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I am excited to share with you the general availability of Project Manufacturing Management and Optimization in SAP S/4HANA 2021 release. In this blog post I would like to provide you an overview of the key highlights and capabilities.

SAP Project Manufacturing Management and Optimization helps achieve greater efficiency with project manufacturing in Engineer to Order (ETO) environment to deliver complex end products (e.g. military aircrafts, ships and submarines, complex industrial machinery etc.), that often involves complex engineering and production processes. On the other hand, it maintains visibility into detailed actual cost reporting and progress analysis.

Roadmap Journey

SAP Project Manufacturing Management and Optimization included core capabilities for grouped non-valuated project stock in SAP S/4HANA 2020. It set a foundation to build upon and deliver key innovations, many of which have now been delivered with SAP S/4HANA 2021 release.


Key Highlights

Key capabilities have been enhanced with every release to help our customers and partners to fully benefit from the latest innovations. Let's dive into the key highlights and new features within Project Manufacturing Management and Optimization in SAP S/4HANA 2021.

Track Project Stock at Vendor

It is common in a complex project manufacturing process to outsource to an external vendor to perform a certain amount of work. This outsourced work could be to rework a component, repair a component or even to manufacture a sub-assembly using raw materials provided to the vendor. As part of this process, project stock components are transferred to the vendor on a subcontracting purchase order and later a goods receipt brings the project stock from the vendor into the customer's project stock. In this release, non-valuated grouped project stock at vendor is tracked and pegged to the final end requirement providing full transparency in terms of both logistics and project cost. Further, any scrapping or inventory adjustments for project stock at vendor are automatically handled within Project Manufacturing Management and Optimization without the need for any manual adjustments.

For a complete list of supported movement types, refer to SAP Note 3082493. For more information on A&D Subcontracting, refer to SAP Note 2590604.

Note: If you are currently using SAP Grouping, Pegging and Distribution (GPD), the standard migration report helps migrate the data into Project Manufacturing Management and Optimization considering the project stock at vendor.

Serial Number Tracking

Another common process within project manufacturing is to track and issue parts and components by serial numbers, especially for higher dollar value materials. When such serial number tracked parts are grouped together across multiple projects, it becomes highly relevant to track and manage the cost based on where these parts are issued to. With this release, you have the capability to enable and track serial numbers to accurately determine costs with grouped project stock.

For more details, refer to this link.

Rounding Pegging Assignments based on Unit of Measure

With this release, Pegging Assignments can be calculated either fractional or rounded to the base unit of measure. Logistically, rounded pegging assignments are more meaningful to explain, as the assignments are rounded to the base unit of measure. If you need a very precise actual costing method, then fractional pegging assignments provide a more accurate assignments when requirements are shared across multiple projects.

Costed Stock Gain

Inventory gains and losses during inventory counts are exceptional cases but not uncommon within project manufacturing. These inventory adjustments often have an impact on the allocation of project costs. In this release, stock gains in grouped project stock segment can be allocated costs which can be critical for high value parts that are found. For this purpose, a production order without header material and without any component is created in the background when stock gains are posted for grouped project stock, depending on configuration. This enables calculating and assigning costs to this order and later allocating the costs to the individual projects within the group as part of Distribution.

For more information, refer to the "Inventory Differences" section here.

Pegging Assignments Update during Order Conversions

Pegging Assignments are typically calculated during a batch run to assign the pro-rated quantities of grouped supply elements (e.g. production order, purchase order, planned order, purchase requisition) to grouped demand elements to the individual WBS.  In this release, pegging assignments can be updated while a supply element is converted from one to another. For e.g., when a single purchase requisition is converted to a purchase order (or during a mass conversion), the Pegging Assignments are automatically updated to reflect the new supply elements. This feature could be helpful to determine and set the Defense Priorities and Allocation Systems (DPAS) rating for suppliers as soon as the order is converted based on the Pegging Assignments for the supply elements.

Collective Order

Collective Orders are a chain of linked planned orders or production orders over several levels for materials that have special procurement type '52' (Direct Production). In this release, Project Manufacturing Management and Optimization supports collective orders by following the collective order relationship overruling the First-In First-Out (FIFO) principle.

For more information, refer to this link.

Vendor Down Payments

With this enhancement, distribution of Purchase Order vendor down payments follows Pegging Assignment ratios and distributes first to "In Stock" assignments and then to "In Procurement" assignments, thereby avoiding any over allocation to completely fulfilled requirements.

For more information, refer to this link.


Enhanced migration capabilities to migrate existing data from SAP Grouping, Pegging and Distribution in SAP S/4HANA to SAP Project Manufacturing Management and Optimization. This includes also migrating existing consumption data considering project stock at vendor.

For more information, refer to this link.

Fiori App: Pegging Assignments with Costs

This Fiori app helps Data and Business Analysts to analyze how Project Manufacturing Management and Distribution Costs are posted including a view of the pegging assignments. Features include capabilities to selectively query based on controlling area, project, WBS, material, MRP controller etc.

For more information, refer to this link.


In addition to the key functional highlights listed above, check out the attachments in SAP Note 3083899 regarding the technical enhancements in this release. SAP Note 3030517 lists the restrictions using Project Manufacturing Management and Optimization in SAP S/4HANA 2021 release.

There are more innovations to come with Project Manufacturing Management and Optimization. I encourage you to check out the features and share your thoughts and comments. See you soon in a another blog post!

For more information on SAP S/4HANA 2021, check out the following links: 

  • SAP S/4HANA release info: sap.com/s4hana

  • SAP S/4HANA Community here

  • Help Portal Product Page here

  • Feature Scope Description here

  • What’s New here

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