There is no better way to manage the logistics of a company than to use SAP production planning. This software provides for everything needed to make the work in any company flow seamlessly. SAP incorporates all elements from the production requirements to the delivery of a sold product. However, let us look at the production planning stage and what the best practices are. SAP has made sure to update their system to provide companies with new cutting edge functionality to answer the modern company’s logistics problems. The following insight sheds more light.
Demand Management in SAP
In production planning, Demand Management is a pivotal element. It is one of the best practices that have been incoporated to make work much easier. It starts with the requirement quantities for products to the delivery dates of the finished or bought products in a company. In this regard, it is required that sales and operations planning section work closely to determine planned sales orders which demand management will implement. This functionality will have a section for Materials Requirement Planning (MRP) which considers all the materials needed to manufacture a product. In this regard, every product will need to have a planning strategy. The most common product strategy types are make to order, make to stock and configurable materials or products.
Make to Order
This category of products in a company is crucial. It refers to products that are created after an order by a customer has been made. There are many reasons why this type of production happens. First, there may be little space in the warehouse to store the product and therefore it is made after an order to avoid storage. In addition, the product might be too expensive for most buyers and hence made upon special order by clients who can afford the products. These made to order products are managed in a special way in SAP production planning with all the provisions necessary for logistics.
Make to Stock
This category of products is made without any order being made by customers. Products made are stored in a warehouse awaiting any orders by customers. To go this direction, cost of production must be suitable to see to it that healthy profit is made from stocking products. Warehouses are an expense and when cost of production is high, the company might suffer as it anticipates sales in future. All in all, this method is able to deliver products immediately to the client upon order.
These are products that make it possible for customers to ask for changes or customization as they desire to configure the finished product. This plays a critical role in helping a company sell ideal products to its customers. It makes for satisfied buyers which in turn will translate to more sales. The above are top production planning elements that come to play in SAP.
After each product has been categorized, production planning in SAP will utilize the Materials Requirements Planning (MRP). This functionality will calculate all the materials needed to produce an order; and if there are shortages, the system will inform the company and produce a purchase order needed to get necessary items. This system will ensure that a specific product is produced as needed to meet the need of a customer. These are the best practices in SAP production planning.