PP (Production Planning) supports manufacturing: forecasting demand, calculating what materials are needed, instructing production and recording results.
From plan to execution
| Stage | What happens | Code |
|---|---|---|
| Demand management | Set the requirements that drive production | MD61 |
| Master production scheduling | Fix quantities and dates for key materials | MD40 |
| MRP | Explode the BOM and propose production and purchasing | MD01 / MD02 |
| Convert planned orders | Turn proposals into production orders and requisitions | CO40 / MD04 |
| Release the order | Instruct the shop floor | CO02 |
| Issue components | Pick materials to the order | MIGO / MB1A |
| Confirm | Record time and quantity produced | CO11N |
| Receive finished goods | Take the product into stock | MIGO |
| Close the order | Calculate variance and settle cost | KKS1 / CO88 |
Production strategies
| Approach | Stock held | Typical industry |
|---|---|---|
| Make to stock | Finished goods | Consumer goods, food, standard parts |
| Make to order | Built per order | Industrial machinery, bespoke products |
| Assemble to order | Components stocked, assembled per order | PCs, vehicles |
| Engineer to order | Designed per order | Plant, shipbuilding |
Make to stock builds ahead against a sales plan. Make to order starts only when an order arrives. The difference affects not just inventory but the unit cost is collected against.
Kinds of production order
| Kind | Characteristic | Suited to |
|---|---|---|
| Production order | Cost collected per order; uses a routing | Batch and discrete production |
| Process order | For chemicals and food; uses recipes and resources | Process industries |
| Repetitive manufacturing | No orders; results recorded per period | Flow and high-volume production |
| KANBAN | Replenishment triggered by consumption signals | JIT production |
Repetitive manufacturing dispenses with orders entirely, recording input and output per line and period, which cuts administration considerably where the same product runs continuously.
Connections to other modules
| Module | Interaction |
|---|---|
| MM | MRP generates requisitions; component issues reduce stock |
| SD | Sales orders become requirements; finished goods become sellable stock |
| CO | Cost accumulates on orders and variance is calculated |
| FI | Issues and receipts post inventory and cost entries |
| QM | In-process and receiving inspection |
| PM | Maintenance of work centres and its effect on capacity |