Be Ready, React Fast: Mastering Production Planning with SAP PP Strategy 40

In today’s dynamic market, businesses must be agile and responsive to customer demands. Regarding production planning, SAP PP offers a range of strategies to help you achieve this. One strategy is Strategy 40, or “Planning with Final Assembly.”

What is Strategy 40?

Strategy 40 prioritizes flexibility in reacting to customer needs. Production for finished goods is triggered by planned independent requirements (PIRs) created before a sales order arrives. This means you’re proactively building stock based on forecasts and trends, allowing you to fulfill orders quickly.

Key Features of Strategy 40

• Focus on PIRs: You plan for finished products using PIRs in the Demand Management module. These PIRs represent your anticipated demand, driving production even before firm customer orders come in.
• Sales Orders Consume PIRs: When a sales order is created, it “consumes” the relevant PIRs. This reduces the planned quantity and ensures your production aligns with actual sales.
• Consumption Modes: Strategy 40 offers different consumption modes to define how sales orders affect PIRs on the timeline. You can choose backward consumption (fulfilling orders from existing PIRs) or forward consumption (adjusting future PIRs based on sales orders).

Benefits of Using Strategy 40

• Improved responsiveness: By building stock based on forecasts, you can react faster to customer demands and reduce lead times.
• Reduced stockouts: Proactive production helps ensure you have enough finished goods to meet customer needs and avoid stockouts.
• Increased efficiency: Knowing your anticipated demand allows for better planning of production resources and materials.

Who Should Use Strategy 40?

Strategy 40 is ideal for businesses that:

• Manufacture products with fluctuating demand patterns.
• Need to respond quickly to customer orders.
• Have good forecasting accuracy.

Things to Consider with Strategy 40

• Forecast Accuracy: Strategy 40’s effectiveness hinges on accurate forecasts. Inaccurate forecasts can lead to excess or insufficient stock.
• Inventory Management: You’ll need a well-defined inventory management strategy to avoid overstocking or stockouts.
• Consumption Mode Selection: Choosing the proper consumption mode is crucial for aligning production with sales trends.