The impetus for the development of the PPSh came partly from the Winter War against Finland, where the Finnish army employed the Suomi KP/-31 submachine gun as a highly effective tool for close-quarter fighting in forests or built-up urban areas.
Although the PPD-40 was rushed into mass production in 1940, it was expensive to manufacture, both in terms of materials and labor, because it used numerous milled metal parts, particularly its receiver. Shpagin’s main idea for cost reduction was to use metal stamping for the production of most parts; that concept was revolutionary in the Soviet Union at the time. Shpagin created a prototype in September 1940, which also featured a simple gas compensator designed to prevent the muzzle from rising during bursts; this improved shot grouping by about 70% relative to the PPD.
The new weapon was produced in a network of factories in Moscow, with high-level local Party members made directly responsible for meeting production targets. A few hundred weapons were produced in November 1941 and another 155,000 were made during the next five months. By spring 1942, the PPSh factories were producing roughly 3,000 units a day. Soviet production figures for 1942 indicate that almost 1.5 million units were produced. The PPSh-41 was a classic example of a design adapted for mass production (other examples of such wartime design were the M3 submachine gun, MP40 and the Sten). Its parts (excluding the barrel) could be produced by a relatively unskilled workforce with simple equipment available in an auto repair garage or tin shop, freeing more skilled workers for other tasks. The PPSh-41 used 87 components compared to 95 for the PPD-40 and the PPSh could be manufactured with an estimated 5.6 machining hours (later revised to 7.3 hours) compared with 13.7 hours for the PPD.Barrel production was often simplified by using barrels for the 7.62mm M1891 Mosin–Nagant rifle: the rifle barrel was cut in half and two PPSh barrels were made from it after machining the chamber for the 7.62mm Soviet submachine gun cartridge.[