Understanding SAP PP Strategy 10: Production Planning for Make-to-Stock

In SAP Production Planning (PP), choosing the right strategy is crucial for efficient inventory management and production scheduling. Today, we’ll delve into the specifics of SAP PP Strategy 10, known as Net Requirements Planning.

What is SAP PP Strategy 10?

Strategy 10 is a pure make-to-stock (MTS) scenario. Production is driven by a pre-defined production plan independent of individual sales orders. This approach is ideal for businesses that manufacture standard products with predictable demand, like:

• Consumer packaged goods (CPG) companies (think beverages, toothpaste)
• Automotive parts manufacturers (brake pads, filters)
• Companies with seasonal demand patterns (toys before holidays)

Key Features of Strategy 10

• Production based on Planned Independent Requirements (PIRs): These represent the planned production quantity for a finished product over a specific period. They are created through Demand Management (MD61) or manually entered.
• Net Requirements Planning: Sales orders do not directly influence production. Instead, production fulfills the PIRs, and finished goods are stocked in the warehouse. When a sale occurs, a goods issue is recorded, which reduces the corresponding PIR. This “netting” helps avoid overproduction based on short-term fluctuations in sales.
• Focus on Smoothing Demand: Strategy 10 allows smoothing out seasonal or erratic demand patterns. Businesses can ensure consistent stock levels by planning production based on forecasts rather than individual orders.

Master Data Setup for Strategy 10

To leverage Strategy 10 effectively, ensure your master data reflects this approach:

• Finished Products: In the Sales Organization view, set the Strategy Group to “10” and the Item Category Group (e.g., NORM).
• Availability Check: Use an availability check group that excludes Replenishment Lead Time (RLT).

Benefits of Using Strategy 10

• Simplified Production Planning: Focuses on fulfilling the production plan, leading to more predictable production runs.
• Improved Inventory Management: Helps maintain optimal stock levels by balancing production with forecasted demand.
• Reduced Production Costs: Enables efficient use of resources by avoiding unnecessary production adjustments based on short-term sales fluctuations.

Who Should Use Strategy 10?

This strategy is well-suited for businesses with:

• Predictable demand for finished products
• Repetitive manufacturing processes
• A focus on maintaining stock levels for immediate customer fulfillment

Conclusion

SAP PP Strategy 10 offers a streamlined approach to production planning for make-to-stock scenarios. By understanding its characteristics and implementation steps, businesses can leverage this strategy to optimize production efficiency, manage inventory effectively, and achieve better business outcomes.