Navigating Production with Confidence: A Guide to Different Planning Strategies in SAP PP

In the fast-paced manufacturing world, a robust production plan is the cornerstone of success. SAP PP (Production Planning) offers a robust suite of tools to streamline this process, and a crucial element is selecting the proper planning strategy.

This blog post will help you understand the various planning strategies available in SAP PP, allowing you to tailor your approach to your specific production needs.

Understanding Planning Strategies

Planning strategies in SAP PP define the methods used to calculate production requirements and scheduling. They determine how sales forecasts, customer orders, and stock levels influence the production plan. By selecting the most suitable strategy, you can optimize inventory management, ensure timely deliveries, and reduce production costs.

Key Strategy Groups:

• Make-to-Stock (MTS): This strategy is ideal for products with predictable demand. It uses forecasts and historical data to generate planned independent requirements (PIRs), which drive production planning. Examples include staples like beverages or office supplies. (Strategy groups: 10, 40)
• Make-to-order (MTO): This approach is suited for products with highly variable demand or a high degree of customization. Production is triggered by confirmed sales orders, eliminating the need for forecasting. Examples include specialized machinery or furniture with various options. (Strategy groups: 20, 21, 25, 26)
• Planning Components: This group focuses on managing dependent demand for materials within a Bill of Materials (BOM). The production plan for these components is derived from the higher-level assembly plan. (Strategy groups: 30, 34, 35, 37)
• Strategies for Configurable Materials: These strategies cater to products with various configurations. The system considers the specific configuration of a sales order when determining component requirements.
• Strategy for Engineer-to-Order (ETO): This approach is used for highly customized products requiring engineering specifications before production. The planning process often involves multiple stages, with the sales order triggering the creation of detailed engineering drawings and production plans.

Choosing the Right Strategy

The optimal planning strategy hinges on several factors, including:

• Demand predictability: For predictable demand, MTS is a good choice. For highly variable demand, MTO is preferred.
• Product customization: MTO or ETO strategies are ideal for highly customized products.
• Inventory carrying cost: MTS strategies typically involve higher inventory levels, while MTO minimizes stock holding.
• Lead times: Long lead times for raw materials or components may necessitate using MTS to ensure buffer stock.

Conclusion

By understanding the different planning strategies in SAP PP and carefully considering your specific production environment, you can make informed decisions that optimize your production processes. Remember, the best approach is the one that best aligns with your business goals and ensures efficient, cost-effective production while meeting customer demands.