set in the work
center. Note, however, that there are different formulas for scheduling
and capacity calculation! The capacity requirements are usually reduced
by the confirmation of the corresponding operation. The requirement is
usually updated corresponding to the quantity confirmed.

The available capacity is maintained for each work center for every
capacity category. To do this, enter the shift schedule of the work center
in the master data of the work center capacity. If no shift schedule is
maintained, you can also work with the standard available capacity. This
is set approximately and constant for the future, meaning that no
fluctuations (e.g., vacation) can be considered.

If you want to get an overview of the capacity load for a work center (e.g.,
for welding station ET-WC-01), use transaction CM01. For our example,
on the initial screen, enter work center ET-WC-01 and plant 1200 and
confirm with the “Enter” key. The standard overview of the capacity load
utilization appears. For each calendar week, you can see the total
requirements from the production orders, the available capacity for the
work center, and a resulting calculated percentage load. Weeks with a
load exceeding 100% are highlighted red. In our example, as seen in
Figure 6.1, the work center is overloaded in weeks 11 and 12.

If you want to know which orders led to this overload, you can select the
required periods with a checkmark and then, by clicking CAP.
DETAILS/PERIOD , display a list of the individual orders.

Figure 6.1: Standard overview of the capacity load utilization CM01

This detailed capacity list is very similar to the list that appears when you
call up transaction CM02. The difference to the transaction call is in the
periods displayed (see Figure 6.2). If you navigate away from CM01, only
the weeks you have selected are displayed.

In contrast, if you call up the capacity detail screen from

transaction CM02, you can see all the coming weeks’ requirements; in
comparison to CM01, no available capacity is visible here. In the
illustration, you can see that the capacity requirements of an order have
been distributed to the individual weeks in accordance with the
scheduling.
Figure 6.2: Capacity detail screen of the capacity load utilization CM01
6.2 Capacity leveling
In the previous section, you saw that at work center ET-WC-01, the load
exceeded the available capacity in two calendar weeks; the work center
is overloaded. During your daily work, you will encounter many such
situations and each one will be slightly different. Therefore, there is no
“one correct” solution for handling this situation or one form that capacity
leveling should take. Therefore, in this section, I not only present a
transaction but also show you some options for which you do not need a
new SAP function. In principle, there are two approaches for reducing the
load in the overloaded weeks:

increase the available capacity, or

reduce the capacity requirements.

You can generally increase the available capacity over the short term in
two ways: you either use an additional individual capacity (however, this
is only possible for work centers operated by personnel), or the available
employees have to work longer (e.g., at the weekend).

If one of these options is available to you, in the SAP system, call up

transaction CR12 to change the available capacity. On the initial screen,
enter PLANT 1200, WORK CENTER ET-WC-01, and CAPACITY CATEGORY 002
and press the “Enter” key to confirm. The standard available
capacity set appears on the subsequent screen (see Figure 6.3).
Assuming that we have a third welder who can be deployed in the two
weeks of the capacity overload, you have to increase the available
capacity accordingly. To do this, we click the INTERVALS AND SHIFTS button
to adjust the shift plan that applies to this work center.
Figure 6.3: Changing the work center capacity, Header

The overview of the intervals of available capacity then appears (see

Figure 6.4). In the lower area of the display , you can see all intervals
with the relevant valid shift plan. Here we can see that on this work
center, work is performed on five days with two shifts each day: the early
shift F-11 and the late shift S-11. Originally, only one person was
planned for each shift. However, to increase the available capacity, we
enter 2 as the number of individual capacities in the early shift . This
means that on this work center, three employees work in two shifts.
Figure 6.4: Changing the capacity, adjusting the intervals of available capacity

We check the result of our capacity increase by calling up transaction

CM01 again (see Figure 6.5). We have eliminated the overload in CW11
and CW12. In fact, we have done more than that—there is now enough
free capacity in production to process even more orders. The use of a
third employee to increase the capacity therefore eliminates our
bottleneck in production.
Figure 6.5: Capacity requirements planning, Standard Overview

Instead of changing the available capacity, you can also adjust the
capacity requirements. To do this, you can either schedule an order on an
alternative work center or shift it in the schedule. I will explain the
procedure with the latter option using the graphical planning table in
SAP ERP. You start the graphical planning table with transaction CM21.
On the initial screen, enter plant 1200, work center ET-WC-01, and
capacity category 002. After confirming with the “Enter” key, we see an
overview, as shown in Figure 6.6. The upper part of the window shows
the operations already scheduled on the work center. In the lower part,
you can see the pool of orders not yet scheduled. In our case, this list
contains the orders for the frame and the fork. As explained in Section
6.1, the components for the fork will not arrive until later, which is why the
operation had to be split. Therefore, we also schedule this order first.

To do so, click the OPERATION and then the SCHEDULE symbol ( ,

alternatively, “F5”). The bar for this operation is now in the scheduled
operations area (see Figure 6.7 ).

Figure 6.6: Graphical planning table, view before scheduling

Figure 6.7: Graphical planning table, forks scheduled

As the forks currently occupy the two individual capacities of the work
center, production of the bicycle frames is not possible in weeks 11 and
12. If you now schedule this operation, the SAP system shifts it
automatically. In our example, the settings mean that the operation would
be brought forward to produce the frame before the fork. If you select the
operation in the pool and click SCHEDULE, the operation is scheduled
accordingly. In Figure 6.8 you can see that the order for the frame now
has to start in week 10 because it has been brought forward. To save this
sequence, simply click the disk symbol. The rescheduling is now saved.

Figure 6.8: Graphical planning table, bicycle frames and forks scheduled

To check whether the overload situation has actually been resolved, call
up transaction CM01 again. In Figure 6.9, you can see that this
procedure has eliminated the capacity overload. However, you have to
check separately whether all required components will be available for
this earlier deadline (see Section 5.3).
Figure 6.9: Capacity requirements planning, standard overview
7 Summary
For manufacturing companies, production planning is the central process;
a production company can only sustainably achieve its objectives if this
process is effectively and efficiently mapped. This makes the PP module
extremely relevant for SAP customers in this area. In writing this book,
my aim was to clearly explain the underlying planning approach and its
methodology. I covered the master data involved in planning processes
and how it is structured. Using our bicycle example, we traced the sales
and operations planning and the material requirements planning, and
their process flow. I showed you the importance of production orders for
lot-related production and which functions they perform. Finally, you
learned how to implement capacity sequencing using capacity leveling in
SAP ERP.

I hope that this book has provided you with an informative overview of
production planning in SAP ERP. While reading this book, you will
certainly have become aware that planning processes are much more
detailed than can be presented as part of an introduction. You could
easily fill an entire book for each chapter.

I imagine you decided to read this book because you were looking for a
quick introduction and overview of SAP PP. If you want to look deeper
into this topic, I recommend that you try things out in practice. Remain
inquisitive! If you are a student, you can ask at your college or university
whether they have access to an IDES (International Demonstration and
Education System). If you are an employee, then ask at work about
access to an IDES or test system. Additionally, in every SAP system, you
can use the “F1” key to get quick and uncomplicated access to
help/documentation. Alternatively, you can use the SAP online help at
any time under http://help.sap.com. However you proceed, I hope that
the basic knowledge I have provided in this book has given you a good
basis for looking at, and dealing with, the topic of production planning in
more detail.
A Transaction Overview
CA01 Create Routing

CA02 Change Routing

CA03 Display Routing

CM01 Capacity Planning, Work Center Load

CM02 Capacity Planning, Work Center Orders

CM21 Capacity Leveling: SFC Planning Table

CO01 Create Production Order

CO02 Change Production Order

CO03 Display Production Order

CO05N Collective Release Production Order

CO11N Enter Time Ticket

CO41 Collective Conversion of Planned Orders

CR01 Create Work Center

CR02 Change Work Center

CR03 Display Work Center

MC35 Create Rough-Cut Planning Profile

MC36 Change Rough-Cut Planning Profile

MC37 Display Rough-Cut Planning Profile

MC75 Transfer PG to Demand Management

MC81 Create Planning for Product Group

MC82 Change Planning for Product Group

MC83 Display Planning for Product Group

MC84 Create Product Group

MC85 Display Product Group

MC86 Change Product Group

CR12 Change Capacity

CR13 Display Capacity

CS01 Create Material BOM

CS02 Change Material BOM

CS03 Display Material BOM

MD04 Stock/Requirements List

MD05 MRP List (individual access)

MD06 MRP List (collective access)

MD07 Current Material Overview

MD44 MPS Evaluation

MD48 Planning Situation: All Plants

MD61 Create Planned Independent Requirements

MD62 Change Planned Independent Requirements

MD63 Display Planned Independent Requirements

MD67 Staggered Split

MIGO Goods Movement (MIGO)

MM01 Create Material (immediately)

MM02 Change Material (immediately)

MM03 Display Material (current status)

You have finished the book.

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B About the Author

Björn Weber is Head of Production Planning Systems in the

Unternehmensgruppe Theo Müller and in this role, is responsible for the
SAP modules PP and PP-PI there. He has detailed technical knowledge
in the areas of process analysis, lean management, and production and
capacity requirements planning. In his function, he supports the
departments across Europe in the implementation of projects for setting
up and optimizing new and existing business processes.

Previously he was employed a production planner at Röhm GmbH, one

of the leading global manufacturers of clamping technology. As a project
manager there, he was responsible for further development of the
planning organization and processes in connection with SAP ERP and
the detailed planning software wayRTS.

As an author, it is particularly important to Björn to convey his expertise

as practically as possible and in a way that is easy to understand, and to
attract the reader with the possibilities offered for further development in
a company by using SAP for example, particularly in times of changing
markets. Privately, Björn enjoys political and contemporary literature and
his great hobby, photography.

Björn recently started a blog: www.production-planning.blog. In the blog

he publishes short articles on the basic principles of production planning
with the aim of passing on his knowledge to anyone starting out in this
area. The blog also contains contributions on current trends in this field.
C Disclaimer
This publication contains references to the products of SAP SE.

SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP

BusinessObjects Explorer, StreamWork, and other SAP products and
services mentioned herein as well as their respective logos are
trademarks or registered trademarks of SAP SE in Germany and other
countries.

Business Objects and the Business Objects logo, BusinessObjects,

Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other
Business Objects products and services mentioned herein as well as
their respective logos are trademarks or registered trademarks of
Business Objects Software Ltd. Business Objects is an SAP company.

Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere,

and other Sybase products and services mentioned herein as well as
their respective logos are trademarks or registered trademarks of
Sybase, Inc. Sybase is an SAP company.

SAP SE is neither the author nor the publisher of this publication and is
not responsible for its content. SAP Group shall not be liable for errors or
omissions with respect to the materials. The only warranties for SAP
Group products and services are those that are set forth in the express
warranty statements accompanying such products and services, if any.
Nothing herein should be construed as constituting an additional
warranty.
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