SAP S/4 HANA Logistics – Production planning processes changes to

run business in a simple and faster way in a digital world

Within just few months after the release of SAP S/4 HANA, SAP’s next generation business suite with
Logistics solution lined up for release to the customer this month. A quick analysis of the features in the
planning component has been analyzed and some of my observations are shared here. Although my initial
guess was that the primary focus of SAP was on the simplification of tables. Code optimization and release
of Fiori apps, but there are quite a good number of changes in transactional part side in planning area.

Sales and Operations Planning: The current ECC functionality of SOP is going to be replaced with
integrated business planning (IBP) in a long run. Since IBP (S&OP on HANA) supports all SOP features
along with advanced statistical forecasting techniques, multi-level demand and supply planning,
collaboration tools and the most user-friendly excel based UI and web-based UI, what-if scenarios which
will definitely going to bring much value than ECC-SOP for new customers and for the existing customer
who are planning to implement IBP-SOP. Also since SAP has been investing more effort in enhancing IBP
functionality than APO, it is a right thing to invest in IBP rather than go with conventional SOP approach.
Of course, there is an additional cost associated to install and implement IBP functionality but it is worth
enough to invest.

Storage location based MRP run is no longer supported – With S/4 HANA Logistics, there is no provision to
exclude MRP run for a single storage location from the pre-defined MRP parameter set for plant-material
combination. In ECC 6.0, the MRP run of the excluded storage location can be handled using reorder point
planning with a maximum lot sizing procedure. Since storage location MRP area concept will be used to
take care of the planning of each storage location, it reduces number of fields from material master
related to storage location MRP planning. It also helps to plan storage location MRP with any planning
type such as PD, P1 etc…

MRP run on HANA: MRP run has been optimized to the maximum extent using MRP live (MD01N
transaction) functionality and Customers are having an option to go in the path of either classical MRP on
HANA platform or to go with MRP live. Since MRP Live reads the data, calculates shortage and writes
planned orders at database level instead of performing at Application server level, there will be a
considerable improvement in performance.
MRP live differs from classic MRP in the following ways.

1. 1. MRP live does not generate MRP list: By using S/4 HANA, there is much improvement in the
performance of the system, hence MD04 ( stock requirement list ) output will be much faster
which eliminated the need to view the old results i.e MRP list.
2. 2. Multi-level, make to order planning ( MD50) is not optimized for HANA: Since this transaction is
to take care of performance issue, there is no further refinement required. With HANA platform,
it will be optimized further.
3. 3. Individual project planning (MD50) not optimized for HANA.
4. 4. MRP live always creates purchases requisitions: It is an unnecessary process step of converting
planned order to purchase requisition that has been eliminated by SAP. This help the amount of
work to be performed by purchaser ( in some cases MRP controller used to handle) who used to
take care of converting planned orders to purchase requisition.

A. S/4 HANA no more support net change plan in the planning horizon (NETPL). With the
improvement in MRP run with HANA (both classic and MRP live), NETPL is a redundant one and
the system can generate planned orders outside planning horizon. Thanks to HANA platformJ. A
new planning file (PPH_DBMV) replaced the old planning file entry tables MDVM/MDVL and
DBVM/DBVL to improve the performance in reading planning file entries.

Forecast based planning: Going forward with S/4 HANA Logistics, Forecast based planning will be moved
out and the suggested approach is to go with a normal MRP type PD, P1,P2,P3 or P4. As per SAP team
thought process, Forecast based planning approach is symmetrical to planned independent requirement
maintenance table derived from statistical forecasting. This may be true for finished product where PIR
functionality used. But in some scenarios where PIR maintenance functionality not used, Forecast based
planning is a required functionality.

Graphical planning table for capacity evaluation: The classical graphical planning table has lot of
disadvantages such as complicated customizing, non-user friendly, not suitable for web-based
environment, Capacity locking issues etc. With the revised approach, a drag and drop approach has been
used to change the start dates of the operations and resources. But there is no major investment made to
make it user friendly and also to make it a web based tool.

LIS replacement with a powerful HANA based platform: with a powerful UI s which will provide reports
dynamically with a multi-dimensional reporting. Once the production planning analytics reports are
available, the LIS can be switched off which will take out lot of redundant data, pre-aggregated data,
locking conflict which in turn will improve the performance. Also LIS supports with material number of 30
characters and SAP is not going to invest time in LIS anymore.

Heard in the beginning that APO component – PPDS (Production Planning and detailed scheduling) will be
a part of S/4 HANA logistics first version, but it looks like that SAP has postposed this task to the next
release. With a major shift in SAP strategy to match with digital transformation, there is a lot of learning
required for the SAP professionals to enable the technology changes to fit into the business needs.

The new SAP implementations or migrations are on SAP S/4 HANA 1610 and higher versions.
When we upgrade or migrate from SAP ECC 6.X to S/4HANA, we need to take into consideration
some of the perquisites, which SAP has published in the Simplification list. In the simplification
list, the features that are available, functionality added and those functionalities that are being
stopped are shared. During the migration activities, some of the important facts need to be
shared with the client also. Some of the important features related to manufacturing area are
mentioned below.

The sequential steps to migrate are shown in the image below:

Some of the features and the functionalities in the Manufacturing area are detailed out below:

The length of the material code is now extended from 18 CHAR to 40 CHAR.

Some of the changes in the Material Requirement Planning views namely MRP-1,2,3,4 are

1. Unit of measure group which is used in the retail (MRP-1)

2. MRP considers the quota arrangement – Quota arr. Usage (MRP-2)
3. Selection of BOM and routing is based on production version – Selection method (MRP-
4)
4. Action control, Fare share rule, push distribution, deployment horizon is part of REM or
assembly manufacturing
5. Another part is the storage location tab for storage location MRP planning
Henceforth all the above mentioned are not activated. The material requirement is simplified in
the S/4HANA version. Transactions related to the logistics batch management have been
replaced by enjoy transactions – MSC1N, MSC2N, MSC3N, MSC4N.

MRP Live in HANA

MRP live is one of the improved version in material requirement planning. It reads the material
receipts & requirements, calculated the shortages and then creates the planned orders and the
purchase requisitions. Some of the advantages of MRP live are as follows:

1. It allows to plan the set of materials specified for the MRP planner and also across
different plants.
2. We can also plan the group of the materials assigned to a product group.
3. MRP live plans the materials sequentially by determining the requirements and across
different plants.
4. It is also a pre-requisite for the future proposed solution like PP/DS in S/4HANA

Some of the differences in the classic MRP and the MRP live are

1. It does not write the MRP lists

2. Make to order planning – MD50 is not optimized in HANA
3. Projects related planning – MD51 is also not optimized in HANA.
4. Purchase requisitions are created for the materials which are defined for external
procurement. Purchase requirement indicator as available in classic is not available in
MRP Live
5. Also, delivery schedule lines are created automatically based on the valid delivery
schedules. Delivery schedule line indicator is not available in MRP live.

Planning file Entry logic has been simplified and optimized in S/4HANA for consistency and
update performance. MRP always determines the shortages and requirements of all the known
materials. MRP does not support the NETPL- Net change planning in the planning horizon.

MRP live does not consider the forecast based planning but it markups the requirements and
sends the information to be processed in the classic ABAP based planning. This effects the
performance. The forecast demand and the planned independent requirements are similar. But,
S/4HANA avoids the redundant data functionality. So the forecasted information should be
passed to the demand as planned independent requirements and the MRP type should be VV.

ABAP List based PI sheets have to be replaced by browser-based PI sheets. Currently, there is
no other alternative. Currently, in the system, X-Step based process instructions are available in
S/4HANA and are to be used for the characteristic based process instructions.

Another functionality is MRP related to subcontracting. For every subcontracting vendor, we

need to maintain the subcontracting vendor as one of the MRP areas. For every part provided to
the subcontractor, a new area-specific master data is not required to be created every time.

Sales Operation Planning(SOP) is going to be replaced by Integrated business planning (IBP).

IBP supports all the features of SOP like – Forecasting, Multi-level planning, along with some
advanced features like – advanced statistical forecasting, multi-level supply planning, an
optimizer, collaboration tools, using an Excel-based UI, and Web-based UIs.

There are many more features and functionalities that are going to come with the latest versions
of S/4HANA . Many of the interfaces like Manufacturing Execution and Manufacturing Intelligence
& Integration, Plant connectivity are going to be the advanced features in the manufacturing area
that are going to be seen a big change.
Looking for more information on SAP S/4HANA? Watch on Demand Webinar

Kiran Kumar Madhurakavi, SAP Senior Consultant PPQM @YASH Technologies