What is Production Planning?

Production Planning is the process of aligning demand with manufacturing capacity to create
production and procurement schedules for finished products and component materials.
PP flow consists of planning and execution as described.
Here is the flow of PP in simple language:
#1 First of all demand is generated for the product to be produced through demand management.
It calculates the quantities to produce and the time for the final assembly.
#2 the data from demand management is transferred to MRP. The data from demand mgmt. can
come from Customer Sales Order (firm) or Planned Order (forecast).
#3 The MRP checks for the availability of material at various stages of BOM. In case material is
not available MRP generates planned order and Purchase requisition for production of components
in house and procurement from vendor respectively.
#4 the planned orders are converted into production order by the planner and the purchase
requisition are converted into purchase order by the purchaser.
#5 Production in charge converts the planned order to production order and carries out the
production activities once the order is released for production. Production is carried out as per the
operation steps provided in the routing. Work centers are also mentioned with each operation in
the routings where these operations are to be carried out.
#6 once the production is completed production confirmation is done and goods movement
(delivery created) takes place.
#7 Capacity planning is yet another part of PP which planes the capacities for various work centers.
MPS is another tool which is used to plan out the master products. If MPS is to be run the inputs
are provided from demand management to MPS. And the output from MPS is then feed into MRP.
ORGANISATION LEVELS IN SAP PP

Client
The Client is the highest hierarchical level unit within a SAP system. It is represented in the
system by a 3-digit numeric key.

Company Code
A Company Code is the organizational unit that allows you to structure your enterprise from a
financial accounting perspective. It represents an independent unit producing its very own
balance sheet. It is represented in the system by a 4-character alphanumeric key.
A company code represents an independent unit producing its own balance sheet, for example, a
company within a corporate group (client).

Plant
The plant is an organizational unit where Operations are concerned. When I say operations, I
mean Production, Procurement, Materials Planning and Maintenance locations. It is represented
in the system by a 4-character alphanumeric key.

Storage location
The storage location is an organizational unit where we differentiate stocks of materials within a
warehouse/plant. If further breakdown is required, we can use Storage Bins. It is represented in
the system by a 4-character alphanumeric key.

Purchasing Group
Purchasing Group is a key to identify a buyer or a group of buyers responsible for a particular
type of purchase. It is however not related to other units in the company structure.

Purchasing Organization
A Purchasing Organization is a unit which is responsible for the procurement of
services/materials, and condition negotiations with vendors.
Difference between Stock requirement list & MRP list?
MD04: The MRP list always displays the stock/requirements situation at the time of the last
planning run and it also provides a work basis for the MRP controller. Changes that are made after
the planning date are not taken into consideration, so the list is static.
MD05: In the stock/requirements list, the most up-to-date stock and requirements situation is
displayed. Changes that are made after the planning date are displayed directly, so the list is
therefore dynamic.
MRP execution Parameters
There are several parameters below in the initial screen of MRP execution transactions like
MD01, here, I am summarizing their usages and also introduce how they work with their
corresponding customizations.

 Scope of planning.
 Processing key
 Create purchase requisition
 Create MRP list
 Planning mode
 Scheduling
 Planning date
 Parallel processing
 Display Material list
 User exit key
 User exit parameter

1. Scope of planning:
It can group multiple plants and MRP areas, so those can be run together by one time execution.
Customization transaction code: OM0E
2. Processing Key:

NEUPL: Regenerative planning, all materials whose MRP type is not ND are planned.
Technically speaking, the materials who have planning file entries in transaction MD21.
NETCH: All materials whose MRP relevant objects have been changed and that actions changed
the stock requirement situation are planned.
Technically speaking, the materials who have the indicator NETCH get set in the
planning file entry are planned, this is for improving the MRP
performance.
NETPL: Only materials which had MRP-relevant change in the planning horizon since the
last planning are planned and requirements in the planning horizon
are covered.
Planning Horizon of NETPL:
For plant: Customization transaction, OPPQ > Planning Horizon
For MRP group: Customization transaction, OPPR > Planning Horizon

3. Create Purchase requisition:

 Purchase requisitions
 Purchase requisitions in opening period
 Planned order
Opening period: MRP creates planned orders first internally, if the planned orders whose
opening date is earlier than today or the same, then they are converted to purchase requisitions.
The scheduling margin key is entered in the material master, and the opening period can be
defined in the customization below for the schedule margin key.

This can be maintained in several places below and they have priorities for total planning
(MD01/MDBT or MS01/MSBT or MD40/MDBS).
Priority
1 MRP group (Other execution parameters can also be maintained here.)
2 Plant
3 Initial screen

4. Planning Mode:
Values
1 Adapt planning data (Normal mode) – Only process the changed data
2 Re-explode BOM and Routing – Read the BOM and routing again for the existing
proposals
3 Delete and recreate planning data – Completely delete the MRP data and create again
Note:
planning mode 3 is not suggested for better performance unless it is really necessary, mode 1 and
2 is generally sufficient in business.

5. Scheduling:

Values:
1 Basic Scheduling
2 Lead time Scheduling
6. Planning Date:

This is only valid for time-phased planning. In time-phased planning, we can run materials on
specific date only, e.g. every Tuesday, the next date to be run is recorded in the planning file
entry of that material in transaction MD21. Therefore, the material is planned when its date of
planning file entry is the same as the planned date entered in the initial screen of MRP execution
transaction.

7. Parallel Processing:

To improve the performance, the materials can be divided into several groups and run on
multiple dialog work processes in parallel. The maximum number of work processes and
destination instances can be defined in the customization transaction OMIQ. Please make sure
that the instance exists in the transaction SM59 and is configured correctly.

If an MRP job is scheduled in parallel on background by transaction SM37, the work processes
occupied can be monitored in transaction SM66 below when the job is running.

The program RMMRP000 which is running on background work process (Type BTC) is the
main program of MRP, this only divides and distributes the materials to several dialog work
processes (Type DIA and programs start with SAPLM61*), RMMRP000 doesn’t run materials
actually. It shows the status ‘Stopped’ (Sometimes ‘On hold’) but it doesn’t mean that the MRP
job is stopped or is held because the materials are running on other dialog processes and it is just
waiting for the result from them so shows those kinds of statuses. Thus, if you’d like to make a
trace for performance analysis, the dialog work processes should be traced instead of the main
program RMMRP000.
8. User exit Key, User exit Parameter:

User exit M61X0001 can be implemented to exclude some materials from planning, the user exit
key and parameters can be entered, and those are transferred to the user exit to identify what
materials should be excluded. E.g. the parameter can be the MRP controller or MRP group or
material group etc.
The user exit contains 2 function modules below. The 2 function modules should be programmed
with the same source codes if the user exit is active because one is for non-parallel processing
and another one is for parallel processing.

EXIT_SAPLM61C_001
EXIT_SAPMM61X_001
The user exit key and parameter are the importing parameters of the function modules as showed
in the screen shot below, so they can be transferred to the function modules, and can be excluded
by writing own source code there based on the parameters transferred.