Production Planning Optimiser - a game changer in S/4HANA Planning

Posted by Sasi Padmanabhan on 25-May-2021 10:45:00

Do you have complex multiple production levels which need to be planned considering constraints at every level? Are you driven by upstream production processes, and the need to ensure that outputs from these are fully consumed and balanced downstream alongside actual demand requirements? 


Creating an optimised plan in the short-term considering demand, supply and available capacity at all levels can often prove challenging. This is either achieved in short-term scheduling tools using multiple planning steps, which may consequently end up contradicting each other, or quite often using mid/long-term planning tools to solve a short-term problem. 

Business Example 

Let us take a simple example of some common situations where in we have a high demand product which can be made in two production lines:


  • Production version - FS01 
  • Production version - SL01 
  • This product can also be made in another production plant (stock transfer) 

The requirement is to first load the faster line (FS01), followed by slower line (SL01) and the remaining demand to be fulfilled by another production plant. In these situations, the expectation from a planning engine is to consider capacity constraints of the production lines, priorities and provide a bucket based finite plan 

The above is an example of a single level, however there could be additional constraints in the form of multi-level bill of materials & shared components 

PPO_constraintsFigure 1 Schematic representation of supply chain network

The existing planning heuristics which are currently available fall short in fulfilling such expectations. These are the kind of business problems which can be solved using Production Planning Optimiser. 

Available Planning Methodologies in S/4 HANA 

From an S/4 HANA viewpoint, we can divide the available planning methods into three categories: 

  • MRP Live 
  • DDMRP (Demand Driven Material requirement planning) 
  • Advanced Planning and Schedulingwhich include ePP/DS (Embedded PP/DS) functionality that provides various planning and scheduling algorithms to solve business problems.  

As part of S/4 HANA on-premise release 2020, a new planning engine was delivered by SAP. There are different names by which it is being called, such as Production Planning Solver (PP Solver) or PPO (Production Planning Optimiser). The PPO uses mathematical techniques (Linear Programming) to provide a finite plan throughout the supply chain.  

What are the benefits of the PPO?

PPO compliments the existing PP/DS processes. The following are the benefits that can be derived: 

  • Ensure Material availability: As the planning engine looks at the entire Bill of Materials and helps in ensuring the optimal end to end material flow. 
  • Lot sizes: It helps creates the orders in optimal lot sizes (across different bill of material levels), helping in smoother transition from bucketed planning to time-continuous scheduling.
  • PP/DS orders: It creates directly PP/DS planned orders in time buckets which can be defined at sub-daily levels as well.  
  • No extra master data: PPO uses a flexible bucketed planning approach, however, it still utilises existing scheduling master data (Production Data Structure) which is more relevant for detailed scheduling. 
  • Balance Capacity: In case of multi sourcing scenarios, it can ensure that load is balanced across different sources of supply. 
  • Optimal Plan: As PPO uses a mathematical approach in providing the results, it gives the best possible solution considering different constraints that have been modelled. 

Optimiser based planning approach 


The PPO considers constraints such as: Transportation_setup_costs

  • Resource Capacity
  • Lot sizes
  • Lead Times
  • Firmed Orders
  • Stock on Hand

It uses penalty cost principles to generate a prioritised feasible plan. These costs are generally notional costs and not actual costs: 

  • Storage 
  • Delay 
  • Non-Delivery 
  • Safety stock violation 

Figure 2 Cost Modelling for the Production Planning Optimiser

Below are some business scenarios which can be solved by using PPO: 



The Production Planning Optimiser is just one innovation which is now an available enriched planning functionality within the most recent release of S/4HANA.  

If you have not already started your journey to S/4HANA, at Olivehorse, our PP/DS Migration Roadmap Service can help you to get started on this journey and to understand the options available to you. Our experts are experienced in migration, scheduling processes across multiple industries, software capability and future innovation to help you understanding your readiness for the next steps. We can provide input into your overall Digital Roadmap and help you identifying the tangible business benefits to help you drive your Business Case. We can also provide a Gap Analysis based on your business processes and requirements compared to current functionality and known future innovations within PP/DS. 

To find out more or arrange a free ‘Planning & Scheduling Advisory’ session, please contact Olivehorse. We will be happy to help you understanding your companies’ options and requirements to formulate or refine your roadmap. 

Read more on: HANA Cloud Platform, Integrated Business Planning, Business Intelligence, Production Planning, Optimisation, Production Planning Optimiser, S/4HANA, Push Production, Multi Level Constraints