SAP built an awesome Production Planning solution within its ERP program almost 50 years ago. Why are companies still not using it correctly and to its full advantage?
SAP built an awesome Production Planning solution within its ERP program almost 50 years ago. Why are companies still not using it correctly and to its full advantage?
Do these things ring true at your company?
- We’ve interfaced a bunch of systems and the information is never correct or up-to-date
- I see all of our planners working in Excel spreadsheets, not SAP
- IT tells us we need to buy more software
- No one can tell me the production schedule for next week
- We are always ripping jobs off the production line because of parts shortages
Production Planning in SAP is not complicated! Here are the very simple steps:
- Decide at what BOM level you will stock your assemblies and forecast accordingly
- Run MRP and resolve exception messages first thing every morning
- Ensure that work centers are not overloaded in the capacity planning period
- Detail schedule (dispatch) the next 2 – 3 weeks
- Run the available to promise program (ATP) to ensure that you have components for the dispatched orders
- Convert the planned orders to production orders and release them to begin production
- Keep the production orders rescheduled until they are complete
Get these production planning processes working correctly in your SAP system before even THINKING about adding on additional planning functionality. You wouldn’t build a house until you built a solid foundation; your production planning solution should be built the same way.
Here are the benefits of running production planning correctly in your SAP system:
- Better customer service – more on time and in full deliveries to customers
- Reduced inventory because you stock assemblies at the lowest (cheapest) level prior before sales
- Reduced inventory because no capacity overloads means you consume component materials right after they arrive in inventory
- Happy planners because they do not need to maintain external planning systems or Excel spreadsheets. They are using SAP the way it was built!
If your company is running SAP and your production team is planning using Excel or 3rd party tools we can pretty well guarantee you that you’re holding too much inventory and/or you could improve your customer service level. Let us show you how to run standard SAP reports to quantify the business value you could get by using the production and inventory modules of SAP correctly. The business value will be: sustainably reduced inventory; higher inventory turns; fewer missing parts on the shop floor; more on time/in full deliveries to customers all with less user effort in the system.
Intrigued?
For more information, please contact me at ahustis@stratserv.co
Ann Hustis, SAP Production Planning Consultant, Strategic Services Inc.
