MRP (Material Requirement Planning)

1. MRP (Material Requirement Planning) • The main function of material requirements planning is to ensure material availability on time. • MRP helps monitor the stocks. • MRP generates procurement proposals for Purchasing and Production (PR/Planned order).

2. Overview of MRP Procedures

3. MRP-BASED MRP Procedures • Material requirements planning is based on current and future requirements. • The planned requirement quantities trigger requirements calculation. • The net requirement calculation is triggered by dependent or independent requirement . • MRP is especially useful for planning finished products and important assembly groups such as components . (PP Domain).

4. Consumption-based MRP procedures • The consumption-based MRP procedures are only based on previous material consumption. • Net requirements calculation is either triggered by the available stock level falling below the reorder point or by forecast requirements calculated from historical data. • External requirements such as sales orders, planned independent requirements, and reservations, are generally not relevant to planning. • The use of these MRP procedures is preferable in areas without in-house production or in manufacturing plants, for planning operating supplies. ( MM Domain)

5. Types of Consumption-based MRP procedures • Reorder point planning • Forecast-based Planning • Time-phased planning

6. Reorder Point Planning

7. Reorder Point Planning • Checks are run to discover whether the planned available stock (total from plant stock and fixed receipts) falls short of the reorder point determined for the material in the master record. • If it does, procurement must be triggered. • The reorder point should include the expected average material requirements during the replenishment lead time.

8. Manual Reorderpoint planning • In manual reorder point planning, you define both the reorder level and the safety stock level manually in the appropriate material master.

9. Automatic Reorder Point planning • Reorder level and the safety stock level are determined by the integrated forecasting program. • The system uses past consumption data (historical data) to forecast future requirements. • The system then uses these forecast values to calculate the reorder level and the safety stock level. • Forecast is carried out at regular intervals, the reorder level and the safety stock level are continually adapted to the current consumption and delivery situation. • This means that a contribution is made towards keeping stock levels low.

10. Process Flow Of Reorder Point -Step 1(Planning File) • The continuous monitoring of available warehouse stock is carried out. • Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level. If this is the case,the system makes an entry in the planning file (contain entries for the materials relevant to planning) for the next planning run. • If a material is returned to the warehouse, the system checks in exactly the same way whether the available warehouse stock exceeds the reorder level again. If this is the case, an entry is made in the planning file, which acts as an indicator for the planning run to delete any unnecessary procurement proposals. • If planned receipts are no longer required due to material returns, for example, then the system will suggest that these receipts should be cancelled. In this case, the MRP controller in cooperation with Purchasing or Production must check whether the purchase order or the production order can be cancelled.

11. Planning File Entry

12. Activate MRP • Customizing for Materials Management under Consumption-Based Planning→ Planning→ Activate Material Requirements Planning, • or from the SAP Easy Access screen, • Choose Logistics→ Materials Management→ Material Requirements Planning (MRP)→ MRP→ Planning→ Planning File Entry→ Set Up in Background. • SAP Easy Access screen: Logistics→ Materials Management→ Material Requirements Planning (MRP)→ MRP→ Planning→ Planning File Entry→ Display

13. Considering External Requirements • Customizing Materials Management under Consumption-Based Planning→ Master Data→ Check MRP Types, • In some condition we can use external req here • Use the indicator Include external requirements for the MRP type in reorder point planning to determine whether external requirements (sales orders and manual reservations) are considered. You can also take other requirements (order reservations and purchase requisition releases) into consideration. • You can decide whether these external requirements are to be included in the complete planning horizon or only within the replenishment lead time

14. Process Flow Of Reorder Point -Step 2Planning run • The system then calculates the net requirements. • The system compares the available stock at plant level (including safety stock) plus the firmed receipts that have already been planned (purchase orders, production orders, firmed purchase requisitions and so on) with the reorder point. • If the sum of the stock plus receipts is less than the reorder point, a material shortage exists

15. Control Parameter Planning Run

16. Process Flow Of Reorder Point -Step 2Planning run (processing Keys) • Planning run types controls the scope of the materials to be planned. It is specified in the Processing key field on the initial screen of planning run. • NEUPL (regenerative planning run), the system plans all materials which are included in the planning file irrespective of all indicators. As soon as a material master record is created with MRP data and a valid MRP type, this material is then automatically included in the planning file. • NETCH (net change planning run), the system only plans those materials which are provided with the net change planning indicator. • NETPL ( net change planning in the planning horizon), the system only plans those materials provided with the net change planning horizon indicator. • The system deletes the net change planning indicator and the net change planning horizon indicator for a regenerative planning run and a net change planning run._ The system only deletes the net change planning horizon indicator for a net change planning run in the planning horizon .

17. Planning Run Type

18. Planning in the Planning Horizon

19. Planning Mode • The planning mode controls how the system is to deal with procurement proposals (planned orders, purchase requisitions, scheduling agreement lines) from the last planning run, which are not yet firmed, in the next planning run. • The planning mode is set automatically in the planning file. However, you can overwrite it in the initial screen of each planning run. • Indicator-1 Weather existing planning just need to be adjusted-from the last planning run. • Indicator-2 Bom N routing needed to be exploded again. • Indicator-3 Planning should B recreated from scratch.

20. Process Flow Of Reorder Point -Step 3(Lot-Size Procedure) • The system then calculates the procurement quantity according to the lot-sizing procedure defined in the material master. • For reorder point planning, the system supports the Fixed lot size and Replenish up to maximum stock level lot-sizing procedures. • You can also use period or optimum lot-sizing procedures for reorder point materials. In this case, you must calculate future requirements using the forecasting functions. The forecast values are then interpreted as requirements.

21. Lot-Size Procedures • lot-for-lot order quantity, an order proposal is created for the shortage quantity. If there are several issues on one day and they cannot be covered, the system still only creates one order proposal covering the total shortage quantity on this particular day. • fixed order quantity, the system creates an order proposal for the fixed lot size in the case of a material shortage. If this order quantity is not sufficient to cover the shortage, the system generates several order proposals for the same date until the shortage is covered. • replenish to maximum stock level and a material shortage occurs, the system creates an order proposal for the amount required to bring the stock level up to the maximum stock level that is recorded in the material master record. • Define lot-sizing procedures in Customizing for Materials Management under Consumption-Based Planning→ Planning→ Lot-Size Calculation→ Define Lot-Sizing Procedure.

22. Lot-Size Procedure

23. Rounding Profile • A rounding profile is used to define settings for rounding up or rounding down the order proposal quantity into deliverable units. • Rounding profiles are defined in Customizing for Materials Management under Consumption-Based Planning→ Planning→ Lot-Size Calculation→Maintain Rounding Profile.

24. Process Flow Of Reorder Point -Step 4 • The system then schedules the procurement proposal. • The system calculates the dates on which the purchase order has to be sent, or when production has to begin and the date on which the vendor has to deliver the goods or by which production has to have the goods ready.

25. Forward Scheduling for External Procurement

26. Scheduling • During scheduling, the system defines the date on which the material will be available, starting from the date of the planning run. This procedure is called forward scheduling. • The purchasing department processing time (work days) is the time available for the buyer to convert a purchase requisition into a purchase order. • The planned delivery time (Calendar Days) is the number of days required to procure the material from external procurement. • The goods receipt processing time is the timeframe between receiving the material and the receipt in the warehouse. This is required to unpack the material, count it, inspect it, and put it away. • Customizing for Materials Management under Consumption-Based Planning→ Plant Parameters→ Carry Out Overall Maintenance of Plant Parameters. • Customizing for Materials Management under Consumption-Based Planning→ MRP Groups→ Carry out Overall Maintenance of Plant Parameters

27. Planning Run or Execution of MRP • The planning run is usually carried out at plant level. In addition, the following are also possible: • Storage Location MRP . • Planning with MRP Areas. • Multi-Plant/Site Planning . • In a scope of planning, you can also specify one or several individual MRP areas and restrict the total planning run to these MRP areas. • Customizing for Materials Management, you can define as many scope of planning groups as you like, under Consumption-Based Planning→ Planning → Define Scope of Planning for Total Planning. • You can carry out the requirements planning run as single-item planning for an individual material. Either a single or multi-level planning run is carried out for one particular material. To execute single-level, single-item planning, choose from the SAP Easy Access screen: Logistics→ Materials Management→ Material Requirements Planning (MRP)→ MRP→ Planning→ Single-Item, Single-Level.

28. Planning Result

29. MRP /Current Stock Req List • The results of the planning run, depending on the particular creation indicator. MRP lists contain the planning results. • The MRP list always displays the stock/requirements status at the time of the last planning run. While The current stock/requirements list displays the most up-to-date stocks and requirements. • Any changes made after the planning date are not considered. The list is static. while stock req list consider any changes and its dynamic. • The MRP list is stored in the system until it is either manually deleted, or replaced by a new list from a subsequent planning run. • To call the MRP list for a material, choose from the SAP Easy Access screen: Logistics→ Materials Management→ Material Requirements Planning (MRP)→ MRP→ Evaluations→ MRP List - Material. OR Current stock/requirement

30. Converting Planned Order • Planned orders can be created manually, but are usually generated automatically with a requirements planning run. • It can be changed or deleted at any time. • In individual conversion, you can decide whether you want to convert the planned order quantity in total, or only partially. • In collective conversion, you can select specific planned orders that have a start date within the opening horizon (time available for the MRP controller to convert a planned order into a purchase requisition or a production order). • To convert planned orders collectively into purchase requisitions, choose from the SAP Easy Access screen: Logistics→ Materials Management→ Material Requirements Planning→ MRP→ Planned Order→ Convert to Purchase Requisition→ Collective Conversion. Or individual.