SAP Production Planning

What is Production Planning?

Production planning is the process of ensuring the required materials are available for the anticipated demand of a product or service. If the forecast requires 100,000 semiconductor chips, for example, the production plan accounts for those materials from the supplier. A production schedule is then created to plan the manufacture of the final product.

Criticality of Production Planning

How critical is production planning in the supply chain? Since the COVID-19 pandemic and rapid increase in e-commerce, supply and demand dynamics have been turned on their head. The extreme volatility of material availability and product shipments is now the new normal. The “market of one” has been replaced by personalization and individual requirements with the expectation of next-day or same-day delivery.

What is Production Planning?

Production planning is the process of ensuring the required materials are available for the anticipated demand of a product or service. If the forecast requires 100,000 semiconductor chips, for example, the production plan accounts for those materials from the supplier. A production schedule is then created to plan the manufacture of the final product.

Criticality of Production Planning

How critical is production planning in the supply chain? Since the COVID-19 pandemic and rapid increase in e-commerce, supply and demand dynamics have been turned on their head. The extreme volatility of material availability and product shipments is now the new normal. The “market of one” has been replaced by personalization and individual requirements with the expectation of next-day or same-day delivery.

According to SAPinsider, manufacturers need more efficient, more effective manufacturing processes that can offer short delivery times without holding too many components in their production cycle or too much inventory in their warehouses. These sorts of processes require planning — and a lot of it.

“This is why SAP brought advanced production planning and scheduling (PP/DS) functionality directly into SAP S/4HANA,” SAPinsider says. “This functionality goes well beyond the basic planning features that were present in classical ERP systems and allows manufacturers to build constraint-based production plans and harness data from across the organization to produce the right products at the right times with optimal efficiency — and work within an end-to-end logistics scenario.”

Vendor partners for production planning include SAP Integrated Business Planning, Blue Yonder, and Anaplan.

Additional production planning resources for SAPinsiders include:

• Efficient Production Planning Using SKU Groups with the SNP Optimizer. Read how to overcome the limitations of Supply Network Planning’s aggregate and block planning capabilities.
• Control Manufacturing Cost Even when Production Planning Runs in a Non-SAP System. Read how to configure your SAP system to use CO production order functionality and learn tips about completing processes and transactions.
• How to Avoid the “Domino Effect” in Production Planning. Read how to use APO Production Planning/Detailed Scheduling to avoid the domino effect of making changes in the short-term planning horizon that cause challenges for the mid-term horizon.