This page provides a basic overview about end-to-end digital supply chain business planning with SAP S/4HANA solutions from an architectural perspective.

Additional Business Process Integration parts are:

Planning SAP Digital Supply Chain Processes

SAP Digital Supply Chain planning balances supply and demand forward oriented to process manufacturing and delivery transactions with SAP digital supply chain systems.

SAP S/4HANA Digital Supply Chain Planning

SAP Digital Supply Chain planning leverages real-time information. Digital technologies (e.g. IoT, Digital Twin) offer end-to-end visibility with data-driven insights to enable agile planning scenarios for changing demands. Simulations with focus on bottleneck workcenters or scarce resources help to improve critical decisions.

Supply Chain Planning needs to be performed on different levels roughly divided with different planning frequency and horizons:

SAP Hybrid Integrated Business Planning (IBP)

Hybrid Digital Supply Chain Planning integrates on-premise systems like S/4HANA or SAP ECC with cloud-based Integrated Business Planning (IBP). IBP offers specific planning modules to support different planning scenarios with real-time insights:

SOP time series planning and R&S OBP transfer planned independent requirements (PIR) as demands to demand management. Demand Management links PIR with planning strategies to detailed material planning.

Demand Management planning strategies control the manufacturing of finished products, subassemblies or components. They are assigned on plant, MRP group or material master (MRP1) level. These strategies consider whether the material planning is based on customer independent forecasts or specific customer requirements.

SAP IBP Data Integration Scenarios

SAP IBP Data Integration Scenarios are available for different supply chain planning scenarios and data sources. Recommended IBP data integration technologies are Realtime Integration (RTI) for OBP and Cloud Integration for Data Services (CI-DS) for Time Series planning (Tactical Planning).

Operational IBP R&S Order-Based Planning (OBP) requires master data, transactional data and configuration data from external systems.

RTI is event based on the SCM Core Interface (CIF) for data integration and requires some kind of Business Technology Platform (BTP) subscription. S/4HANA public Cloud integration and Time Series planning are currently (10/2022) not supported by RTI.

SAP ECC or S/4HANA Cloud add-ons are recommended to facilitate CI-DS data integrations:

IBP integration with S/4HANA Cloud public edition is currently (10/2022) only possible as workaround with a CI-DS agent on-premise (SAP Note 3050525).

S/4HANA Core Digital Supply Chain Planning

S/4HANA Core Digital Supply Chain Planning separates material (MRP) and capacity planning. S/4HANA SOP is limited available as compatibility pack.

SAP Digital Supply Chain Material Planning (MRP/MPS)

Materials are divided by MRP type into Master Production Scheduling (MPS) and Material Requirements Planning (MRP) with similar planning algorithms and identical concepts (e.g. time fencing). MRP may run more frequently (e.g. daily) compared to MPS.

MPS can run single level planning to schedule prioritized products with time and quantity. MRP/MPS both plan infinite and accept overload without considering capacity constraints. Based on MPS, capacity leveling can dispatch operations to times with sufficient capacity.

Material Requirements Planning (MRP) targets material availability on plant/storage location level and helps to avoid shortages or delays in order fulfillment. Demands derived from forecasts (PIR) or orders (sales, production) are compared with supply from purchase or production orders.

Incoming sales orders consume PIRs to adjust the planning to current situation backwards, forwards or period-based.

MRP determines quantity and timing of material requirements. Based on the procurement type, planned orders for in-house produced materials or purchase requisitions get created. MRP controllers can manage changes to procurement elements with the Manage Change Requests app which can be integrated with supplier systems e.g. Ariba Network.

MRP Situation handling detects material exceptions issues. Cancel Process situations enable e.g. to reverse (cancel) goods receipt element without requirements or to cancel purchase requisitions no longer needed based on the current stock situation. Excess Stock situations notify when planned available stock exceeds maximum stock or actual stock and receipt exceed requirements. Predefined receivers are members of the PPMRP team category.

The Monitor Material Coverage Fiori app enables planners to analyze coverage situations of selected materials.

S/4HANA Digital Supply Chain Planning MRP Live

MRP Live is HANA optimized with code push down of processing and transactions (e.g. creation of purchase requisitions, planned orders). Allows running realtime simulations.

MRP Live (MD01N) offers a material scope selection to decide whether MPS or MRP should be processed.

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Customer requirements of sales orders are transferred to material requirements table VBBE.

MRP checks records of the planning file (MD21) containing all materials with valid MRP type in material master data. Materials are planned in sequence determined by the low-level code which represents the lowest level of usage of a material within all product structures.

MRP ensures that dependent production demands (RESB components) are available based on the required quantities to produce products. Scope item J44 (Best Practices Material Requirements Planning) describes the process to procure materials as result of MRP runs.

S/4HANA MRP Live Features

Totals requirements in table VBBS have to be cleaned up before running live MRP.

Comparison of some MRP and MRP Live features:

Feature MRP MRP Live
Processing Key define scope (NETPL in S/4HANA not available) NETCH to plan materials changed after last run and NEUPL to plan all materials default only changed materials after last run. Set regenerative to plan all materials
PP/DS separated planning reduces synchronization of planning with combined job
Planning Scope offers grouping of MRP areas and plants determines planning sequence across plants, plans all MRP areas
MRP List screenshot of past MRP run n.a.
Simulation n.a. available

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S/4HANA Demand Driven MRP (DDMRP)

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SAP S/4HANA 1709 introduced DDMRP planning with scope item Demand-Driven Replenishment Planning and Execution (2QI). Fiori app Monitor Demand Driven Replenishment offers buffer overview and replenishment functionality.

Instead of traditional forecast driven planning, Demand Driven MRP is based on Demand-Driven Buffer Level Management (‏scope item 1Y2‏) to decouple material flows with dynamically adjusted buffers. DDMRP avoids problems of planning with inaccurate forecasts like bull-whip effects caused by coupled forecasts of components and finished products.

DDMRP is composed of 5 steps:

  1. Strategic inventory positioning to define decoupling points
  2. Buffer profiles and levels determination
  3. Define how dynamic adjustments handle changes based on operating parameters or known events
  4. Demand driven planning to generate supply orders
  5. Visible and collaborative execution to manage open supply orders

Buffer level can be calculated using predictive Material and Resource Planning (pMRP).

pMRP (scope item 4B5) supports mid and long-term simulation for time buckets with simplified requirements plans (Sales Orders, PIR) and a simplified material requirement algorithm in real-time (similar to MRP Live). Goal of this simulation is to identify potential capacity issues, to evaluate possible solutions and enable production planners decisions. Releasing makes forecasts available for production environment.

S/4HANA Digital Supply Chain Capacity Planning

S/4HANA Basic Capacity Planning is available without additional license and comprises the components evaluation and leveling. Capacity leveling is used in various S/4HANA modules (SD, PP, PM, PS) and at different planning levels (e.g. SOP, MPS/MRP).

The Fiori apps Manage Work Center Capacity and Capacity Scheduling Table offer capacity planning features with focus on bottleneck resources.

Available work center capacity is used for scheduling and capacity requirements planning. Pacemaker work centers are mapped as production line to operations. These bottleneck operations are planned using midpoint scheduling with forward or backward schedule of other operations from that midpoint.

Supply Chain Production Order Planning

From planned orders converted production orders takeover finished product, amount or components. Operations with workplaces and production resources are taken over from routing.

Production orders are used to prepare and plan supply chain manufacturing execution. Based on the production order requirements, material availability and work center (machines) capacity gets checked. Furthermore, reservations get created for components.

Digital Supply Chain Product Cost Planning

Supply chain production costs are controlled with different digital approaches.

Standard cost estimates, based on BOM and Routing as quantity structures, are used in valuation, pricing, profitability analysis and cost object controlling. Itemization supplies detailed results for material cost estimates at line item level.

Costs for routing operations get calculated based on activity price, routing times and work center formulas information. Initial routing times are taken over from work center configuration. Costs are settled to cost centers which are assigned to operations.

Cost Object Controlling is focused on preliminary costing. This allows to compare planned and actual costs allocated to cost objects (e.g. manufacturing or sales orders) for any phase of the production process. After period-end closing calculated values are settled to Profitability Analysis and Financial Accounting for material valuation and pricing.

The usage of Material Ledger actual costing is optional for materials and movements. Actual costing get valuated with standard prices at the end of the period to calculate and update actual material prices.

Settlement is posting Work in Progress (WIP) and variances costs to General Ledger. Not fully delivered WIP products settled based on confirmations as debits to orders. Manufacturing Variances are calculated as difference between planned and actual costs for completely delivered orders.

Period end closing is focused on cost accounting aspect of production.

S/4HANA DSC Manufacturing for Planning and Scheduling (ePP/DS)

S/4HANA ePP/DS offers advanced capacity constraint-based planning for critical products e.g. with long replenishment time or bottleneck resources. ePP/DS requires separate license and more effort (configuration, consulting) compared to MRP.

Embedded PP/DS integrates with S/4HANA to optimize production planning, procurement and resource scheduling based on the production data structure (PDS contains routing and BOM information). Some outcomes of ePP/DS planning are purchase orders or requisitions and detailed resource schedules.

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Some characteristics of embedded PP/DS are:

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Synchronized Planning enables close integration scenarios between SAP IBP and ePP/DS of S/4HANA embedded or S/4HANA Digital Supply Chain (DSC) edition. One examples of synchronized planning is the creation of tactical time-series-based or operational order-based supply plans in SAP IBP with handed over for detailed planning to S/4HANA ePPDS.