3/22/2021 SAP e-book

Unit 1: SAP S/4HANA Production Planning Overview

If you want to plan material requirements automatically, you must define suitable MRP and
lot-sizing procedures in the material master. To do this, use the MRP type and lot size
indicators. Depending on the procedure you choose, you then have to maintain further data in
the material master. You can define different MRP procedures for a material in different
plants.
The two main planning procedures are consumption-based planning and material
requirements planning.
Consumption-based planning is based on historical consumption values and uses forecasting
or statistical procedures to determine future requirements. Consumption-based planning is
characterized by its simplicity and is mainly used for B and C parts with a low value. One
prerequisite of consumption-based planning is efficient and constantly up-to-date inventory
management.
In contrast to consumption-based planning, material requirements planning takes current
and future sales as a reference point and is executed for the whole BOM structure. The
planned requirement quantities trigger the MRP calculation. It produces better planning
results than consumption-based planning.

The Principle of MRP

Figure 6: The Principle of MRP

In the first step for detailed planning in MRP, the procurement dates and quantities for the
required assemblies and components are determined based on the requirements dates and
quantities for the finished product (for example, a sales order). Bills of material and routings
must be exploded to do this.
Scheduling of procurement for in-house products is carried out using the routing. The
production operations to be executed and the length of the individual operations are specified
in the routing and calculated based on the formulas in the work center. The assemblies (from
the BOM) required for production must be available when production of the finished product

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Lesson: Outlining Production Planning in SAP S/4HANA

is started. Procurement of these assemblies must therefore be initiated earlier. In this way,
assuming the dependent requirements date is the availability date, the system determines
the order dates of the components by means of backward scheduling using the in-house
production time or planned delivery time.
Your enterprise plans to implement SAP S/4HANA and you want to know about the new SAP
S/4HANA Enterprise Management (Materials Management and Operations) solution.

The Business Landscape is Increasingly Complex and Networked

The figure, The Business Landscape Is Increasingly Complex and Networked, shows that the
world around us is becoming more complex. There has been an exponential growth of digital
information (social, mobile, and big data), an increase of globalization and the spread of
business networks, and the Internet of Things. These changes have resulted in more complex
business processes, more complex organizations, and more complex software solutions.

Figure 7: The Business Landscape is Increasingly Complex and Networked

At the end of 2009, 5% of the world's population owned smartphones. Four years later, that
figure jumped to 22%. Currently, 1.7 billion people are on social networks. Over the next three
years that audience will surpass 2.55 billion. By 2020, 5 billion people will enter the middle
class and come online. 50 billion devices will be connected to the Internet of Things, creating
a digital network of virtually everything. And cloud computing, a $41 billion business in 2011,
will grow to a $241 billion business in the same time frame.
The exponential proliferation of mobile devices, social media, cloud technologies, and the
staggering amounts of data they generate, have transformed the way we live and work. 61%
of companies report that most of their people use smart devices for everything, from e-mail
to project management to content creation.
While all of these advancements have improved our lives and provided us with greater
opportunities for innovation than ever before, they have also accelerated the rise of an
entirely new problem to contend with: unprecedented and crippling complexity.
The world may be getting smarter, but it is not getting any easier.

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