PLANNING 101 · PROCESS OVERVIEW

What is Plan to Produce?

See how SAP converts demand into supply proposals, production, inventory movements, and a better planning signal.

How the process works

Plan to Produce is a repeating planning-and-execution loop. Demand creates the requirement, MRP translates it into dated supply proposals, planners make the proposals executable, production turns components into finished goods, and inventory movements give the next planning run a more accurate starting point.

1. 01

   Demand — Demand planning creates a reasoned view of what customers or operations are likely to need.

   History, promotions, orders, market intelligence, and forecast models form a baseline that planners review for bias, exceptions, and consensus.

   Example: A seasonal uplift increases the consensus forecast for fans before the demand reaches material planning.

2. 02

   BOM — What is a bill of materials—and when should an assembly be phantom?

   A BOM defines the components and quantities needed to make a material. Phantom assemblies preserve a logical grouping but are exploded into their components rather than planned or produced as separate stock.

   Example: A finished pump uses a phantom seal kit: MRP and the production order see its seals directly, without creating stock or a separate order for the kit.

3. 03

   Order anatomy — How is a production order put together?

   A production order connects organizational context, order controls, the product, operations, component materials, routing and BOM data, and the settings that govern scheduling, confirmation, backflushing, external processing, and settlement.

   Example: A pump order selects its routing and BOM, schedules operations at work centers, reserves components, backflushes eligible materials at confirmation, receives the finished product, and settles remaining cost according to its profile.

4. 04

   MRP — Material Requirements Planning calculates what supply is needed, in what quantity, and by when.

   MRP nets stock, receipts, reservations, sales demand, forecasts, safety stock, lead times, and lot-sizing rules to create proposals and exception messages.

   Example: Demand for 500 finished units creates planned orders for assembly and dependent requirements for components.

5. 05

   Proposal — Supply proposals are recommendations that planners review before execution.

   Externally procured material usually produces purchase requisitions; in-house production produces planned orders. Dates and quantities can be adjusted before conversion.

   Example: A planner firms a near-term planned order and converts it to production while leaving later proposals flexible.

6. 06

   Produce — Production execution converts a plan into controlled material consumption and finished output.

   A production order carries quantities, dates, components, operations, work centers, and costs. Release enables execution; confirmations and goods movements record progress.

   Example: Components are issued, operation time is confirmed, finished goods are received, and order variance is settled.

7. 07

   Stock — Inventory management records where material is, its status, quantity, and value—and feeds reality back into planning.

   Receipts, issues, transfers, reservations, physical inventory, batches, and valuation update supply visibility. Stock can be unrestricted, quality inspection, blocked, or in transfer.

   Example: A cycle count corrects a component shortage; the next MRP run sees the new balance and creates an appropriate proposal.