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WhatisSAPMRPMaterialRequirementPlanning
StudyMaterialContributedbyUlhasKavleSeniorSAP
Consultant
WhatisSAPMRP
SAPMRP
What is SAP MRP Material Requirement Planning
Overview
Material Requirement Planning (SAP MRP) is a tool which
helpsinplanningtherequirementquantitiesandschedulesofa
given material. It not only ensures availability of the material
forwhichMRPiscarriedout,butalsoensuresavailabilityofthe
components(ofalltheBOMlevels)belowintheBOMstructure.
Apart from assuring material availability, MRP also carries out
scheduling of the procurement proposals using the lead times
forthematerials/components.Whenthematerialisaninternally
manufactured material, it will use the lead times or operation
leadtimesfromtheroutings/recipesandwhenthematerialisan
externalprocuredmaterial,itwillfetchtheleadtimesordelivery
times for the material defined at an appropriate place in the
tool/system.Schedulingoftheprocurementproposalsnotonly
derivesthecapacityloadingoftheordersontheworkcenterbut
it also calculates the delivery dates of the components that
wouldberequriedformanufacturing(deliverydate=startdate
ofprocessing).
The output of MRP proposes procurement proposals (planned
order or purchase requests) so as to gaurantee material
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PresentationoftheSAPMRPDocumentation
PresentationoftheSAPMRPDocumentation
TheSAPMRPDocumentationispresentedin11Simplesteps
whichwillbeexplainedin11differentLinksonthiswebsite.
UsethelinktoLearnSAPMRPin11Steps
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TypesofDemandsinanOrganization
TypesofDemandsinanOrganization
Thefollowingarethevarioustypesofdemands:
A)PlannedindepedentDemandorForecastedDemand:
Anorganizationrunsonexternaldemands(visualizeddemands
or forecasted demands) for its products. When you talk of a
product that is usually stocked and delivered to the customer
fromtheir,itisatypicalcaseofmadetostockscenario.Since
the sales are from inventory, a company has to pile up only a
certain quantity enough to satisfy the demand, such type of
organizationsthereforeforecasttheirfuturedemandsbasedon
historicalsales,currentmarketpopularityoftheproduct,various
environmental factors, seasons, etc. Production from such
plannedindependentrequirementisausualcharacteristicsofa
madetostockscenario.
SAP also offers tools for forecasting the future demand using
the historical data and playing various other fators on it. SOP
(SalesandoperationPlanning)isonesuchtoolinSAP,where
youcanforecastfuturedemandusingpasthistoricalinformation
for a preselected organizational structure, for example, you
could have the system pull in the historical information for a
given organizational segment llike Sales oragnization, Sales
Division, Distribution Channel, Material or for a Sales office,
Sales division, Material group. The forecast carried out the
sales information from specially defined sales information
structure can be used as planned independent demand for
productionovertheforecastedperiod.
B)DemandfromSalesorderorCustomerorders
Ontheotherhand,youcouldalsohavethedemandcomingin
fromsalesordersandtheproductionisinitiatedthereafter,such
scenarios are typical maketoorder. Manfuacturing after an
Orderisbookediscarriedoutforproductsofhighvalueorfor
products whose design is supplied by the customer or as
specified/requestedbyacustomer.ForExample,Manufacturing
ofJewelry,Aircrafts,SpecialPurposePumps.
Note that MadetoOrder can also be initiated for a typical
MadetoStock Product, in cases where a special customer
places a huge order and the manufacturing is triggered
seperatelyforthem.
You should not be amazed to come across a product which is
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manufacturedasbothMTSandMTO.
All the above cases are typical maketoorder and such
demandscomeinthroughsalesorders.
NoteTheSalesordersdemandcominginforamadetostock
material is fulfilled using the existing stock, whereas the sales
order created for a maketoorder material can never be
satisfied using any existing inventory as the inventory created
for the material would have been produced for fulfilling other
customerorders.
EvolutionofMRPMaterialRequirementPlanning
EvolutionofMRPMaterialRequirementPlanning
The concept of Material Requirement planning (MRP I) was
designed as a tool to help planners with the derivation of the
quantities of various material or components that would be
required for satisfying a demand and at the same time for
deriving the capacity based plan for loading the orders for
production on the shop floor. The concept which started as a
lessintegratedmainframetoolhasevolvedovertheyearssince
1960, from the time it was first designed, to now, where it is
tagged as Material Resource Planning (MRP II), a much
stronger integrated version of the first MRP, integrating it with
the finance, human resource, purchasing and production
modulesofabusiness.Italsohadmuchstrongerandcomplex
codestotakecareofafewconstraintsincapacityandmaterial
planning.
The MRP II jargon later took on to be called as ERP or
Enterpise resource planning with the greatest possible
integration with a central database server, storing all the
integrated data there for making the information and
data available across the business, across business modules
and across its vendors/suppliers and customers. With the
evolution of ERP (a superior clone of the evolved MRP
II) businesses took it as the most wildest tool that they could
havetomaketheirbusinessrunsmoothly,inamuchintegrated
fashionwithoutloosinganyinformationorspolingtheintension
oftheinformationwhenitflowsacrossthebusiness.
SAP came across as the very first few companies which
evolved the concept of MRP II in to ERP and earning for
themselves a growing business by selling this new concept.
Companiesandbusinessesacrosstheworldmadeuseofthis
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DifferencebetweenMadetoorderandMadetostock
DifferencebetweenMadetoorderandMadetostock
MadetostockScenario:
If a material is defined as a madetostock material, i.e.,
materials which are not marked with any strategy types or
strategy groups in the SAP material master MRP 3 view or
materials which are marked with collective requirements in the
MRP4screen,thesystemcalculatesthematerialrequirements
throughtheuseofaprettysimplealgorithmwhereittakesinto
account the stock in the storage locations, the receipts
expectedforthematerialsthroughpurchaseorproductionand
theincomingdemands.
In a madetostock scenario, the incoming customer requests
arefulfilledfromtheinventory.Themadetostockproductsare
normally the consumer products or products which have a
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