Production Planning and Control with SAP ERP

Jawad Akhtar earned a chemical engineering degree from Missouri University of Science & Technology in 1996. He is currently the vice president and head of SAP Delivery at AbacusConsulting (www.abacus-global.com) in Pakistan. He has 17 years of professional experience and has completed several large-scale SAP ERP system implementation and rollout lifecycles. His SAP ERP system implementation experience spans the Logistics areas of PP, QM, MM, PM, and DMS in automobile, steel re-rolling, chemicals, fertilizers, FMCG, textile spinning, and building products industries. He has led large teams in his roles as SAP integration manager, as well as SAP project manager, and also been proactively involved in a business development and solution architect role. He is the technical advisor to SAPexperts (SCM hub) and SearchSAP, and frequently writes columns and articles about the various Logistics components for several top SAP websites and knowledgebases. You can view his profile on LinkedIn at http: //pk.linkedin.com/in/jawadakhtar. You can also contact Jawad via email at jawad.akhtar@live.com or Twitter @jawadahl.

Acknowledgments ... 27


PART I: Production Planning Core Concepts ... 29

1. Introduction ... 31

1.1 ... Goals of This book ... 31
1.2 ... Target Audience ... 32
1.3 ... Structure and Content ... 33

2. Organizational Structures in SAP ERP ... 37

2.1 ... Breaking Down the Structure into Units ... 37
2.2 ... Production Planning in SAP ERP ... 47
2.3 ... Product Cost Planning ... 62
2.4 ... SAP Calendar ... 64
2.5 ... Summary ... 68


PART II: Configuration Specifics for Manufacturing Types ... 71

3. Configuration Basics of Discrete Manufacturing ... 73

3.1 ... Material Master ... 74
3.2 ... Bill of Materials (BOM) ... 75
3.3 ... Work Center ... 81
3.4 ... Routing ... 91
3.5 ... Production Order Creation ... 92
3.6 ... Order Type-Dependent Plant Parameters ... 97
3.7 ... Production Scheduling Profile ... 102
3.8 ... Default Values for the Generation of Operations ... 104
3.9 ... Availability Check ... 105
3.10 ... Stock and Batch Determination ... 111
3.11 ... Scheduling ... 111
3.12 ... Reduction Strategy ... 116
3.13 ... Confirmation ... 118
3.14 ... Reason for Variances ... 126
3.15 ... Trigger Points ... 127
3.16 ... Define Print Control ... 128
3.17 ... Background Jobs ... 129
3.18 ... Process Integration ... 131
3.19 ... Summary ... 131

4. Configuration Basics of Process Manufacturing ... 133

4.1 ... Master Data in Process Industries ... 134
4.2 ... Order Type-Dependent Parameters ... 138
4.3 ... Production Scheduling Profile ... 140
4.4 ... Process Management ... 142
4.5 ... Process Messages ... 147
4.6 ... Process Instruction Category ... 153
4.7 ... Control Recipe/Process Instruction Sheets ... 167
4.8 ... Background Jobs ... 172
4.9 ... Process Management Configuration: At a Glance ... 174
4.10 ... Process Management: Configuration and Implementation Roadmap ... 175
4.11 ... Process Manufacturing Cockpit ... 177
4.12 ... Summary ... 179

5. Configuration Basics of Repetitive Manufacturing ... 181

5.1 ... Repetitive Manufacturing Profile ... 182
5.2 ... Scheduling Planned Orders ... 194
5.3 ... Display ... 195
5.4 ... Material Staging ... 197
5.5 ... Global Settings for Confirmation and the Logistics Information System ... 198
5.6 ... Operational Methods Sheet ... 199
5.7 ... Summary ... 200


PART III: Production Planning Workflow by Production Type ... 201

6.
Production Planning for Discrete Manufacturing ... 203
6.1 ... Process Overview ... 204
6.2 ... Master Data ... 205
6.3 ... Production Order Management ... 243
6.4 ... Release Production Order ... 265
6.5 ... Printing ... 268
6.6 ... Material Withdrawal ... 271
6.7 ... Confirmation ... 278
6.8 ... Goods Receipt ... 285
6.9 ... Postprocessing ... 288
6.10 ... Settlement and Completion ... 292
6.11 ... Additional Functions and Information Systems ... 293
6.12 ... Summary ... 298

7. Production Planning for Process Industries ... 299

7.1 ... Process Manufacturing Overview ... 300
7.2 ... Master Data in Process Manufacturing ... 302
7.3 ... Process Management ... 315
7.4 ... Process Order Execution ... 329
7.5 ... Process Management in Action ... 330
7.6 ... Execution Steps (XSteps) ... 341
7.7 ... Process Manufacturing Cockpit ... 354
7.8 ... Process Messages Evaluation ... 355
7.9 ... Miscellaneous Cross-Manufacturing Topics ... 357
7.10 ... Summary ... 359

8. Production Planning for Repetitive Manufacturing ... 361

8.1 ... Overview ... 362
8.2 ... Repetitive Manufacturing Master Data ... 365
8.3 ... Material Requirements Planning in Repetitive Manufacturing ... 388
8.4 ... Collective Availability Check ... 391
8.5 ... Operational Method Sheet ... 392
8.6 ... Planning Table in Repetitive Manufacturing ... 393
8.7 ... Material Staging ... 402
8.8 ... Production List ... 407
8.9 ... Confirmation ... 409
8.10 ... Reversals and Scrap ... 417
8.11 ... Collective Confirmation ... 422
8.12 ... Costing Activities (Cost Object Controlling) ... 423
8.13 ... Reporting ... 424
8.14 ... Summary ... 426


PART IV: Production Planning Workflow Tools ... 427

9. Sales and Operations Planning ... 429

9.1 ... Sales and Operations Planning: An Overview ... 431
9.2 ... Flexible Planning ... 452
9.3 ... Maintaining Version Management ... 477
9.4 ... Forecasting ... 479
9.5 ... Rough-Cut Planning Profile ... 486
9.6 ... Events ... 491
9.7 ... Mass Processing in SOP ... 496
9.8 ... Standard Analysis in Flexible Planning ... 501
9.9 ... Summary ... 503

10. SAP Demand Management ... 505

10.1 ... Planning Strategy ... 506
10.2 ... Planned Independent Requirements ... 515
10.3 ... Customer Independent Requirements ... 520
10.4 ... Summary ... 527

11. Material Requirements Planning ... 529

11.1 ... Process Overview ... 530
11.2 ... Scrap ... 546
11.3 ... Safety Stock ... 549
11.4 ... MRP Procedures ... 551
11.5 ... Consumption-Based Planning ... 557
11.6 ... Forecast-Based Consumption Planning ... 562
11.7 ... Types of Planning Runs ... 567
11.8 ... Scheduling ... 570
11.9 ... Procurement Proposals ... 576
11.10 ... Executing Material Requirements Planning ... 582
11.11 ... Configuration Settings for MRP ... 590
11.12 ... MRP Run Analysis ... 594
11.13 ... Planning Calendar ... 606
11.14 ... MRP Areas ... 609
11.15 ... Summary ... 616

12. Long-Term Planning (LTP) ... 617

12.1 ... LTP Master Data and Planning Data ... 618
12.2 ... Long-Term Planning: Business Process ... 623
12.3 ... Further Options in LTP ... 631
12.4 ... Evaluate Information Systems for LTP ... 638
12.5 ... Summary ... 643


PART V: Optimizing Production Planning ... 645

13. Special Procurement Types ... 647

13.1 ... Overview ... 648
13.2 ... Phantom Assembly ... 650
13.3 ... Direct Production ... 651
13.4 ... Direct Procurement ... 656
13.5 ... Stock Transfer (Inter-Plant Transfer) ... 659
13.6 ... Withdrawal from Alternate Plant ... 662
13.7 ... Production in Alternate Plant ... 664
13.8 ... Subcontracting ... 666
13.9 ... Consignment ... 670
13.10 ... Pipeline Material ... 673
13.11 ... Summary ... 673

14. Capacity Requirements Planning ... 675

14.1 ... Process Overview ... 676
14.2 ... Capacity Requirements and Capacity Evaluation ... 677
14.3 ... Finite Scheduling ... 693
14.4 ... Dispatching ... 695
14.5 ... Capacity Planning Table ... 711
14.6 ... Summary ... 717

15. Classification ... 719

15.1 ... Overview ... 720
15.2 ... Assigning the Material Class to the Material Master ... 726
15.3 ... Finding Objects in Classes ... 729
15.4 ... Assigning an Equipment Class to Equipment ... 731
15.5 ... Summary ... 733

16. Engineering Change Management ... 735

16.1 ... ECM Configuration ... 736
16.2 ... Change Master ... 751
16.3 ... Engineering Change Request (ECR)/Engineering Change Order (ECO) ... 757
16.4 ... ECR/ECO Step-by-Step Approach: At a Glance ... 767
16.5 ... Summary ... 768

17. Co-Products and By-Products in Production Processes ... 769

17.1 ... Check in Material Master ... 771
17.2 ... Bill of Materials (BOM) ... 774
17.3 ... Process Order ... 776
17.4 ... Goods Issue ... 778
17.5 ... Confirmation ... 780
17.6 ... Goods Receipt ... 782
17.7 ... Documented Goods Movement ... 784
17.8 ... Cost Analysis ... 785
17.9 ... Summary ... 787

18. Shift Notes and Shift Reports ... 789

18.1 ... Shift Note Overview ... 790
18.2 ... Configuration for Shift Notes ... 791
18.3 ... Configuration for Shift Reports ... 812
18.4 ... Summary ... 822

19. Document Management System (DMS) ... 823

19.1 ... DMS Configuration ... 823
19.2 ... DMS in Action ... 837
19.3 ... WebDocuments ... 846
19.4 ... Additional Features of DMS ... 850
19.5 ... Summary ... 855

20. Digital Signature ... 857

20.1 ... Configuration Steps to Set Up a Digital Signature ... 858
20.2 ... Digital Signature in Action ... 864
20.3 ... Digital Signature Logs ... 869
20.4 ... Application of Digital Signature in SAP ERP Components ... 871
20.5 ... Summary ... 874


PART VI: Monitoring and Evaluation ... 875

21. Early Warning System ... 877

21.1 ... Overview ... 877
21.2 ... Exceptions ... 879
21.3 ... Set Up Periodic Analysis ... 885
21.4 ... Schedule an EWS ... 887
21.5 ... EWS in Action ... 889
21.6 ... Exception Analysis ... 892
21.7 ... Summary ... 895

22. Reporting in SAP ... 897

22.1 ... The Basics of Reporting ... 898
22.2 ... Order Information System ... 901
22.3 ... Missing Parts Information System ... 919
22.4 ... Standard Analysis Reports ... 920
22.5 ... Data Browser ... 932
22.6 ... QuickViewer ... 937
22.7 ... SAP Query ... 942
22.8 ... Assign a Transaction Code to a Query ... 945
22.9 ... Summary ... 947

23. Further Integration of Production Planning with Logistics Functions ... 949

23.1 ... Integration Prerequisites ... 950
23.2 ... Integration Aspects of Production Planning with Quality Management ... 952
23.3 ... Integration Aspects of Production Planning with Materials Management ... 967
23.4 ... Integration Aspects of Production Planning with Sales and Distribution (Make-to-Order Production) ... 973
23.5 ... Further Integration Aspects of Production Planning with Sales and Distribution (Assembly Processing) ... 977
23.6 ... Integration Aspects of Production Planning with Project System (Engineer-to-Order Production) ... 979
23.7 ... Integration Aspects of Production Planning with Plant Maintenance ... 985
23.8 ... Integration Aspects of Production Planning with Manufacturing Execution ... 985
23.9 ... Integration Aspects of Production Planning with Manufacturing Integration and Intelligence ... 986
23.10 ... Summary ... 987

Appendices ... 989
A ... Comparison Table of Production Types ... 991
B ... Glossary ... 997
C ... The Author ... 1017

Index ... 1019