Business Blueprint

Document

Material Requirement
Planning
 Business Blueprint Document SCPL-BBP-PP-
Material
Requirement
Planning

Document Control Information

Document Information
Document Identification SCPL-BBP-PP-Material Requirement Planning

Document Name Business Blueprint Document

Project Name Project SAPFAL

Client Soujanya Color Pvt. Ltd.

Document Author Pankaj Bagh
Document Version V0
Document Status Submitted for Review
Date Released

Document Edit History

Version Date Additions/Modifications Prepared/Revised by

V0 06.12.2017 New document Pankaj Bagh

Document Review/Approval History

Date Name Organization/Title Comments

16.12.2017 Hemant Sontakke SCPL/BPO
16.12.2017 Sachin Maste Deloitte/Project Manager
16.12.2017 Sachin Bedekar Deloitte/SME

Distribution of Final Document

The following people are designated recipients of the final version of this document:

Name Organization/Title
Gaurav Wani SCPL/Project Manager
Hemant Sontakke SCPL/BPO
Shirish Bhandare SCPL/Functional Team
Manish Yadav SCPL/Functional Team
Sujan Kelvalkar SCPL/Functional Team

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 Business Blueprint Document SCPL-BBP-PP-
Material
Requirement
Planning

Table of Contents
1 Process Introduction....................................................................................................................... 4
1.1 Business Process Overview: ................................................................................................. 4
2 As-Is Process Details ...................................................................................................................... 5
2.1 Description .............................................................................................................................. 5
2.2 As-Is Reporting Details ......................................................................................................... 5
3 Process on SAP (To-Be) ................................................................................................................. 6
3.1 Demand Management ........................................................................................................... 6
3.1.1 Prerequisite Master Data ............................................................................................. 6
3.1.2 SAP Transaction Codes ................................................................................................ 7
3.1.3 Customization Requirements (Application & Software) .......................................... 7
3.1.4 SAP Reports ................................................................................................................... 7
3.2 Material Requirements Planning .......................................................................................... 7
3.2.1 Prerequisite Master Data ............................................................................................. 8
3.2.2 SAP Transaction Codes ................................................................................................ 9
3.2.3 Customization Requirements (Application & Software) .......................................... 9
3.2.4 SAP Reports ................................................................................................................... 9
3.3 Consumption-based planning............................................................................................... 9
3.3.1 Description ..................................................................................................................... 9
3.3.2 Prerequisite Master Data ........................................................................................... 10
3.3.3 SAP Transaction Codes .............................................................................................. 10
3.3.4 Customization Requirements (Application & Software) ........................................ 10
3.3.5 SAP Reports ................................................................................................................. 10
4 Change implications – Benefits .................................................................................................... 11
5 Change implications – Risks ........................................................................................................ 12
6 Change implications – Action plan............................................................................................... 13

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Material Requirement
Planning

1 Process Introduction
This document identifies the business process of Production planning from the demands
flowing from different sources like Forecast and Sales Order.

1.1Business Process Overview:

 Consolidated Demands: Consolidation of demands from Sales, After Market &
inter Plant/Company transfers in Excel.
 Demand Management: Consolidated Demands are entered in SAP as PIR
(Planned Independent Requirements) for Make to Stock products.

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Planning

2 As-Is Process Details

2.1Description
This section describes the existing processes for production planning in SOUJANYA COLOR.
Currently, forecast, planning process and production batch scheduling are being carried out
in local ERP system i.e. Tally. In SOUJANYA, two main type of planning scenario exist as below
1) Planning of materials on forecast basis
2) Planning of materials for incoming sales orders. The detail list of planning processes
are mentioned below.
 Demand forecast is prepared by the sales team and sent across to production
planning department on a monthly basis
 From 20th to 22nd of every month, plan for the next month is shared with the supply
chain team
 Supply chain team adjusts the plan to account for the finished good stock-in-hand.
After this, the MRP run schedule is released to the purchase department and the
production plan is released to the production planning department, on the 24th of
the same month.
 From 28th of the same month, production begins for the most common / fast
moving batches
 Between 05th to 07th of the subsequent month, confirmed sales orders are received
from the customers and the plans are revised accordingly
 Specific raw materials are procured only when the confirmed orders are received
from customers
 In case of imported items, forecast for 3 months is requested from the customer

2.2As-Is Reporting Details

The currently, planning team is using following report from Production Planning perspective
 Production Scheduling in EXCEL: Day wise planning

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3 Process on SAP (To-Be)

3.1Demand Management
The function of Demand Management is to specify the requirement quantities and
delivery dates for finished or semi-finished products.

 Planned independent requirements (PIR) are used to perform Demand

Management functions in Make to Stock and Sales order requirement are used to
perform demand management functions in Make to Order scenario.
 To create the demand program, planning strategy is specified for a product.
Planning strategies represent the methods of production for planning and
manufacturing or procuring a product.
 Using these strategies, it can be decided if production is triggered by sales orders
(make-to-order production) or if it is not triggered by sales orders (make-to-stock
production).
 The planning strategy maintained in material master will vary from material to
material. This is quite flexible and can be changed at any time required.
 PIR can be maintained in monthly, Weekly or Daily buckets.

For SOUJANYA COLOR, forecast (make to stock) on the basis of last 2 to 3 months sale is
used for planning of all finished products. However, business requires to consider sales
order as well if the order quantity is more than the forecast.

Template for uploading the forecast will be designed specifically for SOUJANYA. A custom
program will be designed wherein we will use Excel format to upload the forecast.

In SAP, various planning strategies are used to cater different planning scenarios. For
SOUJANAY, we recommend strategy 40 which is planning with final assembly. If the sales
order quantity is more than the forecast then additional material will be planned.

If the incoming sales order quantity is less than the forecast then additional requirements
based on the forecast will be produced or procured. This additional production or
procurement will be used for the adjustment of next month/weeks forecast automatically
by the system.

Prerequisites:
Customer Sales Plan from Customer or Marketing Department for creating PIR or firm Sales
Order.

3.1.1 Prerequisite Master Data

 Materials Master Data for required Plant

 MRP1, 2, 3 and 4 & Work Scheduling views should be maintained.

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3.1.2 SAP Transaction Codes

Tcode: MD61 (Create Planned Independent requirement)

Tcode: MD62 (Change Planned Independent requirement)

Tcode: MD63 (Display Planned Independent requirement)

3.1.3 Customization Requirements (Application & Software)

A custom program will be designed wherein we will use Excel format to upload the forecast.

3.1.4 SAP Reports

Sr. Reporting Requirement Transaction Report Remarks
No. Code Description
N/A

3.2Material Requirements Planning

The main function of material requirement planning (MRP) is to guarantee material
availability.
MRP is used to procure or to produce the required quantities on time for both internal
purpose and for sales. This process involves monitoring of stocks and the automatic creation
of procurement proposals for purchasing and plan orders for production. MRP is designed for
the production where finished goods are produced as per demands.
The MRP elements are to be represented as below:

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For SCPL, MRP will be carried out at Plant level and at material level in specific cases. As all
Finished Products are Make to stock, however we need to consider confirmed sales orders for
the planning run. Forecast and sales order will be trigger points for planning of all finished
goods. For, finished goods, semi-finished goods & PM dependent requirements will be
generated. For, semi-finished goods, RM and intermediate will be the dependent requirements
to be generated.

Net requirements are calculated during the planning run for every material. For this
calculation, the system checks whether the requirements are covered by the stock and
planned receipts from Purchasing or Production. If the requirements cannot be covered, the
planned order for in-house production and purchase requisitions / planned order for externally
procured components are created.
During the planning run scheduling is carried for the planned order to calculate the start and
finish dates for the planned order (Production).

3.2.1 Prerequisite Master Data

 Material Master Data with MRP views & Purchase views.

 BOM for the Finish & Semi finish Assembly
 Master Recipe for the Finish & Semi finish Assembly
 Purchase data i.e. scheduling agreement, Source list etc.

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3.2.2 SAP Transaction Codes

T Code: MD01/MD01N (Run MRP at a Plant level)
T Code: MD02 (Run MRP at a Single-Item, Multi-level)
T Code: MD03 (Run MRP at a Single-Item, Single-level)
T Code: MD04 (Stock/ Requirements List)

3.2.3 Customization Requirements (Application & Software)

 Available Standard Customization will be used:

 Type
 Planning strategy
 Lot sizing procedure

 To be configured:

 MRP Parameters for plants

 MRP Controllers

3.2.4 SAP Reports

Sr. Reporting Requirement Transaction Report Remarks

No. Code Description
1 Stock/ Requirements List MD04/MD05/MD06 .
2 Planned Order List MD16

3.3Consumption-based planning

3.3.1 Description
Consumption-based planning is based on historical data and uses material forecasts or
statistical procedures to determine future requirements. Consumption-based planning
procedures do not refer to the production plan, i.e. requirements calculation is not triggered
by independent or dependent requirements. It is either triggered by the available stock level
falling below the reorder point or by forecast requirement calculated from historical data.

Consumption-based planning is oriented towards material consumption. By means of the

forecasting tools, forecast values are determined for future requirements based on past
values. These forecast values form the requirement values for the material requirements for
planning run.
With materials which are planned according to forecast-based planning, the requirements
dates in the future are known. The materials have to be ready by these times. The release
date is determined for the Purchasing department to schedule the material be ordered so that
it is available on the requirements date. The system determines the release date of the
purchase requisition or the planned order going backwards from the requirements date.

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 Re-order point planning: In reorder point planning, the system checks whether the
available stock level falls below the reorder point defined for the material. If it does,
procurement must be triggered. You can determine the reorder point manually or, it
can also be calculated automatically using the material forecast.
In SOUJANYA COLOR, consumables will be planned using Re-Order point planning.

3.3.2 Prerequisite Master Data

 Material Master
 BOM
 Production Version
 Cost center

3.3.3 SAP Transaction Codes

T Code: MM01/02/03 Create/Change/Display Material master

T Code: MD01 (Run MRP at a Plant level)
T Code: MD02 (Run MRP at a Single-Item, Multi-level)
T Code: MD03 (Run MRP at a Single-Item, Single-level)
T Code: MD04 (Stock/ Requirements List)

3.3.4 Customization Requirements (Application & Software)

Formulae for Scheduling & Capacity Requirement already customized.
Factory calendar to be customized based on SOUJANYA COLOR factory calendar.

3.3.5 SAP Reports

Sr. Reporting Requirement Transaction Report Remarks

No. Code Description
N/A

The reporting requirements other than the listed in above report sections will be finalized in
RICEFW sessions.

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4 Change implications – Benefits

 Materials requirement planning will provide optimum utilization of available resource.
 Inventory cost will have better control.
 Future sales / production requirement can be figured out.
 It will help in taking strategic decisions.
 With consumption-based planning, all spares and non-production can be automatically
planned.
 Manual tracking of such parts will not be required.
 Optimum inventory cost with just on time supply will ensure that there will not be
shortage of material at any point of time.

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5 Change implications – Risks

 As the users are very much accustomed to create procurement proposal (in-house &
external) without referring to MRP there can be unwanted purchase / production which
can lead to adding inventory cost.
 Re-order point needs to be derived by studying the consumption pattern for all the
relevant materials. Having incorrect re-order point and safety stock can call for
unwanted procurement proposal or shortage of stocks when required.

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6 Change implications – Action plan

 Enforcing change management to adopt best practices and making most use of MRP
feature will ease the day to day decision making.
 Industry experience past consumption data should be thoroughly studied and verified
by business heads before entering reorder point and safety stock

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Planning

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