SAP PP What is CRP

The capacity requirements planning i.e., CRP is a procedure of determining a firm's available production capacity and if it can reach its production goals. The capacity requirements planning method estimates the company's planned manufacturing schedule.

Then the capacity requirements planning weighs the specified schedule against the company's actual production capabilities to review if the present capacity can successfully reach the existing production schedule.

Understanding Capacity Requirements Planning –

The capacity requirements planning is the process by which a company mainly in manufacturing finds how much product it requires to make and decides whether it has the ability to reach the production goals.

The CRP also understand as a management tool which is dependent on using a company resources effectively by projecting the production expectations accurately. If a company figures that the production capacity is inadequate then it may change the production goals or may take other measures to provide expectations in line with capacity which involves contracting with another firm which has excess capacity to maintain the production.

The key points of CRP –

  • It is the process of deciding a firm production capacity and if it can reach the production goals.
  • The CRP analysis is a critical management tool since it helps a company to find whether it can reach the demand for the product.
  • The capacity requirements planning is also name of an enterprise application and software which manages the CRP process of a company.

Why Does CRP Matter? –

The large part of the company success will be achieved by planning for the future. Unless a solid plan is made the business owner may risk facing the unforeseen issues that including those which affect the bottom line.

The capacity requirements planning consists both long and short-term implications of a firm success.

In short term the monthly and quarterly sales numbers are severely affected by if the company is prepared for the regular ups and downs of customer demand. If it is not able to reach the customer demand then it means losing customers to the competition.

In long term the CRP is helpful to determine how much a company will invest in the employees, materials, and equipment.

The inconsistencies between the capacity estimates and the actual production output may result in the shortage of products or personnel that cause long delays in deliveries and even leave some customers orders completely unfilled. The poor CRP may also lead to oversupply in which unused inventory reserves a company revenue and depresses reported earnings.

CRP Procedures –

The businesses usually develop own capacity requirements plans to depend on individual factors that including the industry and sector. However they may categorize CRP into three basic portions such as deciding service-level requirements, analysing present capacity, and planning for the future.

Determining Service-Level Requirements –

In business the work may divide into categories and measure users expectations for how that work gets done:

  • Establishing workloads –
    Organizing the workloads as per who is doing the work, type of work is performing, or the work process.
  • Determining the unit of work –
    Creating a definition of satisfactory service for every part of work that is a workload quantify the resources required to achieve the work and a unit of work calculates the quantity of work completed.
  • Setting service levels –
    A service-level agreement or SLA sets the acceptable parameters between provider and consumer.

Analyse Current Capacity -

The following are the steps that a business should take to analyse the production systems and the individual workloads –

  • They should compare the measurements of items referenced in SLAs with the objectives.
  • They should check the usage of the systems various resource.
  • They may analyse which workloads are the major users of every resource.
  • To determine where every workload spends the time for insight into which resources take the greatest portion of response time for every workload.

Plan for the Future -

  • They should made a base of future plan on forecasted processing requirements to prevent overwhelming the system.
  • They should establish the amount of incoming work expected over a period of specific quarters.
  • They may configure the optimal system for satisfying service levels for this period.

Capacity Requirements Planning in IMT –

Several companies however choose to use off-the-shelf software packages to help in implementing their CRP. In IMT(Information management technology) the CRP refers to an enterprise application.

Naturally, the software manages the CRP process for the company. Based on the data given by management the CRP software can create a personalized production plan including labor, materials, systems, and other resources.

How To Manage Resources Efficiently –

The major objective of any company is the use of resources should be cost effective and optimized. In order to achieve this, the capacity requirement planning(CRP) will be used.

The CRP is helpful to get answers to the questions –

  • What kind of capacity is needed?
  • How much is needed?
  • When is it needed?

The following are the major steps in capacity planning –

  • To make the educated guess about future capacity requirements depending on the planned order/production order etc.
  • By evaluating the existing available capacity of resources.
  • By analysis or comparing requirements and available capacities i.e., evaluation.
  • By finding the alternatives or substitute capacity when any primary resource is full of allocated requirements.
  • By selecting the alternative capacity if need arises.
  • By planning the resources on alternative capacity.
  • By monitoring the outcome of planning and take proper action i.e., levelling considering business requirements.

The main CRP components introduced by SAP –

  • Available capacity
  • Scheduling
  • Capacity Requirement
  • Capacity evaluations
  • Capacity Levelling
  • Capacity reduction

They need to maintain the master data about the capacities in Work Center transaction CR01 in capacities tab page. There it is maintained about capacity category like machine, labor, processing unit, electricity, transport, external processing etc with the formulas i.e. setup, processing, teardown, pooled capacities etc and capacity requirement is basis on the set up, processing and teardown time factors that all together depended on the actual process and requirement of planned or production order.

The various time factors are assigned to operation by routing and further resources are attached to operation and finally scheduling is used to decide the times of the capacity requirements.

In production, the planning requirement is usually consists of planned order, production orders, process Orders and SOP orders.

The other PP master such as material master, BOMS, routing and factory calendar are the pre-requisites of the capacity planning function. The capacity planners are responsible for machine loading are required to process the scheduled capacity requirements in production on time.

The further standard available capacity is handled in the respective header data of capacity category. The available capacity is the work which is done by the capacity at a work center per working day.

The operating time of capacity is measured by considering the start time and finish time of capacity category minus lengths of break considered for the resource or work center multiplied by capacity usage percentages. For calculation of the available capacity , SAP considers the factory calendar attached in Header Data of work center capacity category.

For example consider a machine is capacity category and is available from 8.00 a.m to 8.00 p.m. and there is one hour break during this available time. The Management expects 80% utilization of machine. And no of machine are 2 numbers of same specification.

Here the available capacity will be calculated as follows –

Shift hours – [8.00 AM to 8.00 PM] less [Break – 1 hour] * [No of Machine or capacities – 02 nos] * Capacity Utilization (80%).

So Available Capacity = (12-1) * 2 * 80/100 =17.6 hrs.

The other important component of capacity requirement planning is capacity evaluation that is used to analyse the capacity loads in company. In the capacity evaluations the requirements are compared with the available capacities.

The capacity levelling function is useful for dispatching operations. The operations are dispatched for fixing them at a point in time when there is sufficient capacity for them to be carried out.

The objectives of capacity levelling include –

  • The levelling of overloads and under loads at work centers.
  • To achieving an optimum commitment of machines and production lines.
  • The selection of appropriate resources.

The SAP has provided interface called capacity planning table which allows to carry out the detailed planning of capacity requirements continuously over time. Anyone can use planning table for carry out the simulation.

The capacity reduction is required for the accurate capacity planning functioning. The capacity reduction happens if operations are confirmed or order quantities are reduced or cancelled.

What is the need of Capacity planning? –

To any organisation effective and advanced utilization of assets is an important target. The assets can be man, machines, supplies, space etc. To meet this goal, architect SAP enables SAP basis outsourcing and integrates component called as SAP PP Capacity requirement planning(CRP).

The CRP is helpful to get answers of –

  • kind of capacity need?
  • When is it need?
  • How much is need?

Steps in capacity planning –

The steps in capacity planning is –

  • Should be aware of future capacity prerequisites focused on planned request or production request and so forth.
  • Should assess the existing resources.
  • Should evaluate the available capacities through comparing and analysing the requirements.
  • When it is needed then select an alternative capacity.
  • Taking the proper action by monitoring the outcome of planning.

Role of capacity planners –

The role of capacity planners –

  • It is required to keep up the expert information identified about capacities in work center. And maintain the categories like machine, labor, processing unit, electricity, transport etc.
  • The production planning generally contains production requests, process orders, planned order and so on.
  • The capacity planners responsible for machine stacking are required to process the planned capacity necessities in creation on time.
  • The further standard accessible capacity is kept up in individual header data of capacity class.

Elements of CRP –

The elements of CRP is –

  • An alternate vital component of CRP is capacity evaluation that is used to examine capacity stacks in organisation.
  • The capacity levelling is used to dispatch operations. The operations are dispatched so as to change them at a point in time if there is sufficient capacity for them to be carried out.
  • And also the SAP has gave interface called capacity planning table that empowers to complete definite arranging of capacity prerequisites continuously.

Purpose of CRP –

The economic utilization of resources is intent of many areas of a company. The component capacity planning is available for this purpose.

The capacity planning supports planning in all the phases like –

  • long-term rough-cut planning
  • medium-term planning
  • short-term detailed planning

Integration of CRP –

The capacity planning is integrated in the application elements like –

  • Sales and Distribution (SD)
  • Production Planning and Control (PP)
    • Sales & Operations Planning (PP-SOP)
    • Requirements Planning (Master Production Scheduling and Material Requirements Planning PP-MRP/MPS)
    • Long-term Planning (PP-LTP)
    • Shop Floor Control (PP - SFC)
    • Repetitive Manufacturing (PP-REM)
    • Process Industries (PP-PI)
  • Plant Maintenance (PM) and Customer Service (CS)
  • Project System (PS)
    The capacity planning is flexibly adjusted to planning demands and to the area of responsibility in the company.

Features of CRP –

The capacity planning comprises the below partial elements –

  • Capacity Evaluation
    In capacity evaluation the available capacity and capacity requirements are decided and compared with each other in lists or graphics.
  • Capacity levelling
    The purpose of capacity levelling is –
    • Optimal capacity commitment
    • Selection of appropriate resources
      In most applications the two types of planning table i.e., graphical and tabular versions are used to display the capacity situation and to carry out the capacity levelling.
      In some applications like Repetitive Manufacturing (REM) or Sales and Operations Planning (SOP) there are application-specific planning tables for capacity levelling.