8/11/2019 MRP 1 View

1/16

8/11/2019 MRP 1 View

2/16

PD Relevant for Material Requirement PlanningND No Planning in SAPVB - Manual reorder point planning (Consumption based

planning)

VM- Automatic reorder point planning (Consumption based

planning)VV - Forecast based Planning

X0 - External Planning i.e., APO or BAAN or I2 or MES or anyother external planning system.

MRP types can also be configured to the requirements, but most of

the times, standard MRP types are used.

Lateral Thinking:

Step 1: As a consultant you have to decide whether a particularmaterial needs to be planned in SAP.

Step 2: Then decide the type of planning.

MRP Types can be classified into 2 Major Types or Leagues:

a) Materials for Consumption based planning:

For materials whose planning is based on consumption or for

materials which are really not expensive or which are really not

monitored by finance and the costing teams.

This is mostly used for Raw Materials.

This type of planning is for Materials which are procured based ontheir consumption. Methods like Reorder Point Planning, where

procurement is triggered after the stock falls below certain levels

is the most widely recognized consumption based planning.

The Following are consumption based MRP types:

VB - Manual reorder point planning

VM- Automatic reorder point planning

b) Planning not based on Consumption: Planning Based on

8/11/2019 MRP 1 View

3/16

Demand:

For materials whose planning is not based on the consumption

levels or materials who are to be procured on demand only. These

materials are those whose consumption is monitored by the

finance team and they are really important for the company. Thesematerials are expensive materials.

This type of planning is mostly used for expensive and monitored

Raw Materials and for planning of the manufactured products.

Demands coming from Sales order or planned independentdemand for semi-finished materials, finished materials or even the

most expensive raw mtaerials are planned using Material

Requriement Planning.

Illustrative Explaination of MRP Types:

See the table below:

Material

Category

Criteria

1

Criteria

2

Criteria 3 MRP Type

Preferred

RawMaterial

w/o

Consumable based

Planning.

Expensive or

purchase

ismonitore

d

Consumed lot by

lot

Purchaseor issue is

planned

Then UseNormal

MRP or

MPS typeof planning

RawMaterial W/

Consumabl

e based

planning

Notreally

expensiv

e

Consumed

lavishly

Purchaseor

consumpti

on is not

reallyplanned

Then use aConsumpti

on based

planning

likeReorder

pointPlanning or

forecast

basedplanning

8/11/2019 MRP 1 View

4/16

Manufactured Materialw/ Lot by

Lot

Consumptio

n

Expensive andproducti

on is

monitore

d

Consumed lot by

lot

Producedon Made

to order or

Made to

Stock basis

Then UseNormalMRP or

MPS type

of planning

The Material requirement planning is mostly carried out for high

value materials like the assemblies, subassemblies or the high

value procurement materials whose procurement quantities are

planned based on the incoming demands. For high value materials,the planning is monitored and production/procurement is ordered

once the higher levels demands arrive.

On the other hand, consumption based planning is carried out forlow value materials whose planning methods can be restricted toconsumption based methods like the reorder point planning (with

putting in a lot of efforts in to planning strategies).

The below screen shot shows the various MRP types which are

offered by SAP:

8/11/2019 MRP 1 View

5/16

Material Requirement Planning MRP Type PD

The planning is carried out for the quantities planned

through planned independent requirement or quantities

planned through incoming sales orders (made-to-order ormade-to-stock). The planning is done with respect to the

master plan.

The planning process does not consider any forecast

information or historical consumption patterns. Material

planning is done only for absolute requirements/demands onhand.

The available stock is determined by the planning run (thatis required to meet the demands) by including the following in

an equation as shown below

= Plant stock (considered as receipt) + scheduled receipts

from production and purchase all the demands from sales

order, material reservations and planned independent

requirements.

If the available stock does not satisfy the demand then

procurement proposals are raised to cover the demands.Alternatively we can interpret it as fulfillment of the

incoming demands by all the receipts.

Manual Reorder Point Planning MRP Type VB

Consumption based planning is a type of planning which

is triggered based on consumption of stock. It can based on thepast consumption history based on a forecasted value or it can

be based on the current consumption levels.

The best example of consumption based planning can be

Reorder Point Planning, where the planning for a given

material is triggered when the stocks fall below a reorderpoint. On the other hand you can also have a forecast based

planning where planning is carried out based on forecasted

figures for the material (forecast based on historical data)

In the case of Manual Reorder Point Planning (MRP

8/11/2019 MRP 1 View

6/16

Type VB), when the Plant stock & firmed receipts for a givenmaterial fall below reorder point, the planning for the materialis triggered (a planning file entry is created). For this to

happen, you would have to enter the Reorder level manually in

MRP 1 view of the material master (as in the case of manual

Reorder Point Planning) or the reorder point can beautomatically calculated by the system (as in automatic

Reorder point planning).

In the Reorder Point Planning, we usually maintains a

safety stock (entered manually in MRP 1 View of the

material master though not mandatory) to use it as handystock in the period when the order is placed with the vendor

and the material is being transported to the plant material is

on its way to the plant or warehouse (this is calledreplenishment lead time). The Safety stock can also be

calculated automatically by the system using the DynamicSafety Stock concept. You should also maintain thereplenishment lead time, as accurately as possible in the

material master.

In Re-order point planning, the incoming demands are notconsidered as issues, in other words the incoming demand

plays no role in planning or creation of procurement proposals.

MRP waits for the cumulative of the Stock + Firmedreceipts to fall below the re-order point so as to trigger

creation of a procurement proposal. The procurement proposal

is created for a quantity equal to the Reorder point or equal toa fixed lot size maintained in the material master. If a

procurement proposal already exists for the material with

quantities greater than the proposed quantity (a manuallycreated one), the system would not create a new one.

It is always recommended to use fixed lot sizing

procedure so that every time the stock falls below the reorderpoint, the system can procure the fixed lot size, instead of

using its own planning brains and ordering the quantity

mentioned in the reorder point.

For example, if for a given material which is set for

reorder point planning, with a reorder point of 80 Units, thesystem would try to create a planned order once the stocks

falls below 80 Units. Assuming that the current stock at any

given point in time is 50 Units and the firmed receipts are 20

Units, making it 70 Units, which is still well below the 80units level, in which case the system would create a planned

8/11/2019 MRP 1 View

7/16

order of 10 more units to reach back to the level of 80 units.

Now if you have a Fixed Lot Sizing procedure set in the

material master, for a 100 Units, the system would always create a

planned order of 100 units.

Automatic Reorder Point Planning MRP Type VM

In the case of utomatic Reorder Point Planning (MRP

Type VM) - a type of consumption based planning, the system

calculates the recorder point and the safety stock using the past

historical consumption data to derive the future consumptionpatterns. In this case you would need to extend the material

master for the forecast view with a valid forecasting methodselected.

In the net requirement calculations, the available stock is

determined as equal to the plant stock and the firmed receipts frompurchase and production. Net requirement calculations do not

consider the demand from sales order or from planned

independent requirements or from material reservations. If theavailable stocks fall below the reorder point, procurement

proposals are raised.

Manual/Automatic Reorder Point Planning with External

Requirements MRP Type V1/V2

The only difference between the reorder point planningmethod and the reorder point planning methods with external

requirements is that, the Sales order requirements and the

requirements from manual reservations are also included inthe formula that is used to calculate the available stock.

These external requirements can be considered for the periodwithin the replenishment lead time or within the total horizon;

this option can be configured in the configuration for MRP

procedures.

8/11/2019 MRP 1 View

8/16

Forecast Based Planning MRP Type VV

Another form of Consumption based planning is ForecastBased Planning, in which the historical consumption data is

used to extrapolate the future consumption patterns, which aredirectly used as requirement figures in the next planning run.

The forecast is suggested by the system periodically, i.e., on a

weekly, daily, monthly basis or as per accounting periods.

You can specify the number of historical periods and the

future forecast horizon (periods) for each material. In the

planning run, the forecasted requirements are made to beavailable at the start of the period specified (week, month or

day etc) and then you have an option to further divide/splitthese requirements to a finer detailed period pattern throughthe use of splitting indicator in MRP 3 view. The splitting

Indicator can be configured in the following path Logistics >

Production > MRP > Forecast > Define Splitting of forecast

requirements for MRP.

The forecasted requirements should be covered by the

plant stock + scheduled firmed goods receipts (from purchaseor production). Net requirement calculations do not consider

the demand from sales order or from planned independent

requirements or from material reservations. Only demandsfrom the forecasted figures are considered. If the available

stocks fall below the forecasted requirements/demand, for the

period, procurement proposals are raised.

Safety stock can be considered in the net requirement

calculations

Available stock that is left over after the planning run

calculations = plant stock safety stock + firmed receipts from

purchase or production Forecasted requirements/demand.Another way of interpreting the same is that, the receipts

should cover the demands from forecasts. If the receipts

cannot cover the demands from forecast, then the system raisesprocurement proposals.

8/11/2019 MRP 1 View

9/16

MRP Group

Using the MRP groups you can group materials which would have

the same planning parameters.

Use of planning parameters available at the plant level would have

all the materials in the plant adopt to the same planning

parameters.

MRP Groups allows you to have different set of planning

parameters, which once assigned to the materials helps these

materials to get planned in varied specified ways as describedbelow:

These control parameters include, the planning strategy group, the

consumption mode, the planning horizon, Rescheduling Horizon,Planning Time fence, determination strategies for issue storage

location, Order type to be used for conversion of planned orders,availability checking rule, Safety Stock, whether start is allowed

to be in the past etc.

Lateral Thinking

As a consultant you have to think whether the materials needs tobe grouped in groups which define varied the planning parameters

or you are happy with using the plant level planning parametersfor all the materials.

If you dont have MRP groups specifying grouping of materials

with similar planning concepts, then the system assigns thesematerials with plant specific planning parameters.

Reorder Point

Re-order point planning is a special procedure in materialsplanning under the heading of consumption based planning.

If the reorder point is greater than warehouse stock, an orderproposal is created by materials planning.

Manual reorder point planning, the logic here is more attentive

8/11/2019 MRP 1 View

10/16

towards maintaining the stock levels rather than the (Net)requirements for the material.

Example:

i.e. for example you have a stock of 100 KG and the Reorder point

value is say 150, then the system creates a proposal for the balance50 kg even though there may / may not be requirements for this

ordered qty. At the time of procurement the system would procure

according to the lot sizing procures defined for the material, i.e., if

the lot sizing procures suggests min lot quantity as 60 kg; thesystem would procure 60 kg, instead of 50 kg.

Illustration of the Reorder Point Planning:

MRP Controller

It is a Configurable Field. It has to be configured in IMG.

MRP Controller specifies the absolute three digit code of the MRPcontroller responsible for material planning for the material. MRPcontroller is the person responsible for a group of materials in a

plant or company.

A material that takes part in material requirements planning must

be allocated to an MRP controller. This allocation helps you to

evaluate or run MRP for a controller.

8/11/2019 MRP 1 View

11/16

Lateral Thinking

You can run or evaluate MRP for a plant or material at a plantusing the standard SAP Transaction codes MD01 or MD02

(running MRP at Plant or Material-Plant level or MD04(Evaluation at material plant level). But it would be interesting to

know that you can also run a MRP run for a MRP controller

activating a standard User-Exists in the system.

Lot size (materials planning)

It is a Configurable Field. It has to be configured in IMG in the

MRP section of the Logistics Production area.

Normally consultants avoid configuring this field and they use it

as it is.

Lot Sizing Key determines which lot-sizing procedure the system

uses within materials planning to calculate the quantity to be

procured or produced for the material. Lot Sizing procedure inmaterial requirements planning is used to calculate the order and

production quantities (lot sizes).

Types of Lot sizes:

A) Static Lot Sizing Procedure Static Lot Sizing procedure

means that the lot size is static and it is not be clubbed periodically

or for optimum lot size calculations.

EX is the most commonly used, which means lot for lot quantity.

Which means the lot size is equal to the requirement quantity and

it is not be clubbed periodically or for optimum lot sizecalculations.

FX is used for Fixed Lot Size and HB is used as a lot size to

replenish stock to the maximum level.

B) Period Lot Size Procedure The clubbing of requirements on a

8/11/2019 MRP 1 View

12/16

daily basis or a weekly basis or on a decided periodic basis.

For example - TB is used if you want to carry out Daily Lot

Sizing; WB is used for Weekly,

Note:

As per standard SAP, the material is always planned in the start of

the period. For example if the material is planned with a weekly-

lot-size, then the required planned start date will be in the start of

the week. Nevertheless through configuration, you can have itstarting in the end of the week if required.

There are many other options of starting and ending of the datesfor the lot size planning.

Minimum lot size

It is the Minimum Procurement quantity for the material at the

given plant and storage location defined.

Examples:

If the Minimum Lot size is 100 kg and the required Quantity is 80kg, then the system will create one planned order of minimum 100

kg in number {if the Plant/Storage location stock for that material

is Zero}.

Maximum lot size

It is the maximum Lot size for a Procurement quantity. If theMaximum Lot size is 80 units, then the maximum planned orderqty cannot be more than 80 units in any case.

Examples:

If the required quantity through a demand is 120 kg, then the

8/11/2019 MRP 1 View

13/16

system will create two planned orders of 80 kg & 40 kg {if thePlant/Storage location stock for that material is Zero}

If the procurement qty is 140 kg, and the Maximum lot is 80 kg

and minimum is 15 kg, then the system will create 2 planned

orders of 80 kg & 60 kg. {if the Plant/Storage location stock forthat material is Zero}

If the procurement qty is 85 kg, and the Maximum lot is 80 kg and

minimum is 15 kg, then the system will create 2 planned orders of

80 kg & 15 kg {if the Plant/Storage location stock for that material

is Zero}.

Fixed lot size

The Fixed Lot size defines a fixed procurement lot size quantityfor the material. Which means that you will always procure or

produce a material in a fixed quantity.

Examples:

If the required Quantity through demand/demands is 120 and the

fixed lot size is 80, then the system will create 2 planned orderswith one planned order of quantity 80 an the other planned order

of Qty 80 {if the Plant/Storage location stock for that material isZero}.

Rounding Value

Examples:

If the Rounding Value is 20, and the procurement quantity is 70,

then the system will always round up the planned order to amultiple of 20.

One more example would be, if we dont consider the Min/Max

Lot size and the procurement quantity is 70, then the systemwould create a planned order of 80 to round off to 20 {if the

Plant/Storage location stock for that material is Zero}.

8/11/2019 MRP 1 View

14/16

Rounding Profile

The static rounding value method may not satisfy all the businesscases, where a given rounding value is used and the procurement

proposals are rounding to that value. There may be situations

where the rounding value may change according to the size of theprocurement proposal; this is where the concept of rounding

profile may help you.

Rounding Profile allows you to enter a procurement quantity andthe corresponding rounded value that is applicable if the

procurement quantities. You may configure the system to have a

rounded value of 10 units, if the procurement quantity is at least 1

unit and a rounded value of 100 units, if the procurement quantityreaches 70 units. The transaction code to configure is OWD1. The

Rounding profile configuration screen would look something asbelow. The Rounding Profile configured is named as Z001.

8/11/2019 MRP 1 View

15/16

Explanation for the Rounding Profile Z001 -

Further discussing the above example, the rounding profile Z001,

once created can be simulated by pressing the Simulation

button in the configuration screen. The simulation carries arounding 10 Units for a requirement quantity ranging from 1 unit

to 69 Units (Rounding of 10 for requirement quantity of 1 to 10,11 to 20, and 21 to 30 till 61 to 69) and starting from 70 Units to

100 Units we will round to 100 (i.e., if the requirement quantity

from 70 onwards will be rounded to 100 units every time). This

continues in the same pattern as shown by a rounding of 10 unitsfrom 101 to 110 till 161 to 169 and at 170 units it will round to

200 for the range of 170 to 200; so on and forth.

Assembly scrap

It defines the scrap % that is allowed for the material. It is used to

define the scrap % of the header material.

Examples:

If the scrap % is 10% and the requirement quantity is 100, the

planned order will be created for 100 units and the system will adda column in the MRP screen to Mention that 10 is the scrapQuantity to be produced for that material.

The components of the production order or process order areplanned proportionately for manufacturing 110 units.

Maximum stock level

Maximum Stock level is a Quantity of the material in this plantthat may not be exceeded. In materials planning, the maximum

stock level is used only if you have chosenReplenish to maximum

stock level as the lot-sizing procedure; that is, you have enteredHB as the lot size key. Enter a value if you have chosenReplenish

to maximum stock levelas the lot-sizing procedure.

8/11/2019 MRP 1 View

16/16

If you have chosen to work on Maximum stock level then thesystem procures for the maximum stock level quantity and thenadds the Procurement quantity to that.

Examples:

a) If the Maximum Stock level is 500 and the demanded quantity

is 45, then the system creates a planned order of 545, thereby firstensuring the 500 stock is filled up and then the demand quantity is

added to that.

All the site contents are Copyright www.sapsword.com and the content authors. All rights

reserved.

All product names are trademarks of their respective companies. The site www.sapsword.com is

in no way affiliated with SAP AG. Every effort is made to ensure the content integrity.Information used on this site is at your own risk.

The content on this site may not be reproduced or redistributed without the express written

permission ofwww.sapsword.com or the content authors.

Sitemap

Sitemap

Sign in Recent Site Activity Revision History Terms Report Abuse Print page |

Powered by Google Sites