ACCT 3322 Test 2 PP (PRODUCTION PLANNING) in SAP S/4HANA

Production Planning and Execution

the process of planning, scheduling, and controlling the manufacturing of products to meet customer demand efficiently — using available materials, labor, and machine capacity.

Production Process

actual conversion of raw materials into finished goods.

• Material Requirement Planning (MRP) – Determine what materials are needed and when.

• Production Order Creation – System generates an order to manufacture a specific product.

• Goods Issue (GI) – Raw materials are issued from inventory to production.

• Production Execution – Work is performed (labor, machine time).

• Goods Receipt (GR) – Finished goods are received into inventory.

• Settlement – Production order costs are transferred to finished goods (inventory valuation).

Planning Process

determines what, how much, and when products need to be produced.

• Sales and Operations Planning (S&OP): High-level matching of demand and supply.

• Demand Management: Create planned independent requirements (forecasts).

• Material Requirements Planning (MRP): Calculates material and capacity needs.

• Capacity Planning: Ensures machines and labor can handle production load.

• Production Scheduling: Determines when each order will be produced.

main integration points with Accounting

• Raw Materials Inventory

• WIP (Work in Process) (in SAP – Raw Materials Consumption then Manufacturing Output Settlement)

• FG (Finished Goods) (Settle costs and production variances (if any))

• BI + TI = EI + TO

• Raw Materials to WIP to FG

FI → MM integration

• Goods Issue: Debit: Production Order (WIP), Credit: Raw Material Inventory

• Goods receipt: debit inventory, credit CR/IR

• Invoice receipt: debit GR/IR, credit AP (vendor)

• Payment program: debit AP (vendor), credit bank

integration of production with the cycles of sales and distribution

Customer demand from sales orders feeds into production planning (via MRP).

• Make-to-Order (MTO): Production is triggered directly by a sales order.

• Costing and Settlement: Production costs affect the cost of goods sold (COGS) during billing.

Integration with production with Materials Management (MM)

MM provides raw materials through procurement.

• Goods Issue (GI) and Goods Receipt (GR) movements connect inventory management with production.

• MRP uses MM master data (BOMs, material types, purchasing info) to plan required components.

MRP functions now in Production

• Demand management: Convert demand into requirements

• BOM explosion: Identify materials and quantities

• New requirement calculation: Check inventory and calculate shortage

• Lot sizing and scheduling: Plan production batch sizes and timing

• Procurement proposal creation: Trigger internal/external procurement

  • Exception messages: Manage shortages or scheduling conflicts

MRP functions Settlement

• Collect actual costs: Record all costs during production

• Calculate variances: Compare actual vs. planned costs

• Define settlement rules: Determine where to post costs

• Execute settlement: Transfer costs to FG or COGS

  • Post variances: Record remaining cost differences

Integration with Process

Handoffs and triggers that occur in your real-life business processes can be driven by the system with no drops in communication or responsibility, Process improvement is not only enabled by the system, but the system becomes a source of new ideas and innovation

Integration with Data

Provides context not matched by point solutions, Data entry at all levels is quicker and less error-prone, Processes run on a consistent source of truth, EHS department does not need to deal with maintaining enterprise data

Integration with Reporting

Consistent user-interfaces across multiple parts of SAP, No need to maintain separate interfaces to other reporting tools, Leverage central SAP ERP hierarchies as a source of truth like Plant, Functional Locations, Cost Centers, and Org Structure to enable both roll-up and drill-down reporting in real time, Consistent security paradigm between process data and reporting logic, Gain additional insight with ability to pull data from disparate processes within the SAP landscape