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Materials Requirement

Planning
MRP - Overview
The main function of material requirements planning is to guarantee material
Availability

It is used to procure or produce the requirement quantities on time both for internal
purposes and for sales and distribution.

MRP tries to strike the best balance possible between optimizing the service level and
minimizing costs

Integration between master data, demand management, sales and distribution,


inventory management
MRP Features
Net requirements
calculation

Lot sizing

MRP Internal production


and external purchasing
Forecasting

Order scheduling Bill of Material


and generation Explosion
MRP Overview - MRP at
Plant or MRP Area Level
You can plan material requirements at plant level or for different MRP areas.
System adds together stocks from all of the individual storage locations, with
the exception of individual customer stock, to determine total plant stock.
Individual storage locations can be planned separately or be excluded from
planning.
In the case of material requirements planning on an MRP area level, only the
stocks from the storage locations or subcontractor assigned to the respective
MRP area are taken into account. Only the requirements in this MRP area are
combined and procurement elements are created for them. This enables you to
plan material requirements specifically for certain areas.
MRP Overview - Material
Requirements Planning in
the Logistics Chain
Sales and Distribution - concrete customer requirements from the market.
In Demand Management - sales forecast.
independent requirement, that is, the requirement for the finished product,
tradable assemblies, trading goods and replacement parts.
In order to cover these requirements, MRP calculates procurement quantities
and dates as well as plans the corresponding procurement elements. The
procurement element in the planning run is the planned order or, for external
procurement, the purchase requisition. Both procurement elements are internal
planning elements that can be changed, rescheduled or deleted at any time.
Dependent requirements,
Production orders for in-house production and purchase orders for external
procurement.
MRP Overview - Material
Requirements Planning in the
Logistics Chain
The progress of the order for materials produced in-house is controlled by
using the production order. The production order contains its own scheduling
procedures, capacity planning and status management. Cost accounting is also
carried out via the individual production order.
Materials that are procured externally trigger the purchasing procedure. In
this case, you must have chosen suitable vendors or you must have drawn up
outline agreements.
The quantities made available by production or by external procurement are
placed in stock and are managed by Inventory Management
MRP Overview
The Planning Concept in SAP

SOP MASTER PLANNING MRP


Planned Customer Independent
Independent Requirements
Requirements Demand ie
Sales
Requirements
Plan
Requirements (Orders) from
Offset SD Module

Keep Balanced

Planned Orders
Production
Plan Production Orders
Order Proposals
Purchase
Requisitions

Order proposals, planned orders etc are created and adjusted by running the MRP programs.
MRP Overview - MRP Proceedures

MRP

Consumption Based Planning


MRP PREREQUISITES

Activate MRP
create the master data -
material master (LO-MD-MM)
bills of material (LO-MD-BOM)
When you use MRP for in-house production,
work center (PP-BD-WKC)
routings (PP-BD-RTG)
demand management (PP-MD-DEM)
to define requirement quantities and requirements dates for finished products
and important assemblies..
sales and distribution, if necessary
Material Master MRP 1Key
Fields
MRP Type - Key that determines whether and how the material is
planned.
Reorder Point The stock level below which fresh stocks are to be
planned
Planning Time Fence: defines a period during which MRP will not
automatically add or reschedule orders
MRP Controller The personresponsible for material planning for the
material.
Material Master MRP 1Key
Fields
Lot Size: Key that determines which lot-sizing procedure the system
uses within materials planning to calculate the quantity to be procured
or produced.
Minimum Lot Size
Maximum Lot Size
Fixed Lot Size
Maximum Stock Level
Planned Delivery: lead-time for purchased material
GR Processing Time: goods receipt processing time
Material Master MRP 2 Key
Fields
Procurement Type Inhouse / External / Both
In-house Production: Lead time for the inhouse manufactured item.
Planned Delivery: lead-time for purchased material
GR Processing Time: goods receipt processing time
Safety Stock

Availability Check indicates whether the system generates individual or summarized


requirements for sales orders for this material and for planning, which all MRP elements the
system takes into account for the availability check.
Material Master MRP 3 Key
Fields

Availability Check indicates whether the system generates individual or


summarized requirements for sales orders for this material and for planning,
which all MRP elements the system takes into account for the availability
check.
Material Master MRP 3 Key
Fields

Storage Location MRP


MRP Indicator: determines whether or not requirements, for a specific
storage location, are planned separately from the overall plan

Reorder Level: used for storage location MRP

Replenishment Quantity: used for storage location MRP


MRP Types

ND No Planning

PD MRP

VB Manual Reorder Point Planning:


MRP produces order proposals when stock falls below a reorder point. The reorder point
and safety stock levels are entered manually

VM Automatic Reorder Point Planning:


The reorder point and safety stock level are calculated based on the forecast results

VV Forecast Planning
The latest forecast is copied as requirements which are used to create order proposals
Requirement Types
MPS LEVEL PARTS
Independent Requirements
Planned Independent Requirements:
Are used for the anonymous (Non-order-specific) planning of
production or procurement (eg. demand forecast)
Customer Independent Requirements:
Are sales orders on the system. Sales Orders are generally
copied directly into the PP system from the SD system, but they
can also be entered manually

MRP LEVEL PARTS


Dependent Requirements
Are directly related to or derived from the BOM structure for
other items or end products. They are automatically generated
during MRP
Lot Sizing

Static Periodic Optimum (Cost )

Lot for Lot Daily Lot size Part period balancing

Fixed Lot size Weekly Lot size Least unit cost procedure

Replenish up to Monthly Lot size Dynamic Lot size creation


maximum stock
level Flexible period Groff reorder procedure

Lot size according


to planning calen.
MRP: Static Lot Sizing

Lot for Lot Order Quantity:

Shortage Quantity = Ordered Quantity

Fixed Lot Size:


Order
Material Order = Shortage Quantity Order
Shortage
If Fixed Order = Quantity
Fixed Order If >
Quantity Quantity Fixed Order Quantity Order

Replenishment up to Maximum Stock Level:


Stock required to achieve
Order
Quantity = maximum stock level set in
the material master
Consumption Based Planning
Use past consumption data (historical
data) to calculate future requirements
With the help of the material
no reference to the master plan
Prerequisites

The material consumption is consistent with


only a few fluctuations.
You have an efficient and current inventory
management.
MRP procedures in
consumption-based planning
Reorder Point Planning

Forecast-Based Planning

Time-phased planning
Reorder Point Planning
The reorder point should cover the average
material requirements expected during the
replenishment lead time.
Important for defining the reorder point:
Safety stock, Average consumption,
Replenishment lead time
Reorder Point Planning
important for defining the safety stock:
Past consumption values (historical data) or
future requirements
Vendor/production delivery timelines
Reorder Point Planning
Manual Reorder Point Planning - define
both the reorder level and the safety stock
level manually
Automatic Reorder Point Planning - both
the reorder level and the safety stock level
are determined by the integrated forecasting
program.
Reorder Point Planning
-continuous monitoring of available warehouse stock
within reorder point planning in Inventory
Management.
-calculates the net requirements
-calculates the procurement quantity according to the lot-
sizing procedure
-schedules the procurement proposal
Forecast Based Planning
Forecast-based planning is also based on
material consumption
Forecast values and future requirements are
determined via the integrated forecasting
program-MP30/MP38
Period Pattern and Forecast Periods
MRP Prerequisites

PLANT LEVEL Activated for MRP

MATERIAL LEVEL Valid MRP Type

Valid Material Status

Material MRP Views Maintained


MRP Controller
Planned Lead Time
MRP Group
Lot Size Data
MRP: Reorder Point Planning

Stock

Reorder Point

Safety Stock

Time
Order Date Delivery Date
Carrying Out the Planning
Run
Total Planning All materials in a given plant

MD01
All materials are reviewed by MRP regardless of activity

Only the materials in a plant that have undergone a change relevant


to planning since the last planning run (net change planning)

Planning Interval Limiting the MRP Planning Interval

example:
100 days

Planned requirements and


supply order receipts
Time
MRP Planning Horizon
Planning Run Options for
Automatic
Creation of Requisitions and
Delivery Schedules

MRP Control Parameter: determine whether or not MRP will


automatically create requisitions or delivery schedules
Options are:
Do not automatically create. Only create planned order
Automatically create within the opening period
Automatically create for the entire planning horizon
Opening Period Parameter: allows the user to take advantage of MRP
automatic creation features while retaining control over the number of
open purchasing documents
Total MRP Run Online-MD01
Total MRP Run Scheduling-MDBT
Planning Run Types
Regenerative Planning all master schedule items are planned for a
plant. It is generally used during initial start-up to insure all items are
planned or when heavy maintenance causes most items to be re-
planned.
Net Change Planning only master schedule items which have
undergone a change to the supply/demand balance, such as warehouse
receipts and issues, are re-planned. It is common to run net change
MRP daily.
Net Change Planning in the Planning Horizon shortens the period
over which MPS plans to the planning horizon, which is set in
Customizing. It is typically set to the length of time of the longest lead
time item. This means that only those master schedule items which
have undergone a relevant change within the planning horizon are
planned.
Single Item Planning-MD02/MD03
Single-level, Single-Item Planning
Planning carried out for a single item on a BOM.
Dependent requirements are only created for materials on
the next lower level
Multi-level, Single-Item Planning
Planning carried out for the complete BOM structure of a
material
Multi-Level Planning Structure
Independent Requirements
Customer Requirements

= Demand
E1
= Supply
Planned Orders Level 0

Dependent Requirements

B1 B2
Planned Orders Planned Orders
Level 1
Dependent Dependent
Requirements Requirements

R1 R2 R3
Planned Orders Planned Orders Planned Orders

Level 2
MRP List vs Stock
Requirements List
MRP Current Stock,
MRP MRP Rqmts, Balances,
Planning
Planning
Planning planned Receipts,
Process
Process
Result Issues

Last planning Stock Requirements


run results List uses current data

The MRP List displays the result of the last planning run
The Stock Requirements List displays the most up-to-date
stock and requirements situation
Stock Requirements List-
MD04
Stock Requirements List-MD04

Date MRP Element Supply/Demand Ref EM Quantity Available

01/01 STOCK 100


01/08 ORDER Sales Order 25 75
01/15 PL ORD 1000 120 05 100 175

Stock Requirements List brings together all the supply orders, independent
and dependent demands and stock balances for the material. MRP makes
order proposals to balance the supply/demand position for the material