SAP Long-Term Planning (LTP) functionality is used to simulate various business scenarios to help in production and procurement planning using existing master data and other information. Understand the end-to-end process of running LTP and evaluating the results.
Key Concept
SAP Long-Term Planning (LTP) provides an interactive as well as institutive tool for business simulation. It offers flexibility as well as functionalities to test various business models without affecting the standard database. However, it also provides the option of moving the simulated LTP data to actual operative planning.
SAP Long-Term Planning (LTP) is a simulation tool that companies can use to test various hypothetical assumptions affecting business decisions. The advantage of using LTP, as compared to materials requirement planning (MRP), which is also known as operative planning, is the fact that it does not affect the database of results that was created while running normal MRP. In other words, it is a separate area where you can undertake all simulation-related planning. However, you can also transfer the simulative results of LTP to operative planning in standard MRP.
Here I show the steps to prepare the master data and planning data needed for LTP using a real-life business case from the fertilizer industry. At the end of the article, I cover the logistics information system (LIS) with particular reference to LTP, focusing on the purchasing and inventory controlling subsets of LIS. The LIS for each module provides a plethora of standard analysis reports. It derives the data and information from all the transactions performed in the system, thus ensuring the availability of comprehensive information for evaluation and decision making purposes. I also cover additional features and functionalities offered by LTP to cater to various business scenarios.
Who Uses Long-Term Planning
The LTP component provides support for long-term production planning and for carrying out simulations in short- and mid-term planning. For example, to carry out an annual or a rolling quarterly planning run, a company needs information on the future stock and requirements situation. This also means that the company needs to know how sales and operations planning influences resources, capacities, capital, and manpower.
The purchasing department can also use the results of LTP. It uses the information on the future requirements quantities to estimate and plan future orders. This provides it with a basis for negotiating delivery schedules and long-term contracts with vendors. Vendors also benefit from long-term planning as they are sent a preview of future procurement needs of the company, and can foresee and take actions to ensure they are able to meet impending demands of the company.
Master Data and Planning Data for LTP
LTP derives its detail from existing information in the SAP system. This includes, for example, the master data in the material master that is going to be planned using LTP. Similarly, the details about the components of the planning material are taken from the bill of materials (BOM), also already available. The planning data needed for LTP has to be set up in the SAP system on which the simulation is intended to be run. For example, month-wise planning quantities of the planning material (finished goods) need to be given as planned independent requirements (PIR). All these quantities are defined in a specific planning version number. Therefore, the same planning material can have different month-wise planning quantities separately defined in different version numbers. This means you can execute various simulative LTP scenarios and evaluate the results separately.
You need the following data in your SAP system before you can run LTP:
• Master data: Planning materials for LTP – that is, materials to be planned using LTP – and BOM of the planning material
• Planning data: Planning quantities of the planning material and version number for PIR
I now cover each of the above in detail.
Master Data: Planning Materials for LTP
In my example, LTP is performed on unpacked urea bulk, which is the main planning material, and its associated components (ammonia hydrous and UF-85 for urea plants) in the BOM, as shown in Table 1.
Table 1
Unpacked bulk urea and its components as a BOM for use in LTP
Master Data: BOM
Table 2 shows details of the BOM for unpacked bulk urea. Ammonia hydrous is not marked for LTP planning. Therefore, I will eliminate it from all planning activities in LTP. In other words, in the material master, I define which of these three materials are relevant for planning. LTP makes use of the same data and no additional data needs to be defined anywhere. For ammonia hydrous, the MRP type defined in material master is ND, which means No Planning.
The BOM for unpacked urea bulk was also previously defined and, once again, LTP makes use of this information. The two materials for LTP are therefore unpacked urea bulk and UF-85.
Table 2
BOM details of unpacked urea bulk and its two components, which are active/in-active for LTP
Tip!
Based on my practical experience of implementing LTP on several projects, I recommend that you consider creating a new BOM exclusively for LTP simulation. This provides greater visibility from a planning perspective. A dedicated BOM for LTP not only eliminates the chances of error while creating normal production BOM of a material, but also ensures that it is used for LTP purposes only. It then becomes easier for the person managing the production planning master data to segregate the normal production BOM from the LTP BOM. BOM usage is maintained in SPRO (configuration), which is not in the scope of this article. In the latter part of this article, I address the significance of defining a separate BOM usage for LTP.
Figure 1 shows the initial screen for BOM display. It includes a Usage field, which indicates the application of the BOM, whether it is a production BOM, a costing BOM, engineering/design BOM, or another usage. In my example, I enter usage 1, which indicates production use. To display the BOM, follow menu path Logistics > Production > Master Data > Bill of Material > Bill of Material > Display or use transaction code CS03.
Figure 1
Standard production BOM with usage 1
Planning Data: Planning Quantity
Table 3 represents the monthly planning quantities for the main planning material (unpacked urea bulk), which forms the basis for PIR. Quantities defined in PIR are read not only for regular MRP runs, but also for LTP. In other words, all the planning quantities of the main planning material are defined as PIR, and LTP simulates the requirements based on this information.
Table 3
Planning quantities of unpacked urea bulk which are defined in PIR and used by LTP
Planning Data – Version Number of PIR
The purpose of having multiple versions of PIR in an SAP system is to account for various planning situations and scenarios, each of which is identified by its version number. In other words, it is the demand plan identified. One demand plan can be a sales plan while another can be a production plan, each having its own planning quantities of the same material.
Table 4 represents the standard PIR versions available in an SAP system. In my example, I make use of version 02 (simulation 2) for LTP as it is available in standard SAP. Figure 2 also shows a list of standard versions available. Follow menu path Logistics > Production > Production Planning Demand Management Planned Independent Requirements Create or use transaction code MD61.
Table 4
Standard versions available in SAP
Figure 2
Standard versions available as shown in the SAP system
Note
Although standard SAP provides several PIR versions, you can create more versions if you need them by using SPRO (configuration), which is outside the scope of this article.
Long-Term Planning Process
Having covered the master data as well as the planning data needed to set up LTP, I now address the series of steps you take to use LTP. The LTP process begins with creating a planning scenario in which you define all the details related to planning parameters. Planning quantities in PIR are defined next. Then, the LTP run is executed and the results are saved. These results are finally evaluated in detail in an LTP stock/requirements list. Take the following series of activities in sequential order:
- Create a planning scenario
- Enter PIR in simulative version
- Run LTP (simulative MRP) and save the results
- Evaluate the LTP stock/requirements list
I now explain the step-by-step procedure for running the LTP process.
1. Create a Planning Scenario
To create a planning scenario, follow SAP menu path Logistics > Production > Production Planning > Long-Term Planning > Planning scenario > Create or use transaction code MS31 (Figure 3). These are the important steps in creating a planning scenario:
- Define the planning scenario. In my example, I define the planning scenario as 001.
- Give a planning period for the LTP. I use the planning period from 01.01.2011 to 31.12.2011.
- Define the opening stock. I select option 2, which is the plant stock at the time of planning.
- Select other parameters as deemed appropriate.
- Select the respective BOM ID. In my example, I use BOM ID 01, which is the production BOM. If a separate LTP-specific BOM usage is defined previously, then this is the time to assign it.
- Select the plants for which the LTP will be applicable. The Plants button is located on the top section of the Create Planning Scenario screen.
- Select the PIR and assign the simulative version (I use 02). The Planned Independent Requirements button is also located on the top section of the Create Planning Scenario screen.
- Click the Release + Save button to save the planning scenario.
Figure 3
Planning scenario creation screen, in which you define the relevant parameters
2. Enter PIR in Simulative Version
After you create the planning scenario, which is 001 in my example, the next step is to incorporate all the planning quantities defined in Table 3 as PIR. Follow menu path Logistics > Production > Production Planning > Long-Term Planning > Planned Independent Requirements > Create or use transaction code MD61. Figure 4 is the initial screen where the user enters the relevant material number (in my example: unpacked urea bulk), plant, and version number.
Figure 4
Initial screen for defining the PIR details of a material for the LTP process
Figure 5 shows the tabular view to incorporate all the planning quantities for unpacked urea bulk as initially defined in Table 3. Once all the planning figures are incorporated, save the results by clicking the save icon on the top of the PIR screen.
Figure 5
Planning figures defined in PIR as given in Table 3 while the simulative version is 02
3. Run LTP (Simulative MRP) and Save the Results
To run this LTP (simulative MRP), follow menu path Logistics > Production > Production Planning > Long-Term Planning > Long-Term Planning > Single Item, Multi level or use transaction code MS02. Figure 6 shows the planning results for the materials selected for planning in the form of a list. The material list is the output after LTP is run and results are saved. In other words, I defined in Table 2 that planning is only applicable to the materials unpacked urea bulk and UF-85, and now Figure 6 shows the same in the form of a material list. Note that since ammonia anhydrous was not marked for planning in Table 2, it is neither planned nor available in the material list.
Figure 6
LTP List (which is the simulative MRP List) is generated
4. Evaluate the LTP Stock/Requirements List
All the necessary steps needed to execute LTP have been completed and now you can evaluate the results and outcome of the LTP in the form of an LTP stock/requirements list.
Follow SAP menu path Logistics > Production > Production Planning > Long-Term Planning > Evaluations > Stock/Requirements List or use transaction code MS04. Figure 7 is the initial screen for entering parameters with planning scenario, material number, and plant. After defining the initial parameters in Figure 7, press enter or click the continue icon to see the opening stock.
Figure 7
Initial screen for entering parameters for a stock/requirements list for LTP
Figure 8 has an opening stock of 3,427 metric tons. This is because I selected the existing stock as the opening balance while creating planning scenario 001. All figures are available as shown in Table 3, which shows the planning quantities for unpacked urea bulk.
Figure 8
The stock/requirements list of urea bulk unpacked after LTP has run and results are saved
Figure 9 shows the results of component UF-85, which is also part of the planning material as well as the BOM. The dependent requirements of UF-85 calculated by LTP are based on BOM details given in Table 2. Follow menu path Logistics > Production > Production Planning > Long-Term Planning > Evaluations > Stock/Requirements List or use transaction code MS04 to view these results.
Figure 9
After the LTP run, results of the stock/requirements list for the component UF-85
Since the component UF-85 is planned, its LTP results are reflective of the calculated results based on the BOM for unpacked urea bulk in Table 2 (0.009). Table 5 represents the calculated value of the component UF-85 in LTP, based on the BOM of unpacked urea bulk.
Table 5
Results of LTP for component UF-85 of unpacked urea bulk
Additional LTP Functionality
The above information detailed the steps needed to successfully run LTP. However, the following additional functionalities and options are also available in LTP:
- Manually create a simulative planned order
- Firm the simulative planned order using a firming date
- Calculate average plant stock
- Copy LTP to operative planning
- Evaluate Information system for LTP
- The Purchasing Information System for LTP
- The Inventory Controlling Information System for LTP
1. Manually Create a Simulative Planned Order
While the LTP functionality provides complete automation in planning and proposal generation, it is often necessary to manually create a simulative planned order to meet any additional requirements during the simulation phase. This simulative planned order then becomes available in all stock/requirements lists and is also firmed. That means that no changes during the next LTP run can be made to this manually-created simulative planned order. Follow menu path Logistics > Production > Production Planning > Long-Term Planning > Simulative Planned Order > Create or use transaction code MS11.
Figure 10 is the initial screen for the creation of simulative planned order. In my example, I created a simulative planned order for component UF-85 for quantity of 60 metric tons and also associate it with planning scenario 001. Also, the firming indicator was set so that during the next LTP run, the details of this simulative planned order are not changed.
Figure 10
Manual creation of simulative planned order
2. Firm the Simulative Planned Order Using a Firming Date
The process of manually firming planned orders ensures that all future LTP runs do not impact or overwrite the existing simulative planning data. In manual firming, a date is specified and all the simulative planned orders generated from LTP then are firmed until that date. During the next LTP run, these manually firmed simulative planned orders are not changed or deleted. While remaining in Stock/Requirement List click Edit > Manual Firming Date (Figure 11).
Figure 11
Manual firm date set as 30.03.2011
Figure 12 is a graphical representation of the PIR, receipts, available quantity, and available-to-promise quantity of UF-85. This is available while remaining on the stock/requirements list in Figures 8 and 9. To get to this screen while remaining in the stock/requirements list, select List > Graphics from the menu in Figures 8 and 9.
Figure 12
Graphical representations of receipts and issuances (requirements) for UF-85
3. Calculate Average Plant Stock
Based on the period under evaluation, LTP offers the option to calculate the average plant stock of all the materials that went through the LTP process. The average plant stock is calculated by adding up the total stock for the period under evaluation divided by the number of periods (months) under evaluation. The benefit of providing the average plant stock to purchasing and inventory management departments is the fact that they can better coordinate with vendors for timely deliveries, while warehouses have an advanced preview of space to be made available for this incoming stock. To do so, follow menu path Logistics > Production > Production Planning > Long-Term Planning > Long-Term Planning > Average plant stock or use transaction code MS29 (Figure 13).
Figure 13
Selection screen for average stocks for LTP
The average plant stock for unpacked urea bulk was calculated by the SAP system to be 7,550.485 metric tons for the period under evaluation (Figure 14).
Figure 14
Average plant stock of unpacked urea bulk for period under evaluation in LTP
The average plant stock for UF-85 is 66.944 metric tons for the period under evaluation (Figure 15).
Figure 15
Average plant stock of component UF-85 for period under evaluation in LTP
4. Copy LTP Results to Operative Planning
Once all the necessary simulations (LTP) have been completed, the business often needs to move the results of one of the simulations of LTP to operative planning, on which the actual MRP run can be executed. The results are used by the production and procurement departments. However, LTP is the simulative planning, which cannot be used by operative planning until and unless the simulated LTP data is moved from LTP to MRP (simulative planning to operative planning).
The option to copy results of simulative planning to operative planning saves an enormous amount of work already done during the LTP process and eliminates redundancy of data entry. Further, it provides flexibility to make changes in operative planning during results transfer with respect to LTP. Whenever the results are transferred, they become available in PIR, and actual MRP is run on them.
To copy LTP results to operative planning, follow menu path Logistics > Production > Production Planning > Long-Term Planning > Planned Independent Requirements > Copy version or use transaction code MS64. Figure 16 is the initial screen for defining parameters to transfer results of simulative planning of version 02 to operative planning in version 03.
Figure 16
Selection parameter screen for copying source version 02 to target version 03
I specified that source version 02 be copied to target version 03 for material unpacked urea bulk. Other parameters defined are dates of transfer from version 02 to 03. It also provides the option to make changes in quantities between the source and target versions as well as the number of months it can be displaced. The displacement is the moving of quantities forward or backward from version 02 to version 03 during copying of simulative data to operative data.
After execution (by pressing F8), Figure 17 shows the copied results to target version 03 with all the urea bulk quantity now transferred to version 03 successfully. These copied results are now available in PIR under version 03.
Figure 17
Results after using copy version functionality
After copying LTP planning results of version 02 to operative planning in version 03, I now check to see if those results have successfully moved to PIR. To check PIR, follow menu path Logistics > Production > Production Planning > Long-Term Planning > Planned Independent Requirements > change or use transaction code MD62. Looking at Figure 18, you can confirm that the copy function was successfully executed and the simulative figures of version 02 are now transferred in 03.
Figure 18
PIR screen displays LTP target version 03, which was copied from source version 02
5. Evaluate Information System for LTP
The SAP LIS is available for all the core supply chain modules. Therefore there is also a comprehensive information system for LTP, catering to both the purchasing as well as inventory control functions.
The Purchasing Information System for LTP
You have to set up data before the Purchasing Information System for LTP is ready for use and evaluation. To get to the initial screen for the data setup (Figure 19), follow menu path Logistics > Production-Process > Production Planning > Long-Term Planning > Evaluation > Purchasing Information System > Set up data or use transaction code MS70.
Figure 19
Set-up screen for Purchasing Information System for LTP
To set up the data, select the relevant parameters (e.g., planning scenario). In my example, I select planning scenario 001. For order value calculation, I select standard/moving average price which will be read from the material master. Press F8 to execute.
The Purchasing Information System is now ready to be used for evaluation purposes. Follow menu path Logistics > Production-Process > Production Planning > Long-Term Planning > Evaluation > Purchasing Information System > Material or use transaction code MCEC. Enter the relevant parameters for component UF-85 as shown in Figure 20. These parameters are planning scenario, standard/moving average price (or other value calculation), material number, plant, and the period to analyze.
Figure 20
Initial screen for evaluation of component UF-85 in the Purchasing Information System for materials
Note that I entered planning scenario 001 in Figure 20, and the results for material UF-85 are shown in Figure 21. Monthly order quantities along with values are reflected. The monthly purchase order quantity as well as the monthly total value in local currency is shown in Figure 21. Also shown is the per unit price in local currency of UF-85.
Figure 21
Monthly results of component UF-85 displaying the order quantities and the total value of each monthly order
Inventory Controlling Information System for LTP
The setup data has to be run before the Inventory Controlling Information System for LTP is ready to be used. To set up the data, follow menu path Logistics > Production > Production Planning > Long-Term Planning > Evaluations > Inventory Controlling > Setup data or use transaction code MCB&.
Figure 22 shows the selection parameters for unpacked urea bulk. It also provides the option for entering the planning scenario 001 based on the details of inventory control that you want to make available. In Figure 22, the selection parameters are material, plant, evaluation period, and planning scenario (which is 001 in my example). After the parameters are defined, click the execute function icon or press F8.
Figure 22
Initial screen for evaluating the inventory control in which planning scenario 001 is specified
Figure 23 reflects the inventory situation of component UF-85 for individual months. To get to the screen, follow menu path Logistics > Production > Production Planning > Long-Term Planning > Evaluations > Inventory Controlling > Setup data or use transaction code MCB). Figure 23 shows the monthly inventory situation of material UF-85. The total monthly requirement of U-85 is shown first, followed by the stock situation, and finally how much quantity must be received per month against procurement proposals generated by MRP/LTP (as shown in the column titled GdsReceiptMRP).
Figure 23
Monthly requirements and total stock of component UF-85
Jawad Akhtar
Jawad Akhtar earned his chemical engineering degree from Missouri University of Science and Technology. He has 17 years of professional experience, of which nine years are in SAP. He has completed eight end-to-end SAP project implementation lifecycles in the areas of PP, QM, MM, PM, and DMS in the steel, automobile, chemical, fertilizer, FMCG, and building products industries. He also has worked as an SAP integration manager and an SAP project manager. He has been proactively involved in a business development and solution architect role for seven years. He is the author of Production Planning and Control with SAP ERP, it's filled with in-depth infomation on discrete, process, and repetitive manufacturing types. His profile on LinkedIn is at https://pk.linkedin.com/in/jawadakhtar. You may follow Jawad on Twitter @jawadahl. Currently, he is associated with AbacusConsulting as Head of SAP Delivery.
You may contact the author at jawad.akhtar@live.com.
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