Planning & Production Alternate Plant

What is the Difference Between a Planning Plant & Production Plant?

In cross-plant planning, the planning plant and production plant serve distinct roles in the supply chain. Through demand management, organizations can plan material requirements across different plants to optimize production and procurement.
  • A planning plant is responsible for procurement and storage of materials, independent of specific production orders.
  • A production plant (or ordering plant) is where materials are physically manufactured or assembled to fulfill sales orders, production orders, or other business requirements.
This relationship is managed through the special procurement key in the MRP 2 view of the material master, ensuring seamless coordination between plants.

Why Do We Maintain a Planning Plant?

The planning plant concept is crucial when an organization operates multiple plants but cannot manufacture certain materials in every location due to resource constraints. Instead, these materials are produced in another plant within the same organization.

Example: Planning Plant vs. Production Plant

Consider two plants, Plant A and Plant B:
  • Plant A requires a material but lacks the necessary resources to produce it.
  • Plant B has the resources needed for production.
In this case:
  • Plant A serves as the planning plant, responsible for demand planning and MRP execution.
  • Plant B serves as the production plant, where the actual manufacturing takes place.
Whenever Plant A has demand for the material, it triggers the procurement process, and production happens in Plant B. The finished material is then transferred to Plant A.

Step-by-Step Process for Planning and Production in an Alternate Plant

1. Configure the Special Procurement Key in SPRO

In SPRO (SAP Customization Settings), define a special procurement key for Plant A, specifying Plant B as the alternative production plant.

2. Maintain Material Master Data in the Planning Plant (Plant A)

In MRP 2 view of the material master, set:
  • Special procurement key = 40 (Procure from alternative plant) or
  • Special procurement key = 80 (Production in an alternative plant).

3. Set Up Material Master Data in the Production Plant (Plant B)

  • Ensure the material exists in Plant B.
  • In MRP 2, set procurement type = E (In-house production).
  • Maintain routing and bill of materials (BOM) for production in Plant B.

4. Execute MRP Run in the Planning Plant (Plant A)

  • Run MRP in Plant A to generate demand.
  • Depending on the special procurement key:
    • For key 40: An STPR (Stock Transport Requisition) or a planned order is created in Plant A.
    • For key 80: A planned order in Plant A is later converted into a production order in Plant B.

5. Production Execution in the Production Plant (Plant B)

For special procurement key 40:
  • A planned order is created in Plant B.
  • After production, the material is transferred from Plant B to Plant A via a Stock Transport Order (STO).
For special procurement key 80:
  • The planned order in Plant A is converted into a production order in Plant B.
  • Upon goods receipt (GR) against the production order in Plant B, stock in Plant A is updated directly.

Key Benefits of Using a Planning & Production Plant Setup

  • Optimized Resource Utilization – Ensures efficient use of manufacturing capabilities across multiple plants.
  • Cost Reduction – Avoids duplication of production facilities by consolidating production in a central location.
  • Streamlined Material Planning – MRP runs efficiently, ensuring material availability at the right location.
  • Improved Supply Chain Efficiency – Faster production and distribution across plants.
  • Centralized Demand Management – Enables a unified approach to planning and procurement.

Frequently Asked Questions (FAQs)

1. What is the purpose of the special procurement key in MRP?

The special procurement key in MRP 2 view of the material master defines how a material is procured, allowing planning and production to be carried out in different plants.

2. Can a planning plant exist without a production plant?

No, a planning plant must always have at least one production plant or procurement source to fulfill its requirements.

3. How does MRP handle cross-plant planning?

MRP consolidates demand from the planning plant and creates procurement proposals (planned orders or stock transport requisitions) in the production plant.

4. What happens if the production plant runs out of capacity?

If Plant B reaches its production limit, alternative plants or external procurement can be used based on predefined MRP strategies.

5. Can a material be produced in multiple plants?

Yes, a material can be set up in multiple production plants, and Plant A can procure from the most suitable plant based on priority or availability.

6. Is it necessary to maintain the same material master in both planning and production plants?

Yes, the material must exist in both plants with correct MRP settings, BOMs, and routing details.

Conclusion

The planning plant and production plant concept in SAP plays a crucial role in optimizing supply chain efficiency, reducing costs, and ensuring seamless material availability.  By strategically defining planning and production roles across plants, organizations can maximize resource utilization and streamline operations.

For businesses managing multiple plants, implementing cross-plant planning ensures smoother production processes and better demand fulfillment.

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