The flow from planning to execution, how production strategies differ, and where PP connects to MM, SD and CO.
Contents
PP (Production Planning) supports manufacturing: forecasting demand, calculating what materials are needed, instructing production and recording results.
From plan to execution
Stages of the production process
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.
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
Check your understanding
Test what you just read.
Quiz 1
Which step follows the MRP Run in the PP process?
Quiz 2
The PP module integrates with MM for component procurement.
Quiz 3
Which best describes Make-to-Stock (MTS) production?
Quiz 4
PP integrates with CO (Controlling) to calculate manufacturing costs.
Quiz 5
Which best describes Make-to-Order (MTO) production?
Quiz 6
Arrange the PP core process steps in the correct order.
Click items in the correct order
Quiz 7
In process industries such as chemicals, food and pharmaceuticals, which order is used instead of a production order?
Quiz 8
In assemble-to-order, components are prepared in advance and final assembly happens once the sales order arrives.
Quiz 9
MRP plans not only in-house produced materials but also creates purchase requisitions for externally procured materials.
Quiz 10
Which is the clearest link between PP and SD?
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