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Material Planning: Theory and Process for Efficient Manufacturing

Learn about the theory and process of material planning to ensure efficient utilization of resources in manufacturing. Topics covered include profitability analysis, sales and operations planning, master production scheduling, and material requirement planning.

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Material Planning: Theory and Process for Efficient Manufacturing

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  1. SAP TERP10 Preparation Presentation 5 Dr. Gábor Pauler, Associate Professor, Private Entrepeneur Tax Reg. No.: 63673852-3-22 Bank account: 50400113-11065546 Location: 1st Széchenyi str. 7666 Pogány, Hungary Tel: +36-309-015-488 E-mail: pauler@t-online.hu

  2. Content of the presentation • 3.Material PlanningScenario (Continued) • 3.4.Material planning • 3.4.1.Theory of Material Planning • 3.4.1.1.Profitability Analysis (PA) • 3.4.1.2.Sales and Operations Planning (SOP) • 3.4.1.3.Master ProductionScheduling (MPS) • 3.4.1.4.Material Requirement Planning(MRP) • 3.4.1.5.PP/MM:Production/Procurement Execution • 3.4.2.Change material: MM02 • 3.4.3.Create Product Groups: MC84 • References • ObjectSymbols • GUI Symbols

  3. 3.Material Planning: 3.4.Planning Process: 3.4.1.Theory d(Di) pit=99% dit Di Dit Bit dit • 3.4.Material planning:Forthesimplestudents, „bigbuisness” is win$1MonlotteryoratForex, butithappensveryseldom. Intherealitybig business is tosave5centsinStep4671 of a massproductionrepeated93000times a day... • 3.4.1.DEF:Material Planning:A multi-phaseplanensuringthatalllimitedresources (Materials, Machinery, Labour) will be at right place, rightquan-tity, righttimefor a complex, highlyinflexiblemanufacturingprocesstryingtosatisfyvaguelychangingcustomerdemand. Itsphasesare: • 3.4.1.1.CO:Profitability Analysis (PA) • 3.4.1.1.1.Revenue plan:ExpectedProfit (Nyereség) by Regions • 3.4.1.1.2.Sales Plan: ExpectedSales (Értékesítés) estimate broken up by Aggregate quantity of allproduct categories • 3.4.1.2.LO:Sales and Operations Planning (SOP) • Long-term planning: linking marketing based sales forecasting with manufacturing based capacity planning • Aggregatedplanning: does not deal with BOM explosion and parts requirement, just finished products • 3.4.1.2.1.SD|SIS:Sales Plan:It is broken up by: • 3.4.1.2.1.1.Product Groups:FERT/HALB materialswith similar planning properties, sharing100%Proportion Factor(Arányfaktor)amongthem • 3.4.1.2.2.PP:Aggregate Production Plan: • 3.4.1.2.2.1.Resourcesavailability in time:(YR|MO|WK|DY) • 3.4.1.2.2.2.Standard Planning Table: • By product group hierarchy: • In time periodst(YR|MO|WK|DY):equalizing: • Sales(t) = Production(t) + Stock level(t) (5.1) • With the following possible goal functions: • ALT:MinimizeStock level,Units to 0 • ALT:MinimizeStock level,Units to a targetlevel • ALT:MinimizeStock level,Dayssupply to a target • 3.4.1.2.3.LO:Feasibility estimate:Examines theprobability that key resources will cover the need of planning table in time, as demand and sometimes availability of resources are uncertain

  4. 3.Material Planning: 3.4.Planning Process: 3.4.1.Theory: 3.4.1.3.MPS 1 • 3.4.1.3.PP:Master Product Sceduling (MPS) • 3.4.1.3.1.SD:Incoming Sales orders • Customer • Product type • Quantity • Delivery deadline • 3.4.1.3.2.MM:Demand Management • 3.4.1.3.2.1.Data sources: • Sales Orders  • Historic Aggregated Sales  • Sales forecast • 3.4.1.3.2.2.Content: • DEF:Independent requirement (Független Igény): • Required quantity of product groups|finished products • At a given deadline • According to sales forecast • DEF:Dependent requirement (Függő Igény): • Required quantity components and assemblies back-chained through BOM • Occouring at delivery deadline – production time • 3.4.1.3.2.3.Planning strategies: • They make balance among stock, production, froecast, orders • DEF:Make-to-Stock (Raktárra Termelés): • Can be done with finished product or easy to assemble subassemblies •  More consistent production capacity usage •  More expensive inventory • DEF:Make-to-order (Rendelésre Termelés): • Mainly for finished product •  Low inventory costs •  Uneven capacity usage

  5. 3.Material Planning: 3.4.Planning Process: 3.4.1.Theory: 3.4.1.3.MPS 2 • DEF:Planning with final assembly (Tervezett végszerelés)(Code=40): • Independent requirement is designed as make-to-stock • But if sales orders consume all the planned quantity, the difference is incorporated in planned independent requirement of future time periods. How it is done can be set in Material master or MRP group: • Consumption periods: by default it is days • Direction of sales order consumption from planned independent requirement: • Consumption mode Backward:01: sales orders are incorporated into plan before their delivery date, so they will be produced preliminary •  Requires less safety stock •  Creates excess stock if order cancelled • Consumption mode Forward:03: sales orders are incorporated into plan after their delivery date, so they will be delivered from stock •  Requires more safety stock •  Excess stock is not created if order cancelled • Consumption mode Mixed:02/04: mix of the two above to reach best compromise • Finally, dependent requirement is computed from modified independent requirement in periods, considering production time of components •  Tries to preserve even capacity use, but stay flexible for demand changes •  More difficult than simple strategies • 3.4.1.3.3.Master Production Scheduling Adjustment (MPS) • It makes Standard Planning table for main profit generator finished products only to compute their independent requirement • Then first level dependent requirement of their assemblies is computed, and no already planned orders for these assemblies are considered! • Resources reserved for 1st level dependent reqirement to prevent other less important products to drain them

  6. 3.Material Planning: 3.4.Planning Process: 3.4.1.Theory: 3.4.1.4.MRP 1 d(Di) d(Di) d(Di) d(Di) n2 pit=99% pit=99% pit=99% pit=99% dit dit dit dit q Nit Nit Nit Nit dit dit dit dit Dit Dit Dit Dit q n1 time Quantity, pcs • 3.4.1.4.Material Requirement Planning, MRP(Anyagszükségleti Tervezés):Design phasewichensuresdetaled material availability • 3.4.1.4.1.ALT:No MRP:Manual entry • 3.4.1.4.2.ALT:PD(MRP): • 3.4.1.4.2.1.Multi level MRP: • Design along fully extracted BOM, for all levels it computes with backward scheduling: Available Quantity = Stock + Fixed receipts – Safety stock (5.2) Net Requirement = Gross requirement – Available quantity (5.3) Procurement Proposal = Round( NetReq/LotSize ) × LotSize (5.4) Component due time = Head due time – Comp.prod./delivery(5.5) • 3.4.1.4.2.2.Single level MRP:Made just for lowest 1 level of BOMs • 3.4.1.4.3.ALT:Consumption-based planning: • For low valued, simple, stanardized components consumed at high quantity (eg. HAWAConsumable goods) • Do not use BOM explosion to compute dependent requirement, instead it forecasts future consumption from past: • Reorder quantity method (Fix újrarendelési mennyiség módszere): • It ordersqfixed lot size invariablen1, n2...periodswhen stock goes under:Reorder Quantity = SafetyStock + + Daily fix consumption×Replenishment time (5.6) •  Optimal if transport is flexib- le in time but inflexible in size (eg. Concrete) •  Lowercost of inventory •  More difficultordering pro- cess

  7. 3.Material Planning: 3.4.Planning Process: 3.4.1.Theory: 3.4.1.4.MRP 2 d(Di) d(Di) d(Di) d(Di) pit=99% pit=99% pit=99% pit=99% dit dit dit dit Nit Nit Nit Nit dit dit dit dit Dit Dit Dit Dit n q1 q2 time n Quantity, pcs • Periodic reorder method (Fix újrarendelési időköz módszere): • Itorders q1, q2, ...changing quantitiesin fixed nperiods •  Optimal if transport inflexible in time and flexible in size (eg. Newspaper) •  Simple automated ordering •  Higher cost of inventory • 3.4.1.4.4.MRP Run levels • Total for Plant and reevaluates BOMs:NEUPL • MRP group • Refined manual selection • Single Material • For net changes only:NETCH • For a given time period (usually 30days):NETPL • Online/Background job

  8. 3.Material Planning: 3.4.Planning Process: 3.4.1.Theory: 3.4.1.5.Execution • 3.4.1.4.5.MRP Outputs • 3.4.1.4.5.1.Types: • Stock/requirement list:Dynamic list summing up results from all: • Stocks, • Orders, • MRP runs • MRP lists: • Static list with the results of 1 MRP run • Can contain error list of inconsistencies in BOMs • 3.4.1.4.5.2.Usual GUI content: • FRM:Top: Variable header • FRM:Left: Material BOM tree • FRM:Right: MRP items requirement/stock • 3.4.1.5.PP/MM:Production/Procurement Execution • 3.4.1.5.1.MRP Consequence Documents • 3.4.1.5.1.1.At internal products it creates: • Planned order • Production order • Planned reservation for dependents • 3.4.1.5.1.2.At external materials it creates: • If there is no Schedulingagreement (Szállítási megállapodás) in Source list (Forrás lista) of material: • Purchase requisitions (Beszerzési igény): No vendor yet • Purchase orders (Beszerzési megrendelés): Vendor assigned • If there is Scheduling agrrement in Source list of material: • Schedule Line Release • Schedule Line

  9. Content of the presentation • 3.Material PlanningScenario (Continued) • 3.4.Material planning • 3.4.1.Theory of Material Planning • 3.4.1.1.Profitability Analysis (PA) • 3.4.1.2.Sales and Operations Planning (SOP) • 3.4.1.3.Master ProductionScheduling (MPS) • 3.4.1.4.Material Requirement Planning(MRP) • 3.4.1.5.PP/MM:Production/Procurement Execution • 3.4.2.Change material: MM02 • 3.4.3.Create Product Groups: MC84 • References • ObjectSymbols • GUI Symbols

  10. 3.Material Planning: 3.4.Planning Process: 3.4.2.Set material consumption: MM02 Click Click • 3.4.2.Set materialconsumption: MM02 • 3.4.2.1.DEF: Consumption setting of materials: • It sets that Planned orders will consume (will be subtracted from) Planned independent requirement: the plan should be reduced, if one part of it becomes actual order • Itsets the direction of consumption in time • 3.4.2.2.Set consumption: GigaBike-Name: MM02 • LO|PP|Masterdata|Material master|Material|MM02| • 3.4.2.2.1.SCR:Start • DDN:Material = GigaBike-Name • BTN:SelectViews • 3.4.2.2.1.1.SCR: SelectViews • MRP3 • 3.4.2.2.1.2.SCR: Organization levels • Plant = 1000 • Storage = 1010 • KEY:Enter • 3.4.2.2.2.MM:TAB:MRP3 • DDN:Consumption mode = 2(Backward /ForwardConsumption) • TBX:Backward period = 30 • TBX:Forward period = 30 • 3.4.2.2.3.BTN:Save( ) • 3.4.2.3.Practice:Set consumption: MiniBike-Name: MM02 Click Click Click CA01: Create Routing Base- Bike- Name Click Click Click CA01: Create Routing Base- Bike2- Name CA01: Create Routing Giga- Bike- Name CA01: Create Routing Mini- Bike- Name Click Click MM02: Set con- sumption Giga- Bike- Name Click Click MM02: Set con- sumption Mini- Bike- Name

  11. 3.Material Planning: 3.4.Planning Process: 3.4.3.Create product groups: MC84 Click • 3.4.3.Create Product Groups: MC84 • 3.4.3.1.DEF: Product Group:Groups similar products into common maintenance • 3.4.3.2.Create product group: Racing-Bike-Name: MC84 • LO|PP|SOP|Product group|MC84 Create| • 3.4.3.2.1.SCR:Start • DDN:Product Group = RacingBike-Name • TBX:Product Group = RacingBicycle-Name • DDN:Plant = 1000 • DDN:Unit = PC • RAD:Members = Material • 3.4.3.2.2.SCR:Main • 3.4.3.2.3.BTN:Save( ) Click Click Click CA01: Create Routing Base- Bike2- Name Click Click CA01: Create Routing Giga- Bike- Name Click CA01: Create Routing Mini- Bike- Name MM02: Set con- sumption Giga- Bike- Name MM02: Set con- sumption Mini- Bike- Name MC84: Create product group Racing- Bike- Name

  12. References • http://www.sap-img.com/abap.htm • http://erpgenie.com/ • http://help.sap.com/search/sap_trex.jsp • http://sap.ittoolbox.com/groups/technical-functional/sap-abap/

  13. Object Symbols Partner (Partner) Anyag (Material) Sarzs (Batch) Bevitt anyag (Partner material) Készlet (Inventory) Raktár (Deposit) Gyári szám (Serial number) Darabjegyzék (Bill of materials) Szortiment (Sortiment) Anyagmeghatá-rozás (Material Identification) Árazás (Pricing) Engedmény (Allowance) Fizetési mód (Payment Method) Számla (Invoice) Bizonylat (Voucher) Értékesítés támogatás (Sales Promotion) Direkt mail (Direct mail) Ajánlat (Offer) Árazás (Pricing) Rendelés (Order) Validáció (Validation) Szerződés (Contract) Szállítás (Transport) Hitel (Credit) Ütemezés (Scheduling) Szerviz (Service) Vevőszolgálat (Customer Service) Kattintás (Click) Dupla kattintás (Double Click) Adatbevitel (Write) Csak olvasható (Read Only) • Cég (Company) • Gyár (Plant) • Értékesítési szervezet (Sales Department) • Üzletkötő csoport (Sales Representative Group) • Értékesítési integráció (Sales Integration) • Csatorna (Channel) • Földrajzi hely (Geographic Location) • Kiszállítási hely (Delivery Location) • Szállítási mód (Transportation Mode) • Rakodási pont (Loading Point) • Árucsoport (Product Group) • Értékesítési terület (Sales Area) Click Right Click

  14. GUI Symbols • To make GUI usage descriptions more short and straightforward, we will use standardized denotions of GUI controls, which can be nested into each other: • DEF:-definition, • PRC:-process, • ALT:-alternatives, • CYC:-cycle, • -follows, •  -(dis)advantage, • Aaa|Bbb|-Menu/Submenu, • SCR:-Screen, • FRM:-Frame, • ID-UniqueID, • BTN:-Button, • TXB:-Textbox, • DDN:-Dropdown, • TAB:-Page tab, • CHK:-Checkbox (any of them can be checked) • RAD:-Radiobox (one can be checked only), • LIN:-Tableline, • KEY:-Hotkey, • WRN:-Warning box • ERR:-Errorbox

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