Keeping Up With Demand: Mastering Demand Management in SAP PP

In the fast-paced world of production, anticipating customer needs is crucial. That’s where SAP PP’s demand management function comes in, providing the tools to ensure you have the suitable materials at the right time to fulfill those needs.

What is Demand Management in SAP PP?

Demand management in SAP PP is all about forecasting and planning for producing finished goods. It acts as the bridge between Sales and Production Planning (PP), ensuring a smooth flow of materials based on anticipated customer demand.

The Planned Independent Requirement (PIR) is the critical player. A PIR tells the system what and how much to produce, independent of any specific sales order. It can represent a fixed quantity of a particular date or an amount spread over a period.

Planning Strategies: Matching Demand with Production

SAP PP offers various planning strategies to cater to different production scenarios:

• Make-to-Stock (MTS): Here, PIRs reign supreme. They dictate production based on forecasted demand, and sales orders reduce the existing stock levels. Planning strategy ten is commonly used for MTS.
• Make-to-order (MTO): In MTO, production is triggered by a confirmed sales order. PIRs are not considered, and planning strategy 20 is often used.

Benefits of Effective Demand Management

• Reduced Inventory Costs: By accurately forecasting demand, you avoid overproduction and the associated storage and handling costs.
• Improved Customer Satisfaction: Having the right materials on hand allows you to fulfill orders faster and avoid stockouts.
• Enhanced Production Efficiency: A clear understanding of demand helps streamline production planning and resource allocation.

Mastering Demand Management in SAP PP

Here are some tips to get the most out of SAP PP’s demand management features:

• Maintain Accurate Forecasts: Regularly update your forecasts based on sales trends and market conditions.
• Leverage Different PIR Types: Use different PIR types (LSF, VSF) depending on your planning strategy.
• Monitor Demand Trends: Monitor demand fluctuations closely and adjust PIRs accordingly.
• Integrate with Sales & Marketing: Ensure your demand forecasts are aligned with sales and marketing activities.

You can gain a significant advantage in today’s competitive production environment by effectively utilizing SAP PP’s demand management tools. Remember, it’s all about anticipating customer needs and ensuring a smooth flow of materials to meet those demands.