Untangling Consumption Modes in SAP PP

For those in the world of Production Planning (PP) with SAP, consumption modes can be a bit of a mystery. But fear not! This blog post will illuminate consumption modes, why they matter, and how to use them effectively.

What is a Consumption Mode?

In SAP PP, a consumption mode dictates how the system consumes Planned Independent Requirements (PIRs) by sales orders, dependent requirements, or material reservations. Think of PIRs as your forecasted demand for finished goods. Consumption modes define the direction (in time) the system looks to fulfill those demands.

The Different Consumption Modes:

• Backward Consumption: Sales orders or requirements consume PIRs before the current date. Imagine you have a PIR for 100 units in August and another for 100 units in September. A backward consumption mode would prioritize fulfilling the August PIR first.
• Forward Consumption: Sales orders or requirements consume PIRs after the current date. The system would look to September’s PIR to fulfill the current demand in this scenario.
• Backward then Forward: The system prioritizes consuming backward from the current date, but if insufficient PIRs exist, it will look forward.
• Forward then Backward: The opposite of backward then forward. The system prioritizes consuming forward from the current date, but if insufficient PIRs exist, it will look backward.

Why Do Consumption Modes Matter?

Consumption modes ensure your production plan aligns with your sales and inventory realities. They influence how MRP calculates planned orders and ensure you have the suitable materials at the right time.

Choosing the Right Consumption Mode:

The best consumption mode depends on your specific needs. Here are some factors to consider:

• Planning Strategy: Consumption modes are most relevant for planning strategies that rely on PIRs, such as Make-to-Stock (MTS).
• Demand Forecasting Accuracy: If your demand forecasts are highly accurate, backward consumption might be suitable. However, with less accurate forecasts, a forward or combined mode might be preferable.
• Inventory Management Strategy: Consumption modes can impact your safety stock levels. For example, a forward consumption mode might lead to higher safety stock requirements.

Additional Considerations:

• Period-Based Consumption (S/4 HANA): A newer feature in S/4 HANA allows for period-based consumption, restricting PIR consumption to specific periods (e.g., months).
• Backward and Forward Consumption Periods: You can define timeframes (in workdays) to limit how far backward or forward the system looks to consume PIRs.

Conclusion:

Understanding consumption modes is essential for optimizing your production planning process in SAP PP. By carefully selecting the correct mode for your scenario, you can ensure a smoother flow of materials and finished goods.