Production Planning: A Complete Guide to BOM, MRP, Production Orders, Actuals Management, Capacity Planning, and Repetitive Manufacturing
June 2026
Chapter 1: Overview and Role of SAP PP
What is PP
SAP PP (Production Planning and Control) is the module that plans “when, where, what, how many, and how” products will be manufactured, issues instructions to the shop floor, and records actual results. PP is closely integrated with MM (Procurement: sourcing materials), QM (Quality: inspection), CO (Costing: manufacturing costs), and SD (Sales: incorporating order information), integrating manufacturing operations as a whole.
The core function of PP is “MRP (Material Requirements Planning).” MRP works backward from demand information — “how many finished products are needed by when” — to automatically calculate “what materials need to be procured or manufactured, in what quantities, and by when.” This automatic calculation fundamentally eliminates the manual, person-dependent process of discovering material shortages and then placing orders.
Integration Between PP and Other Modules
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PP↔MM: Purchase requisitions generated by MRP are passed on to MM’s procurement flow (ME57 → ME21N → MIGO). Material issues to production orders (MIGO: movement type 261) are also executed from MM’s inventory.
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PP↔CO: A CO-PC cost collector is assigned to the production order, and actual material costs, processing costs, and overhead are collected. Variances between the standard cost calculated in CK11N and the actual cost are analyzed in CO88 (production order settlement).
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PP↔QM: “In-process inspection (inspection type 03)” and “final inspection (inspection type 04)” for production orders are realized through PP-QM integration. An inspection lot is automatically generated when the production order is released.
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PP↔SD: SD sales orders (VA01) are automatically pulled in as MRP requirements. In MTO (make-to-order), the sales order is the trigger for production. ATP (Available-to-Promise) confirmations are returned based on PP’s MRP results.
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PP↔PS: For project-based products (ETO), WBS elements are used as the cost collector for production. By linking PP operations to PS network activities, project management and production management are integrated.
PP Sub-components
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PP-MRP (Material Requirements Planning): Calculates the requirements for materials and semi-finished goods needed based on demand. Automatically generates production orders and purchase requisitions.
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PP-SFC (Shop Floor Control): Manages the issuance of production instructions to the shop floor, progress tracking, and entry of actuals.
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PP-CRP (Capacity Requirements Planning): Performs load leveling of the production plan, taking into account the capacity constraints of work centers.
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PP-REM (Repetitive Manufacturing): Used when the same product is mass-produced repeatedly. Managed via “Run Schedule Quantity (RSQ)” instead of production orders.
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PP-MPS (Master Production Scheduling): A higher-level planning layer that separates the production plan for finished products from MRP, allowing planners to manage them individually.
Automatic Journal Entry Generation, Inventory Movements, and Workflow
In the PP manufacturing process, each step from the issue of components to the receipt of the finished product simultaneously generates both an inventory movement and a journal entry. With backflushing (retroactive consumption), both the journal entry for component consumption and the journal entry for finished-goods stock posting are automatically generated the moment production is confirmed.
| Production Step | Movement Type | Journal Entries Automatically Generated |
| Component issue to production order (MIGO / CO27) | 261 | Work in process (GBB-VBR) ← Raw material inventory (BSX) |
| Product completion / production order receipt (MIGO / CO15) | 101 (with reference to production order) | Finished goods inventory (BSX) ← Production order cost (PRD) |
| Scrap / defective goods processing | 551 | Scrapping loss (GBB-VNG) ← Inventory (BSX) |
| Backflushing (at CO15 confirmation of actuals) | 261+101 executed simultaneously | Component consumption entry and finished-goods receipt entry generated together automatically |
| Production order settlement (CO88/KO88) | Settlement | Standard cost vs. actual cost variance (PRD) posted to the variance account. WIP is cleared |
| ▌ Workflow: Production Order Release and Status Management |
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Chapter 2: What PP Can and Cannot Do
What PP Can Do
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Automatic multi-level BOM explosion: Automatically performs multi-level explosion from finished product → semi-finished goods → material BOM. Even if the BOM has hundreds of levels, the required materials are calculated automatically.
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Automatic procurement calculation via MRP: Automatically calculates “net requirements” taking into account inventory, open purchase orders, and open production orders, and generates production orders and purchase requisitions. After running MRP, planners only need to review and approve, automating a large volume of procurement work.
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Cost collection on production orders: Production orders collect both “planned costs (built up from BOM + routing)” and “actual costs (actual material costs, actual labor costs),” which form the basis for variance analysis (CO88) by CO-PC.
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Operation management via routing: The manufacturing process for each product (which work center, how many hours) is defined in the routing, forming the basis for scheduling and actuals management of production orders.
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Overload detection through capacity planning: Compares a work center’s “available capacity” against its “capacity requirements” to visualize overloads. CM21 (graphical capacity planning) allows rescheduling on a Gantt chart.
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Mass-production line management via repetitive manufacturing (PP-REM): On mass-production lines such as automobiles and home appliances, the production schedule is managed using “RSQ (Run Schedule Quantity)” instead of production orders. Actuals can be entered in a simplified way through backflushing (MFBF).
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Electronic work instructions (PP integration): Shop floor work instructions can be digitized and printed using COBi (PP-DI) or production order printing (CO04N). A “production order slip” that lists operations, materials, and quality requirements is automatically generated.
What PP Cannot Do / Points Requiring Attention
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Standard MRP is infinite capacity planning: Standard MRP (infinite capacity planning) calculates requirements while ignoring work center capacity constraints. This can result in the mass generation of “production orders that exceed capacity,” requiring adjustment by the planner. Planning that takes capacity constraints into account requires integration with Opcenter APS or SAP IBP.
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Maintenance cost of BOM and routing: When there are many product variants, the effort to maintain BOM and routing master data becomes significant. Designing operational rules for change management (ECM: Engineering Change Management) is important.
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MRP run time: When the number of materials and BOM levels is large, the MRP run (MD01N) can take a long time. Using S/4HANA’s pMRP (Parallel MRP) can significantly shorten run times.
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Complex progress tracking (ETO items): Detailed progress tracking for complex, multi-operation products (engineer-to-order items, equipment products) can exceed the scope of standard PP functionality. Integration with the PS module or with MES should be considered.
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Limits of PP alone for serial number and lot tracking: PP production orders manage traceability at the production lot level, but fine-grained tracking of finished-product serial numbers and the material lots used requires integration with MES or QM (inspection lots).
Chapter 3: Master Data
Bill of Materials (BOM)
A BOM is “a list of the materials and parts required to manufacture a product.” It defines relationships such as “Finished Product A = Part B × 2 units + Part C × 1 unit + Material D × 500g.”
Sample Operations: CS01/CS02 — Creating and Changing a BOM
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CS01 (Create BOM): Create a BOM by specifying the material number, plant, and BOM usage (“1” for production). The BOM header’s “Alternative BOM” number allows multiple manufacturing methods (normal production, use of alternative materials, etc.) to be defined for the same material.
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Item lines: Enter the item code, quantity, unit of measure, valid-from date, obsolescence date, the “Fixed” flag (controlling whether or not the item is included in MRP explosion), and the alternative item group (defining substitute parts).
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Text item (item category T): A free-text note line within the BOM. No item code is required, and supplementary instructions for the shop floor can be recorded.
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CS02 (Change BOM): Changes using effective-date management (Change Number / ECM) are recommended. Using ECM controls “from when this change is effective” and “which BOM should be used for past production orders.”
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CS11/CS12 (BOM Explosion): Explodes a multi-level BOM to display the full list of required materials from “finished product → material level.” CS12 (multi-level explosion) displays all component items and cumulative quantities in a hierarchical view.
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C223 (Production Version): Defines a production version when a product has multiple manufacturing methods (BOM ① × Routing ① = Production Version ①). Specifies which production version is used by MRP and CK11N (cost estimate).
Work Center
A work center is a unit representing “the equipment, group of personnel, or production line that performs a manufacturing operation.” Examples include a “lathe processing area, assembly line 1, inspection station,” which are set up as work centers.
Sample Operations: CR01/CR02 — Creating and Changing a Work Center
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CR01 (Create Work Center): Enter the work center code, plant, and work center category (0001: machine, 0006: labor, etc.) and press Enter.
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Basic data: Set the work center description, person responsible, cost center (where processing costs are posted), activity type (machine time, labor time), and standard value key (reference for the calculation formula).
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Available Capacity tab: Calculates the “available capacity (hours/day)” from the shift model (e.g., 2 shifts of 8 hours each), the operating calendar, and the capacity utilization rate (e.g., 85%). This forms the base data used by CRP to calculate capacity surplus or shortage.
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Costing tab: Sets the activity types used (machine time / labor time / setup time, etc.) and the calculation formula (referencing the standard value key). Used for building up planned costs on production orders and for CO-PC standard cost calculation.
Routing
A routing is “the set of instructions describing the sequence of operations used to manufacture a product.” It defines a process flow such as “Operation 10: Turning (Work Center A, 30 minutes machine time) → Operation 20: Assembly (Work Center B, 60 minutes labor time) → Operation 30: Inspection (Work Center C, 20 minutes).”
Sample Operations: CA01/CA02 — Creating and Changing a Routing
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CA01 (Create Routing): Create a routing by specifying the material, plant, and usage (1: Production).
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Operation details: Enter the operation number (10, 20, 30…), work center, control key (PP01: in-house, PP02: subcontracting, PP03: milestone), the standard time for each activity type (machine time, setup time, labor time), and the work center code.
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Control Key: PP01 (in-house: includes capacity planning + cost calculation), PP03 (milestone: a reference operation, a management point that confirms completion of downstream operations), PP02 (subcontracting: uses movement types 541/543).
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QM inspection integration: When “inspection characteristics” are assigned to an operation, an “in-process inspection lot (inspection type 03)” for that operation is automatically generated when the production order is released.
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CA21 (Reference Routing): When multiple product variants share common operations, a reference routing can be created and referenced from the routing of each material.
Chapter 4: Demand Planning and Master Production Scheduling (MPS)
Entering Demand
There are multiple sources for entering the “demand” (what needs to be produced, how much, and by when) that drives MRP.
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Planned independent requirements (PIR: MD61): For make-to-stock (MTS), “material, quantity, date” is entered manually, or linked from IBP (Integrated Business Planning).
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Confirmed sales orders (SD order: VA01): SD sales orders are automatically pulled in as MRP requirements. In make-to-order (MTO), the sales order is the trigger for production.
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Dependent requirements: Requirements for lower-level materials that are automatically calculated from the BOM explosion of higher-level materials. Planners do not need to enter these; MRP generates them automatically.
MPS (Master Production Scheduling)
Sample Operations: MD40/MD41/MD43 — Planning MPS Items
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MD40 (Interactive MPS Planning): Runs an MPS run (an MRP run that calculates only MPS items) to generate planned orders. Surpluses and shortages can be checked visually via a graph showing the trend of “demand, stock, and planned orders.”
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MD41 (Single-Item MPS Planning): Interactively plans a single item’s MPS on screen, checking and adjusting as needed. Changing it to a “Firmed Planned Order” maintains a stable plan that will not be overwritten by the next MRP run.
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MD43 (MPS in Folder Layout): Allows planned orders to be reviewed and converted with drag-and-drop-like operation. Used as the MPS planner’s day-to-day working screen.
Chapter 5: MRP (Material Requirements Planning)
How MRP Works
MRP calculates “Gross Requirements − current stock and scheduled receipts = Net Requirements,” and automatically generates production orders and purchase requisitions for the net requirement quantity. It automatically determines order points that respect the requirement date constraints, taking lot size and lead time into account.
| Basic MRP Calculation Formula |
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Gross requirements (demand) − stock − scheduled receipts (open purchase orders / open production orders) = Net requirements The net requirement is rounded based on the lot size, and the date obtained after subtracting the lead time becomes the “start date (order date).” |
Sample Operations: MD01N — Running Total MRP
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Launch MD01N. Enter the MRP controller, plant, planning horizon (the future period over which MRP is run), and planning mode (1: Regenerative planning, 3: Net change planning).
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Selecting the planning mode: “1 (Regenerative)” recalculates all materials. “3 (Net Change)” recalculates only materials that have changed since the last run (stock movements, order changes, BOM changes, etc.). NC is normally used to shorten run time.
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Background execution: MD01N is often scheduled as a background job (SM36) and run automatically overnight.
Sample Operations: MD04 — Stock/Requirements List (Checking MRP Results)
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Launch MD04. Enter the material and plant and press Enter.
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Information displayed: “Date, receipt/issue category (PIR / SD order / purchase requisition / production order / stock balance), requirement quantity, and the trend of available quantity (surplus/shortage)” are displayed chronologically.
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Rows shown in red (negative available quantity): Indicate that stock will be short on that date. The “MRP exception (Rescheduling Message)” icon displays recommended actions such as “orders that need to be expedited” or “excess orders that should be canceled.”
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Drilling into planned orders: Double-clicking a planned order line takes you to MD12 (Change Planned Order), where you can revise the date and quantity.
Key MRP Parameters (Material Master: MRP Views)
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MRP Type: PD (standard MRP), M0 (MPS), VB (reorder point method), ND (no MRP), etc.
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Lot Size: EX (exact lot: generates exactly the required quantity), FX (fixed lot: always a fixed quantity), HB (replenishment), PK (weekly lot), MB (monthly lot). Minimum order quantity, maximum order quantity, and rounding value can also be set.
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In-house Production Time: The number of days from the start to the completion of a production order. Used in MRP’s requirement-date calculation.
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Planning Strategy: 10 (make-to-stock), 20 (make-to-order), 40 (mixed MTO+MTS), 52 (netting of planned independent requirements against confirmed orders).
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Special Procurement Type: 30 (subcontracting), 40 (stock transfer from another plant), 50 (subcontractor), etc.
Chapter 6: Managing Production Orders
Creating and Confirming Production Orders
Sample Operations: CO01/CO40 — Creating/Converting Production Orders
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CO01 (Manually Create Production Order): Create a production order by directly entering the material, production version, quantity, and production period. Used for cases such as urgent items or prototypes that are issued without going through MRP.
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CO40 (Individual Conversion of MRP Planned Order → Production Order): Select a planned order from the MD04 screen and run CO40. Convert while checking the production order details (BOM items, routing, due date).
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MD16 (Mass Conversion of Planned Orders → Production Orders): Buyers or planners use MD16 to mass-convert multiple planned orders. Regular mass-production items are often processed in daily batches via MD16.
Releasing Production Orders (Authorization to Execute)
A production order must go through the status change from “Created (CRTD)” to “Released (REL)” before work can begin on the shop floor.
Sample Operations: CO02 — Releasing a Production Order
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Launch CO02 (Change Production Order) and enter the production order number.
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Press the “Release” button (or menu: Production Order → Functions → Release). An “Availability Check” of materials is performed at the same time as the release.
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Handling material shortages: If a part is out of stock, a “Missing Parts” list is displayed. A decision is made whether to hold off shop-floor start until the shortage is resolved (according to operational rules) or to release the order knowing about the shortage.
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After release: The production order slip (work instruction) can now be printed (CO04N). Shop-floor workers proceed with the work according to this instruction slip.
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CO26 (List of Production Orders with Missing Stock): Provides a consolidated view of the shortage list. Used for following up on parts procurement.
Material Issue and Work-in-Process Management
Sample Operations: MIGO — Issuing Materials to a Production Order (Movement Type 261)
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Launch MIGO. Select “Goods Issue” → “Order (with reference to a production order).”
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Enter the production order number and press Enter. The BOM component items are automatically exploded and the issue line items are displayed.
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Check and, if necessary, adjust the actual issue quantities. If a substitute part was used, change the item code.
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Posting: Costs are posted as “Inventory account Cr / Production order (WIP) Dr.” The production order’s “Actual Costs” are updated at the same time as the issue.
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Backflushing: An option that automatically executes the material issue (261) at the time of production order completion receipt (MIGO: movement type 101). By setting the backflush flag on the material master, individual issue postings on the shop floor can be skipped.
Confirmation (Entering Operation Actuals)
Sample Operations: CO11N — Confirming Production Order Actuals
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Launch CO11N (Confirm Production Order Actuals). Enter the production order number and operation number.
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“Confirmation Type”: Select Partial or Final confirmation. A Final confirmation marks that operation as complete.
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Entering actual quantities: Enter the “Yield Quantity, Scrap Quantity, and Rework Quantity.” The scrap quantity is automatically transferred to QM’s quality notification.
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Entering actual times: Enter “machine run time, direct labor time, and setup time.” This forms the basis for CO-CCA’s activity allocation (from cost center to production order).
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Executing the final confirmation: Once the final confirmation of all operations is complete, the production order status becomes “Confirmed (CNF).”
Receiving Into the Production Order (Receipt of Finished Goods)
Sample Operations: MIGO — Receiving Finished Goods Into a Production Order (Movement Type 101)
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Launch MIGO. Select “Goods Receipt” → “Order (with reference to a production order).”
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Enter the production order number and press Enter. Enter the finished-goods material, production quantity, and storage location.
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Posting: The journal entry “Inventory account (BSX) Dr / Production order (WIP account) Cr” is automatically generated. The finished goods are posted into stock.
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Partial receipt: It is possible to receive part of the production order’s finished-goods quantity. The remaining quantity is received at a later date.
Completion and Settlement of Production Orders
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TECO (Technically Complete): After the full quantity has been received, the production order is set to “Technically Complete (TECO).” A TECO order is excluded from scheduling and MRP, but costing is not yet finished.
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CO88 (Production Order Settlement): At period-end, the production order’s residual balance (planned cost − actual cost) is analyzed and settled via CO-PC. Variances are classified into categories such as “price variance, quantity variance, work variance,” etc., and posted to CO-PA or as inventory variances.
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CLSD (Fully Closed): After CO88 settlement, the production order is fully closed (CLSD). No further changes are possible after this point.
Chapter 7: Capacity Planning
The Concept of Capacity Planning
Capacity planning (CRP: Capacity Requirements Planning) is a function that verifies and adjusts “whether the operation load of production orders generated by MRP fits within the available capacity of the work centers.” Because MRP assumes infinite capacity, detecting and resolving capacity overloads is handled separately through CRP.
Sample Operations: CM01/CM21 — Capacity Evaluation and Graphical Planning
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CM01 (Work Center Capacity Evaluation: List Format): Specify the work center and period to display “available capacity, capacity requirements, and utilization rate (%)” by period. Periods over 100% (shown in red) represent overloads.
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CM21 (Graphical Capacity Planning): Displays production orders in a Gantt-chart format. Overloaded production orders can be rescheduled by dragging and dropping them to a different date or work center. This intuitive operation achieves load leveling.
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CM04 (Capacity Situation List): Displays the capacity surplus/shortage for all work centers in one list. Used as a starting screen for identifying high-priority overloads.
Repetitive Manufacturing (PP-REM)
Repetitive Manufacturing (PP-REM) is a production management method designed for environments where the same product is mass-produced repeatedly (mass-production lines for automobiles, home appliances, consumer goods, etc.). Instead of individual production orders, it manages “production line, schedule, and quantity.”
Characteristics of PP-REM: individual production orders are not issued (instead, planning is done via RSQ: Run Schedule Quantity), actuals entry is simplified through backflushing (MFBF), and manufacturing costs are collected in a “product cost collector.”
Sample Operations: MF50 — Creating and Planning RSQ for Repetitive Manufacturing
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MF50 (Repetitive Manufacturing Planning Table): Specify the production line and planning period to display the planning board. The planning table generated by MRP can be edited visually as a Gantt chart.
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Assign daily or weekly production plan quantities to each line. The plan can be adjusted by dragging and dropping.
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Once the plan is confirmed, it is saved as an “RSQ (Run Schedule Quantity).”
Sample Operations: MFBF — Backflushing (Entering Actuals)
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Launch MFBF (Repetitive Manufacturing Backflush). Enter the production line, material, actual quantity, and receiving storage location.
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Executing “Post” automatically processes both the finished-goods receipt (101) and the component issue (261) simultaneously. There is no need to process production orders one by one, greatly simplifying actuals entry for mass production.
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If defects occur, the scrap quantity is entered. Scrap is collected in the product cost collector as a cost variance.
Chapter 8: Subcontracting (PP-MM Integration)
The Concept of Subcontracting
Subcontracting is a form of production where “your own materials are supplied to an external processing vendor, and the processed semi-finished or finished goods are received back.” In PP, the subcontracted operation is specified using the production order’s operation control key (PP02). In MM, a purchase order with item category L (subcontracting) is used.
Sample Operations: CO01+ME21N — Production Orders and Purchase Orders for Subcontracting
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Subcontracting operation in the routing (control key PP02): Set the subcontracting cost account and activity type on the work center for the subcontracting operation.
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At production order release: When the subcontracting operation is reached, a “subcontracting PO request” is automatically generated.
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ME21N (Create Subcontracting Purchase Order): The purchasing staff reviews the subcontracting PO request and creates a subcontracting purchase order (item category L) using ME21N. The supplied materials are automatically set in the “Components” tab.
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MIGO (Movement Type 541: Issue of Supplied Materials): Materials are issued to the subcontractor (ownership remains with your company).
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MIGO (Movement Type 101: Receipt of Subcontracted Goods): When the finished goods arrive from the subcontractor, they are received into stock. The supplied materials are automatically consumed (543).
Chapter 9: End-to-End Transaction Operations Guide
Scenario ①: Production Execution for Make-to-Stock Items (MTS)
Sample Operations: Step 1 — Entering the Production Plan
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MD61 (Enter PIR): Enter the demand plan (or the forecast quantity linked from the sales department) by material, month, and quantity.
Sample Operations: Step 2 — Running MRP
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MD01N (Run Total MRP): Calculates requirements for all materials and automatically generates planned orders and purchase requisitions.
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MD04 (Check MRP Results): Check the stock, requirements, and surplus/shortage trend for each material. Prioritize materials with shortages (negative available quantity).
Sample Operations: Step 3 — Converting Planned Orders to Production Orders
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MD16 (Mass Conversion): Mass-converts confirmed planned orders into production orders.
Sample Operations: Step 4 — Preparing Materials and Starting Production
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CO02 (Release Production Order): Perform an availability check and release. Issue the work instruction slip using CO04N (Print Production Order).
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MIGO (261: Material Issue): Issue materials with reference to the production order.
Sample Operations: Step 5 — Entering Operation Actuals
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CO11N (Confirmation): Enter the actual time, yield quantity, and scrap quantity for each operation.
Sample Operations: Step 6 — Receiving Finished Goods
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MIGO (101: Finished Goods Receipt): Post the finished goods into stock with reference to the production order.
Sample Operations: Step 7 — Settling the Production Order (CO-PC)
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Close out in the order TECO (Technically Complete) → CO88 (Production Order Settlement) → CLSD (Fully Closed).
Scenario ②: Make-to-Order Items (MTO)
Sample Operations: Step 1 — Receiving the Sales Order (SD)
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VA01 (Create Sales Order): The SD sales order is automatically pulled into MRP as a requirement. For items under planning strategy 20 (make-to-order), MRP only runs once the sales order comes in.
Sample Operations: Step 2 — Running MRP and Converting to a Production Order
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MD04 (Sales-Order Special Stock Check): Stock is managed as sales-order special stock (E). Run MD01N → convert via MD16.
Sample Operations: Steps 3–7 — Same as Above
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Release → issue → confirmation → finished-goods receipt → settlement follow the same flow as MTS. The finished goods are posted to sales-order special stock and shipped to the customer via SD outbound delivery (VL01N).
Chapter 10: Detailed SPRO Configuration
Basic Settings
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OPJN (Controlling Area): Enables PP functions (PP-MRP, PP-CRP, PP-SFC, PP-REM) at the controlling area level.
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OPPE (Define MRP Controller): Defines MRP controller codes. The MRP controller responsible for each material is specified in the MRP view of the material master.
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OPPR (MRP Controller: Assignment to Plant): Sets which plants each MRP controller is used in.
Master Data Settings
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OS21 (Set BOM Usage): Defines BOM usages (1: Production, 2: Engineering, 3: Sales).
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OP43 (Set Control Key): Defines the control keys (PP01/PP02/PP03, etc.) used in routing operations. Controls whether capacity planning, cost calculation, and confirmation are required.
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CR10 (Set Work Center Category): Defines work center categories (machine, labor, line, etc.).
MRP Settings
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OPPQ (Set Plant Parameters): Sets the plant’s MRP-related parameters (MRP type, evaluation, logic). Enabling “Parallel MRP” is also done here.
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OMD3 (Set Planning Horizon): Sets the future period over which MRP calculates (e.g., up to 90 days ahead).
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OMI9 (Set MRP Run): Defines the behavior parameters (background execution, log settings) of total MRP (MD01N).
Production Order Settings
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OPJ1 (Set Production Order Type): For each production order type (PP01: in-house, PP02: repair, etc.), sets the “number range, release conditions, completion confirmation rules, availability check rules, and costing rules.”
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CO78 (Period-End Processing Schedule): Defines the execution schedule for CO88 (production order settlement). Configured as a monthly settlement batch.
Chapter 11: Implementation Case Studies
Case Study 1: Precision Machinery Manufacturer — Automating Material Procurement and Reducing Shortages with MRP
Background and Challenges
At a precision machinery manufacturer, purchasing staff checked material stock in Excel every day, manually listing shortage items and placing orders. Stockouts (causing production stoppages) due to judgment errors occurred 2–3 times a month, and excess inventory from over-ordering had become the norm.
Introducing MRP
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Accurately set the MRP type (PD), lot size, and lead time in the material master. Maintained the BOM to its current, up-to-date state.
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Configured MD01N (net change MRP) to run automatically in the background every morning.
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Made MD06 (list of exception messages) the starting point of the purchasing staff’s morning routine. Items with shortages that need priority attention are immediately visible.
Results
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Automating material procurement eliminated the two hours per day that purchasing staff spent on Excel work.
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Production stoppages (caused by shortages) improved from 2–3 times a month to zero per month (after 3 months).
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Excess inventory value decreased -25% year over year. Lot size optimization made small-lot procurement possible.
Case Study 2: Automotive Parts Manufacturer — Streamlining Actuals Management by Introducing Repetitive Manufacturing (PP-REM)
Background and Challenges
At an automotive parts manufacturer that mass-produces the same product types, an enormous administrative burden arose from individually creating, releasing, and confirming thousands of production orders each month. Actuals entry on the shop floor also had to be done order by order, causing entry delays and preventing daily actuals management.
Migrating to PP-REM
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Migrated core mass-production items to PP-REM (Repetitive Manufacturing). Abolished production orders and manages the weekly plan using MF50 (Repetitive Manufacturing Planning Table).
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Enters daily actuals in a single operation using MFBF backflushing. Finished-goods receipt and material issue are processed simultaneously.
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Aggregates monthly manufacturing costs using the product cost collector and performs variance analysis with CO88.
Results
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Effort to create and manage production orders dropped from 40 hours per month to 5 hours (an 87% reduction).
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Backflushing enabled daily actuals entry to be completed by 6:00 PM the same day (previously, next-day entry had been the norm — now improved).
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Monthly cost analysis via the product cost collector made the causes of losses by operation visible.
Case Study 3: Industrial Equipment Manufacturer — Improving On-Time Delivery Rate Through Capacity Planning (CRP)
Background and Challenges
At an industrial equipment manufacturer running high-mix, low-volume production, delivery date commitments relied heavily on the intuition and experience of production planning staff, and delivery delays had become chronic. Because it was not possible to identify which work centers were the bottleneck, effective countermeasures could not be implemented.
Establishing and Utilizing Capacity Planning (CRP)
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Accurately set up the available capacity of work centers (CR01: shift settings, operating calendar).
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Established a routine of reviewing CM01/CM21 (capacity evaluation, graphical planning) every Monday. Identified bottleneck work centers and addressed them on a priority basis.
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Introduced CTP (Capable-to-Promise) settings so that, at order entry, SD (VA01) automatically proposes a confirmed delivery date that takes capacity constraints into account.
Results
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The capacity surplus/shortage at bottleneck work centers became visible on a weekly basis, enabling planned arrangement of overtime and support staff.
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On-time delivery rate improved from 68% to 89% (after 6 months).
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The introduction of CTP eliminated unreasonable delivery-date commitments at order entry, reducing customer complaints.
End of document
What You Can Do with SAP PP — Key Functions and Operations for Production Planning and Manufacturing
SAP PP (Production Planning) is the module that integrates and manages the entire manufacturing process, from demand forecasting through production planning, production orders, and production completion. Through automatic material procurement via MRP, progress management of production orders, and automatic material consumption via backflushing, it minimizes manufacturing lead time and work-in-process inventory.
| ▌ ① Production Planning and MRP |
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| ▌ ② Managing Production Orders |
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| ▌ ③ Quality and Batch Management Integration |
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