MRP (Material Requirement Planning)

The main function of material

requirements planning is to ensure
material availability on time.

MRP helps monitor the stocks.

MRP generates procurement proposals for
Purchasing and Production (PR/Planned
order).
Overview of MRP Procedures
MRP-BASED MRP Procedures
Material requirements planning is based on
current and future requirements.

The planned requirement quantities trigger
requirements calculation.

The net requirement calculation is triggered
by dependent or independent requirement .

MRP is especially useful for planning
finished products and important assembly
groups such as components . (PP Domain).
Consumption-based MRP
procedures
The consumption-based MRP procedures are only based on
previous material consumption.

Net requirements calculation is either triggered by the available
stock level falling below the reorder point or by forecast
requirements calculated from historical data.

External requirements such as sales orders, planned independent
requirements, and reservations, are generally not relevant to
planning.

The use of these MRP procedures is preferable in areas without in-
house production or in manufacturing plants, for planning operating
supplies. ( MM Domain)
Types of Consumption-based MRP
procedures
Reorder point planning
Forecast-based Planning
Time-phased planning
Reorder Point Planning
Reorder Point Planning
Checks are run to discover whether the
planned available stock (total from plant
stock and fixed receipts) falls short of the
reorder point determined for the material in
the master record.

If it does, procurement must be triggered.

The reorder point should include the
expected average material requirements
during the replenishment lead time.

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
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.
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.

Process Flow Of Reorder Point -Step 1
(Planning File)
The continuous monitoring of available warehouse stock is
carried out.

Every time a material is withdrawn from the warehouse, the
system checks whether this withdrawal has caused stock levels to
fall below the reorder level. If this is the case,the system makes an
entry in the planning file (contain entries for the materials relevant to
planning) for the next planning run.

If a material is returned to the warehouse, the system checks in
exactly the same way whether the available warehouse stock
exceeds the reorder level again. If this is the case, an entry is made
in the planning file, which acts as an indicator for the planning run to
delete any unnecessary procurement proposals.

If planned receipts are no longer required due to material returns,
for example, then the system will suggest that these receipts should
be cancelled. In this case, the MRP controller in cooperation with
Purchasing or Production must check whether the purchase order or
the production order can be cancelled.


Planning File Entry
Activate MRP
Customizing for Materials Management under Consumption-
Based Planning Planning Activate Material Requirements
Planning,


or from the SAP Easy Access screen,

Choose Logistics Materials Management Material
Requirements Planning (MRP) MRP Planning Planning File
Entry Set Up in Background.

SAP Easy Access screen: Logistics Materials Management
Material Requirements Planning (MRP) MRP Planning
Planning File Entry Display
Considering External Requirements
Customizing Materials Management under
Consumption-Based Planning Master Data
Check MRP Types,
In some condition we can use external req here
Use the indicator Include external requirements for the
MRP type in reorder point planning to determine whether
external requirements (sales orders and manual
reservations) are considered. You can also take other
requirements (order reservations and purchase
requisition releases) into consideration.
You can decide whether these external requirements are
to be included in the complete planning horizon or only
within the replenishment lead time
Process Flow Of Reorder Point -Step 2
Planning run
The system then calculates the net
requirements.

The system compares the available stock at
plant level (including safety stock) plus the
firmed receipts that have already been
planned (purchase orders, production
orders, firmed purchase requisitions and so
on) with the reorder point.

If the sum of the stock plus receipts is less
than the reorder point, a material shortage
exists
Control Parameter Planning Run
Process Flow Of Reorder Point -Step 2
Planning run (processing Keys)
Planning run types controls the scope of the materials to be
planned. It is specified in the Processing key field on the initial
screen of planning run.

NEUPL (regenerative planning run), the system plans all materials
which are included in the planning file irrespective of all indicators.
As soon as a material master record is created with MRP data and a
valid MRP type, this material is then automatically included in the
planning file.
NETCH (net change planning run), the system only plans those
materials which are provided with the net change planning indicator.
NETPL ( net change planning in the planning horizon), the
system only plans those materials provided with the net change
planning horizon indicator.

The system deletes the net change planning indicator and the net
change planning horizon indicator for a regenerative planning run
and a net change planning run._ The system only deletes the net
change planning horizon indicator for a net change planning run in
the planning horizon
.
Planning Run Type
Planning in the Planning Horizon
Planning Mode
The planning mode controls how the system is to deal
with procurement proposals (planned orders, purchase
requisitions, scheduling agreement lines) from the last
planning run, which are not yet firmed, in the next
planning run.

The planning mode is set automatically in the planning
file. However, you can overwrite it in the initial screen of
each planning run.

Indicator-1 Weather existing planning just need to be
adjusted-from the last planning run.
Indicator-2 Bom N routing needed to be exploded
again.
Indicator-3 Planning should B recreated from
scratch.

Process Flow Of Reorder Point -Step 3
(Lot-Size Procedure)
The system then calculates the procurement
quantity according to the lot-sizing procedure
defined in the material master.

For reorder point planning, the system supports
the Fixed lot size and Replenish up to maximum
stock level lot-sizing procedures.

You can also use period or optimum lot-sizing
procedures for reorder point materials. In this case,
you must calculate future requirements using the
forecasting functions. The forecast values are then
interpreted as requirements.
Lot-Size Procedures
lot-for-lot order quantity, an order proposal is created for the
shortage quantity. If there are several issues on one day and they
cannot be covered, the system still only creates one order proposal
covering the total shortage quantity on this particular day.
fixed order quantity, the system creates an order proposal for the
fixed lot size in the case of a material shortage. If this order quantity
is not sufficient to cover the shortage, the system generates several
order proposals for the same date until the shortage is covered.
replenish to maximum stock level and a material shortage occurs,
the system creates an order proposal for the amount required to
bring the stock level up to the maximum stock level that is recorded
in the material master record.

Define lot-sizing procedures in Customizing for Materials
Management under Consumption-Based Planning Planning
Lot-Size Calculation Define Lot-Sizing Procedure.
Lot-Size Procedure
Rounding Profile

A rounding profile is used to define settings for
rounding up or rounding down the order
proposal quantity into deliverable units.


Rounding profiles are defined in Customizing for
Materials Management under Consumption-
Based Planning Planning Lot-Size
CalculationMaintain Rounding Profile.
Process Flow Of Reorder Point -Step 4
The system then schedules the
procurement proposal.

The system calculates the dates on which
the purchase order has to be sent, or
when production has to begin and the date
on which the vendor has to deliver the
goods or by which production has to have
the goods ready.
Forward Scheduling for External
Procurement
Scheduling
During scheduling, the system defines the date on which the
material will be available, starting from the date of the planning run.
This procedure is called forward scheduling.
The purchasing department processing time (work days) is the time
available for the buyer to convert a purchase requisition into a
purchase order.
The planned delivery time (Calendar Days) is the number of days
required to procure the material from external procurement.
The goods receipt processing time is the timeframe between
receiving the material and the receipt in the warehouse. This is
required to unpack the material, count it, inspect it, and put it away.
Customizing for Materials Management under Consumption-
Based Planning Plant Parameters Carry Out Overall
Maintenance of Plant Parameters.

Customizing for Materials Management under Consumption-
Based Planning MRP Groups Carry out Overall
Maintenance of Plant Parameters
Planning Run or Execution of MRP
The planning run is usually carried out at plant level. In addition, the
following are also possible:

Storage Location MRP .
Planning with MRP Areas.
Multi-Plant/Site Planning .

In a scope of planning, you can also specify one or several individual
MRP areas and restrict the total planning run to these MRP areas.
Customizing for Materials Management, you can define as many scope
of planning groups as you like, under Consumption-Based Planning
Planning Define Scope of Planning for Total Planning.

You can carry out the requirements planning run as single-item
planning for an individual material. Either a single or multi-level
planning run is carried out for one particular material. To execute
single-level, single-item planning, choose from the SAP Easy Access
screen: Logistics Materials Management Material Requirements
Planning (MRP) MRP Planning Single-Item, Single-Level.

Planning Result
MRP /Current Stock Req List
The results of the planning run, depending on the particular creation
indicator. MRP lists contain the planning results.

The MRP list always displays the stock/requirements status at the time of
the last planning run. While The current stock/requirements list displays
the most up-to-date stocks and requirements.

Any changes made after the planning date are not considered. The list is
static. while stock req list consider any changes and its dynamic.

The MRP list is stored in the system until it is either manually deleted, or
replaced by a new list from a subsequent planning run.

To call the MRP list for a material, choose from the SAP Easy Access
screen: Logistics Materials Management Material Requirements
Planning (MRP) MRP Evaluations MRP List - Material. OR Current
stock/requirement
Converting Planned Order
Planned orders can be created manually, but are usually
generated automatically with a requirements planning run.
It can be changed or deleted at any time.
In individual conversion, you can decide whether you want to
convert the planned order quantity in total, or only partially.
In collective conversion, you can select specific planned orders
that have a start date within the opening horizon (time available
for the MRP controller to convert a planned order into a
purchase requisition or a production order).

To convert planned orders collectively into purchase
requisitions, choose from the SAP Easy Access screen:
Logistics Materials Management Material Requirements
Planning MRP Planned Order Convert to Purchase
Requisition Collective Conversion. Or individual.