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SAP Production Planning Overview

A workshop that provides an overview of the SAP R/3 Production Planning and Control (PP) module

SAP PP Overview

Course Contents
 Introduction  Organizational Structure  Production
# Master Data  Planning # Planning Levels  Control # Production Orders  Integration with other modules

SAP PP Overview

Target Group
All departments with a fundamental knowledge of SAP

SAP PP Overview

Manufacturing Methods / Manufacturing Strategies

Methods of Manufacturing  Repetitive Manufacturing  Discrete Manufacturing  Process Manufacturing  Projects

Manufacturing Strategies  Engineer to Order  Make to Order  Assemble to Order  Make to Stock

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Lead Times for Manufacturing Strategies

DLT Delivery Lead Time

Design Purchase Inventory


Assemble Assemble

Ship Ship Ship Ship



Manufacture Inventory Assemble


Manufacture Manufacture





Response Time to customer is shortest for MTS.

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Organization structure
Client 1000 SSML Controlling Area - 1000 Company - SSML Purchase Organizations Plants
Cost Center Production

Sales Organizations
Cost center Maintenance

Profit center

SAP PP Overview

Production Planning and Control Master Data

SAP PP Overview

Master Data in PP

Material Master Bill of Material Work Center Routing Production Resources and Tools

SAP PP Overview

Master Data in PP Material Master

SAP PP Overview

Material Master
 The material master contains information on all the materials that a
company procures, produces, stores, and sells.

 The material master is used by all modules in the SAP.  Different departments in a company work with the same material, so data in
a material master record is subdivided in the form of user departments.

 A minimum of five fields need to be maintained in the Material Master to

create a material Material Number, Material Type, Industry Sector, Material Description and Base Unit of Measure.

 In PP the material master is used for maintaining data relating to MRP,

Forecasting and Work Scheduling.

SAP PP Overview


User departments

SAP PP Overview


Material Types in Standard SAP

Material Type

Finished Product Semi Finished Product Raw Material Spare Part Trading Goods Operating Supply Empty Containers Non stock Item Packaging Competitor Product Production Resources/ Tools

SAP PP Overview


MRP Views
 MRP 1 contains data relating to MRP Type, Lot Size and MRP Controller.  MRP 2 contains data relating to Procurement Type, Special Procurement    
Type, Lead Time and Scheduling Margin Key. MRP 3 contains data relating to Planning Strategy, Consumption Mode and Availability Check. MRP 4 contains data relating to Production Versions, BOM Selection Method during MRP run and Repetitive Manufacturing. Work Scheduling contains data related to Set-up Time, Processing Time, Delivery Tolerances, etc. Forecasting contains data as to how the material consumption took place during the last few periods and on the basis of certain formulae, projections for the future are made.

SAP PP Overview


Material Master MRP Key Fields

Basic, General, and Lot Size Data

 Procurement Type indicates if the material is externally procured,

or produced internally or both.

 Special Procurement identifies special planning rules which may

be used for in-house production or external procurement

 MRP Type determines how the material is planned such as MRP,

MPS, or consumption based planning

 Lot Size determines which lot-sizing procedure the system uses to

calculate order quantities

 MRP Controller is the person who is responsible for planning of

the material

SAP PP Overview


Material Master MRP Key Fields

Scheduling Parameters

 Planning Time Fence: defines a period during which MRP/MPS will

not automatically add or reschedule orders

 Scheduling Margin Key: controls the release period, opening period

for a material and scheduling floats for production

Release period is the number of working days taken to release a production order Opening period is the number of working days taken to convert a planned order into a production order Order floats allows for safety margin before and after production

 Planned Delivery Time: lead-time for purchased material  In-house Production Time: lead-time for manufactured material  GR Processing Time: goods receipt processing time

Example: dock-to-stock time

SAP PP Overview


Material Master MRP Key Fields

 Availability Check indicates whether the system generates individual
or summarized requirements for sales orders for this material and for planning, which MRP items the system includes in the availability check.

 Plant Specific Material Status is used to limit the usability of materials

for certain activities such as, purchasing, bills of material, etc.

SAP PP Overview


Master Data in PP Bill Of Materials (BOM)

SAP PP Overview


Bill of Materials
 A bill of material is a complete, formally structured list of the
components required to produce the product or assembly.

 The BOM contains the material number of each component,

together with the quantity , unit of measure and item category of component.

 BOMs are used in product costing and materials requirement


 BOMs are also called List of Ingredients or Recipe List.  The material for which the BOM is created is called the header and
it can contain one or more items below it.

SAP PP Overview


BOM Structure

BOM Header

BOM Items
Component 1 Component 2 Component 3

Component 31

Component 32

Component 33

Note: BOM items are also known as BOM components.

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Item Categories
For each item of a BOM, an item category must be assigned. The item category defines the features and functions of an item.


Stock Item Non-Stock Item Variable Size Item Text Item Document Item PM Structural Element Class Item Intra Material

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Stock Items
 BOM components/items that are kept in stock.  A valid material master record with a material type that
supports stock, must exist in the plant.

 During materials planning, the system creates dependent

requirements for all the material components of a product that are subject to material requirements planning (MRP).

 When you open a production order, the system generates a


SAP PP Overview


Non-Stock Items
 This item category is used if a user wants to enter a material that is not
kept in stock before use, and that is only procured for a specific planned order or production order.

 The material is only rarely required for a custom-made product and is

used directly in the product as a purchased part.

 A non-stock item in a BOM may be either with or without a material

master. If you enter a non-stock item without a material master, you must enter a description. For non-stock items, you have to maintain purchasing data in the bill of material.

 In the planning run, the system generates purchase requisitions instead

of dependent requirements for components that are procured directly.

SAP PP Overview


Variable-Size Items
 This item category is used if a user wants different-sized sections of a
material (raw material) to be represented by one material number in BOM items.

 A valid material master record with a material type that supports stock
must exist in the plant you select.

 Different-sized sections of a material (for example, sheet metal) can be

stored under one material number.

SAP PP Overview


Document Items
 If a document or drawing needs to be maintained for a material, this item
category is used.

 Drawings, photos or texts can be attached through this item category type.  A document info record has to exist for the document, which is maintained
through the document management system. (DMS)

SAP PP Overview


PM Structural Element
 A PM structural element describes the structure of an equipment for design
purposes only.

 If you want to maintain an item as a PM Structural element, this material

should have been created with material type IBAU. (Maintenance Assembly).

 No plant data is required for these materials.  These items are not copied to the production order.  This item category is mainly used in BOMs which are relevant to Plant

SAP PP Overview


Class Items
 A class item has characteristics and is used in configurable BOMs.  If materials or documents are classified in the class, they can be used as a
class item.

 When a BOM is configured, the class node can be replaced by a specific

material or document.

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Text Items and Intra Material

 A text item may contain instructions required for the manufacture of the
header material.

 Example, Assemble the left front door to the left side of the car

 A material that exists temporarily between two sub processes in the

production process is called an intra material.

 These materials have to be created with the material type INTR in the
material master.

 Example Charge in a foundry.  This item category is mainly used in the process industry.
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BOM Technical Types

Simple BOM

Variant BOM

Alternative 1

Alternative 2

Multiple BOM
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Variant BOM
Bike color T Shirt Red color T Shirt Black Color T Shirt

Blue Color Fabric Red Color fabric Black Color Fabric



Qty. for variant 1 Qty. for variant 2

Blue Collar Red Collar Dyed yarn Black Collar

Several similar products are represented in one bill of material

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Multiple BOM
Alt 1 - Lot Size 1 to 100 Alt 2 - Lot Size 101 to 500

T Shirt

Qty. for alternative 1 Qty. for alternative 2


Gassed Mercerized fabric

alternative 1

Plain Fabric
alternative 2

The same product can be manufactured using different methods of production or with different components or component quantities
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Master Data in PP Work Centers

SAP PP Overview


Work Centers
 A work center is a place where production operations are performed.
Machines, machine groups Employees, groups of employees

 Work centers are used in task list operations (routings) and integrated with
Human Resource Management System .

 A work center is always created with respect to a plant.  To each work center a work center category is assigned, that determines
which data can be maintained in the work center.

SAP PP Overview


Work Center Category

 Machine  Person  Processing Unit  Production Line  Machine Group  Statistical Work Center  Zone  Station

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Available Capacity at a Work Center

1 hr Break Time 1 hr 8 hrs 7 hrs 6 hrs Planned Downtime

Total Working Hours

Working Hours less Breaks

Productive Working Hours

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Work Center Views

Basic Data Default Values for Task Lists Costing Data and HR System Data
Name and description Standard value key Performance efficiency rate Control key Standard text key Wage data Cost center Activity types Formula key Capacity category Interoperation times Formula key Available capacity Formula key Utilization

Scheduling Data

Capacity Data
SAP PP Overview

Uses of Work Centers

Cost Center

Capacity Requirements Planning

Assembly Line

Work Centers



Production Line

Scheduling, Execution Times

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Master Data in PP Routings

SAP PP Overview


Definition: A routing describes the processing steps required to produce a material or provide a service . Routings are also called task lists. A routing is always created with reference to material and a plant. Examples: Work steps -

Op 10 - Pre-Assembly ... Op 20 - Assembly ... Op 30 - Inspection ... Op 40 - Packaging ... Op 50 - Delivery ...

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Routing Structure
 A routing is composed of a header and one or more sequences.  The header contains data that are valid for the whole routing.  A sequence is a series of operations.  Operations describe individual process steps, which are carried out during

SAP PP Overview


Operations in a Routing
Material Operation 20 Routing Group Routing Operation 10 Work center Texts Control data Times Material Components

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Operation Lead Time

Float Before

Oper 0010

Oper 0020

Oper 0030

Float After

Operation Lead Time Queue | Setup | Process | Teardown | Wait | Move Interoperation Time Execution Time Interoperation Time

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Use of Routings
Order RTG. Op 10



Times Control data Texts PRTs Material Quality



.... N

Start date Finish date

Capacity Planning
C a p a c i t y Work center Machine Labor

Manufacturing Costs Manufacturing Overheads

Op. 10 Op. 20


SAP PP Overview

Master Data Costing Relationship

Work Center Formula Constants Cost Center Routing Standard Values

Activity Type


Activity Price

Actual Time/Quantity

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Master Data in PP PRTs

SAP PP Overview


 PRT stands for Production Resources and Tools.  PRTs are aids or resources which help in the manufacturing process.  PRTs maybe tools, jigs and fixtures, documents and drawings or NC

 PRTs may or may not get consumed during a production process.  PRTs maybe assigned to one of more operations in a routing or production

SAP PP Overview


Production Planning and Control Planning Levels

SAP PP Overview


Planning Levels in SAP R/3

SAP PP Overview


Planning Levels Sales and Operations Planning

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Sales and Operations Planning

 SOP specifies sales quantities for the long and intermediate term to roughly
assess the feasibility of sales and operation plans

 Sales and Operations Planning at the Product Group or F/G level

Materials may be planned together in Product Groups Sales quantities are determined for future periods Production quantities are then determined on the basis of sales

 The data from SOP is then disaggregated and then transferred to the next
planning level i.e. Demand Management

SAP PP Overview


Planning Levels Demand Management

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Demand Management
Copy from Sales Plan Copy from Production Plan Copy from Forecast Copy from Original Plan

Manual Planned Independent Requirements

Demand Management Demand Program

Sales Demand from Sales Orders


SAP PP Overview


Demand and Supply Elements

Demand Elements
Sales Orders Planned Independent Requirements Dependant Requirements Reservations Safety Stock Demand Elements are also called requirements or issues, while Supply Elements are also called receipts.
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Supply Elements
Planned Orders Production Orders Purchase Requisitions Purchase Orders Warehouse Stock

Requirement Types
Independent Requirements

 Planned Independent Requirements:

Are used for the anonymous (Non-order-specific) planning of production or procurement (E.g. demand forecast)

 Customer Independent Requirements:

Are sales orders on the system. Sales Orders are generally copied directly into the PP system from the SD system, but they can also be entered manually Dependent Requirements

 Are directly related to or derived from the BOM structure for

other items or end products. They are automatically generated during MRP

SAP PP Overview


Planning Strategy Make-to-Stock

 Make product for stock in expectation of customer sales.  Plan using planned independent requirements for anonymous
make-to-stock production.

 Use Net or Gross Requirements Planning

Net Requirements -- includes warehouse stock, planned issues and receipts Gross Requirements -- excludes warehouse stock. Just includes planned and open orders

 Example is a shelf stock item such as an emergency lamp.

SAP PP Overview


Strategy: Make-To-Stock Production

Example: Common shelf items such as a emergency lamp
Sale from stock
Warehouse Stock Finished Product


Production Push

SAP PP Overview


Planning Strategy Make-to-Order Production

 Sales orders trigger the production process.  Produced quantities for each sales order are managed individually.  Production and procurement costs are settled either to a sales order or a

 Example is a custom product with a unique structure such that it only

applies to a particular customer order.

SAP PP Overview


Strategy: Make-To-Order Production

Example: New machinery
Sales Order
Warehouse Stock Finished Product

Production by Lot Size Pull

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Consumption Logic

Customer requirements consume planned independent requirements directly before or after it. Consumption mode is either determined in the material master record or in the configuration menu of demand management Consumption mode determines either -Backward consumption requirements directly before the sales order Forward consumption requirements directly after the sales order Both types are allowed the system looks for the next closest planning requirements If no consumption periods exist, then you can only consume requirements planned on the same day.

 Example -- Forward Consumption

Planned Requirements Customer Requirements

01/07 01/14 01/21 01/28 0 0 0 100 25 -------^

Example -- Backward Consumption 01/07 01/14 01/21 01/28 Planned Requirements 0 100 0 100 Customer Requirements ^----- 25

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Planning Levels Material Requirements Planning

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Functions of MRP
 To guarantee material availability.  It is used to procure or produce the requirement quantities on time
both for internal purposes and for sales and distribution.

 Monitoring of stocks, creation of order proposals for purchasing and


 Determines any shortages and create the appropriate procurement


 Create messages that inform the MRP controller of critical parts and
exceptional situations so that the MRP controller can quickly reprocess the results of the automatic planning run in the specific area with problems.

SAP PP Overview


MRP Controller
 The MRP controller is responsible for specifying the type, quantity
and time of the requirements.

 He must also calculate when and for what quantity an order

proposal has to be created to cover these requirements.

 He is provided with the information on stocks, stock reservation

and stock on order to calculate quantities and he needs all the information on lead times and procurement times to calculate dates.

 The MRP controller determines a suitable MRP and lot-sizing

procedure for material to determine procurement proposals.

SAP PP Overview


MRP Types
VB Manual Reorder Point Planning: MRP produces order proposals when stock falls below a reorder point. The reorder point and safety stock levels are entered manually Automatic Reorder Point Planning: The reorder point and safety stock level are calculated based on the forecast results Deterministic Planning MRP produces order proposal(s) to match the exact quantity of the requirements based on independent and dependent demands Master Production Scheduling Similar to PD but used for master schedule items




SAP PP Overview


MRP: Reorder Point Planning


Reorder Point

Safety Stock

Time Order Date Delivery Date

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Lot Sizing
Lot for Lot Fixed Lot size Replenish up to maximum stock level

Daily Lot size Weekly Lot size Monthly Lot size Flexible period Lot size according to planning calendar.

Part period balancing Least unit cost procedure Dynamic Lot size creation Groff reorder procedure

SAP PP Overview


Planning File
 The planning file contains a list of all materials relevant to the planning run.  This means that as soon as a material master record is created with MRP
data and a valid MRP type, this material is then automatically included in the planning file.

 Before running MRP, the MRP controller has to ensure that the planning file
has been set up and includes all materials relevant to MRP.

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MRP Prerequisites


Activated for MRP Valid MRP Type Valid Material Status Material MRP Views Maintained  MRP Controller  Planned Lead Time  MRP Group  Lot Size Data


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MRP Features
Net requirements calculation Lot sizing


Internal production and external purchasing

Order scheduling and generation

Bill of Material Explosion

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Running MRP
 For a plant, online  For a plant, in the background  Single Item, Single Level  Single Item, Multi Level  Single Item, Project  Single Item, Interactive  Single Item, Sales Order

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Scope of the Planning Run

 Regenerative Planning: All materials are planned for a plant. Usually, the
regenerative planning run is only carried out in the implementation stages.

 Net Change Planning: Only those materials are planned, which have
undergone a change relevant to MRP since the last planning run.

 Net Change Planning in the Planning Horizon: Only those materials are
planned, which have undergone a change relevant to MRP within the planning horizon.

SAP PP Overview


MRP Control Parameters

 Whether or not MRP will automatically create purchase
requisitions, planned orders or delivery schedules.

 Whether an MRP list will be created or not after the MRP run.  Whether the planning data will be adopted or whether the BOM will
be re-exploded.

 Whether basic date scheduling or lead time scheduling will be

carried out.

 Whether or not unchanged components are to be planned.  Whether results are to be displayed before they are saved.  Whether MRP is to be run in the simulation mode.

SAP PP Overview


The MRP Run

Independent Requirements: Sales Orders & Planned Independent Requirements BOM explosion Dependent Requirements: From BOM explosion

Quantity Requirements Start

Timings Finish

Resource Requirements

July 1

July 5



Raw Materials

Order Proposal

Stock Requirements List / MRP List

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MRP List
MRP Controller Group of Materials for which controller is responsible Controllers MRP Listing
MRP Order Proposals and Planner Messages from MRP Planning run. Planner can drill down to review material movement activity

Goods Issues

Goods Receipt

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Production Planning and Control Production Orders

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Production Order - Definition

 Production orders are used to control the production activity within a

 A production order defines

Which material is to be produced At which location i.e. work center. At what time (when to produce ?) How much work (quantity) is required. Which resources are to be used and How the order costs are to be settled.

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Functions of a Production Order

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The Production Cycle

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Order Request Order Creation Availability Check Machine Reservation Order Release Print Shop Floor Papers Material Staging Order Processing Confirmations Goods Receipt Calculate Variances Order Settlement Archiving / Deletion

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Methods of Creating Production Orders

An order can be created in the following ways:


With Material Without Material From Planned Order Collective Conversion of Planned Orders For Sales Order For Project

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Production Order Creation

Manual Order Creation Order Proposal MRP Conversion

Determine Order Type

Routing Selection

At least one operation is required

Changes are allowed before order release

Lead Time Scheduling

Enter start or finish date depending on scheduling direction


Bill of Material Selection

Components Material Reservations Item Categories

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Backward Scheduling for In-house Production


MRP determines the basic scheduling dates using backward scheduling If the release date lies in the past, the system automatically switches to forward scheduling
Order Release Date Order Start Date Order Finish Date

Order Release Process Time

In-house Production Time

Goods Receipt Process Time

MRP Planning Date -- today

MRP Planning Lead Time

Future Requirement Date

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Production Order Release

Production Order Ready for Release

Order release is carried out manually

Material Availability Check

Uses checking rules defined in configuration

Order or Operation Release

Shop Paper Printing Possible


On-line or in background Pick List, Confirmation Slips,...

Material Withdrawals Possible

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Material Availability Check

Stock on Hand 150 Units Reservation for 50 Units Planned Order for 200 Units Dependent Requirement for 200 Units

Net Available


100 Requirement for 50 Units are Available



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Goods Movement for a Production Order

Reservation Planned Goods Issue

Material 1


Unplanned Goods Issue

Material 2 Consumption of Material 1 and 2 Goods receipt of Material 3

Goods Issue

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Back flushing
A goods issue has to be posted for every material that is withdrawn during order processing. This can occur at the following times:

 Directly as the goods are issued  When the operation is confirmed, the materials allocated to the
operation have the goods issue posted. This is known as backflushing. Whether a material can be backflushed is decided in three different places. These are the master records of:

 The Routing  The Material Master  The Work Center

SAP PP Overview


Backflushing (cont..)
If the Backflush indicator is set in the routing, the material is always backflushed regardless of what is entered in the material master record.

If not set the indicator in the routing, whether the material is backflushed or not depends on how you set the indicator in the material master record.

 Set indicator for backflushing in material master

Always backflush Work Center decides whether to backflush

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Types of Confirmations
 Order Confirmation  Operation Confirmation  Partial Confirmation  Final Confirmation  Individual Confirmation  Collective Confirmation  Milestone Confirmation

SAP PP Overview


Milestone Confirmation
Confirm Operation 0010 Activities

Production Order Operations C 0010 - Assemble Board 0020 - Assemble Case Milestone 0030 - Assemble unit 0040 - Final Test
Confirm Operation 0030 Activities Confirm Operation 0020 Activities


Reduction of Capacity Requirements Determination of Actual Costs

Confirm Operation 0040 Activities

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Confirmation Data


Yield Scrap Quantity Scrap Reason



Start date Finish date Work Center Personnel Number Qualification Wage Group Wage Type



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Production Order Status

CREATED . BOM and RTG selected . Lead Time Scheduling . Reservations created for components . Capacity Reqmts for Work Centers . Planned Order costs created (PRC) . Settlement Rule Determined (SETC)

RELEASED . Completion Confirmation possible . Shop paper printed

CONFIRMED .. Actual Production usage and time captured .Milestone operation (MILE)

DELIVERED . Goods Receipt delivered

COMPLETE . Actual costs settled to cost objects

. Availability Check possible, at or before release . Material issues after oper release

SAP PP Overview


Order Settlement
When a production order is settled, the actual costs incurred for the order are settled to one or more receiver cost-objects (for example, to the account for the material produced or to a sales order). Offsetting entries are generated automatically to credit the production order:

 If the costs for the production order are settled to a material account, the
order is credited each time material is delivered to stock. The material stock account is debited accordingly.

 If the costs for the production order are settled to another receiver (for
example to a sales order), the order is credited automatically at the time of settlement. The cost-objects are debited accordingly.

SAP PP Overview


Production Planning Summary

SAP PP Overview


Integration with other modules

SAP PP Overview


Integration of PP with other modules

Sales Order Material Availability Check


Shipment Credit Limit Sales Forecast / Plan

Sales & Distribution


Transfer of Requirements Goods Issue to SO

Production Planning
Production Cost Inspection

Production Order Production Order Receipt Accounting Document

Materials Management
Purchase Order Invoice Receipt Goods Receipt

Quality Quality Management Finance & Controlling

Accounts Payable

Receivable Accounts / Cash Receipt


SAP PP Overview