SAP MRP 2 View

SAP MRP 2 View:

Procurement Type (Plant Specific):

Procurement type indicator defines how the material is procured. The following
procurements types are possible

E = material is produced in-house, F = material is procured externally, X = material can

be both produced in-house and procured externally X (to be used as an exception)

E.g. A material in Plant A will have this field as E (being produced in-house), where as
the same material in Plant B will have F if it is being externally procured.

You can not change the configuration for this field.

Note: Every Material needs to have a Procurement type.

Batch Entry - Determination of batch entry in the process order:

Defines when batches have to be determined when using the PP/WM interface.

This indicator refers to the Raw Materials of an order, not to the FG of the order. You
have the following options:

The batches can be determined when the goods issue is posted.

The batches must be entered in the order before it is released.
The batches are determined automatically when the order is released

Back Flush Indicator:

Definition:

As a consultant or a user, you have to classify the components required in production as,
components whose:

Consumption is as per the standard Bill of Material or consumption of the component is

totally unknown.

Consumption is not exactly as per the Bill of Material or where the user would personally
like to create the goods issues.

In the second case, the components have to be issued to the order manually through the
goods issue transactions.

And in the first case, the components can be Backflushed (issue automatically in the
background) to the production order or process order.

A component identified as Back Flush component is automatically issued to the order

when you carry out a production order Confirmation or process order confirmations.
When you Carry out Production order or Process order Confirmation, and confirm a
Partial or Final Qty out of the Total Qty for the order, the system automatically issues the
proportionate Back Flush Component qty to the Order.

Illustration:

If you are producing 20 Pc of M1 and the Bill of Material for M1 has a component RM2 as
below:

RM2 = 2 Pc for every 1 quantity of M1 that is produced (To be Backflushed), then -

Step 1: Initial Order confirmations for 5 Pc for the order (of 20 pc)

Step 2: Auto Issue of Backflush items (RM2) in the background, that quantity required for
production of 5 Pc = 5 Pc X 2 Pc = 10 Pc.

Step 3: Optional - Editing the Backflush records before saving:

This automatic consumption of the backflush components happens in the background

during the production order or process order confirmations. Nevertheless you can
manually go and edit the quantities in the confirmation screen itself before saving the
production order or process order confirmations. To edit the entries you have to press the
Goods Movement Button in the confirmation main screen.

Lateral thinking

Thus we can conclude here that the goods movement screen in the confirmation
transaction behaves as a normal goods issue screen from where we can issue any
component to the order and not just backflush components.

Possible errors:

Since the backflush of components is executed in the background automatically by the

system, it is certainly possible that some errors may prop up. These errors can be due to:

The storage location is missing The storage location from where this backflush
component is to be consumed from is not defaulted for the material in the issue storage
location of the MRP views of the material.

The Batch Number is missing or it does not exist If the Component that is to be
backflushed is a batch managed component and the batch which is to be consumed is
not allocated to the component then the error may occur. It is advisable to create auto
batch determination for these components so that the system automatically allocates
batches for consumption on the selection or sort rule that is given in the batch
determination procedure.

Stock is in deficit If the component that is to be backflushed is not available in the plants
storage location defined for the material, then the error is inevitable.

Issue Storage Location:

Definition:

In the case of a material produced in-house, this is the key of the storage location that is
copied to the planned order, production order.

If the material is a material that is to be consumed, then it is the issuing storage location
to which it is posted.

If the material is a material that is to be produced, then it is the receiving storage location
to which the receipt of the material is posted.

Lateral thinking

The issue storage locations for components can also be defined in the BOM Item data.
The issue storage location for a component in the BOM Item data takes the precedence
over the material master value. This means that you can change the issue storage
location of a certain component depending upon the material you are manufacturing.

Moreover you can also maintain Issue storage location for a material in the production
version of a material.

You can use your common sense and generalize that when you maintain the issue
storage location in the production version, it is the Goods receipt storage location for a
material that is being manufactured.

In-house production time (FG & SFG):

Definition:
It specifies the time in workdays needed to produce the material in-house. In-house
production time is independent of the order quantity.

The system requires the in-house production time to determine the planned dates for
planned orders in materials planning if the MRP is run at Basic dates.

On the other hand if MRP is run through lead time scheduling (parameters set in the MRP
Run screen) these dates are not considered at all. In that case the scheduling is done
through the use of Routing or Recipes.

Planned delivery time in days (RM & STO Procured):

Definition:

Number of calendar days needed to obtain the material or service if it is procured

externally right from the requisition time to the goods receipt time.

If you have multiple vendors for the material, you must specify an average value. The
same applies if you order the material from a fixed vendor that has varying delivery times.

Goods receipt processing time in days (for all Materials):

Definition:

This is a time required for goods receipt of a material at a given Plant and it does not
include the transportation time used bring the material till the plant.

For Finished Goods & Semi Finished Goods: Number of workdays required after receiving
the material from Production for inspection and placement into storage. It may vary for
each product.

For Raw Material & Semi Finished Goods: Number of workdays required after receiving
from the source for inspection and/or labeling before its further shipment or internal
usage.

Schedule Margin Key:

Definition:
Key that the system uses to determine the floats required for scheduling an order. You
define the following floats with the scheduling margin key. The definition of the floats or
the schedule margin keys are through IMG.

Opening period: Number of working days between the date that the order is created and
the planned start date. This time is available for the MRP controller to convert a planned
order into a purchase requisition or a production order.

Float after production: Number of working days between the scheduled finish date and
the order finish date; used as a float in production scheduling.

Float before production: Number of working days between the order start date and the
scheduled start date; used as a float in production.

Scheduling release period: Number of workdays between the planned start date and the
date for releasing the order. If the order release indicator is set, the production order is
released by a background program that takes all dates into account.

Safety Stock:

Definition:

Safety Stock specifies the quantity whose purpose is to satisfy unexpectedly high demand
in the coverage period. The risk of shortfalls is reduced by having a safety stock.

The safety stock defined here for a material in terms of quantity is an additional static
requirement and the system adds to this quantity as an additional requirement quantity.
You can use this along with manual reorder point planning as well.

Dynamic Safety Stock (Coverage Profile):

In place of defining a static or constant safety stock for a material, there is also a provision
to define a dynamic safety stock through the Coverage profile field.

The concept identifies the demand for a required period (as mentioned in customizing)
and calculates the average daily requirement. Then it uses this average daily requirement
to calculate the target stock for a target safety coverage period defined in customizing.

Example:
If the Demand over 10 weeks in future is 7000 Units and the safety stock coverage is
required for 2 days, then the system calculates the average daily requirement as 7000/
(10*7 factory calendar working days) = 100 Units per day, which in turn means that for
covering 2 days of safety stock the required quantity will be 2*100 = 200 Units.

Therefore as soon as the stock falls below the Minimum safety stock calculated for
minimum safety coverage period, the system creates requirements for the dynamic safety
stock.

Customizing required:

First we have to define in the Configuration section of MRP, a Coverage profile which
contains the following primary items:

The Demand for the number of periods which is to be used to calculate average daily
requirement = XX period

Period in terms of = Weeks/days/Months

The Target safety stock coverage = XX period

Minimum safety Stock coverage = XX period

Maximum safety Stock coverage = XX period

Minimum Safety Stock/Service Level:

Definition:

Minimum Safety Stock is the quantity that defines the lower limit for safety stock. This
value cannot be exceeded. The lower limit is checked if you use an availability indicator
which shows, according to customizing settings, if the safety stock is to be calculated
again in a forecast. If the safety stock is lower than this level in forecasting, the safety
stock is automatically increased to the value of the lower level. The safety stock must
always be greater or equal to this lower level.

Service level is the system uses the service level to calculate the safety stock. The higher
the service level, the higher will be the safety stock calculated by the system to
compensate for additional consumption or delays in delivery.