The SAP PP module assumes a production planning and execution process with the following stages / phases:
- Sales and operations planning
- Material requirements planning
- Capacity requirements planning
- Production execution and control
Sales and operations planning
Sales planning aims at forming some expectation of future sales orders. Forecasting is a central aspect of sales planning and forecasts are often formed based on extrapolations of historic sales. Availability of inventory and production capacity is only considered from a general and strategic perspective.
Material requirements planning
Material requirements planning is a central step of ERP-based production planning. Demand figures are translated into requirement of specific products and materials.
Material requirements planning seeks to make sure that production will plan the correct quantities to be produced and procured on all levels of the internal and external supply chain.
Material requirements planning takes into account lead times , lot sizes and scrap rates but ignores capacity constraints in production.
Capacity requirements planning
Capacity requirements planning aims at establishing a feasible production schedule. During this phase production orders are created. A production schedule specifies what product will be produced on which work center at what time.
Production execution & control
Production execution and control defines how execution of scheduled production orders is controlled. Booking processes involve material withdrawal, order confirmation, storage and invoicing.