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Consumption-Based Planning

In consumption-based planning, the following MRP procedures are available:

Reorder point procedure

Forecast-based planning

Time-phased materials planning

Reorder Point Planning
In reorder point planning, procurement is triggered when the sum of plant stock and firmed
receipts falls below the reorder point.
The reorder point should cover the average material requirements expected during the
replenishment lead time.
The safety stock exists to cover both excess material consumption within the replenishment lead
time and any additional requirements that may occur due to delivery delays. Therefore, the safety
stock is included in the reorder level.
The following values are important for defining the reorder point:
Safety stock
Average consumption
Replenishment lead time
The following values are important for defining the safety stock:
Past consumption values (historical data) or future requirements
Vendor/production delivery timelines
Service level to be achieved
Forecast error, that is, the deviation from the expected requirements
Manual Reorder Point Planning
In manual reorder point planning, you define both the reorder level and the safety stock level
manually in the appropriate material master.
Automatic Reorder Point Planning

In automatic reorder point planning, both the 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,
taking the service level, which is specified by the MRP controller, and the material's
replenishment lead time into account, and transfers them to the material master.
Since the 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.
Forecast-Based Planning
Forecast-based planning is also based on material consumption. Like reorder point planning,
forecast-based planning operates using historical values and forecast values and future
requirements are determined via the integrated forecasting program. However, in contrast to
reorder point planning, these values then form the basis of the planning run. The forecast values
therefore have a direct effect in MRP as forecast requirements.
The forecast, which calculates future requirements using historical data, is carried out at regular
intervals. This offers the advantage that requirements, which are automatically determined, are
continually adapted to suit current consumption needs. The forecast requirement is reduced by
the material withdrawal so that the forecast requirement quantity that has already been produced
is not included in the planning run again.
Reducing Forecast Requirements
Reducing forecast requirements
by consumption
If consumption is higher than the forecast requirements in the current month, then the system
also reduces future forecast requirements.
Reducing current forecast requirements
by consumption
If consumption is higher than the forecast requirements in the current month, then the system
does not reduce future forecast requirements.
Average reduction
of the forecast requirements

The reduction of the forecast requirements is based on average daily consumption. Actual
consumption data is not relevant.
The system calculates the average daily requirement first using the formula forecast
requirement/number of workdays in the forecast period.
The forecast requirements are then reduced by the quantity resulting from the following formula:
number of workdays worked x average daily requirements.
Period Pattern and Forecast Periods
You can specify the period pattern for the forecast (daily, weekly, monthly or per accounting
period) and the number of periods to be included in the forecast individually for each material. It
is possible, however, that the forecast period pattern is not specific enough for planning
purposes. In this case, you can define per material that the forecast requirements should be
divided according to a finer period pattern for planning. You can also define how many forecast
periods are to be taken into account during requirements planning. The splitting indicator is
defined in Customizing for MRP per plant and per period unit and is assigned to the material in
the material master.

For a monthly forecast, the requirements date would be set on the first workday of the month
because, for planning, it is assumed that the total requirement must be available at the beginning
of the period. You can then divide this monthly requirement into either daily or weekly
T ime-Phased Planning
If a vendor always delivers a material on a particular day of the week, it makes sense to plan this
material according to the same cycle, in which it is delivered.
Materials that are planned using the time-phased planning technique are provided with an MRP
date in the planning file. This date is set when creating a material master and is re-set after each
planning run. It represents the date on which the material is to be planned again and is calculated
on the basis of the planning cycle entered in the material master.
The net change planning indicator and the net change planning horizon indicator are irrelevant
for materials planned using the time-phased planning procedure. The system does not therefore
set these if changes are made in the planning run.
If you want to plan a material earlier than the specified MRP date, you can enter an MRP date
during the planning run. For example, if the planning run is set for Monday, you can bring it
forward to Saturday instead.

If you use the SAP Retail System, the system proposes the planning cycle from the vendor subrange when you create a material master record. The vendor sub-range contains all the goods of a
particular vendor that, from a logistical view, can be planned similarly.
Time-phased planning can be executed using consumption-based planning or MRP:
If you want to carry out time-phased planning using consumption-based planning techniques, the
requirements have to be created using the material forecast. If you use consumption-based
planning, only the forecast requirements are included in the net requirements calculation. For
reducing the forecast requirements, you can choose the same settings in Customizing as used for
forecast-based planning.
If you want to carry out time-phased planning using MRP, all the requirements that are relevant
to MRP are included in the net requirements calculation. For this purpose, the indicator Timephased with requirements must have been selected in the MRP type. The forecast requirements
can also be taken into account in this process.