scm production planning

SCM240Production Planning (SAP R/3)

mySAP Supply Chain Management

Date

Training Center

Instructors

Education Website

Instructor HandbookCourse Version: 2004 Q3Course Duration: 5 Day(s)Material Number: 50066127Owner: Bill Welch (i008505)

An SAP Compass course - use it to learn, reference it for work

ContentsCourse Overview ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Course Goals.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .viiCourse Objectives .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Unit 1: Overview of Production Planning in SAP ERP...... . . . . . . . . . . . . . . . . . . . . . . . . . . .1SAP ERP Supply Chain Planning Overview .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Unit 2: Evaluation the Planning Results ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Using the MRP and Stock/Requirements List. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Exception Messages in SAP ERP... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71Days� Supply .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Unit 3: MRP Basics..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95Concept of MRP ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97MRP Types ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104Prerequisites for Running MRP... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119Methods for Executing a planning run .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132Settings in the Planning Run ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151

Unit 4: Demand Management in SAP ERP..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179Overview of Demand Management ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181Make to Stock versus Make to Order ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .190Make to Stock Planning Strategies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196Make to Order Planning Strategies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .224Settings and Customizing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252

Unit 5: Master Production Scheduling ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273Master Production Scheduling ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .274

Unit 6: Influencing the Planning Run ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .295Net Requirements Calculation ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .297Using Buffers in Planning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .307Controlling order quantities in the planning run... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342Multi-Site Planning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367Continuous Input/Output.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .394

2004/Q3 © 2003 SAP AG. All rights reserved. v

Contents SCM240

Unit 7: Technical Process of the Planning Run ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .417Basic Dates Scheduling in the Planning Run .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .419Lead Time Scheduling in the Planning Run .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .438Master Data Selection during the Planning Run.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .460

Unit 8: Multiple Sources of Supply in Planning ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .489Source Determination Overview ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .491Source Determination in Manufacturing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .496Quota Arrangements .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511Source Determination in Procurement .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532

Unit 9: Life Cycle Planning ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .559Discontinuation in Production Planning... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .560

Unit 10: Effects of Inventory in the Planning Run ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .583Stock Types in Production Planning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .584Modeling Quality Inspection in Production planning .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .595

Unit 11: Component Availability ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .615ATP in the Planned order ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .617Configuration of ATP ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .640

Unit 12: Simulating the Production Plan ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .657Long-term planning requirements .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .658

Index ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .697

vi © 2003 SAP AG. All rights reserved. 2004/Q3

Course Overview[Enter a brief overview of the course.]

Target AudienceThis course is intended for the following audiences:

� Consultants Implementing MRP/MPS in SAP ERP� Customers or Users who will be using MRP/MPS on a daily basis

Course PrerequisitesRequired Knowledge

� Working knowledge of the following master data objects in SAP ERP

� Material Masters� Bills of material� Task Lists/Routings� Work Centers/Resources� Master Recipes

Recommended Knowledge

� General understanding of Production Planning process and industry terms� General understanding of SAP ERP applications and the integration to

Production Planning (PP)

Course Duration DetailsUnit 1:Overview of Production Planning in SAP ERPSAP ERP Supply Chain Planning Overview 45 MinutesExercise 1: Overview of SAP ERP Supply ChainPlanning 25 Minutes

Unit 2: Evaluation the Planning ResultsUsing the MRP and Stock/Requirements List 30 MinutesExercise 2: Using the MRP Lists 10 MinutesException Messages in SAP ERP 30 MinutesDays� Supply 25 Minutes

2004/Q3 © 2003 SAP AG. All rights reserved. vii

Course Overview SCM240

Unit 3: MRP BasicsConcept of MRP 20 MinutesMRP Types 40 MinutesPrerequisites for Running MRP 20 MinutesMethods for Executing a planning run 30 MinutesExercise 3: Executing a planning run in SAP ERP 30 MinutesSettings in the Planning Run 30 MinutesExercise 4: Settings in the planning run 20 Minutes

Unit 4: Demand Management in SAP ERPOverview of Demand Management 30 MinutesExercise 5: Managing your Planned IndependentRequirements Minutes

Make to Stock versus Make to Order 10 MinutesMake to Stock Planning Strategies 45 MinutesExercise 6: Using Make to Stock planning strategies 30 MinutesMake to Order Planning Strategies 45 MinutesExercise 7: Make to Order in SAP ERP MinutesSettings and Customizing 50 Minutes

Unit 5: Master Production SchedulingMaster Production Scheduling 25 MinutesExercise 8: Master production scheduling (MPS)and material requirements planning (MRP) 25 Minutes

Unit 6: Influencing the Planning RunNet Requirements Calculation 20 MinutesUsing Buffers in Planning 30 MinutesExercise 9: Dynamic Safety Stock 25 MinutesControlling order quantities in the planning run 45 MinutesExercise 10: Controlling Order Quantities in thePlanning Run 25 Minutes

Multi-Site Planning 30 MinutesExercise 11: Multi-Site Planning 30 MinutesContinuous Input/Output 35 MinutesExercise 12: Continuous Input/Output in thePlanning Run (OPTIONAL) 25 Minutes

Unit 7: Technical Process of the Planning RunBasic Dates Scheduling in the Planning Run 30 MinutesExercise 13: Basic DateScheduling in the PlanningRun Minutes

Lead Time Scheduling in the Planning Run 40 Minutes

viii © 2003 SAP AG. All rights reserved. 2004/Q3

SCM240 Course Overview

Exercise 14: Lead Time Scheduling in the PlanningRun 15 Minutes

Master Data Selection during the Planning Run 20 Minutes

Unit 8: Multiple Sources of Supply in PlanningSource Determination Overview 30 MinutesSource Determination in Manufacturing 30 MinutesExercise 15: Source Determination inManufacturing Minutes

Quota Arrangements 30 MinutesExercise 16: Production Versions and QuotaArrangements Minutes

Source Determination in Procurement 30 MinutesExercise 17: Source Determination in Procurement Minutes

Unit 9: Life Cycle PlanningDiscontinuation in Production Planning 45 MinutesExercise 18: Discontinuation in production planning 25 Minutes

Unit 10: Effects of Inventory in the Planning RunStock Types in Production Planning 30 MinutesModeling Quality Inspection in Production planning 30 MinutesExercise 19: QM lots in Production Planning Minutes

Unit 11: Component AvailabilityATP in the Planned order 45 MinutesExercise 20: Availability Checking in the Plannedorder 25 Minutes

Configuration of ATP 30 Minutes

Unit 12: Simulating the Production PlanLong-term planning requirements 50 MinutesExercise 21: MRP Run 25 Minutes

2004/Q3 © 2003 SAP AG. All rights reserved. ix


Course GoalsThis course will prepare you to:

� Gain an overview of the basic principals of SAP ERP Production Planning� Demonstrate the tools that a production planner would use on a daily basis� Demonstrate how Planning strategies are used to control the planning and

inventory process� Gain detailed working knowledge of:

� Demand Managements (DM)� Materials Requirements Planning (MRP)� Master Production Scheduling (MPS)� Long Term Planning (LTP)

� Demonstrate how to configure MRP in SAP ERP

Course ObjectivesAfter completing this course, you will be able to:


inventory process� Gain detailed working knowledge of MRP/MPS in SAP ERP� Demonstrate how to configure MRP in SAP ERP

SAP Software Component InformationThe information in this course pertains to the following SAP Software Componentsand releases:

Several of the Tasklists for the R-F##, and R-B## at plant 1000 are in German. UseT-Code ZPSL or YILA to translate tasklists from English to German.

Prior to the start of this class CATT ZT_SCM240 must be run in order togenerate the following data:

Configuration

� Change Calendar in Plant 2400 from IT to 01. This allows the R-F1## at 2400 tobe included in a product group to introduce the multi-site planning lesson.

x © 2003 SAP AG. All rights reserved. 2004/Q3

SCM240 Course Overview

Master Data:

Create the Following Material Masters:

� R-F3##/1000� R-F4##/1000� R-F5##/1000� R-F1##/2400

Create BOM and Routings for the Following materiasl copying from the R-F1##/1000

� R-F3##/1000� R-F4##/1000� R-F5##/1000

Chage the following settings to the the mateiral master records

� R-F1##/1000: Strategy 10� R-F2##/1000: Strategy 40� R-F3##/1000: Strategy 50� R-F4##/1000: Strategy 52� R-F5##/1000: Strategy 20� R-F1##/2400: Strategy 40

Creat Product groups Pump-00 thru Pump-30, Include the following settings:

Material Plant Agg Factor ProportionR-F1## 1000 1 20R-F2## 1000 1 20R-F3## 1000 1 20R-F4## 1000 1 20R-F1## 2400 1 20

Create Rough Cut Planning Profile for Pump-## Plant at 1000

Time Span: 20 Days

Base Qty: 1 pc

Status: 4 � Release General

Usage: 1- Production

2004/Q3 © 2003 SAP AG. All rights reserved. xi


From Lot Size: 1 To Lot Size: 999,999,999

work center: R-L## /1000

Running Rate 7 min/pc

xii © 2003 SAP AG. All rights reserved. 2004/Q3

Unit 11 Overview of Production Planning in

SAP ERP

Unit OverviewThis unit will give you an overview of some of the steps that be performed by a supplychain planner using SAP ERP.

Unit ObjectivesAfter completing this unit, you will be able to:

� Outline the steps in the SAP ERP Supply Chain Planning process� Demonstrate knowledge of the different planning techniques in SAP ERP

Unit ContentsLesson: SAP ERP Supply Chain Planning Overview ... . . . . . . . . . . . . . . . . . . . . . . . . . .2

Demonstration: Sales and Operations Planning ... . . . . . . . . . . . . . . . . . . . . . . . . . . .5Demonstration: Display Requirement in Demand Planning .. . . . . . . . . . . . . . . .8Demonstration: Materials Requirements Planning.. . . . . . . . . . . . . . . . . . . . . . . . . 11Exercise 1: Overview of SAP ERP Supply Chain Planning.. . . . . . . . . . . . . . . 15

2004/Q3 © 2003 SAP AG. All rights reserved. 1

Unit 1: Overview of Production Planning in SAP ERP SCM240

Lesson:2

SAP ERP Supply Chain Planning OverviewLesson Duration: 45 Minutes

Lesson OverviewIn this lesson you will get an overview of supply chain planning as it could beimplemented with SAP ERP. This will involve understanding the different steps in theprocess and how they are interrelated.

Lesson ObjectivesAfter completing this lesson, you will be able to:

� Outline the steps in the SAP ERP Supply Chain Planning process� Demonstrate knowledge of the different planning techniques in SAP ERP

The idea of this unit is to give students a high level overview of the entire process.An exercise will be done at the end of the lesson to setup the evaluation unit anddemand management unit.

Business ExampleThe Precision Pump company manufactures and sells pumps. Some manufacturedgoods are produced in-house and the rest are externally procured. As a planningmanager, you need to plan and manage the requirement, sales, and manufacture ofpumps. To do so, you need to evaluate and analyze the SAP ERP solution for SupplyChain Planning. To do this you will identify the different step in the process andcompare them to the functionality in the Production Planning (PP) module of SAPERP.

SAP ERP Supply Chain Planning ProcessAny business that sell products or services typically needs to perform some sort ofplanning process to ensure enough supply is available to support demand. Dependingupon the types of products or services a company offers, or the industry in which theymay compete, the process might be altered slightly.

The overall goal of production planning is to maintain high customer service levelswhile minimizing costs. The process may be adapted based on certain characteristicsof the material during the sales, inventory management or production process.

2 © 2003 SAP AG. All rights reserved. 2004/Q3

SCM240 Lesson: SAP ERP Supply Chain Planning Overview

Figure 1: The Production Planning Process

In the graphic above you can see the different steps that can be used in SAP ERP tostart what is often referred to as the Plan to Inventory process. This process is typicalin a make to stock type of environment, where a forecast, sales plan, or demand plan isrequired to triggered procurement of some nature. This demand can be at the finishedgood, semi finished good, or raw material level.

Sales and Operations Planning (S&OP)The first step in any make to stock process is to derive some type of demand at the plantwith a forecast. This demand plan will be the basis or input in the operational process.S&OP is a strategic process. This typically entails developing a sales plan from anywhere between six to eighteen months or longer, depending upon the industry.



Figure 2: Sales and Operation Planning (S&OP)

The S&OP process is typically made up of a minimum of three steps:

1. Sales Plan2. Production Plan3. Rough Cut Capacity Planning

The sales plan is typically generated using historical consumption (sales) data thenapplied to a statistical model in order to generate a �forecast�. During the first passat creating sales plans, they should be developed without regards to operationalconstraints. This will give the operations team a look at the �true�demand.

The process it self is rough in nature due to the fact the demand is typically created ataggregate levels than what is typically executed. This means that the sales plan maybe created at the regional, division, or product group level. In addition it is oftendeveloped in weekly or monthly buckets of time, compared to the operations teamthat will plan at material and daily level.

When demand is created at a higher level than which inventory is stored, adisaggregation process is required. Disaggregation will require proportional factors orpercentages to ultimately get a �high-level� plan down to the material level.

The first time the production plan is generated, it is typically equivalent to that of thesales plan. This assumes that the operations team will attempt to meet demand as it isplanned by sales. Once the initial production plan is generated, it will be evaluatedusing rough cut capacity planning.



In rough cut capacity planning, planners will identify one or more bottleneck workcenters, and/or several critical materials for which supply is tight. If the capacitycheck identifies overloads then planners will typically adjust the production plan inaccordance with the work centers capabilities. This might typically involve movingproduction forward of the demand in order to build inventory ahead of the capacityconstrained period.

Demonstration: Sales and Operations Planning

Purpose

System DataSystem: SAP ERPClient: 8XXUser ID:Password:Set up instructions:1. SAP ERP menu path: Logistics→ Production→ SOP→ Product Group→

Display (MC85)

2. Enter Product group Pump-## at plant 1000

3. The product group should contain the following data:

Material Plant Agg Factor ProportionR-F1## 1000 1 20R-F1## 2400 1 20R-F2## 1000 1 20R-F3## 1000 1 20R-F4## 1000 1 20

4. Exit Transaction

5. SAP ERP menu path: Logistics→ Production→ SOP→ Planning→ ForProduct Group→ Change (MC82)

6. Enter Product Group PUMP-## at plant 1000 and select the Active version.

7. Enter the following demand starting in the third period:



Period Month 3 Month 4 Month 5 Month 6 Month 7 Month8

Sales 1000 800 1000 900 1000 1100

8. Edit→ Create productn plan→ Synchronous to sales

9. Views→ Capacity situation→ Rough-cut planning→ Show

10. Select Save

11. SAP ERP menu path: Logistics→ Production→ SOP→ Disaggregation→Break Down PG Plan (MC76)

12. Enter Product Group PUMP-## at plant 1000 and select the Active version.

13. Select Create Sales Plan and select Continue

14. Scroll to review the details of the disaggregated sales plan

15. SAP ERP menu path: Logistics→ Production→ SOP→ Planning→ ForProduct Group→ Transfer Product Group to Planning (MC75) enter thefollowing:

Field ValueProduct Group Pump-##Plant 1000Version A00Transfer strategy andperiod

Prod.plan for mat. or PG members as proportionof PG

From/To Leave defaultsInvisible Transfer Leave SelectedRqmts type Leave BlankVersion 00Active Select

16. Select Transfer Now



Demand ManagementDemand management is the link between top-level requirements planning (S&OP)and materials planning (MPS and/or MRP).

Figure 3: Demand Management in Production Planning

Demand management may contain one or more demand programs or versions thatwill help drive the production planning process. Input for the demand programs cancome from one or more sources:

� The Sales Plan or Production Plan from S&OP� A Material Forecast� Manual Entry� Another program Plan� Transferred from SAP SCM

The result of the demand programs are called Planned Independent Requirements(PIRs). Demand management determines the requirements dates and quantities ofthe materials we are planning. Planning strategies are used to determine how thesePIRs will be used during the MPS/MRP planning runs.

Demand Management can be tied into the Sales and Distribution module to ingratesales orders with the planning run. Sales orders can serve as a sole requirementssource, for which procurement is then triggered specifically (make-to-order), ortogether with planned independent requirements, they can create the �total� demand.



Demonstration: Display Requirement in DemandPlanning

Purpose

System DataSystem: SAP ERPClient: 8XXUser ID:Password:Set up instructions:1. SAP ERP menu Path: Logistics→ Production→ Production Planning→

Demand Management→ Planned Independent Requirements→ Change (MD62)

2. Select Product Group and enter Pump-## at plant 1000.

3. SAP ERP menu Path: Logistics→ Production→ Production Planning→Demand Management→ Environment→ Stock/Requirements List (MD04)

4. Enter R-F1## at Plant 1000

Long Term PlanningOver the course of normal business, planners will often be presented with �Whatif......�. Whether the situation be a shift in demand patterns, extensions of existingproduct lines or the creating of new product lines, each situation could present aproblem with available capacity or material availability.



Figure 4: Long Term Planning

In SAP ERP, simulation planning can be obtained through the use of the Long TermPlanning (LTP) module. Long term planning is an optional tool that will allowplanners to simulate demand changes and run a full Materials Planning and CapacityPlanning analysis. These analyses allow planners to identify possible work centeroverloads or issues obtaining semi-finished or raw materials. Long term planning willhave the same capabilities and analysis tools that the operational planners will use toconstantly evaluate the production plan.

Production Planning ProceduresWhen deciding how to use SAP ERP for planing you will need to identify howmaterials behave over the course of time. Certain characteristics will decide howmaterials are going to be handled in SAP ERP Planning runs.



Figure 5: Planning Procedures in SAP ERP

Planning procedures will be typically made at the material/plant level. Thereforeplanners can group products that behave similarly together so that they can usecommon planning techniques.

In SAP ERP there are three main techniques that planners can use to drive theproduction planning process:

� Master Production Scheduling (MPS)� Material Requirements Planning (MRP)� Consumption Based Planning

MPS and MRP will be discussed at great length in this course. MPS/MRP take intoaccount current inventory and any frozen production as a starting point. Then usingfuture planned demand (PIRs) or actual demand (sales orders), trigger a calculationprocess to predict future procurement or need.

In contrast Consumption Based Planning is based on past usage values and uses aforecast to statistical procedure to determine future requirements. Consumption basedplanning is characterized by its simplicity and is mainly used for B and C parts withlow value.



Demonstration: Materials Requirements Planning

PurposeDescribe at an overview level the purpose of MRP

System DataSystem: SAP ERPClient: 8XXUser ID:Password:Set up instructions:1. From the system menu at the top: System→ Create Session

2. SAP ERP menu path: Logistics→ Production→ MRP→ Planning→Single-Item, Multi-Level Planning (MD02)

3. Use the following parameters for the planning run for product groupPump-## atplant 1000:

Field ValueProduct Group SelectedProcessing Key NETCHCreate Purchase Req. 1 - Purchase requisitionsDelivery Schedules 3 - Schedule linesCreate MRP List MRP ListPlanning Mode 1 - Adapt Planning DataScheduling 2 - Lead time schedulingAlso plan unchanged components Select

4. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→Stock/Requirements List (MD04)



Capacity planningThe economic use of resources is an objective for many areas of a company. In recentyears many companies have consolidated facilities in order to obtain a higher rate ofutilization on resources. This trend has caused many companies to place more focuson the creation of a detail plan or a shop floor schedule

Figure 6: Capacity Planning

In SAP ERP this process is called Capacity Requirements Planning (CRP). Thisprocess typically consists of two steps:

� Capacity Evaluation� Capacity Leveling

With capacity evaluation, schedulers are reviewing the results of MPS/MRP and arelooking for any time periods in which certain work centers may have more productionplanned than can be actually executed. This is called an overload.



When and overload has been identified the production scheduler begins reschedulingthe orders based on additional planning criteria. This may include performing finitescheduling to ensure that the resource is not overloaded, or performing an optimizationrun to improve the schedule by grouping like production runs together to reducethe amount of setup time between jobs.

Note: Capacity planning in SAP ERP can occur in:

� SOP� After MPS� After MRP� With Production and Process orders� Long Term Planning

The result of CRP will be a detailed schedule that will be issued to the shop floor.This schedule will instruct production management of the sequence and prioritiesof the production.

Shop Floor ControlOnce a shop floor scheduled has been created and issued, the next step is execution,or shop floor control. In SAP ERP, companies will have several options to choosefrom on how they wish to execute and track production.

Figure 7: Production Execution



The graphic above identifies four types of execution process in SAP ERP:

� Repetitive Mfg (REM)� Production Orders� Process orders.� Project systems

Repetitive Manufacturing is the simplest form of execution. This is often used forless complicated products that are made several times a week/month, or endure longproduction runs while receiving production continuously. This type of execution isoften used in consumer products or the chemical industry. With this type of executionprocess communication between scheduling and execution must remain tight, but thecontrol of the process remains simple. The shop floor will use planned orders tocommunicate production runs, and production will be tracked on a material basisnot an order basis.

Production orders are typically used in a more complicated manufacturing process.Complex products typically require a higher degree of control on the productionfloor. With production orders, companies can control and track the production processthrough the uses of order status. The production orders also act as a cost and datacollector for each production run. This allows management to review each productionrun if necessary, for efficiency and profitability.

Process orders are used more often in regulated industries. Process orders are verysimilar to production orders in that they act as a cost and data collector for eachproduction run. However, industries like pharmaceuticals and food require tightercontrols and tracability. Process orders have a tighter integration with EngineeringChange Management (ECM) and can develop electronic batch records of eachproduction run to give details of every step of the production process.

Project Systems (PS) is often used in Engineer-to-Order industries. This would beapplicable in construction and aero space and defense to name a few. Project systemsprovides tight control and accounting for long extremely complex manufacturing.Using a Work Break down structure and activities tied to production orders, allowscompanies to tie several levels of production or services together for better supervisionand cost control.



11 Exercise 1: Overview of SAP ERP SupplyChain PlanningExercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Create a high level sales and production plan for your Product group Pump-##� Transfer a production plan at the product group level to the material level� Execute MRP to initiate a procurement plan

Business ExampleAs a senior planner, you must be able to explain how SAP ERP will be used to modelyour entire production planning process. Enter a simple sales plan in S&OP andrun it through a simplified production planning process to get a basic overview ofthe functionality.

System DataSystem: SAP ERPClient: 8XXUser ID:Password:

CATT: Z_SCM240Set up instructions:

1. CAT ZSCM240 Must be run prior to executing this exercise

Task 1: Create a Sales and Operations Plan in SAP ERPTo better understand the SAP ERP production planning process, we will create a salesplan for one of your pump product groups. You will then release the sales plan todemand management as the demand plan, which will drive the MRP/MPS processfor IDES.

1. A product group Pump-## has been created for you at plant 1000 to representthe materials that you will be responsible for planning. Display your productgroup and fill in the table below:

Continued on next page



Material Number Plant Proportion

2. Create /Change a sales plan for your product group PUMP-## at plant 1000 inthe active version (A00). Enter the following demand starting in the third period:


Sales 1000 700 800 900 1000 1100

3. Create a production plan that equals the sales plan

4. View the rough cut capacity to see if your demand is going to cause any potentialcapacity overloads, at work center R-L##, at any point within the planninghorizon.

5. Save your plan

Task 2: Planned Independent RequirementsOnce a sales and production plan is complete at the strategic level, it must betransferred to the operations level were it can be viewed at the material level. Oncedemand is active in demand management, it can be used to drive the MPS/MRPprocess.

1. Now that you have created a high level or rough production plan for your productgroup, PUMP-## at plant 1000 for version A00, disaggregate and release theplan, to the locations, at the material level using the product group�s proportions.

2. Now that demand has been disaggregated and transferred to the material level,review the planned independent requirements in demand management. Fill outthe following table based on the results of your transfer:




Mat. Plant Ver. P1 P2 P3 P4 P5 P6

3. Now that you have transferred demand from the strategic high-level plan, downto a tactical material level, use the stock requirements list to review what thetransfer has actually accomplished for your material R-F1## at plant 1000:

4. What is your current planning situation?

Task 3: Material Requirements PlanningAfter releasing the production plan from the S&OP process, you have populateddemand management with planned independent requirements. These requirements arecausing negative inventory. Using material requirements planning, you will create aprocurement plan for product R-F1## .

1. After reviewing the stock/requirements list, it is obvious that demand isexceeding supply. In a second session, run a single-item, multi-level MRP runfor R-F1## at plant 1000. Use the following parameters for the planning run:

Field ValueProcessing key NETCH

Create purchase req. 1 - Purchase Requisitions

Delivery schedules 3 - Schedule lines

Create MRP list MRP List




Field ValuePlanning mode 1 - Adapt Planning Data

Scheduling 2 - Lead time schedulingand capacity planning

Also plan unchanged components Select

2. Now that a MRP run has been executed, review the stock requirements list, forR-F1## at plant 1000, to determine if the planning situation has changed.

3. What has changed as a result of the MRP run?



Solution 1: Overview of SAP ERP SupplyChain PlanningTask 1: Create a Sales and Operations Plan in SAP ERPTo better understand the SAP ERP production planning process, we will create a salesplan for one of your pump product groups. You will then release the sales plan todemand management as the demand plan, which will drive the MRP/MPS processfor IDES.

1. A product group Pump-## has been created for you at plant 1000 to representthe materials that you will be responsible for planning. Display your productgroup and fill in the table below:

Material Number Plant ProportionR-F1## 1000 20R-F1## 2400 20R-F2## 1000 20R-F3## 1000 20R-F4## 1000 20

a) SAP ERP menu path: Logistics→ Production→ SOP→ Product Group→ Display (MC85)

b) Enter Product group Pump-## at plant 1000

2. Create /Change a sales plan for your product group PUMP-## at plant 1000 inthe active version (A00). Enter the following demand starting in the third period:


Sales 1000 700 800 900 1000 1100

a) SAP ERP menu path: Logistics→ Production→ SOP→ Planning→ ForProduct Group→ Change (MC82)

b) Enter Product Group PUMP-## at plant 1000 and select Active version.

c) Enter the demand as indicated in the table above.




3. Create a production plan that equals the sales plan

a) Edit→ Create productn plan→ Synchronous to sales

4. View the rough cut capacity to see if your demand is going to cause any potentialcapacity overloads, at work center R-L##, at any point within the planninghorizon.

a) Views→ Capacity situation→ Rough-cut planning→ Show

Note: Any production overloads would manually be addressed bydecreasing or increasing production to keep the capacity loadunder 100%.

5. Save your plan

a) Select Save




Task 2: Planned Independent RequirementsOnce a sales and production plan is complete at the strategic level, it must betransferred to the operations level were it can be viewed at the material level. Oncedemand is active in demand management, it can be used to drive the MPS/MRPprocess.

1. Now that you have created a high level or rough production plan for your productgroup, PUMP-## at plant 1000 for version A00, disaggregate and release theplan, to the locations, at the material level using the product group�s proportions.

a) SAP ERP menu path: Logistics→ Production→ SOP→ Planning ForProduct Group→ Transfer Product Group to Planning (MC75) enter thefollowing:

Field ValueProduct group Pump-##Plant 1000Version A00Transfer strategy and period Prod.plan for mat. or PG members as

proportion of PGFrom/To Leave defaultsInvisible Transfer Leave SelectedRqmts type Leave BlankVersion 00Active Select

b) Select Transfer Now, to transfer the product group�s production plan to thematerial level in Demand Management.

2. Now that demand has been disaggregated and transferred to the material level,review the planned independent requirements in demand management. Fill outthe following table based on the results of your transfer:

Mat. Plant Ver. P1 P2 P3 P4 P5 P6R-F1## 1000 00 200 140 160 180 200 220R-F1## 2400 00 200 140 160 180 200 220




Mat. Plant Ver. P1 P2 P3 P4 P5 P6R-F2## 1000 00 200 140 160 180 200 220R-F3## 1000 00 200 140 160 180 200 220R-F4## 1000 00 200 140 160 180 200 220

a) SAP ERP menu Path: Logistics→ Production→ Production Planning→Demand Management→ Planned Independent Requirements→ Change(MD62)

b) Select Product Group and enter Pump-## at plant 1000. Select Enter.

c) Select the Table tab to review the period details of all materials.

d) Exit the Planning Table.

3. Now that you have transferred demand from the strategic high-level plan, downto a tactical material level, use the stock requirements list to review what thetransfer has actually accomplished for your material R-F1## at plant 1000:

a) SAP ERP menu Path: Logistics→ Production→ Production Planning→Demand Management→ Environment→ Stock/Requirements List (MD04)

4. What is your current planning situation?

Answer: Current inventory balance is Zero (0). The independent requirements,from the production plan, are causing a negative available balance. Theserequirements which are acting like a demand plan, will drive production planningat the material level.

Task 3: Material Requirements PlanningAfter releasing the production plan from the S&OP process, you have populateddemand management with planned independent requirements. These requirements arecausing negative inventory. Using material requirements planning, you will create aprocurement plan for product R-F1## .

1. After reviewing the stock/requirements list, it is obvious that demand isexceeding supply. In a second session, run a single-item, multi-level MRP runfor R-F1## at plant 1000. Use the following parameters for the planning run:






Field ValueDelivery schedules 3 - Schedule lines


Planning mode 1 - Adapt Planning Data

Scheduling 2 - Lead time schedulingand capacity planning


a) From the system menu at the top: System→ Create Session

b) SAP ERP menu path: Logistics→ Production→ MRP→ Planning→Single-Item, Multi-Level Planning (MD02)

c) Select Enter twice to execute the run.

d) Select Back twice to return to the main menu

2. Now that a MRP run has been executed, review the stock requirements list, forR-F1## at plant 1000, to determine if the planning situation has changed.

a) SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→Stock/Requirements List (MD04)


Answer: As a result of MRP, a planned order has been created to cover eachplanned independent requirement. This results in a zero inventory balance aftereach requirement.NOTE: due to different working days in each month, during some teaches thefirst planned order may be late.



Lesson Summary

You should now be able to:� Outline the steps in the SAP ERP Supply Chain Planning process� Demonstrate knowledge of the different planning techniques in SAP ERP


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Outline the steps in the SAP ERP Supply Chain Planning process� Demonstrate knowledge of the different planning techniques in SAP ERP


SCM240 Test Your Knowledge

21Test Your Knowledge

1. Define Sales and Operations Planning?

2. Standard SOP is the only functionality provided to support this process.Determine whether this statement is true or false.□ True□ False

3. How may demand be provided to the SOP tool?Choose the correct answer(s).□ A Statistical forecast□ B Manually entered□ C Copy from COPA□ D Copy from Sales info System□ E All of the above

4. Why is shop floor control important in the planning process?


Test Your Knowledge SCM240

22Answers

1. Define Sales and Operations Planning?

Answer: SOP is typically a monthy process where representatives from variousareas of the company meet and review the supply and demand situation from avery high level (typically at the product group level).

2. Standard SOP is the only functionality provided to support this process.

Answer: False

Flexible planning may also be used.

3. How may demand be provided to the SOP tool?

Answer: E

All of the above are valid.

4. Why is shop floor control important in the planning process?

Answer: It provides the latest information to the planning tools as to whathas actually occured.


Unit 223 Evaluation the Planning Results

Unit OverviewThis unit will introduce you to the tools that would be used on a day to day basisduring the planning process. You will customize some of the views that speed uptasks in later units.


� Demonstrate how to use the MRP and Stock Requirements List for use in dayto day planning.

� Describe the differences between the MRP List and Stock Requirements (S/R)list

� Explain how exception messages are used in the production planning process� Demonstrate how to configure exception messages.� Interpret day�s supply and receipt day�s supply

Unit ContentsLesson: Using the MRP and Stock/Requirements List . . . . . . . . . . . . . . . . . . . . . . . . . 31

Demonstration: Navigating the Stock Requirements list . . . . . . . . . . . . . . . . . . . 35Procedure: Navigating the Stock Requirements list . . . . . . . . . . . . . . . . . . . . . . . . 37Demonstration: Changing MRP Elements in the Stock Requirementslist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Demonstration: Navigate the Overview Tree .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42


Unit 2: Evaluation the Planning Results SCM240

Demonstration: Order Report .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Demonstration: Pegged Requirements.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Demonstration: Navigation Profiles .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Demonstration: Collective Access to MRP Lists and Stock/RequirementsLists .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Exercise 2: Using the MRP Lists .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Lesson: Exception Messages in SAP ERP... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71Demonstration: Use of Exception messages ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76Procedure: Using Exception Messages .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Demonstration: Exception Message Configuration .. . . . . . . . . . . . . . . . . . . . . . . . 79

Lesson: Days� Supply .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83Demonstration: Days� Supply and Receipt Days� Supply ... . . . . . . . . . . . . . . . 86


SCM240 Lesson: Using the MRP and Stock/Requirements List

Lesson:24

Using the MRP and Stock/Requirements ListLesson Duration: 30 Minutes

Lesson OverviewIn this lesson, you will learn about the usage of Material requirements planning (MRP)List and Stock/Requirements List and it�s functions. In addition, you will learn how tocollectively access the both result lists.


� Demonstrate how to use the MRP and Stock Requirements List for use in dayto day planning.

� Describe the differences between the MRP List and Stock Requirements (S/R)list

Processing the MRP results usually follows a total planning run. The aim is tomanually process problem situations, which have led to the creation of exceptionmessages. The typical tools for this manual processing are the stock/requirements listand the MRP list with their respective collective accesses. Alongside the exceptionmessages, these lists offer a range of functions for processing the planning results:Rescheduling data, firming, evaluation functions such as order report or peggedrequirements, days� supply and receipt days� supply.

Business ExampleAs a production planner, you need to ensure that the production plan generated bythe SAP ERP system, meets the demand requirements. In order to do this you need atool that will help you manage problems with the production plan, and give detailedinformation as to the supply and demand situation. Explore the MRP List andStock/Requirements (S/R) List as an option for managing the production plan.



Planning Run List EvaluationsAs a result of a planning run in SAP ERP, a production and procurement schedule willhave been created. The planning run will have generated the following items:

� Planned orders� Purchase requisitions� Schedule Lines� Stock Transfer Requests� Material Transfers� Dependent Requirements� Exception messages

Planners will require a tool that will allow them to view the results and to identifyif any problems have occurred. Prior to the initiating the planning run a planner candecide if they want an MRP list to be generated to display the results of the planningrun. The MRP list will be created at the Material/MRP Area/Plant level. The MRP listalways displays the supply and demand situation at the time of the last planning runand it also provides a work basis for the MRP controller. Changes that are made afterthe planning date are not taken into consideration, so the list is static. MRP lists arestored in the system until they are either deleted manually or replaced by new listsfrom a subsequent planning run.

While the MRP list is a result of the planning run, a real evaluation tool is available inthe Stock/Requirements (S/R) list. The structure of the lists are very similar in nature.Each list will have it�s own unique attribute to display the relevant information forwhich it was designed; Static or Real time.



Figure 8: MRP List and Stock/Requirements (S/R) List Layout

The MRP list and S/R lists are made up of several different components to which theuser can navigate to at any time:

� Material Header� Material Header Details (Dynamic)� Material Tree (Dynamic)� MRP Elements� Period Totals (Dynamic)

The material header will identify which material/location is being viewed as wellas the unit of measure. The header details are dynamic, and can be turned on or off.These details refer to information about the material master or planning statisticsthat were a result of the last planning run.

The overview tree is used for toggling between various material numbers selected bythe user. If users access the the collective list and select several materials, all materialswill appear in the tree. If a user access�s the MRP list using a product group, the listwill contain all the members of the product group.

The MRP Elements section will give the details about the supply and demandsituation. An MRP Element is a term for all objects displayed as items in the MRP listor in the S/R list. Such objects include planned orders, purchase orders, reservations,and sales orders. The MRP Elements are listed individually by day. By selecting any



MRP element and pressing the F1 key, users can get a list of all the MRP elementsused by SAP ERP. MRP Elements are created on the basis of the supporting masterdata. Not all MRP Elements will be applicable for a material.

The period totals display will aggregate the MRP elements to a larger bucket oftime, by summarizing the same MRP elements for the same day/week/month or userdefined period.

The basic structure of both lists is the same:

Figure 9: Planning Segments

The MRP and S/R list is divided into various planning segments. This means thatrelated MRP elements are also displayed together. Depending upon which planningstrategy(s) are being used the list reports might be broken down into several segments.For example in a make-to-order scenario, each order and its associated inventorywill be planned separately from any other inventory or order. The individual stocks,receipts, and issues are displayed and planned within the appropriate segment. TheMRP calculation takes place within the individual segments.

Within each segment, the system will display the receipt first, followed by therequirement. If a receipt will be late then it will show up after the requirement, andtypically, exception messages will appear describing any issues with the plan.



Variable HeadersThe header details of the List reports contain additional data for the planning run. Inparticular, they contain the number of exception messages that have occurred duringthe planning of a material (MRP List Only). You define the display of the headerdetails for the MRP evaluations in the Customizing IMG activity �Define screensequence for header details�. Using the IMG menu path Production→ MRP→Evaluation→ Define Screen Sequence for Header details , companies can createthere own sequence of headers.

The header details show an overview of master data and transaction data for eachmaterial. This data is grouped together according to topic in individual screens.TheMRP type controls the screens that are displayed in the requirements planningevaluations. For this, the screen sequences have a key that is assigned to theMRP type. Therefore, you can display different master data for the evaluation ofconsumption-based materials than for planning-based materials.

Demonstration: Navigating the Stock Requirements list

Purpose

System DataSystem:Client:User ID:Password:Set up instructions: Exercise from Lesson Production Planning overview mustbe complete.

CATT Z_SCM240 should be run to generate master data.

1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→ Stock/Requirements List

2. Enter Material R-F1## at plant 1000 and press ENTER

3.

Caution: To show the Material header information select ExpandHeader details.

4. To show the MRP elements in an Aggregated time bucket select Switch toperiod totals and select the tab with the correct period of aggregation.



5. Select Switch to individual lines.



28Navigating the Stock Requirements list

1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→ Stock/Requirements List


3. To show the Material header information select Expand Header details.

4. To show the MRP elements in an Aggregated time bucket select Switch toperiod totalsand select the tab with the correct period of aggregation.

5. Select Switch to individual lines.

Functions of the MRP listOnce in the MRP list a planner can use the data displayed to make intelligent businessdecisions. In addition to displaying information, the MRP list is interactive and cancarry out several functions.

Figure 10: Functions of the MRP List

Once inside the List reports, users can create/change the material memo. This is aworking script of notes regarding the material. In the List reports, the material memowill be marked with whom ever has updated the memo last and the date it was lastchanged.



Each MRP element can be viewed in more detail. By selecting Details of Element,users can view more summary information about the specific MRP element. In

addition it will give the user additional options to possibly Change or Displaythe element. Depending upon which element is chosen other options are availablesuch as converting a planned order to a production order, partially converting to aproduction order, convert to a process order, or convert to a purchase requisition.

Over time planners will make changes to the plan that should be documented. Thismay be required to adhere to company wide accountability standards. By selecting the

Material Memo icon, users can leave long text notes, which will be cumulatedover time. After saving the material memo, the icon will show who and when lastchanged the long text on the material memo.

Users can also access the following functions:

� Change/Display Material master� Display ATP Quantities� View Stock/Sales Statistics� Compare results to Long Term Planning

Demonstration: Changing MRP Elements in the StockRequirements list

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→ Stock/

Requirements List


3. Select the first Planned order and Double click or select Details of element

then select Change element



4. Select the first planned independent requirement and select Details of

elementthen select Change element

5. In the material field, replace R-F1## with R-B1## and press ENTER

6. Select Details of element, for the first dependent demand and display theparent planned order number

7. In the material field, replace R-B1## with R-T1## and press ENTER

8. Select Details of element, for the first purchase Requisition.

9. Demonstrate changing the material master. From S/R List Menu Path:Environment→ Change Material

List Report Display StructureThroughout the course of a day planners will have to review the supply and demandsituation as it relates to several materials. Depending upon how the user enters the listreports, they may have access to a tree structure on the left side of the screen that willmake navigating between materials easier.

Displaying the material tree is optional. Upon entering either list report, the overviewtree can be accessed by selecting Show Overview tree button.

You can change the layout of the tree and display the following:

� Worklist tree� Order tree� Product group tree

After accessing one of the lists, each user can set the overview tree to appearautomatically. To set the overview tree to appear automatically, users must selectSave Settings, and in the Display tab select Overview Tree Displayed option.

Caution: This setting will be relevant for both the MRP List and the S/R list.



Figure 11: Overview Tree

The worklist tree displays all materials in the current session. When accessing thelist through the collective process, all materials that were selected are displayed.Otherwise as you type over the material number, the new product will be added tothe worklist. The work list can be customized by each user. You can set in whichorder the fields are to be displayed. User-specific definitions for the traffic lightsare also possible. User-specific sortings and groupings, such as according to theprocessing indicator, are possible. You can search for specific materials accordingto exception messages.

You can display the stock/requirements list or MRP list for a material bydouble-clicking on the material in the tree.



Figure 12: Order Tree

The order tree will display the individual component requirements for the selectedorder or requirement are displayed on several levels. By selecting the planned order in

the MRP Elements section, and selecting Order Tree, the multi level order willbe displayed. In addition to the order details, exception messages and information willappear to the right of the material number. By selecting the line dividing the tree fromthe MRP elements a user can re-size the window and see more order information.

Note: As of SAP ERP release 4.7, it is possible to now view order networkexceptions. These messages are generated and placed at the top assembly ifthere is an exception at a lower level.

When you navigate in the order tree, by selecting a material the correctstock/requirements list or MRP list is displayed in the MRP Element area, and theelement involved in the order report is highlighted. This way, you can quickly get anoverview of the stock situations at all levels of the order structure.

The product group tree will only appear if users have accessed the collective listsand used Product group as the selection criteria. By selecting a particular material, theMRP Elements section will display the supply and demand situation.



Demonstration: Navigate the Overview Tree

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→

Stock/Requirements List


3. Display the order tree, by selecting the first planned order and then selectSet Up Order Structure.

4. Double click on several of the components, in the tree structure, to show theMRP elements changing and the element being highlighted in blue.

5. Show students the MRP exceptions. Move your cursor just to the right of the�alert� icons to get the quick info on the exceptions.

6. Show the worklist tree by selecting Work list.



Order Report

Figure 13: Order Report

The evaluation �Order report� enables you to gain an overview of the status of allBOM levels from the list of MRP elements: Sales order, production order includingcollective and process order, and planned order. In doing so, you can recognizeproblems in the production and procurement of assemblies and components at anearly stage.

You access the transaction directly from the stock/requirements list or the MRP list.

The system determines the receipt elements that are planned for each MRP element.The MRP controller checks how the production of a certain sales order is progressingor if there are missing parts or scheduling problems on a certain BOM level or forcertain components.

The receipt elements are color coded. This enables the MRP controller to foreseepossible future problems on subordinate BOM levels:

� Red: There are exception situations on subordinate BOM levels.� White: The requirement is covered by warehouse stock on the subordinate

BOM levels.� Green: Receipt elements have been created on subordinate BOM levels, yet

no exception situations exist.� No color coding: You cannot explode the receipt element any further.



Demonstration: Order Report

PurposeTo demonstrate Order Report/Order Tree/Pegged Requirements




3. Display the order tree for the first planned order. Select the first planned order,

and select Order Report.

4. Drill down to show the details of the report by selecting Open all lines.

5. Double Click on the planned order to see the dependent requirements.

6. Call the list of the component R-T1##. Call the pegged requirements for the firstrequirement in the list and reproduce the path to the order.



Pegged Requirements Report

Figure 14: Pegged Requirements

You can use the evaluation �Pegged requirements� ( you can access this directly fromthe stock/requirements list and MRP list) to trace from any BOM level on a multilevelbasis which requirements have caused an order proposal and which independentrequirements (particularly sales orders) are affected by the change in date or quantityof an order proposal on a lower level.

In SAP ERP 4, you can navigate from the requirements element directly to thepegged requirement on the level above in the stock/requirements or MRP list. Thesystem displays the stock/requirements or MRP list of the superordinate level andautomatically positions the cursor on the correct line of the pegged requirement. Thismakes it much easier to find pegged requirements on different MRP levels. Youcan call up this function from the details display of the requirements element. Thefunction is available for the requirements, such as dependent requirements, orderreservations, stock transfer requirements, and stock transfer reservations.

Demonstration: Pegged Requirements

PurposeTo demonstrate Order Report/Order Tree/Pegged Requirements





2. Enter Material R-T1## at plant 1000 and press ENTER

3. Display the pegged requirements report for the first purchase req/planned order.

Select the first purchase requisition or planned order, and select PeggedRequirements.

4. This report shows the origin of the requirement at the top of the order structure.

5. Select Order Route to see the trail of requirements as it blew through the billof material.

6. To see and order graphic chart, select Back, then select Graphic.

Advanced Functions of MRP and Stock/RequirementsList

Navigation profile

The navigation profile function is enhanced by the possibility of defining your ownfavorites. See notes : Changeability of Customizing Tables in the Production Systemand Authorization for Maintenance of Own Favorites, for maintaining favorites.

Customizing: Production→ Material Requirements Planning→ Evaluation→Define Navigation Profiles

Over time Planners will find the stock requirements list invaluable due to the amountof information that it contains as it relates to supply and demand. However, plannersare often put into a situation where others in the business will asked for data related tocertain MRP elements. As of SAP ERP release 4.6, users can now filter and selectwhich MRP elements can be viewed and used in the available quantity calculation.



Figure 15: Display Filter and Selection Rule

Display filters are used in the Stock/Requirements list and in the MRP list. This isa display function, and display filters have no influence on the MRP elements thatare used in the calculation of the available quantity. You define display filters in theCustomizing IMG: Production→ MRP→ Evaluations→ Filter→ Define DisplayFilter . In the configuration of the display filter users can choose:

� which MRP elements are displayed� of the MRP elements that you select, and that are procurement proposals

(planned order, purchase requisitions, schedule lines), whether only the firmedelements are displayed

� which MRP segments are displayed� which period (display horizon) is displayed You either directly define the display

horizon or allow the user to make the setting in the respective transaction.� whether the MRP elements selected should be further limited using certain

additional selections (for example, customer, vendor, storage location) Youeither define these additional selections directly or allow the user to define themin the respective transaction

The filters can be accessed in either of the lists by selecting Filter On. This willallow users to choose the selection filter that fits the particular requirements. To turnthe filter off users can select a �blank� filter with no limitations or select Filteroff to remove the filter.



Selection rules apply to the stock/requirements list only. You define which MRPelements are displayed and which of these elements are used in the calculation of theavailable quantity. Selection rules enable the analysis in the stock/requirements listof various planning situations that are different with regard to the MRP elementstaken into account. Selection rules have no influence on the requirements calculation.You define these in the Customizing: IMG Production→ MRP→ Evaluations→Filter→ Define Selection Rules.

In detail, you define

� which MRP elements are selected to set up the respective evaluation list and/orto calculate the quantity available and the ranges of coverage

� do not consider: the element is not displayed and is not used to calculatethe quantity available and the ranges of coverage

� display: the element is displayed but is not used in the calculation� show affecting availability: the element is displayed and is used in the

calculation� which stocks are used to calculate the stock available� whether schedule lines in the display are replaced by the more current forecast

delivery schedules or JIT delivery schedules� whether dependent requirements and dependent reservations for bulk materials

are displayed and, if necessary, also calculated� which period (selection horizon) should be represented. You determine the

selection horizon either directly or allow the user to make this setting in therespective transaction

You define whether selection rules and display filters are to be used when accessingthe list. This is done by choosing the indicator �With filter� in the initial screen, or bychoosing the �Filter on� icon in the list, or in the user-specific settings.

Due to its important content planners will use the List reports several times a day. Dueto it�s frequency of use, as of SAP ERP release 4.6, the list reports can be customizedby each user. Through users settings, planners will be able to add their own iconbuttons to jump to the most well used transactions for certain types of materials.



Figure 16: Navigation profile

Each user can be assigned a navigation profile. A navigation profile containstransaction calls for transactions that can be called directly from the stock/requirementslist or the MRP list. The transactions are either general, which means actions at thematerial level, or they refer to a particular MRP element (planned order, dependentrequirement).

A navigation profile is defined in Customizing Production→ MRP→ Evaluations→Define navigation profiles, and the user is assigned to a profile in the user-specificsettings on the General Settings tab page.

In a navigation profile, you can determine any number of transaction calls. However,the display in the list is limited to five general transaction calls and two transactioncalls per MRP element. The system always displays the first five or first twotransaction calls that are relevant for the context.

For each transaction call, you can preassign three parameters for the initial screenof the transaction. You can also connect the offering of a transaction to certainparameters from the material master, such as procurement type, material type, MRPgroup, and MRP type.

A function similar to the navigation profiles is available with the selection of personalfavorites where you can also activate up to five general transaction calls. To do this,choose Environment - Own favorites. In addition, you can activate two favorites perMRP element as transaction calls. For this, choose the * button in the details forthe MRP element.



Caution: During the user-specific maintenance of own favorites in thestock/requirements list and MRP list, users may not have the correspondingauthorization. However, also users who have generally no table maintenanceauthorization should be able to maintain these tables in the requirementsplanning.

Authorization group �MCMD� is assigned to the affected views. Thisauthorization group refers to authorization object �S_TABU_DIS� and is, ingeneral, assigned to the tables and views of the MRP Customizing. Therefore,users who have no general authorization for the table maintenance in MRP donot have this authorization group.

If it is required that also users who are not allowed to maintain the othertables should be able to maintain entries for their own favorites, a separateauthorization group should be created for this and assigned to these users.In order to create the authorization group for the affected views proceedas follows:

1. With the ABAP Dictionary (Transaction SE11), call up the tablemaintenance generator for views V_U444B and V_U444C (Utilities-> Table maintenance generator).

2. Here, choose �Environment -> Authorization -> Authorization groups�.3. Create a new authorization group for authorization object

�S_TABU_DIS� using �New entries�.4. Return to the previous screen and here replace entry �MCMD� by your

new authorization group in field �Authorization group�.5. Save your change.6. Assign this authorization group to the corresponding user profiles.

See note 501318 - MD04: Authorization group for maintenance of ownfavorites, for more information.



Figure 17: Settings that Can Be Made Individually

You can use your personal settings to specify a number of default display options forthe stock/requirements list and the MRP list.

Your personal settings, as well as your �Own favorites� in Environment - OwnFavorites, determine the screen that appears when accessing the lists. From the lists,you can change the various settings at any time. For example, you can show or hidethe overview tree.

You define the screen sequence of the header details in Customizing for the MRP type.

A user exit for showing user-specific categories is available.

As of SAP ERP 4.6, you can set the indicator Buffered Reading of Order Report/Treein the general settings of the stock/requirements list. If you set the indicator, stockand requirements situations on the individual MRP levels are buffered in the memorywhen the order report or tree is being compiled. This ensures that subsequent calls ofthe order report and tree can be carried out much faster.

Demonstration: Navigation Profiles

PurposeTo demonstrate Navigation Profiles in the List reports





2. Enter Material R-T1## at plant 1000 and press ENTER

3. Select Save Settings .

4. Scroll through the tabs and select the General settings Tab.

5. In the Navigation profile field select SAPPPMRP00 - MRP Controller.

6. Select Save and enter through any informational messages.

7. Discuss the changes in the application toolbar.

8. Add the Stock Overview Report to your own favorites.

Collective Access to MRP and Stock/Requirements ListAfter a planing run is completed, every planner will have the same question, �Wheredo I start�? Due to the amount of materials most planners are responsible for, it isimpossible and illogical to review the results of every material. Therefore, after theconclusion of every � batch�planning run, planners will review the collective listreports to derive the situation that warrants the highest attention. From there plannerswill work through the less severe problems until the next planning run.



Figure 18: Collective Access to MRP List and Stock/Requirements List

Both the MRP List and the Stock/Requirements list can be collectively accessed toreview a large number of materials. Users, will typically use broad selection criteria togather large amounts of information. For example, you can display all the lists forwhich you are responsible as MRP controller.

Note: Each list report will have a different method of selecting materials,based on the situation that will presented to the planner, real-time versusstatic data.

First, a material overview is displayed with all of the selected materials. If youhave set the �Set up lists in background� indicator, the following are available asorientation help: Traffic lights, various search functions in the overview and in theindividual lists, and sort functions for individual customer segments by date ornumber. You can use the search function to specifically select materials according toparticular exception messages.

You can make user-specific definitions for the display of traffic lights according today�s supply violations or exception groups. You can also define user-specific sortcriteria.

Note: As of release 4.6, users can not save the sort criteria as �user-specific�settings.



From the overview, you can branch to the individual lists and process the materialsthere. If you have used the search function to select several lists for processing, youcan go from one list directly into the next selected list. The selection criteria forcollective access in the MRP lists are not the same as those in the stock/requirementslists. Here, the MRP or processing date and/or the processing indicator for theselection are available. The orientation guides in the material overview correspondwith those in the stock/requirements list. It is also possible search for processingindicators or new exceptions.

In the material list of the collective display of the stock/requirements list (TransactionMD07) or the display of the MRP lists (Transaction MD06), the system sorts amongother things according to the criterion �Traffic light�. The following sequence isdisplayed:

Ascending order: Red - green - yellow

Descending order: Yellow - green - red

The following sequence is expected: Ascending: Red - yellow - green Descending:Green - Yellow - red

The unexpected sort sequence only occurs in systems which use an EBCDIC characterset, for example, with operating system OS/400. With an ASCII character set, thesystem sorts as expected.

To achieve the required sort sequence with an EBCDIC character set, you canimplement the following modification. Here, the previous icon for the red traffic lightis replaced with a different icon. This is not a correction in the standard system!

Note: See SAP Note : 509928 - MD07/MD06: Sorting according to trafficlight, for more details or updates.

Demonstration: Collective Access to MRP Lists andStock/Requirements Lists

PurposeTo demonstrate collective access to MRP lists and stock/requirements lists

System DataSystem:Client:



User ID:Password:Set up instructions:

Note: The two collective accesses have different selection screens. However,you do not have to explain every individual field.

1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→ MRPList - Collective Display (MD06)

2. Select your MRP controller 0## at plant 1000.

3. In the initial screen of the collective MRP list , display and explain the variousselection parameters:

� MRP controller� Product group� MRP date� Exception groups� Processing indicator, only in MRP lists� Material data

4. Select the Exception groups Tab, and select all exception groups and select

Continue (Enter)

5. In the Material List, point out the settings and functions of the traffic lightsand the sort and search functions. Select Define Traffic Light and explain tothe students the concept of sorting.

6. Select Sort. Sort the list by traffic light in ascending order.

7. Select several materials and select Selected MRP lists

8. Using the Overview tree or the �Next/Previous Materials� icons, scroll throughthe list of materials.



43 Exercise 2: Using the MRP ListsExercise Duration: 10 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Use the display filter and the selection rule� Use the collective display of Materials Requirement Planning (MRP) lists� Use the processing indicator

Business ExampleYour batch planning run has just been completed therefore you need to processthe results and resolve any issues. You process the MRP lists of the materials forwhich you are responsible as MRP controller and which were created this week.You concentrate on situations for which rescheduling proposals exist. After havingclarified the situation in production, you change the scheduled dates of the plannedorders according to the rescheduling proposals that are in the MRP list.

System DataSystem: SAP ERP 4.7 x 2.00Client: 8XXUser ID: SCM240-##Password:

CATT: Z_SCM240Set up instructions:

1. The production Planning overview exercise must be completed before any ofthese exercises can be completed.



Task 1: Navigation Profiles in the Stock Requirements listUpon completion of a planning run, certain exceptions or problems will be raised. Asa planner you need a tool that will allow you to resolve any exceptions that have comeabout since the last planning run. Customize the List reports so that you can haveseveral �hot buttons� that will allow planners to speed up the exception process.

1. As a planner, you often have more exceptions to deal with, than time tocorrect them. You have been told that the Stock/Requirements list is a veryflexible tool to manage the supply and demand situation. However you needto make it more flexible. Use your material R-F1## at plant 1000 to accessthe Stock/Requirements list

Using your user settings, add the Navigation profile SAPPPMRP00 - MRPController so you can use the List Reports more easily.

2. What changes took place as result of adding the navigation profile?

3. In the S/R list, review your purchased material R-T1##. Did the icons change atall?

4. One of the transactions that you normally run, the stock overview report(MMBE) is not available through the navigation profile. Add the stock overviewreport to your �Own Favorites � so that you can access it at any time. Use thefollowing settings:

Field ValueNavigation no. 1

Transaction code MMBE

Text in menu Stock Overview Report




Field ValueIcon Select Any

Icon text First select enter torefresh the screen, thenenter Stock

Info text Stock Overview Report

5. What were the results of your activity?

6. Exit the stock requirements list

Task 2: Filters in the Stock Requirements list (Optional)Your production manager has just requested the production plan for one of yourpumps R-F1## at plant 1000. In this instance she would like the firmed schedulecompared to the current demand. Demonstrate how this is possible by using the filtersand selection rules in the stock/requirements list for material R-F1##. Choose Filteron then, the system displays two new fields in the list header where you can define adisplay filter or a selection rule.

1. Access the Stock/Requirements list for material R-F1## at plant 1000. Use thedisplay filter with the description SAP requirements and firmed receipts.What changes do you observe in the display of the MRP elements?

2. Do you also see changes in the available quantity that is calculated for eachMRP element?

3. Test the effect of display filter SAP Only Receipts. What was the affect on thedisplay

4. Enter a selection rule with the description SAP Only Receipts. What is theaffect of the selection rule?

5. Select Filter off to work without a display filter or a selection rule.




Task 3: Using the Collective MRP ListYour nightly planning run has just completed. The first thing that you must do as aplanner is to evaluate your planning results. You are responsible for more materialsthan you have time to review. Use the collective MRP List to identify what materialshave issues that you must resolve.

1. As a planner, you need to find out what materials need your immediate attention.Access the MRP list - Collective display and select the MRP lists by plant 1000and your MRP controller number 0## and MRP lists have been created in thecurrent week. In addition, filter using only exception groups 8, 7, and 4.

You want to edit MRP lists with exceptions that affect the rescheduling ofprocurement proposals, such as Selection group 7. Restrict the selection byselecting the exception group 7 on the tab page Exception groups. Start theselection by choosing Enter.

How many materials were selected? ___________

2. Define your traffic light so that exception group 7 and 8 will give your a redlight, and 4, 5, and 6 will give you a yellow light.

3. Did any changes occur in the Material overview screen?

4. The system displays the overview of the materials selected. This means, itdisplays all materials for the MRP controller 0##, for which there are MRP listsin which receipt elements with exception messages for rescheduling have beencreated. Choose all the materials and review the details

5. In the lists, find a planned order for which exception message 10, 15, or 30 isdisplayed and for which the rescheduling date is not today.

Make a note of the material number and the number of the selected plannedorder: __________

6. For the order in question, see how many exception messages exist.

In the detailed data for the selected MRP element, two rescheduling dates areexecuted in the exception messages for rescheduling. What are the two datesand what significance do they have?




1. Date: __________ Significance: _______________________


7. If the order in question has a rescheduling date to the right of the MRP Elementdata we need to reschedule the planned order for the date it is suggesting. Changethe Planned order so it will arrive in time to cover the requirement in question.

8. After making the changes to the plan, you need to acknowledge that the materiallist has been processed. Set the processing indicator for the material and returnto the Material List. In which MRP list, that is, in which material MRP list,did you set the processing indictor?

Material: ____________________________

Exit the collective display of the MRP lists.

9. Return to the S/R list and for the planned order that you firmed remove thefirming indicator and save.



Solution 2: Using the MRP ListsTask 1: Navigation Profiles in the Stock Requirements listUpon completion of a planning run, certain exceptions or problems will be raised. Asa planner you need a tool that will allow you to resolve any exceptions that have comeabout since the last planning run. Customize the List reports so that you can haveseveral �hot buttons� that will allow planners to speed up the exception process.

1. As a planner, you often have more exceptions to deal with, than time tocorrect them. You have been told that the Stock/Requirements list is a veryflexible tool to manage the supply and demand situation. However you needto make it more flexible. Use your material R-F1## at plant 1000 to accessthe Stock/Requirements list

Using your user settings, add the Navigation profile SAPPPMRP00 - MRPController so you can use the List Reports more easily.


b) Enter Material R-F1## and plant 1000and press ENTER

c) Select Save Settings

d) Scroll through the tabs and select the General settings Tab

e) In the Navigation profile field select SAPPPMRP00 - MRP Controller

f) Select Save and enter through any informational messages.

2. What changes took place as result of adding the navigation profile?

Answer: Several icons were added to the icon bar for planning transactions,(MRP, Planning File, etc.)

3. In the S/R list, review your purchased material R-T1##. Did the icons change atall?

Answer: Yes, due to settings in the navigation profile, different transactionsshow up for those materials that are �purchased� versus being manufactured.

4. One of the transactions that you normally run, the stock overview report(MMBE) is not available through the navigation profile. Add the stock overviewreport to your �Own Favorites � so that you can access it at any time. Use thefollowing settings:




Field ValueNavigation no. 1

Transaction code MMBE

Text in menu Stock Overview Report

Icon Select Any

Icon text First select enter torefresh the screen, thenenter Stock

Info text Stock Overview Report

a) From the S/R list menu path Environment→ Own Favorites→ Maintain

b) Select New Entries

c) Enter the parameters in the table

d) Select Save

e) Select Back twice and answer YES to saving the changes.

5. What were the results of your activity?

Answer: A new icon was added, with the icon and the icon text. In addition ifyou place your cursor on the icon, quick info, will give you the description foryou transaction. Lastly, if you use the menu path Environment→ Own Favorites, the text for your menu appears.

6. Exit the stock requirements list

a)




Task 2: Filters in the Stock Requirements list (Optional)Your production manager has just requested the production plan for one of yourpumps R-F1## at plant 1000. In this instance she would like the firmed schedulecompared to the current demand. Demonstrate how this is possible by using the filtersand selection rules in the stock/requirements list for material R-F1##. Choose Filteron then, the system displays two new fields in the list header where you can define adisplay filter or a selection rule.

1. Access the Stock/Requirements list for material R-F1## at plant 1000. Use thedisplay filter with the description SAP requirements and firmed receipts.What changes do you observe in the display of the MRP elements?


b) Enter your material R-F1## at plant 1000 and press ENTER.

c) Select Filter On.

d) Set the filter to display: Requirements and firmed receipts.

2. Do you also see changes in the available quantity that is calculated for eachMRP element?

a) Changes to the available quantity: No, the available quantity is notchanged by the display filter.

3. Test the effect of display filter SAP Only Receipts. What was the affect on thedisplay

a) Effect of display filter SAP Only Receipts: The system only displays thereceipt elements and no change to the Available Qty

4. Enter a selection rule with the description SAP Only Receipts. What is theaffect of the selection rule?

a) The available quantity have been recalculated using only receipts.

5. Select Filter off to work without a display filter or a selection rule.

a)




Task 3: Using the Collective MRP ListYour nightly planning run has just completed. The first thing that you must do as aplanner is to evaluate your planning results. You are responsible for more materialsthan you have time to review. Use the collective MRP List to identify what materialshave issues that you must resolve.

1. As a planner, you need to find out what materials need your immediate attention.Access the MRP list - Collective display and select the MRP lists by plant 1000and your MRP controller number 0## and MRP lists have been created in thecurrent week. In addition, filter using only exception groups 8, 7, and 4.

You want to edit MRP lists with exceptions that affect the rescheduling ofprocurement proposals, such as Selection group 7. Restrict the selection byselecting the exception group 7 on the tab page Exception groups. Start theselection by choosing Enter.

How many materials were selected? ___________

a) SAP ERP Menu path: Logistics→ Production→ MRP→ Evaluations→MRP List - Collective Display (MD06)

b) Enter the following Data:

Field Name ValuePlant 1000

MRP Controller 0##

MRP date from: Beginning of the weekto: Today

Select the Exception groups Tab

Field Name ValueGeneral messages Select

Exception during rescheduling Select

Terminations Select

Select Continue (Enter)




2. Define your traffic light so that exception group 7 and 8 will give your a redlight, and 4, 5, and 6 will give you a yellow light.

a) From the Material List select Define traffic light.

b) Set the radio buttons for exception groups 7 and 8 so that they will trigger ared traffic light.

c) Set the radio buttons for exception groups 4, 5, and 6 so they will trigger ayellow traffic light.

d) Select Save as user setting.

3. Did any changes occur in the Material overview screen?

Answer: Some or all of the materials should have changed from green toyellow or red.

4. The system displays the overview of the materials selected. This means, itdisplays all materials for the MRP controller 0##, for which there are MRP listsin which receipt elements with exception messages for rescheduling have beencreated. Choose all the materials and review the details

a) Select Select All and then select Display selected MRP lists to displaythe corresponding lists in order.

5. In the lists, find a planned order for which exception message 10, 15, or 30 isdisplayed and for which the rescheduling date is not today.

Make a note of the material number and the number of the selected plannedorder: __________

a) To navigate through the list of materials select Next Material and/or

Previous Material to switch between the lists. Additionally you canuse the Show Overview Tree button and use the worklist to navigatebetween the materials.

b) Number of selected planned order: Varies

6. For the order in question, see how many exception messages exist.

In the detailed data for the selected MRP element, two rescheduling dates areexecuted in the exception messages for rescheduling. What are the two datesand what significance do they have?






a) Select Details of element for this order. In the additional data, amaximum of two exception messages are saved. To display the long text ofan exception message, you can select the respective message in the detail

screen for the MRP element and select Exception-Info.

b) 1. Date: Varies Significance: Availability date

2. Date: Varies Significance: Goods receipt date

7. If the order in question has a rescheduling date to the right of the MRP Elementdata we need to reschedule the planned order for the date it is suggesting. Changethe Planned order so it will arrive in time to cover the requirement in question.

a) Select Details of element for the order in questions.

b) In the MRP list for this order, select Change element.

c) Enter the Reschedule date, less one day as the order finish in the datessection. Delete the dates in the fields Start and Plnd Open. Choose Enterso that the system determines the current start and opening dates.

d) Select Save

8. After making the changes to the plan, you need to acknowledge that the materiallist has been processed. Set the processing indicator for the material and returnto the Material List. In which MRP list, that is, in which material MRP list,did you set the processing indictor?

Material: ____________________________

Exit the collective display of the MRP lists.

a) Select Processing indicator on in the list. Check in the header detailsthat the processing indicator is set. If not, repeat the last step.

b) Exit the material MRP List

c) In the Material List, the material that has been process has the followingindicator set .

d) Material: Varies, for example R-F1##.

e) Exit the collective display of the MRP List.




9. Return to the S/R list and for the planned order that you firmed remove thefirming indicator and save.


b) Enter your material R-F1## at plant 1000 and press ENTER.

c) Double click on the firm planned order with the * at the end.

d) Select change element.

e) In the bottom right corner remove the check from the Firmed indicator.

f) Select Save.



Facilitated Discussion

Discussion QuestionsUse the following questions to engage the participants in the discussion. Feel free touse your own additional questions.



Lesson Summary

You should now be able to:� Demonstrate how to use the MRP and Stock Requirements List for use in day

to day planning.� Describe the differences between the MRP List and Stock Requirements (S/R)

list

Related InformationThe follow Notes may offer more information about the list reports:

� 94145: MD04: Explanation note for displaying columns


SCM240 Lesson: Exception Messages in SAP ERP

Lesson:55

Exception Messages in SAP ERPLesson Duration: 30 Minutes

Lesson OverviewIn this lesson, you will learn about monitoring MRP result by using exceptionmessages.


� Explain how exception messages are used in the production planning process� Demonstrate how to configure exception messages.

Business ExampleAs a production planner you are responsible for the procurement plan and inventory ofhundreds of materials. Based on the number of changes that happen every day youcan not review the procurement plans of every production.

Using Exception MessagesUpon completion of almost every planning run, problems will have arisen fromscheduling issues. Planners need a method to identify each problem as it relates toa material/locaton. SAP ERP uses exception messages to identify any issues witha production plan.



Figure 19: Exception Messages

As a result of a planning run or simple changes to supply and demand, the plan resultsare monitored using exception messages. Exception messages alert you to situationsthat require further processing, such as start date in the past or stocks falling below thesafety level. The MRP controller can then select those materials from the planningresults to process them manually.

When using either the MRP List or the Stock/Requirements list, users should be awarethat different exception messages could be displayed for the same material/plantcombination. The MRP list shows the exception messages that were generated asa results of the planning run. The Stock/Requirements list will show exceptionmessages in a real time environment. When dealing with make-to-stock materials,the Stock/Requirements list will show alerts based on dynamic pegging. Peggingis the relationship between a specific requirement and the receipt that was createdto supply the demand. Make-to-stock products are constantly re-pegging based onchronological order.

Exception messages indicate the following: Newly created order proposals fromplanning, dates in the past, problems with BOM explosion or scheduling, reschedulingproposals.

Here is a list of the current exception messages in SAP ERP:



Group No. Exception message6 96 Stock fallen below safety stock level8 98 Abnormal end of requirements planning6 70 Max. release qty - quota exceeded4 01 Newly created1 02 New, opening date in the past2 03 New, and start date in the past3 04 New, and finish date in the past4 61 Scheduling: Customizing inconsistent4 62 Scheduling: Master data inconsistent2 63 Production start before order start3 64 Production finish after order finish5 50 No BOM exists5 52 No BOM selected5 54 No valid run schedule5 55 Phantom assembly not exploded5 53 No BOM explosion due to missing config.6 58 Uncovered reqmt after effective-out date6 56 No Requirements coverage6 40 Coverage not provided by master plan

69 Recursive BOM components possible1 05 Opening date in the past2 06 Start date in the past3 07 Finish date in the past7 10 Bring process forward7 15 Postpone process7 20 Cancel process7 30 Plan Process according to schedule6 25 Excess stock6 26 Shortage in individual segment6 57 Disc. matl partly replaced by follow-up



Group No. Exception message6 59 Receipt after effective-out date4 42 Order proposal has been changed4 44 Order proposal re-exploded4 46 Order proposal has been manually changed4 80 Reference to retail promotion4 82 Item is blocked

If scheduling problems occur, the system displays a corresponding exception messagein the stock/requirements list and the MRP list as a rescheduling proposal. If thisproposal is to be accepted, you must adjust the dates for the receipt element manually.The automatic adjustment of these dates is possible in the planning result displayor evaluation, for example, in interactive planning or when the indicator, �Displayresults before saving� has been selected in the initial screen of the planning run. Therescheduling proposal can be accepted here using the function, �Reschedule orderproposal�.

Figure 20: Old/New Exception Messages

You can differentiate between old and new exceptions in the MRP list if you workwith the processing indicator.



For processed MRP lists, the system compares the exceptions with those from the oldMRP list during the planning run. If the exception corresponds to an element in bothlists, it is flagged as an �old� exception.

In the collective list display, you can specifically select the lists with new exceptionmessages.

When using collective display of the MRP lists, you can specifically select the listswith new exceptions and even search for new and old exceptions in the individual lists.

Note: In the planning run, exceptions can be characterized as �old� or �new�.This function only refers to the exceptions with the highest priority

The mode of operation in the planning run can be sketched roughly as follows: First,all exceptions are regarded as �new�. The exceptions of the old and the new MRP listare only adjusted if a processed MRP list exists for the material/plant. If the systemfinds correspondences, the exception of the new list is characterized as �old�. Refer toNote 30684 for more details on this point.

During the materials planning of a material, an exception adjustment is executedfor the previously available MRP list if this is characterized as processed. If thereare exception messages in the MRP list that was just created, the system searchesfor matching exceptions in the old MRP list that is indicated as processed. If thecorresponding exception is then found, it is characterized in the new list as �old�.If this applies to all the exceptions of the new list, the processing indicator of theMRP list is retained. In addition, the MRP list does not appear if only lists with newexceptions are selected in the collective display for MRP lists (MD06). It is possiblefor a line of the MRP list to have two exceptions, but the adjustment only affects theexceptions that are directly visible when displaying the MRP list, which is normallythat with the higher priority.



The following exceptions can never be regarded as �old�:

� newly scheduled� new. Creation date in the past� new. Start date in the past� new. End date in the past� order proposal automatically changed� newly exploded� material has no bill of material� no valid bill of material� version without valid SAFK record

In contrast, the exception �Order proposal manually changed� must always be �old�since a change was consciously made to the corresponding line of the list.

All remaining exceptions take part in the adjustment. In this case, the old list is firstsearched for the corresponding element. If this exists and has the same exception thenthe exception is marked as �old� if one of the following special cases does not apply:

� Rescheduling exception: The rescheduling date must then also agree� Stock material surplus: Then quantity and reduction quantity must also agree

Demonstration: Use of Exception messages

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→ MRP

List - Collective Display

2. Select using your MRP Controller 0## at plant 1000

3. Select the Exception groups tab, and select all exception groups.

4. Press ENTER .

5. Point out the exception message groups.



6. Select a material that has an exception message in group 7 and select Displayselected MRP list.

7. Select Details of element to see the exception messages for the MRP element.



61Using Exception Messages

1. SAP ERP menu path: Logistics→ Production→ MRP→ Evaluations→ MRPList - Collective Display

2. Select using your MRP Controller 0## at plant 1000.

3. Select the Exception groups tab, and select all exception groups.

4. Press ENTER .

5. Select a material that has an exception message in group 7 and select Displayselected MRP lists.

6. Select Details of element to see the exception messages for the MRP element.

Customizing Exception MessagesWhen exception messages are generated, only SAP developed exception messageswill be used. Therefore companies can only use those exception messages aredelivered by SAP.

Figure 21: Exception Message Configuration



In the Customizing IMG Production→ Materials Requirements Planning→Evaluation→ Exception Messages→ Define and Group Exception Messages. In thisactivity companies can:

� Text of the exception message� Determine the priority of each message (99 = highest priority)� Assign which group the exception messages belong� Turn off the exception message� Create the MRP list depending on the exception message created

Caution: These settings are client specific and affect all plants during theplanning run.

Per line of the MRP list (for example planned order, purchase order ...) you can save amaximum of two exception message in the planning run. If an element has more thantwo exception messages, the two messages with the higher priority are selected. Onlythe exception with the highest priority is displayed in the list. On the detail screen forthe line (double-click on the element) the system displays both exception messages.

In addition, there is a search function concerning the exception messages in thedetails of the MRP element. This only refers to the exceptions with the highest priority.

In addition to configuring each exception message, companies can change the textof each exception message group. following the IMG menu path: Production→Materials Requirements Planning→ Evaluations→ Exception Messages→ CheckException Group TextsGroups can not be added or removed, only renamed.

Demonstration: Exception Message Configuration

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. In the Customizing IMG Production→ Materials Requirements Planning→

Evaluations→ Exception Messages→ Define and group together exceptionmessages



2. Double click on first entry and explain the settings.



Facilitated DiscussionDiscuss the Purpose of Exception messages and what reports will be relevant toreview them.




Lesson Summary

You should now be able to:� Explain how exception messages are used in the production planning process� Demonstrate how to configure exception messages.


SCM240 Lesson: Days� Supply

Lesson:64

Days� SupplyLesson Duration: 25 Minutes

Lesson OverviewIn this lesson, you will learn how to interpret the day�s supply and receipt day�s supplyfor a material.


� Interpret day�s supply and receipt day�s supply

Discuss the need for using the day�s supply function. Then, explain the process ofinterpreting day�s supply and receipt supply.

Business ExampleThe Precision Pump company constitutes a number of independent business unitsfor manufacturing pumps. As a planning manager, you need to identify potentialshortages for the material supply.



An Overview to Day�s Supply

Figure 22: Days� Supply

The days� supply enables you to determine potential shortages at an early stage.

This function provides you with information about when the material shortage willoccur if no goods receipt is delivered (worst case).

In the �Safety stock� field in the IMG activity, �Define receipt elements for receiptdays� supply�, you define per plant whether or not the days� supply should be definedas the point where the stock falls below the physical stock level (indicator �Safetystock� = �1�) or the safety stock level (indicator = �blank�).

The days� supply is entered in workdays and the value entered after the decimal pointindicates the portion of the requirement that can still be covered on the shortage day.For example, a days� supply of 24.6 means that the stock can cover the requirementsfor the next 24 days and on day 25, there will be enough stock to cover 60% of therequirement).

You can flag materials with critical days� supplies using a red traffic light in thestock/requirements list and in the MRP list.



Figure 23: Receipt Days� Supply

The receipt days� supply provides you with information about when the materialshortage will occur if certain firmed receipts are delivered. You can define twodifferent receipt days� supplies that are different with reference to the selection offirmed receipt elements that are taken into account.

You choose which firmed receipts are to be taken into account in the calculation perplant in the Customizing activity, �Define receipt elements for receipt days� supply�.In the �Safety stock� field, you define whether or not the receipt days� supply shouldbe defined as the point where stock falls below the physical stock level or the safetystock level (see days� supply).



Figure 24: Receipt Days� Supply 1 and 2 (Example)

You can analyze two different receipt days� supplies (1 and 2). These supplies aredifferent with reference to the selection of their receipt elements, which is defined inthe Customizing IMG activity, �Define receipt elements for receipt days� supply�.You define for various firmed receipts whether or not they are taken into account, forboth receipt days� supplies (�X�), receipt days� supply 1 (�1�), or only for receiptdays� supply 2 (�2�).

In the above example, production orders and firmed planned orders are taken intoaccount to calculate receipt days� supply 1, whereas receipt days� supply 2 suppliesinformation about the size of the receipt days� supply taking the production ordersinto account.

Demonstration: Days� Supply and Receipt Days� Supply

PurposeTo demonstrate days� supply and receipt days� supply.

System DataSystem:Client:User ID:Password:



Set up instructions:1. Call the stock/requirements list for material R-F1## plant 1000: Expand the

header and scroll to the Stocks/coverage tab. Display the days� supply andthe two receipt days� supplies in the header details; if necessary, explain howthe days� supplies are calculated using goods receipts and additional plannedindependent requirements.

2. In Customizing, show how to define the days� supply and receipt days� supplyand include safety stock.

Customizing: Production→ Material Requirements Planning→ Evaluation→Define Receipt Elements for Receipt Days� Supply.

Demo example:

For plant 1000 enter �1� in the �Firmed Planned Orders� (FPOrd) column inCustomizing. Enter �1� in the �Safety Stock� column.

Create a new material by copying R-F1##. Warehouse stock 7 pieces; (static)safety stock 5 pieces; create planned independent requirements: current week+ 2 weeks to current week + 6, each 10 pieces; planning run, refresh MD04 ,and explain values for days� supply and receipt days� supply (all three valuesare the same);

Convert the first planned order in a production order. Manually fix the secondplanned order. Explain the calculated values for both receipt days� supply;

Enter �blank� in the �Safety stock� column in Customizing. Call up MD04 again(do not refresh ) and explain the calculated value for the days� supply.





What information is provided by the receipt day�s supply?



Lesson Summary

You should now be able to:� Interpret day�s supply and receipt day�s supply


Unit Summary SCM240

Unit SummaryYou should now be able to:� Demonstrate how to use the MRP and Stock Requirements List for use in day

to day planning.� Describe the differences between the MRP List and Stock Requirements (S/R)

list� Explain how exception messages are used in the production planning process� Demonstrate how to configure exception messages.� Interpret day�s supply and receipt day�s supply




1. What does it mean to say the stock requirements list and the MRP list are splitinto various planning segments.

2. Where can you see many pieces of master data for the material in the MRP list ?

3. If I wished to look at only those materials for which I was responsible as theMRP controller, how can I do so?

4. Can I control what data is displayed and in what order in the variable header?

5. What is the purpose of exception messages?



6. What exception messages should be displayed generated and displayed to theplanner?

7. How can the number of rescheduling exception messages be reduced or limited?Choose the correct answer(s).□ A Net Change planning□ B Tolerance Values□ C Planning time fence□ D Reduce all lead times to 1

8. What is the purpose of the receipt days� supply?



71Answers

1. What does it mean to say the stock requirements list and the MRP list are splitinto various planning segments.

Answer: This means that the MRP elements that are linked with each otherare also displayed together.

2. Where can you see many pieces of master data for the material in the MRP list ?

Answer: In the detailed (variable) header.

3. If I wished to look at only those materials for which I was responsible as theMRP controller, how can I do so?

Answer: Using the collective display of the MRP or stock requirements listand limit the selection accordingly.

4. Can I control what data is displayed and in what order in the variable header?

Answer: Yes. Through customizing for MRP type.

5. What is the purpose of exception messages?

Answer: Exception messages alert the planner that a planning situation hasoccured that the system could not resolve completely and therefore shouldrequire manual intervention.

6. What exception messages should be displayed generated and displayed to theplanner?

Answer: Too many exception messages will lead to the planner ignoring all ofthem. In general the only exception messages that should be displayed are theexceptions that will have action taken against them. IE: only the ones you willdo something about.



7. How can the number of rescheduling exception messages be reduced or limited?

Answer: B, D

Tolerance values can be set to limit the exception messages generated. Althoughreducing the lead time will reduce the exception messages; it�s not a feasiblesolution. Adding a planning time fence would actually increase the number ofrescheduling messages.

8. What is the purpose of the receipt days� supply?

Answer: The receipt days� supply provides you with information about whenthe material shortage will occur if certain firmed receipts are delivered.


Unit 373 MRP Basics

Unit OverviewThis unit will discuss the basics relevant to production planning. You will beintroduced to various concept of planning ins SAP ERP as well as some of thetransactions that will be used throughout the balance of the course to triggerreplenishments for large amounts of material.


� Explain the Fundamental concept of Materials Requirements Planning (MRP)� Explain the purpose of independent requirements.� Explain how the different planning techniques can influence your business

process� Explain how MPS is used in SAP ERP� Explain how MRP is used in SAP ERP� Explain how Consumption based planning is used in SAP ERP� Demonstrate the configuration of MRP Types in SAP ERP� Identify the minimum configuration requirements in order to execute a planning

run in SAP ERP� Explain the different techniques of executing planning runs in SAP ERP� Demonstrate the purpose of the settings in the planning run


Unit 3: MRP Basics SCM240

� Explain the purpose of the planning file and how it influences the settings inthe planning run.

Unit ContentsLesson: Concept of MRP ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Lesson: MRP Types .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104

Demonstration: Firming Settings .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Procedure: Planning time fences.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113Procedure: MRP Type and MRP Group Configuration ... . . . . . . . . . . . . . . . . . 114

Lesson: Prerequisites for Running MRP... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119Demonstration: Prerequisites for Material Requirements Planning(Optional) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121Procedure: MRP Activation and Create planning files.. . . . . . . . . . . . . . . . . . . .122Demonstration: MRP Settings in the Material Master, MRP Group, andPlant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123Procedure: MRP Settings in the Material Master, MRP Group, andPlant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125Demonstration: MRP Controllers .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126Procedure: Create and Maintain MRP Controllers... . . . . . . . . . . . . . . . . . . . . . .127Demonstration: Material Status... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128Procedure: Creating and setting the Material Status ... . . . . . . . . . . . . . . . . . . .129

Lesson: Methods for Executing a planning run ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132Procedure: Setting up MRP to run in the background .. .. . . . . . . . . . . . . . . . . .136Demonstration: Executing MRP ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143Exercise 3: Executing a planning run in SAP ERP ... . . . . . . . . . . . . . . . . . . . . .145

Lesson: Settings in the Planning Run... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151Exercise 4: Settings in the planning run.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161


SCM240 Lesson: Concept of MRP

Lesson:75

Concept of MRPLesson Duration: 20 Minutes

Lesson OverviewThe concept of enterprise wide planning can encompass numerous tasks with manydifferent groups or departments getting involved. In this lesson we will focus onthe topics of material oriented planning, such as MPS and MRP, etc. This lessonwill address these topics from a high-level perspective and be discussed in detail inother lessons.


� Explain the Fundamental concept of Materials Requirements Planning (MRP)� Explain the purpose of independent requirements.

This lesson is designed to introduce the concept of production planning. Keep it at avery high level as if it was to be delivered to people with no SAP ERP planningexperience. Based on the make up and experience of the class, the instructor candecided how much time is required to discuss rudimentary concepts of planning.

Essentially that this is a material/location based planning process. We need to explainthe concept of planning against independent requirements. What they are, why theyare important in the supply chain planning process.

Business ExampleAs a senior production planner you are often required to train new planners or explainyour sophisticated planning process to other members of management. At this timewe will outline the General concepts of Materials Requirements Planning.



Basic MRP Concept

Figure 25: MRP Overview

The ultimate goal of Material Requirements Planning (MRP) is in reality very straightforward. MRP�s purpose is to create material replenishments to offset current andfuture demands.

Supplies are considered on hand inventory and existing open orders.

Demands are critical and they are the key for driving MRP. Throughout this entirecourse we will discuss two basic types of demand that are relevant to MRP:

1. Independent Demand: Customer requirements or Forecast.2. Dependent Demand: Requirements for component parts on the Bill of Material.

Independent demand is demand that is not dependent upon a bill of material explosion.It is not driven by the requirements of another higher level assembly. The twobasic kinds of independent demand are customer requirements (actual) and forecast(planned). Customer requirements typically take the form of Sales Orders, CustomerIndependent Requirements or Schedule Lines (blanket orders).

A Forecast is a projection of what an organization believes the demand may be in thefuture. This projection is normally derived using sales history and statistical methods.However those details are beyond the scope of this course. This forecast then servesas a baseline for planning. This way a plan can be put together and the organizationis ready when the actual customer demand is received. The term used in SAP ERPplanning for this future projection is Planned Independent Requirements.



Dependent demand is demand for a component item used in a Bill of Material. Itmay be a purchased raw material or a sub-assembly. The requirements are directlyrelated to, and in most cases proportionally related to, the demand requirements of theupper level item.

MRP Process

Figure 26: Basic MRP processing steps



Material Requirements Planning (MRP) is a process of logical steps:

1. Net Requirements Calculation (Do we need any?) : This is a time phasedcomparison of supplies vs. demand. Determines if there is a shortage and when.

2. Lot Size Calculation (How many do we get?): Determination of how manyshould be procured. For example: minimum lot size or rounding value.

3. Procurement Type (Where do we get them?): Determine the source.Manufactured or purchased.

4. Scheduling (When do we need to start?): Schedule based on the items lead time.This provides a start date and finish date.

Note: If the material is to be purchased, the order is created. Step 5 isnot performed.

5. Bill of Material explosion (What components will be required?) The BOMwill be exploded to determine what materials are required to complete themanufacturing process. A planned order is created and dependent requirementsare passed to the component materials. Step 1 then begins all over again withthe components.

Procurement Proposals

Figure 27: Principles and Results of MRP



If the system determines shortage of material quantities during MRP, the systemgenerates procurement proposals. Purchase requisitions and planned orders areinternal planning elements that you can change, reschedule, or delete at any time.

In the case of in-house production, the system creates planned orders to plan theproduction quantities. When planning is complete, planned orders can be convertedinto production or process orders.

In the case of external procurement, the system either creates a planned order ora purchase requisition to plan the external procurement quantity. When planningis complete, the planned order is converted into a purchase requisition, which issubsequently converted to a purchase order.

In the case of in-house production, the system creates planned orders to plan theproduction quantities. In multi-level production, that is, when a finished productis made up of assemblies or components, the corresponding assembly grouprequirements are mapped using dependent requirements.

During a planning run, dependent requirements created for the assembly act asrequirements. This ensures timely staging of the assemblies.

When planning is complete, planned orders can be converted into production orders.When this is done, the system transforms the dependent requirements of the plannedorder into production order reservations.



Facilitated DiscussionEnsure that students can give a general purpose for why companies do material basedplanning.


� How does production planning fit into the Supply Chain Planning process.

In SAP ERP it is a material/location based planning process, that is designed toplan the procurement and production from the Finished product at a distributioncenter, to the raw material at a vendor.

� What is the purpose of Independent Requirements, and what form do they take.

Independent requirements are used to drive the make-to-stock process at somelevel of the Bill of material. They can take the form of Sales orders or PlannedIndependent Requirements. This is used to initial the planning process.



Lesson Summary

You should now be able to:� Explain the Fundamental concept of Materials Requirements Planning (MRP)� Explain the purpose of independent requirements.



Lesson:81

MRP TypesLesson Duration: 40 Minutes

Lesson OverviewIn order for a planner to succeed on a day to day basis, one must be aware of thefunctionality that can be used that best fits the traits of how a products reacts in yourbusiness environment. In this lesson you will explore how MRP types can be used togroup products together in a planning process that limits that amount of time a personwill have to spend adjusting production and procurement plans.


� Explain how the different planning techniques can influence your businessprocess

� Explain how MPS is used in SAP ERP� Explain how MRP is used in SAP ERP� Explain how Consumption based planning is used in SAP ERP� Demonstrate the configuration of MRP Types in SAP ERP

Consumption based planning should be covered from a very high level. Details arecovered in SCM525.

Firming, planning time fence and MRP Type concepts should be covered in detail.

MPS should be covered from a level just so they understand the various MRP Types.There is a separate unit covering MPS.

Business ExampleAs a senior production planner it is your responsibility to manage and over see all theproduction planning processes in SAP ERP. In the manufacturing of pumps, yourcompany experiences many different scenarios in which it must manage the demandfor all of your finished goods, semi finished goods and raw materials. To properlyguide your planners we must identify the different planning techniques in SAP ERP.


SCM240 Lesson: MRP Types

MRP Procedures in SAP ERP

Figure 28: Overview of Planning Procedures

MRP is a time phased material replenishment plan. Detailed procurement elementsare generated at the appropriate time to ensure specific quantities are available to meetdemands. If the material is to be manufactured, the bill of material is exploded to alsoassure proper planning of component materials.

A more basic type of planning known as Consumption based planning is available.These methods are based on historical consumption values. A significant difference isthat the requirements for these materials are based on a statistical forecast as opposedto being driven a master plan. It is characterized by simplicity and is therefore not ascomplex as the standard MRP procedure. It is typically well suited for high volume,low value materials. For example: pallets and common packaging materials.

There are three basic consumption based planning methods; reorder point planning,forecast-based planning and time-phased planning.

1. In reorder point planning, the quantity available for planning results from thefollowing calculation: Warehouse stock + fixed receipts. For example, purchaseorders, fixed planned orders, and fixed purchase requisitions.

The reorder point is made up of the expected average material requirementduring the replenishment lead time and the safety stock. In accordance with this,the following points must be considered when defining the reorder point:

� Safety stock



� Previous consumption or future requirements� Replenishment lead time

The safety stock must cover both the unplanned material excess consumptionduring the replenishment lead time, as well as the additional requirementscaused by delayed deliveries.

The reorder point can be determined manually or automatically using thematerial forecast.

If the quantity available for planning is less than the reorder point, there is amaterial shortage. The purchase order quantity is created from the lot-sizingprocedure in the material master record.

The system sets the planning date as the basis for the requirements date.

For automatic reorder point planning, the reorder point and the safety stock arecalculated during the forecast run on the basis of the forecast values, the servicelevel, and the replenishment lead time.

2. In forecast-based planning, historical data is used in the material forecast toestimate future requirements. These requirements are forecast requirements andare immediately available in planning.

The system only takes into account forecast requirement quantities as issues.The shortage quantity is calculated by comparing the receipt elements, such aswarehouse stock, order proposals, and purchase orders, with the safety stock andthe forecast requirement quantities. Other issue elements such as sales orders orreservations are only displayed in forecast-based planning. These are not takeninto account in the net requirements calculations.

3. In time-phased planning, forecast requirements are also calculated. The materialis only planned on the days that have been specified by the planning cycle. Inaddition, the forecast requirements are used to define the procurement quantityfor covering the relevant time interval until the receipt of the next procurementquantity. To compensate for unforeseen fluctuations in requirements,time-phased material planning can be combined with a reorder point.



Master Production Schedule (MPS) in SAP ERP

Figure 29: MPS Concept

Master production Scheduling is a different organizational process rather thandifferent functional goal. The goal of MPS is to generate material supplies (plannedorders, purchase requisitions, schedule lines) to offset current or future materialshortages. Therefore it is functionally equivalent to MRP.

The concept of MPS is to enables you to plan materials that greatly influence acompany�s profits and critical resources and therefore need to be planned morecarefully. It is typical for theses materials that the master production schedule isinitially defined on the level of this critical or important material before the dependentassemblies and purchased parts are planned and procured. This means that changesmade to these critical parts are not copied to the dependent parts, thus avoiding anydisruption arising during production and procurement of purchased parts.

You plan the master schedule items (MPS items) and the non-master schedule items inseparate planning runs. You are able to specify finished products or assemblies formaster schedule items in the "MRP 1" view of the material master.

The master production scheduling run only plans the master schedule items. Masterproduction scheduling is executed with the same logic as material requirementsplanning but without planning materials that are not labelled as MPS items. Dependentrequirements are created for the next low-level code, but planning is not executed forthese items unless they are MPS items. The results of master production scheduling



are not passed on to dependent parts until the master plan for the critical parts hasbeen processed and finely-tuned. Master schedule items are not planned along withthe MRP run to ensure that you can plan these materials independently.

Firming/Fixing in SAP ERP

Figure 30: Firming planned orders

If a planned order is changed manually, the system automatically sets the �firmed�indicator for this planned order. This means that the header data of the planned orderwill not be changed in the next planning run.

If a component in a planned order is changed manually, the system also sets the�firmed� indicator for the components as well as for the header information. Thismeans that the components of the planned order will not be changed in the nextplanning run.

The firming indicators for the planned order or the components of the planned ordercan only be changed manually.

If the planned orders are flagged as firmed while defining a firming period in thestock/requirements list and the MRP list, this occurs independent of the firmingindicator for the planned order or its components.

By resetting the conversion indicator in the planned order, you can prevent the plannedorder being converted into a production order or purchase requisition.



Planning Time Fence in SAP ERP

Figure 31: Planning Time Fence

Using the planning time fence, you can protect the production schedule for a materialfrom being automatically changed. Procurement proposals within the planning timefence are no longer changed automatically during the MRP run.

You can define the firming period using the planning time fence. The systemcalculates the finish date of the firming period based on the MRP date.

You can define the planning time fence either per material in the material masterrecord or using the MRP group assigned to the material master. The length of thefirming horizon, in workdays, should be based on the total lead time of the material.

The firming horizon is only effective in connection with an MRP type that has afirming type.

The firming type defines for the planning run how the procurement proposals arefirmed and how the dates are set within the planning time fence.



Configuration of Firming Types

Figure 32: Overview of Firming Types

The MRP type controls two important aspects of the planning run. First it identifieswhich materials are to be planned during the MPS and which materials are planned byMRP. Secondly it controls use of the planning time fence.

MPS materials are identified with an MRP type that starts with �M�: M0, M1, M2,M3 or M4.

MRP materials are identified with an MRP type that starts with �P�: PD, P1, P2,P3 or P4.

The difference between the various types is defined by how they treat the planningtime fence.

In firming types, 1 and 2 procurement proposals will be automatically firmed as theyroll into the planning time fence. As a result, the procurement proposals can no longerbe changed by the planning run but only by the scheduler.

Firming type 1: The planning run covers all the shortages that have occurred duringthe firming period at the end of the firming period. This means that a planned orderwill have a end date at the time fence and will be backward scheduled.

Firming type 2: The planning run does not cover any shortages that have occurredduring the firming period. However, Exception messages will be created.



Firming type 3: All procurement proposals that have not been manually firmed withinthe firming period are moved to the end of the firming period. If new shortages occurwithin the fixing period, they are covered at the end of the fixing period.

Firming type 4: All procurement proposals that have not been manually firmed withinthe firming period are deleted. If new shortages occur within the fixing period, theyare not covered, and exceptions are generated.

Firming types:

� Firming Type 0: MRP Types M0 and PD. The planning time fence is notconsidered. Even if a value is entered into the planning time fence field of thematerial master, it is not taken into consideration during planning.

� Firming Type 1: MRP Types M1 and P1.� Firming Type 2: MRP Types M2 and P2.� Firming Type 3: MRP Types M3 and P3.� Firming Type 4: MRP Types M4 and P4.

Demonstration: Firming Settings

PurposeTo demonstrate firming settings

System DataSystem:Client:User ID:Password:Set up instructions:1. Display the Customizing for MRP types:

Customizing: Production→ Material Requirements Planning→ Master Data→ Check MRP Types.

� Explain the MRP type field and, in this context, explain the differencebetween types, PD, P1, P2, and so on.

2. Display the planning time fence in the material master of R-F1## (MRP 1)

Change the MRP Type to either a firming type 1 or 3. Display the planning timefence in the Stock requirements list.

3. Show how it is possible to define a planning time fence in the Customizing ofthe MRP groups.



Customizing: Production→ Material Requirements Planning→ MRP Groups→ Carry Out Overall Maintenance of MRP Groups or

Customizing: Production→ Material Requirements Planning→ Planning→MRP Calculation→ Define Planning Time Fence and Roll Forward Period.



89Planning time fences

1. Change the material master for material R-F1##. Transaction MM02.

2. Note the value in the MRP Type and Planning time Fence fields on the MRP 1view. Enter 30 days for the Planning Time Fence and change the MRP type toa firming type that uses the planning time fence. Suggest either type 1 (P1) ortype 3 (P3).

3. Access the Stock Requirements, transaction MD04. The planning time fenceshould now be displayed.

4. Return to the material master (step 1). Change the MRP Type and Planning timefence back to the original noted values.



90MRP Type and MRP Group Configuration

1. Access the configuration for the MRP Type.

Customizing: Production→ Material Requirements Planning→ Master Data→ Check MRP Types.

2. Access the configuration for MRP Groups.

Customizing: Production→ Material Requirements Planning→ MRP Groups→ Carry Out Overall Maintenance of MRP Groups

Manual Firming Dates in SAP ERP

Manual Firming Date

In contrast to the planning time fence, the manual firming date is also effective formaterials of MRP types with firming type 0 or without a firming type.

Figure 33: Manual Firming Date

You can also define the firming period by manually entering a date in the future, suchas the �manual firming date�.



The manual firming date causes automatic firming for materials that have firmingtypes 1 and 2 and lie before the manual firming date.

Unlike the planning time fence, materials without a firming type (firming type 0) areconsidered as materials with firming type 1 with reference to the manual firming date.This means that the procurement proposals that lie before the firming date are firmedand new procurement proposals are moved to the manual firming date.

If you have set a manual firming date and a planning time fence is active, then ifthis date is later than the manual firming date, the firming period is determined bythe end of the planning time fence. If the manual firming date is the later of the twodates, then this defines the firming period.

You set and reset the manual firming date in the stock/requirements list, in theplanning results, or in single-term, interactive planning.

You can apply this function in material requirements planning, master productionscheduling, or long-term planning.

Roll Forward in SAP ERP

Roll Forward Period

You use the roll forward period to delete firmed but out-of-date planned orders to clearor update planning. You activate the function in the Customizing of the MRP type.

Customizing: Production→ Material Requirements Planning→ Master Data→Check MRP Types.

You define the start and the length of the roll forward period in the Customizingof the MRP group:

Customizing: Production→ Material Requirements Planning→ MRP Groups→Carry Out Overall Maintenance of MRP Groups→ Planning time fence.

or Customizing: Production→Material Requirements Planning→ Planning→MRPCalculation→ Define Planning Time Fence and Roll Forward Period.



Figure 34: Roll Forward Period

In addition to the planning time fence, you can maintain the roll forward period inthe MRP group. You can use the roll forward period to delete firmed but out-of-dateplanned orders to automatically update the production schedule.

The �Roll forward indicator� in the Customizing for the MRP type controls whetheror not the roll forward mechanism is applied for a material.

All firmed planned orders with an end date within the roll forward period are deletedin the planning run and either new planned orders are created with suitable dates orif the corresponding firming type applies, the orders are moved to the end of theplanning time fence.



Lesson Summary

You should now be able to:� Explain how the different planning techniques can influence your business

process� Explain how MPS is used in SAP ERP� Explain how MRP is used in SAP ERP� Explain how Consumption based planning is used in SAP ERP� Demonstrate the configuration of MRP Types in SAP ERP


SCM240 Lesson: Prerequisites for Running MRP

Lesson:93

Prerequisites for Running MRPLesson Duration: 20 Minutes

Lesson OverviewPrior to running Material Requirements Planning. The appropriate minimumconfiguration settings must be set. In this lesson we will explore those settings.Certain settings may also be maintained at different levels (ie: plant vs. MRP group).We will also review the controls and priorities here.


� Identify the minimum configuration requirements in order to execute a planningrun in SAP ERP

The following points must be explained in order for MRP to function in SAP ERP

� Activate MRP and Set Up Planning File� Define Planning File Entries for Goods Movements� Plant configuration� MRP group configuration� Order number configuration (manual vs system gen. orders)� MRP controllers

Business ExampleAs the senior production planner you are responsible to ensure the production planningrun generates the correct results for your procurement plan. Identify the necessaryconfiguration steps to execute a planning run.



Activating MRP in SAP ERP

Figure 35: MRP Activation

By selecting "Material requirements planning" in the Customizing IMG activity"Activate MRP and set up planning file", you can specify for which plant an MRPrun is to be carried out.

Entries in the planning file can be made only after this indicator has been set. Thatmeans, once the indicator has been set: - when a material that is relevant for MRP iscreated, the system copies the material number to the planning file and sets both the"total change indicator" and the "net change indicator", - whenever a change relevantto MRP is made for the material, the system sets the "total change" or the "net changeplanning" indicator (dependent on the planning horizon) in the planning file.

If materials have been created, and subsequently the MRP run for a plant is activated,you must create an entry in the planning file for all materials relevant to MRP inthis plant. This function can only be used as background processing. You activatethis function in the activity "Set up planning file" in the Customizing IMG activity"Activate MRP and set up planning file", which you can access directly from the MRPmenu. Materials already in the planning file can be excluded from the MRP run usingthe MRP type in the material master (for example, by using the MRP type ND). Inaddition, you are able to lock a material using the material status for MRP or generatea warning regarding the planning.

Note: for new customers, when creating material masters via a legacy upload do notcreate a planning file entry. Therefore a consistency check should be run to createthe planning file entries.



Demonstration: Prerequisites for Material RequirementsPlanning (Optional)

PurposeTo explain the prerequisites for MRP

System DataSystem:Client:User ID:Password:Set up instructions:1. Display where SAP R/3 Enterprise Material Requirements Planning is activated:

Customizing: - Production→Material Requirements Planning→ Planning FileEntries→ Activate MRP and Set Up Planning Files.

�Activate MRP� and �Set Up Planning File� needs to be executed only once.

The consistency check is only required if material requirements planning isto be deactivated for one plant, for example, or if MRP is to be deactivatedfor individual materials using the MRP type �No planning�. The planning fileentries that are no longer relevant are then deleted.

The consistency check is also relevant if material masters are transferredinappropriately to the system using transfer programs created by the user. It isnot certain whether or not the low-level code in the material master matchesthe code in the planning file.

Structure of the planning file and the consistency check are also under thefollowing menu path:Production→ MRP → Planning→ Planning FileEntry.......

2. Using pump R-F1##, plant 1000 as an example, show the entries for theMRPtype (material master, MRP 1).

Graphic from SCM240, as a result, this section is described briefly.



95MRP Activation and Create planning files

1. Display where SAP R/3 Enterprise Material Requirements Planning is activated:

Customizing: - Production→Material Requirements Planning→ Planning FileEntries→ Activate MRP and Set Up Planning Files.

�Activate MRP� and �Set Up Planning File� needs to be executed only once.

The consistency check is only required if material requirements planning isto be deactivated for one plant, for example, or if MRP is to be deactivatedfor individual materials using the MRP type �No planning�. The planning fileentries that are no longer relevant are then deleted.

The consistency check is also relevant if material masters are transferredinappropriately to the system using transfer programs created by the user. It isnot certain whether or not the low-level code in the material master matchesthe code in the planning file.

Structure of the planning file and the consistency check also under the followingmenu path:Production→ MRP→ Planning→ Planning File Entry.......

Customizing for MRP in SAP ERP

Figure 36: MRP Parameter Priorities



The Customizing settings for the requirements planning are controlled at three levels:

� Material master� MRP group (Customizing step �Carry Out Overall Maintenance of MRP

Groups�)� Plant parameters (Customizing step �Carry Out Overall Maintenance of Plant

Parameters�)

The MRP group is an organizational object that is used to allocate certain controlparameters for MRP to a group of materials. This includes the creation indicators forpurchase requisitions, schedule lines, and the planning horizon. In Customizing, youdefine the MRP group with these specific control parameters and assign the materialto the corresponding MRP group in the material master record (MRP 1 view).

If a setting is possible on several levels, the setting in the material master takes priorityover that in the MRP group to which the material is assigned. The setting in the MRPgroup takes priority over the setting in the plant parameters.

Demonstration: MRP Settings in the Material Master,MRP Group, and Plant

PurposeTo learn about MRP settings in material master, MRP Group, and Plant

System DataSystem:Client:User ID:Password:Set up instructions:1. Display the material master R-F1##:

MRP 1: Explain the MRP group field.

MRP 3: Display the settings for consumption. The same settings are alsopossible in the MRP group.

2. Display the MRP group 0031 in Customizing:

Customizing: Production→ Material Requirements Planning→ MRP Groups→ Carryout Overall Maintenance of MRP Groups.

Consumption/adjustment: You can set up consumption and adjustment in theMRP group.



Display the planning horizon. This can also be entered in the plant.

3. Display the plant parameters in Customizing:

Customizing: Production → Material Requirements Planning→ PlantParameters→ Carryout Overall maintenance of Plant Parameters.

Display the planning horizon



97MRP Settings in the Material Master, MRP Group, andPlant

1. Display the material master R-F1##:

MRP 1: Display the MRP group field.



Customizing: Production→ Material Requirements Planning→ MRP Groups→ Carryout Overall Maintenance of MRP Groups.




Customizing: Production→ Material Requirements Planning → PlantParameters→ Carryout Overall Maintenance of Plant Parameters.


MRP Controllers in SAP ERP

Figure 37: MRP Controllers



An organization typically has many materials. Therefore a corresponding number ofmaterial masters must be created and maintained. The majority of these materialswill also be planned by MRP.

These planned materials must be managed by the appropriate individual who isresponsible for the specific item. This identification in SAP ERP is the MRPController. The MRP Controller represents who is responsible for the planning of amaterial in a certain plant. It is maintained in the material master on the MRP 1 view.

Typically MRP Controller codes are based on logical groupings of parts. Ratherthan based planner names. This provides the flexibility for one person (planner)to be responsible for multiple MRP Controllers. This controller code can then beused to access and process the planning results for a specific group of materials. Itcan also be used for reporting.

Demonstration: MRP Controllers

PurposeTo learn about MRP controllers


MRP 1: Display and explain the MRP Controller field.

2. Display the customizing for MRP Controller 0##.

Customizing: Production→ Material Requirements Planning→ Master Data→ Define MRP Controllers

OR

SAP Menu→ Logistics→ Production→ MRP→ Environment→ CurrentSettings→ Define MRP Controllers



99Create and Maintain MRP Controllers

1. Display the material master R-F1##:

MRP 1: Display the MRP Controller field.

2. Display the customizing for MRP Controller 0##.

Customizing: Production→ Material Requirements Planning→ Master Data→ Define MRP Controllers

OR

SAP Menu→ Logistics→ Production→ MRP→ Environment→ CurrentSettings→ Define MRP Controllers

Material Status SAP ERP

Figure 38: Material Status

The material status enables you to control how a material is used in various businessapplications. You define this in the Customizing IMG activity "Define materialstatus". You can define the material status cross-plant ("Basic data 1" view) or for anindividual plant ("MRP 1" view). If both have been maintained, the more restrictiveof the two applies for the respective application.



In general, you can limit how a material is used in various ways: - It can be flaggedfor deletion. - It can be locked for specific business transactions by the material status(materials management and production planning and control views). You can displaywhether a material is subject to certain restrictions by means of the status informationfunction. You call up this function from the MRP 1 view of the material master bychoosing the push-button "Information on material".

Demonstration: Material Status

PurposeTo explain material status

System DataSystem:Client:User ID:Password:Set up instructions:1. Display the definition of the material status in Customizing

Customizing: Logistics - General→ Material Master→ Settings for Key Fields→ Define Material Statuses

2. Display and explain the assignment of the material status (cross-plant andplant-specific) in the material master.

3. Enter plant-specific material status �01� (blocked for procurement/warehouse)in material R-F1##, plant 1000 - material requirements planning can no longerbe executed.

Then delete the material status you entered.



101Creating and setting the Material Status

1. Display the definition of the material status in Customizing

Customizing: Logistics - General→ Material Master→ Settings for Key Fields→ Define Material Statuses

2. Display the assignment of the material status (cross-plant and plant-specific)in the material master.

3. Enter plant-specific material status �01� (blocked for procurement/warehouse)in material R-F1##, plant 1000 - material requirements planning can no longerbe executed.

Then delete the material status you entered.



Lesson Summary

You should now be able to:� Identify the minimum configuration requirements in order to execute a planning

run in SAP ERP



Lesson:103

Methods for Executing a planning runLesson Duration: 30 Minutes

Lesson OverviewOver the course of a day or a week, production planners will have to execute planningruns at will, in order to evaluate the impact of supply or demand changes. It shouldbe the goal of each planner to touch as few materials as possible, and manage theirbusiness by exception. Once faced with exceptions, it will be the planners job tocorrect these problems. Review the different methods of executing planning runs toeliminate the exceptions.


� Explain the different techniques of executing planning runs in SAP ERP

Discuss the following concepts:

MRP Run

You can execute MRP as total planning not only at the plant level but also in theplanning scope (see the following graphics). If MRP areas are activated, plantplanning includes planning in the plant MRP area.

To set up the user exit in the total planning run, you can refer to SAP Note 208025.

Cross-Plant Total Planning

� Planning scope as summary of plants/MRP areas in a particular planningsequence, taking into account mutual dependencies, for example, stock transfers

� Planning with planning scope only with parallel processing

At this point, refer to planning with MRP areas (unit 8).

Parallel Processing

During the Planning Run Customizing: Select Production→ Material RequirementsPlanning→ Define Parallel Processing in MRP or select Logistics→ Production→MRP→ Environment→ Current Settings→ Define Parallel Processing in MRP.

Division of the planning run between various sessions of an application server orbetween various servers: Each low-level code is divided into work packages, whichare processed by different sessions or servers. A low-level code is only processed afterall the work packages of the previous one have been completed.


SCM240 Lesson: Methods for Executing a planning run

Target: Improving performance and robustness.

� Total planing� Parallel Processing� Scope of planning� MRP Areas� Background planning (how to set one up)� Single item planning methods.� etc.

Business ExampleAs the senior production planner you are given the responsibility of planning some ofthe more critical parts in the manufacturing of pumps. In order to do this effectivelyyou will need to run MRP several times a week and in some instances, several times aday. Identify the different ways to execute a planning run.

Low Level Codes in SAP ERP

Figure 39: Low-Level Codes

The low-level code is the lowest level at which the material appears in a BOM.A material�s low-level code is always greater than the low-level code of all itspredecessors in all BOMs.



The low-level code controls the planning sequence: First, materials with low-levelcode 0 are planned, followed by low-level code 1, and so on. This allows all thematerials to be planned in the correct sequence in one run.

The low-level code is calculated and saved at the client level during BOMmaintenance. You can display the low-level code in the material master from the MRP1 view by choosing �Information on material� or in the planning file entry, providedthat an entry for that material exists in the planning file.

Total MRP

Figure 40: Total MRP Run

You can execute the planning run at two levels, as total planning for a plant or foran individual material. You can also execute a total planning run for several plantsand/or MRP areas (planning scope).

You can execute single-item planning either for one BOM level only (single-level) orfor all BOM levels (multi-level). Interactive planning of a material is also possible.

You can execute multi-level single-item planning for a Sales and Operations Planning(SOP) product group.

You can execute total planning online or as a background job.

Total planning for a plant consists of all materials relevant to MRP for this plant andincludes the BOM explosion for materials with BOMs.

From the MRP menu, you can execute total planning �Online� or �As backgroundjob�. In order to execute total planning as a background job, you select a report variantlimiting it to the corresponding plant and schedule the job.



A user exit enables you to limit the total planning run specifically to those materials,which fulfill the freely definable criteria. You can use this, for example, to select allthe materials belonging to a particular MRP controller.



106Setting up MRP to run in the background

1. Create a variant MRP or MPS (program names: RMMRP000or RMMPS000)using transaction code SE38 OR SA38. This variant should contain theappropriate settings for the MRP run.

2. Schedule the background job using transaction code SM37.

Parallel Processing of the Planning Run

Figure 41: Parallel Processing of the Planning Run

When planning with a planning scope, you must set the indicator, �Parallelprocessing�, in the planning run.

Parallel processing means that the planning run is divided into several independentwork packages that run parallel to each other in different sessions. You define thesessions in the Customizing activity, �Define parallel processing in MRP�. You canaccess this activity directly from the MRP menu.



Advantages of parallel processing:

� Improves performance: If several computers or processors are available for thesesessions, the time required for a planning run can be reduced significantly.

� Robustness: The planning run can continue if there is a run-time error for amaterial. This material is indicated with a corresponding entry in the materiallist. Without parallel processing, the planning run terminates with a dump andthe remaining materials are not planned.

The work packages are divided by low-level code. The improvement in performanceis clear if the BOMs have a wide structure, that is, if the individual elements in theBOM are made up of several components.

Scope of Planning in SAP ERP

Figure 42: Cross-Plant Total Planning

The total planning run can be triggered per plant, for example, as a background jobwith a variant for each plant to be planned. If there are mutual dependencies. Forexample, due to stock transfer, plants may have to be planned several times (plant1000 in the graphic).

As a result, you can group together several plants (or MRP areas) in the scope of aplanning run in a planning sequence and plan on a cross-plant basis in a total planningrun. The system automatically takes into account mutual dependencies, such as thosearising through stock transfer. The situation displayed in the graphic requires plant



1000 and plant 1100 to be entered in the scope of planning - planning takes place foreach material in the proposed sequence, plant 1000, plant 1100, and where necessary,in plant 1000 again.

You define the scope of planning for total planning in the MRP Customizing activity,�Define scope of planning for total planning�. If you have activated MRP with MRPareas, you can group together plants and MRP areas within a planning scope. Inparticular, you can plan all the materials in an MRP area.

The planning scope allows you to execute a total planning run online or as abackground job for a plant, for several plants, for an MRP area, for several MRP areasin MRP, in master production scheduling, and in long-term planning. The planningrun with planning scope must always be started with parallel processing.

MRP Areas in SAP ERP

Figure 43: Requirements Planning Without MRP Areas

Without MRP areas, the requirements planning takes place at the plant level. Thismeans that all requirements of a material, such as dependent requirements, plannedindependent requirements, and customer requirements for all storage locations thatare not planned separately or excluded from MRP, flow into requirements planningtogether at the plant level. Depending on the procurement type of the material,in-house production or external procurement is used to satisfy the requirements.

The settings defined in the material master of the material for MRP are valid for theentire plant, excluding storage locations planned separately or excluded from MRP.



Figure 44: Planning with MRP Areas

With the introduction of MRP areas, a larger degree of differentiation is possible inMRP. Planning takes place separately for each MRP area. For example, it is possibleto plan the requirements separately for different production lines.

In storage location MRP areas, one or several storage locations are grouped together inone organizational unit. This unit is planned separately from the remaining plant andMRP areas. You can assign a receipt (procurement) or issue element (requirement)to a storage location area using the storage location. One storage location can beassigned to one MRP area only.

The provision of components for individual subcontractors can be planned separatelyusing a MRP area. An MRP area is also defined for a subcontractor (supplier) and thecorresponding components to be provided are assigned to this MRP area.

In each MRP area, separate evaluation of the planning results takes place withindividual MRP lists or stock/requirements lists. In the collective display, you canselect materials specifically for one MRP area and for all MRP areas of a plant.

For each MRP area, you can assign various MRP parameters to a material so thatrequirements planning can be specifically tailored to the needs of the individual MRPareas.



Figure 45: Preparing for Planning with MRP Areas

For introducing requirements planning with MRP areas, the existing planning fileentries at the plant level must be converted to planning file entries at the MRP arealevel (Customizing: Convert Planning File Entries for MRP Areas). The requirementsplanning for MRP areas can be activated (Customizing: Activate RequirementsPlanning for MRP Areas) and you can create MRP areas (Customizing: DefineMRP Areas).

In Customizing: Define MRP Areas, you define the MRP area, type, and plantassignment. In storage location MRP areas, you are asked to define a receivingstorage location. To complete the process of defining the storage location MRP area,assign one or more storage locations. For defining subcontractor MRP areas, assignone subcontractor only.

The materials to be planned in MRP areas other than the plant MRP area must beassigned to these MRP areas by creating the corresponding MRP area segments inthe MRP 1 view of the material master.

As the assignment to a storage location MRP area takes place using the storagelocations that the system determines in the planning run, you should check whethercertain factors are included in the MRP area that you assigned in the material master.These factors are like, storage location already specified in the Bill of material (BOM)(BOM item), the work center (production supply area), and in the production versionor material master. To ensure consistent planning, it is also important that either theStorage 1 or the Storage 2 view exists in the material master for this storage location.



Single Item MRP in SAP ERP

Figure 46: Executing the Planning Run for Single Items

During single-item, multilevel planning, the system explodes the material�s Bill ofmaterial (BOM) and creates and plans the dependent requirements of the assembliesand components. If the components also have BOMs, these BOMs are also explodedand the components are planned. This is repeated until all BOM levels are exploded.All materials are planned according to the parameters entered in the initial screen ofsingle-item, multilevel planning. Planning is carried out as �top-down planning�. TheMRP controller has the option of displaying and manually changing the planningresult of assemblies or components before planning is resumed.

During single-item, single-level planning, the system generates dependentrequirements for materials at the next BOM level. Single-item, interactive planningis available as a variant in which the system displays the current planning situationbefore the planning run can be triggered manually.

You can check and process planning results for single-item, single-level, or multilevelplanning before saving them using the indicator �Display results before they aresaved� in the initial screen. The MRP controller is able to create, change, delete, andreschedule procurement proposals before planning is resumed.



Interactive MRP Planning in SAP ERP

Figure 47: Options in �Interactive� Planning

You have the following options for influencing the planning result interactively:

� �Single-level planning, interactive�: You plan on a single-level, the systemdisplays only the current planning situation when you access the function.You trigger the planning manually from the menu for single-item, interactiveplanning and save the result when closing the function.

� �Single-item, multi-level� setting the indicator �Display results before they aresaved� (function also possible for multi-level planning). This has the advantagethat the results are not saved until they have been checked and changed bythe MRP controller, if necessary. The materials to be planned this way aredisplayed as breakpoints, and you are able to control at which point a materialcan be stopped. Then, you are able to display the planning result for the desiredbreakpoint and change the planning result before proceeding with furtherplanning. The changes take immediate effect on subsequent planning.

If you do not set the �Display results before they are saved�, the planning resultsare automatically written to the database in the planning run. In addition, youhave the option of checking the result for all planned materials directly at the endof planning by selecting the �Display matl. list� on the initial screen.

� �Single-item, multi-level�, setting the indicator �simulation mode�: You canplan a planned order on multiple levels.



Demonstration: Executing MRP

PurposeTo explain how to display the different possibilities to execute the MRP run

System DataSystem:Client:User ID:Password:Set up instructions:1. Display the different possibilities to execute the MRP run.

� Total planning of a plant (or of a plant MRP area)� Planning with planning scope (only with parallel processing)� Single-item, single-level, and multi-level planning� Single-item, interactive planning



113 Exercise 3: Executing a planning run in SAPERPExercise Duration: 30 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how to run a single-time MRP run

Business ExampleProduct Group Pump-## contains five material/plant combinations: R-F1## (plant1000 and plant 2400), R-F2## (plant 1000), R-F3## (plant 1000), R-F4## (plant1000). MRP has been executed for material R-F1## in plant 1000. To complete thefull planning process, we must run MRP for the other materials in our product group.


CATT:Set up instructions:

1.



Task: Material Requirments Planning for a Product GroupAfter releasing the production plan from the S&OP process, you have populateddemand management with planned independent requirements. These requirements aredriving your stocking position into negative territory. Using material requirementsplanning, you will build a procurement plan for all of the products in your productgroup PUMP-##.

1. Run a single-item, multi-level MRP run for all products in the product groupPUMP-##. Use the following parameters for the planning run:

Hint: Enter your Product Group PUMP-## in the material field of theMRP run transaction. Be sure to select the check box �Product Group�in the scope of planning area.






Scheduling 2 - Lead time scheduling


2. How many materials have been planned?

3. Now that a MRP run has been executed, execute the stock requirements list tosee if the planning situation has changed for material R-F2## in plant 1000.




Solution 3: Executing a planning run in SAPERPTask: Material Requirments Planning for a Product GroupAfter releasing the production plan from the S&OP process, you have populateddemand management with planned independent requirements. These requirements aredriving your stocking position into negative territory. Using material requirementsplanning, you will build a procurement plan for all of the products in your productgroup PUMP-##.

1. Run a single-item, multi-level MRP run for all products in the product groupPUMP-##. Use the following parameters for the planning run:

Hint: Enter your Product Group PUMP-## in the material field of theMRP run transaction. Be sure to select the check box �Product Group�in the scope of planning area.








a) SAP ERP menu path: Logistics→ Production→ MRP→ Planning→Single-Item, Multi-Level Planning (MD02)

b) Select Enter twice to execute the run.

c) Select Back twice to return to the main menu

2. How many materials have been planned?

Answer: Varies. But each material contained in the product group has beenplanned. Along with their corresponding component parts.




3. Now that a MRP run has been executed, execute the stock requirements list tosee if the planning situation has changed for material R-F2## in plant 1000.



Answer: As a result of MRP, a planned order has been created to cover eachplanned independent requirement. This results in a zero inventory balance aftereach requirements.NOTE: due to different working days in each month, during some teaches thefirst planned order may be late.



Lesson Summary

You should now be able to:� Explain the different techniques of executing planning runs in SAP ERP


SCM240 Lesson: Settings in the Planning Run

Lesson:118

Settings in the Planning RunLesson Duration: 30 Minutes

Lesson OverviewDue to constant changes in demand, planners often must execute a planning run duringthe day. In order to mimimize the use of system resources, planners must be aware ofthe settings used in the planning run to finish the run as quick as possible. Review thevarious Planning run settings and execute a planning run.


� Demonstrate the purpose of the settings in the planning run� Explain the purpose of the planning file and how it influences the settings in

the planning run.

Include the following topics:

� MRP Processing KEY (NEUPL, NETCH, NETPL)� Different Planning run Settings� MRP Group Settings for Planning run� Planning File entries� Etc...

Note: Scheduling will be done in a later unit. Discuss it at a high level.

Business ExampleAs the senior planner you are given the most critical items to plan. Therefore you needto ensure that when a planning run is executed, the results are as accurate as possiblethe first time round. Identify the purpose of each of the settings in the planning run toensure accurate results. Demonstrate how changes in demand and master data canaffect the settings in the planning run.



MRP Control Settings

MRP Control Parameters

The indicators to create purchase requisitions, scheduling agreements, and MRP listscan be defined in the initial screen for the planning run and in the MRP group.

Important note on the creation indicators for each MRP group: Customizing:Production→ Material Requirements Planning→ Planning→ Define CreationIndicator.

For the total planning run: The creation indicators, which can be entered in the initialscreen at the start of a planning run only function as proposals. These indicators areonly valid if the system does not find a creation indicator in the MRP group.

For single-item planning (single-level and multi-level):

Only the settings on the initial screen are valid in this case. The Customizing settingshave no effect. This rule is valid for both single-level and multi-level planning.Similar to total planning, in the case of multi-level planning, several materials areaccessed, which may have settings in their MRP group.

The planning mode, which is set in the planning file for a material, may be overriddenby the planning mode in the initial screen of the planning run. The planning modecontrols how procurement proposals from the previous planning run, which are notfirmed, should be dealt with in the next planning run.

Scope of the Planning Run

Restricting the planning run and using the net change procedure avoids performanceproblems: You should not plan more materials then necessary.

The net change planning procedure (NETCH) only includes materials that haveundergone a planning-relevant change since the last planning run. This is controlled inthe planning file.

By defining a planning horizon, you also restrict the planning scope as far as time isconcerned (NETPL). The planning horizon should, at least, span the time period inwhich sales orders are received. In addition, the planning horizon should contain thedelivery and total lead times for the material.

You should only choose complete planning (NEUPL) in exceptional cases or if thereare data inconsistencies. You cannot use NEUPL in single-item planning.

Already in SCM240. As a result, this section is described briefly.

Planning File and MRP (1)

Planning File and MRP (2)



SA→ record type: B = MRP part, D = phantom assembly

The planning mode is automatically set in the planning file and can be defined inthe initial screen for every planning run.

NETCH/NETPL (equivalent to planning mode 1)→ If the NETCH/NETPLindicators are set, the existing planning data is reactivated in the planning run, whichmeans that procurement proposals that are not firmed remain in the database andare only adjusted if they do not match the new planning situation with reference todates or quantities. The BOM and the routing are only exploded for newly adjustedprocurement proposals. This improves performance.

Examples of changes, which lead to planning mode 1:

� Changes, additions, or deletions to planned orders, purchase requisitions,purchase orders, sales requirements, forecast requirements, dependentrequirements, or reservations

� Changes to the stock� Changes to fields relevant to planning for these goods receipts or issues� Changes to the lot-sizing procedure or the MRP type

Re-explode BOM (equivalent to planning mode 2)→ The existing non-firmedprocurement elements are transferred but the BOM and the routing are explodedagain, even for those that do no have to be adjusted. Examples of changes, whichlead to planning mode 2:

� Changes to BOMs, sales order BOMs, phantom assemblies� Changes to the dependency that is assigned in the BOM Classification of a

material� Classification of a material� Changes to the production version in the material master or in the planned order� Changes to or new key assignment of BOM explosion number

Rest procurement proposals (equivalent to planning mode 3)→ Any existingplanning data is deleted and created again.


� Changes to the lot size-independent in-house production time (MRP 2)� Change to planned delivery time� Change to scheduling margin key� Change to MRP controller



No planning file entry is created for the following changes:

� Changes in Customizing, for example, changes to the purchasing departmentprocessing time in the plant parameters

� Changes relevant to planning in the routing, for example, changes to the standardtime and component assignment, or a change to the lot size independent in-houseproduction time (work scheduling view); you can overcome this functional gapby setting this indicator manually following a change to a routing and/or in-houseproduction time or by executing a planning run with planning mode 2 or 3.

You can define whether or not to retain or delete the planning file entries following atermination of the planning run in the following Customizing activity:Customizing:Production→ Material Requirements Planning→ Planning→ MRP Calculation→Define Error Handling in Planning Run.

Net Change Planning in the Planning Horizon

If a requirement drifts into the planning horizon, this is not an MRP-relevant change.Solution: Carry out NETCH (complete time-axis) regularly in addition to NETPL (netchange planning in the planning horizon);

Or: Indicator �Plan Regularly� in the MRP type together with the� Maximum MRPPeriod� per MRP group.

Figure 48: MRP Control Parameters



When starting the planning run, specify the following control parameters for materialsplanning:

� Processing key: You define the planning type as regenerative planning or netchange planning over the whole period or restricted to the planning horizon.Explained further in the next section.

� The �Create purchase requisition� and �Schedule lines� indicators are onlyrelevant for materials that are procured externally. MRP typically createsplanned orders. However you can set this indicator if purchase requisitions andschedule lines are required as a result of the planning run.

The appropriate purchasing data must be set up accordingly: Info records, sourcelists or schedule agreements.

Three options are available for each purchase requisitions and schedule lines:None (always planned orders), always create and only create within the openingperiod defined in the material master (planned orders after).

� You can also determine whether or not the planning run should generate MRPlists. It can also be based on the exception message. ie: Only generate MRP listswhen certain exception messages have appeared for a material. The exceptionmessages that should trigger an MRP list to be generated can be defined in theCustomizing activity, �Define and group exception messages�.

� With the planning mode, you define whether or not the existing planning datashould simply be adjusted, whether or not BOMs and routings should also bere-exploded, or whether or not the existing unfirmed plan should be deletedand rescheduled from the very beginning again. (Caution: The final option ofdeleted and recreating the planned orders could have performance implications.It could also use a large portion of the number range.)


� Changes to the lot size-independent in-house production time (MRP 2)� Change to planned delivery time� Change to scheduling margin key� Change to MRP controller

You can also set the creation indicator for purchase requisitions, schedule lines, andMRP lists in the MRP group. The materials that are assigned to this MRP group arethen planned accordingly in the total planning run.



Scope of the Planning run

Figure 49: Scope of the Planning Run

During regenerative planning, the system plans all the materials of a plant. This ispractical when carrying out the planning run for the first time and in a productivesystem when, due to technical errors, the consistency of the data cannot be guaranteed.

In a working plant, when you use a lot of materials, you need to execute MRP only forthose materials that have undergone MRP-relevant changes, such as through goodsissues, new sales orders, and changes to the BOM structure. Due to its short runtime, net change planning, which is used to plan only these materials, enables youto carry out the planning run at short time intervals so that you can always workwith the current planning results.

During net change planning in the planning horizon, the system only takes the changeswithin the planning horizon into account. The system only plans those materials thathave been subject to an MRP-change within the planning horizon. The materials areplanned within this horizon only.

You set the planning horizon in Customizing for MRP as a plant or MRP groupparameter. The planning horizon should at least span the time period in which salesorders are received and should contain the delivery and total lead times for the material.

You specify the type of planning run using the �processing key� field in the initialscreen for planning. In single-item planning, you can only decide whether or not�net change planning� (NETCH) or �net change planning in the planning horizon�(NETPL) is executed. In total planning, you also have the option of using the NEUPLkey, using which all the materials in the planning file are planned.



Planning File Entries in SAP ERP

Figure 50: Planning File Entries and MRP

The planning file contains all the materials relevant to MRP for each plant.

Net change planning only plans those materials that have been subject to a changerelevant to MRP. Changes relevant to MRP lead to a planning file entry being createdspecific to the plant and material. Examples of MRP-relevant changes includechanges to the procurement type, changes to the operation times, and also creation ofsales orders, dependent requirements, and stock changes.

The respective entries in the planning file are made automatically by the businessapplication of the system. You can also make the entries manually from the MRPmenu in individual cases. When doing this, you should remember that a change in therouting does not automatically cause an indicator to be set in the planning file.

The planning file entry includes the following information:

� The low-level code of the material� Whether or not the material has been subject to an MRP-relevant change

(NETCH or NETPL indicator)� Whether or not the BOM has to be re-exploded or whether or not all existing

order proposals are to be deleted

You can use the transaction, Display planning file entry, from the MRP menu toanalyze the contents of the planning file entry record for the materials.



Figure 51: Planning File Entries and MRP (2)

During the planning run, the system checks every entry for a material in the planningfile.

� In the case of regenerative planning, the system plans all the materials containedin the planning file without taking the indicators into account.

� In the case of net change planning, the system only plans those materials thathave been flagged with the �NETCH planning file entry� indicator.

� In the case of net change planning in the planning horizon, the system onlyplans those materials that have been flagged with the �NETPL planning fileentry� indicator.

After the planning run has been executed, the entry in the planning file is automaticallydeleted. The �NETCH planning file entry� and �NETPL planning file entry� indicatorsare reset upon regenerative and net change planning. During net change planning inthe planning horizon, only the �NETPL planning file entry� indicator is reset.

The planning horizon is maintained in the Customizing for MRP as a plant parameteror per MRP group.

You can define whether or not a planning entry is to be retained or deleted if atermination should occur while planning a material. You can do this in the IMGactivity, �Define error processing in the planning run�, in the Customizing for MRPcalculation by choosing �Del. planning flag�. This determines whether or not thematerial is taken into account in the next planning run.



Net Change within the Planning Horizon

Figure 52: Net Change Planning in the Planning Horizon

You can only restrict material requirements planning to the planning horizon if youneed to accelerate MRP for performance reasons. Only those requirements within theplanning horizon are covered by the goods receipts. If you only execute net changeplanning in the planning horizon, the system does not plan those requirements that areoutside the planning horizon.

It is important to note that, as time lapses, requirements may fall into the planninghorizon that have not yet been covered by goods receipts. As long as no other changesrelevant to MRP are made, these requirements will not be covered until the nextplanning run for the whole time axis (�NETCH� indicator). This type of planning runshould be carried out on a regular basis.

A further possibility for dealing with the problem shown in the graphic is to set theindicator, �Regular MRP�, in the Customizing for the MRP type of the material andto maintain the maximum MRP interval in the MRP group. An entry for the nextplanning date is generated automatically in the planning file. The material is includedin MRP automatically by the MRP date at the latest, regardless of the other settings inthe planning file.

To plan the changes outside the planning horizon, you must carry out net changeplanning at larger intervals.



125 Exercise 4: Settings in the planning runExercise Duration: 20 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate the relationship between planning file entries and Material

Requirements Planning.

Business ExampleMRP relevant changes to either transactional data (sales orders, forecast, etc) ormaster data (BOM, Material Master, etc) should flag materials to be planned in thesubsequent MRP run. This will ensure complete planning of all materials. The projectteam needs to familiarize itself with the relationship between the planning run andthe planning file. In addition, we must examine the effect of master data changes onMaterial Requirements Planning (MRP).



Task:Analyze the relationship between the planning run and the planning file.

1. Display the planning file for the material R-F1## in the plant 1000.

Which of the following indicators are set?

NChgplng ____ NChgePHor. ____

ExplodeBOM____

2. Production has determined that the most efficient method to produce the productis in lots of at least 10 pcs. Change the material master (MRP 1 View) formaterial R-F1## to reflect this minimum lot size.

3. Review the planning file again for material R-F1## and note the entries.Continued on next page



Select the planning file entry for the material R-F1## in the plant 1000. Whichof the following indicators are set now?

NChgplng ____ NChgePHor. ___

ExplodeBOM ____

4. Run a single-item, multi-level MRP run for R-F1## at plant 1000. Use thefollowing parameters for the planning run:







Also Plan Unchanged components Select

5. Review the planning file again for material R-F1## and note the entries.


NChge plng ____ NChgePHor. ___

ExlodeBOM ____



Solution 4: Settings in the planning runTask:Analyze the relationship between the planning run and the planning file.

1. Display the planning file for the material R-F1## in the plant 1000.

Which of the following indicators are set?

NChgplng ____ NChgePHor. ____

ExplodeBOM____

a) Menu path: Logistics→ Production→ MRP→ Planning→ PlanningFile Entry→ Display

b) Enter material R-F1## and plant 1000.

c) Select

Indicators set:

NChge plng No

NChgePHor. No

ExplodeBOM. No

2. Production has determined that the most efficient method to produce the productis in lots of at least 10 pcs. Change the material master (MRP 1 View) formaterial R-F1## to reflect this minimum lot size.

a) Menu path: Logistics→ Production→ Master Data→ Material Master→ Material→ Change→ Immediately (MM02)

b) Enter material R-F1##. Select .

Choose MRP 1 View and select .

Enter Plant 1000 and select .

c) Enter 10 in the field �Minimum lot size� and select Save.



NChgplng ____ NChgePHor. ___




ExplodeBOM ____


Indicators set:

NChgeplngYes

NChgePHor. Yes

ExplodeBOM No

4. Run a single-item, multi-level MRP run for R-F1## at plant 1000. Use thefollowing parameters for the planning run:







Also Plan Unchanged components Select






NChge plng ____ NChgePHor. ___




ExlodeBOM ____


Indicators set:

NChge plng No

NChgePHor. No

ExplodeBOM No



Lesson Summary

You should now be able to:� Demonstrate the purpose of the settings in the planning run� Explain the purpose of the planning file and how it influences the settings in

the planning run.


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Explain the Fundamental concept of Materials Requirements Planning (MRP)� Explain the purpose of independent requirements.� Explain how the different planning techniques can influence your business

process� Explain how MPS is used in SAP ERP� Explain how MRP is used in SAP ERP� Explain how Consumption based planning is used in SAP ERP� Demonstrate the configuration of MRP Types in SAP ERP� Identify the minimum configuration requirements in order to execute a planning

run in SAP ERP� Explain the different techniques of executing planning runs in SAP ERP� Demonstrate the purpose of the settings in the planning run� Explain the purpose of the planning file and how it influences the settings in

the planning run.


Unit Summary SCM240




1. What is the overall purpose of MRP?

2. What supplies will MRP create to offset shortages?Choose the correct answer(s).□ A Planned Independent Requirements□ B Sales Orders□ C Production Orders□ D Planned Orders□ E None of the above□ F

3. Sales orders are dependent demand.Determine whether this statement is true or false.□ True□ False

4. Requirements for a screw needed to manufacture a pump are dependent demand.Determine whether this statement is true or false.□ True□ False

5. What is a planned independent requirement used for?



6. If you wish to run single-item MRP for an item designated as MRP type �M1�,what will happen?

7. Why is a planning time fence used?

8. What is the difference between �firming� and �fixing� when dealing withMRP types?

9. Explain the relationship between the PTF and MRP TYPE.

10. If both the PTF and the manual firming date are maintained, which takesprecedent?



11. Can a manual firming date be assigned in MRP, MPS and long-term planning?

12. What is the �MRP Group�

13. Material Master settings can override settings in the MRP group, which in turncan override settings in the plant parameters.Determine whether this statement is true or false.□ True□ False

14. What field can be configured to control the transactions that may take place fora material?

15. What is the danger of not allowing inventory movements?

16. What is the MRP Controller?



17. One planner may only be responsible for one MRP controller.Determine whether this statement is true or false.□ True□ False

18. What are the three levels on which a planning run can be carried out?

19. The low level code is calculated by the system and saved at the client levelduring BOM maintenance.Determine whether this statement is true or false.□ True□ False

20. What is the main advantage of using Scope of Planning?

21. Parallel Processing must be active to use scope of planning.Determine whether this statement is true or false.□ True□ False

22. If MRP Areas are used, all materials in the given storage location are plannedat the MRP area level.Determine whether this statement is true or false.□ True□ False



23. Explain �net change planning�

24. Give some examples of changes �relevant to MRP�

25. How does R/3 know what materials have undergone a change relevant toproduction?

26. What is the reason an MRP controller would likely choose to run net change inthe planning horizon as opposed to net change in the total horizon?

27. What is the danger in running NETPL only ?



28. You have activated MRP and set up the planning file, yet you are unable toinclude a material in the planning run. Why may this happen?



139Answers

1. What is the overall purpose of MRP?

Answer: The purpose of MRP is to assure material is available when needed.To accomplish this it must balance supply versus demand. If a shortage occursMRP must create more supply to offset the shortage. This is done through alllevels of the Bill of Material.

2. What supplies will MRP create to offset shortages?

Answer: D

MRP will create planned orders.

3. Sales orders are dependent demand.

Answer: False

Sales orders are independent demand.

4. Requirements for a screw needed to manufacture a pump are dependent demand.

Answer: True

Dependent demand because the quantity required is dependent on the number ofpumps to be manufactured.

5. What is a planned independent requirement used for?

Answer: Planned independent requirements represent a projection of what thedemand will be. Another term might be forecast. These requirements are used todrive planning in a proactive manner so that materials are available when needed.

6. If you wish to run single-item MRP for an item designated as MRP type �M1�,what will happen?

Answer: You will get a message stating you cannot carry out this transaction.(you can, however, run MPS on an MRP item)



7. Why is a planning time fence used?

Answer: The planning time fence delineates the time frame for whichMPS/MRP will not automatically make changes to the plan.

8. What is the difference between �firming� and �fixing� when dealing withMRP types?

Answer: Nothing.

9. Explain the relationship between the PTF and MRP TYPE.

Answer: The MRP Type , through �firming type� controls how and if the MRPrun will firm existing and new order proposals in relation to the firming period.

10. If both the PTF and the manual firming date are maintained, which takesprecedent?

Answer: The later in time of the two.

11. Can a manual firming date be assigned in MRP, MPS and long-term planning?

Answer: yes

12. What is the �MRP Group�

Answer: A material master field with which you can assign special planningcontrol parameters to materials.

13. Material Master settings can override settings in the MRP group, which in turncan override settings in the plant parameters.

Answer: True

Material master take the higher priority

14. What field can be configured to control the transactions that may take place fora material?

Answer: The Material Status field



15. What is the danger of not allowing inventory movements?

Answer: Excess material may not be disgarded.

16. What is the MRP Controller?

Answer: The MRP Controller field defines who is responsible for a specificmaterial in a plant.

17. One planner may only be responsible for one MRP controller.

Answer: False

MRP controllers should be structured by logically grouping materials. Thereforeone physical person may be responsible for more than one MRP Controller.

18. What are the three levels on which a planning run can be carried out?

Answer: Single item, Total plant, Product group

19. The low level code is calculated by the system and saved at the client levelduring BOM maintenance.

Answer: True

Low level code is calculated following BOM Maintenance.

20. What is the main advantage of using Scope of Planning?

Answer: Multiple plants and/or MRP areas can be selected for the MRPrun. If dependencies exist between the locations; this will be automaticallyaccomodated for by the planning run. Therefore it isn�t necessary to run theplants multiple time in a specific sequence.

21. Parallel Processing must be active to use scope of planning.

Answer: True

Parallel processing must be activated.



22. If MRP Areas are used, all materials in the given storage location are plannedat the MRP area level.

Answer: False

Assignment to the MRP area is material specific.

23. Explain �net change planning�

Answer: This is the planning of only those materials that have undergone achange relevant to MRP since the last planning run.

24. Give some examples of changes �relevant to MRP�

Answer: BOM changes, sales orders, goods movements, etc.

25. How does R/3 know what materials have undergone a change relevant toproduction?

Answer: R/3 reads the planning file which will contain an entry specific toplant and material.

26. What is the reason an MRP controller would likely choose to run net change inthe planning horizon as opposed to net change in the total horizon?

Answer: To accelerate MRP.

27. What is the danger in running NETPL only ?

Answer: Requirements that were outside the planning horizon move into theplanning horizon as time marches on. They are not covered until the nextplanning run.

28. You have activated MRP and set up the planning file, yet you are unable toinclude a material in the planning run. Why may this happen?

Answer: The mrp type and the material status must also be set to allow MRPfor each material.


Unit 4143 Demand Management in SAP ERP

Unit OverviewThis unit will introduce you to the Demand Management tool in SAP ERP. While onlya select employees of a company will have access directly to the tool itself, you willsee how various master data fields affect demand management and its interactionwith the planning runs.


� Explain where Demand Management is in the flow of the supply chain planningprocess.

� Demonstrate various functions in Demand Management� Explain how make to stock and make to order will be represented in SAP ERP� Explain how Net Requirments planning differs from Planning with Final

Assembly� Demonstrate how to plan at the sub assembly level� Explain the concepts of Consumption and Reduction� Identify several popular planning strategies and their characteristics.� Explain how make to order works in SAP ERP� Demonstrate how to plan at the sub assembly level while still maintaining make

to order at the finished good level� Identify several popular planning strategies and their characteristics


Unit 4: Demand Management in SAP ERP SCM240

� Explain the difference between make to order and assembly to order� Customize MRP settings

Unit ContentsLesson: Overview of Demand Management ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181

Exercise 5: Managing your Planned Independent Requirements.. . . . . . .185Lesson: Make to Stock versus Make to Order .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .190Lesson: Make to Stock Planning Strategies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196

Demonstration: Net Requirements Planning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199Procedure: Make-toStock .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201Demonstration: .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204Demonstration: .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .207Exercise 6: Using Make to Stock planning strategies .. . . . . . . . . . . . . . . . . . . .213

Lesson: Make to Order Planning Strategies ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .224Demonstration: SAP R/3 Strategy 60 (Planning With PlanningMaterial). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230Demonstration: Subassembly Planning Without Final Assembly (74) ..233Demonstration: Assembly Processing... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .236Exercise 7: Make to Order in SAP ERP .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237

Lesson: Settings and Customizing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252Demonstration: Planning with Final Assembly (Strategy 50/52) ... . . . . . .252Demonstration: MRP Settings in the Material Master, MRP Group, andPlant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257Demonstration: Customizing Planned Independent RequirementsManagement .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257


SCM240 Lesson: Overview of Demand Management

Lesson:145

Overview of Demand ManagementLesson Duration: 30 Minutes

Lesson OverviewThere are many different types of demand that may or may not be relevant toMaterial Requirements Planning: Sales Demand, Planned Independent Requirements,Dependent Requirements, etc. In order to execute supply chain planning in SAPERP, planners must be aware of how and where requirements will be stored. Inaddition, companies must often make changes to planned demand in order to bettercommunicate the changes through the rest of the supply chain. In this lesson you willlearn how the basic functions of demand management work in SAP ERP.


� Explain where Demand Management is in the flow of the supply chain planningprocess.

� Demonstrate various functions in Demand Management

Discuss the following topics:

� Purpose of Demand Mgt. Holds both planned and actual independent rqmts.� Requirements plans� Versions and active flag� Period and automatic splitting� Item text and item history

Note: Make sure you include several demonstrations/procedures.

Business ExampleAs the senior production planner, you will be advising other planners on how to usethe planning functionality in SAP ERP. You realize that various products sell and reactdifferently to demand. In order to minimize inventory, but keep service levels highyou must make sure all demand is being represented properly in SAP ERP. You willreview the different techniques in SAP ERP in order to position your demand properly.



Demand Management

Demand Management

Discuss that demand management creates the demand program. The demand programis NOT software, but rather is the requirements plan to which MRP plans. MRP andMPS will plan to the demand program.

In effect, demand management acts as a funnel or pipeline to translate requirementsor forecasts from a number of different sources to standard formats to which MRPand MPS can plan. Without values in Demand Management, MRP/MPS can do noplanning.

Because a variety of different processes may exist between and among our customers,demand management can pull its numbers from many sources.

Transfer of requirements can be done at a number of different levels depending on theappropriate business processes of the company.

Planning horizon is unlimited � discuss how this can affect a customer.

Period splitting is important because sales and marketing often forecast in months, butproduction must plan in daily buckets or weekly buckets. We can therefore split theperiods as required manually or automatically.

We can maintain a change history so that we can compare results with forecasts.

Figure 53: Demand Management

Demand management is the link between planned requirements, sales customerrequirements and materials planning (MPS and/or MRP).



Contained within Demand Management may be two types of demand.

� Planned Independent Requirements� Customer Independent Requirements

Planned Independent Requirements are sometimes synonymous with a forecast.They are the �planned�demands that a company believes will be required in the future.A procurement plan can then be put together to assure product is available whenthe �actual� demand is received.

Planned Independent requirements may come from the following sources:

� The sales plan or the production plan from SOP� A material forecast� Manual entry� Another program plan

Customer Independent Requirements can be input into demand management inplace of sales orders. For planning purposes they are treated just like a sales order.

Normally this is done only when the Sales and Distribution (SD) module is not used.However they can be very useful for testing.

Hint: Demand Management is very important. However it is not a programthat must be run. As the diagram above depicts, it serves as a filter for thedemands being passed to MRP. Planned Independent Requirements andCustomer Independent Requirments are stored and maintained in DemandManagement. Actual customer requirements are managed via the Sales andDistribution module.

The demand program analyzes all of these demands and determines theappropriate quantity and dates that should be passed to the planningfunction(s).



Figure 54: Demand Management

The planning horizon is unlimited.

We can split periods into finer detail. For example, if the SOP plan we transferredto demand management was in monthly periods, we could split the requirementsinto weeks and/or days, or into user-defined lengths. We can do this for a materialor a group of materials.

We can create a change history of our plan, as well as descriptive texts.

Planning data (sales or production quantities) can be transferred to demandmanagement from an individual material (single transfer), or from all materials in aproduct group (multiple transfer).

Multiple requirements can be managed using a Requirements plan number.Thisallows easier organization and access to requirements for multiple materials.

Planned independent requirements are assigned to a version. This allows multipledemand plans to be maintained for the same product. Only the �active� version ispassed to the operative planning functions. Multiple versions can be active at once.Inactive versions may be used for �what if� planning.



149 Exercise 5: Managing your PlannedIndependent RequirementsExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate the ability to manually change planned independent requirements.� Display the change history for requirements.� Split planned independent requirements into smaller time buckets for more

precise planning.

Business ExampleManagement has decided that the forecast should be increased. We will manuallychange the forecast to reflect these changes. You, as a planner, have decided that theforecast should be split into weekly buckets so the product can be planned in morefinite time buckets. These changes must also be logged and noted for traceabilitypurposes.





Task: Planned Independent RequirementsOnce a sales and production plan is complete at the strategic level, it must betransferred to the operations level were it can be viewed at the material level. Oncedemand is active in demand management it can be used to drive the MPS/MRPprocess.

1. Now that you have created planned independent requirements, changes havebeen suggested and they must be revised. There are only a few changes formaterial R-F1## in Plant 2400. The requirements for this material in plant 2400must be increased by 25 each month. Therefore we will make these changesdirectly in demand management.

2. Since we made a manual override to the requirements, we will document thechange with item text.

3. You wish to plan the first three periods in weekly buckets as opposed to monthly.Split the requirement into weekly buckets.

4. Return to the Planning Table , of the PIRs and review the history of changesmade to the independent requirement.



Solution 5: Managing your PlannedIndependent RequirementsTask: Planned Independent RequirementsOnce a sales and production plan is complete at the strategic level, it must betransferred to the operations level were it can be viewed at the material level. Oncedemand is active in demand management it can be used to drive the MPS/MRPprocess.

1. Now that you have created planned independent requirements, changes havebeen suggested and they must be revised. There are only a few changes formaterial R-F1## in Plant 2400. The requirements for this material in plant 2400must be increased by 25 each month. Therefore we will make these changesdirectly in demand management.

a) SAP ERP menu path: Logistics→ Production→ Production Planning→Demand Management→ Planned Independent Requirements→ Change(MD62) , and enter the following:

Field ValueMaterial R-F1##Plant 2400All active versions SelectPlanning horizon Leave defaultsPlanning period Leave default

b) Select enter, to access the maintenance screens.

c) Highlight the line with your material and select the Sched. lines tab.

d) Select all the periods with an independent requirement and select Chge

sched.lines .

e) Enter 25 in the Change quantity field and plus �+� in the OP field. Select

enter .

f) Return to the Table tab.




2. Since we made a manual override to the requirements, we will document thechange with item text.

a) Highlight the line containing material R-F1##, Plant 2400.

b) Menu path: Goto→ Item text. Confirm any information message sincelong text does not yet exist.

c) Enter text. For example: �I increased the requirements because my bosstold me to.�

d) Select Save

e) Select Back to return to the Plnd ind. reqmts Change:Planning Table

3. You wish to plan the first three periods in weekly buckets as opposed to monthly.Split the requirement into weekly buckets.

a) Highlight the line with your material and select the Sched. lines tab.

b) Place aW in the Splt column for the first three requirements and select .

c) The requirement has been split, based on the number of workdays, intoweekly buckets.

d) Select Save

4. Return to the Planning Table , of the PIRs and review the history of changesmade to the independent requirement.

a) Highlight the line with your material.

b) Menu path: Goto→ Item history.

Note: The changes you just made are shown in the item history.



Lesson Summary

You should now be able to:� Explain where Demand Management is in the flow of the supply chain planning

process.� Demonstrate various functions in Demand Management



Lesson:153

Make to Stock versus Make to OrderLesson Duration: 10 Minutes

Lesson OverviewIn certain industries the replenishment lead times of a product and the manufacturingprocess itself will dictate how a planning process will unfold for various products.When planning production, a planner, must know how SAP ERP will allow themto mimic the products demand patterns as best as possible. Review the process ofmake-to-stock and make-to-order in SAP ERP.


� Explain how make to stock and make to order will be represented in SAP ERP

Introduce the concept of Make-to-stock and make-to-order in simple terms.Demonstrate the unrestristriced versus sales order stock so students begin to get anidea of what Make -to-order means in SAP ERP.

Business ExampleThe pumps that your company manufacturers have different demand patterns. Somepumps sell directly from inventory that is placed ahead of time at your distributioncenters. Other pumps can only be manufactured upon receipt of a sales order andcan only be sold to that specific customer. Identify how SAP ERP will model thesetwo processes.

Make-to-Stock vs. Make-to-Order

Make-to-Stock Production

Discuss the concepts of make-to-stock versus planning with final assembly. Ensurethat students are aware that with make to stock, planning is to the forecast only,regardless of sales orders. With planning with final assembly, planning is to the higherof sales or forecasts.

Describe the different concept between Make-to-Stock and Make-to-Order planning.Specific strategies will be covered in a later lesson.


SCM240 Lesson: Make to Stock versus Make to Order

Figure 55: Requirements Strategies

Requirements strategies represent the business procedures to plan productionquantities and production dates. Various requirement strategies are available, rangingfrom make-to-order production to make-to-stock production.

Make-to-Stock Planning

Make-to-Order Planning

R/3 contains several different make-to-stock processes in order to allow companies tomeet a number of business requirements.

In this lesson we will discuss MTS vs MTO. Other strategies are highlighted on thegraphic; point out that this is a subset of Make-to-Order planning strategies and willbe discussed in a later lesson.



Figure 56: Make-to-Stock overview

Make-to-stock production means we build general stock in anticipation of customerdemand. We ship the customer order from our stock of finished goods.

If strategies are used for make-to-stock production, production takes place withoutsales orders already having to be present for the material concerned. If sales ordersare received, these orders can be met by warehouse stock so that reduced deliverytimes can be realized.

Make-to-stock production can also be executed for assemblies. In this case, thefinished products are not produced to stock but the necessary assemblies are procured.A sales order for a finished product can then be met quickly because it is only the finalassembly that has to be executed because the assemblies already exist.



R/3 contains several different make-to-order processes in order to allow companies tomeet a number of business requirements.

In this lesson we will discuss MTS vs MTO. Other strategies are highlighted on thegraphic; point out that this is a subset of Make-to-Order planning strategies and willbe discussed in a later lesson.



Figure 57: Make-to-Order Overview

In the Make-to-Order planning; execution cannot take place until actual customerdemand is realized. Typically Planned Independent Requirements are not entered forthe product and planning is not done ahead of time for the product. Only when thesales order is received can execution take place.

In Make-to-Order planning all aspects of planning and execution are linked directly tothe sales order line item.

� MRP planned orders are created directly with reference to the sales order item.� Execution (production orders, process orders, etc) are created with reference to

the sales order item.� Material is placed in specific inventory with reference to the sales order item.� Shipment occurs from specific inventory only.



Lesson Summary

You should now be able to:� Explain how make to stock and make to order will be represented in SAP ERP



Lesson:157

Make to Stock Planning StrategiesLesson Duration: 45 Minutes

Lesson OverviewSeveral of your products have extensive lead times and volatile demand. In orderto combat this and ensure high levels of customer service, you have decided toplace product in inventory in anticipation of customer demand. Review severalmake-to-stock (MTS) planning strategies to see how SAP ERP will allow planners tomodel different approaches with this concept.


� Explain how Net Requirments planning differs from Planning with FinalAssembly

� Demonstrate how to plan at the sub assembly level� Explain the concepts of Consumption and Reduction� Identify several popular planning strategies and their characteristics.

Discuss the following techniques:

� Strategy 10� Strategy 40� Thorough discussion in Consumption and reduction� Strategy 70� Strategy 52 (demo)� Strategy 59

Business ExampleAs a production planner several of your pumps sell directly from inventory. Somehave very predictable demand others have very erratic demand. In addition some ofyou pump assemblies are common to several finished pump products and you want toreduce lead times and inventory. You will use several planning strategies to minimizeinventory and keep service levels high.


SCM240 Lesson: Make to Stock Planning Strategies

Strategies of Make-to-Stock Production

Go through the basic characteristics of make-to-stock production again and derive thetwo strategies, 11 and 59, from the familiar strategies, 10, 40, and 70:

� Strategy 11 corresponds to strategy 10 but does not take existing warehousestock into account.

� Strategy 59 corresponds to strategy 70, except for phantom assemblies.

Brief explanation of the net requirements planning logic based on a numericalexample:

1. Stock: 15 pieces, planned ind. req.: 10 pieces, procurement? No. The stock istaken into account in the net requirements calculation.

2. Goods issue of 5 pieces: Stock 15 pieces→ planned ind. req. 10 pieces→ 5pieces (oldest requirement is reduced).

Make-to-Stock Production Gross Requirements Planning (11)

Gross requirements planning, focus on load on production.

Brief explanation of the gross requirements planning logic based on a numericalexample:

1. Stock 15 pieces, planned ind. req. 10 pieces, procurement? Yes. Stock is nottaken into account.

2. Goods issue of 7 pieces: Stock 15 pieces→ 22 pieces, planned ind. req. 10pieces→ 3 pieces (oldest requirement is reduced).

Settings for Gross Requirements Planning (11)

Mixed MRP indicator 2 is required for gross requirements planning. (Pay specialattention to this when resetting the planning data.)

Make-To-Stock Strategies and ConceptsMake-to-Stock Strategies



Figure 58: Strategies of Make-to-Stock Production

The make-to-stock production strategies plan production or procurement usingplanned independent requirements, which can be created from sales or forecastfigures. Sales orders are met by the warehouse stock.

Make-to-stock production strategies are used in industries in which demand and salesfluctuate but where production is to be kept at the same capacity. Fluctuations indemand and sales are balanced using warehouse stock.

Make-to-Stock

Figure 59: Anonymous Make-to-Stock (10)



The demand is defined without reference to sales orders. Sales orders are not relevantto MRP, but can be displayed for information purposes. You make this setting in the"No MRP" field in Customizing for the appropriate requirements class (workstep,"Defining Requirements Classes" in Customizing for SD).

Sales orders are covered by warehouse stock. In Sales and Distribution, you can carryout the availability check according to ATP logic. Material withdrawals for a salesorder reduce this sales order�s quantity.

The consumption of the demand program (that is of the planned independentrequirements) is carried out at goods issue (the indicator "PIR reduction" inCustomizing of the requirements class 30 must be set if you want to reduce thedemand program when delivering to a sales order). The oldest planned independentrequirement is reduced first according to the FIFO (first-in-first-out) principle usingthe requirement date. Future planned independent requirements are also reduced bygoods issues, if allowed by the consumption mode and the forward consumptionperiod.

In addition to net requirements planning (Strategy 10), gross requirements planning(Strategy 11) is another strategy of make-to-stock production. In the case of grossrequirements planning, no warehouse stock is taken into account. Only receiptelements are included in the net requirements calculation. In net requirementsplanning, the available warehouse stock for planning is taken into account.

Demonstration: Net Requirements Planning

PurposeTo explain net requirements planning

System DataSystem:Client:User ID:Password:Set up instructions:

Note: You can set navigation profile SCM001 during this demonstrationto call the main functions from the stock/requirements list. Refresh thestock/requirements list after each step. Execute the goods receipt and goodsissue transactions in a separate session or define up to five favorites for thepurpose.

1. Material R-F1##, Plant 1000



Check the material master and make the following settings: MRP type PD,strategy group 10 (F4 help for strategy group).

2. Convert the first two planned orders into production orders. Release bothproduction orders.

3. Post a goods receipt for the production orders (goods issue for order, movementtype 101, storage location 0002).

→ The stock level increases by the amount of the posted goods receipt; theplanned independent requirements remain the same. A new MRP run does notcause any new planned orders because the stock level that now exists is takeninto account in net requirements planning.

4. Create a customer requirement: 8 pieces for today + 6 weeks

→ The customer requirement does not affect planning (make-to-stockproduction). This can be determined by the fact that the available quantity inthe list is not affected.

5. Post a goods issue for the customer requirement (movement type 231, storagelocation 0002).

Reduction of the customer requirement, reduction of the warehouse stock,reduction of the oldest planned independent requirement according to the FIFOrule (first-in-first-out). If more material was removed than there were plannedindependent requirements in the past, then planned independent requirements inthe future are also reduced if a corresponding entry exists in the consumptionperiod forward (although this function does not actually have anything to dowith consumption).

You can display the subsequent documents for a customer requirement, such aspartially processed goods issue for a customer requirement, from the display ofthe requirements under Environment→ Status overview.



160Make-toStock

1. Material R-F1##, Plant 1000

Check the material master and make the following settings: MRP type PD,strategy group 10 (F4 help for strategy group). MM02

2. Convert the first planned order into a production order from the S/R List.

3. Post a goods receipt for the production orders (goods issue for order, movementtype 101, storage location 0002).

Logistics→ Production→ Production Control→ Goods Movements→ GoodsReceipt (MB31)

→ The stock level increases by the amount of the posted goods receipt; theplanned independent requirements remain the same. A new MRP run does notcause any new planned orders because the stock level that now exists is takeninto account in net requirements planning.

4. Customer requirement: 8 pieces for today + 6 weeks. Logistics→ Production→Production Planning→ Demand Management→ Customer Requirements→Create (MD81)

→ The customer requirement does not affect planning (make-to-stockproduction). This can be determined by the fact that the available quantity inthe list is not affected.

5. Post a goods issue for the customer requirement (movement type 231, storagelocation 0002).

Logistics→ Production→ Production Control→ Goods Movements→ GoodsIssue (MB1A)

→ Reduction of the customer requirement, reduction of the warehouse stock,reduction of the oldest planned independent requirement according to the FIFOrule (first-in-first-out). If more material was removed than there were plannedindependent requirements in the past, then planned independent requirements inthe future are also reduced if a corresponding entry exists in the consumptionperiod forward (although this function does not actually have anything to dowith consumption).



Planning with Final Assembly

Figure 60: Planning with Final Assembly Overview

In planning with final assembly (strategy 40), the main focus is on flexibility inreacting to customers� demands. Production, including final assembly, is triggered bythe planned independent requirements before the sales order is received. You plan theplanned independent requirements for the finished product in Demand Management.

Incoming sales orders consume these planned independent requirements. Plannedindependent requirements left unconsumed increase the warehouse stock - as longas they are not adjusted to customer requirements (�Adjust Requirements� is afunction to be run periodically to ensure that old, unconsumed planned independentrequirements no longer have an effect on planning).

If customer requirements exceeds planned independent requirements, the systemautomatically creates a planned order for the unplanned quantity in the next MRP run.In effect planning is on the higher of the two: Planned Independent Requirementsvs. Actual sales Requirements.



Figure 61: Consumption

To set up consumption of customer requirements, subassembly planning of dependentrequirements, or reservations with planned independent requirements, you must setthe consumption mode and the consumption period in the material master in the MRP3 view or in the MRP group.

The consumption mode defines the direction on the time axis in which theconsumption with planning should occur, starting from the date of the sales orderto the dependent requirement.

In backward consumption (consumption mode 1), the sales order or dependentrequirements consume planned independent requirements that are available before thecustomer requirement.

In forward consumption (consumption mode 3), the sales order or dependentrequirements consume planned independent requirements that are available aftermeeting the customer requirement.

You can combine backward and forward consumption only if you take theconsumption periods into account (consumption mode 2 or 4).

If no values are entered for the consumption mode and the consumption interval, thesystem uses the default setting with backward consumption for 999 days.

Note: If consumption mode 1 and the backward consumption period are notmaintained, only requirements on the same day are consumed.



The consumption indicator (consumption type) is important in addition to theconsumption mode and consumption periods. The consumption indicator controlswhether or not the planned independent requirements are consumed usingrequirements and/or dependent requirements and order reservations. The consumptionindicator is defined as a default value for each planned independent requirement classin Customizing for demand management. The indicator can be overridden in the itemdetail screen of planned independent requirements management.

Consumption vs. reduction

Consumption is not the only integration between actual sales requirements and plannedindependent requirements. Reduction of the planned independent requirements willalso take place as a result of the sales requirement.

Reduction is the process of actually reducing the value of the planned ind. requirementas it�s stored in the system. Whereas during �consumption� the actual value storedwas not changed, only the quantity passed to planning was lowered.

With the exception of planning strategy 11 (gross requirements planning) reductiontakes place when the goods are actually issued. In gross requirements planningreduction takes place when the goods are received into inventory.

Demonstration:

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Follow exercise:



Planning at the Assembly Level

Planning at the Assembly Level (70)

Consumption

Brief revision of the terms, consumption mode, consumption period, and consumptionindicator (consumption type):

Consumption mode, consumption interval: Maintain these in the material master(MRP 3) or in the Customizing for the MRP group parameters.

Customizing: Select Production→ Production Planning→ Demand Management→ Planned Independent Requirements→ Maintain consumption mode and periodof adjustment.

Default values for the consumption type for each requirements class: Determinationof concrete requirements, such as customer requirement, dependent requirement, andreservations, with which consumption occurs.

Customizing: Select Production→ Production Planning→ Demand Management→ Planned Independent Requirements→ Default Values and Presettings→ Definedefault values for consumption type per requirements class

Brief explanation of the subassembly planning logic based on a numerical example:

The motor assembly is to be developed into three different car models: A, B, andC. Planning is executed for the motor: 1000 pieces in January and procurement istriggered.

Sales orders are received for the cars.

400 pieces for A, 500 pieces for B, and 300 pieces for C.

The dependent requirements for the motors consume the planned independentrequirements; however, the dependent requirements exceed the planning quantityby 200 pieces.

This means that 1000 pieces can be obtained from the warehouse stock and 200 piecesmust still be procured.

Phantom Assemblies

Do not describe the planning strategy but describe the functions of a phantomassembly.



In exceptional cases, phantom assemblies can be placed in stock and withdrawn at alater date. You control the withdrawal using the function, �Edit components� of theplanned order of the material at a level higher than the phantom assembly level (for adetailed view of a component item click the button �From warehouse�).

Phantom Assembly Planning (59)

This strategy is very complicated and difficult to explain. You can think of it as amodification of strategy 70, in which the missing stock level of the assembly createsa further complication.

Go through the individual steps of this strategy based on the notes. While doingso, you should point out that the prerequisite to backflush the phantom assemblycomponents is of a technical nature and not part of the strategy. Technically, at leastone component of the phantom assembly must be subject to backflushing so that theplanned independent requirements and reservations are reduced with the phantomassembly.

Figure 62: Planning at the Assembly Level (70)

Planning at the assembly level (strategy 70 + assembly planning indicator set) isappropriate for production with variants, for example, when it is easy to specify arequirements forecast for certain assemblies than it is to do so for the variant diversityof the finished product.



In this planning strategy, the planned independent requirements for an assembly areplanned separately. The requirements are created at the assembly level and theserequirements trigger the production of the assembly.

If sales orders are received for the finished product, the BOM is exploded for thefinished product. Dependent requirements or reservations are also created for theassembly as a result of planned orders or production orders for the finished product.These dependant requirements consume the planned independent requirements ofthe assembly.

If, due to sales orders, planned orders, or production orders at finished productlevel, the dependent requirements or reservations exceed the assembly�s plannedindependent requirements, a planned order is created for the assembly during thenext planning run.

In the strategy group of the material master record, you must enter strategy 70 and themixed MRP indicator must be set for assembly planning.

Demonstration:

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Follow exercise:



Planning at the Phantom Assembly level

Figure 63: Phantom Assembly

A phantom assembly can represent a subassembly, which is created in the productionprocess, which is not placed into stock but used immediately. Phantom assemblies canalso represent a logical grouping. For example, a car radio assembly consists of theradio, speakers, and an aerial.

You flag a phantom assembly by entering a special procurement type in the materialmaster (view MRP 2) or by entering the indicator (or overriding it) in the BOM item.

In the planning run, the dependent requirements of the higher-level assembly aredirectly passed down to the components of the phantom assembly.

In exceptional cases, phantom assemblies can be placed in stock and withdrawn at alater date.



Figure 64: Phantom Assembly Planning (59)

You must have entered strategy 59 (phantom assembly planning) in the materialmaster of the phantom assembly and set the mixed MRP indicator 1 (subassemblyplanning) and the special procurement type 50 (phantom assembly).

The planned quantities for the phantom assembly are set in step one (1). This plannedindependent requirement leads to a dependent requirement for the components ofthe phantom assembly in MRP. Procurement of the components is triggered in steptwo (2).

The customer requirement or the planned order/production order at the finishedproduct level creates a dependent requirement/reservation at the phantom assemblylevel. Normally, this is not the case for phantom assemblies. However, withstrategy 59, these dependent requirements/reservations are created to balance theplanned independent requirements. However, these are not relevant for planning.Consumption of the planned independent requirements also means that the dependentrequirements are reduced at the component level. However, MRP-relevant dependentrequirements/reservations are created at the component level as a result of the plannedorder/production order for the finished product in step three (3).

After final assembly has been carried out in step four (4), the phantom assembly isconfirmed and, if necessary, the components of the assembly are backflushed. Theplanned independent requirement and the reservation of the phantom assembly andthe reservations of the components are reduced in step five (5).



Backflushing is important so that the planned independent requirements and thereservations can be reduced consistently.

Figure 65: Phantom Assembly Planning Settings (59)

If you want to use the Phantom assembly planning (59) strategy, you must make thefollowing settings in the material master of the assembly (�MRP� view):

� Special procurement type = 50 (phantom assembly).� Strategy group = 59 (planning at the phantom assembly level).� Mixed MRP indicator = 1 (assembly planning with final assembly).

In the material master of all the components of the phantom, set the indicator forbackflush (MRP 2 view) to ensure consistent reduction of the planned independentrequirements and the reservations. You should also assign the components to the sameoperation in the routing to ensure that the components are confirmed at the same time.



Reorganizing the Planned Independent Requirements

Figure 66: Reorganizing Planned Independent Requirements

Planned independent requirements that have not been reduced can be reorganizedusing SAP R/3 transactions MD74, MD75, and MD76. The goal of this is to deleteobsolete planned independent requirements from the database.

Reorganization takes place in 3 steps:

1. Adjust requirements: Quantities that have not been consumed/assigned beforethe reorganization key date which is to be specified (this date can also be inthe future; the reorganization period is also possible per plant) are set to 0 andare flagged for reorganization.

Note: This should not be confused with adjustment according toMRP group in SAP R/3 Enterprise, whereby planned independentrequirements within an adjustment period are ignored by the systemduring planning, but remain quantitatively preserved.

2. Reorganization of schedule lines: Schedule lines with quantity 0 before thekey date are deleted from the database.

3. Delete history: The history can be deleted by determining a (further) key date.

Alternatively, a reorganization period can be maintained per plant in SAP R/3Enterprise (demand management Customizing). This can be calculated backwardsfrom the current date.



It is recommended that you periodically execute reorganization, such as once permonth.



169 Exercise 6: Using Make to Stock planningstrategiesExercise Duration: 30 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Maintain the planning strategy settings in the material master of product R-F2##.� Receive a sales order for the product.� Verify the requirements type and consumption process are functioning as

expected.

Business ExampleFinished product R-F2## is built in advance and inventoried so customer shipmentscan be made on an on-time basis. However, if sales orders exceed the expectedplanned demand, additional product must be produced. Planning strategy 40 (Planningwith final assembly) will be used to control this planning situation. If we oversell thecurrent month�s projection; that does not mean less will be sold in another month.Therefore our business environment will dictate backward consumption only.

Assembly R-B4## is required for the production of R-F2##. It is also sold as a sparepart and used in other finished products that are not planned. Therefore, we mustplan this material at the component level.



1.



Task 1: Planning with final assembly: RequirementsStrategy 40Material R-F2##, plant 1000 is to be planned using strategy 40 (30 days backwardconsumption only). To assure proper planning we will maintain the materialmaster. We will then verify the planned independent requirements using the stockrequirements list. After the requirements have been entered, they will be verifiedand we will run MRP.

Finally, an actual sales order is received, which will consume the independentrequirements. The material will then be re-planned for accuracy.

1. Maintain the material master for pump R-F2##. Assure it is setup for planningstrategy �Planning with final assembly�. Consumption mode �Backward Only�and backward consumption period of 30 days.

2. Access the stock requirements list to review the current planning situation formaterial R-F2##at plant 1000.

3. What is the requirements type of the planned independent requirements?

4. Have planned orders been created to offset the shortages? On what dates?

5. Enter a sales order (type OR) for 50 pcs of material R-F2## to be delivered intwo months.

6. Return to the stock requirements list to see if the planning situation has changed.




7. Have the planned independent requirements been consumed.

8. Has the planning situation changed?

9. If MRP is run again, how will it change the planning results?

10. In a second session, run a single-item, multi-level MRP run for R-F2## at plant1000. Use the following parameters for the planning run:








11. Access the stock requirements list to review the current planning situation.




12. Have the planned orders been adjusted to the revised demand situation?

Task 2: Planning at assembly level: RequirementsStrategy 70Material R-B4##, plant 1000 is to be planned using strategy 70 (30 days backwardconsumption only). To assure proper planning we will maintain the material master.We will then enter planned independent requirements into demand management andverify them using the stock requirements list. After the requirements have beenentered, they will be verified and we will check consumption.

1. Maintain the material master for component assembly R-B4##. Assure it issetup for planning strategy �Planning at assembly� level. Consumption mode�Backward Only �and backward consumption period of 30 days.

2. Projected total demand for R-B4##in plant 1000is 1200 pcs per month (for thenext six months). Enter these as planned independent requirements



5. Why are the planned independent requirement quantities not displaying thevalues entered in the previous step?

6. Display the consumed quantities using the total requirements display.



Solution 6: Using Make to Stock planningstrategiesTask 1: Planning with final assembly: RequirementsStrategy 40Material R-F2##, plant 1000 is to be planned using strategy 40 (30 days backwardconsumption only). To assure proper planning we will maintain the materialmaster. We will then verify the planned independent requirements using the stockrequirements list. After the requirements have been entered, they will be verifiedand we will run MRP.

Finally, an actual sales order is received, which will consume the independentrequirements. The material will then be re-planned for accuracy.

1. Maintain the material master for pump R-F2##. Assure it is setup for planningstrategy �Planning with final assembly�. Consumption mode �Backward Only�and backward consumption period of 30 days.

a) SAP ERP menu path: Logistics→ Production→ Master Data→ MaterialMaster→ Material→ Change→ Immediately (MM02) , and enter thefollowing:

Enter material R-F2## and select enter

b) Choose the MRP 3 view and select enter

c) Enter plant 1000 and select enter

d) On the MRP 3 tab, make sure the entries are made per the table below:

Field ValueStrategy group 40Consumption mode 1Bwd consumption per. 30Fwd consumption per. Leave blank

e) Select save . Enter through any warning messages.




2. Access the stock requirements list to review the current planning situation formaterial R-F2##at plant 1000.



Answer: The requirements type is VSF.

4. Have planned orders been created to offset the shortages? On what dates?

Answer: A previous MRP run has created planned orders to satisfy the demand.The planned orders are scheduled to be completed by the requirements date ofthe planned independent requirements.




5. Enter a sales order (type OR) for 50 pcs of material R-F2## to be delivered intwo months.

a) System→ Create session

b) SAP ERP menu path: Logistics→ Sales and Distribution→ Sales→Order→ Create (VA01).

On the initial screen enter data from the table below and select

Order Type ORSales Organization 1000Distribution Channel 10Division 00

c) Enter the data per the table below:

Field ValueSold-to party 1000Ship-to party 1000PO Number PO##Req.deliv.date two months from today

Material R-F2##Order quantity 50

d) Select , and confirm any warnings regarding the billing date and thensave .


a) Go to your other session that should be open.

b) Refresh the stock/requirements situation by selecting

7. Have the planned independent requirements been consumed.

Answer: As a result taking the sales order, planned independent requirements inthe appropriate period have been lowered by the amount of the sales order.




8. Has the planning situation changed?

Answer: As a result of the sales order, the total demand quantity has not changed.However, the requirement dates have changed. But the planned order for thetotal quantity is still due on the date of the planned independent requirement.

9. If MRP is run again, how will it change the planning results?

Answer: The planned order generated to offset the planned independentrequirement will be lower. Another planned order will be created for the quantityof the sales order and due on the sales requirement date. In all, the total demandfor the period will remain the same.














12. Have the planned orders been adjusted to the revised demand situation?

Answer: Yes




Task 2: Planning at assembly level: RequirementsStrategy 70Material R-B4##, plant 1000 is to be planned using strategy 70 (30 days backwardconsumption only). To assure proper planning we will maintain the material master.We will then enter planned independent requirements into demand management andverify them using the stock requirements list. After the requirements have beenentered, they will be verified and we will check consumption.

1. Maintain the material master for component assembly R-B4##. Assure it issetup for planning strategy �Planning at assembly� level. Consumption mode�Backward Only �and backward consumption period of 30 days.


Enter material R-B4## and select enter




Field ValueStrategy Group 70Consumption mode 1Bwd consumption per. 30Fwd consumption per. Leave blankMixed MRP 1

e) Select save . Enter through any warning messages.




2. Projected total demand for R-B4##in plant 1000is 1200 pcs per month (for thenext six months). Enter these as planned independent requirements

a) SAP ERP menu Path: Logistics→ Production→ Production Planning→Demand Management→ Planned Independent Requirements→ Create(MD61)

b) Enter material R-B4## at plant 1000.

c) Starting with the current period; enter 1200 in each monthly period forthe next six months.

d) Save




Answer: The requirements type is VSFB.

5. Why are the planned independent requirement quantities not displaying thevalues entered in the previous step?

Answer: R-B4## is set for planning strategy 70. The planned independentrequirements for this item are consumed by dependant requirements. There aredependant requirements for this material to be used in R-F2##.

6. Display the consumed quantities using the total requirements display.

a) From within the stock/requirements list: Environment→ Total ReqmtsDisplay

b) The original planned independent requirement quantity is displayed. Aswell as the details of what has consumed this requirement.

Hint: This display can also be accessed from the standard menupath. Logistics→ Production→ Production Planning→ DemandManagement→ Evaluations→ Display Total Reqmts

Note: MRP should be run again to correctly plan the materialbased on the increased demand. That is not necessary at this point.But can be done at the students discretion.



Lesson Summary

You should now be able to:� Explain how Net Requirments planning differs from Planning with Final

Assembly� Demonstrate how to plan at the sub assembly level� Explain the concepts of Consumption and Reduction� Identify several popular planning strategies and their characteristics.



Lesson:180

Make to Order Planning StrategiesLesson Duration: 45 Minutes

Lesson OverviewSeveral of your products have limited demand and respectable lead times. In order todeal with this sporadic demand and ensure high levels of customer service, you havedecided to only produce this product in response to actual customer demand. Reviewseveral planning strategies in the make-to-order (MTO) manner to see how SAP ERPwill allow planners to model different approaches of this concept.


� Explain how make to order works in SAP ERP� Demonstrate how to plan at the sub assembly level while still maintaining make

to order at the finished good level� Identify several popular planning strategies and their characteristics� Explain the difference between make to order and assembly to order

Discuss the following techniques:

� Strategy 20� Strategy 50� Strategy 60 (demo)� Strategy 74 (demo)� Assemble to Order (81, 82,..... ) (demo)� Individual collective flag

Business ExampleAs a production planner several of your pumps are very complex and expensive whichprohibits you from keeping them from selling directly out of inventory. Some havevery predictable demand others have very erratic demand. In addition some of yourpump assemblies are common to several finished pump products and you want toreduce lead times and inventory. You will use several planning strategies to minimizeinventory and keep service levels high.


SCM240 Lesson: Make to Order Planning Strategies

Make-to-Order

Figure 67: Production Based on Sales Orders

When working with the strategies for make-to-order production, the sales order isthe only pegged requirement.

In addition to classic make-to-order production, planning without final assembly isalso possible. This means that although planning occurs at the finished product orassembly level, the final assembly is triggered by a sales order.

Figure 68: Strategy 20: Make-to-Order

The net requirements calculation is carried out individually for every sales order.Stock cannot be swapped back and forth between sales orders.

The procurement elements, that is the planned orders are created with reference to thesales order and are managed in the individual customer segment. This direct referenceto the sales order also remains in the production order.



Influencing MTO at the Component Level

Figure 69:

The individual/collective indicator in the material master record determines whether acomponent is procured for a special customer requirement in the individual segment.

The indicator "1" for individual requirements means that the material is being speciallymanufactured or procured for a sales order. A special individual segment is createdfor each requirement. An individual requirement is only created if the higher-levelmaterial does not create a collective requirement.

The indicator "2" for collective requirements means that the material is producedor procured for various requirements. You can find these requirements in the netrequirements segment.

The indicator "blank" means that the component is to be planned in the same way asthe higher-level assembly.

In the above example, two individual segments are created for the shaft for salesorders A and B.

If you want to control the material item individually for the respective BOM, use the"explosion control" field in the component�s item data (general data view). The settingin the BOM overrules the setting in the material master record.



Planning without Final Assembly

Figure 70: Planning Without Final Assembly (50/52):

With strategy 50 (planning without final assembly), the finished product is producedbased on the sales order. To achieve short delivery times, certain assemblies should beproduced or procured before the sales order for the finished product is received.

Planning that is independent of the sales order occurs using planned independentrequirements for the finished product. In the MRP run, the system creates plannedorders for the finished product to cover these requirements.

Note: These planned orders are created with an Order Type: VP. Plannedorders of this type cannot be changed or converted into an executable ordersuch as a production order. Planned orders of type VP exist to drive dependantrequirements and capacity requirements.

However, the system creates planned orders in the MRP run at the subassemblyand component levels in case of a material shortage exists. These plannedorders can be converted into a production order or a purchase requisition.

These planned orders cannot be converted into production orders, such as order typeVP. However, the system creates planned orders in the MRP run at the subassemblyand component levels in case of a material shortage exists. These planned orders canbe converted into a production order or a purchase requisition.



Final assembly is triggered on the receipt of the sales order. With the strategy50, the sales order appears in an individual customer planning segment in thestock/requirements list, in which planning is executed separately for the sales order.With the strategy 52, the sales order is administered in the net requirements planningsegment. This means that during requirements planning and creation of a sales order,any existing make-to-stock inventory and other receipt elements can be taken intoaccount in the net requirements planning segment. The quantity produced on the basisof a sales order is also posted to the make-to-stock inventory.

You can only carry out the availability check for planned independent requirements.That is, the check of planned independent requirements at the finished product level.

Figure 71: Planning Without Final Assembly (52)

Note for this procedure that the lot-size procedure �lot-for-lot� is used. You alsoneed to make sure that neither rounding values/rounding profiles nor minimum ormaximum lot sizes are maintained. Otherwise, the assignment logic is not compatiblewith an availability check, which could lead to excess planning or incorrect resultsin the availability check.



Planning with a Planning Product

Figure 72: Overview: Planning with a planning material

The planning strategy "Planning with planning material" is particularly useful if youhave several finished products with the same main assemblies.

Here, you define a planning material which contains the common assembly and itsBOMs.

The planning run is carried out for the planning material which triggers the productionand procurement of the planning material�s components.

The sales order for a finished product which refers to the planning material reducesthe planned independent requirements of the planning material and simultaneouslytriggers final assembly.

When processing the sales order, you can check whether the planned independentrequirements quantities cover the demand (that is, the availability check as a checkagainst the planned independent requirements).

In the material master record of the planning material, you must enter strategy 60, theconsumption mode and the consumption periods. In the material master records whichrefer to the planning material, you must enter the planning material as a referenceand strategy 60. The consumption periods are calculated starting from the plannedindependent requirements of the planning material.



Demonstration: SAP R/3 Strategy 60 (Planning WithPlanning Material)

PurposeTo demonstrate Planning with Planning Material Strategy

Note: Carry out this demonstration if the course participants are interested inthis strategy and you have enough time. You do not need to go into changesand effects on the assemblies here. Otherwise, explanation of the abovementioned graphics, which also contain a deviant example, should suffice.

System DataSystem:Client:User ID:Password:Set up instructions:1. Material master for R-F130, plant 1000, MRP 3, strategy group 60, consumption

mode 2, consumption period forward/backward each 30 days.

2. Material masters for R-F126, R-F127, R-F128, plant 1000, MRP3: Each withstrategy group 60, planning material R-F130, planning plant 1000, planningconversion factor 1.

3. Create planned independent requirements for R-F130, plant 1000: From thecurrent month +2 to the current month +4 each for 10 pieces.

4. Transaction MC84 (this can be found under Production→ SOP→ ProductGroup→ Create). Create product group: PLNGRP, product group, plant 1000,base unit: Pieces (PC). Materials R-F126, R-F127, R-F128, R-F130 all plant1000, Enter, confirm, save.

5. Select MRP Run for product group PLNGRP.

6. Current stock/requirements list, collective display for PLNGRP. Leave all blankexcept for R-F130 (VSEV requirements)

7. Create customer requirements (KEVV):

3 pieces R-F126, current month +2

24 pieces R-F127, current month + 3

5 pieces R-F128, current month +4



8. Look at the stock/requirements list.

9. Multilevel planning run for product group PLNGRP.

10. Look at the stock/requirements list. Display the procurement elements andexplain the consumption situation.

11. If necessary, clean the data or do not continue to use the same materials.

Planning without Final Assembly at the Sub-Assembly

Figure 73: Planning at Assembly Level w/o Final Assembly (74) (1)

The strategy �Assembly planning without final assembly� (strategy 74) is a mixtureof the strategies �assembly planning� (strategy 70) and �planning without finalassembly� (strategy 50 or 52). As in strategy 70, in strategy 74 also, the plannedindependent requirements for an assembly are regarded separately to the end productand independent of any lot size. You do not have to know the finished production forwhich the assembly is required.

The planned independent requirements are created at the assembly level. As opposedto the strategy 70 and as in the strategies 50 and 52, the creation of the plannedindependent requirements does not trigger the production of the assemblies but ratherthe procurement of the components. The components are placed into stock till



the planned order or the production order for the finished product is received. Theproduction of the assembly is not triggered till the planned order or the productionorder for the finished product is received.

The planning run is carried out for the assembly and initially creates planned ordersfor the assembly�s planned independent requirements. These cannot be convertedinto a production order nor can they be converted in repetitive manufacturing (ordertype VP). The planned independent requirements and the planned orders for theassembly are in the planning segment. Conversion and procurement (assembly) arenot possible until a planned order or a production order for the finished product iscreated. However at component levels below the assembly, the system creates plannedorders in the planning run if a material shortage exists. These planned orders can beconverted into a production orders or a purchase requisition.

At this stage of planning, the stock at the assembly level is not taken into account.

Production of the assembly is not triggered till receipt of the planned order orthe production order for the finished product. The dependent requirements andreservations created as a result of the planned order or the production order consumethe planned independent requirements of the assembly (as in the strategy 70).

Depending on the strategy of the finished product and the individual/collectiveindicator of the assembly in the net segment, the dependent requirements andreservations of the assembly and the accompanying planned orders of the assemblyappear in an individual customer segment or in the individual customer planningsegment.

In the planning run, dependent requirements and reservations in the net requirementssegment or an individual customer segment result in planned orders that can beconverted or that can be dispatched in repetitive manufacturing. This allows theproduction of the assembly. At this stage of planning, stock at the assembly level isregarded as stock in the net segment or as sales order stock. In the planning segment,the planned order quantity of the VP planned order is reduced according to the newrequirements situation.

In the first step, you create the requirement quantities expected in the future for theassembly. You do this in demand management.

Sales orders, planned orders, or production orders are created for the finished product.

The resulting dependent requirements or reservations for the assembly consume theplanned independent requirements of the assembly.

The consumption mode and the consumption periods are calculated according to thereservation or the dependent requirements.



Figure 74: Planning at Assembly Level w/o Final Assembly (74) (4)

If you want to use the �Planning without final assembly� strategy (74) for the assembly,you must make the following settings in the material master record (�MRP� view):

� The strategy group 74 (planning without final assembly at assembly level) forthe assembly.

� Mixed MRP indicator = 3 (assembly planning without final assembly).� Consumption parameters (consumption mode, backward consumption period,

and forward consumption period).

Individual/collective indicator = 2 (collective requirements only) for the componentsto be procured and stored before receipt of the planned or production order.

Individual/collective indicator = 1 (individual requirements only) or blank (individualand collective requirements) for the components not to be procured until receipt of theplanned order or the production order for the finished product.

Demonstration: Subassembly Planning Without FinalAssembly (74)

PurposeTo learn about subassembly planning without final assembly



System DataSystem:Client:User ID:Password:Set up instructions: Materials R-F1##, R-B1##, R-T1##, R-T2##, R-T3##,in Plant 10001. Change the material master R-B1##:

MRP 3: Strategy group 74, consumption mode 2, consumption interval backwardand forward each 30 days, mixed MRP indicator 3

2. Change material master R-T2##: Individual/collective indicator = blank. Thereshould be no warehouse stock.

3. Create planned independent requirements: 200 pieces R-B1## for current month+4.

4. Execute multilevel requirements planning for R-B1##.

→ Planned order (not convertible) in planning segment created. Procurement ofthe component R-T1## is triggered using dependent requirements. For R-T2##,the dependent requirements end up in the planning segment due to the ind/collindicator = blank. Also, display the stock/requirements list for R-T3##. Nodependent requirement is created. Ask the participants why not: → MRP typeVB (manual reorder point planning).

5. → Ensure that strategy group 20 is entered for R-F1##.

Create customer requirement for R-F1##: 50 pieces for 15th of the currentmonth + 4.

6. Execute multilevel requirements planning for R-F1##.

→ Planned order created.

7. Display stock/requirements list for R-B1##: A convertible planned order wascreated in the net planning segment for R-F1##. Demonstrate the consumptionof the dependent requirements for R-F1## with the planned independentrequirements for R-B1##.

Display the stock/requirements lists for R-T1## and R-T2## and explain thechanged situation.



Assemble-to- Order (ATO)

Figure 75: Overview: Assembly Processing

Assembly processing is a form of sales order processing. The procurement elementsare created when you create the sales order items.

In general, the components of the finished product have already been manufactured.

Once you have created the sales order, the system checks the availability of thecomponents (for the production order). It also determines a possible delivery dateand costs the order.

With strategy 82, creating the sales order triggers the creation of a production order. Itis not necessary to carry out a separate MRP run. With strategy 81, when you create asales orders, the system creates a planned order for repetitive manufacturing and withstrategy 83, it creates a network for engineer-to-order production.

Order processing is carried out using the tools available in production control, deliveryis made in Sales and Distribution.

The total confirmation date depends on the date of the components which are last tobe available. The confirmation quantity depends on the available quantity of thecomponents with the lowest confirmed quantity on the requirements date.

Assembly processing can either be carried out statistically (an assembly order persales order item) or dynamically (several assembly orders per sales order item).Dynamic processing enables you to execute partial deliveries. In this case, however,the direct reference to the sales order is lost.



Demonstration: Assembly Processing

PurposeTo learn about assembly processing

System DataSystem:Client:User ID:Password:Set up instructions:1. Material master R-F1##: Enter the strategy group 82 (MRP 3).

2. Material master of the assembly R-B3## (I/C = blank): Checking group ZN(no check).

3. Create planned orders manually (MD11) for R-B1## and R-B4##, today + 10weeks, each 10 pieces.

4. Create sales order (order type TA) (VA01): Sold-to the party 1000, ship-to theparty 1000, any order number, the sales organization 1000, distribution channel10, division 00, today + 6 weeks, R-F1##, 12 pieces.

→ The system automatically creates an assembly order or rather due to thestrategy 82, a production order. The component availability check is executedon the basis of this. Set the scheduling of the production order to �backward�without a time. Adopt the generated total commitment date as the finish date.

Complete delivery, indicator fix date not set? The sales order remains on thedesired date in the transaction MD04. This should still be relevant for planning.Only the schedule line remains on the confirmed date, the production orderhas a rescheduling message.

5. Postpone the order finish date of the production order by one week→ theschedule line of the sales order is also postponed.

Changes to the quantity or dates in the production order only affect the schedulelines of the sales order.

6. Change to the sales order quantity→ new availability check: Complete delivery,�fix date� set→ in the transaction MD04. The sales order date is adjusted to suitthe availability date of the production order, which no longer has a reschedulingmessage.



191 Exercise 7: Make to Order in SAP ERPExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how to a produce in a pure make-to-order environment (strategy

20)� Demonstrate how to plan components and subassemblies while maintaining

make-to-order at the finished product level.� Generate a production plan for an assembly using strategy 50.

Business ExampleSeveral of our products are complex and expensive. The demand can also be veryerratic. Therefore we do not keep the finished product in inventory. The product willbe produced as the customer requires it.

We also have a number of assemblies that are commonly used throughout manyfinished products. These assemblies are expensive once produced. However, the leadtime to produce is not long. For these items, we will project with planned independentrequirements, however we will not assemble them until the actual dependant demand isreceived. The plan will serve to drive component requirements and capacity planning.





Task 1: Make-to-Order: requirements Strategy 20For Material R-F5##, plant 1000 we will only begin the planning and executionprocess when actual customer demand is received. For this we will use strategy 20.To assure proper planning we will maintain the material master.

Actual sales orders will be received. These sales order will drive planning andexecution in their own �planning segments�. ie: Planning and execution will be tieddirectly to the sales demand.

One assembly R-B3## must also be tied directly to the sales order demand. The othercomponents should be planned as �collective� or general stocking.

1. Maintain the material master for pumpR-F5## . Assure it is setup formake-to-order planning.

2. Create a sales order type OR for 50 pcs of material R-F5## to be delivered intwo months to customer 1000 and ship-to 1000.


4. Is there any inventory available? Can this inventory be used to satisfy sales orderdemand in the given scenario (strategy 20)?

5. Enter another sales order type OR for 15 pcs of material R-F5## to be deliveredin three months. Do this in another session.


7. Run a single-item, multi-level MRP run for R-F5## at plant 1000. Do this inanother session. Use the following parameters for the planning run:








Field ValuePlanning mode 1 - Adapt Planning Data



8. View the planned orders that were generated.

9. Display the stock requirements list for assembly R-B3##.

10. From the Stock/Requirements lists for the R-F5## at plant 1000, convert the firstplanned order to a production order and release. Refresh the S/R list and notethe production order number.

11. Confirm production of the order.


Task 2: Planning without final assembly: RequirementsStrategy 50Material R-F4##, plant 1000 is to be planned using strategy 50 (30 days backwardconsumption only). To assure proper planning we will maintain the materialmaster. We will then verify the planned independent requirements using the stockrequirements list. After the requirements have been entered, they will be verifiedand we will run MRP.

Finally an actual sales order then gets received that will consume the independentrequirements. The material will then be re-planned for accuracy.

1. Maintain the material master for pump R-F4##. Assure it is setup for planningstrategy �Planning without final assembly�. Consumption mode �BackwardOnly �and backward consumption period of 30 days.






4. In what planning segment are the independent requirements and planned orderscontained?

5. What is the order type of these planned orders? What does this mean?

6. Enter a sales order (type OR) for 10 pcs of material R-F4## to be delivered intwo months for customer 1000 and ship-to 1000.



Field ValueProcessing Key NETCH

Create Purchase Req. 1 - Purchase Requisitions

Delivery Schedules 3 - Schedule lines

Create MRP List MRP List

Planning Mode 1 - Adapt Planning Data

Scheduling 2 - Lead time Scheduling

Also Planning Unchgd comp. Select





10. From the Stock/Requirements list, display the consumed quantities using thetotal requirements display for your R-F4## at plant 1000.



Solution 7: Make to Order in SAP ERPTask 1: Make-to-Order: requirements Strategy 20For Material R-F5##, plant 1000 we will only begin the planning and executionprocess when actual customer demand is received. For this we will use strategy 20.To assure proper planning we will maintain the material master.

Actual sales orders will be received. These sales order will drive planning andexecution in their own �planning segments�. ie: Planning and execution will be tieddirectly to the sales demand.

One assembly R-B3## must also be tied directly to the sales order demand. The othercomponents should be planned as �collective� or general stocking.

1. Maintain the material master for pumpR-F5## . Assure it is setup formake-to-order planning.






Field ValueStrategy group 20Consumption mode blankBwd consumption per. blankFwd consumption per. blank

e) Select save .




2. Create a sales order type OR for 50 pcs of material R-F5## to be delivered intwo months to customer 1000 and ship-to 1000.



On the initial screen enter data from the table below and select Enter.



Field ValueSold-to party 1000Ship-to party 1000PO Number PO##Req.deliv.date two months from today


d) Select Enter

, to confirm any warnings regarding the billing date and Save..



4. Is there any inventory available? Can this inventory be used to satisfy sales orderdemand in the given scenario (strategy 20)?

Answer: Inventory is available and displayed on the top line (general stock).This inventory is not available for use in the make-to-order scenario. It wouldhave to be transferred to sales order stock to be available to satisfy the demand.




5. Enter another sales order type OR for 15 pcs of material R-F5## to be deliveredin three months. Do this in another session.






Field ValueSold-to party 1000Ship-to party 1000PO Number PO##Req.deliv.date three months from today


d) Select Continue (enter), to confirm any warnings regarding the billingdate and Save..



b) Refresh the stock/requirements situation by selecting Refresh

c) The sales order should be displayed in it�s own planning segment.

7. Run a single-item, multi-level MRP run for R-F5## at plant 1000. Do this inanother session. Use the following parameters for the planning run:













c) Select Back twice to return to the main menu.

8. View the planned orders that were generated.



c) Double click on a planned order in the sales order planning segment.

d) Select change

e) Select the �Assignment� Tab and the sales order that the planned order istied to is displayed. Select to return to the list.

9. Display the stock requirements list for assembly R-B3##.

a) Go to your other session that should be open. From within the stock

requirements list; enter R-B3## in the material field and enter .

b) The assembly is also planned in individual segments referring to thesales requirement. This is due to the individual/collective indicator beingset to �1 or blank.�




10. From the Stock/Requirements lists for the R-F5## at plant 1000, convert the firstplanned order to a production order and release. Refresh the S/R list and notethe production order number.

a) Return to the final assembly material by entering R-F5## in the materialfield.

b) Double click on the planned order for the customer demand.

c) Select to convert to a production order.

Select to release the order.

d) Save and note the production order number.

Production Order: _______________________

11. Confirm production of the order.

a) Logistics→ Production→ Production Control→ Confirmation→ Enter→ For Order (CO15).

b) Enter the production order number and select .

c) Accept the default values and save.




c) The inventory received by confirming the production order is onlyavailable in the individual planning segment.

Note: The inventory contained in the individual segment cannot beused for any other demands.




Task 2: Planning without final assembly: RequirementsStrategy 50Material R-F4##, plant 1000 is to be planned using strategy 50 (30 days backwardconsumption only). To assure proper planning we will maintain the materialmaster. We will then verify the planned independent requirements using the stockrequirements list. After the requirements have been entered, they will be verifiedand we will run MRP.

Finally an actual sales order then gets received that will consume the independentrequirements. The material will then be re-planned for accuracy.

1. Maintain the material master for pump R-F4##. Assure it is setup for planningstrategy �Planning without final assembly�. Consumption mode �BackwardOnly �and backward consumption period of 30 days.





d) On the MRP 3 tab, make sure entries are made per the below table:

Field ValueStrategy Group 50Consumption mode 1Bwd consumption per. 30Fwd consumption per. Leave blank




Answer: The requirements type is VSE.




4. In what planning segment are the independent requirements and planned orderscontained?

Answer: Independent requirements and planned orders are contained in thesegment planning without assembly.

5. What is the order type of these planned orders? What does this mean?

Answer: The order type is displayed the planned order is double clicked. Theseare order type VP.Orders of type VP cannot be executed. They cannot be converted or changed.They exist strictly to drive dependant demand and capacity requirements.

6. Enter a sales order (type OR) for 10 pcs of material R-F4## to be delivered intwo months for customer 1000 and ship-to 1000.






Field ValueSold-to party 1000Ship-to party 1000PO Number PO##Req.del.date two months from todayMaterial R-F4##Order quantity 10

d) Select Enter, to confirm if any warnings regarding the billing dateand Save.







c) The sales order should be displayed in it�s own planning segment.

d) The planned independent requirements have been consumed.



Create Purchase Req. 1 - Purchase Requisitions

Delivery Schedules 3 - Schedule lines

Create MRP List MRP List


Scheduling 2 - Lead time Scheduling

Also Planning Unchgd comp. Select







c) The planned order has been generated in the sales order planning segment.

d) This new planned order is a type KD (make-to-order) and can be executedto.




10. From the Stock/Requirements list, display the consumed quantities using thetotal requirements display for your R-F4## at plant 1000.

a) From within the stock/requirements list: Environment→ Total Reqmtsdisplay

b) The original planned independent requirement quantity is displayed. Aswell as the details of what has consumed this requirement.

Hint: This display can also be accessed from the standard menupath. Logistics→ Production→ Production Planning→ DemandManagement→ Evaluations→ Display Total Reqmts

Note: MRP should be run again to correctly plan the materialbased on the increased demand. That is not necessary at this point.But can be done at the students discretion.



Lesson Summary

You should now be able to:� Explain how make to order works in SAP ERP� Demonstrate how to plan at the sub assembly level while still maintaining make

to order at the finished good level� Identify several popular planning strategies and their characteristics� Explain the difference between make to order and assembly to order



Lesson:205

Settings and CustomizingLesson Duration: 50 Minutes

Lesson OverviewIn this lesson, you will learn about customizing settings for MRP.


� Customize MRP settings

Hint: Setting the Requirement Parameters:

In transactions MD61, 62, 63 (Create, change, display planned independentrequirements), you can preset the requirements parameters. This function isnot advisable if using strategies, and then only for displaying and changing.

Business ExampleThe Precision Pump company constitutes a number of independent business units formanufacturing pumps. While planning for the company products, you need to adjustMRP settings and customize strategies for requirements planning.

Demonstration: Planning with Final Assembly (Strategy50/52)

PurposeTo learn about planning with final assembly

System DataSystem:Client:User ID:Password:Set up instructions: Materials R-F1##, R-B1##, R-B3##, Plant 10001. Change material master R-F1##:


SCM240 Lesson: Settings and Customizing

MRP 3: Strategy group 50, consumption mode 2, and consumption periodbackward and forward each 30 days.

2. Create warehouse stock 10 pieces for R-F1##: Goods receipt→ Other→Without Purchase order (movement type 501, storage location 0002).

3. Create planned independent requirements: 120 pieces R-F1## for current month+2.

→ Planned independent requirements are displayed in a separate planningsegment.


→ R-F1##: VP planned order is created. This cannot be converted to aproduction order. For details, see conversion indicator in planned order. Existingwarehouse stock is not taken into account.

→ R-B1##: Dependent requirements and convertible planned order in collectivesegment (I/C=2). In addition, existing warehouse stock is taken into account.

→ R-B3##: Dependent requirement and non-convertible planned order inplanning segment (I/C=blank).

5. Create customer requirement: 11 pieces R-F1## for the fourth of the currentmonth + 2 and another for 13 pieces for the same date.

→ Display of customer requirements in individual customer segment,consumption with planned independent requirements.

6. Change the material master R-F1##: Enter the strategy group 52.

7. Create additional customer requirements, now with a new strategy: 15 piecesR-F1## for the sixth of the current month + 2, and another for 16 pieces forthe same date.

→ Display customer requirements in collective segment and consumption withplanned independent requirements.


→ R-F1##: Convertible customer planned orders for 11 and 13 pieces inindividual customer segments, convertible planned order for 15+16-10=21pieces in the collective segment taking into account the warehouse stock,planned order for 120 -11 -13 -15 -16 = 65 pieces reduced in planning segment.

→ R-B1##: Planned orders in the collective segment adjusted to fit the newsituation as far as dates are concerned.



→ R-B3##: As R-F1##.

MRP Settings and Strategy Customizing

Figure 76: Customizing: Planned Indep. Reqmts Management

The planning strategy is an effective procedure for planning a material.

You define the planning strategy using a requirements type from planned independentrequirements management, a requirements type from sales order management, or byeffectively combining both requirements types.

The strategy group enables you to combine several planning strategies.



Figure 77: Strategy Groups and Planning Strategies

You can create the strategy groups in Customizing, that is, in the work step �DefiningStrategy Groups�. A strategy group can contain a main strategy and up to sevenalternative strategies. You can also create the strategies in the Customizing forDemand Management.

You assign the strategy group to the material in the material master record (MRPview) or through the MRP group.

When you create the customer requirements or the planned independent requirements,the system uses the customer requirements type or planned independent requirementstype defined in the main strategy of the strategy group assigned to the material. Youcan do this provided that the requirements type is not defined by user parametersor manual entry when creating the planned independent requirements or customerrequirements, such as a sales order. You can determine the requirements types thatcan be used for a material in the alternative strategies.

In a sales order, you can access the customer requirements type in the sales orderitem on the �procurement� tab.

You can also determine the customer requirements type from the item type of thesales order if no strategy group has been assigned to the material. For example inCustomizing for SD, specify the work step �Determination of Requirements TypeUsing Transaction�.



Figure 78: Requirement Types and Classes

Generally, a planning strategy groups two requirements types - for plannedindependent requirements and for customer requirements.

The requirements type is allocated to exactly one requirements class. Therefore,the requirements class represents a kind of �values list� for the settings of therequirements type. This means that any changes to the requirements type are madethrough the corresponding requirements class.

In the requirements class, you control how the customer requirements should besettled against the planned independent requirements.

The definition of the requirements class is made in the Customizing for DemandManagement for planned independent requirements classes and in the Customizing forSD for customer requirements classes.

The requirements class controls requirements-relevant functions for sales orders inlogistics. In the requirements class, you define the type of availability check, whetherthe requirement is relevant to MRP (�No MRP� field), and which type of consumptionis to be executed (�Assignment indicator� field). The exact type of assemblyprocessing is defined using the customer requirements type of the correspondingsales order.

You also save specifications used in cost accounting, such as in the settlement profilefor settling a requirements class.



Demonstration: MRP Settings in the Material Master,MRP Group, and Plant

PurposeTo learn about MRP settings in material master, MRP Group, and Plant


MRP 1: Explain the MRP group field.







Demonstration: Customizing Planned IndependentRequirements Management

PurposeTo learn about customizing PIR management

System DataSystem:Client:User ID:



Password:Set up instructions:1. Display and explain the following fields and functions in the Customizing for

Demand Management and Sales and Distribution:

Customizing: Production→ Production Planning→ Demand Management→Planned Independent Requirements→ ......

Customizing: Sales and Distribution→ Basic Functions→ Availability Checkand Transfer of Requirements→ Transfer of Requirements→ .......

2. Strategy:The strategy is defined by entering a planned independent requirementtype and a customer requirement type.

Customizing: Production→ Production Planning→ Demand Management→Planned Independent Requirements→ Planning Strategy→ Define Strategy

3. Strategy group:Definition of main and secondary strategy

Customizing: Production→ Production Planning→ Demand Management→Planned Independent Requirements→ Planning Strategy→ Define StrategyGroup

4. Requirement types:



Strategy for determining the requirements type (from documentation)

1. First, the system tries to find a requirements type using the strategy groupfrom the material master.

2. If the strategy group in the material master is not maintained, the systemdetermines it using the MRP group.

3. If the MRP group is not defined, the system uses the material type whileaccessing the corresponding control tables. According to Martin Preiss,this is no longer relevant as it is a relic from the transition of R/2 to R/3.

4. For the customer requirement type: If the system does not find arequirement type here, the system assumes a special rule and tries to locatea requirement type with the aid of the item category and the MRP type.

Customizing: Sales and Distribution→ Basic Functions→ AvailabilityCheck and Transfer of Requirements→ Transfer of Requirements→Determination of Requirement Types Using Transaction

5. If this is not possible, the system makes a final attempt to find arequirements type using only the item category.

6. If the last attempt fails, the system declares that the transaction is notrelevant for the availability check and the transfer of requirements.

Message output for invalid requirements type:

Customizing: Production → Production Planning → DemandManagement→ Planned Independent Requirements→ RequirementsTypes/Requirements Classes→ Message Output for Invalid RequirementsType

The check occurs against the requirements types defined in main strategyand secondary strategies assigned in respective strategy group.

The way in which a requirements type works is determined by assigninga requirements class. Changes to a requirements type occur using thecorresponding requirements class. Changes to a requirements type occurusing the corresponding requirements class.

Independent requirements type:

.......Requirements Types/Requirements Classes→ Define RequirementsTypes and Allocate Requirements Class

Customer requirements type:

.......Define Requirements Types

5. Requirements classes:



Planned independent requirements classes:

......Requirements Types/Requirements Classes→ Maintain RequirementsClasses

Customer requirements class:

......Define Requirements Classes

6. Consumption mode, consumption period: In material master (MRP 3) orfor each MRP group:


or

Customizing: Production→ Production Planning→ Demand Management→ Planned Independent Requirements→ Maintain consumption mode andperiod of adjustment

Default values for consumption type for each requirements class:

Determination of concrete requirements (customer requirement, dependentrequirement, reservations) with which consumption occurs.

Customizing: Production→ Production Planning→ Demand Management→Planned Independent Requirements→ Default Values and Presettings→ Definedefault values for consumption type per requirements class

7. Period of adjustment (per MRP group):


or

Customizing: Production→ Production Planning→ Demand Management→ Planned Independent Requirements→ Maintain consumption mode andperiod of adjustment

8. Reorganization interval (per plant):

Customizing: Production→ Production Planning→ Demand Management→Planned Independent Requirements→ Define the reorganization interval





Discuss the various requirements types and classes.



Lesson Summary

You should now be able to:� Customize MRP settings


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Explain where Demand Management is in the flow of the supply chain planning

process.� Demonstrate various functions in Demand Management� Explain how make to stock and make to order will be represented in SAP ERP� Explain how Net Requirments planning differs from Planning with Final

Assembly� Demonstrate how to plan at the sub assembly level� Explain the concepts of Consumption and Reduction� Identify several popular planning strategies and their characteristics.� Explain how make to order works in SAP ERP� Demonstrate how to plan at the sub assembly level while still maintaining make

to order at the finished good level� Identify several popular planning strategies and their characteristics� Explain the difference between make to order and assembly to order� Customize MRP settings


Unit Summary SCM240




1. How does Demand Management interact with the planning tools?

2. There is only one version of planned independent requirements.Determine whether this statement is true or false.□ True□ False

3. Explain the difference between Planned Independent Requirements andCustomer Independent requirements.

4. What are two benefits of using customer independent requirements?

5. In the make to stock environment; procurement can be executed prior to theactual sales demand being reveived.Determine whether this statement is true or false.□ True□ False



6. In the make to order environment what event must take place before procurementmay be started?

7. MTS planning strategies 10 and 11 do not consider customer orders so they arenot displayed on the stock requirements list.Determine whether this statement is true or false.□ True□ False

8. Explain the term �consumption� from the standpoint of Demand Management.

9. With MTS strategy 40 (Planning with final assembly) , the final assembly cannot be completed until the receipt of a sales order.Determine whether this statement is true or false.□ True□ False

10. If demand fluctuates, but production is always used to full capacity, whatplanning strategy makes most sense?



11. With planning strategy 70 , Planning at Assembly Level, there is consumption ofplanned independent requirements by dependent requirements. Explain.

12. If you designate backward/forward consumption with a backward period of 30days and forward period of 20 days, the system will consume past requirementsfor a period of 30 calendar days before consuming any future requirements.Determine whether this statement is true or false.□ True□ False

13. With the MTO strategy planning without final assembly, what triggers theproduction of the sub-assemblies and components?

14. What is the �stocking level�?

15. This material master field indicates whether or not a component will be plannedcollectively or with direct pegging to a requirement.



16. What is the main difference between �assemble-to-order� planning strategiesand �make-to-order� planning strategies?

17. While customizing MRP settings, you assign the strategy group to the materialin the material master record or through the .Fill in the blanks to complete the sentence.

18. Choose the true statement (s)Choose the correct answer(s).□ A Strategy groups can contain up to seven main planning strategies.□ B A strategy group will contain one main planning strategy.□ C The main planning stategy will indicate the �default� requirement

type when entering independent requirements□ D Strategy groups are only necessary for the materials for which

independent demand will be placed

19. The configuration of the planning strategy is made up a a requirementstype for independent requirement and a requirements type for

Fill in the blanks to complete the sentence.

20. The configuration of the requirements types is the assignment of a




215Answers

1. How does Demand Management interact with the planning tools?

Answer: Demand management determines what quantities should be consideredas demand.

2. There is only one version of planned independent requirements.

Answer: False

Multiple versions may be maintained. Although usually only one is active.

3. Explain the difference between Planned Independent Requirements andCustomer Independent requirements.

Answer: The difference is how they are treated in the planning run. Plannedindependent requirements are projections (forecast). The planning run treatsCustomer Independent Requirements exactly as it would a true sales order.

4. What are two benefits of using customer independent requirements?

Answer: 1) They are very efficient for testing.2) They could be used to model customer demand if the SD module is notimplemented.

5. In the make to stock environment; procurement can be executed prior to theactual sales demand being reveived.

Answer: True

True, procurement may take placed simply based on planned independentrequirements.

6. In the make to order environment what event must take place before procurementmay be started?

Answer: Actual sales demand must be entered.



7. MTS planning strategies 10 and 11 do not consider customer orders so they arenot displayed on the stock requirements list.

Answer: False

They can be displayed for information only.

8. Explain the term �consumption� from the standpoint of Demand Management.

Answer: This is the settling of customer orders against planned independentrequirements. The customer orders �consume� the PIR�s

9. With MTS strategy 40 (Planning with final assembly) , the final assembly cannot be completed until the receipt of a sales order.

Answer: False

In Planning with final assembly, execution may take place prior to an actualsales order being taken.

10. If demand fluctuates, but production is always used to full capacity, whatplanning strategy makes most sense?

Answer: Strategy 10 - Make to stock

11. With planning strategy 70 , Planning at Assembly Level, there is consumption ofplanned independent requirements by dependent requirements. Explain.

Answer: PIR are entered for the assembly, triggering production. When thesales order is received for the finished product, the BOM is exploded resulting independent requirements for the assembly. These dependent requirements aresettled against the PIR for the assembly.

12. If you designate backward/forward consumption with a backward period of 30days and forward period of 20 days, the system will consume past requirementsfor a period of 30 calendar days before consuming any future requirements.

Answer: False

The consumption period is in working days.



13. With the MTO strategy planning without final assembly, what triggers theproduction of the sub-assemblies and components?

Answer: MRP is carried out for the planned independent requirements ofthe final assembly, resulting in dependant req�t and planned orders for thesub-assemblies and components.

14. What is the �stocking level�?

Answer: The level up until which the material is produced before the salesorder is received.

15. This material master field indicates whether or not a component will be plannedcollectively or with direct pegging to a requirement.

Answer: The individual / collective indicator.

16. What is the main difference between �assemble-to-order� planning strategiesand �make-to-order� planning strategies?

Answer: With ATO , production orders are created automatically when salesorders are received. With MTO , the MRP process must be carried out togenerate planned orders, which are then converted to production orders.

17. While customizing MRP settings, you assign the strategy group to the materialin the material master record or through the MRP group.

Answer: MRP group

18. Choose the true statement (s)

Answer: B, C, D

B,C and D are all true. There may be seven sub strategies.

19. The configuration of the planning strategy is made up a a requirements type forindependent requirement and a requirements type for Customer requirements.

Answer: Customer requirements.



20. The configuration of the requirements types is the assignment of a requirementsclass.

Answer: requirements class.


Unit 5219 Master Production Scheduling

Unit OverviewThis unit will introduce you to the concept of MPS from a business process standpoint and how various tools in SAP ERP will be used to support the MPS process insupply chain planning.


� Explain how master production scheduling will fit into the production planningprocess

� Demonstrate how to execute and MPS planning run.

Unit ContentsLesson: Master Production Scheduling .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .274

Demonstration: Defining Master Scheduling Items ... . . . . . . . . . . . . . . . . . . . . .275Demonstration: Executing and MPS run .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .279Exercise 8: Master production scheduling (MPS) and materialrequirements planning (MRP)... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .281


Unit 5: Master Production Scheduling SCM240

Lesson:220

Master Production SchedulingLesson Duration: 25 Minutes

Lesson OverviewIn this lesson, you will learn about master production scheduling and its relationshipwith MRP in the overall production planning process.


� Explain how master production scheduling will fit into the production planningprocess

� Demonstrate how to execute and MPS planning run.

[Enter a description of what the instructor should discuss with the participants aboutthe context of the lesson. ]

Business ExampleSeveral of your products sell direct from the distribution centers. This demandmust explode back to the production facility where there are several work centersthat are highly utilized. To ensure proper customer service, only plan the finishedpump production so that capacity planning may be done on those resources that areoverloaded.

An Overview to MPS PlanningMaster Production Scheduling (MPS) enables you to plan materials that influence acompany�s profits or use critical resources. Therefore, these materials need to beplanned carefully. For these materials, the master production schedule is initiallydefined on the level of this critical or important material. This is done before thedependent assemblies and purchased parts are planned and procured. This means thatchanges made to these critical parts are not copied to the dependent parts. This helpsavoid any disruption arising during production and procurement of purchased parts.


SCM240 Lesson: Master Production Scheduling

Figure 79: Master Production Scheduling and Material Requirements Planning(1)

You plan the master schedule items, MPS items, and the non-master schedule itemsin separate planning runs. You can specify finished products or assemblies for MPSitems, provided that you have entered a corresponding MRP type per plant or per MRParea in the �MRP 1� view of the material master. You must define the MRP procedure�M�, which is MPS item procedure, in this MRP type in Customizing for MRP types(Customizing activity �Check MRP types�).

The MPS run only plans the MPS items. MPS is executed with the same logic asMRP but without planning materials that are not labeled as MPS items. Dependentrequirements are created for the next low-level code, but planning is not executed forthese items unless they become MPS items.

The results of MPS are not passed to dependent parts till the master plan for the criticalparts has been processed and fine-tuned. The MPS items are not planned along withthe MRP run to ensure that you can plan these materials independently.

Demonstration: Defining Master Scheduling Items

PurposeTo explain the process of master scheduling



System DataSystem:Client:User ID:Password:Set up instructions:1. Change the material master for material R-F2## plant 1000: In the MRP 1 view,

enter the MRP typeM1 with the MRP procedure �M�, which is defined in theCustomizing of the MRP type. Enter a planning time fence of 10 days. Save.

2. Display the planning file entry for material R-F2##: The MPS item indicator isset. Now, the material is a part of the master production scheduling run ratherthan that of the normal MRP run.

MPS Planning Process

Firming

Master schedule items have to be planned with increased attention and thecorresponding capacity load may have to be adjusted. Therefore, firming the masterproduction schedule is important in master production scheduling.



Figure 80: Master Production Scheduling and Material Requirements Planning(2)

There are two steps in the total MPS run:

MPS plans the MPS items on the basis of the requirements that exist for these parts,such as planned independent requirements. The MPS run generates planned ordersfor the MPS items and the corresponding dependent requirements on the BOM levelbelow. The second is capacity leveling. Capacity leveling is possible if lead-timescheduling is performed during the MPS run. Lead time scheduling will be discussedin another lesson.

MRP plans the other assemblies and components in the BOM structure.

You can combine both steps by setting the indicator �Process MRP materials� inthe initial screen.



Figure 81: Firming in Long-Term Planning

With the help of the firming period, you can protect the MPS schedule for MPS itemsfrom being automatically changed. This makes planning easy. Within the firmingperiod that is defined individually for each material, procurement proposals are notautomatically changed during the MRP run.

You should define the firming period with reference to the total lead time of thematerial.

In the above example, the order finish date of the planned order, E1, lies one daybefore the end of the firming period. The system treats it as firmed and does notautomatically reschedule it. Therefore, the master production schedule for thecomponents is stabilized.

You can define the firming period using the planning time fence or a manual firmingdate. In addition, you can manually firm or unfirm planned orders.

The system draws your attention to any possible changes to the MPS in the formof an exception message in the MRP list. It is up to the MRP controller to processthese changes.

Note: Firming or the planning time fence is not limited to MPS. It iscontrolled by the configuration of the MRP type of a material.



Demonstration: Executing and MPS run

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Demonstrate the exercises.



225 Exercise 8: Master production scheduling(MPS) and material requirements planning(MRP)Exercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Explain the relationship between Master Production Scheduling (MPS) and

Material Requirements Planning (MRP)

Business ExampleSome finished products, including pump R-F2## use critical resources. Therefore,you should define these as master production items and plan these separately. Youdo this in order to review the plan results, evaluate capacity, and make any necessarychanges. While doing this, you do not want to waste time and energy planning thelower level components as the requirements dates are likely to change.

System DataSystem:Client:User ID:Password:Set up instructions: Prior to the students performing this exercise, the instructorwill need to run a Plant wide MRP run.


Create Purchase req. 1

Schedule Lines 3

Create MRP list 1

Planning mode 3

Scheduling 2



Task 1: Setup Master Production Scheduling in SAP ERPDemand on your pump R-F2## has been erratic and capacity to manufacture thepump is limited. Due to this situation, as a planner, you want to look at the results ofthe planning run prior to exploding the rest of the Bill of Material. Set the materialR-F2## at plant 1000, to an MPS item, execute a planning run and review the resultsand make changes as necessary.

1. To better understand the MPS functionality, we will create some demand in theshort term. Enter the following demand, in weekly buckets starting from the2nd period, into your active version of demand management for R-F2## atplant 1000.

Period Week 2 Week 3 Week 4 Week 5 Week 6Amount 20 10 10 10 10

2. From the Stock/Requirements list change material R-F2## in plant 1000 to amaster schedule item, fixing type 1. In addition you promised the productionmanager that you would freeze the schedule for two weeks. Insert a Planningtime fence of 10 working days.

3. What affect did the changes have, and why?

4. What affect will the Fixing Type 1 have on the planning run?

5. Check the planning file. Which of the following indicators are set?

MPS Indicator ____ NChge plng ____

NChgePHor. ____




Task 2: Executing an MPS processes in SAP ERPNow that you have set your material R-F2## to an MPS item and have indicated theneed for using a planning time fence. Execute a Single-item, Single-level MPS run.

1. From the Stock/Requirements list execute single-item, multi-level planning forthe material R-F2## in the plant 1000 (MD02). Is this possible? _____________

2. Execute single-item, single-level planning for master schedule items (MD42)for the material R-F2## in the plant 1000 from the menu of master productionscheduling. Use the following parameters


Create purchase req. 1

Delivery Schedules 3

Create MRP list 1

Planning mode 1

Scheduling 2

Task 3: Evaluate the MPS run resultsNow that you have executed an MPS run for you product R-F2## at plant 1000, youmust review the plan results. Check the capacity situation of the resources involved.If you have sufficient capacity, reschedule the items inside the fence using simulativeMRP to make sure all components will be available as well.

1. Now that your MPS run has completed for R-F2## at plant 1000, view theresults in the stock requirements list. Are the planned independent requirementsnow covered by corresponding procurement elements?

2. From the Stock/Requirements list, access the capacity situation for the resourcespertinent to the production of R-F2##. Review the detailed capacity in weeklybuckets. Are there any overloads? Is there enough capacity to plan productionin the current period or next period?

3. Execute a single item, multi-level MPS run in simulation mode for R-F2## atplant 1000.. Check to see if the dependent requirements created by the MPSrun can be replenished in time to support the requirements date of R-F2## atplant 1000.

Use the following planning parameters:






Delivery schedules 3

Create MRP list 1

Planning mode 3

Scheduling 2


Simulation mode Select

Note: Upon selecting the Simulation Mode the detailed materials listindicator will automatically be set.

4. Are there any delays for the planned orders for R-F2## that lie outside theplanning time fence? Will Rescheduling the orders to the �reschedule data�improve or worsen the delays. Exit the planning run without saving.

5. Remove the settings from Task 1 for material R-F2## in plant 1000 by settingthe MRP type back to �PD�. Save the material master.



Solution 8: Master production scheduling(MPS) and material requirements planning(MRP)Task 1: Setup Master Production Scheduling in SAP ERPDemand on your pump R-F2## has been erratic and capacity to manufacture thepump is limited. Due to this situation, as a planner, you want to look at the results ofthe planning run prior to exploding the rest of the Bill of Material. Set the materialR-F2## at plant 1000, to an MPS item, execute a planning run and review the resultsand make changes as necessary.

1. To better understand the MPS functionality, we will create some demand in theshort term. Enter the following demand, in weekly buckets starting from the2nd period, into your active version of demand management for R-F2## atplant 1000.

Period Week 2 Week 3 Week 4 Week 5 Week 6Amount 20 10 10 10 10

a) Follow SAP ERP menu path Logistics→ Production→ ProductionPlanning→ Demand Management→ Planned Independent Requirements→ Change (MD62)

b) Enter material R-F2## plant 1000. Set the Planning period toW -Weeks

c) Press ENTER

d) Enter the quantities from the above chart starting in the 2nd week

e) When finished select Save




2. From the Stock/Requirements list change material R-F2## in plant 1000 to amaster schedule item, fixing type 1. In addition you promised the productionmanager that you would freeze the schedule for two weeks. Insert a Planningtime fence of 10 working days.

a) Follow SAP ERP menu path Logistics → Production → MRP →Evaluations→ Stock/Requirements List (MD04)

b) Enter Material R-F2## at plant 1000, and press ENTER

c) Follow the menu path:Environment→ Change material .

d) In the MRP 1 view, change the MRP type toM1 - MPS, Fixing Type 1,and set the Planning Time Fence to 10 days.

e) Select F1, field level help for information regarding the calculation of days.

3. What affect did the changes have, and why?

Answer: From the Stock/Requirements list you can see the MRP type haschanged. In addition, a MRP segment has been created 10 days from the currentdate, stating the end of the planning time fence. This was caused by using theMRP type that allowed use of a planning time fence and setting the planningtime fence to 10 days.

4. What affect will the Fixing Type 1 have on the planning run?

Answer: Any existing orders inside the planning time fence will be firmed. Thisis identifiable by the * after the planned order number. Note the Planning timefence does not set the firming indicator in the planned order. This is in casea user changes the MRP type or the length of the planning time fence. Thesystem may need to replan/remove those orders previously firmed by the MRPtype. In addition, if any new requirements fall inside the fence, during the nextplanning run new orders will be created and scheduled backwards from theplanning time fence.

5. Check the planning file. Which of the following indicators are set?

MPS Indicator ____ NChge plng ____




NChgePHor. ____

a) From the Stock/Requirements list select Display Planning File Entries..Note this icon was place in the S/R list by the navigation profile.

or Logistics→ Production→ MRP→ Planning→ Planning File Entry→ Display (MD21)

b) Indicators set in the planning file:

MPS indicator: yes NChge plng yes

NChgePHor. yes

Task 2: Executing an MPS processes in SAP ERPNow that you have set your material R-F2## to an MPS item and have indicated theneed for using a planning time fence. Execute a Single-item, Single-level MPS run.

1. From the Stock/Requirements list execute single-item, multi-level planning forthe material R-F2## in the plant 1000 (MD02). Is this possible? _____________


b) From inside the Stock/Requirements list select Sng-item, Multi-Lvl

c) Single-item, multi-level planning for master schedule items possible: No

2. Execute single-item, single-level planning for master schedule items (MD42)for the material R-F2## in the plant 1000 from the menu of master productionscheduling. Use the following parameters



Delivery Schedules 3

Create MRP list 1

Planning mode 1

Scheduling 2

a) SAP ERP menu path:Logistics→ Production→ Production Planning→MPS→ Master schedule items→ Single-Item, Single-Level (MD42)

b) Select Enter twice.Continued on next page



Task 3: Evaluate the MPS run resultsNow that you have executed an MPS run for you product R-F2## at plant 1000, youmust review the plan results. Check the capacity situation of the resources involved.If you have sufficient capacity, reschedule the items inside the fence using simulativeMRP to make sure all components will be available as well.

1. Now that your MPS run has completed for R-F2## at plant 1000, view theresults in the stock requirements list. Are the planned independent requirementsnow covered by corresponding procurement elements?


b) Planned independent requirements covered by procurement elements: Yes.However, due the planning time fence several orders were created outsidethe fence. This was a result of using an MRP type with fixing type 1.

2. From the Stock/Requirements list, access the capacity situation for the resourcespertinent to the production of R-F2##. Review the detailed capacity in weeklybuckets. Are there any overloads? Is there enough capacity to plan productionin the current period or next period?

a) From the Stock/Requirements list follow menu path: Goto→ Capacitysituation .

b) select Detailed Planning andWeeks, then select Continue (Enter).

c) To review any overloads at related work centers select Overload

d) There are NO overloads in the current period or next period for the workcenters related to the production of R-F2##. Select Continue (Enter)toreturn to the Detailed Planning screen.

e) In the Utilization per period report, review the available capacity forthe next two weeks and compare it to the capacity requirements for theMaterial in week three.

f) There is adequate capacity at all resources to support productionrequirements for the R-F2##.

g) Exit the Detailed Planning screen.

3. Execute a single item, multi-level MPS run in simulation mode for R-F2## atplant 1000.. Check to see if the dependent requirements created by the MPSrun can be replenished in time to support the requirements date of R-F2## atplant 1000.




Use the following planning parameters:



Delivery schedules 3

Create MRP list 1

Planning mode 3

Scheduling 2


Simulation mode Select

Note: Upon selecting the Simulation Mode the detailed materials listindicator will automatically be set.

a) SAP ERP menu path:Logistics→ Production→ Production Planning→MPS→ Master schedule items→ Single-Item, Multi-Level (MD41)

b) Press ENTER twice. Confirm any warning messages.

c) Select material R-F2## and select Display the planning results of theselected materials

d) Select Execute planning run

4. Are there any delays for the planned orders for R-F2## that lie outside theplanning time fence? Will Rescheduling the orders to the �reschedule data�improve or worsen the delays. Exit the planning run without saving.

Answer: Varies. If Delays already exist for those orders outside the planningtime fence with rescheduling dates, moving the orders up (closer to today) willonly increase the delays. Therefore, the orders can not be moved in any closereven though capacity exists for all work centers.

5. Remove the settings from Task 1 for material R-F2## in plant 1000 by settingthe MRP type back to �PD�. Save the material master.

a) Follow the SAP ERP menu path: Logistics→ Production→ Master Data→ Material Master→ Material→ Change→ Immediately

b) Select material R-F2##, select MRP 1 and plant 1000.

c) After making the changes select Save.



Lesson Summary

You should now be able to:� Explain how master production scheduling will fit into the production planning

process� Demonstrate how to execute and MPS planning run.


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Explain how master production scheduling will fit into the production planning

process� Demonstrate how to execute and MPS planning run.


Unit Summary SCM240




1. What purpose does MPS serve?

2. If you do not review the exception messages or capacity prior to planning theentire BOM, than MPS is not a step you need in your planning process?Determine whether this statement is true or false.□ True□ False

3. If an item is marked as an MPS item you can not plan down to its requiredraw material.Determine whether this statement is true or false.□ True□ False

4. The planning time fence is only a function of MPS?Determine whether this statement is true or false.□ True□ False



238Answers

1. What purpose does MPS serve?

Answer: MPS allows a planner to limit the bill of material explosion during aplanning run. This is done in order to review capacity and exception messages inorder to make changes prior to planning the balance of the Bill of Material items.

2. If you do not review the exception messages or capacity prior to planning theentire BOM, than MPS is not a step you need in your planning process?

Answer: True

Processing exception messages and capacity planning are the two main reasonsfor Master Production Scheduling.

3. If an item is marked as an MPS item you can not plan down to its requiredraw material.

Answer: False

You can plan down to the raw material by running a single-item, multilevel MPSrun, or Executing total planning and selecting the process MRP materials, or setall materials down to the raw materials as MPS items.

4. The planning time fence is only a function of MPS?

Answer: False

The planning time fence can be used during an MPS or MRP run. This controlledby the MRP type and how the firming functionality is configured.


Unit 6239 Influencing the Planning Run

Unit OverviewThis unit will introduce you to various techniques of influencing the output of theplanning run. It will involve defining how order quantities are calculated as well asinterpreting various types of demand in the planning run.


� Explain how the planning run works in detail.� Describe the different methods of modeling buffers in the planning run� Demonstrate how several of the different methods of safety stock work� Demonstrate how Lot size techniques an influence the size of a planned orders� Demonstrate how use several fields in the material master to influence the size of

a planned order� Explain how planning calendars can be used to specifically coordinate the

quantity and timing of receipts.� Explain the configuration process of Lot Size techniques.� Explain how to perform Cross location planning in SAP ERP� Demonstrate how cross location planning work in SAP ERP� Demonstrate how to initiate a continuous output for a long production run� Demonstrate how to initiate continuous input for components that will not be

used discretely but continuously


Unit 6: Influencing the Planning Run SCM240

Unit ContentsLesson: Net Requirements Calculation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .297

Demonstration: Rescheduling Check .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .303Lesson: Using Buffers in Planning.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .307

Demonstration: Static Safety Stock .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .309Demonstration: Safety Stock Calculation .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312Procedure: Calculated Safety Stock ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .315Demonstration: Safety Stock Partially Available .. . . . . . . . . . . . . . . . . . . . . . . . . .317Procedure: Safety Stock Partially Available .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .319Demonstration: Dynamic Safety Stock .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .324Demonstration: Safety Time ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .330Exercise 9: Dynamic Safety Stock .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .331

Lesson: Controlling order quantities in the planning run.. . . . . . . . . . . . . . . . . . . . . .342Demonstration: Periodic lot sizes ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .348Demonstration: Planning Calendar .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .349Demonstration: Rounding .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353Demonstration: Special Lot-Sizing Procedures ... . . . . . . . . . . . . . . . . . . . . . . . . .358Exercise 10: Controlling Order Quantities in the Planning Run .... . . . . . .361

Lesson: Multi-Site Planning ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367Demonstration: One Step Stock Transfer .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .371Demonstration: Two Step Stock Transfer Posting ... . . . . . . . . . . . . . . . . . . . . . .372Demonstration: Demonstrate Two Step Stock Transfer Withoutdelivery.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378Demonstration: Demonstrate withdrawal from another facility . . . . . . . . . . .384Demonstration: Demonstrate Production in another plant .. . . . . . . . . . . . . . .387Exercise 11: Multi-Site Planning .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .389

Lesson: Continuous Input/Output.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .394Exercise 12: Continuous Input/Output in the Planning Run(OPTIONAL)... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .401


SCM240 Lesson: Net Requirements Calculation

Lesson:241

Net Requirements CalculationLesson Duration: 20 Minutes

Lesson OverviewIn this lesson we will briefly discuss what is net requirements calculation and how canwe influence the result of the planning run.


� Explain how the planning run works in detail.


Business ExampleAs a production planner you are responsible for a the results of the planning run.In order to manage the business properly you need to ensure the accuracy of yourplanning run results. Review how the MRP process will work in order to betterunderstand how to influence the results.

Details of the Planning Run

Low-Level code has already been discussed in the Methods for Executing a planningrun lesson. Based on the level of understanding, the instructor must decided howmuch time to spend on this section. If you have many experienced planners, glossover it and move on to the next section.

In order to better understand how the calculations are being performed, we need tolook at how the process as a whole is going to take place. Is SAP ERP, the planningrun process takes place in a �Level-by-Level� methodology. Level-by-Level refersthat during the planning run, all finished goods will be run first then, all materials atthe next level of the bill of material followed by the next level, and so on till theraw materials are planned.



Figure 82: Low Level Code

Some components may appear in several products and in several production levels ofa product. The low-level code represents the lowest level of usage of a material withinall product structures. It determines the sequence in which the materials are planned.The system plans materials with the low-level code 0 first and then those with 1 andso on. The lower the low-level code is, the higher the number assigned to the level.

The low-level code is stored in the BOM management program in the material master

(Additional data, ) and is entered in the planning file. If a planner is concernedwith the correctness of the low-level code, by the consistency check of the planningfile entry in requirements planning should also correct the low-level codes in table�Entry in MRP File�. Use the menu path Logistics→ Production→MRP→ Planning→ Planning file entry→ Consistency check.

Note: The consistency check calls up report RMMDVM10 internally whichadjusts the low-level codes in field MDKEY in table MDVM to the low-levelcodes of table MARA.

As a planner who is responsible for the production and procurement of materials it isyour responsibility to understand how the calculations are being performed duringthe planning runs. In having a better understanding of how the calculations work, aplanner has more opportunity to influence the out come of planning run.



Figure 83: MRP Process

Knowing how the system will process the numerous materials during a planning run,we have to consider what affect it will have. By processing the materials by low-levelcode, planners will have the opportunities to cover several sets of requirements withone replenishment element if that is their choice.

Note: Planners must be aware that it is that function of the a planned ordercreating the depended demand not the planning run. The Planning run, createsplanned orders, which copy the bill of material, and are then scheduled, thusdetermining the quantity and the timing of the dependent demand.

Calculation in the Planning RunThe net requirements calculation is the first step in the MRP run and is executed atthe plant level or MRP area level. During the MRP run, the system checks whetheror not the demand (requirements) can be met by the supply (on hand inventory andfixed receipts).



Figure 84: Overview: Net Requirements Planning

Here are some examples of various demands considered during the planning run:

� Planned independent Requirements (strategy dependent)� Customer requirements (Sales orders/Deliveries/Schedule Lines - strategy

dependent)� Dependent demand from planned orders� Order reservations from production/process orders� Material reservations from goods movement request� Stock transfer requests/orders (outbound )� Safety stock

Here are some examples of fixed receipts:

� Production/Process orders� Firmed Planned orders� Purchase orders� Firmed Purchase requisitions� Stock Transfer order ( inbound )

When comparing demand to supplies, if shortages exist, the system creates aprocurement proposal.



Figure 85: Net Requirements Calculation

In MRP, a net requirements calculation is executed in the planning run to determinewhether or not a material shortage exists for a particular material. In addition, stockand fixed receipts that currently exist, such as purchase orders, production orders,fixed purchase requisitions, and planned orders, are compared with the safety stockand requirements to determine the quantity available for planning.

The stock available for planning combines the following stock from all the storagelocations that belong to this plant or MRP area and are not excluded from MRP orplanned separately: Stock that is usable without restrictions, quality inspection stock,consignment store stock that is usable without restriction, and consignment storestock in quality inspection.

In the Customizing a company can decide wether certain stock types are relevant forplanning. In the IMG,Production→MRP→ Planning→MRP Calculation→ Stocks→ Define Availability Stock in Transfer/Blocked Stock/Unrestricted Stock, you candefine for each plant whether or not the stock in transfer from plant-to-plant stocktransfers is included in the plant stock, whether the blocked stock or restricted stockfor batches is included in plant stock.

If the quantity available for planning is less than zero, a material shortage exists.MRP reacts to material shortages by creating new procurement proposals, that is, bycreating purchase requisitions or planned orders, independent of the procurement type.The suggested procurement quantity results from the lot-sizing procedure that is setin the material master.



Rescheduling HorizonOne consideration planners will have to consider is how scheduling will be affectedby firmed receipts. Firmed receipts are not

Figure 86: Rescheduling Check for Firmed Receipts

The planning run does not automatically reschedule firmed receipts. If the dates ofthese elements no longer fall within the rescheduling horizon, the system generatesthe following exception messages:

� �Reschedule in operation�: If the requirements date is less than that of thereceipt element.

� �Reschedule out operation�: If the requirements date is greater than that of thereceipt element.

� �Reverse operation�: If the requirement no longer exists.

Using the rescheduling horizon, you can stop the system from using receipts that are along time into the future to cover the requirements in the near future. In this case, thesystem checks within the period, consisting of the in-house production time, goodsreceipt processing time, and the rescheduling horizon (starting from the planningdate), to see whether or not the existing dates for firmed receipts are still suitable orwhether or not the firmed receipts can be rescheduled to cover requirements.



In Customizing, you define at the plant level which firmed receipts the system checks.You can maintain the rescheduling horizon and the tolerance values for each plant andeach MRP group.

If the system cannot find a receipt element within the rescheduling horizon that can berescheduled in or out to cover requirements, the system creates a new receipt element.The rescheduling check of firmed elements is not restricted to a horizon.

To reduce the number of exception messages, you can set tolerance values forrescheduling in and out. The system only creates an exception message when thedifference between the current receipt date and the rescheduling date exceeds thetolerance value.

Demonstration: Rescheduling Check

PurposeTo demonstrate rescheduling check for firmed receipts.


Show the Customizing settings for the rescheduling check: Rescheduling horizon,tolerance value, firmed elements

1. In the plant parameters:

Customizing: Production→ Material Requirements Planning → PlantParameters→ Carry Out Overall Maintenance of Plant Parameters→ SelectMaintain→ Enter Plant 1000→ Select Maintain→ Rescheduling.

2. In the settings for the MRP group

Customizing: Production→ Material Requirements Planning→ MRP Groups→ Carry Out Overall Maintenance of MRP Groups→ Enter Plant 1000→Select Maintain→ Enter MRP Group 0031→ Select Maintain→ Reschedulinghorizon.



Optional Demo for Rescheduling Check (Firming Demo Continued) Startingpoint: The customer independent requirement was increased by 15 pieces; thesubsequent planning run creates an unfirmed planned order with more than 15pieces with the exception message, �Schedule operation on time�, for the end ofthe firming area defined here by the manual firming date;

Single-item, interactive:

1. Create additional planned orders with more than 12 pieces with the orderfinish time today in 2 months; the planned order is firmed due to manualcreation.

2. Rescheduling key→ both planned orders receive the exception messages,�Schedule operation on time� and/or �Bring forward�.

3. Execute planning→ the first unfirmed planned order is reduced from 15 to3 pieces and retains the exception message, �Schedule operation on time�;the second firmed planned order retains the original date with the originalquantity of 12 pieces and retains the exception message, �Bring forward�;the firmed elements are first considered for planning and the reschedulingcheck and then the unfirmed.

4. Reschedule both the planned orders, save the orders, and refresh thestock/requirements list.

5. Reschedule the date of the planned order to two days before therescheduling date to explain the tolerance values; the rescheduling datedisappears.



Lesson Summary

You should now be able to:� Explain how the planning run works in detail.


SCM240 Lesson: Using Buffers in Planning

Lesson:249

Using Buffers in PlanningLesson Duration: 30 Minutes

Lesson OverviewThis lesson describes net requirements planning by taking safety stock and dynamicsafety stock into account. It also describes the quantity and time buffers used tocalculate demand.


� Describe the different methods of modeling buffers in the planning run� Demonstrate how several of the different methods of safety stock work


Business ExampleDue to an imperfect planning and manufacturing process, you are constantly facedwith shortages of materials due to scrap during manufacturing, delays in productionor delays in the delivery of externally procured products. Demonstrate how usingseveral fields in the material master will allow planners to account for these typesof problems without affecting service.

Buffers in PlanningDue to an imperfect planning and manufacturing process, you are constantly facedwith shortages of materials due to scrap during manufacturing, delays in production,or delays in the delivery of externally procured products. While faced with theserealities, planners must have a methods of accounting for these short falls or delays, sothat customer service is not negatively impacted. Planners usually use some time ofquantity or time buffer to offset these problems.



Here are some methods of counter acting delays and shortages:

� Safety stock� Safety stock partially available� Dynamic safety stock� Safety time

There are two types of buffers that you can plan to take into account uncertainties inthe development of demands:

� Quantity buffer: Safety stock, partially available safety stock, and dynamicsafety stock

� Time buffer: Safety time

Static Safety stock in the Planning RunOne of the quantity based methods of buffering against production shortages or delaysis the use of Safety stock. There are two philosophies regarding safety stock

1. Safety stock should never be used2. Some portion of safety stock can be used to offset expensive delays.

Figure 87: Static Safety Stock



You can define the safety stock level per material plant in the �MRP 2 view� of thematerial master or per MRP area in the MRP area segment. Safety stock acts as arequirement during the planning run thus reduces the stock available for planning.Upon entering a value in the material master, the safety stock is valid until the end oftime and is effective immediately, based on the system date.

The safety stock MRP element will appear immediately after the stock MRP elementin either the MRP or Stock/Requirements list. When the on hand balance is lessthan the defined safety stock level, the system replenishes the safety stock during theplanning run. Note that this is also the case if the safety stock is only slightly belowthe defined safety stock level.

Note: Due to the fact that safety stock appears as a requirement, as soon as theavailable quantity falls below zero, during the next planning run the systemwill create a replenishment to return the available balance to zero. Eventhough there is physical stock on hand.

Caution: While safety stock is used during the planning runs, theinventory is not technically classified as safety stock. In order to assurethe quantity of safety stock is not physically used, you would need to useAvailable-to-Promise ( ATP) functionality. In the configuration of ATP,you can select wether to include/exclude the Safety stock values from theavailability check. Depending upon how you have this coded it could showthe user a warning or produce an error that would stop the transaction fromoccurring.

Demonstration: Static Safety Stock

PurposeDemonstrate how Safety stock is used during the planning runs.

System DataSystem:Client:User ID:Password:Set up instructions:1. From the stock requirements list for you material R-F2## at plant 1000,

Environment→ Change Material.

2. In the MRP 2 Screen add a safety stock of 10 pcs. Save the material master



3. Refresh the stock the S/R list

4. Point out to the students that the safety stock is now visible as a requirement

5. Run Single-item, Multi-Level MRP to see how the planning run reacts to thechanges

Calculating Safety StockThe previous method of safety stock is a very simple process, choose a value for yoursafety stock or calculate the value outside of SAP ERP and enter the value in thematerial master at the pertinent time. SAP ERP also allows you another slightly moresophisticated method of calculating. While this method will take some knowledge ofstatics and forecasting, it is still static; relevant for the entire horizon.

Figure 88: Calculated Safety Stock

Note: This method will use a calculation process to derive the safety stockvalue that will be placed in the material master. The information in theprevious section apply after the calculation has been complete.



Prerequisites for Calculation Safety Stock:

� Service level maintained in the material master� Consumption values captured via goods issues transactions.� Maintenance of the forecasting tab in the material master. (requires statistical

background)

With this method, calculating the safety stock depends on the service level that youspecified in the MRP II view of the material master record and on the accuracy of theforecast. The more accurate the forecast, the smaller your safety stock can be. Thefollowing figure shows that, without safety stock, customer demand can be satisfiedby 50%. It also shows that it is almost impossible to satisfy customer demand 100%of the time. Factor R describes the relationship between forecast accuracy and servicelevel (SL).

If replenishment lead time is greater than the forecast period by factor W, then themean absolute deviation (MAD) is recalculated for this period (formula 17). TheMAD is a parameter of forecast accuracy.

Note: Safety Stock Calculation:

SS = R xV_W x MAD

W = Planned Delivery time/ Forecast Period

Otherwise the following formula is used:

Note: SS = R x W X MAD

If the material is produced in-house, the delivery time is: opening period + in-houseproduction time + goods receipt processing time. It is expressed in workdays. Theforecast period is taken from the material master record (Forecast Tab) and is alsoexpressed in workdays.

If the material is procured externally, the delivery time is: goods receipt processingtime + planned delivery time + goods receipt processing timee. It is expressed incalendar days. The forecast period is taken from the material master record (forecastand is also expressed in calendar days. The safety stock calculation may lead torounding effects.

You can specify a minimum safety stock. If the result of the safety stock calculation islower than this limit, the safety stock is then automatically set to this minimum value.You enter the minimum safety stock in the material master record (the MRP 2 screen).



The calculation of the safety stock in the SAP ERP system is always performedaccording to formula 17 of the documentation.

SS = R * MAD * sqrtW

In this case, it is important that for W a special calculation is performed which willbe described in the following.

The planned delivery time is defined in calendar days. For the forecast, however, itneeds to be defined in workdays.

1. WZEIT = PLIFZ * 5/7 days

Note that in this case only an integral planned delivery time is useful. Therefore, itis always rounded.

Then, the goods purchasing processing time from the material master and theprocessing time of the purchasing from table T399D are added to the planned deliverytime.

2. WZEIT(*) = WZEIT + WEBAZ + T399D-BZTEK

Afterwards, the result is divided by the period. Generally, these values are as follows:length of the period: 5 for period indicators = W length of the period: 21.4 for periodindicators = M.

3. W = WZEIT(*) / length of the period

Then, this value is inserted in the above formula and can be used for the calculation ofthe safety stock. Consequently, the reorder point is the total of the safety stock plusthe forecasted requirements within the replenishment lead time.

Demonstration: Safety Stock Calculation

PurposeDemonstrate to students how SAP ERP can use consumption values and a servicelevel to calculate safety stock.




1. Access the stock requirements list for R-T1## at plant 1000. LogisticsProduction→ MRP→ Planning→ Evaluations→ Stock/Requirements List(MD04)

2. Go to the materials Master MRP 1 view Environment→ Change Material

3. In the MRP 1 view change the MRP type to SS - MRP with Safety stockplanning

4. In the MRP 2 view set the Service level to 90 %, and set a minimum safetystock level of 15 pcs.

5. In the Forecast tab make the following settings:

Field ValueForecast Model K -

Forecast Periods 1

Initialization Leave Blank

6. At the bottom of the forecast tab select Consumption Values. Enter the followingvalues in the corrected value column.

Previous Period 650

Previous Period - 1 700




Previous Period- 5 850





When finished select Main Data

7. Return to the forecast tab and select Execute Forecast

8. Select

9. Select the constant model and select Execute forecasting twice.



10. Review the results of the forecast, and notice the Safety stock Calculation

11. Select Copy, then return to the MRP 2 view to review the results

12. Select Save.

13. Upon returning to the S/R list select Refresh

14. Note the safety stock MRP Element



254Calculated Safety Stock

1. Access the stock requirements list for R-T1## at plant 1000. LogisticsProduction→ MRP→ Planning→ Evaluations→ Stock/Requirements List(MD04)

2. Go to the materials Master MRP 1 view Environment→ Change Material

3. In the MRP 1 view change the MRP type to SS - MRP with Safety stockplanning

4. In the MRP 2 view set the Service level to 90 %, and set a minimum safetystock level of 15 pcs.

5. In the Forecast tab make the following settings:

Field ValueForecast Model K -

Forecast Periods 1

Initialization Leave Blank

6. At the bottom of the forecast tab select Consumption Values. Enter the followingvalues in the corrected value column.

Previous Period 650





Previous Period- 5 850





When finished select Main Data

7. Return to the forecast tab and select Execute Forecast




8. Select

9. Select the constant model and select Execute forecasting twice.

10. Review the results of the forecast, and notice the Safety stock Calculation

11. Select Copy, then return to the MRP 2 view to review the results

12. Select Save.

13. Upon returning to the S/R list select Refresh

14. Note the safety stock MRP Element

Safety Stock Partially AvailableAnother philosophy on safety stock is that part of the inventory should be availablefor use in planning. This is often the case in certain industries where the cost oftearing down and setting up a production line out-ways the risk of additional customerservice problems.

Figure 89: Safety Stock Partially Available

You can define the proportion of safety stock that is available for planning for eachMRP group in Customizing, Production→ MRP→ Planning→ MRP Calculation→ Stocks→ Define Safety Stock Availability or Production→ MRP→ Carry OutOverall Maintenance of MRP Groups.



The availability of the safety stock is defined at the MRP Group level. This wayplanners can decide which materials should plan to use safety stock. The value isdefined as a percentage of the safety stock level, which was entered in the materialmaster, MRP 2 view.

A new order is not created until the stock falls below the available portion of safetystock. This order proposal replenishes the stock up to the safety stock level. Thismeans that no individual order proposals are created for small material shortages. Thisreduces the amount of administrative work and planning, since orders will not becreated every time the available quantity dips below zero.

Demonstration: Safety Stock Partially Available

PurposeTo learn about partially available safety stock

System DataSystem:Client:User ID:Password:Set up instructions:1. Add 45 pcs of inventory for you R-F2## at plant 1000. Use transaction MB1C

and movement type 501. Place inventory in storage location 0001. SelectSave.

2. Access the stock requirements list for product R-F2## at plant 1000. Logistics→ Production→ MRP→ Evaluations→ Stock/Requirements List ( MD04 )

3. Change material R-F2##, Environment→ Change Material . Enter safety stock:10 pieces (MRP 2) if you have not yet done so, and Lot-sizing procedure exact.Select Save.

4. Refresh the stock requirements list Refresh.

→ Safety stock is displayed � it flows into the net requirements calculation as arequirements element.

5. Execute material requirements planning for R-F2##, and display the results:

→ If there is a shortage in the safety stock, a receipt element for the amountof the material shortage is generated.

6. Definition of partially available safety stock in the Customizing for MRP groups



Customizing: Select Production→Material Requirements Planning→ Planning→ MRP Calculation→ Stocks→ Define Safety Stock Availability.

For MRP Group 0031 Enter 50% and Save.

7. Execute the planning run again. A new receipt element is only created in theamount of the safety stock when the safety stock that is partly available is belowthe permissible limit. No more planning is executed.

8. Remove the setting in Customizing.



257Safety Stock Partially Available

1. Add 45 pcs of inventory for you R-F2## at plant 1000. Use transaction MB1Cand movement type 501. Place inventory in storage location 0001. SelectSave.







5. Execute material requirements planning for R-F2##, and display the results:

→ If there is a shortage in the safety stock, a receipt element for the amountof the material shortage is generated.

6. Definition of partially available safety stock in the Customizing for MRP groups

Customizing: Select Production→Material Requirements Planning→ Planning→ MRP Calculation→ Stocks→ Define Safety Stock Availability.

For MRP Group 0031 Enter 50% and Save.

7. execute the planning run again. A new receipt element is only created in theamount of the safety stock when the safety stock that is partly available is belowthe permissible limit. No more planning is execute

8. Remove the setting in Customizing.

Dynamic Safety Stock in MRPCertain industries, and for that matter certain products, would not find the method ofstatic safety stock applicable to their business. When products tend to have seasonalperiods or periods where demand spikes, planners often like to keep different levels ofsafety stock. While the static method is more of a fixed safety stock, the method ofDynamic Safety Stock allows safety stock to fluctuate with the rise and fall of demand.



Figure 90: Dynamic Safety Stock (1)

Using the Range of Coverage calculation, you can determine a dynamic levelof safety stock that meets the requirements of time and demand dependency. Theconcept of the range of coverages is similar to that of Target Days Supply or Days offorward coverage. The goal of the range of coverage is to design a profile that willdefine a minimum, target, and maximum level of supply coverage over and above thatof the existing demand.

During every planning run, the system checks whether or not the available quantityis below the minimum stock level. If this is the case, the system creates an orderproposal to increase the available quantity to the target stock level (dynamic safetystock). If the available quantity exceeds the maximum stock level, the quantity isadjusted as long as a firmed procurement proposal is not involved. The system issuesan exception message for firmed procurement proposals.

Caution: Unlike static safety stock which appears as a separate MRP element,dynamic safety stock does not have its own MRP element. Dynamic safetystock, is simply production that going to be produced earlier. By lookingat the pegging report for a planned order, you can see that it pegs to futuredemand. Therefore without using the pegging report, at first glance plannerswill not know why production is being pulled up.

For any additional static safety stock and the dynamic safety stock, add to each other.




The dynamic safety stock is calculated according to the average daily requirements.As a result, the dynamic safety stock automatically adjusts itself to changes in demand.The dynamic safety stock is calculated using the following formula: Average dailyrequirement x Target range of coverage.



Figure 92: Range of Coverage configuration

In the Customizing, Production→ MRP→ Planning→ MRP Calculation→ DefineRange of Coverage Profile (Dynamic Safety Stock), you will define a profile that willbe used in the material master . You can define the periodicity (week, month, or periodaccording to the planning calendar) and the number of periods for which the averagedaily requirements are to be determined. The average daily requirement is calculatedfor each period. For example in the figure above, if each period were a month, thesystem calculates the average daily demand by summing two months of requirements,and dividing by the number of days in each total for both periods. In the profile, userswill define what type of days they want to use:

� Work days according to the plant calendar� Calendar days, according to the Gregorian calendar� Standard days, user defined number in the profile.

In the definition of the profile you will have the opportunity to define three timeperiods. The first number of periods will be valid from the current system date, tothe end of the periods specified. The second period will start with the end of thefirst, and the end date based on the number of periods entered for the length of thesecond period. The third period starts at the end of the second period and is valid tillthe end of time. In addition, you enter the minimum and target range of coverage asthe number of days in which a material must still be available. You can also enter a



maximum range of coverage. You can determine the minimum, target, and maximumstock by multiplying the average daily requirements with the values for the minimum,target, and maximum range of coverage defined in the profile.

During the planning run, the system checks whether or not the range of coverage(available quantity divided by average daily requirement) is below the minimum rangeof coverage or above the maximum range of coverage.


You can enter the ranges of coverage (minimum, target, and maximum ranges ofcoverage) for up to three periods and maintain different ranges of coverage for eachperiod. If you have maintained only one period, the validity of the range of coverageis unlimited.

The values used for the individual parameters of the dynamic safety stock can eitherbe checked directly after single-item planning in the planning results or in thestock/requirements list. In both evaluations, the dynamic safety stock data is availablein the periods total displ The following data is displayed: target range of coverage,minimum range of coverage, maximum range of coverage, target stock (dynamicsafety stock), and minimum stock.

The parameters that calculate the dynamic safety stock are stored in a range ofcoverage profile in the Customizing for MRP, in the IMG activity, �Define Range ofCoverage (Dynamic Safety Stock)�. You can access this activity directly from theMRP menu by selecting Environment→ Current Settings.



The range of coverage profile is assigned to the material in the material master record(MRP data screen 2 or MRP area segment).

Figure 94: Time Dependent Dynamic Safety Stock

While often times planners find this method of safety stock workable, it still has itsfaults. With dynamic safety stock, the periods are always being calculated based onthe current system date. Planners often need levels of coverage to be time dependent.In addition to the three intervals for which you can define different ranges of coverage,you can set up fixed periods with a different range of coverage. This is useful, forexample, if a high safety stock is to be planned because of increased demand in aparticular period.

In the Customizing activity, �Define Range of Coverage (Dynamic Safety Stock)�,within the details of the profile, you define validity periods in which you assign arange of coverage, which is different from an existing range of coverage profile. Youcan define as many deviating periods as you want, with various ranges of coverage forone profile. Each deviating period is defined by entering the start date and finish date.

Demonstration: Dynamic Safety Stock

PurposeTo learn about the dynamic safety stock




Note: To provide a better overview, use a material for which no planning dateexists. The lot-sizing procedure must be exactly same.

Note that in the period totals display, changed days� supplies and stock aredisplayed only after accessing the display again. You cannot view the display byrefreshing the display.1. Review the Range of the Coverage Profile in Customizing for profile 001

Customizing: Select Production→ Material Requirements Planning →Planning→ MRP Calculation→ Define Range of Coverage Profile (DynamicSafety Stock).

or

Select Logistics→ Production→ MRP→ Planning→ Environment→ CurrentSettings→ Define Range of Coverage Profile (Dynamic Safety Stock).

Display and explain.

2. Delete the existing set of requirements and create new planned independentrequirements for R-F1## at plant 1000: 50 pieces each for the current month +2until the current month +7 (6 x 50 pieces).

3. Call the stock/requirements list for material R-F1##; Period totals display: Nodays� supply

4. Execute a Single-item, Multi-level planning run for the R-F1##. Use the defaultsettings.

5. Refresh the S/R list and then change material master R-F1##: Assign range ofcoverage profile 001 (MRP 2)

6. Call the stock/requirements list again, period totals display (months): Theaverage daily requirement, minimum stock level, target stock level, andmaximum stock level are displayed according to the range of coverage profile.

7. Execute the planning run, call the stock/requirements list again, period totalsdisplay (months): The available quantities are displayed.

Optional demo for minimum range of coverage:

8. Current month + 2, 7th day: Create planned independent requirements, 5 pieces



9. Execute planning run; a planned order was generated by the system for theprecise quantity to cover the material shortage.

10. Current month + 2, 14th day: Create additional planned independentrequirements, 5 pieces

11. Execute planning run; another planned order was generated by the system forthe precise quantity to cover the material shortage.

12. Assign range of coverage profile 003 instead of range of coverage profile 001(minimum days� supply 2, target range of coverage 5, maximum days� supply 10days), call the current stock/requirements list again and clarify changed days�supply and requirements in the period totals display.

13. Execute the planning run; only one planned order is created for the 14th of thecurrent month + 2 and replenished to the target stock level. No more planningis executed.

Conclusion: The minimum range of coverage for the dynamic safety stock hasthe same function as the amount of the static safety stock that is not availablefor planning.

Safety Time

Note: Do not confuse the safety time with the negative and positive lead timesfrom the BOM item, which have a completely different function.

With certain products safety stock might not cover problems that are caused by delays.For some product safety stock may not even be an option due to excessive costs,obsolescence, or space issues, so there is an need for other options.



Figure 95: Safety Time

Safety time is one time based buffer that SAP ERP offers to planners. The goal ofsafety time is to have material arrive earlier than the requirement date. The safety timeis a float after production or arrival of purchased materials. This is in contrast to thelead time and lead-time offset in the component data of a Bill of material (BOM) item,which is used to move the dependent requirement date. The safety time is used toavoid material shortages caused, for example, by an unreliable vendor.

Order proposals are pushed back from the delivery date by the number of workdaysspecified in the safety time. The actual requirements dates are not changed.

You define the safety time for each plant in the material master in the MRP 2 viewor for each MRP area in the MRP area segment. The system simulates bringing therequirements forward (closer to current period) by the specified number of days andthe planning for the receipts, created for these requirements in the planning run, is alsobrought forward by this number of days.

Hint: The work scheduler defines a safety time / actual range of coverageof 2 days. A requirement exists for January 31st. In the planning run, thesystem brings the requirements date forward by 2 days in simulative modeand creates a planned order with the end date on January 29th. However, theactual requirements date (January 31st) does not change.



Caution: The disadvantage of this procedure is that a procurement elementis created for each requirement. The system only groups the procurementquantities for the requirements into one procurement element if you work withweekly lot sizes or monthly lot sizes.

Note: You can display the requirements dates that have been moved forwardin simulation by selecting the function key Switch On Safety Time in thestock/requirements list. The System then shows the earlier, calculatedrequirements date instead of the actual requirements date

Figure 96: Safety Time in Multilevel Production

If a safety time has been defined at the finished product level and also at assemblylevel, these two safety times are added together when planning the assemblies. Thismay not be desired. As a result, you can define for each material whether or not thesafety time is valid for all the requirements or only for independent requirements,such as sales orders.



You define the following in the safety time indicator in the MRP 2 view of the materialfor each plant or for each MRP area in the MRP area segment:

� Safety time is not to be taken into account (indicator = blank).� Safety time is only to be taken into account for independent requirements

(indicator = 1).� Safety time is to be taken into account for all requirements (indicator = 2).

Figure 97: Period Profile for the Safety Time

You define the safety time in the material master per plant (view �MRP 2�) or perMRP area (in the MRP area segment). In addition, you can assign a safety time periodprofile to a material per plant (view �MRP 2�). You can use the period profile todefine deviating safety times for particular periods, which are freely definable. Thesecould, for example, be periods when a special marketing campaign is being used.

You define safety time period profiles in the Customizing activity, �Define PeriodProfile for Safety Time/Actual Range of Coverage�. You can access this activitydirectly from the MRP menu by selecting Environment→ Current Settings.

You then create a period profile to which you can assign many periods with differentsafety times.



Demonstration: Safety Time

PurposeTo learn about safety time

System DataSystem:Client:User ID:Password:Set up instructions:1. Access the S/R list for R-F1##, plant 1000. MD04

2. Change the Material master �MRP 2: R-F1##, plant 1000

Set the Safety time indicator to 2 - all requirements

Set the Safety time/Actual range of coverage to 4 days

3. Save the results and return to the stock requirements list and refresh.

4. Upon refreshing the stock requirements list exception messages will appear. It isimperative that students understand the system is considering the requirementsdates pulled forward four days causing the procurement proposals to be late.

5. Execute a single-item, multi-level plan. As a result you will see the procurementproposals pulled forward by four days.

6. In a separate session, access the Production → Material RequirementsPlanning→ Planning→ MRP Calculation→ Define Period Profile for SafetyTime/Actual Range of Coverage.

or

Logistics→ Production→ MRP→ Environment→ Current Settings→ DefinePeriod Profile for Safety Time/Actual Range of Coverage.

Create profile P00 in plant 1000: Period: 1st day of current month + 6 to lastday of current month + 7, safety time 10 workdays.

Enter period profile P00 and safety time indicator 1 in the material master,execute the planning run, and show the effects.

Finally, reset the range of coverage profile and the safety time indicator andexecute the planning run.



267 Exercise 9: Dynamic Safety StockExercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how to use static safety stock as a quantity buffer� Demonstrate how to use dynamic safety stock as a quantity buffer

Business ExampleFollowing the production phase-in period, it is apparent that the pump R-F1## is soldin larger quantities. In the future, the pump is to be planned, assembled, and putinto storage so that sales orders can be filled as quickly as possible. Uncertaintiesin planning are to be taken into account using dynamic safety stock. Any deliverydelays, on the part of production, caused by reorganizational measures should beintercepted using safety time.

Task 1: Static Safety stockDue to minor fluctuations in demand, and the need to assure high customer service onyour R-F1## pump, you will use static safety stock to buffer unpredictable demand.

1. Delete the existing independent requirements for R-F1## at plant 1000.

2. Now, create the following planned independent requirements for the pumpR-F1## in the plant 1000:

Current month +3 Current month +4 Current month +5 Current month +690 70 120 100

Save your entries.

3. From the Stock/Requirements list, execute single-item, multilevel planningfor the pump R-F1## in plant 1000.

In the initial screen of the planning run, check the creation indicators, and savethese as your defaults:




Processing key NETCHCreate purchase req. 2Delivery schedules 3Create MRP list 1Planning mode 1Scheduling 1Also plan unchanged components SelectDisplay results before they are saved Do not selectDisplay material list SelectSimulation mode Do not select

Before executing select Settings→ Save and confirm the warning message. Startthe planning run by choosing Enter two times.

4. Refresh the stock/requirements list for the material R-F1## in the plant 1000.What is the available quantity at the end of the net planning segment?

5. From the Stock/Requirements list, add a safety stock of 80 pieces in the materialmaster for R-F1## in the plant 1000 in theMRP 2 view.

6. Refresh the stock/requirements list. What is the available quantity at the endof the net planning segment?

Explain this shortage.

7. Execute a single-item, multilevel requirements planning run one more timeusing the settings below and explain the result after you have refreshed thestock/requirements list.

Processing key NETCHCreate purchase req. 2Delivery schedules 3Create MRP list 1Planning mode 1Scheduling 1Also plan unchanged components Select




Display results before they are saved Do not selectDisplay material list SelectSimulation mode Do not select

Task 2: Dynamic Safety StockDue to fluctuating demand, the definition of static safety stock does not seempractical. The safety stock should adjust to the requirements situation more. Therange of coverage of the safety stock should be 5 days.

1. From the Stock/Requirements list Change the material master for R-F1## in theplant 1000 as follows:

Delete the Safety Stock . Enter a coverage profile of 002 instead.

Save the changes.

2. Open an additional session and check the range of coverage profile 002 in plant1000 in the Customizing for MRP. What are the parameters for determining theaverage daily requirement and what values do these parameters have?

3. From the stock/requirements list, execute single-item, multilevel planning usingthe settings listed below:


4. Refresh the stock/requirements list. Go to the Period totals display and viewthe details in Months . Determine that the available quantity differs from onemonth to another.

What is the available quantity in the current month + 4?Continued on next page



Reconstruct the calculation method.

Task 3: Safety Time in PlanningDuring the months current month + 5 and current month + 6, there are likely to bedelivery delays on the part of production due to various reorganization measures.

1. In the Customizing for MRP, create a period profile P## for the plant 1000 forthe safety time with the description �Period profile group ##� for the periodfirst day of current month + 5 to last day of current month + 6 with a safetytime of 3 workdays. Save your entries.

2. From the Stock/Requirements list for your R-F1## at plant 1000, and changeyour material master to by entering the new period profile P## in theMRP 2view. Remove the coverage profile before saving

3. From the Stock/Requirements list, execute single-time, multi-level planning formaterial R-F1## in plant 1000 with planning mode 3.

4. Refresh the stock/requirements list. In the two critical months, do the availabilitydates correspond to the requirements dates?

5. From the Stock/Requirements list for your R-F1## at plant 1000, and changeyour material master to by removing the safety time period profile P##in theMRP 2 view.



Solution 9: Dynamic Safety StockTask 1: Static Safety stockDue to minor fluctuations in demand, and the need to assure high customer service onyour R-F1## pump, you will use static safety stock to buffer unpredictable demand.

1. Delete the existing independent requirements for R-F1## at plant 1000.

a) Menu path: Logistics→ Production→ Production Planning→ DemandManagement→ Planned Independent Requirements→ Create

b) Enter your material R-F1## and plant 1000 and press ENTER

c) In the table tab, select the row with the existing requirements and select

Delete line item

2. Now, create the following planned independent requirements for the pumpR-F1## in the plant 1000:

Current month +3 Current month +4 Current month +5 Current month +690 70 120 100

Save your entries.

a)

3. From the Stock/Requirements list, execute single-item, multilevel planningfor the pump R-F1## in plant 1000.

In the initial screen of the planning run, check the creation indicators, and savethese as your defaults:

Processing key NETCHCreate purchase req. 2Delivery schedules 3Create MRP list 1Planning mode 1Scheduling 1Also plan unchanged components Select




Display results before they are saved Do not selectDisplay material list SelectSimulation mode Do not select

Before executing select Settings→ Save and confirm the warning message. Startthe planning run by choosing Enter two times.

a) Menu path: Logistics→ Production→ MRP→ Planning→ Evaluations→ Stock/Requirements list (MD04)

b) Select the Single-item, multi-level MRP button at the top.

4. Refresh the stock/requirements list for the material R-F1## in the plant 1000.What is the available quantity at the end of the net planning segment?

a) Quantity available for planning at the end of the net requirements planningsegment: 0 pieces.

5. From the Stock/Requirements list, add a safety stock of 80 pieces in the materialmaster for R-F1## in the plant 1000 in theMRP 2 view.

a) Change the material master from the stock/requirements list throughEnvironment→ Change Material

or through Menu Path: Logistics→ Production→ Master Data→Material Master→ Material→ Change→ Immediately

6. Refresh the stock/requirements list. What is the available quantity at the endof the net planning segment?

Explain this shortage.

a) Quantity available for planning at the end of the net requirements planningsegment: Minus 80 pieces.

Reason: The newly entered safety stock flows into the net requirementscalculation as a requirement.

7. Execute a single-item, multilevel requirements planning run one more timeusing the settings below and explain the result after you have refreshed thestock/requirements list.

Processing key NETCHCreate purchase req. 2Delivery schedules 3




Create MRP list 1Planning mode 1Scheduling 1Also plan unchanged components SelectDisplay results before they are saved Do not selectDisplay material list SelectSimulation mode Do not select

a) The available quantity at the end of the net requirements planningsegment is 0 pieces. The requirement from the safety stock was fulfilledas a result of requirements planning.

Task 2: Dynamic Safety StockDue to fluctuating demand, the definition of static safety stock does not seempractical. The safety stock should adjust to the requirements situation more. Therange of coverage of the safety stock should be 5 days.

1. From the Stock/Requirements list Change the material master for R-F1## in theplant 1000 as follows:

Delete the Safety Stock . Enter a coverage profile of 002 instead.

Save the changes.


b) From the stock requirements list select Environment→ Change Material

c) Select the MRP 2 view and make the necessary changes, the select Save




2. Open an additional session and check the range of coverage profile 002 in plant1000 in the Customizing for MRP. What are the parameters for determining theaverage daily requirement and what values do these parameters have?

a) Follow system menu: System→ Create Session

b) IMG Menu path: Production→ Material Requirements Planning→Planning→ MRP Calculation→ Define Range of Coverage Profile(Dynamic Safety Stock)

c) Select the line for plant 1000 and profile 002. Select Details.

Parameters for determining the average daily requirement:

Number of periods: 3

Type of period length: 3 (standard days)

Days per period: 20

3. From the stock/requirements list, execute single-item, multilevel planning usingthe settings listed below:


a)

4. Refresh the stock/requirements list. Go to the Period totals display and viewthe details in Months . Determine that the available quantity differs from onemonth to another.

What is the available quantity in the current month + 4?




Reconstruct the calculation method.

a) To update the stock/requirements list, select Refresh

b) To view the period totals in months select Switch to Period Totals,and select the Months tab.

c) Available quantity in Current month + 4: 25 pieces

Calculation method: Planned independent requirements from 3 periods:

Period 1: Current month + 4: 70 pieces

Period 2: Current month +5: 120 pieces

Period 3: Current month + 6: 100 pieces

Total: 290 pieces

290 pieces divided by 3 x 20 days = 4.83 pieces/day 4.83 pieces/day xcoverage range 5 days = 24.16 pieces

24.16 pieces rounds up to 25 pieces

Task 3: Safety Time in PlanningDuring the months current month + 5 and current month + 6, there are likely to bedelivery delays on the part of production due to various reorganization measures.

1. In the Customizing for MRP, create a period profile P## for the plant 1000 forthe safety time with the description �Period profile group ##� for the periodfirst day of current month + 5 to last day of current month + 6 with a safetytime of 3 workdays. Save your entries.

a) Menu path: Customizing-Production→ Material Requirements Planning→ Planning→ MRP Calculation→ Define Period Profile for SafetyTime/Actual Range of Coverage

b) Select New Entries

c) Enter the plant, period profile, and description from above and pressENTER.

d) Select your entry P## and double click on the folder to the left calledPeriods from/to

e) Select New Entries and enter the date parameters specified above

f) Select Save.




2. From the Stock/Requirements list for your R-F1## at plant 1000, and changeyour material master to by entering the new period profile P## in theMRP 2view. Remove the coverage profile before saving


b) From the stock requirements list select Environment→ Change Material

c) Select the MRP 2 view and make the necessary changes, and remove theCoverage profile 002, enter your Safety Time Period Profile P##, and setSafety time indicator to 1.

d) Select Save

3. From the Stock/Requirements list, execute single-time, multi-level planning formaterial R-F1## in plant 1000 with planning mode 3.

a) Select Single-item, Multi-Level at the top of the S/R list

4. Refresh the stock/requirements list. In the two critical months, do the availabilitydates correspond to the requirements dates?

Answer: No. Reason: Due to the period profile entered with a safety time of 3workdays, the availability dates are 3 workdays before the requirements datesin the defined period.

5. From the Stock/Requirements list for your R-F1## at plant 1000, and changeyour material master to by removing the safety time period profile P##in theMRP 2 view.

a) From the stock requirements list select Environment→ Change Material

b) Select the MRP 2 view and make the necessary changes, and remove thesafety time period profile P## and the safety time indicator of 1.

c) Select Save



Lesson Summary

You should now be able to:� Describe the different methods of modeling buffers in the planning run� Demonstrate how several of the different methods of safety stock work



Lesson:278

Controlling order quantities in the planning runLesson Duration: 45 Minutes

Lesson OverviewIn this lesson, you will learn about lot-sizing procedures and how to optimize theseprocedures. You will also learn about special lot-sizing procedures for make-to-orderproduction.


� Demonstrate how Lot size techniques an influence the size of a planned orders� Demonstrate how use several fields in the material master to influence the size of


quantity and timing of receipts.� Explain the configuration process of Lot Size techniques.


Business ExampleAs a senior production planner, it is your responsibility to see that inventories are keptto a minimum on all products. Demonstrate using the fields in the material master tocontrol specific planned order quantities based on business requirements.

An Overview to Lot-Sizing ProceduresIn the net requirements calculation, the system determines the shortage quantities onthe respective requirements dates. These shortage quantities must be covered byreceipt elements. Within the material master lies a definition that controls the quantityfor each proposal and number of proposals in planning run.


SCM240 Lesson: Controlling order quantities in the planning run

Figure 98: Overview: Lot-Size Calculation

You can define how the lot sizes are calculated by selecting the lot-sizing procedurewhen maintaining the material master record (MRP 1). The result of the lot-sizecalculation is the quantity to be produced or procured, which you can change anddisplay in the order proposal.

There are three groups of lot-sizing procedures: static, periodical, and optimizing.

You can also enter restrictions in the material master that the system is to take intoaccount when forming the lot sizes:

� Minimum lot size (minimum procurement quantity, below which the lot sizeis not allowed to fall)

� Maximum lot size (maximum procurement quantity for each lot)� Rounding value (the system rounds up to a multiple of the rounding value)� Rounding profile (for the creation of scaled rounding)

You define the different lot-sizing procedures in the Customizing activity �CheckLot-Sizing Procedure�. You assign the procedure to a material on a plant basis in thematerial master (MRP 1) or per MRP area in the MRP area segment of the material.



Static Lot-Sizing ProceduresBefore initiating a planning run, planners must decide how they choose to influencethe lot size of a planning run. In static lot-sizing procedures, the procurement quantityis calculated exclusively by means of the quantity specifications entered in thematerial master. The following static lot-sizing procedures are available:

� Lot-for-lot order quantity� Fixed lot size� Fixed lot size with splitting and overlapping� Replenishment up to maximum stock level

Figure 99: Static Lot-Sizing Procedures

With the lot-for-lot order quantity, the system creates an order proposal for the amountof the material shortage. If there are several requirements for one day, which leads to ashortage, only one procurement proposal for the total shortage quantity is created inSAP ERP Enterprise for this date.

Note: This technique is recommending in use with Make-to-Order basedstrategies.

If you use the fixed lot size, the system creates an order proposal for the amount ofthe fixed lot size should material shortages occur. If this order proposal does notsufficiently cover the requirements, the system creates as many additional order



proposals for the same date in this lot size as are necessary to cover the requirements.Fixed lot sizes are often used to order things in specific quantities, like truck loads,shift based production, or more frequently batches with a fixed yield.

Caution: This lot-sized Technique will typically cause the available balanceto be greater than zero.

When replenishing to the maximum stock level, if a material shortage occurs, aprocurement proposal is created for the amount defined in the material/ masterrecord as the maximum stock level. If the shortage quantity for a day is larger thanthe maximum stock level, the lot size is then the same as the shortage quantity. Abalanced stock/requirements situation takes priority over the lot-sizing procedure. Asa variant, you can instruct the system to order enough to bring the stock level up to themaximum stock level and also to cover all requirements.

Note: You can use this lot-sizing procedure with reorder point planning orMRP.

Periodic Lot-SizingWhen considering what lot-size techniques to apply to a material, a planner shouldreview the demand and capacity situations. If a product does not cycle into productionthat often and demand is low, but change over costs high, one should considergrouping together requirements. This grouping will allow planners to create onereplenishment to cover several periods.

Caution: However, it would be prudent to review the capacity plan, as theplanning run will not split a replenishment amongst several supply options,unless instructed by the master data. Capacity should be available to coverthe requirement whenever production is needed.



Figure 100: Period Lot-Sizing Procedures

In the periodic lot-sizing procedures, the system groups procurement of requirementsquantities within one period in one lot size. The period lengths can be days, weeks,months, or freely defined periods according to the planning calendar.

You can freely define the number of periods within which to summarize theprocurement quantities. The specifics of periodic lot-sizes are controlled incustomizing. If the number of periods is to be larger than one, the number is entered inthe No. of periods field in the SAP ERP Customizing step Production→ MRP→Planning→ Lot Size Calculation→ Check Lot-Sizing Procedure for the lot-sizingprocedure selected in the SAP ERP material master.

Within in the lot-size procedure you can control the placement of the resulting receiptat the period start, period finish, or on the date of the first requirement, by maintainingthe relevant value in the Scheduling field in the Customizing step.

If, in Customization, you have defined that the availability date is at the start or finishof the period, the date of the planned order that is generated is accordingly moved.



Figure 101: Lot Size According to Planning Calendar

In certain situations planners need to be more specific in the procedure to groupquantities together for lot-sizing. For example, you may have a vendor that requestthat they deliver every Wednesday, or a certain product is always scheduled tobe manufactured on a certain day of the week. In the period lot-sizing procedureaccording to the planning calendar, the system groups the procurement of therequirements quantities within a period defined by the planning calendar in one lot.You assign a planning calendar to a material on a plant basis in the SAP ERP materialmaster (MRP 2 view) or per MRP area in the MRP area segment.

You maintain a planning calendar (period divisions) in the master data in the MRPmenu in SAP R/3 Enterprise or in the Customizing activity Maintain PlanningCalendar. The basis of the planning calendar will be a factory calendar that will beassigned during the definition process. The factory calendar will define work days,



non-work days (weekends and holidays). When defining the planning calendar theuser much chose a calculation rule. The calculation rule determines the calculation ofthe periods for the planning calendar. Some examples are :

� Weeks (weekdays) - Example: period start on Monday and Wednesday everyweek

� Months (weekdays) - Example: period start on every second Wednesday ofthe month

� Months (workdays) - Example: period start on every fifth workday of themonth. You can specify the workday(s) of the planning calendar according to theworkdays defined in the factory calendar.

� Years (workdays) - Example: period start on every fifth workday of the yearYou can specify the workday(s) of the planning calendar according to theworkdays defined in the factory calendar.

� Workdays - Example: period start on every fifth workday from a particular startdate You can specify the workday(s) of the planning calendar according to theworkdays defined in the factory calendar.

� Weekdays - Example: period start on every second Wednesday from a particularstart date

Demonstration: Periodic lot sizes

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. From the S/R list for R-F1## at plant 1000, select one of the planned independent

requirements and select Details of element.

2. Select Change Element.

3. Goto the schedule lines tab and in the split column enter d - day, for one ofthe periods of demand

Hint: Enter through and warnings about the planning time fence.



4. Select Save.

5. Refresh the stock requirements list. Run MRP and refresh again

6. From the S/R list change the material and enter a lot-size technique of 3D- Three day lot size

7. Save and re-run MRP and refresh the S/R list.

Demonstration: Planning Calendar

PurposeDemonstrate how planning calendars are used.

System DataSystem:Client:User ID:Password:Set up instructions:1. Follow the menu Path: Logistics→ Production→ MRP→ Master Data→

Planning Calendar→ Create Periods.

2. Create a calendarSCM, at plant 1000, with a description of SCM240 Demo.

3. Set a minimum period of 30 days. Leave the work period settings as is andpress ENTER

4. We want to delivery product every Wednesday of every week. Therefore selectWeeks (weekdays).

5. In the area Calculation rule for period specification set the period to begin on 3- Wednesday. Select Enter.

6. Change the start date to the first day of the current month and then end date to thelast day of next year select Continue (enter) to specify the month in whichthe calendar will be generated from

7. Select Save

8. Change the Lot-size technique for material master for R-F1## to PK - Period.LS according to Planning Calendar. Set the planning cycle to SCM.



9. Select Save

10. From the S/R list run MRP to see the results. All planned orders should bearriving on a Wednesday.

Optimizing Lot-Sizing Procedures

Figure 102: Optimizing Lot-Sizing Procedures

Optimizing lot-sizing procedures optimize the total costs resulting from lot size fixed(order and setup costs) and storage costs.

You enter the ordering costs in the material master (MRP 1) or, where applicable, inthe MRP area segment.

The system determines the storage costs based on the storage costs indicator, whichyou define in the Customizing activity �Check Lot-Sizing Procedure� by entering astorage cost interest rate. You assign the storage costs indicator to the material master(or per MRP area). The formula for calculating storage costs is then:

Storage costs = Requirement x Price x Storage cost interest rate x Time in storage /100 / 365.

Based on the first material shortage date determined in the net requirements planning,the system groups requirements until the optimum cost has been reached. Theoptimizing lot size procedures differ only by the type of the minimum cost.



Part period balancing: Sum of storage costs equals lot-sized fixed costs

Least unit cost procedures: Minimum total costs per piece

Groff reorder procedure: Groups requirements quantities in one lot until the rise inthe average storage costs per period is greater than the reduction in the order costsper period.

Dynamic planning invoice: Groups the requirement quantities in one lot until theadditional storage costs are greater than the lot size fixed costs.

Additional Lot-Size InfluencesIn addition to configurable lot-size techniques, there is another set of other parametersin the material master that can influence the quantities in the replenishmentsuggestions generated by the planning run.

Figure 103: Minimum Lot Size / Maximum Lot Size

For example, you can define limiting values (minimum lot size, maximum lot size).During lot-size calculation, the system takes into account these limiting values. Whenusing the minimum lot size the planning run will generate a replenishment for theminimum quantity identified in the product master. If the requirement is larger thanthe minimum, the system will refer back to a lot-for-lot result. The maximum lot-size



places ceiling on the size of the replenishment order. If the requirement exceeds themaximum the system will generate another replenishment on the same day till therequirement is fulfilled.

Note: The minimum and maximum work well together in batch relatedproduction. Your formula is approved for between 10,000 kgs and 100,000kgs.

Caution: Using minimums and maximums will cause your available balanceto exceed zero.

Figure 104: Rounding

Another technique for influencing the lot-size is by rounding the production quantitiesup. By specifying a rounding value, for example, the system will determine duringlot-size calculation that the lot size quantity to be created in increments of a specifiedquantity (for example, pallet size, if the material is only delivered in complete pallets).

In addition to that, you can use rounding profiles. A rounding profile is used todefine settings for rounding up or rounding down the order proposal quantity intodeliverable units.

You define the rounding profiles in Customizing, Production→ MRP→ Planning→ Lot Size Calculation→ Maintain Rounding profile (OWD1)A rounding profileconsists of the threshold value and the rounding value. The threshold value is the



value from which the system rounds up to the value of the next deliverable unit.The rounding value is the value to which the system should round up as soon asthe threshold value is exceeded.

You can define several combinations of threshold and rounding values for a roundingprofile.

Requirement Procurement Qty1 12 56 107 1021 2531 3532 4041 4574 80

Hint:

� For a requirement of 7 pieces, the system checks how many times 5fits into 7. This results in a procurement quantity of 5 pieces (1x5 =5). The system rounds up the remaining 2 pieces to 5 pieces. Thus,for a requirement of 7 pieces, one procurement proposal is created for10 pieces.

� For a requirement of 74 pieces, the system checks how many times40 in fits into 74. This results in a procurement quantity of 40 pieces(1x40 = 40). The system rounds up the remaining 34 pieces to 40pieces. Thus, for a requirement of 74 pieces, a procurement proposalis created for 80 pieces.

A simulation is available for checking the rounding profile Customizing settings.

Demonstration: Rounding

PurposeTo learn about rounding



System DataSystem:Client:User ID:Password:Set up instructions:1. From the S/R list for R-F1## at plant 1000, change the material master by setting

the lot-size technique to EX - lot for lot and set a rounding profile to 0002- SCM240 (E) Demo

2. The Rounding profile, consisting of a threshold value and a rounding value;create a new static rounding profile:

Rounding profile 0002 in plant 1000:

Level 1: Threshold value 2, rounding value

Level 2: Threshold value 32, rounding value 40

Demonstrate how the rounding profile works using the simulation (from 1 to200), exit without saving.

3. Save the material Master, and Re-run MRP. Refresh and explain the results

Special Lot-Sizing ProceduresWhen planners run across special situations such a multiple sources of supply ormake-to-order, special adjustments need to be made.



Figure 105: Special Lot-Sizing Procedures

Since lot-sizes are controlled in configuration, planners will not always have thechance to configure new techniques on fly. This is why it might be necessary to haveseveral profiles set up to adapt to other master data or the planning situation itself.Planners may run into a situation where the material is typically make-to-stock andtherefore have special lot size parameters. However, when a sales order is assigneda certain requirements type, the line item can become make to order and periodiclot sizes could cause a built in inventory.

Figure 106: Lot Size Configuration



When configuring a lot-size technique which may at times be used for make-to-ordersituating planners can set a parameter in configuration called MTO Lot Size. You usethis indicator to control the selection of the lot-sizing procedure for make-to-orderproduction and for project production. You can select the following procedures:

� The system calculates the order quantity using the lot-for-lot order quantity.� The system calculates the order quantity using the lot-for-lot order quantity

and it also takes the rounding quantity or the minimum and maximum lot sizesinto account

� he system calculates the order quantity using the lot-sizing procedure specifiedin the short-term period.

Certain products will have the opportunity to be multi-sourced. These may be productsthat are purchased from one or more vendors or products that can be transferred frommore than one plant, or made with more than one production version. In this situation,planners can set up quota arrangements which will split the demand between themultiple sources. This is normally done by reviewing each requirement to determineits supply source. By setting the �splitting quota� indicator in the Customizing forlot-size procedures, you can distribute the procurement quantity across varioussources. By setting this flag you will split each requirement by the designated quotaarrangement settings. To do this, you must set the quota arrangement usage indicatorin the material master record (Purchasing or MRP 2 view). You maintain the portionsof the various sources in the quota arrangement in the master data of purchasing.

You can set the �overlapping� indicator for all lot-sizing procedures in Customizing inorder to distribute the order quantity into partial quantities. These quantities are notproduced at the same time, but rather in regular, overlapping periods. Procurementproposals can overlap in the future and in the past. You also maintain the tact timeand, depending on the lot-size procedure, the maximum lot size or the rounding value.



Figure 107: Long-Term Lot Size

Certain materials based on their popularity or long lead time may have a long demandhorizon. To create planned orders in a lot-for-lot environment for 18 months wouldconsume precious processing time. After a certain point in the horizon, plannersloose interest in the details and want rough numbers. The purpose of the long-termlot size is to divide the time axis for MRP into a short-term and a long-term area,enabling the lot-size calculation to be carried out using different lot-sizing proceduresin these two areas. Creating larger lots in the long-term area has a particularly positiveeffect on performance.

It is therefore possible to receive a rough preview of the future master productionschedule in the long-term area and to have a more precise analysis in the short-termarea.

You maintain the settings for the long-term lot size, just as for the other lot-sizingprocedures, in the Customizing for MRP in the IMG activity �Check Lot-SizingProcedures�. You can define the lot size that is to be used in the short-term periodand the lot size that is to be used in the long-term period, as well as the end ofthe short-term/beginning of the long-term periods using the key of the lot-sizingprocedure. You defined the length of the short-term area by entering the periodicity(for example, month, week) and the number of periods.

If a material is planned with short-term and long-term lot sizes, the period of validityof both lot-sizing procedures is determined during the planning run. The orderquantities in the short-term horizon are calculated using the lot size in the short-term



area. The system switches to the long-term lot size on the date from which thelong-term lot size is valid. To calculate this date, the system always rounds up to thebeginning of the next full long-term period.

It is possible that a material planned using long-term lot size is not changed. Thematerial is then not included in new planning when using NETCH or NETPLplanning. The planning order would then be converted in the long-term lot size. Inorder to prevent this from occurring, you can set the �Recurring MRP� indicator inCustomizing for the MRP type of the material, and also maintain the �Max. MRPInterval� in the MRP group. The material is then included in planning after themaximum MRP interval has been processed and is planned with the short-term lotsize, if required.

Demonstration: Special Lot-Sizing Procedures

PurposeTo learn about special lot-sizing procedures

System DataSystem:Client:User ID:Password:Set up instructions:1. For each lot-sizing procedure, the lot-sizing procedure is defined specially

for make-to-order production. Explain this in Customizing using lot-sizingprocedures FX and FK.

2. Lot-size with splitting quota: Splitting the lot across various sources accordingto the quota in the master data for purchasing; you must also set the �splittingquota� indicator in the Customizing for the lot-size procedure and the quotaarrangement usage indicator in the material master (purchasing and MRP 2views). Do not confuse this with the quota arrangement in the procurementtype segment, with which the individual lots are to be drawn alternately fromvarious sources.

3. Lot-size with overlapping: Forward or backward overlapping (in time) ofpartial quantities of an order; possible demonstration based on lot-sizingprocedure FS, showing it first in Customizing, set overlapping to �-�, and thenentering it in the material master R-F1## (MRP 1), which was used for thedemonstration of safety stock; enter a fixed lot size (120 pieces), talk time (1



AT), and a rounding value (40 pieces), and remove any range of coverage profilethat may exist; execute material requirements planning and explain the results;finally, reset the settings.



293 Exercise 10: Controlling Order Quantitiesin the Planning RunExercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate and explain how lot sizing parameters affect the results of the

planning run.

Business ExampleAs the senior planner, it is import that you be able to answer all questions regardingthe planning run. Lot size parameters will have a major influence in the efficiencyof the production floor as well as the amount of product in inventory. Test severaldifferent lot-size parameters to showcase their affects on the replenishment proposals.



Task: Lot-size Parameters in the Planning RunAs the senior planner, it is your responsibility to ensure low inventories but also highefficiency in procurement and production. Therefore, you must test several lot-sizeparameters to ensure they do not affect your inventory or replenishment plans in anegative way.

1. From the stock/requirements list of your product R-F1## at a plant 1000, youneed to change the demand into smaller buckets of time. Take the monthlyrequirements and split them into daily buckets.

2. Run MRP to correct the plan using the Ex - lot-for-lot parameter.




3. After conversations with your pump production manager, you will not haveenough capacity to cycle in and produce the R-F1##. However, after reviewingthe demand you can run it about every three days. From the S/R list, change thematerial master so that R-F1## at plant 1000, will group together three days ofdemand into one requirement. Re-run MRP to review the results.

4. After reviewing the results with your production manager, he is still not happy.He figures to meet minimum profitability on the shop floor he must produce aminimum of 25 pumps with every production run. How would you accomplishthis in MRP?

5. Set a minimum lot-size of 25 pcs for R-F1## at plant 1000. Re-run MRP andreview the results use the default settings for the planning run.

6. After further conversations with your pump production manager, the 25 pcs isstill too small. From the S/R list, change the material master so that R-F1## atplant 1000, will group together two weeks of demand into one requirement.Re-run MRP to review the results.

7. Now that the two week lot size is more manageable, you want to clean things up.Your pumps fit 6 to a pallet in the warehouse. Make sure that your lot size is inpallet increments. From the S/R list, change the material master so that R-F1##at plant 1000, will group together two weeks of demand into one requirement aswell as round up to pallet quantities. Re-run MRP to review the results.

8. From the S/R list, change the material master so the R-F1## at plant 1000, on alot-to-to basis for lot sizing.



Solution 10: Controlling Order Quantities inthe Planning RunTask: Lot-size Parameters in the Planning RunAs the senior planner, it is your responsibility to ensure low inventories but also highefficiency in procurement and production. Therefore, you must test several lot-sizeparameters to ensure they do not affect your inventory or replenishment plans in anegative way.

1. From the stock/requirements list of your product R-F1## at a plant 1000, youneed to change the demand into smaller buckets of time. Take the monthlyrequirements and split them into daily buckets.

a) Follow the menu path: Logistics→Production→ MRP→ Evaluations→Stock/Requirements lists (MD04)

b) From the S/R list for R-F1## at plant 1000, select one of the planned

independent requirements and select Details of element

c) Select Change Element.

d) Goto the Sched. lines tab and in the split column enter d - day, for theperiods of demand.

Hint: Enter through and warnings about the planning time fence.

e) Select Save.

2. Run MRP to correct the plan using the Ex - lot-for-lot parameter.

a) From the S/R list select Expand header, and select the Lot-size datatab to ensure it is set to EX.

b) Select the Single-item, Multi-levelMRP button to execute MRP and thenselect Refresh update to see the new results.




3. After conversations with your pump production manager, you will not haveenough capacity to cycle in and produce the R-F1##. However, after reviewingthe demand you can run it about every three days. From the S/R list, change thematerial master so that R-F1## at plant 1000, will group together three days ofdemand into one requirement. Re-run MRP to review the results.

a) From the S/R list Environment→ Change

b) In the MRP 1 view, set the lot size to 3D - Three day lot size

c) Select Save.

d) Select the Single-item, Multi-level MRP button to execute MRP and thenselect Refresh update to see the new results.

4. After reviewing the results with your production manager, he is still not happy.He figures to meet minimum profitability on the shop floor he must produce aminimum of 25 pumps with every production run. How would you accomplishthis in MRP?

Answer: A minimum lot size would allow you to set a minimum of 25 units butif requirements were higher, the system would propose a larger quantity.

5. Set a minimum lot-size of 25 pcs for R-F1## at plant 1000. Re-run MRP andreview the results use the default settings for the planning run.


b) In the MRP 1 view set the minimum lot- size to 25 pcs

c) Select Save.


6. After further conversations with your pump production manager, the 25 pcs isstill too small. From the S/R list, change the material master so that R-F1## atplant 1000, will group together two weeks of demand into one requirement.Re-run MRP to review the results.


b) In the MRP 1 view set the lot size to - 2W - Two Week Lot Size

c) Select Save.





7. Now that the two week lot size is more manageable, you want to clean things up.Your pumps fit 6 to a pallet in the warehouse. Make sure that your lot size is inpallet increments. From the S/R list, change the material master so that R-F1##at plant 1000, will group together two weeks of demand into one requirement aswell as round up to pallet quantities. Re-run MRP to review the results.


b) In the MRP 1 view set the lot size to - 2W - Two Week Lot Size

c) Set the rounding value to 6.

d) Select Save.

e) Select the Single-item, Multi-level MRP button to execute MRP and thenselect Refresh update to see the new results.

8. From the S/R list, change the material master so the R-F1## at plant 1000, on alot-to-to basis for lot sizing.


b) In the MRP 1 view set the lot size to - EX - Lot for Lot and remove therounding value.

c) Select Save.



Lesson Summary

You should now be able to:� Demonstrate how Lot size techniques an influence the size of a planned orders� Demonstrate how use several fields in the material master to influence the size of


quantity and timing of receipts.� Explain the configuration process of Lot Size techniques.


SCM240 Lesson: Multi-Site Planning

Lesson:299

Multi-Site PlanningLesson Duration: 30 Minutes

Lesson OverviewIn this lesson, you will gain an overview of stock transfer options.

In this lesson, you will familiarize yourself with stock transport orders for the transferof material within a company code.


� Explain how to perform Cross location planning in SAP ERP� Demonstrate how cross location planning work in SAP ERP

This is lesson is not to discuss Stock transfers in detail but how it is involved inplanning. If customers wish to know more details direct them to the following classes:

� SCM500 - Processes in Procurement (5 days)� SCM510 - Inventory Management and Physical Inventory (5 days)� SCM680 - Cross Application Business Process (2 days)

Do not allow students to get into a debate. Currently we cannot ship between locations1000 and 2400 since they belong to different purchase orgs. Hope to deliver a demoat a later time.

Business ExampleSome of your make to stock pumps are sold out of several of your distributioncenters but are manufactured in several locations. Examine how to use the SAP ERPfunctions to model this process.

Overview of Stock Transfers and Transfer PostingsDuring the initial design process of materials planning, planners must always considerthe source of supply. Often time planners are faced with situations where somelocations such as distribution centers do not perform any manufacturing activities,and must replenish their supply form other locations. This situation will often requirestock to be transferred from another location.



When organizations follow a make-to-stock process, forecasts will be placed atdistribution centers and the periodic resupply must be a planned process. Using SAPERP the process can be accomplished through many different methods called transferpostings or stock transfers.

A change of the stock ID or stock type of a material is prominent in transfer postings.Transfer postings do not need to be connected to an actual goods movement. In stocktransfers, however, a physical goods movement always takes place. In the case ofa plant-to-plant stock transfer, the plants between which material is transferred canbelong either to the same company code or to different ones. As a general rule,cross-plant stock transfers can only be booked out of unrestricted-use stock.

Figure 108: The Stock Transfer Procedures



A stock transfer between two plants can be executed using different procedures.The procedures used to execute a stock transfer posting solely use the componentMM - materials management. In contrast to a storage-location-to-storage-locationstock transfer, a plant-to-plant transfer affects Financial Accounting and MaterialRequirements Planning.

� Financial Accounting (only if the two plants are assigned to differentvaluation areas):

A cross-plant stock transfer leads to a value update in the stock accounts. Anaccounting document is generated parallel to the material document for the stocktransfer. The stock transfer is valuated at the valuation price of the material inthe issuing plant.

A cross-plant stock transfer leads to a value update in the stock accounts. Anaccounting document is generated parallel to the material document for the stocktransfer. The stock transfer is valuated at the valuation price of the material inthe issuing plant.

In the case of a cross-company-code stock transfer, two accounting documentsare created at the time of posting: one for each company code. The offsettingentry to the stock posting is then made to a company-code clearing account.

Hint: If the stock transfer is entered in two separate steps, valuationalways takes place at the time of the first step.

� Material Requirements Planning (MRP): A change in the plant stock is takeninto account by MRP.

Several procedures are available for the physical transfer of materials from one plantto another:

� One-step procedure� Two-step procedure

Possible reasons for a stock transfer using the two-step procedure are that theplants are located a long distance from each other and the goods remain in transitfor a certain time, or that a different employee is responsible in each plant, eachof whom can post movements only in his or her own plant.

� Stock transport order without delivery� Stock transport order with delivery via shipping (also possible with billing

document).



One Step Stock Transfer (Transfer Posting)When companies want a very simple process of transferring stock from one plant toanother, they can make use of the one step procedure. This will typically be used whenplants are a short distance from each other and transit time is not an issue and is notneeded for planning purposes.

Hint: This situation often works when a plant and distribution center (twoplant codes) share the same physical location.

Figure 109: One Step Stock Transfer Posting

In the case of the one-step procedure, the goods issue and goods receipt are posted ina single material document. You must therefore enter all relevant data, such as thematerial, issuing plant, issuing storage location, receiving plant, and receiving storagelocation in this one step. The movement type (in the standard system) is 301. Thistransaction is accomplished by using the normal transfer posting transaction MB1B.



Demonstration: One Step Stock Transfer

PurposeDemonstrate how a one step stock transfer posting is performed

System DataSystem:Client:User ID:Password:Set up instructions:1. Create material master for R-F1## at location 1200. SD view, MRP view,

Acctg/costing Views

2. create inventory for 200 pcs of R-F1## at location 1000. Materials Management→ Inventory mgmt→ Goods Movement→ Goods Receipt→ Other (MB1C).Use movement type 501.

3. Create Transfer posting for 25 pieces for the R-F1## at location 1000 to the newproduct R-F1## at location 1200. Materials Management→ Inventory mgmt→Goods Movement→ Transfer Posting (MB1B). Use movement type 301.

4. Review the S/R list for R-F1## at location 1200.

5. Drill down on the Stock MRP Element and note the 25 pcs is in UnrestrictedStock.

Two Step Stock Transfer (Transfer Posting)When considering transferring stock between locations, many members ofmanagement do not like the two step stock transfer posting since the shipping locationis making the transaction. If there are issues with quantity discrepancies, this couldcause problems in planning since the material has already been posted to unrestrictedstock.



Figure 110: Two Step Stock Transfer Posting

In the case of the two-step procedure, when removing the material from storage(movement type 303), you must specify the receiving plant in addition to the materialand the issuing organizational levels. This is necessary because valuation of the stocktransfer takes place when the material is removed from storage and posted to stockin transfer at the receiving plant. You can either enter the put away (placement instorage, movement type 305) with reference to the material document of the stockremoval or enter all data manually. As a result of the put away, the quantity is bookedout of stock in transfer and into unrestricted-use stock at the receiving plant. Valuationof the put away is not necessary, since the stock in transfer and the unrestricted-usestock at the receiving storage location belong to the same plant.

Demonstration: Two Step Stock Transfer Posting

PurposeDemonstrate how to perform a two step stock transfer posting.




User ID:Password:Set up instructions:1. Access the S/R list for R-F1## plant 1000. Review the on-hand inventory and

review the details of it by double clicking on the StockMRP element.

2. Access the S/R list for R-F1## plant 1200. Review the on-hand inventory andreview the details of it by double clicking on the StockMRP element.

3. Using Tcode MB1B, Transfer 20 pcs of inventory of the R-F1## in plant 1000to the receiving plant 1200. Use Movement type 303 - Transfer Posting Plantto Plant remove from storage

4. Access the S/R list for R-F1## plant 2400. Review the on-hand inventory noticethe increase and review the details of it by double clicking on the Stock MRPelement.

5. . Note the 20 pcs are still in transfer.

6. Using Tcode MB1B, Transfer 20 pcs of inventory of the R-F1## in plant 1200.Use Movement type 305 - Transfer Posting Plant to Plant receive into storage

7. Refresh S/R list for R-F1## at plant 1200. and notice the change to the On-handbalance is now 20 pcs due to the receipt.

8. Review the on-hand inventory and review the details of it by double clicking onthe StockMRP element. Note the 20 pcs are still in inventory

Damage to Goods During TransportationIf goods are damaged during transportation, leading to their destruction, you mustreport this as scrapping so that the system can correct the figure for the quantity ofstock in transit.



This can be done in different ways:

� Reverse the removal from storage at the issuing plant and then post the scrappingof the material at the issuing plant. In this case, the scrapping is posted on avalue basis in the issuing plant.

� Alternatively, place the full quantity of the goods into storage at the receivingplant and then post the scrapping at the receiving plant. The scrapping is thenposted on a value basis at the receiving plant.

Hint: Movement types 557 (issue from stock in transit - adjustmentposting) and 558 (receipt to stock in transit - adjustment posting) arereserved for use by SAP. They are used to make adjustment postingsfor stock in transit. These movement types can only be posted withtransaction MB1A.

It is important that the quantity destroyed does not remain in stock in transfer but isreported in the system as scrapped.

Stock Transfer and MRPCompanies that engage in a make-to-stock environment, often store their product asclose to the customer as possible in distribution centers. For high volume products it isnecessary to plan the replenishments of these locations in order to explode the demandthrough the entire supply chain and take into account the necessary lead times.

You can define the procurement type for the material within the MRP data in thematerial master record of the receiving plant. You can assign a special procurementkey to the materials that are predominantly procured via a stock transport order fromanother plant.



Figure 111: Stock transfer in the material master record

You define special procurement keys in the Customizing of MRPProduction→ MRP→ Master Data→ Define Special Procurement Key. You define special procurementkeys based on a plant-dependent basis.

If you set up special procurement keys for stock transfers, you must define a keyfor each supplying plant.



Figure 112: Stock Transfer Configuration

In the case of a supply shortage, the program can generate purchase requisitions withitem category stock transfer (U) for these materials.

This requirement can be seen in the supplying plant straight away.

Stock Transfer Without DeliveryThis type of stock transfer involves not only Inventory Management but alsopurchasing at the receiving plant. The process begins in the receiving plant withthe entry of a stock transport order in the purchasing department. A goods issuereferencing this stock transport order is then entered in the issuing plant. The quantitybooked out is initially managed as stock in transit at the receiving plant. The processis ended by the posting of the goods receipt against the stock transport order at thereceiving plant.



Figure 113: Stock Transfer Without Delivery

In contrast to a stock transfer without a stock transport order, a stock transfer via astock transport order has the following advantages:

� The stock transport order is integrated within MRP; purchase requisitionsgenerated by MRP can be converted into stock transport orders.

� The receipt can be planned at the receiving plant.� You can enter delivery costs and a forwarder/carrier in the stock transport order.� The goods receipt can be posted directly to consumption.� In the case of a goods receipt into the warehouse, you can also post the material

to stock in quality inspection or to blocked stock.� The entire process (goods issue and goods receipt) can be monitored via the

PO history.

Displaying Stock in TransitThe stock in transit is shown in the material master record in the plant stock viewfor the receiving plant.

A special report for the analysis of transit stocks is available in the InventoryManagement menu under Environment→Stock→Stock in Transit (MB5T). With thisreport, you can select transit stocks for the receiving or issuing plant, for example.



Stock in transit is also displayed in the Stock Overview and the Warehouse Stocksof Material report. In the Warehouse Stocks of Material report, stocks in transit andstocks in transfer are summarized at plant level in a stock line without a storagelocation.

Demonstration: Demonstrate Two Step Stock TransferWithout delivery

Purpose

System DataSystem:Client:User ID:Password:Set up instructions: Change the following IMG settings: MaterialsManagement→ Purchasing→ Purchase order→ Setup Stock Transport order→Define Shipping Data for plants

Review the details for Plant 1200.

change the distribution channel from 12 to 10 and SAVE.

1. Change the material master for R-F1## in plant 1200 to include the procurementkey 40 and Save.

2. Enter Several PIRs (MD61) for 10 pieces per piece for several weeks.

3. Execute a Single-item, Multi-level MRP run. Be sure to set the purchaserequisition indicator to 1 - purchase requisition.

4. From the S/R list on the first PurRqs. select Details of Element.

5. Select Convert Purchase Requistion to Purchase Order

6. From the Document Overview, select the Purchase Requisition number and

then select Adopt.

7. Enter the goods receipt for the stock transport order. Logistics→ MaterialsManagment→ Inventory Managment→ Goods movment→ Goods Movement(MIGO)

8. Choose Goods Receipt and reference Purchase Order.

9. Enter purchase order number 4151-08## .



10. Check the movement type 351 (Transfer Posting: Unrestricted to Stock inTransit).

11. Choose Execute.

12. Set the Item OK indicator for both items.

13. Enter Storage Location 0001 for both items.

14. Choose Post.

Stock Transfer Two Step with DeliveryWhen initiating the stock transfer process between two locations, companies mustconsider the impacts of goods issue (shipping) and goods receipt (receiving). Ifcompanies are separated by a large distance it is often important to represent theshipment of the product in order to adjust for the goods issue from the shippingfacility, but also the intransit or planned receipt.

In the two step procedure with stock transport order and shipping processing, stockin transit is created when the goods issue is posted. Stock that is intransit is thusmontitored. With this action, one can display the stock in transit in the stock overviewfor the material.



Figure 114: Two Step Stock Transfer with Delivery

Stock in transit is valuated, but not for unrestricted use. It is stocked at the receivingplant level. A goods receipt is posted in the receiving plant when the goods arereceived. Depending on the decision you make, you can transfer the stock tounrestricted-use stock, blocked stock, or quality inspection stock.

You create stock transport orders for stock transfer within a company code usingdocument type UB in the default. In addition to the receiving plant, you also specifythe supplying plant here. You also use the item category U (stock transfer) here.Astock transport order with an own MRP element is displayed in the requirements/stockoverview.

You use document type NB (purchase requisition) , and item category U (stocktransfer) for the purchase requisition.

You use the stock transport scheduling agreement if stock transfers are to be executedin regular time intervals, or if you want to schedule the delivery dates of a stocktransfer precisely.

Moreover, you can make settings in Customizing that define whether an availabilitycheck is executed or not in the delivering plant when a purchase order is created.



Characteristics of a stock transport order:

� The quantity of stock booked out is first stocked in the stock in transit of thereceiving plant.

� Only when the goods receipt is posted is the quantity posted to the stock of thereceiving plant. In this way, it is possible to monitor the quantity that is in transit.

� The transfer posting with the valuation price of the material is valuated in theissuing plant.

If the two plants belong to different company codes, the stock transport orderis also a stock transfer from company code to company code. In this case, twoaccounting documents are created when the goods issue is posted. The offsettingentry for the stock posting occurs in a company-code clearing account.

Menu paths to demonstrate configuration if necessary:

IMG→ Materials Management→ Purchasing→ Purchase Order→ Setup Stocktransfer Order:

� Define Shipping Data for plants (assign internal customer number to receivingplants

� Assign Delivery Type and Check rule - In this step, you specify whether anSD delivery is to be created in the case of a PO with a certain combination ofsupplying plant and document type. You can also specify which delivery type isto be used. The delivery type in Sales and Distribution (SD) determines how adelivery is handled. In the standard system, the delivery type �NL� is used forstock transfers without a billing document. For stock transfers with a billingdocument, the delivery type �NLCC� is used.

� Assign Document type, One-step procedure.

� If the supplying and receiving plants belong to the same company code,choose the document type �UB� or a comparable document type of yourown. A physical stock transfer is then carried out without a billingdocument.

� If the supplying and receiving plants belong to different company codes,choose the document type �NB� or a comparable document type of yourown. A physical stock transfer is then carried out with delivery and billingdocument.



Prerequisites Stock Transfer:

� Create customer master to represent receiving plant in SD.� Reviewing plant must be set up as an internal customer (Define shipping data for

plants)� Define delivery type and assign check rule� Assign Document type (one or two step procedure)

Note: For more detailed information on Stock transfers attend SCM680Cross-Application Processes in MM and SD. Course SCM510 deals with thedifferent stock transfers that are possible within inventory management.

Withdrawal from Alternative PlantOften time planners are faced with supply chain planning dilemmas that arise due thegeographic closeness of facilities that supply each other. In some situations companieshave manufacturing locations within a close geographical area, which tend to supporteach other with manufactured components. During normal business activity largeamounts of goods movements and affect system performance negatively. In and effortto minimize master data and other transactions that arise with vertical integrationplanners can use the special procurement method Withdrawal from Another Plant

Figure 115: Withdrawal from Another Plant

Another alterative for planning vertical integration is using the

You can specify for an assembly that the components required to build the assemblyare to be withdrawn from a different plant from the planning plant (that is, the issuingplant). Dependent requirements for these components are directly created in the



issuing plant. You can use withdrawal from alternative plant for both componentsproduced in-house and procured externally. A special procurement key is definedfor both procedures.

Figure 116: Configuration of Withdrawal from Another Plant

This procedure provides an alternative to using stock transport orders and is especiallyuseful when plants are close together.

Prerequisites to Withdrawing from alternative plant

� In Customizing for MRP, in the IMG activity Define special procurement type,you have maintained a special procurement key for Withdrawal from alternativeplant and you have entered the issuing plant there.

� You have assigned the component, which is to be withdrawn from an alternativeplant, to this special procurement key in the material master of the planningplant (MRP 2 view).

� In the withdrawal plant, you have created a material master for the componentto be withdrawn.

Example:



Assume you pump that you manufactured is used in a larger cooling unit that isproduced in plant 1200. Plant 1200 is on the other side of town about an hour away.Due to such short lead times there is not sense in generating stock transfers as itwould be too much work. The heat exchanger that goes into the cooling unit is alsomanufactured in plant 1200.

You carry out the planning run in the planning plant for your cooling unit, that is,in plant 1200. During the planning run, the system creates a planned order for theassembly in plant 1200, if this is necessary.

The system then creates a dependent requirement for the heat exchanger in plant 1200,and then creates a dependent requirement for the pump in plant 1000. A dependentrequirement is created in the issuing plant, that is, in plant 1000, for the pump with thespecial procurement Withdrawal from alternative plant.

When the planned order for the cooling unit is converted into a production order, thedependent requirements of the components are automatically converted into orderreservations. The withdrawal for the production order is carried out in plant 1200 forthe heat exchange and in plant 1000 for the pump.

Note: One of the main purposes of this scenario is to cut down on goodsmovement transactions.

Demonstration: Demonstrate withdrawal from anotherfacility

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Extend material master R-B1## to location 1100, with MRP, work scheduling,

Acctng, and work scheduling views, using R-B1## at 1000 as a template

2. change the Material master for R-B1## at location 1000, and enter a specialprocurement key of 70 - Reservation in alternative Plant 1100.

3. Using T-Code MB1C, create 1000 pcs of inventory in plant 1100, storagelocation 0001, movement type 501



4. With existing requirements for the R-F1## at plant 1000, from the S/R list youwill execute a single item multi level MRP (ensure to delete orders).

5. From the S/R list review the BOM for one of the new planned orders. Payattention to the Plant for the R-B##.

6. convert the planned order into a production order

7. From within the production order set all materials to backflush by setting thebackflush indicator on the item overview.

8. Release and Save the order.

9. Confirm the production order using transaction CO15. Set to final confirmationand select the Goods movement button. Note the issue storage location

10. Note the inventory in both locations 1000 and 2400 for the R-B1##. Theinventory should have been issued at location 1100.

Production in Alternative Plant

Figure 117: Production in Alternative Plant



You can define that a particular product is to be produced in an alternative plant (thatis, the production plant) from the planning plant. The planning of the product iscarried out in the planning plant but it is actually produced in the production plant.The product�s BOM is created in the production plant.

� In Customizing for MRP, in the IMG activity Define special procurement type,you have maintained a special procurement key for production in an alternativeplant and you have entered the different production plant there.

� You have assigned this special procurement key to the assembly in the materialmaster of the planning plant (MRP 2 view).

� You have created a material master for the material in the production plant

Figure 118: Configuration for Production in Alternative Plant

You first plan material requirements in the planning plant. During the planning run,the system creates a planned order for the assembly in the planning plant, if this isnecessary.

The following is to be taken into account for the scheduling of the planned orders inthe planning plant: The system uses the in-house production times and schedulingmargin key entered in the material master record for the planning plant to determinethe basic dates. If MRP is carried out using lead time scheduling via the routing,the routing and scheduling margin key in the production plant are the basis of theproduction date calculation in. If you have defined that the basic dates are to beadjusted for the production dates in lead time scheduling (Customizing, IMG activity



Define scheduling parameters for planned orders) the system calculates the basic dateby adding the production finish date and the float after production. The system usesthe production start date minus float before production as the order start date. Thesystem determines the float before production and the float after production from thescheduling margin key in the material master record for the production plant.

You plan material requirements in the production plant. The system explodesthe BOM for the assembly in the production plant and determines the dependentrequirements. You convert the planned order in the planning plant into a productionorder. The dependent requirements in the production plant are converted into adependent reservation and production of the components in the production plant isinitiated. When creating the goods receipt for the production order, the stock in theplanning plant is increased.

Demonstration: Demonstrate Production in another plant

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Change Material R-F1## in plant 2400, by setting the special procurement key

to 91 - production in plant 1100. In addition make sure the procurementtype is set to E.

2. PIRs were already created in another exercises.

3. Execute an Multi-level MRP run (MD02), for R-F1##/2400 make sure to select�All Unchanged components�.

4. Review the Stock/Requirements list (MD04) for R-F1## at plant 2400, andplant 1000.

5. Review the details of the planned order for R-F1## in plant 2400. Notice theorder type is Production in Plant 2 and can not be converted.

6. Review the S/R list for R-F1## in plant 1000. Notice the planned order with norequirement, however the receiving plant is plant 2400. Review the detailsof the order.



7. convert one of the planned orders to a production order and release it. Notice onthe assignment tab in the production order the planning and production plant.

8. review the results in location 2400 in the stock requirements. Note the stocklevel and the new production location

9. Confirm the production order using transaction CO15.

10. Note the inventory in both location 1000 and 2400.



315 Exercise 11: Multi-Site PlanningExercise Duration: 30 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Initiate multi-site planing by using the special procurement key

Business ExampleA majority of your pumps are of a make-to-stock nature. The lead times are too greatand demand to volatile to plan them as a make to order. However, due to your globalcustomer base you need to stock your product closer to the customer. Plant 2400 is justsuch a distribution center. You have forecasted at plant 2400 via the S&OP process.Set up plant 2400 so that it will automatically source the R-F1## out of Plant 1000.



1. CATT Z_SCM240 must be run prior to this exercise. It will create the mateiralR-F1## at location 2400.

Task: Planning Stock TransfersThe majority of your pumps are of a make to stock nature. In order to provide a highlevel of customer service, your company has established distribution center/plant2400. Plant 2400 will need to procure internally, the R-F1## from plant 1000, in orderto support customer demand. During the S&OP process you have already createddemand at location 2400 for the R-F1##. Change the material master in location 2400so that it will create stock transfers to location 1000. Execute a multi-level MRPand review the results.

1. From the stock requirements list for R-F1## at plant 2400, change the materialmaster setting the special procurement key so that demand is source via a stocktransfer from location 1000.




2. From the Stock/Requirements list for you materialR-F1## at plant 2400, executeSingle-item, Multi-Level, using the following settings

Field ValuePurchase req. 1 - Purchase requisitions

Planning mode 3 - Delete

Scheduling 2 - Lead time w/ cap. rqmts


3. Refresh the stock requirements list and what do you now see?

4. Change the stock requirements list and review the R-F1## at plant 1000. Whatdo you see here?



Solution 11: Multi-Site PlanningTask: Planning Stock TransfersThe majority of your pumps are of a make to stock nature. In order to provide a highlevel of customer service, your company has established distribution center/plant2400. Plant 2400 will need to procure internally, the R-F1## from plant 1000, in orderto support customer demand. During the S&OP process you have already createddemand at location 2400 for the R-F1##. Change the material master in location 2400so that it will create stock transfers to location 1000. Execute a multi-level MRPand review the results.

1. From the stock requirements list for R-F1## at plant 2400, change the materialmaster setting the special procurement key so that demand is source via a stocktransfer from location 1000.

a) Follow menu path: Logistics→ Production→ MRP→ Evaluations→Stock/Requirements list (MD04)

b) From the S/R list select Environment→ Change material, and proceedto the MRP 2 View

c) In the MRP 2 view set Special Procurement to 41 - Stock Transfer (proc.from plant 1000).

d) Select Save

2. From the Stock/Requirements list for you material R-F1## at plant 2400, executeSingle-item, Multi-Level, using the following settings

Field ValuePurchase req. 1 - Purchase requisitions

Planning mode 3 - Delete

Scheduling 2 - Lead time w/ cap. rqmts



b) Select Single-item, Multi-Level, Use the settings in the table above.

c) Select Refresh update




3. Refresh the stock requirements list and what do you now see?

a) As a result you should now see MRP elements PurRqs (PurchaseRequisition), being displayed. Additionally you will see the deliveringplant column appear to identify the source of supply.

4. Change the stock requirements list and review the R-F1## at plant 1000. Whatdo you see here?

a) Type over plant 2400 with plant 1000. Press ENTER and elect Refresh

b) As a result, you should now see MRP elements PRqRel (Release orderfor a stock transfer requisition ) , being displayed. Additionally you willsee the receiving plant column appear to identify the source of supply.



Lesson Summary

You should now be able to:� Explain how to perform Cross location planning in SAP ERP� Demonstrate how cross location planning work in SAP ERP

Related Information

� FAQ: Stock transfer with delivery in purchasing (SAP Note number:0000498143)

� FAQ: Stock transfer to stock transport order (SAP Note number: 0000521090)



Lesson:319

Continuous Input/OutputLesson Duration: 35 Minutes

Lesson OverviewLearn how distribution keys can be used to model continuous consumption ofcomponents and the continuous receipt of assemblies.


� Demonstrate how to initiate a continuous output for a long production run� Demonstrate how to initiate continuous input for components that will not be



Business ExampleSome of your production assemblies are so common you are constantly making longruns. In addition the cycle time for manufacturing is quite short. Use the distributionkeys in the production version to depict a constant stream of production receipts,while also using the distribution key in the bill of material to show a continuousconsumption of components.

Discrete ConsumptionAs a result of scheduling during the planning run, all component requirements andreceipts are planned in a discrete manner.


SCM240 Lesson: Continuous Input/Output

Figure 119: Discrete Consumption

In supply chain planning the term discrete means at a specific point in time. Whenscheduling occurs, either basic date or lead time, the receipt is planned at the orderfinish date. the order finish date is the production finish date + goods receiptprocessing time. This can be misleading for some types of production. Typically,manufactures that produce product with short cycle times, begin receiving productionshortly after the production starts. With a discrete output, it is misleading to the downsteam activities, since they only see one receipt, when in actuality, production is beingreceived continuously.

Another similar situation is the component consumption during the manufacturing ofan assembly. Again this is typical in repetitive type manufacturing were cycle time tomanufacture a product is relatively short. In certain situations planners might not havethe warehouse space or production floor space to store all the necessary components.However, if a component will be continuously consumed, a planner could possiblyspread the receipts or transfers for the components over the duration of the entire order.

Continuous InputThe concept of continuous input is relatively simple, but one must understand that isnot something that should be used by every material. Continuous input is somethingthat should be used when a planner has relatively simple routings and the productioncycle time is short.



Figure 120: Continuous Input in the Planning Run

Continuous input ins SAP ERP uses functionality called the Distribution Key. Thisdistribution key is defined in the IMG, but applied in the item details of the BOM inthe Distribution Key field. In this field, you can enter the distribution key for dividingup dependent requirements or reservations for this component over time.

If you enter a distribution function for a component, portions of the dependentrequirement are distributed over the runtime of the planned or production order inaccordance with the distribution function. This means that dependent requirementsare not available in full on the order start date. Instead, they are brought into theproduction process continuously between the order start date and the order finish date.

Note: The system will only create one dependent requirement numberfor each item and planned order. However, this will trigger multiplereplenishment elements to cover the distributed requirement.

Caution: When using distribution keys in Planning, you must remember weare typically dealing in days. Even when performing lead time schedulingwhich is in seconds, receipts and requirements are still planned at dailylevels. When a distribution key with equal distribution is used, the dependentdemands will distributed evenly over the total number of days between theorder start date and the order finish date. Remember this will include floatsbefore and after, so it may not give you a true distribution!



Caution: Use of the distribution key would not be recommended fororder with a long cycle time that have many operations that are performedsequentially. In this type of situation a planner would typically allocatecomponents to an operation to improve detailed scheduling. Use of thedistribution key and component allocation in SAP ERP would be a conflictin functionality.

Continuous OutputThe concept of continuous output is very similar to continuous input, however theresults can only be used in a limited fashion. Continuous output is something thatshould be used when a planner has relatively simple routings and the productioncycle time is short.

Note: Continuous input and output are mutually exclusive functionality.

Figure 121: Continuous Output in the Planning Run

You can specify that the output/receipt of a planned order is to be spread over thevalidity period of the planned order or production order automatically during theplanning run or in repetitive manufacturing. To do so, enter a distribution key in theproduction version when maintaining the material master record.



In materials planning, only one planned order will be created. However if you reviewthe Stock/Requirements list you will see the planned order has been split into dailybuckets, noting the order number is the same.

Caution: The distribution function has no effect on the materials planning ofthe material but on the availability check of ATP logic. If you are not usingATP the distribution key in the production version serves not purpose.

. To clarify to this and for better understanding of the planning result, these orders arenot displayed as distributed in the MRP list. This causes differences between the MRPlist and current stock/requirements list.

Caution: When using distribution keys in Planning, you must remember weare typically dealing in days. Even when performing lead time schedulingwhich is in seconds, receipts and requirements are still planned at daily levels.When a distribution key with equal distribution is used, the planned orderreceipts will distributed evenly over the total number of days between theorder start date and the order finish date. Remember this will include floatsbefore and after, so it may not give you a true distribution!

Distribution KeysThe concept of distributing data over periods of time is a common function in SAPERP. In the planing of production and procurement we will use the distribution key inseveral areas:

� Demand Management: Splitting demand from larger periods of time to smallerperiods of time during the transfer from SOP/Flexible Planning

� MRP/MPS: Displaying continuous output planned/production/process orders(ATP)

� MRP/MPS: Generating continuous dependent demand (input) for a given order.� Planning Table: Display the production quantities for one order over a period

of time� Capacity planning: Distributing capacity requirements based on the scheduling

duration.

The distribution functionality for capacity planning is different than in the other areas.In capacity planning the capacity requirements will be distributed over the lead timescheduling duration, so you will get a more exact distribution

In the planning run, the distribution functionality works over the order dates, not theproduction dates/times.



For distribution to work in the planning run, planners must apply a distribution key inthe item details in the BOM or the details of the production version. While the masterdata fields call it distribution key, in configuration it is defined as the DistributionStrategy.

Figure 122: Distribution Strategy

The distribution strategy consists of two parts:

� Distribution Function� Distribution Types

The Distribution Function defines the percentage of the quantity that is to be producedafter a certain percentage of the total production time. This will be defined in anothercustomizing table.



Figure 123: Distribution Function

In the definition of a distribution function you specify the percentage of the quantitiesthat are to be produced within a certain percentage of the production time. In theduration field indicates what percentage of the demand/receipts should be plannedbased on how much of the order has elapsed. The Percent Requirement fielddetermines what percentage of the receipts or demand should be planned after acertain percentage of the order has elapsed. These fields are mutually inclusive

The distribution function is made up of a series of basic values, each consisting ofa percentage time value and a percentage requirements value. The percentage timevalue defines a point in the duration of the order. The percentage requirements valuespecifies the proportion of the demand/receipt that must be scheduled by a certainpoint in time. In the case of a discrete distribution strategy, the receipts/requirementsare scheduled at the specified points in time. In the case of a continuous dispatchingstrategy, the requirements are distributed equally between two points in time.

The Distribution Type defines whether the requirement is distributed exactly accordingto the points defined in the function or over the time axis according to the distributionfunction. The definition of the distribution type is hard coded in the software butyou have two choices:

� 01 - Carry out distribution continuously through time� 02 - Carry out distribution according to discrete points



327 Exercise 12: Continuous Input/Output in thePlanning Run (OPTIONAL)Exercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how distribution keys can be used in the BOM to model continuous

input� Demonstrate how distribution keys can be used in the production version

to model continuous output

Business ExampleSome of your production assemblies are so common you are constantly making longruns. In addition the cycle time for manufacturing is quite short. Use the distributionkeys in the production version to depict a constant stream of production receipts,while also using the distribution key in the bill of material to show a continuousconsumption of components.



1. CATT Z_SCM240 must be run

Task 1: Continuous Input in the Planning RunThe fly wheel (R-B2##) for you pump (R-1##) is an expensive item. You are receivingpressure from accounting to minimize the amount of inventory over a period of time.The assembly for your pump R-F1##, has a relatively short cycle time in production,yet you typically schedule long runs. Use the distribution key for your turbo driveR-B2## to distribute the dependent demand over the entire production run.

1. For product R-B2## at plant 1000, review the Stock/Requirements list, focusingon the first dependent requirement for product R-F1## at plant 1000.




2. In another session, change the bill of material for product R-F1## at plant 1000,usage production. Your fly wheel is consumed in a continuous fashion. Changeitem R-B2## so that is consumed equally over the duration of the planned order.

3. From the Stock/Requirements list for you materialR-F1## at plant 1000, executeSingle-item, Multi-Level, setting the planning mode to 3 - Delete and Recreateplanning data., and the scheduling indicator to 2 -Lead time scheduling.

4. Select a specific planned order for R-F1## at plant 1000 and populate thefollowing table:

Planned Order NumberOrder Start DateOrder Finish DateProduction Start DateProduction Finish Date

5. Review the stock requirements list for your product R-B2## at plant 1000.




6. Select the first dependent requirement that came from R-F1##.What is the date of the first dependent requirement?What is the Dependent Requirement number for R-B2##?What is the planned order number for R-F1##?

7. Select the second dependent requirement that came from R-F1##.What is the Dependent Requirement number for R-B2##?What is the planned order number for R-F1##?

Task 2: Continuous Output in the Planning RunSome of your pumps are assembled very quickly, but you may have long productionruns due to high demand. Your colleagues in shipping need to plan the shipment ofproduct, so knowing the variability of production is essential. When assemblingR-F2##, you have very short cycle times. Therefore, you want to use the distributionkey to show multiple production receipts. Create a production version and use anequal distribution key to spread the receipts over time.

1. From the stock requirements list for R-F2## at plant 1000, change the materialmaster by creating a production version A001 (continuous Output BOM 01) inthe MRP 4 view, which will include the alternative BOM 1 with a usage 1-Production and a �detailed� standard routing for your product R-F2## atplant 1000. Be sure to include the distribution key for plant. Make the productionversion valid from today until the end of next year. Before saving set yourselection method in the MRP 4 view to 2 - Selection by Production version.

2. From the Stock/Requirements list for you material R-F2## at plant 1000, executeSingle-item, Multi-Level, setting the planning mode to 3 - Delete and Recreateplanning data., and the scheduling indicator to 2 -Lead time scheduling.

3. Select a specific planned order and populate the following table:





4. Select a second MRP element for the same planned order you selected in theprevious step and populate the following table:


5. Where there any similarities between the two planned order numbers.



Solution 12: Continuous Input/Output in thePlanning Run (OPTIONAL)Task 1: Continuous Input in the Planning RunThe fly wheel (R-B2##) for you pump (R-1##) is an expensive item. You are receivingpressure from accounting to minimize the amount of inventory over a period of time.The assembly for your pump R-F1##, has a relatively short cycle time in production,yet you typically schedule long runs. Use the distribution key for your turbo driveR-B2## to distribute the dependent demand over the entire production run.

1. For product R-B2## at plant 1000, review the Stock/Requirements list, focusingon the first dependent requirement for product R-F1## at plant 1000.


2. In another session, change the bill of material for product R-F1## at plant 1000,usage production. Your fly wheel is consumed in a continuous fashion. Changeitem R-B2## so that is consumed equally over the duration of the planned order.

a) Follow menu path: Logistics→ Production→ Master Data→ Bills ofMaterial→ Bill of Material→ Material BOM→ Change (CS02)

b) Select the item for R-B2##, and select item.

c) In the Basic Data view, enter a Distribution Key of 1000 - GLEI (EqualDistribution)

d) Select Save.

3. From the Stock/Requirements list for you material R-F1## at plant 1000, executeSingle-item, Multi-Level, setting the planning mode to 3 - Delete and Recreateplanning data., and the scheduling indicator to 2 -Lead time scheduling.


b) Select Single-item, Multi-Level, setting the planning mode to 3 - Deleteand Recreate planning data., and the scheduling indicator to 2 -Leadtime scheduling, and then refresh the S/R list

4. Select a specific planned order for R-F1## at plant 1000 and populate thefollowing table:




Planned Order Number VariesOrder Start Date VariesOrder Finish Date VariesProduction Start Date VariesProduction Finish Date Varies

5. Review the stock requirements list for your product R-B2## at plant 1000.


6. Select the first dependent requirement that came from R-F1##.

What is the date of the first dependent requirement?

What is the Dependent Requirement number for R-B2##?

What is the planned order number for R-F1##?

Answer: Place your cursor in the dependent requirement and select Detailsof Elements.The first date of the dependent requirement is: VARIESR-B1## Dependent Requirement Number: VARIESR-F2## Planned order number:VARIES

7. Select the second dependent requirement that came from R-F1##.

What is the Dependent Requirement number for R-B2##?

What is the planned order number for R-F1##?

Answer: Place your cursor in the dependent requirement and select Detailsof Elements.R-B2## Dependent Requirement Number: VARIES , and is the same as thefirst dependent demand MRP element.R-F1## Planned order number:VARIES, however it comes from the sameplanned order as the first dependent requirement




Task 2: Continuous Output in the Planning RunSome of your pumps are assembled very quickly, but you may have long productionruns due to high demand. Your colleagues in shipping need to plan the shipment ofproduct, so knowing the variability of production is essential. When assemblingR-F2##, you have very short cycle times. Therefore, you want to use the distributionkey to show multiple production receipts. Create a production version and use anequal distribution key to spread the receipts over time.

1. From the stock requirements list for R-F2## at plant 1000, change the materialmaster by creating a production version A001 (continuous Output BOM 01) inthe MRP 4 view, which will include the alternative BOM 1 with a usage 1-Production and a �detailed� standard routing for your product R-F2## atplant 1000. Be sure to include the distribution key for plant. Make the productionversion valid from today until the end of next year. Before saving set yourselection method in the MRP 4 view to 2 - Selection by Production version.


b) From the S/R list select Environment→ Change material, and proceedto the MRP 4 View

c) Select Production Versions button

d) Enter version A001, with description Continuous Output, and entertoday�s date and the date for the end of next year, then select Details.

e) In the Planning Data section, under Detailed Planning, select Task listtype Routing, then using the search functionality, search for your GroupNo./Counter, by using your material R-F2## at plant 1000.

f) Enter Alternative BOM 1, and BOM Usage 1.

g) In the distribution key field select 1000 GLEI Equal Distribution

h) select Continue twice and continue through any messages.

i) Set the selection method in the MRP 4 view to 2 - Selection by productionversion

j) Select Save




2. From the Stock/Requirements list for you materialR-F2## at plant 1000, executeSingle-item, Multi-Level, setting the planning mode to 3 - Delete and Recreateplanning data., and the scheduling indicator to 2 -Lead time scheduling.


b) Select Single-item, Multi-Level, setting the planning mode to 3 - Deleteand Recreate planning data., and the scheduling indicator to 2 -Leadtime scheduling, and then refresh the S/R list

3. Select a specific planned order and populate the following table:


4. Select a second MRP element for the same planned order you selected in theprevious step and populate the following table:


5. Where there any similarities between the two planned order numbers.

Answer: The order numbers were the same, and the order start date were thesame.

The planning run only creates one planned order however, the individual MRPelements will have the same start day however a different finish date for eachelement.



Lesson Summary

You should now be able to:� Demonstrate how to initiate a continuous output for a long production run� Demonstrate how to initiate continuous input for components that will not be



Unit Summary SCM240

Unit SummaryYou should now be able to:� Explain how the planning run works in detail.� Describe the different methods of modeling buffers in the planning run� Demonstrate how several of the different methods of safety stock work� Demonstrate how Lot size techniques an influence the size of a planned orders� Demonstrate how use several fields in the material master to influence the size

of a planned order� Explain how planning calendars can be used to specifically coordinate the

quantity and timing of receipts.� Explain the configuration process of Lot Size techniques.� Explain how to perform Cross location planning in SAP ERP� Demonstrate how cross location planning work in SAP ERP� Demonstrate how to initiate a continuous output for a long production run� Demonstrate how to initiate continuous input for components that will not be





1. What is considered in the net requirements calculation.(What is compared?)

2. Your planners will not attempt to reschedule out a procurement element (delay)if it�s less than three days early. This will simply cause too much confusion withvendors. Where would this be defined?Choose the correct answer(s).□ A Schedule Margin Key□ B Safety time□ C Tolerance value□ D Min Queue time□ E Vendor delay factor□ F Withdrawl period

3. Where is the tolerance value maintained?

4. Dynamic safety stock shows up as an MRP elements throughout the horizon?Determine whether this statement is true or false.□ True□ False

5. If a safety time of 2 days has been specified, the requirement date is broughtforward 2 days.Determine whether this statement is true or false.□ True□ False



6. What are the three different groups of lot-size procedures?

7. If you wish to define the period lot-size other than standard week , month etc.how can this be accomplished?

8. If , when using lot size procedure, �replenish up to maximum stock level�,the shortage quantity for a day exceeds the max. stock level , what will theresponse of the system?

9. Lot-sizing procedures are defined in the Customizing activity.


10. For optimizing lot-sizing procedures, what is the formula used to calculatestorage costs?

11. What is the benefit to using a two step stock transfer process?



12. For material planning purposes, what controls the relationship between plants?Choose the correct answer(s).□ A Plant Master□ B GR Processing Time□ C Transportation Lanes□ D Process Models□ E Schedule Margin Key

13. Assume you two buildings on the same physical grounds. Close proximity toeach other. Each building has been configured as a plant. If one plant producesa component that the other needs for their manufacturing process, how couldthis be modelled in SAP ERP?Choose the correct answer(s).□ A Stock transfers between the plants□ B Trucks and forklifts□ C Withdrawl from another plant□ D Set the procurement type to E

14. Non discrete input and output is controlled using the


15. The distribution key is entered on what master data object(s)?Choose the correct answer(s).□ A Material Master□ B Production Version□ C BOM Header□ D BOM Item□ E Routing□ F Work center

16. If a distribution is used the material must be distributed equally among theindividual time periods.Determine whether this statement is true or false.□ True□ False



340Answers

1. What is considered in the net requirements calculation.(What is compared?)

Answer: Stock available for planning, fixed receipts, and firm orders arecompared with requirements plus safety stock.

2. Your planners will not attempt to reschedule out a procurement element (delay)if it�s less than three days early. This will simply cause too much confusion withvendors. Where would this be defined?

Answer: C

The tolerance value defines a period for which is necessary to generate exceptionmessages.

3. Where is the tolerance value maintained?

Answer: Tolerance value is maintained in the MRP Group .

4. Dynamic safety stock shows up as an MRP elements throughout the horizon?

Answer: False

Dynamic safety stock does not have its own MRP element. It pegs to futurerequirements and plans the production in advance?

5. If a safety time of 2 days has been specified, the requirement date is broughtforward 2 days.

Answer: False

It is the order proposal that is moved ahead.

6. What are the three different groups of lot-size procedures?

Answer: Static, Periodic and Optimum

7. If you wish to define the period lot-size other than standard week , month etc.how can this be accomplished?

Answer: Define the periods by a planning calendar.



8. If , when using lot size procedure, �replenish up to maximum stock level�,the shortage quantity for a day exceeds the max. stock level , what will theresponse of the system?

Answer: The system prioritizes a balanced stock/requirements situation overthe lot-sizing procedure so will cover the shortage.

9. Lot-sizing procedures are defined in the Customizing activity Check Lot-SizingProcedure.

Answer: Check Lot-Sizing Procedure

10. For optimizing lot-sizing procedures, what is the formula used to calculatestorage costs?

Answer: The formula is:Storage costs = Requirement x Price x Storage cost interest rate x Time instorage / 100 / 365.

11. What is the benefit to using a two step stock transfer process?

Answer: With the two step process In-Transit inventory is visable.

12. For material planning purposes, what controls the relationship between plants?

Answer: E

The schedule margin key (MRP2) identifies a relationship for the specificmaterial.

13. Assume you two buildings on the same physical grounds. Close proximity toeach other. Each building has been configured as a plant. If one plant producesa component that the other needs for their manufacturing process, how couldthis be modelled in SAP ERP?

Answer: A, C

A and C are both viable options. C is more efficient. However A providesmore visibility.



14. Non discrete input and output is controlled using the Distribution Key.

Answer: Distribution Key.

15. The distribution key is entered on what master data object(s)?

Answer: B, D

The distribution key is entered on the BOM Items or Production Version.

16. If a distribution is used the material must be distributed equally among theindividual time periods.

Answer: False

Proportions may also be used in addition to equal distribution.


Unit 7343 Technical Process of the Planning Run

Unit OverviewThis unit will introduce you into some of the details of how scheduling and masterdata selection are performed during the planning. These topics will have direct impactinto the arrival dates of replenishments as well as the quantity and requirements datesof sub-assemblies and raw materials.


� Demonstrate how Basic Scheduling works in the Planning run� Demonstrate how scheduling works for Externally Procured materials.� Demonstrate how Lead Time Scheduling works in the Planning run� Demonstrate knowledge of configuring lead time scheduling.� Demonstrate how a bill of material will be chosen during the planning run if

multiple BOMs exist� Demonstrate how a task list will be chosen during the planning run if multiple

routings exist.� Demonstrate how a production version will be chosen during the planning run if

multiple versions exist.� Identify how configuration can influence master data determination


Unit 7: Technical Process of the Planning Run SCM240

Unit ContentsLesson: Basic Dates Scheduling in the Planning Run ... . . . . . . . . . . . . . . . . . . . . . .419

Demonstration: Basic Date Scheduling .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .425Exercise 13: Basic DateScheduling in the Planning Run ... . . . . . . . . . . . . . .429

Lesson: Lead Time Scheduling in the Planning Run... . . . . . . . . . . . . . . . . . . . . . . . .438Demonstration: Lead-Time Scheduling .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .441Demonstration: .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .447Demonstration: Reduction and Adjustment ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .448Demonstration: Order Dates with Lead-Time Scheduling and Postponingthe Dependent Requirement Dates .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .449Exercise 14: Lead Time Scheduling in the Planning Run ... . . . . . . . . . . . . . .451

Lesson: Master Data Selection during the Planning Run... . . . . . . . . . . . . . . . . . . .460Demonstration: BOM Selection ID/BOM Usage... . . . . . . . . . . . . . . . . . . . . . . . . .465Demonstration: Lot Size Selection .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .466Demonstration: BOM Dates in MRP ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .472Demonstration: BOM Explosion Numbers .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .475Demonstration: Routing Selection .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .480


SCM240 Lesson: Basic Dates Scheduling in the Planning Run

Lesson:344

Basic Dates Scheduling in the Planning RunLesson Duration: 30 Minutes

Lesson OverviewIn this lesson, you will learn about how basic data scheduling is performed during theplaning run or during manual planned order creation.


� Demonstrate how Basic Scheduling works in the Planning run� Demonstrate how scheduling works for Externally Procured materials.


Business ExampleDue to a large number of materials that must be run on nightly basis you need to runMRP as fast as possible. In order to do this you must be aware of how schedulingis going to impact your planning run. Execute MRP with basic dates planning andinterpret the results.

An Overview of Procurement TypeDuring the planning run, once the system determines a replenishment is required, itis necessary to determine the source of the supply.At this time, the system checkswhether the receipt is to be produced in-house or procured externally.

During scheduling, the system calculates the start and finish dates of the procurementelements for materials produced in-house or externally. To calculate these dates, thesystem uses the in-house production time for parts produced in-house and the deliverytime in the material master or purchasing info record for parts procured externally.



Figure 124: Procurement Types

The procurement type defines whether a material is produced in-house or procuredexternally.

The procurement type is predefined by the material type in the Customizing for thematerial master and is defined in the material master record. Most material typesallow the user to decided how the material will be procured. This can be set in theMRP 1 tab in the procurement type field. Material types such as ROH - RAW,come pre-configured as buy only, but this can be changed in configuration of thematerial type. If the procurement type allows both in-house production and externalprocurement, the MRP is always based on in-house production.

Note: You can set a different type of procurement to in-house productionor external procurement using the special procurement key in the materialmaster. The special procurement key will be discussed in the Multi-siteplanning lesson.

Basic Dates SchedulingPrior to executing , a planning run planners must decided what type of scheduling toperform. In any of the planning run programs there is an indicator called Scheduling.SAP ERP offers two types of scheduling:

1. Basic Dates Scheduling - Using the material master2. Lead Time Scheduling - Using routing or master recipe (task list).



Basic dates scheduling is a rough from of scheduling since it will schedule in dailybuckets. Lead time scheduling will perform detail scheduling to the second, since ithas the detailed information contain in the routing

Note: Only lead time scheduling will generate capacity requirements whichwill all companies to perform capacity evaluation and leveling functions.

In this section we will focus on basic dates scheduling.

Customizing: Production→ Material Requirements Planning→ Planning→Scheduling and Capacity Parameters→ Parameters for Determining the Basic Dates

During the planning run, when a material has a procurement type E - Inhouse or X -Both, the system will generate a planned order when a replenishment is required. Withmaterials planned using MRP, and future requirements dates are known, backwardscheduling is used for these materials.

Figure 125: Backward Scheduling for In-house Production

With backward scheduling, first the system determines the order finish date byscheduling the goods receipt processing time backwards from the requirements date.The Goods Receipt (GR) processing time is located in the MRP 2 view of the materialmaster. This valued specifies the number of workdays that are required after thereceipt of the goods for entering the receipt into the system and placing it in storage.



Caution: Be careful when determining the GR processing time. It is not thebest scenario to use this buffer to determine quality inspection time. When thereceipt is entered into the system the GR processing time is no longer valid.Therefore if this was used to model Quality inspection time, planners have noidea when the product is available.

Starting from the order finish date, the system counts backward by the length of thein-house production time to determine the order start date. In the material master twotypes of inhouse production times are available:

� Lot-size Independent - (Integer values only) MRP 2 or Work Scheduling view� Lot-size Dependent - (real numbers - decimal) Work Scheduling view

You can only have one of these items populated at any time. The lot-size dependentvalue consists of Setup time (fixed duration), Inter-operation times/floats (fixedduration) and processing/production time (variable duration). Both the lot-sizedependent and independent can be updated via the routing/recipe.

Note: When using lot-size independent values, these are the only values usedin determining the order start and order finish date.

Note: When using the lot-size dependent values, the in-house productiontime comprises:

� Float after production (fixed duration - Scheduling margin key)� Processing time (variable)� Setup time (fixed duration)� Inter-operation times (fixed duration)� Float before production (fixed duration - Scheduling margin key)

While all of these elements may be used, users will not see each of theindividual segments, only the order start and finish time.

Caution: If safety time is being used, it will offset the requirements date firstprior to calculating the order finish day. Safety time is used in schedulingregardless of which lot size type you use.

After using the lot-size parameters, the order start date is derived. Once the orderstart date is calculated, the system determines the opening date. The opening date isdetermined by subtracting the opening period from the order start date. The openingperiod reflects the processing time that the MRP controller requires to convert plannedorders. You define the opening period as a float of the scheduling margin key in the



Customizing for MRP, Production→ MRP→ Planning→ Scheduling and CapacityParameters→ Define Floats (Scheduling Margin Key). The scheduling margin keycan be entered in the material master (MRP 2) or for each plant .

Note: The Opening period does not influence the order start or finishdate. Therefore depending upon the situation, the opening periods may bescheduling on past date. However, exception messages are generated toinform the planner the standard �lead times� have been breached.

Figure 126: Forward Scheduling for In-House Production

If during backward scheduling of materials planned using MRP, the system determinesan order start date is in the past, it automatically switches to forward scheduling inorder to receive realistic scheduling data.

With forward scheduling, the system sets the current date as the order start date. Thein-house production time is added to the current date, which determines the orderfinish date. The goods receipt processing time is added to the order finish date todetermine the MRP date. The material is available from this date onwards. Whilethis is not the best scenario, an exception message will be generated identifying theopening date is in the past.

There is no order creation date with forward scheduling because the opening datecalculated is in the past.

In Customizing for MRP, Production→ MRP→ Planning→ Scheduling andCapacity Parameters→ Parameters for Determining the Basic Dates, you define foreach plant that the system does not automatically switch to forward scheduling when



determining the basic dates but all the order to schedule in the past. If the indicatoris set, backward scheduling is always used to determine the basic dates even if thestart date is in the past.

Figure 127: Order Dates for Basic Scheduling

Once the planned order is scheduled, the bill of material will be copied into theplanned order. At this time using the order start date, the system creates dependentrequirements for the bill of mateiral items. Taking the dependent requirements date asthe availability date, the system determines the basic order dates of the components bymeans of backward scheduling using in-house production time or planned deliverytime.

Caution: With basic scheduling, no capacity requirements are calculatedor dispatched for the order.



Figure 128: Changing Dependent Requirement Dates

In the BOM explosion, the required components or assemblies are determined forthe relevant BOM.

Often times due quality requirements, planners would like to bring materials inearly. In addition when dealing with long production times, planners would liketo delay the arrival of certain materials, delivering them closer to their point ofconsumption. When performing basic dates scheduling planners can offset thedependent requirements dates using the Lead time offset field in the bill of material.When scheduling the dependent requirement date, of a particular component, the datecan be adjusted using the negative lead time or positive lead times. Enter a positivenumber of days and the component is not required until after the start date. Enter anegative number of days and the component is required before the start date.

Caution: The lead time offset field will only be used in Basic DatesScheduling. It is not applicable in Lead time scheduling. In converse, theoperation lead time offset is only applicable during lead time scheduling.The positive lead time is not taken into account in lead-time scheduling. Itis used for the simulation of component assignment in the routing duringbasic-date scheduling.

Demonstration: Basic Date Scheduling

PurposeTo know more about basic scheduling.




Explain basic scheduling with the help of a planned order:

1. Call up the material master R-F1##, the plant 1000. Display and explain thefollowing fields:

� Scheduling the margin key (MRP 2)� Lot-size-independent in-house production time (MRP 2) and

lot-size-independent (work scheduling)� Goods receipt processing time (MRP 2)� Planned delivery time (MRP 2)

2. Display and explain the following in Customizing:

� Definition of the scheduling margin key:

Customizing: Production→ Material Requirements Planning→ Planning→ Scheduling and Capacity Parameters→ Define Floats (SchedulingMargin Key)

� Order Start Date in the Past indicator at plant level:

Customizing: Production→ Material Requirements Planning→ Planning→ Scheduling and Capacity Parameters→ Parameters for Determiningthe Basic Dates

or

Customizing: Production→ Material Requirements Planning→ PlantParameters→ Carry Out Overall Maintenance of Plant Parameters

The parameter order start date in the past is maintained only per plant. Theswitch in the MRP group parameter is wrong!

3. Execute Material Requirements Planning for material R-F1##, plant 1000, usingplanning mode 3 and scheduling indicator 1.

4. Stock/requirements list of material R-F1##, plant 1000. Double-click a plannedorder and �Change element�.



The planned order contains only the basic dates, not production dates or capacityrequirements.

Scheduling for External ProcurementPlanners are typically responsible for all materials that are relevant for production.When dealing with high volume materials your purchasing department will often setupblanket purchase orders. These are referred to as scheduling agreements in SAP ERP.

Prior to the planning run, there are two indicators that are relevant to purchasingactivities, Create Purchase req., and Delivery Schedules. If the indicators are set toPlanned Orders, only planned orders will be created. Otherwise purchasing relateddocuments will be created. In order for purchasing documents to be created theprocurement type must be set to F- External in the MRP 2 view of the material master.

Figure 129: Scheduling for External Procurement

Scheduling for externally-procured materials takes place in the same way as formaterials produced in-house. Working back from the dependent requirements date,the system will adjust the delivery date by subtracting the GR processing time.This will determine the Delivery date/Order finish date. The system will thenbackwards schedule using the Planned delivery lead time in the material master.You enter the planned delivery time in calendar days. It can be determined on anon-vendor-specific or vendor-specific basis.



Figure 130: MRP/Purchasing configuration

In Customizing Production→MRP→ Planning→ Procurement Proposals→ DefineExternal Procurement, planners can set by Plant or MRP group the selection of vendorspecific planned delivery times. By setting the indicator Scheduling Informationreq/agreement, planners can choose vendor specific lead times over the non-vendorspecific delivery time in the material master. In addition in the plant parameters, youcan define the purchasing department processing time in workdays. Lastly in theplant/MRP group you can define settings for the planning run, that will over-ride whathas been set in the planning run for those specific materials.

You maintain the non-vendor-specific planned delivery time in the material master(view �MRP 2�). You enter a vendor-specific planned delivery time in the purchasinginfo record or in the outline agreement. It is used in the planning run if the indicator�Scheduling info record/agreement� is maintained as a plant parameter or the MRPgroup parameter in Customizing and a vendor can be assigned in automatic sourcedetermination. This will be discussed in another lesson.



353 Exercise 13: Basic DateScheduling in thePlanning RunExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Describe the functions of scheduling� Monitor the order dates in multilevel production

Business ExampleBased on material R-F1## in plant 1000, the project team examines the possibilitiesfor staging the assemblies and components are different times in multilevel productionplanning.


Task 1: Understanding Basic Dates SchedulingAs a production planner, your responsibility is to keep customer service high andinventories as low as possible. In order to do this, it is important that you understandthe details of how the planning run performs scheduling, for both in-house productionand external production. Execute a multi-level planning run with basic datesscheduling and interpret the results.

1. Call the Stock/requirements list for material R-F1## in the plant 1000. From theS/R list execute a single-iteml multi-level planning run. Make sure to set theplanning mode to 3 - Delete and Re-create planning data, and the schedulingindicator to 1 - Basic dates will be determined for planning. Once completerefresh the Stock/Requirements list.

2. Select any planned order, which is not firmed and which does not show anyexception message. Make a note of the number of the planned order. _______




3. Select the planned order and run the order report. Review all lines of the report.Fill out the details of the chart below by looking at the details of each element.

R-F1## Basic dates Production dates

End: ____________ End: _________

Start: ____________ Start: ________

Goods receipt processing time:

R-B1## Basic dates Production dates

End: ____________ End: _________

Start: ____________ Start: ________

Goods receipt processing time:R-B4## Basic dates Production dates

End: ____________ End: _________

Start: ____________ Start: ________


4. What relationship do the dates have with one another?

_________________________________________________

_________________________________________________

_________________________________________________

5. Why are there no production dates?

_______________________________

_______________________________

_______________________________




Task 2: Lead Time OffsetsThe assembly electronic turbo drive R-B4## cannot be installed until assembliesR-B1##, R-B2##, and R-B3## are assembled. Therefore, the electronic turbo driveshould be made available later in the basic-date scheduling.

1. Change the BOM for material R-F1## in the plant 1000, with a usage 1 -production. Update the BOM so that material R-B4## will be delivered 5 daysin advance of the start of the order.

2. From the Stock/Requirements list execute a single-item, multi-level MRP runformaterial R-F1## in plant 1000. Make sure to set the planning mode to 3 - Deleteand Re-create planning data, and the scheduling indicator to 1 - Basic dateswill be determined for planning

3. From the Stock/Requirements list select the first planned order in the list.Review the detail of the planned order by looking at the component list.

4. What are the requirements dates of the different components:

Component RequirementR-B1##R-B2##R-B3##R-B4##



Solution 13: Basic DateScheduling in thePlanning RunTask 1: Understanding Basic Dates SchedulingAs a production planner, your responsibility is to keep customer service high andinventories as low as possible. In order to do this, it is important that you understandthe details of how the planning run performs scheduling, for both in-house productionand external production. Execute a multi-level planning run with basic datesscheduling and interpret the results.

1. Call the Stock/requirements list for material R-F1## in the plant 1000. From theS/R list execute a single-iteml multi-level planning run. Make sure to set theplanning mode to 3 - Delete and Re-create planning data, and the schedulingindicator to 1 - Basic dates will be determined for planning. Once completerefresh the Stock/Requirements list.

a) Follow menu path Logistics→ Production→ MRP→ Evaluations→Stock/Requirements list (MD04)

b) Enter your material R-F1## and plant 1000 and press Enter

c) Select Single-item, Multi-level to execute your planning run

d) Set the planning mode to 3 - Delete and Re-create planning data, and thescheduling indicator to 1 - Basic dates will be determined for planning

e) Press ENTER twice

f) Return to the S/R list and select Refresh.

2. Select any planned order, which is not firmed and which does not show anyexception message. Make a note of the number of the planned order. _______

a) Number of selected planned orders: Varies

3. Select the planned order and run the order report. Review all lines of the report.Fill out the details of the chart below by looking at the details of each element.





End: ____________ End: _________

Start: ____________ Start: ________



End: ____________ End: _________

Start: ____________ Start: ________


End: ____________ End: _________

Start: ____________ Start: ________


a) Select the planned order by placing your cursor in the MRP element section

of the planned order. Then select Order report at the bottom-left ofthe screen.

b) In the next screen select Open all lines.

c) In the order report, select the date of the relevant MRP element (planned

order/purchase requisition) and select Display element. Copy the datesinto the subsequent table

d)




R-F1##Basic dates Production dates

End:Varies End:Not available

Start:Varies Start:Not available

Goods receipt processing time: 1 day

R-B1##Basic dates Production dates

End:Varies End: Not available

Start:Varies Start: Not available

Goods receipt processing time: 1 dayR-B4##Basic dates Production dates

End:Varies End: Not available

Start:Varies Start: Not available

Goods receipt processing time: 1 day

4. What relationship do the dates have with one another?

_________________________________________________

_________________________________________________

_________________________________________________

a) The order start date of the finished product coincides with the orderfinish dates of the assemblies plus the goods receipt processing timesof the assemblies.

5. Why are there no production dates?

_______________________________

_______________________________

_______________________________

a) There are no production dates because material requirements planningwas executed with scheduling indicator 1 (basic-date scheduling).




Task 2: Lead Time OffsetsThe assembly electronic turbo drive R-B4## cannot be installed until assembliesR-B1##, R-B2##, and R-B3## are assembled. Therefore, the electronic turbo driveshould be made available later in the basic-date scheduling.

1. Change the BOM for material R-F1## in the plant 1000, with a usage 1 -production. Update the BOM so that material R-B4## will be delivered 5 daysin advance of the start of the order.

a) Menu path: Logistics→ Production→ Master Data→ Bills of Material→ Bill of Material→ Material BOM→ Change (CS02)

b) Select the item for the assembly R-B4## and select Item.

c) On the Basic data tab page, define a positive Lead-time offset of 5workdays.

d) Select Save.

2. From the Stock/Requirements list execute a single-item, multi-level MRP runformaterial R-F1## in plant 1000. Make sure to set the planning mode to 3 - Deleteand Re-create planning data, and the scheduling indicator to 1 - Basic dateswill be determined for planning

a)

3. From the Stock/Requirements list select the first planned order in the list.Review the detail of the planned order by looking at the component list.

a) Select the first planned order and select Details of Element.

b) Select Display Element

c) At the top of the planned order select component overview.





Component RequirementR-B1## VariesR-B2## VariesR-B3## VariesR-B4## Varies from the other three

Due to the positive lead time of 5 days, which is set in assembly R-B4##, theorder finish date of this assembly is 5 days after the order finish date of assemblyR-B1##. The requirements for R-B4## are pushed back 5 working days.



Lesson Summary

You should now be able to:� Demonstrate how Basic Scheduling works in the Planning run� Demonstrate how scheduling works for Externally Procured materials.



Lesson:362

Lead Time Scheduling in the Planning RunLesson Duration: 40 Minutes

Lesson OverviewIn this lesson, you will learn about lead time scheduling in the planning run. In additionyou will learn how lead time scheduling impacts the capacity planning process.


� Demonstrate how Lead Time Scheduling works in the Planning run� Demonstrate knowledge of configuring lead time scheduling.


Business ExampleDue to high utilization on several resources, you must evaluate the capacityrequirements in order to level the production plan or make adjustments to the demandplan. In sure the as a result of the planning run, you have exact production times andlocations in addition to capacity requirements being generated.

Lead Time SchedulingOften times planning to the day is not detailed enough for some planners. Either thecomponent scheduling is to rough or they need capacity requirements generated toperform capacity evaluation and leveling. In order to accomplish these goals plannersneed make use of the task list during the planning run.


SCM240 Lesson: Lead Time Scheduling in the Planning Run

Figure 131: Lead-Time Scheduling

Prior to initiating the planning run, planners can decide if they want to use thematerial master for scheduling or the task list. You can trigger lead-time schedulingfor the planning run by using the scheduling indicator 2 - (lead-time schedulingand capacity planning).

During the planning run with the scheduling indicator 2, two sets of dates arecalculated, Order start/finish and Production star/finish. The order start and finishdates are determined for each order using basic scheduling. This is followed by theactual lead-time scheduling, which will be used to calculate the production start andstop dates. Alternatively, the production dates can also be executed manually forindividual planned orders (Planned order→ Change→ Edit→ Scheduling).

In lead-time scheduling, the precise production times, that is, production start andfinish dates, are defined for materials produced in-house and at the same time thecapacity requirements are created. The material staging dates for the componentsare also determined. Lead-time scheduling is carried out using the times from therouting. This takes place as backward or forward scheduling according to the settingin the Customizing Production→ MRP→ Planning→ Scheduling and CapacityParameters→ Define scheduling parameters for planned orders.



Figure 132: Segments in Lead Time Scheduling

The following items are taken into account during lead time scheduling:

� Safety time - Material Master� Float After Production - Scheduling Margin key (mat. mstr)� Processing time - fixed/variable (routing)� Setup time - fixed/variable (routing)� Operation floats: Waiting time, Move time, Queue time - Work Center/Routing� Float Before Production - Scheduling Margin key (mat. mstr)

In backward scheduling, the system subtracts the float after production from the orderfinish date to calculate the production finish date. The individual operations of therouting are scheduled backward starting from the production finish date. The startdate of the first operation becomes the production start date.



Figure 133: Operation Segments in Scheduling

During the definition of master data, planners or engineers have the opportunity todetail exactly how a product will move through each step of production. To properlymodel the production process, planners should model any idle time that a productmight experience during the production process. The following inter-operation timescan be modeled for each operation:

� Queue time: The time a product will sit idle prior to any setup activities beingperformed. This time can be used with capacity leveling functionality. Definedin each operation of a routing.

� Wait time:The time a product will sit idle after a production operation, inanticipation of being moved to the next work center. Defined in each operationof the routing

� Move time:The time a product will spend being moved from one work centerto another. Defined in the work center using a �move time matrix� or eachoperation in the routing.

Demonstration: Lead-Time Scheduling

PurposeTo demonstrate lead-time scheduling




User ID:Password:Set up instructions:

Tie this with previous demonstrations or call up the details for a planned order and�Change element� in MD04.

1. From the stock requirements, edit one of the planned orders by going intochange mode.

2. SelectEdit→ Scheduling Review the Header tab page. Production dates forthis one planned order are displayed.

3. Execute a planning run for material R-F1##, plant 1000, using the planningmode 3 and the scheduling indicator 2.

4. Stock/requirements list of material R-F1##, plant 1000. Double-click anotherplanned order as above and �Change element�.

The planned order is scheduled using detailed scheduling and containsproduction dates.

5. Compare the order start dates and the production dates using the floats from thescheduling margin key.

Influencing Scheduling Through ConfigurationThrough the use of customizing parameters, planners can control the schedulingprocess of planned orders via the planning run or manually. Production→ MRP→ Planning → Scheduling and Capacity Parameters → Define schedulingparameters for planned orders. The scheduling parameters are controlled at thePlanner/Production Scheduler/Order type. This table must be populated to performlead time scheduling and capacity planning.



Figure 134: Planned Order Scheduling Configuration (1)

The figure about display some of the configuration parameters that can be set. First,planners must select at what level they will schedule. Typically with planned ordersyou will be using detailed planning, except in the case of repetitive manufacturingwhere order type PE is used. By selecting the Scheduling indicator, and if a validrouting exists, lead time scheduling is carried out. The production dates are calculatedfrom the floats in the scheduling margin key of the material master and the individualoperation times in the routing. if the Capacity Requirements indicator is selected,capacity requirements are generated for the operations. The dates for the capacityrequirements are the operation dates.

Note: For performance reasons it is advisable to use the scheduling horizon(detailed planning) to limit the period for which lead time scheduling andcapacity planning should be carried out. The scheduling horizon is a timeperiod that is in working days. If a planned order has its basic start datewithin this period in the future, lead time scheduling is carried out usingthe selected routing. If a planned order has its basic start date further in thefuture than this scheduling horizon, the basic dates are calculated from thein-house production times in the material master and are transferred to theproduction times.



Figure 135: Reduction and Adjustment

To ensure smooth interplay between basic-date scheduling and lead-time scheduling,the in-house production time in the material master must match the lead-timescheduling through the routing. It is essential to schedule the routing and to update thescheduling result in the material master. If basic scheduling differs from lead-timescheduling, the basic-dates can be adjusted to the production dates after the productiondates are redetermined.

If the production start date of the planned order is before the order start date, thesystem can determine new production dates using reduction. Reduction can takeplace at two points:

1. To reduce the float before and after production. You can control this on apercentage basis. You can define 6 different levels of percent reduction. Thesystem will reduce one level at a time trying to improve the order dates.

2. To reduce the operation times, you must assign a reduction strategy to theoperation in the routing. Here you can define the use of splitting (multiplecapacities), overlapping operations versus sequential operations, reducing thewait time and the queue time.



Figure 136: Planned Order Scheduling Configuration (2)

In the Customizing IMG activity, �Define Scheduling Parameters for Planned Orders�in the Adjust scheduling section. You can define whether and how the basic dates areto be adjusted to the production dates.

If there are scheduling problems, the basis for calculating basic dates switches frombackward to forward scheduling. Depending on these dates if detailed schedulingoccurs backward and the times in the routing are shorter than those in the materialmaster, the following situation may arise: The calculated production start date isfurther in the future than is necessary and may still be able to produced on schedule. Toexclude this kind of situation, the system overrides the Customizing settings. Forwardscheduling takes place and the end date is adjusted, although the end date is on therequirements date at the earliest. The proposed order start date remains the same.



Figure 137: Order Dates for Lead-Time Scheduling

With lead-time scheduling using the routing, the dependent requirements dates can beplaced on the dates of the assigned operations. This enables the staging of materials totake place with relation to the operation.

The standard system assumes staging of materials in accordance with the componentassignment of the Bills of Material (BOM) to the routing. The dependent requirementsdate of the BOM components is placed on the production start date of the operationsto which they are assigned.

If BOM components are assigned to the first operation of the routing in the defaultsettings or component assignment maintenance, their dependent requirements dateis set to the production start date of the first operation. With pure basic scheduling,their dependent requirements date is the order start date of the planned order thatcaused the requirements.

In Customizing for MRP under the section Adjust scheduling of the IMG activityDefine Scheduling Parameters for Planned Orders, you can define that the dependentrequirements date is also to be placed on the order start date with lead-time scheduling.For example, if capacity requirements have to be created using lead-time scheduling.



Figure 138: Changing Dependent Requirement Dates

In the BOM explosion, the required components or assemblies are determined for therelevant BOM. The dependent requirement date of a particular component can bemoved using the negative lead time or positive lead time using the operational leadtime offset in the bill of material. Lead-time offset for operation is the time that thecomponent lead-time offset states with reference to the start date of the allocatedoperation. With positive value, the component can be available after the operationstart date Lead time. Using a negative value, the component must be available beforethe operation start date.

Demonstration:

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Explain the corresponding Customizing settings:



Customizing: Production→ Material Requirements Planning→ Planning→Scheduling and Capacity Parameters→ Define scheduling parameters forplanned orders

Pay attention to:

� Detailed scheduling� Adjusting dates and defining the dependent requirement dates� Scheduling control for detailed scheduling� Reduction

Detailed Scheduling Horizon:

A new planned order that was generated in the planning run and whose orderstart date lies outside the detailed scheduling horizon does not undergo lead-timescheduling irrespective of scheduling indicator 2.

If the order start date of the planned order lies within the detailed schedulinghorizon during a later planning run with the scheduling indicator 2 and planningmode 1, the planned order undergoes lead-time scheduling.

Demonstration: Reduction and Adjustment

PurposeTo ensure smooth interplay between basic-date scheduling and lead-time scheduling.

System DataSystem:Client:User ID:Password:Set up instructions:1. If the production start date is before the order start date, the system can

determine new production dates using reduction.

Demo example:

In the material master:

Reduce the processing time by 10 days

Create requirements: 100 pieces for today + 5 months,

planning run with scheduling indicator 2,



analyze generated planned order:

no reduction, basic start date was adjusted, the original order start date is stillvisible as explosion date

In the scheduling and capacity parameters in the section �Reduction�Maximumreduction level 4,

%Red. Float before production/float after production: 50 60 70 80 90 100%

Execute planning run again with planning mode 3 and scheduling indicator 2:

New planned order: Reduced to specified level 4; the order start date wasadjusted to the production start date that resulted from the reduction, and theoriginal order start date is still visible as the explosion date.

2. Reduction for Forward Scheduling:

Demo example:

In the material master, enter the original processing time again manually, orschedule the routing and update the material master,

In the scheduling and capacity parameters in the section �Reduction�: Resetmaximum reduction level to 0,

Create requirements: 100 pieces for today + 1 week;

planning run with scheduling indicator 2;

analyze generated planned order: Forward scheduling, no reductions.

Set maximum reduction level back to 4;

execute planning run again with planning mode 3 and scheduling indicator 2:

New planned order: Reduced to the specified level 4, the order start was adjustedto the production end date that resulted from the reduction.

Demonstration: Order Dates with Lead-Time Schedulingand Postponing the Dependent Requirement Dates

PurposeTo demonstrate Order Dates with Lead-Time Scheduling and Postponing theDependent Requirement Dates.



System DataSystem:Client:User ID:Password:Set up instructions:1. Explain the function of the negative/positive lead time and the component

assignment in both scheduling types as far as the sequencing of the dependentrequirements of the assemblies or components is concerned.

Instead of using the order report, the assembly requirements dates can also bedisplayed in the component overview of the planned order. You can also usethe new order tree.



371 Exercise 14: Lead Time Scheduling in thePlanning RunExercise Duration: 15 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate lead time scheduling in the planning run� Demonstrate the affect on lead time scheduling using component allocation in

the task list

Business ExampleDue to lengthy production times, planners require more accurate scheduling of theraw materials and sub-assemblies. Execute lead time scheduling and review thedifferences between basic dates scheduling and lead time scheduling. In addition, theturbo drive R-B4##, is not used until the fifth operation. Allocate the component inthe routing and execute a planning run deleting the old orders and creating new oneswith lead time scheduling, and review the results.




Task 1: Lead Time Scheduling in the Planning RunDemand for your pump products is at an all time high. With a recent increase indemand, you are worried that you will be stretching your capacity beyond yourcapabilities. In order to make intelligent decisions, you need the most detailed dataavailable. In order to see more exact scheduling, you need to perform lead timescheduling for your pump R-F1##. In addition, you are concerned about the supplysituation of some of the components for your turbo drive R-B4##. In order to giveyour vendor more accurate information, you want the turbo drives to be produced asclose to the actual consumption dates as possible. Update your routing for R-F1## toshow the point of consumption for your R-B4##.

1. From the Stock/Requirements list execute Single-item, multilevel planning formaterial R-F1## in plant 1000. Select planning mode 2 (re-explode BOM androuting) and scheduling type 2 (lead-time scheduling).

2. Refresh the Stock/Requirements list for material R-F1## in plant 1000. Usingthe order report, analyze the new scheduling situation for the planned orderyou selected previously.


End: ____________ End: _________

Start: ____________ Start: ________



End: ____________ End: _________

Start: ____________ Start: ________


End: ____________ End: _________

Start: ____________ Start: ________





3. Do production dates exist now? _____________

Task 2: Component Allocation in Lead Time SchedulingTo achieve timely staging of assemblies or components in lead-time scheduling, youmust make a component or operation assignment for the affected assemblies orcomponents.

1. Call the BOM for the material R-F1## in the plant 1000 with usage 1 once more.From the Bill of Material Assign R-B4## to operation 50.

2. From the Stock/Requirements list execute a Single-item, multilevel planning formaterial R-F1## in plant 1000. Select planning mode 2 (re-explode BOM androuting) and scheduling 2 (lead-time scheduling).

3. From the Stock/Requirements list of R-F1## at plant 1000, select the firstplanned order in the list. Review the detail of the planned order by lookingat the component list.

4. Navigate to theDet. scheduling tab of the planned order you selected. What isthe start date of operation 0050?


Component RequirementR-B1##R-B2##R-B3##R-B4##




6. Compare the result with the results from the basic dates scheduling exercise.Will the assembly R-B4## also be staged at a later date in lead-time scheduling?



Solution 14: Lead Time Scheduling in thePlanning RunTask 1: Lead Time Scheduling in the Planning RunDemand for your pump products is at an all time high. With a recent increase indemand, you are worried that you will be stretching your capacity beyond yourcapabilities. In order to make intelligent decisions, you need the most detailed dataavailable. In order to see more exact scheduling, you need to perform lead timescheduling for your pump R-F1##. In addition, you are concerned about the supplysituation of some of the components for your turbo drive R-B4##. In order to giveyour vendor more accurate information, you want the turbo drives to be produced asclose to the actual consumption dates as possible. Update your routing for R-F1## toshow the point of consumption for your R-B4##.

1. From the Stock/Requirements list execute Single-item, multilevel planning formaterial R-F1## in plant 1000. Select planning mode 2 (re-explode BOM androuting) and scheduling type 2 (lead-time scheduling).


b) Select Single-item, Multi-Level planning, and select planning mode 2(re-explode BOM and routing) and scheduling 2 (lead-time scheduling).

2. Refresh the Stock/Requirements list for material R-F1## in plant 1000. Usingthe order report, analyze the new scheduling situation for the planned orderyou selected previously.





End: ____________ End: _________

Start: ____________ Start: ________



End: ____________ End: _________

Start: ____________ Start: ________


End: ____________ End: _________

Start: ____________ Start: ________


a)

3. Do production dates exist now? _____________

Answer: Production dates available: Yes, because requirements planning wasexecuted with scheduling indicator 2 (lead-time scheduling).




Task 2: Component Allocation in Lead Time SchedulingTo achieve timely staging of assemblies or components in lead-time scheduling, youmust make a component or operation assignment for the affected assemblies orcomponents.

1. Call the BOM for the material R-F1## in the plant 1000 with usage 1 once more.From the Bill of Material Assign R-B4## to operation 50.

a) Menu path: Logistics→ Production→Master Data→ Bills of Material→ Bill of Material→ Material BOM→ Change

b) Select item R-B4## in the item overview. Select Extras→ Operationallocation .

c) Select operation 50 (install electronic turbo pump) in the operationoverview and follow the menu path Edit→ New assignment.

d) Select Save

2. From the Stock/Requirements list execute a Single-item, multilevel planning formaterial R-F1## in plant 1000. Select planning mode 2 (re-explode BOM androuting) and scheduling 2 (lead-time scheduling).


b) Select Single-item, Multi-Level planning, and select planning mode2 (re-explode BOM and routing) and scheduling type 2 (lead-timescheduling).

c) Return to the stock requirements list and refresh it.

3. From the Stock/Requirements list of R-F1## at plant 1000, select the firstplanned order in the list. Review the detail of the planned order by lookingat the component list.

a) Select the first planned order and select Details of Element.


c) At the top of the planned order select component overview.

4. Navigate to theDet. scheduling tab of the planned order you selected. What isthe start date of operation 0050?

Answer: Varies





Component RequirementR-B1## VariesR-B2## VariesR-B3## VariesR-B4## Varies from the other three

As a result of the positive 5 day off set for R-B4##, the requirements are pushedback 5 working days.

6. Compare the result with the results from the basic dates scheduling exercise.Will the assembly R-B4## also be staged at a later date in lead-time scheduling?

a) Yes, the assembly R-B4## will now be staged at a later date, that is,on the start date of operation 50 of the finished product, which isassigned to the assembly.

Hint: The staging date, for the assembly R-B4##, determinedusing component assignment, in lead-time scheduling does notnecessarily correspond to the staging date determined in basic-datescheduling because the positive lead time is independent of lot size.



Lesson Summary

You should now be able to:� Demonstrate how Lead Time Scheduling works in the Planning run� Demonstrate knowledge of configuring lead time scheduling.



Lesson:379

Master Data Selection during the Planning RunLesson Duration: 20 Minutes

Lesson OverviewIn this lesson, you will learn about Bill of material (BOM) explosion and its uses.In addition, you will learn to select alternative BOM and material according toproduction version. In addition, you will learn how to change the BOM status in theBOM structure. In this lesson, you will learn about the process of routing selection.


� Demonstrate how a bill of material will be chosen during the planning run ifmultiple BOMs exist

� Demonstrate how a task list will be chosen during the planning run if multipleroutings exist.

� Demonstrate how a production version will be chosen during the planning run ifmultiple versions exist.

� Identify how configuration can influence master data determination


Business ExampleAt your plant you have a very flexible group of resources. Because of this youcan assemble a pump using various component structures (BOMs) and you canmanufacture them on different work centers/resources(Rtgs). You need to be awareof how SAP ERP will allow you to model this type of environment and allow theplanning run to perform most of the sourcing decisions.

An Overview of BOM ExplosionDuring the planning run the net requirements calculation takes place, along withthe lot-size calculation, and the scheduling for a final assembly. For materialsthat are manufactured in-house, each planned order must determine the requiredquantities for assemblies produced in-house and the materials staging date for therequired components and assemblies. In order for the system to generate dependent


SCM240 Lesson: Master Data Selection during the Planning Run

requirements for each planned order, the bill of material must be accessible. Duringthe creation of each planned order, the system determines and explodes the validBOM for assembly in the planning run.

Figure 139: BOM Explosion

The detailed data for the BOM explosions is displayed in the master data of a plannedorder. The production-relevant BOM items are copied as components to the plannedorder, regardless of the MRP type. The BOM status is crucial as a validity criterion,in addition to the BOM selection ID/usage, alternative selection indicator/alternative,and change status/explosion date. The BOM, or all of the materials and BOMs, in thecomplete structure must be maintained in the corresponding plant.



During the planning run, the system explodes the BOM for every new planned orderof an assembly. The following steps are carried out to determine the valid BOM:

� In the planning run, the system first checks which BOM usage has the highestpriority. Then, it checks if this usage has a valid BOM on the explosion date. Ifthis is not the case, the system creates an exception message.

� If there are various BOM alternatives, the system checks which alternativecorresponds to the prerequisites of the alternative selection.

� If necessary, the change status on the explosion date is determined for theselected BOM alternative.

� The BOM items relevant to production are copied to the planned order for thevalid BOM. The dependent requirements quantity is determined by the quantityfactor of the BOM item.

� The dependent requirements date is based on the scheduling of the superiorassembly. This date is either determined on the basis of the basic start dateor based on the production start date of the planned order operations for thehigh-level assembly.

The BOM must be maintained in the appropriate plant to carry out the planning run.In addition, the validity of a BOM is determined by the BOM status. To use the BOMin MRP, you must set the BOM status in the BOM header so that it is active for MRP.

BOM Updates to Existing OrdersIn the case of existing procurement proposals, Depending upon the settings in theplanning run or the planning file entry the BOM explosion might be treated differently.The BOM is only re-exploded if the quantity or the date of the procurement proposalor the BOM structure has been changed. If the BOM structure has changed, the systemcreates a planning file entry with the �new BOM explosion� indicator. If you wanta new BOM explosion during the production run, you can trigger this on the initialscreen through the planning mode, such as 2 or 3.

When manual changes to the date or quantity of the planned order occur, the BOM inthe affected planned order and the dependent requirements are adjusted without a newplanning run. In this case, the NETCH/NETPL indicators are set in the planning fileof the affected material and components. If the BOM structure changes, the BOMexplosion indicator sets in the planning file.

You can view the detailed data for the BOM explosion in the planned order on the�Master data� screen.



BOM SelectionWhen a planned order is created the first step that must be completed in order to findan applicable BOM is to determine the correct BOM usage.

Figure 140: Selection of BOM Usage

With the BOM usage, it is possible to manage separate BOMs for the differentbusiness areas, such as Engineering/Design, Production, and Costing. The maindifferences in the BOM structures result from the different tasks of the various areasthat process different item data.

Note: When creating a BOM the usage is one of the required fields thatmust be defined first.

You have to define which BOM usage is to be used in the planning run. You determinethe priority of the usage for the planning run using the selection ID in the Customizingfor MRP, Production→MRP→ Planning→ BOM Explosion/Routing Determination→ Define BOM and Routing Selection. You can define a sequence for the selection ofa valid BOM through the �usage� criterion.

If the system does not find a valid BOM in the selected usage, it selects the usage withthe next lowest priority and carries out the check for valid BOMs. You define theorder of priority for the BOM usage, that is, the selection ID, in the Customizing forproduction basic data, in the IMG activity �Define Order of Priority for BOMUsages�.



Figure 141: Selection of Alternative BOM

In the case of multiple BOMs, you have to define which alternative BOM is to beselected during the planning run.

You can define which procedure is to be used to select the BOM for an assembly inthe material master record in the Selection method field of the MRP data (MRP 4).

Three options are available:

� BOM selection using the order quantity (lot size): The order quantity is based onthe lot size according to the selected lot-size procedure.

� Selection according to explosion date: The system uses the explosion dateto determine the valid BOM or the valid routing for a planned order. InCustomizing, you can define whether the order start date, order finish date, orfixed key date of the BOM explosion number is selected.

� Selection according to production version: The production version determinesthe different production methods that can be used to produce a material.Therefore, the production version contains a routing and a BOM. The alternativeBOM to be selected, the BOM usage, the lot-size range, and the effectivity periodof a BOM can be defined for the alternative selection. With alternative selectionindicator 3, the selection is always made according to production version. Withindicator 2, the selection is made according to production version when this ispossible. If this is not possible, the selection is done according to lot size.



Demonstration: BOM Selection ID/BOM Usage

PurposeTo demonstrate the usage and selection of BOM

System DataSystem:Client:User ID:Password:Set up instructions:1. The BOM selection ID for MRP is defined for each plant.

Customizing: Production→ Material Requirements Planning→ Planning→BOM Explosion/Routing Determination→ Define BOM and Routing Selection.

Important: Point out that you do not define the routing selection in thisCustomizing activity, as the title suggests!

2. BOM usage:

Customizing: Production→ Basic Data→ Bill of Material→ General Data→BOM Usage→ Define BOM Usages

Customizing: Production→ Basic Data→ Bill of Material→ AlternativeDetermination→ Define Order of Priority for BOM usages

The system determines the first valid usage according to the selection ID. Validmeans valid on the explosion date and having the BOM status active.

Note: For long-term planning, you can use a deviating BOM selectionID by assignment in the long-term planning scenario.

3. From the S/R list of material R-F2## at plant 1000, display the details of anyplanned order

4. Select the master data tab, and point out the BOM usage field



BOM Explosion Based on Lot Size

Figure 142: Selection by Order Quantity (Lot Size)

During the planning run, the system checks whether a valid alternative BOM existsfor the order quantity (lot size). The lot-size range of the alternatives of a multipleBOM is determined in the BOM header. If the system does not find a valid or suitablealternative for the order quantity, it creates an exception message.

Note: The lot size fields only appear in the header of the BOM if there ismore than one BOM for a given material. If only one BOM exists it is validfor all lot sizes.

The valid alternative is exploded and dependent requirements are created for thecorresponding components based on the BOM quantities

Demonstration: Lot Size Selection

Purpose

System DataSystem:Client:User ID:



Password:Set up instructions:1. Change the strategy group to 40.

2. Create two planned independent requirements for R-F130 at plant 1000.

Month 3 90 pcsMonth 6 150 pcs.

Save the results

3. Create a second BOM for R-F130 at plant 1000 (alternative 2), using the original(Alt . 1) as template.

4. Before saving change the quantity of the R-B230 from 1 pc to 2 pcs. In addition,in the BOM header set the lot size from 101 - 999,999 and Save.

5. Change the Alt 1 BOM for R-F130 at plant 1000, so that the lot size is from1 - 100, and save the results.

6. From the S/R list execute a single-item, multi-level planning run.

7. Review the results of each planned order, paying special attention to the lotsize and the BOM Alternative.

8. The Planned order for 90 pcs should have Alt BOM 1 and the order for 150should have Alt BOM 2

9. From the Material Master point out the Selection Method indicator that is setto Blank - Order Quantity

BOM Explosion Based on Order DateIn certain situations where multiple BOMs overlap or you are using EngineeringChange Management (ECM), a planner may want the BOM to explode on a particulardate.

Hint: For example, you make the same chocolate year round. However youhave several BOMs that support seasonal packaging based on the foil color,but the are valid in the same time interval. Since your customers mark downoff season merchandise, they want to make sure you are sending them theright packaging mateiral for the correct holiday. There for based on timing ofa production run is very important.



Figure 143: Defining the Explosion Date

In Customizing for MRP, Production - Material Requirements Planning - BOMExplosion/Routing Determination - Define BOM Explosion Control. , you can definethe explosion date for the BOM and routings selection at the plant or the MRPgroup level.

The explosion date determines which BOM or routing is to be used for the explosionin the planning run and for the determination of dependent requirements. This means,the BOM that is valid on the explosion date is selected and dependent requirementsare created for the components entered there.

Note: If a mateiral has multiple BOMs and more than one is valid for thesame lot-size and date, the system will use the Alternative BOM field asa priority field.

Caution: By default, when creating BOMs unless specified, the systemwill create the first BOM as alternative 1. This is the highest priority whenchoosing between multiple BOMs. The first time you create a BOM foreach material you may want to create the BOM using a character and a alphacombination such as A1.



The following options are available for the explosion date:

� Order start date� Order finish date� BOM explosion date (gross date)

Note: Point out that if the order start date is adjusted to the production startdate, the BOM is still exploded in the original order start date. This meansthat the explosion date and the final order start date differ from one another.

Figure 144: Explosion Using Order Start Date

In order to use the explosion date for BOM determination, you must first set theSelection Method indicatorin the Material master to 1- selection by order date. If morethen one assembly exists, assembly-specific periods are defined, within which certainalternative BOMs are to be used. Then, the system checks the defined period for theassembly during the planning run. The system checks in which period the explosiondate lies and selects the corresponding alternative BOM. The default setting is that theorder start date is set as the BOM explosion date. The suitable alternative is explodedand dependent requirements are created for the corresponding components.

If more than one BOM is valid for a period of time, or the validity periods overlap,using a master data table, users can specify which alternative is valid during a specificperiod.Logistics→ Production→MRP→Master Data→ BOM by date To define the



alternative selection using dates, enter the following parameters in the table: Materialnumber, plant, BOM usage, and the valid-from date, from which the alternative BOMis to be used in the planning run, and the BOM alternative.

Note: This table allows you to define user defined validity period for MRP.This does not interface with ECM.

To assign several alternative BOMs with different effectivity periods to a material,you define the beginning of the effectivity period for each alternative in the �Validfrom� field. The beginning of the validity period of the next alternative on the timeaxis marks the end of the effectivity period of the previous alternative.

The system selects the BOM and explodes it as soon as the basic dates have beendetermined in the scheduling. This is applicable in the case of lead-time schedulingeven before the scheduling is carried out through the routing. If the basic date is tobe adjusted to the production date, such as if the deadline is missed, the BOM is stillexploded on the original basic date. The BOM explosion date and the final basic dateare different in this special case.

Figure 145: Explosion Using Order Finish Date

Here, you can see the BOM explosion situation if you define in Customizing that theBOM explosion date is to be set as the planned order finish date.



The system selects and explodes the BOM as soon as the order finish date has beendetermined in the scheduling. If in the case of lead-time scheduling the order start dateis to be adjusted to the production dates, this does not change the order finish date. Thismeans that the BOM explosion date and the final basic date do not differ in this case.

If the system does not find a valid or suitable alternative, the BOM with the suitablelot size is used.

Figure 146: Change Status According to Order Start Date

The BOM or alternative BOM can have different validity periods on the time axis dueto changes that have been made, such as in the BOM composition. The BOM canhave different compositions or statuses at different times.

Different validity for the same BOM indicates that an organization is using a form ofEngineering Change Management (ECM).

Every change status has a valid-from date and a valid-to date, defined by thevalid-from date of the next change.

The BOM status at the time of the explosion date is exploded. Whether this is theorder start or finish date or the gross date of the BOM explosion number, dependson the settings made in Customizing (Customizing IMG activity �Define BOMExplosion Control�.



Figure 147: Change Status According to Order Finish Date

Demonstration: BOM Dates in MRP

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. Follow Menu path: Logistics→ Production→ MRP→ Master Data→ BOM

by date

2. Select New Entries

3. Make the following two entries



Material Plant BOMUsage

Valid From Alt BOM

R-F130 1000 1 15th of currentmonth

2

R-F130 1000 1 1st of Month4

1

4. Select Save

5. From the S/R list of R-F130 at plant 1000, Environment→ Change Material , Setthe selection method to 1 - Selection by explosion date, and Save the material

6. Remind the students that in the previous demo it was by lot size.

7. From the S/R list, execute a single-item multii-level planning run, use planningmode 3. Refresh the S/R list

8. Drill into the details of each planned order. The order quantity of 90 pcs shouldnow have Alt 2, and the 150 pcs order should have alt 1

BOM Explosion Using Fixed DatesIn certain situations planners need a specific BOM exploded for a particular productionrun. By selecting BOMs by explosion date, and using a fixed date, planners can tieinto a specific BOM. In order to do this, you must define a BOM explosion number(user defined) and attach it to a specific or fixed date. You will then attach the BOMexplosion number to the appropriate MRP element.



Figure 148: Explosion Using the BOM Explosion Number

If the order start date of the planned order is set as the explosion date for the BOMexplosion, there could be large intervals between the explosion dates of the individualBOM structures under certain circumstances in the case of multiple BOMs. If BOMs(alternatives) change over time due to various requirements, the situation could occurthat an assembly used several times is produced using different BOM compositions.

You define BOM explosion numbers by entering the fixed key date in materialrequirements planning. Using the BOM explosion number, you can define a standardexplosion date for all BOM levels. This �gross date� is contained in the BOMexplosion number. The BOM is exploded for all level with this gross date.

You maintain a BOM explosion number in the MRP master data. You can define thegross date for an alphanumeric BOM explosion number. Logistics→ Production→MRP→ Master Data→ BOM Explosion Number→ Edit.

You can assign the BOM explosion number (fixed date) in the following places:

1. Planned independent requirement2. Customer requirement (item screen)3. Sales order (item detail screen sales A)4. Planned order (header screen)



To assign a BOM explosion number to a planned independent requirement (PIR)you must edit the PIR. From Schedule lines view, select Settings→ BOM Explosionnumber. The column BOMexpNo, will now be changeable. Here is where you enterthe fixed date/BOM explosion number. During the planning run the BOM explosionnumber will be copied to the planned order header and change the explosion date tothe fixed date in the explosion number.

Another option will be to edit and existing planned order and enter the BOM explosionnumber in the header of the order. This will cause the explosion date to change

Demonstration: BOM Explosion Numbers

Purpose

System DataSystem:Client:User ID:Password:Set up instructions: Must perform the previous demo for this demo to work!1. Remind the students that you are now using BOM explosion dates and thus your

the BOMs for your orders are sensitive to the BOM by Date table entries.

2. Create two BOM explosion numbers with the following data:

Logistics→ Production→ MRP→ Master Data→ BOM Explosion Number→ Edit.

BOM ExpNo.

Fixed Key Date Plant Description

Alt 1 15th of Month 5 1000 Alternative 1Alt2 15th of Current Month 1000 Alternative 2

3. Save the results.

4. Access the S/R list for R-F130 at plant 1000

5. Select the first PIR and select Change Element

6. In the schedule line tab Settings→ BOM explosion number .

7. Set the first requirement to BOM Explosion number Alt 1, and Save



8. Refresh the S/R list and point out the new BOM Explosion number column.

9. Execute a multi-level planning run, Refresh the results, and review the headerof the Planned order with the Alt 1, BOM explosion number. Note the numberin the header.

10. Select the master data view, and point out the BOM explosion date is the sameas the fixed date.

BOM Explosion Based on Production VersionOften times planners are forced due to the manufacturing process to tie a specific BOMto a routing or need to prioritize which BOMs or Routings are selected during theplanning run. Production versions allow planners to perform both tasks if necessary.

Figure 149: Selection by Production Version

There may be different BOMs according to which a material is produced. Theproduction of a material can also be processed through various routings. This meansthe material can be produced on identical but different production lines, such as workcenters, or use a different sequence of work centers. The data on the different methodsaccording to which a material can be produced, can be combined in the productionversion and assigned as such to the material.



The production version defines the following data:

� Alternative BOMs and BOM usages for the BOM explosion� Task list type, task list group, and group counter of the routing� Validity period of the production version (fields �Valid from� and �valid to�)� Lot-size range of the production version (fields �Lot size from� and �Lot size to�)� Distribution of receipts� Identify bottle neck work centers

If the value �2� is entered for the selection method indicator in the material master, theBOM is selected by production version, as long as valid data is available. If the systemdoes not find a production version or does not find a production version which issuitable as far as usage, lot size and validity period is concerned, the selection occursaccording to lot size. This is the way it happens when the selection method indicatorwere set to �blank�. If the indicator is set to �3�, the selection occurs according toproduction version, which means that if the system does not find any selection versionor does not find any appropriate selection version, it cannot create a production orderand issues an exception message.

Note: If both the lot-size and validity date of more than one productionversion is the same, the system uses the production version number asa means of prioritization.

Caution: Production version 0001 is the highest priority. It is suggested thatif you frequently create alternative BOMs to handle component changes, use aversion number starting with a character, such as A001.



BOM selection Summary

Figure 150: Summary: BOM Selection

The BOM selection in the MRP run has three steps:

1. The BOM usage is defined by the BOM selection ID, which you assign on aplant basis in the Customizing activity �Define BOM and Routing Selection�.

2. The alternative BOM is determined according to the setting for the BOMselection indicator in the material master. If the selection is to be madeaccording to the explosion date, you should enter which date is to be used in theCustomizing activity �Define BOM Explosion Control�.

3. The change status of the BOM is determined using the explosion date. The sameCustomizing setting as in step 2 is the basis for the choice of date.



Process of Routing Selection

Figure 151: Routing Selection

If you start the planning run with the scheduling indicator 2 (lead-time schedulingand capacity planning), the system selects the routing for each planned order. Thesystem calculates the dates, the staging of materials and the capacity requirementsusing the routing.

The �selection method� indicator in the material master (MRP 4) is also crucial forselecting the routing:

� If selection method indicator has been set to value 2 or 3 (selection by productionversion), the routing is also selected according to the selected production version.

� Else, the selection ID of the routing selection, which is defined in theCustomizing for MRP at the detailed scheduling level in the activity �Definescheduling parameters for planned orders� decides which routing is selected.

You define the selection ID of the routing selection in the Customizing for Production,basic data. Customizing: Production→ Basic Data→ Routing→ Routing Selection→ Select automatically. In this activity you define in which order a routing will beselected using task list type and the routing status. In the configuration of schedulingof the order type, Customizing→ Production→ Material Requirements Planning→Planning→ Scheduling and Capacity Parameters→ Define scheduling parametersfor planned orders, planners attach by Planned order type/Plant/Production scheduler,the selection ID. This selection ID will be used during the planning run whenexpecting lead time scheduling.



The explosion dates of the BOM and the routing are identical. If the planned order ismanaged using Engineering Change Management, the system uses the routing withthe change status at the time of the BOM explosion date. The task list group and thegroup counter for the routing as well as the corresponding scheduling and capacityrequirements can be seen on the screen �Detailed scheduling� for the order.

Demonstration: Routing Selection

PurposeTo select routing for each planned order

System DataSystem:Client:User ID:Password:Set up instructions:1. The selection method indicator in the material master is also responsible for the

routing selection like the following two settings in Customizing:

Customizing→ Production→ Material Requirements Planning→ Planning→ Scheduling and Capacity Parameters→ Define scheduling parameters forplanned orders.

Set the selection ID Detailed scheduling for each plant, order type, andproduction control.

Customizing: Production→ Basic Data→ Routing→ Routing Selection→Select automatically:

and there using the selection ID: Priority sequence for task list type, usage,and status



With selection according to production version (with selection method indicator2 or 3) if the system cannot select a routing according to production version,it determines the routing using the standard logic, as if the selection methodindicator were set to� blank�.

Note: For indicator 2, this is clear and identical to the BOM selection.This is not the case for indicator 3. This can lead to problems withindicator 3 when you convert the planned order to a production orderbecause the production order with standard settings requires a routingaccording to production version and does not use the routing selected inthe planned order.





Discuss the steps involved in BOM selection in the MRP run.

Discuss why is the selection method indicator crucial for selecting the routing.



Lesson Summary

You should now be able to:� Demonstrate how a bill of material will be chosen during the planning run if





Unit Summary SCM240

Unit SummaryYou should now be able to:� Demonstrate how Basic Scheduling works in the Planning run� Demonstrate how scheduling works for Externally Procured materials.� Demonstrate how Lead Time Scheduling works in the Planning run� Demonstrate knowledge of configuring lead time scheduling.� Demonstrate how a bill of material will be chosen during the planning run if







1. If the procurement type allows both in-house production and externalprocurement, the MRP is always based on external procurement.Determine whether this statement is true or false.□ True□ False

2. What is the difference between scheduling for in-house production and externalprocurement?

3. In basic scheduling, you can trigger lead-time scheduling for the planning runby using the scheduling indicator .Fill in the blanks to complete the sentence.

4. Lead Time scheduling is used when planned orders should generate


5. Planned orders always generate production dates?Determine whether this statement is true or false.□ True□ False

6. If a material had to cure for a specific time period before it could be passed to thenext operation, what time would be most appropriate to model this in SAP ERP?Choose the correct answer(s).□ A Curing time□ B Drying time□ C Wait time□ D Sit around time□ E Queue time



7. For BOM explosion in MRP, you must set the BOM status in the BOM headerso that it is active for MRP.Determine whether this statement is true or false.□ True□ False

8. For selecting an alternate BOM, you can define the procedure to be used forselecting the BOM in the field of the MRPdata.Fill in the blanks to complete the sentence.

9. System can create a production order even if it does not find any selectionversion or does not find any appropriate selection version.Determine whether this statement is true or false.□ True□ False

10. While changing BOM status, you can define an explosion date for a BOMstructure by entering aFill in the blanks to complete the sentence.

11. The explosion dates of the BOM and the routing are identical.Determine whether this statement is true or false.□ True□ False



401Answers

1. If the procurement type allows both in-house production and externalprocurement, the MRP is always based on external procurement.

Answer: False

The MRP is always based on in-house production if the procurement type allowsboth inhouse-production and external procurement.

2. What is the difference between scheduling for in-house production and externalprocurement?

Answer: Scheduling for both is similar except that the in-house production timeis replaced by the sum of purchasing processing time and planned deliverytime in external procurement.

3. In basic scheduling, you can trigger lead-time scheduling for the planning runby using the scheduling indicator 2.

Answer: 2

4. Lead Time scheduling is used when planned orders should generate Capacityrequirements.

Answer: Capacity requirements.

5. Planned orders always generate production dates?

Answer: False

Production dates are only generated in planned orders when MRP is run usingscheduling mode "2" or is scheduled manually.

6. If a material had to cure for a specific time period before it could be passed to thenext operation, what time would be most appropriate to model this in SAP ERP?

Answer: C

Wait time would be most appropriate. Curing, drying and sit around time don�tecplicitally exist in SAP ERP.



7. For BOM explosion in MRP, you must set the BOM status in the BOM headerso that it is active for MRP.

Answer: True

To use the BOM in MRP, you must have set the BOM status in the BOM headerso that it is active for MRP.

8. For selecting an alternate BOM, you can define the procedure to be used forselecting the BOM in the Selection method field of the MRP data.

Answer: Selection method

9. System can create a production order even if it does not find any selectionversion or does not find any appropriate selection version.

Answer: False

If the system does not find any selection version or does not find any appropriateselection version, it cannot create a production order and issues an exceptionmessage.

10. While changing BOM status, you can define an explosion date for a BOMstructure by entering a BOM explosion number.

Answer: BOM explosion number.

11. The explosion dates of the BOM and the routing are identical.

Answer: True

The explosion dates of the BOM and the routing are identical.


Unit 8403 Multiple Sources of Supply in Planning

Unit OverviewThis unit will inform you how the system will react or can be controlled in situationswere replenishment orders can be sourced from multiple plants, vendors, or resources.


� Explain what happens if multiple sources of supply exist.� Demonstrate how to set up the system to choose the correct method of

manufacturing when several exist.� Demonstrate how to split demand between multiple sources� Describe how to initiate the purchasing process as a result of the planning run� Demonstrate how to split demand between multiple sources

Unit ContentsLesson: Source Determination Overview... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .491Lesson: Source Determination in Manufacturing .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .496

Demonstration: Source Determination in Mfg ... . . . . . . . . . . . . . . . . . . . . . . . . . . .500Exercise 15: Source Determination in Manufacturing ... . . . . . . . . . . . . . . . . . .503

Lesson: Quota Arrangements .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511Demonstration: Quota Arrangement ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .513Demonstration: Quota Arrangement ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .516Demonstration: Quota Arrangement ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .525


Unit 8: Multiple Sources of Supply in Planning SCM240

Exercise 16: Production Versions and Quota Arrangements .. . . . . . . . . . . .527Lesson: Source Determination in Procurement... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532

Exercise 17: Source Determination in Procurement .. . . . . . . . . . . . . . . . . . . . . .541


SCM240 Lesson: Source Determination Overview

Lesson:404

Source Determination OverviewLesson Duration: 30 Minutes

Lesson OverviewIn this lesson you will discuss at a high level, what happens if multiple sources ofsupply exist for replenishment element.


� Explain what happens if multiple sources of supply exist.


Business ExampleNot all of your materials are single sourced. You have some materials that have morethan one BOM, and can run on more than one machine. In addition you have somematerials that can be purchased from more than one vendor. Examine how you canuse the planning run to initiate some of these scenarios your business deals with.

Source Determination: OverviewOver time companies will typically have to make such decisions as to whichproduction line to run a production, or which vendor to purchase particular materials.In addition you have you might have the option to make or buy the product.



Figure 152: Source Determination

In the mateiral master, planners will be able to decide what type of replenishmentelement will be created as a result of the planning run. The following options areavailable:

� F - Buy (External procurement)� E - Make (In-house Production)� X - Both Make or Buy)� � � - (blank) No procurement

External procurement is defined as replenishing supply from �any� outside source.The idea of external procurement can cover many different options. Here are a fewoptions:

� Standard Purchase from Vendor� Stock Transfer from a company facility� Purchase Consignment stock from vendor� Sub-contracting (service purchase order)

As a result of using these options, the planning run will create some from ofpurchasing document to initiate the replenishment process.

In house manufacturing will typically take place within the plant itself. It can take theform of several replenishment or execution methods. Here a some options:

� Production Orders (Discrete Mfg)� Process Orders (Process Mfg)� Planned Orders (Repetitive Mfg)



Caution: If the procurement type is set to X - Both, the planning run willassume in-house production. This means during the planning run allscheduling will be based off of manufacturing master data. Any decisions toprocure form outside sources will have to be done manually.

Once the general type of procurement has been decided, planners might want thesourcing details to get more specific. The purpose of the source determination processis to automatically assign a source of supply to replenishment element whether it be aplanned order or purchase requisition. In a manufacturing/distribution environment,planners have to choose between the following:

� Multiple bills of material for one material number� Multiple routings or recipes for one materials� Multiple production versions for one material� Multiple plants suppling one/more distribution centers� Multiple vendors supplying one material.

As it relates to purchasing, more than one vendor may be able to supply your companywith a purchased item.

No matter what the scenario is, as it relates to planning, more often than not,companies would like these types of decisions to happen automatically. When dealingwith multiple sources of supply, planners have the following options to help determinethe source of supply:

� Effectivity date� Lot size� Priority� Quota Arrangement� Source List



Lesson Summary

You should now be able to:� Explain what happens if multiple sources of supply exist.



Lesson:408

Source Determination in ManufacturingLesson Duration: 30 Minutes

Lesson OverviewThis lesson will instruct users how to set up the system to select the correct source ofsupply for in-house production if more than one option exists for a material.


� Demonstrate how to set up the system to choose the correct method ofmanufacturing when several exist.


Business ExampleFor those materials that are made in-house, planners may have to choose betweenmultiple options for production. Your pump R-F2## can be made using one of twoactive BOMs. Using production versions you will alter the material master so that itwill choose the newest BOM as the default during a planning run.

Source Determination in Manufacturing/DistributionAs mentioned earlier, when modeling the manufacturing environment, plannersmaybe faced with certain dilemmas as it relates to sourcing. The following are someof problems planners come across:

� Multiple bills of material for one material number� Multiple routings or recipes for one materials� Multiple production versions for one material� Multiple plants suppling one/more distribution centers


SCM240 Lesson: Source Determination in Manufacturing

Figure 153: Source Determination for Multiple Bills of Material

When dealing with multiple bills of materials (alternates) for one product plannershave four options:

� Lot size� Explosion Date� Alternative BOM field� Production Versions

When dealing with multiple BOMs, planners need to make sure that the planning runchooses the correct BOM. In an earlier lesson you learned about how to configure theBOM selection, using the selection indicator in the material master. This allowed theplanning run to choose by lot size (default), explosion date, and production version.Using the explosion date can be very cumbersome do to the fact users have tomaintain a separate table.

However, what happens if you need all BOMs valid during the same period of time?The solution to this is using either the Alternate BOM field on the BOM header orthe Production Version Number. Both of these fields act as a priority. If all factorsare equal, when it is time to choose a BOM the Alt. BOM field and the Productionversion number both act as a priority. In regards to the Alt BOM field, the highest



priority value is 01. This field is alpha numeric, so by entering an alpha characterwhen creating the BOM will allow planners to create other BOMs at a later date thathave a higher priority.

Note: When creating the first BOM for a material, the system will start withAlt BOM value 01.

Figure 154: Source Determination for Multiple Routings

When dealing with multiple routings/task lists, planners need to make sure that theplanning run chooses the correct routing. During the planning run the system canchoose by lot size (default), and production version. Unlike the BOM the routing doesnot use explosion date.

However, what happens if you need all routings valid during the same period oftime? The solution to this is using either the Group counter field on the routingheader or the Production Version Number. Both of these fields act as a priority. If allfactors are equal, when it is time to choose a routing the Group Counter field and theProduction version number both act as a priority. In regards to the Group Counterfield, the highest priority value is 1. This field is alpha numeric, so by entering analpha character when creating the routing will allow planners to create other routingsat a later date that have a higher priority.

Note: When creating the first routing for a material or group of materials,the system will start with Group counter value 1.



Figure 155: Source Determination for Multiple Production Versions

When dealing with multiple production versions, planners need to make sure that theplanning run chooses the correct production version. Production versions are usedin the following ways:

� Prioritize BOMs� Prioritize Routings� Define a Master Recipe� Join a specific BOM and Routing combination

During the planning run the system can choose a production version by lot size,effectivity data, production version number and a quota arrangement.

However, what happens if you need all production versions valid during the sameperiod of time? The solution to this is using the Production Version Number. Thisfield acts as a priority. If all factors are equal, when it is time to choose a productionversion the Version number field acts as a priority. This field is alpha numeric, so byentering an alpha character when creating the production version, this will allowplanners to create other production versions at a later date that have a higher priority.



Demonstration: Source Determination in Mfg

PurposeDemonstrate the different ways of source determination.

System DataSystem:Client:User ID:Password:Set up instructions:1. Create a new BOM R-F1## at plant 1000, using the R-F1##, alt BOM 1 as a

template Logistics→ Production→ Master Data→Bills of Material→ Bill ofMaterial→ Material BOM→ Create (CS01)

2. Enter your material number R-F1## at plant 1000, altA1, and select Copy As.

Note: Pay attention to the message at bottom WARNING that analternative BOM is being created.

3. In template BOM choose Select all and the select Copy As.

4. Select Header, and point out the new lot size fields. Save the new BOM

5. Go to your Material master and create two production versions A001 and A002for your material R-F1## at plant 1000Logistics→ Production→ Master Data→ Material Master→ Material→ Change Immediately (MM02)

6. In the MRP 4 view select the Production versions button. Create two newproduction version A001 for alt BOM A1 and version A002 for Alt BOM 01Effective till end of next year and an unlimited lot size.

7. Go to the MRP 4 view and select the drop down on the Selection Method andchoose 2. - production version.

8. Review the routing group counter and lot size fields in the routing headerLogistics→ Production→ Master Data→ Routings→ Routings→ StandardRouting→ Change (CA02)

9. Enter R-F1## at plant 1000, and select Header

10. From the S/R list , execute and MRP run for R-F1## at plant 1000 with planningmode three .



11. review the details of the S/R list. Due to the selection method and productionversions, you should see production versions A001 being selected. Reviewthe details of the planned order, note the master data tab and the BOM thatwas chosen.



413 Exercise 15: Source Determination inManufacturingExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how using productional versions you can select different BOMs

Business ExampleEngineering has just come to you with a change to the R-F2## pump in plant 1000.This new change will allow for the casing to made directly as part of the pumpassembly order. This will entail creating a new BOM for R-F2## at plant 1000 andsetting the R-B1## to a phantom material. Both BOMs will be active at the same timesince the previous method is still available if inventory needs to be build ahead oftime due to capacity constraints.

Once these two methods of manufacturing exist, you will need to prioritize the newBOM as the one selected during the planning. Create a new production version thatwill prioritize the new BOM over the old.



Data Date ValueMaterial R-F2##Plant 1000Usage 1 - ProductionAlternative BOM A1

Data Date ValueProduction Version A001Description Continuous output BOM 01Date Effectivity Now - 12/31/2010



Detailed PlanningTask List type RoutingGroup Number /Counter use drop down and searchby materialAlt BOM 01BOM usage 1Distribution key Delete/leave Blank

Data Date ValueProduction Version 5000Description Pump Assembly and MachineCasingDate Effectivity Now - 12/31/2010Detailed PlanningTask List type RoutingGroup Number /Counter use drop down and searchby materialAlt BOM A1BOM usage 1Distribution key Delete/leave Blank

Task 1: Setup Alternative Production Master DataYou have just convince Engineering that manufacturing the casing R-B1## duringthe assembly of the R-F2## pump will save time and carrying cost. This will entailcreating a new BOM for R-F2## at plant 1000, and setting the R-B1## to a phantommaterial. Both BOMs will be active at the same time since the previous method is stillavailable if inventory needs to be build ahead of time due to capacity constraints.

1. Create a new BOM R-F2## , alternative A1, at plant 1000, using the R-F2##,Alternative BOM 1 as a template. Select all materials during the copy process.In the new BOM for the R-F2## , set the R-B1## to become phantom material.

Task 2: Source Determination in ManufacturingYou now you have two active BOMs for the R-F2## at plant 1000. However, if wewere to execute a planning run the system would choose alternative 01 as the priorityBOM. The production manager insists that as long as capacity is available you willmake the casing R-B1## at the time of assembling the R-F2##. There fore you needto create a new production versions that will allow the alternative BOM A1, to bechosen over 01 during the planning runs.

1. Review the stock requirements list for your R-F2## at plant 1000.Continued on next page



2. How is the current master data being chosen?

3. From the stock requirements list for R-F2## at plant 1000, create a productionversion to specify your original BOM using the data below:

Hint: If you performed the continuous output exercise , remove theDistribution key from A001 and move to the next step.

4. From the stock requirements list for R-F2## at plant 1000, create a productionversion to specify your new BOM using the data below. If you have not yet doneso, set the selection method to 2 - selection by production version.

5. From the Stock/Requirements list for you material R-F2## at plant 1000, executeSingle-item, Multi-Level, setting the planning mode to 3 - Delete and Recreateplanning data., and the scheduling indicator to 2 - Lead time scheduling.

6. Refresh the stock requirements list again for your R-F2## at plant 1000. Whichproduction version is being chosen and why?

7. Review the details of the planned order. What BOM was copied into the plannedorder?



Solution 15: Source Determination inManufacturingTask 1: Setup Alternative Production Master DataYou have just convince Engineering that manufacturing the casing R-B1## duringthe assembly of the R-F2## pump will save time and carrying cost. This will entailcreating a new BOM for R-F2## at plant 1000, and setting the R-B1## to a phantommaterial. Both BOMs will be active at the same time since the previous method is stillavailable if inventory needs to be build ahead of time due to capacity constraints.

1. Create a new BOM R-F2## , alternative A1, at plant 1000, using the R-F2##,Alternative BOM 1 as a template. Select all materials during the copy process.In the new BOM for the R-F2## , set the R-B1## to become phantom material.

a) Follow Menu Path: Logistics→ Production→ Master Data→Bills ofMaterial→ Bill of Material→ Material BOM→ Create (CS01)

b) Enter your data and select Copy as

c) enter through the warning that your are creating a alternative BOM

d) Enter Alternative 1 as your template

e) Select Select all

f) Select Copy

g) Select item 0010 and then select Item.

h) In the Basic Data tab, enter a special procurement key 50 - PhantomAssembly

i) Select Save




Task 2: Source Determination in ManufacturingYou now you have two active BOMs for the R-F2## at plant 1000. However, if wewere to execute a planning run the system would choose alternative 01 as the priorityBOM. The production manager insists that as long as capacity is available you willmake the casing R-B1## at the time of assembling the R-F2##. There fore you needto create a new production versions that will allow the alternative BOM A1, to bechosen over 01 during the planning runs.

1. Review the stock requirements list for your R-F2## at plant 1000.


2. How is the current master data being chosen?

Answer: From the stock/requirements list, you can see the production versionA001 to the right side of the chart. If you performed the continuous input/outputexercise, this was done by creating a production version and setting the selectionmethod indicator on the MRP 4 view to 2- selection by production version.

3. From the stock requirements list for R-F2## at plant 1000, create a productionversion to specify your original BOM using the data below:

Hint: If you performed the continuous output exercise , remove theDistribution key from A001 and move to the next step.

a) From the S/R list select Environment→ Change material, and proceedto the MRP 4 View

b) Select Production Version button

c) Enter version A001, with descriptionContinuous Output BOM 01, andenter today�s date and the date for end of next year, then select Continue.

d) In the Planning Data section, under Detailed Planning, select a Task listtype Routing, then using the search functionality, search for your GroupNo./Counter, by using your material R-F2## at plant 1000.

e) Enter Alternative BOM 1, and Usage 1.

f) select Continue twice and continue through any messages.




4. From the stock requirements list for R-F2## at plant 1000, create a productionversion to specify your new BOM using the data below. If you have not yet doneso, set the selection method to 2 - selection by production version.

a) From the S/R list select Environment→ Change material, and proceedto the MRP 4 View

b) Select Production Version button

c) Enter version 5000 , with descriptionPump Assembly and MachineCasing, and enter today�s date and the date for end of next year, thenselect Continue.

d) In the Planning Data section, under Detailed Planning, select a Task listtype Routing, then using the search functionality, search for your GroupNo./Counter, by using your material R-F2## at plant 1000.

e) Enter Alternative BOM A1, and Usage 1.

f) select Continue twice and continue through any messages.

g) Set the selection method in the MRP 4 view to 2 - Selection by Productionversion

h) Select Save

5. From the Stock/Requirements list for you materialR-F2## at plant 1000, executeSingle-item, Multi-Level, setting the planning mode to 3 - Delete and Recreateplanning data., and the scheduling indicator to 2 - Lead time scheduling.


b) Select Single-item, Multi-Level, setting the planning mode to 3 - Deleteand Recreate planning data., and the scheduling indicator to 2 - Leadtime scheduling, and then refresh the S/R list

6. Refresh the stock requirements list again for your R-F2## at plant 1000. Whichproduction version is being chosen and why?

Answer: From the stock/requirements list, you can see the production version5000 to the right side of the chart. This was done by creating a productionversion and setting the selection method indicator on the MRP 4 view to 2-selection by production version. In addition it selected production version 5000because numbers have �higher priority� then letters in determining the source.




7. Review the details of the planned order. What BOM was copied into the plannedorder?

a) For the first planned order select Details of Elements.


c) Select the master data tab

d) In the Bill of Material section Alt BOM A1 copied into the plannedorder. This was the alternative BOM that was assigned to productionversion 5000.



Lesson Summary

You should now be able to:� Demonstrate how to set up the system to choose the correct method of

manufacturing when several exist.


SCM240 Lesson: Quota Arrangements

Lesson:421

Quota ArrangementsLesson Duration: 30 Minutes

Lesson OverviewA quota arrangement represents an additional source assignment option in the processof automatic source determination. If a quota arrangement exists for a material, ithas the highest priority during source determination. This lesson describes how aquota arrangement can be used when you create a purchase requisition, or duringthe requirements planning run.


� Demonstrate how to split demand between multiple sources


Business ExampleNot all of your materials are single sourced. At the time of planning planners still needto determine a source of supply for some manufactured items. Currently your R-F2##is using only one bill of material and this is causing capacity issues. Your productionmanager figures if you plan a 50/50 split, he will be able to manage the productionbetter. Set up a quota arrangement to make this happen.

Determine sources with Quota ArrangementsThe quota arrangement facilitates the administration of sources of supply at plant level.If you procure a certain material from a number of different sources, you can assign aquota to each individual source. The quota indicates which share of the requirementsarising for the material over a certain period is to be procured from which source.

If a quota arrangement exists for a material, it is taken into account during sourcedetermination. A quota arrangement is valid for a specific period of time. A quotaarrangement item is created for each source during that period.



Caution: If a quota arrangement applies, this does not mean that the quantityof a single manually created replenishment is automatically apportionedamong different sources. In such case, the entire requested quantity of thereplenishment is assigned to one source - the source that is next in line toreceive the relevant order - in accordance with the quota arrangement. Thebreakdown of requirements according to the specified quotas can only takeplace if material requirements planning is used. It can only be carried out withregard to aggregate, not individual, requirements.

Figure 156: Quota Arrangement

To define a quota allocation procedure for the procurement of a material, proceed asfollows:



After having entered the material and plant numbers on the initial screen, specify, inthe header overview, the date until which the quota arrangement is valid. The startdate is always the current date or the follow-on date from the end of the previousquota arrangement. Enter a quota arrangement item for each source that you wish todefine in the arrangement, as follows:

1. Specify the procurement type for each source (in-house production or externalprocurement).

2. Where appropriate, specify the special procurement type (for example, stocktransfer).

3. Enter the vendor, supplying plant or production version.4. Specify the quota ratios on the basis of which requirements arising over the

period are to be apportioned.

The system calculates the percentage distribution of the requirements on the basis ofthe quotas and updates the quota-allocated quantity following each assignment ofrequirements effected on the basis of the quota arrangement.

In Customizing for quota arrangements, you define the number range for the quotaarrangement and specify whether the number is to be assigned internally (by thesystem) or externally (through user input).

Hint: Before you can maintain a quota arrangement item with theprocurement type external procurement, a source of supply (info recordand/or outline agreement) must exist.

Create quota arrangement:

SAP Menu→ Logistics→ Production→MRP→Master Data→ Quota Maintenance

Demonstration: Quota Arrangement

Purpose


To activate quota arrangement, you need to fulfil the following prerequisites:



1. From the S/R list, change the material master for R-F2## at plant 1000, so thequota arrangement is active for MRP. Quota Arrangement usage to 4. Save

Setting up the Quota ArrangementBefore a quota arrangement can be maintained for a material, you must specify thebusiness applications for which the quota arrangement is to be used (for example,in materials planning or in purchase requisitions). You make this specification inthe Quota Arrangement Usage field, which is to be found in the plant-specificpurchasing/materials planning data of the material master record.

Set quota arrangement usage indicator:

R/3 Customizing→ Implementation Guide→ Materials Management→ Purchasing→ Quota Arrangement→ Define Quota Arrangement Usage.

Figure 157: Quota Arrangement Usage



An entry in this field determines the areas in which the source determinationfacility finds the appropriate source on the basis of the quota arrangement. Thequota-allocated quantity of the relevant quota arrangement item is updated from theareas specified via this indicator. The following areas can be taken into consideration:

� Purchase orders

The quantity of the material ordered to date goes into the quota-allocatedquantity, provided that a source from the quota arrangement was used.

� Purchase requisitions

The source determination process is controlled via the quota arrangement andthe thus-assigned requested quantity of all purchase requisitions for this materialgoes into the quota-allocated quantity.

� Scheduling agreement

The total quantity of the scheduling agreement delivery schedule lines for thismaterial goes into the quota-allocated quantity.

� Planned orders

The total quantity of all relevant assigned planned orders for this material goesinto the quota-allocated quantity.

� Materials planning

Source determination on the basis of quota arrangements can also be used inmaterial requirements planning (MRP). Planned orders and purchase requisitionsgenerated via MRP have a source assigned on a quota basis, and the requirementgoes into the quota-allocated quantity.

� Production order

The total quantity from all production orders for this material goes into thequota-allocated quantity of a relevant quota arrangement item for in-houseproduction.

Permissible combinations of the areas listed are stipulated in Customizing andcombined to form keys for quota arrangement usage.

In the case of sources for which you have specified a quota in the current validityperiod, the system calculates which source is next in line for a certain requirement.This calculation is carried out by the system during the source determination processfor a requested material.




PurposeTo know the usage of Quota Arrangement



1. You maintain the quota arrangement usage indicator in Customizing forpurchasing:

Customizing: Material Management→ Purchasing→ Quota Arrangement→Define Quota Arrangement Usage.



Calculation the Quota Splits

Figure 158: Source Determination

The system assigns a quota rating to each of the sources. The quota rating is calculatedas follows:

Quota rating = (quota-allocated quantity + quota base quantity / quota

The individual values are as follows:

� Quota-allocated quantity

Total quantity of all requirements included in the quota-allocated quantityaccording to the quota arrangement usage indicator in the material master record.The quota-allocated quantity is updated automatically.

� Quota base quantity

Quantity used for manual control of the quota arrangement (for example, whennew sources are included).

� Quota

Number that determines how requirements are apportioned among the varioussources.



In the automatic source determination process, the source with the lowest quotarating is assigned.

The formula yields the following truism: The higher the quota, the lower the quotarating and the greater the probability that the relevant source will be determined as thevalid source.

The quota base quantity can be used on the one hand when a new source is includedin an already existing quota arrangement and on the other to remedy a disproportionbetween quota and quota-allocated quantity. You can use the quota base quantity toprevent the new source from being assigned all requirements (for example, in the formof requisitions or purchase orders) until such time as its quota-allocated quantityexceeds that of one of the existing sources. This is achieved due to the fact that thequota base quantity acts as an additional quota-allocated quantity in the calculationof the quota rating.

Use of the quota base quantity - example:

You include a new vendor in an already existing quota arrangement. The existingquota arrangement consists of two vendors, who are each assigned 50% of the materialrequirements that arise. Each of these vendors has a high quota-allocated quantitybecause your company has already ordered a lot of material from them during thevalidity period of the quota arrangement.

The new vendor is to be assigned the same share of forthcoming requirements as theother two. However, according to the formula for calculating the quota rating, allrequirements will be allocated to the new vendor until such time as his quota ratingexceeds that of one of the other two vendors.

If the purchase requisitions are to be assigned evenly, as if the new vendor had alwaysbeen a party to the quota arrangement, you must define the quota base quantity for thenew vendor appropriately, or have it determined by the system.

The system provides the following procedures for determining the quota base quantity:

� Individual calculation

Calculates the quota base quantity for the selected quota arrangement items.Select the items whose quota base quantity is to be recalculated and choose Edit→ Base Quantities→ Individual Calculation.

� Collective calculation

Calculates the quota base quantity for all quota arrangement items. Use thisprocedure if the allocation of requirements that arise for a material under a quotaarrangement is to be based on the starting situation again, in which all sourceshave the same quota rating. Choose Edit→ Base Quantities→ CollectiveCalculation.



Calculation of quota rating - example:

You create a purchase requisition for a material (100 pc) for which the sourcedetermination process in the requisition is regulated on the basis of a quotaarrangement. The following table shows the current situation with regard to the quotaarrangement at the time of source determination:

Vendor Quota Quota-allocatedquantity

Quota base quantity

A 3 780 0B 2 380 0C 1 0 260

According to the specified formula, the quota ratings for vendors A, B, and C are asfollows:

Vendor Quota ratingA (780 + 0) / 3 = 260B (380 + 0) / 2 = 190C (0 + 260) / 1 = 260

This means that the source representing vendor B is will be assigned to the requisitionitem because this vendor has the lowest quota rating.

After the requisition has been saved, the situation regarding the quota arrangementis as follows:


Quota base quantity

A 3 780 0B 2 480 0C 1 0 260

Quota Arrangement in Material Requirements PlanningIn contrast to source assignment via quota arrangement in the manual creation of areplenishment, in the planning run it is possible to split up the requirement as per thespecified quotas among the various sources in the quota arrangement.



For the quota arrangement to be taken into account during the source determinationprocess in material requirements planning, the quota arrangement usage indicatormust have previously been set to the appropriate value in the material master record.Furthermore, each source in the quota arrangement (apart from info records) musthave been entered in the source list with the appropriate MRP indicator.

Figure 159: Quotas in Manufacturing

In source determination for manufacturing, the only option planners have is to choosethe production version. BOMs and Routings can not be selected using a quotaarrangements.

Note: However, a production version can contain only a BOM or only arouting. Both are not mandatory.



Figure 160: Requirement Splitting

Whether or not a requirement is split is determined via the lot-sizing procedure thathas been assigned. The indicator for the splitting quota must have been assigned tothe lot-sizing procedure with which the material is planned (in Customizing). In thecase of the lot size ES (exact lot size calculation with splitting), for example, theSplitting indicator is set.

Example of requirement splitting in materials planning:

The starting situation is as follows: There is a requirement for 1000 pc of a certainmaterial in whose master record the lot size ES (exact lot size calculation withsplitting) has been set. Each vendor has been assigned the quota shown in thefollowing table:

Vendor Quota Quota-allocated quantityA 4 420B 3 310C 2 190D 1 100



In requirements planning, four purchase requisitions are generated, the requirementof 1000 pc being apportioned among the four sources in the proportion 4:3:2:1. Inthe case of a quota arrangement with splitting, the quota-allocated quantity and quotarating are both irrelevant. The following distribution thus applies with respect tothe quota arrangement:

Vendor Quota Quota-allocated quantityA 4 820B 3 610C 2 390D 1 200

To prevent the system from splitting up a requirement that is too small in the courseof a planning run, you can specify a minimum quantity for splitting. The minimumquantity defines the lowest quantity that a lot must have before it can be split upamong several sources during the requirements planning run.

If the lot is smaller than or equal to the minimum quantity, the usual quota arrangementlogic applies.

Example of requirement splitting with minimum splitting quantity:

During the maintenance of a quota arrangement for a material with the numberR-T100, a minimum splitting quantity of 1200 is set. Suppose there is a requirementof 1000 pc. In the course of a planning run for material R-T100, this requirement willbe converted into a single purchase requisition. Since the requirement falls belowthe minimum quantity for splitting, no splitting takes place and the vendor with thehighest quota is determined by the system as the source for the requisition.

Define lot-sizing procedure:

R/3 Customizing → Implementation Guide → Materials Management →Consumption-Based Planning→ Planning→ Lot-Size Calculation→ DefineLot-Sizing Procedure.

When maintaining a quota arrangement, you can also specify a minimum or maximumlot size for each item of the arrangement. However, the specified lot sizes are onlytaken into account in the case of requisitions and planned orders that are generatedautomatically (that is, via the MRP system). The lot size specified in the quotaarrangement item overrides the settings in the material master record.



Figure 161: Lot Sizes

� Maximum lot size per quota arrangement item

A maximum lot size is defined as the maximum PO quantity that may beassigned per order proposal to a source in the requirements planning run. If therequirement quantity exceeds the maximum lot size, another quota-allocationprocess takes place for the residual quantity. It may now happen that, due to alow quota rating, the same source is reselected and a second order proposalgenerated for it. To prevent this, you can set the 1x indicator. If this indicatoris set, a source is not taken into account for more than one lot with a quantityequal to the maximum lot size per planning run. The remaining quantity is thenallocated to the next sources.

� Minimum lot size per quota arrangement item

A minimum lot size is defined as the minimum PO quantity that may beassigned per order proposal to a source in the requirements planning run. If therequirement quantity is less than the minimum lot size, the lot is assigned to thesource with a quantity equal to the minimum lot size.

Example of maximum lot size with 1x indicator:

There is a requirement for 500 pc of a certain material. The starting situation is asshown in the following table:




Max. lot size 1x

A 3 100 250 xB 1 200

Due to the fact that the 1x indicator has been set, a planning run will result inthe generation of one requisition for 250 pc with vendor A as the source and onerequisition for 250 pc with vendor B as the source.

Without the 1x indicator, the planning run would generate two requisitions for 250pc with vendor A as the source.

In addition to a minimum and/or maximum lot size, you can also specify amaximumquantity in a quota arrangement item. The maximum quantity is taken into accountin both the manual creation of purchase requisitions and the automatic generation ofrequisitions within the framework of material requirements planning.

The maximum quantity acts as a limit value for the quota-allocated quantity for asource. A quota arrangement item is not suggested as the source if the quota-allocatedquantity is - or would become - greater than or equal to the maximum quantity.

Figure 162: Maximum Quantity

Example of maximum quantity

There is a requirement for 800 pc of material R-T100. The quota arrangement hasbeen maintained in the system according to the following table:




Max. quantity

A 1 1500 2000B 2 3800

With this starting situation, a planning run would result in the generation of onerequisition for 800 pc with vendor B as the source. Although vendor A has a lowerquota rating than vendor B, due to the already quota-allocated quantity of 1500 pc,the maximum quantity would be exceeded if the former were to be assigned to therequisition as the source.

If the maximum quantity were not 2000 but 2500 pc, the system would assign vendorA as the source.


PurposeTo know the usage of Quota Arrangement



1. Create a quota arrangement for the R-F2## at plant 1000 Logistics→ Production→ MRP→ Master Data→ Quota Maintenance

2. Set a validity date till end of next year.

3. Select your validity period and select Item Overview

4. Enter the following:

Quota Proc. Type SP key Plng Plant Prod.Version

Quota

1 E E 1000 A001 502 E E 1000 A002 50



Save

5. Execute and MRP run for R-F2## at plant 1000, using planning mode 3.

6. Review the S/R list and note the production version alternating.

7. A source list entry must exist for external procurement, including�MRP-Relevant� indicator.

8. The quota arrangement usage indicator must be set in the material master.

9. You maintain the quota arrangement usage indicator in Customizing forpurchasing:

Customizing: Material Management→ Purchasing→ Quota Arrangement→Define Quota Arrangement Usage.



435 Exercise 16: Production Versions and QuotaArrangementsExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how Quota Arrangements are used in manufacturing

Business ExampleNot all of your materials are single sourced. At the time of planning planners still needto determine a source of supply for some manufactured items. Currently your R-F2##is using only one bill of material and this is causing capacity issues. Your productionmanager figures if you plan a 50/50 split, he will be able to manage the productionbetter. Set up a quota arrangement to make this happen.



Task: Quota Arrangements in ManufacturingCurrently your R-F2## is using only one bill of material and this is causing capacityissues. Your production manager figures if you plan a 50/50 split, he will be able tomanage the production better. Set up a quota arrangement to make this happen.

1. Create a quota arrangement for the R-F2## at plant 1000 that specifies a 50/50split between your production version A001 and 5000. make it valid from nowtill the end of next year.

2. From the Stock/Requirements list, execute a Single-item, Multi-levelMRP runfor R-F2## at plant 1000, using planning mode 3.




3. Prior to refreshing the Stock/Requirements list, how can you tell replenishmentis being driven by a Quota Arrangement

4. Refresh the Stock/Requirements list, what is the result of the MRP run.

5. What is the split between the two production versions:

Production Version Allocated Qty5000A001



Solution 16: Production Versions and QuotaArrangementsTask: Quota Arrangements in ManufacturingCurrently your R-F2## is using only one bill of material and this is causing capacityissues. Your production manager figures if you plan a 50/50 split, he will be able tomanage the production better. Set up a quota arrangement to make this happen.

1. Create a quota arrangement for the R-F2## at plant 1000 that specifies a 50/50split between your production version A001 and 5000. make it valid from nowtill the end of next year.

a) Follow menu path:Radiologists→ Production→ MRP→ Master Data→Quota Maintenance

b) Enter your mateiral R-F2## and plant 1000 and press ENTER

c) Set a validity date till end of next year.

d) Select your validity period and select Item Overview

e) Enter the following:

Quota Proc.Type

SP key Plng Plant Prod.Version

Quota

1 E E 1000 A001 502 E E 1000 A002 50

f) Select Save

2. From the Stock/Requirements list, execute a Single-item, Multi-levelMRP runfor R-F2## at plant 1000, using planning mode 3.


b) Select Single-item, Multi-level MRP

3. Prior to refreshing the Stock/Requirements list, how can you tell replenishmentis being driven by a Quota Arrangement

Answer: A new icon at the top appears labeled Quota Arrangement




4. Refresh the Stock/Requirements list, what is the result of the MRP run.

Answer: Making sure to look at the production version column you can see thatplanning run seems to be �almost � alternating between production versions

5. What is the split between the two production versions:

Production Version Allocated Qty5000A001

a) From the Stock/Requirements list, Select Quota Arrangement icon

b) Enter Through the warning

c) Select the valid period of time and select Item overview

d)

Production Version Allocated Qty5000 VariesA001 Varies



Lesson Summary

You should now be able to:� Demonstrate how to split demand between multiple sources



Lesson:440

Source Determination in ProcurementLesson Duration: 30 Minutes

Lesson OverviewThis lesson shows you how the source list is used in purchasing and in materialrequirements planning. It provides an overview of how you can use the source listto influence the process of automatic source determination that takes place when apurchase requisition is created and during the requirements planning run.


� Describe how to initiate the purchasing process as a result of the planning run� Demonstrate how to split demand between multiple sources


Business ExampleNot all of your materials are made in house. You are still required to purchase yourraw materials from external suppliers. Some vendors will store material at yourlocation till its use, other suppliers act as sub-contractors. Examine how you can usethe planning run to initiate some of these scenarios your business deals with.

Source Determination in PurchasingPrior to initiating the planning run, planners can have purchasing related replenishmentcreated as a result of a short. Items that are purchased frequently will typically havepurchasing master data stored:

� Purchasing Information Records� Scheduling Agreements� Purchasing Contracts� Source lists.� Quota Arrangements


SCM240 Lesson: Source Determination in Procurement

If the requester has set the Source Determination indicator in the requisition header, thesystem searches for possible sources of supply for all the items of the requisition. If thesystem finds several valid sources for an item, the decision process can be supportedby a price simulation or by reference to data from the vendor evaluation facility.

Figure 163: Source Determination: Overview

To have the system assign a single unique source during the automatic sourcedetermination process, you can make use of a source list and/or a quota arrangement.



Figure 164: Master Data in Purchasing

In the source list, you specify which source of supply is valid for a certain period oftime. You can specify a preferred source as fixed for a certain period in the source list.In automatic source determination, the system will then suggest just this source, evenif other potential sources exist.

With the aid of a quota arrangement, you can have material requirements arisingover a certain period divided up among different sources on the basis of quotas. Quotaarrangements determine which source of supply (maybe from among several possibleones) is automatically assigned to a purchase requisition.



Functions of the Source ListYou use the source list to administer your sources of supply. The source list containsthe allowed and prohibited sources of a material in a certain plant over a certainperiod. Each source is defined by a source list record. The source list has thefollowing purposes:

� Restriction of the selection of sources during the automatic source determinationprocess

� Definition of a source as fixed, meaning that the relevant source counts aspreferred for a stipulated period during automatic source determination

(For example, the preferred vendor for material 1 is Miller Corp. in the firstquarter and Myers & Co. in the second quarter.)

� Definition of a source as blocked

(This means, for example, that no release orders can be issued against, say,contract 4712 for a certain period.)

Figure 165: Source List



Each source list record consists of the following data:

� Validity period

Period within which the settings made in the source list are valid.

� Key source data

Number of the vendor and the responsible purchasing organization (info records)or number and item of the outline agreement (scheduling agreement or contract)representing the source of supply for the material.

� Fixed source

Select the Fixed field to define a source as preferred for the purposes of automaticsource determination. Within a validity period, not more than one source shouldbe flagged as Fixed, since otherwise the automatic source determination wouldnot produce a unique result.

� Procurement plant

If the material can be procured from a plant or another point within your firm,enter the plant number in the field and leave the field for the vendor numberand/or contract number empty.

� Blocked source

Select the Blocked field to define a source of supply as blocked. The info recordor outline agreement is not suggested in the course of the source determinationprocess and no PO can be created for the source in question.

Hint: If you set the Blocked indicator and enter only one validity period,the material is excluded from external procurement; that is, it cannot beordered during this period.

� MRP

You use the MRP indicator to determine whether an automatic sourcedetermination process is carried out during the requirements planning run. Theappropriate source is then automatically assigned to a purchase requisition, orscheduling agreement delivery schedule lines can be generated directly viathe planning run.

If you wish to prevent a material from being ordered from a vendor for whom nocorresponding source has been entered in the source list, define the material as subjectto a source list requirement in the material master record.



Figure 166: Source List Requirement (Material-Related)

Hint: If an attempt is made to order a material subject to a source listrequirement from a source that is not included in the source list, the standardsystem issues an error message with the text: �Source not included in listdespite source list requirement�. This error message (no. 06 722) can bechanged to a warning message in Customizing for purchasing.

In Customizing, you can specify that all materials for a certain plant are to be subjectto a source list requirement. If a source list requirement has been defined for a plant,you must maintain the source list for every material in the plant before a materialcan be procured for the plant.



Figure 167: Source List Requirement (Plant-Related)

Hint: With the source list analysis, you can find out whether source listrecords exist for materials of a plant within a certain period. In this way,you can identify the materials for which source list records are missing for aplant with a source list requirement.

Analyze source list:

SAP Menu→ Logistics→ Materials Management→ Purchasing→ Master Data→Source List→ Follow-On Functions→ Analyze.

Define source list requirement at plant level:

R/3 Customizing→ Implementation Guide→ Materials Management→ Purchasing→ Source List→ Define Source List Requirement at Plant Level.



Creation of Source List Records

Figure 168: Create Source List Records

You can create source list records for individual sources of a material as follows:

� Manually

This method is recommended if you have to make numerous changes to, ornew entries in, a source list.

� Creation from within an outline agreement

With this procedure, you can adopt an item from an outline agreement in asource list when creating or changing the agreement. On the outline agreementoverview screen, select an item for which you wish to enter source list recordsand choose Item→ Maintain Source List. If you have not entered a plant in theoutline agreement item, you must enter the plant for each source list record.

� Creation from within an info record

With this procedure, you can enter a vendor in the source list when creating orchanging a purchasing info record. In the info record, choose Extras→ SourceList. If the info record is valid for an entire purchasing organization, you cancreate the source list for all plants of the organization in question. Choose theplant via Goto→ Plant.

� Automatically



You can have source list records generated automatically by the system. Thesource list records can be generated for several materials (collective procedure)or for a single material (individual procedure). The system thus enables you tocreate or update all the records for a certain source list very quickly. With thisprocedure, you can generate a source list record for every info record and/orevery outline agreement item for a material or several materials.

Caution: This functionality is not suitable for updating your sourcelists because source list records cannot be automatically generated justfor the new sources.

Before generating source list records, you should answer the following questions:

� For which materials or plants are source list records to be generated?� Are only outline agreement items, only info records, or both to be taken

into account?� For which period are the source list records that are to be generated to be

valid?� Do source list records already exist for the materials for which you wish to

generate source list records? If so, you must decide how the system is totreat the old records (for example, delete or leave unchanged)?.

Create source list manually:

SAP Menu→ Logistics→ Materials Management→ Purchasing→ Master Data→Source List→ Maintain/Display.

Generate source list automatically:

SAP Menu→ Logistics→ Materials Management→ Purchasing→ Master Data→ Source List→ Follow-On Functions→ Generate.



449 Exercise 17: Source Determination inProcurementExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate using a source list in the planning run� Demonstrate using a quota arrangement in purchasing

Business ExampleAll of your raw materials are procured externally. Your flat gasket R-T2## is used inthe production of the casing R-B1##. This material is procured from several venders.Examine the details of the purchasing master data. Vendor 1002 (SKF KugelmeierKGaA) is currently your primary vendor.

Four months from now your are going to split the demand between vendors 1000,1001, and 1002. Set up a quota arrangement to make sure the split is 25/60/15respectively



1. [Enter all instructions necessary for the maintenance of this exercise.]

Data Date ValueMaterial R-T2##Plant 1000Purch Org 1000Scope of list RAHM

Data Date ValueVendor 1000: 25Vendor 1001: 60



Vendor 1002: 15

Data Date ValueCreate Purch Req.: 1Delivery Schedules: 3Planning Mode: 3

Task 1: Procurement via the Planning run1. Review the scheduling agreement for flat gasket R-T2##. Use scheduling

agreement 5500000124.. What is the cost per part?

2. How many scheduling agreements are currently active for your flat gasketR-T2##?

3. Review your source list for R-T2## at plant 1000. Which vendor/schedulingagreement is the priority during planning.




4. How many vendors are in your source list?

5. Which Vendor is the preferred vendor and how do you know this?

6. Will a schedule line or purchase requisition be created for the R-T2## ?

7. From the Stock/Requirements list for R-F2## at plant 1000, execute aSingle-item, multi-levelMRP run. Be sure to set the Delivery schedule indicatorto 3 - Schedule lines and the planning mode to 3.

8. Review the Stock/Requirements list for your flat gasket R-T2## at plant 1000.




9. What Does the MRP Element data refer to?

Task 2: Purchasing Quota Arrangements in MRP (TimePermitting)Your other two vendors have provided you with competitive bids for the flat gasketR-T2##. However, you are not sure if they can handle the volumes. As test, you aregoing to split some of the demand between all three vendors still giving vendor 1001the bulk of the demand. Four months from now your are going to split the demandbetween vendors 1000, 1001, and 1002. Set up a quota arrangement to make surethe split is 25/60/15 respectively

1. Create a quota arrangement for R-T2## at plant 1000, starting four months fromnow till the end of next year, that reflects the following:

2. From the Stock/Requirements list for your flat gasket R-T2## at plant 1000,change the material master to activate your quota arrangement (MRP 2 view)

3. From the Stock/Requirements list for your flat gasket R-T2## at plant 1000,execute Single-item, Multi-levelMRP, making sure to set the following indicatorsin the planning run:

4. Refresh the stock requirements, and what is the result?

5. At the bottom of the Stock/Requirements list select Vendor. What happensas a result?

6. What is the split between the three vendors ?:Continued on next page



Production Version Allocated Qty100010011002



Solution 17: Source Determination inProcurementTask 1: Procurement via the Planning run1. Review the scheduling agreement for flat gasket R-T2##. Use scheduling

agreement 5500000124.. What is the cost per part?

a) Follow menu path:Logistics→ Materials Management→ Purchasing→Outline Agreement→ Scheduling Agreement→ Display (ME33L)

b) Net price is $0.10 per piece.

2. How many scheduling agreements are currently active for your flat gasketR-T2##?

a) Follow menu path:Logistics→ Materials Management→ Purchasing→Outline Agreement→ List Displays→ By Material (ME3M)

b) Enter the data parameters and select Execute.

c) Answer: Three scheduling agreements:

5500000123

5500000124

5500000125

3. Review your source list for R-T2## at plant 1000. Which vendor/schedulingagreement is the priority during planning.

a) Follow menu path:Logistics→ Materials Management→ Purchasing→Master Data→ Source List→ Display (ME03)

b) Enter your material R-T2## at plant 1000 and select Enter

4. How many vendors are in your source list?

Answer: Three. Vendors 1000, 10001, and 10002

5. Which Vendor is the preferred vendor and how do you know this?

Answer: Vendor 1001 is the preferred vendor, since the fixed source of supplyindicator is set.




6. Will a schedule line or purchase requisition be created for the R-T2## ?

Answer: Due to the Source list usage in MRP indicator vendor 1001 is set togenerate schedule lines if, the Delivery Schedule indicator in the planning runor MRP group will allow it.

7. From the Stock/Requirements list for R-F2## at plant 1000, execute aSingle-item, multi-levelMRP run. Be sure to set the Delivery schedule indicatorto 3 - Schedule lines and the planning mode to 3.


b) Select Single-item, multi-level and set the Delivery schedule indicator to3 - Schedule lines and the planning mode to 3 - Delete and recreateplanning data

8. Review the Stock/Requirements list for your flat gasket R-T2## at plant 1000.


b) Select Refresh

c) You should now see planned orders or purchase reqs being replaced byschedule lines.

9. What Does the MRP Element data refer to?

Answer: The MRP element data is referring to the Scheduling agreementnumber and the item number for the R-T2## on that scheduling agreement.




Task 2: Purchasing Quota Arrangements in MRP (TimePermitting)Your other two vendors have provided you with competitive bids for the flat gasketR-T2##. However, you are not sure if they can handle the volumes. As test, you aregoing to split some of the demand between all three vendors still giving vendor 1001the bulk of the demand. Four months from now your are going to split the demandbetween vendors 1000, 1001, and 1002. Set up a quota arrangement to make surethe split is 25/60/15 respectively

1. Create a quota arrangement for R-T2## at plant 1000, starting four months fromnow till the end of next year, that reflects the following:

a) Follow menu path: Logistics→ Production→ MRP→ Master Data→Quota Maintenance (MEQ1)

b) Enter mateiral R-T2## at plant 1000 and select Enter

c) In the overview screen, enter a valid to date that is End of next Month

d) Enter a second valid to date that is End on month + four months fromthe previous validity periods end date. (add three months to the previousend period)

e) Select the second validity period and then select theItem overview

f) Enter the following:

Proc. Type Vendor Quota Percent.

F 1000 25F 1001 60F 1002 15

g) Select Save.

2. From the Stock/Requirements list for your flat gasket R-T2## at plant 1000,change the material master to activate your quota arrangement (MRP 2 view)


b) Follow menu path: Environment→ Change Material

c) In the MRP 2 view set the Quota Arrangement usage to 4.

d) Select Save.Continued on next page



3. From the Stock/Requirements list for your flat gasket R-T2## at plant 1000,execute Single-item, Multi-levelMRP, making sure to set the following indicatorsin the planning run:

a) From the S/R list select Single-item, Multi-levelfrom you icon bar set theindicators as instructed

4. Refresh the stock requirements, and what is the result?

Answer: After running the MRP run you can know see schedule lines for thepriority vendor, and purchase requisitions or planned orders/ExtP for the othertwo vendors.

Note: Purchase req versus planned order was controlled by the MRPgroup/planning run setting for purchase reqs. in addition if the MRPusages was set to 2 - Scheduling agreement in the Source list, schedulingagreements would have been created for all replenishment elements.

5. At the bottom of the Stock/Requirements list select Vendor. What happensas a result?

Answer: Upon select the vendor button, two new columns appear to the rightidentifying the vendor number and the vendor name.

In addition if you drill into the details of the planned orders/purchase reqs youwill see the vendor was assigned.

Note: the quota arrangement takes priority over the source list!

6. What is the split between the three vendors ?:




Production Version Allocated Qty100010011002

a) From the Stock/Requirements list, Select Quota Arrangement icon

b) Enter Through the warning

c) Select the valid period of time and select Item overview

d)

Production Version Allocated Qty1000 Varies1001 Varies1002 Varies



Lesson Summary

You should now be able to:� Describe how to initiate the purchasing process as a result of the planning run� Demonstrate how to split demand between multiple sources


Unit Summary SCM240

Unit SummaryYou should now be able to:� Explain what happens if multiple sources of supply exist.� Demonstrate how to set up the system to choose the correct method of

manufacturing when several exist.� Demonstrate how to split demand between multiple sources� Describe how to initiate the purchasing process as a result of the planning run� Demonstrate how to split demand between multiple sources




1. What are the two general categories that define a source?

2. A material may be both In House Production and Procured Externally.Determine whether this statement is true or false.□ True□ False

3. If a material is assigned procurement type = �X� what type of planned order willbe generated by MRP (assuming no quota arrangements exist).

4. Why might multiple in-house production sources exist?

5. What criteria might planning use to determine a BOM for a material producedin-house?Choose the correct answer(s).□ A Lot Size□ B Explosion Date□ C Alternative BOM□ D Production Version□ E All of the above



6. If multiple production versions exist (A001 & A002) and there is no differencein the lot size or validity period; which will planning choose? Why?

7. What does quota rating define?

8. Quota arrangements may be used to split procurement elements between whattypes of sources?Choose the correct answer(s).□ A External vendors□ B Other Plants□ C In house Manufacturing□ D Safety Stock□ E All of the above

9. What prerequisite field in the material master must be set for planning to usequotas?

10. If a new vendor is certified, how would you prevent the new vedor from gettingdisproportionate share of the requirements?



11. Quotas always determine a source using the cumulative quantities and not splitstrictly based on percentages.Determine whether this statement is true or false.□ True□ False

12. One of two possible items must exist for planning to aotomatically a purchasedsource. What are they.



464Answers

1. What are the two general categories that define a source?

Answer: Produced In House (manufactured) or Procured Externally (purchased)

2. A material may be both In House Production and Procured Externally.

Answer: True

Procurement Type = "X"

3. If a material is assigned procurement type = �X� what type of planned order willbe generated by MRP (assuming no quota arrangements exist).

Answer: In House Production

4. Why might multiple in-house production sources exist?

Answer: There may be more than one BOM or Routing.

5. What criteria might planning use to determine a BOM for a material producedin-house?

Answer: E

All of the above are valid determining factors.

6. If multiple production versions exist (A001 & A002) and there is no differencein the lot size or validity period; which will planning choose? Why?

Answer: A001, the version number becomes the determining factor.

7. What does quota rating define?

Answer: Quota rating defines which source of material supply is next in line.



8. Quota arrangements may be used to split procurement elements between whattypes of sources?

Answer: A, B, C

All are valid EXCEPT safety stock.

9. What prerequisite field in the material master must be set for planning to usequotas?

Answer: The quota arrangement usage field must be set.

10. If a new vendor is certified, how would you prevent the new vedor from gettingdisproportionate share of the requirements?

Answer: Adjust the quota base quantities.

11. Quotas always determine a source using the cumulative quantities and not splitstrictly based on percentages.

Answer: True

Source decisions are based on the cumulative quantities. However splittingmay be permitted.

12. One of two possible items must exist for planning to aotomatically a purchasedsource. What are they.

Answer: A source list or quota arrangement must exist.


Unit Summary SCM240


Unit 9467 Life Cycle Planning

Unit OverviewThis unit will introduce you to the functionality of product replacement ordiscontinuation. You will learn of the functionality that will properly allow you phasean existing component out and introduce its replacement while considering inventory.


� Demonstrate how to phase in a product using Simple Discontinuation� Demonstrate how to phase in a product using Parallel Discontinuation� Explain how Engineering Change Management works With Discontinuation.

Unit ContentsLesson: Discontinuation in Production Planning... . . . . . . . . . . . . . . . . . . . . . . . . . . . . .560

Demonstration: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .563Demonstration: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .567Exercise 18: Discontinuation in production planning .. . . . . . . . . . . . . . . . . . . . .569


Unit 9: Life Cycle Planning SCM240

Lesson:468

Discontinuation in Production PlanningLesson Duration: 45 Minutes

Lesson OverviewIn this lesson will you will learn how to model then end of a life cycle for a certainproduct by using the Discontinued Parts Functionality in SAP ERP.


� Demonstrate how to phase in a product using Simple Discontinuation� Demonstrate how to phase in a product using Parallel Discontinuation� Explain how Engineering Change Management works With Discontinuation.


Business ExampleDue to constant improvements in technology, your engineering department is constantupgrading your pump based on new components, changes in part specification, andother design related changes. In stead of creating new finished mateiral numbers youwill continue to use the same part number but update the bill of material to reflect anychanges. Since these changes are inventory and time dependent you will explore youroptions of modeling this process in SAP ERP.

Simple DiscontinuationIn engineering/design, it may be decided that a material is to be replaced by anothermaterial on a particular date. These changes may be necessary for the followingreasons, for example:

� Other safety regulations are to apply from a particular date. A certain componentmust therefore be exchanged as it is no longer in accordance with safetyregulations

� A cost-intensive part is replaced by a more favorably priced part


SCM240 Lesson: Discontinuation in Production Planning

When a material on a BOM is being replaced by another material users will need toselect a specific data in the BOM that the change will be effective. Often times thesedates do not coincide with the level of inventory on the part be replaced or obsoleted.Through the use of the discontinued parts functionality, planners can identify a followup material and plan a start date for the run out of material. Once inventory falls tozero, the planning run will substitute the follow up material in the planned order.

Figure 169: Simple/Single Discontinuation

When the situation arises that one mateiral will be replaced by another material,planners can use the simple discontinuation functionality.

Simple discontinuation occurs when a discontinued component is replaced by afollow-up material from a particular date as soon as the available stock for planningof the discontinued component is zero. This means that when the available stockfor planning of the discontinued material reaches zero, the dependent requirementsof the discontinued material are diverted to the follow-up material. If the availablestock of the follow-up material is not adequate, the follow-up material (instead ofthe discontinued material) is procured.

Caution: The safety stock of the discontinued material is not touched byMRP. If this part is to become obsolete, the safety stock should be removed. Ifthe available stock for planning of the discontinued material becomes largerthan zero again, for example due to a repeat order, this material is used again.



Prerequisites

� Both materials are planned using MRP� The base unit of measure of the follow-up material is the same as the base unit of

measure of the discontinued material� You can define discontinuation data for the following item categories:

� Stock item� Variable-size item

Note: Discontinuation will not work in the following instances

� You can only define discontinuation data for a stock item or variable-sizeitem that is not assigned to an alternative item group.

� Discontinuation is not supported for co-products

To make this work , you have to set the discontinued parts indicator 1 - Single/Paralleldiscontinued part/material in the material master record of the discontinuedcomponent. In addition you, must enter a follow-up material. By defining aneffective-out date, you decide the date from which the stocks of the current material areto be used up. When the available balance reached zero, the dependent requirementswill created for the follow-up material.

Caution: The follow-up material can be maintained in the bill of materialas the follow-up material for information purposes. This functionality willover ride the BOM effectivity dates!

Note: Discontinued parts functions in the same way in long-term planning,master production scheduling and material requirements planning.

Caution: You cannot use a serial change of discontinuation. The system willonly allow one �planned � change.

Note: Reservations for a part to be discontinued are not redirected to thefollow-up material. In the discontinued parts procedure, the system onlyautomatically redirects the dependent requirements in materials planning. Asof Release 3.0D, existing reservations after the effective-out date are markedwith exception message 58 "Uncovered requirements after the effective-outdate" on the MRP list.



Demonstration:

PurposeDemo simple discontinuation

System DataSystem:Client:User ID:Password:Set up instructions: Focus on end item R-F1##. You will replace thecomponent R-B2## with component R-B22##.1. Display Stock/Requirements list for the R-B2## at plant 1000. You should

have a balance of 20 piece in inventory.

2. From the Stock/Requirements list, change the material R-B2## at plant 1000 sothat it will be replaced by the R-B22## immediately. Save the material.

3. In demand management create a PIR for next month for 40 pcs and split therequirement into weekly or daily buckets.

4. Execute a single-item, Multi-level planning run with planning mode 3, for theR-F1## at plant 1000.

5. Check the Stock/Requirements list for the R-B2## and the R-B22## at plant1000 did discontinuation occur?

Dependent Parallel DiscontinuationIn certain situations, when one material is being replace, other materials may beaffected by the change.

Hint: Example: marketing is changing the graphics on the front label onbottle of water. These changes will affect the back label as well. Thereforewhen you run out of inventory of one label you must replace the other.

Example: Engineering found a cheaper, but sturdier material to make yourshaft from, which allows the m to shrink the diameter of the shaft. Bychanging the diameter of the shaft you have to change the diameter in thegears the get welded to the shaft.



Figure 170: Material Group (Dependent Parallel) Discontinuation

In this situation a group of materials is being replaced by another group of materials.If a component is to be discontinued (main discontinued part) and its available stock iszero, another component (dependent discontinued part) also has to be discontinued.If, for example, a particular nut is to be discontinued, the corresponding bolt alsohas to be discontinued.



Steps for using parallel discontinuation

� Choose the material that will become the main or lead material. This may bebased on volume of inventory or the cost of inventory. (Planner decision)

� Material master record: in the �Lead material�, you must set the discontinuedpart indicator �1� in the material master record and define the effective outdate and follow up materials.

In the dependent material master, set the discontinued part indicator �3� in thematerial master record of the dependent discontinued part.

Note: No follow up materials will be considered with type 3.

� BOM: In the extras for the BOM item, you define a discontinuation group in the�Discontinuation data�. You can define the name of this character string, whichthen combines BOM items that belong together and are to be discontinued.The main and the dependent discontinued parts are identified using the samediscontinuation group.

� Add the new items to the BOM� You also set the follow-up item indicator for the follow-up component or

components. The follow-up group combines all follow-up items of a BOMthat belong together. This group determines which discontinued parts are to bereplaced by the follow-up items. The character string of the follow-up groupmust be identical to that of the discontinuation group.

Caution: You cannot use a serial change of discontinuation groups. Thesystem will only allow one �planned � change.

Note: Planned independent requirements and forecast requirementsare not redirected. Explanation: Planned independent requirements afterthe effective-out date are not redirected but are provided with an exceptionmessage in the MRP list stating that they cannot be included in the availabilitycheck. Planned independent requirements and forecast requirements aretherefore displayed in the MRP list and in the stock/requirements list.However, they do not influence planning.

As of Release 3. 0F, the system also sets the exception message 58.



As of Release 3,0D, sales orders and other definite requirements after theeffective-out date are provided with the exception message 58.

Note: No redirection of material staging requirements for subcontractingMaterial staging requirements are not redirected to the follow-up material.Requirements after the effective-out date that are not covered are marked withexception message 58 "Uncovered requirements outside the effective-out date"in the MRP list. The requirements are not covered by new order proposals.

Note: The distribution key is ignored for parts to be discontinued.Reason: The distribution key cannot be taken into consideration by parts tobe discontinued. Up to and including Release 3.0F, this situation has ledto errors. As of Release 3.1G, the distribution key is ignored by parts tobe discontinued (see Note 73467).

Note: Safety stock not consumed after the effective-out date The systemassumes that even after the effective-out date, it should keep the safety stock(for unplanned consumption by replacement parts requirements, for example).Therefore, the dependent requirements are switched to the follow-up materialeven if safety stock is still available. If the stock level falls below the safetystock level, the system also creates an order proposal after the effective-outdate. If you want the system to consume the safety stock, we recommendthat you set the safety stock in the material master record to zero for theeffective-out date.

Note: Receipts (purchase orders, production orders, QM lots, etc.) afterthe effective-out date are not taken into account for discontinued parts.Firm receipts after the effective-out date include the exception message,"Cancel process".

Note: Different single or collective indicators for parts to be discontinuedand follow-up material If individual requirements (" or "1") is set for partsto be discontinued, dependent requirements in single segment planning aredisplayed. If the total requirements ("2") is set for the follow-up material, thedependent requirements are displayed in individual sections as technicallyonly one transfer of dependent requirements from the parts to be discontinuedto the follow-up material can be carried out at any one time. With simplediscontinuation a main feature is the interchangeability of both components.As a result there are no significant differences.



In this instance, the problem can be solved by using parallel discontinuation,that is inclusion of follow-up components in the bill of material, entry ofdiscontinued group for the discontinued components and follow-up groups forthe follow-up components. Additional key words

Note: Creation of a planned order: During the creation of a planned order,the BOM explosion always makes sure that all requirements end up on thediscontinued materials. This is regardless of whether you are working withsimple or parallel discontinuation. For simple discontinuation, only thediscontinued material is displayed in the component list of the planned orderwith the full requirement quantity. At this point, the follow-up materialis not yet an item under the components of the planned order. For paralleldiscontinuation, all discontinuation and follow-up materials are copied fromthe BOM as planned order components. The main and parallel parts to bediscontinued have the full requirement quantity. The requirement quantities ofthe follow-up materials are 0.

Note: See SAP note: 51374 Discontinued part in the planned order(explanatory note): For issues relating to :

� Changing a planned order, with active discontinuation� Planned order backflush in the repetitive manufacturing� Response to master data changes

Demonstration:

PurposeDemo Dependent Parallel discontinuation

System DataSystem:Client:User ID:Password:Set up instructions: Focus on end item R-F1##. You will replace thecomponent R-B3## with component R-B33##.1. Display Stock/Requirements list for the R-B3## at plant 1000. You should have

a balance of 50 pieces in inventory. Set the discontinuation indicator in thematerial master record for R-B3##.



2. Change the BOM for R-F1## at plant 1000.

3. Set the discontinuation group for R-B2## and R-B3## to 01

4. Add R-B22## and R-B33## to the BOM

5. Set the follow-up group for R-B22## and R-B33## to 01.

6. Execute a single-item, Multi-level planning run with planning mode 3, for theR-F1## at plant 1000.





473 Exercise 18: Discontinuation in productionplanningExercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate simple discontinuation� Demonstrate parallel discontinuation

Business ExampleEngineering has made a specification change to the R-B2## fly wheel that is used inthe production of the R-F1## pump. Engineering wants the change to take place assoon as possible with the R-B22##. However, the fly wheel is an expensive part, soyou would like to change the part over when the inventory of the R-B2## has beenexhausted. Review you inventory for R-B2## at plant 1000 and initiate a parts changeas soon as inventory has been exhausted.

In addition to changing the fly wheel, engineering has decided that the shaft, R-B3##,will need to be changed out as well. Since the fly wheel, R-B2##, is the moreexpensive component, set the system up so that the shaft R-B3##, will be changed outsimultaneously with the fly wheel R-B2##.



1. Requires CATT Z_SCM240 to be run



Task 1: Simple DiscontinuationEngineering has made a specification change in the R-B2## fly wheel that is used inthe production of the R-F1## pump. Engineering wants the change to take place assoon as possible with the R-B22##. However, the fly wheel is an expensive part, soyou would like to change the part over when the inventory of the R-B2## has beenexhausted. Review the inventory of R-B2## at plant 1000 and initiate a part change assoon as inventory has been exhausted.

1. Use the Stock/Requirments list to review the inventory situation for R-B2## atplant 1000.

2. How much inventory do you currently have for the R-B2## at plant 1000?

3. From the Stock/Requirments list, change the material R-B2## at plant 1000 sothat it will be replaced by the R-B22## immediately. Save the material.

4. Execute a single-item, Multi-level planning run with planning mode 3 - Deleteand recreate planning data, for the R-F1## at plant 1000.




5. Review view the S/R list for R-B2## at plant 1000. On what date do thedependent requirements end?

6. On what date do the dependent requirements begin for R-B22## as it relates tothe R-F1## demand?

Task 2: Parallel DiscontinuationEngineering has just realized that by changing the fly wheel, R-B2##, you will need tochange out the hollow shaft, R-B3##. R-B3## will be replaced by R-B33##. Sincethe fly wheel is the more expensive part, make it the primary for the discontinuation.However, it is important that they be changed out at exactly the same time or therewill be problems in production.


2. What is the current on hand inventory for R-B3##?

3. From the Stock/Requirments list, change the material R-B3## at plant 1000 sothat it will be replaced by the R-B33## when the inventory runs out on theR-B2##. Save the material.

4. In another session, change the bill of material for the R-F1## at plant 1000.Adjust the BOM by adding the two new components, R-B22## and R-B33##(use same item info as other parts). Use the discontinuation functionality in theBOM, to phase out R-B2## and R-B3## by the new components you added tothe BOM. Use discontinuation/follow groups 01. Save the BOM changes

5. Execute a single-item, Multi-level planning run with planning mode 3 - Deleteand recreate planning data, for the R-F1## at plant 1000. Make sure to selectalso plan unchanged components indicator !




6. Review view the S/R list for R-B2## at plant 1000. On which date do thedependent requirements end?

7. On which date do the dependent requirements begin for R-B22## as it relates tothe R-F1## demand?





Solution 18: Discontinuation in productionplanningTask 1: Simple DiscontinuationEngineering has made a specification change in the R-B2## fly wheel that is used inthe production of the R-F1## pump. Engineering wants the change to take place assoon as possible with the R-B22##. However, the fly wheel is an expensive part, soyou would like to change the part over when the inventory of the R-B2## has beenexhausted. Review the inventory of R-B2## at plant 1000 and initiate a part change assoon as inventory has been exhausted.


a) Follow menu path: Logistics→ Production→ MRP→ Evaluations→Stock/Requirments list (MD04)

2. How much inventory do you currently have for the R-B2## at plant 1000?

Answer: 20 pieces

3. From the Stock/Requirments list, change the material R-B2## at plant 1000 sothat it will be replaced by the R-B22## immediately. Save the material.

a) Menu Path: Environment→ Change material, select the MRP 4 view

b) Enter the following values:

Field ValueDiscontinued Indicator 1 - Simple/Parallel

discontinuedpart/material

Eff. out Leave Blank

Follow up Material R-B22##

c) Select Save.




4. Execute a single-item, Multi-level planning run with planning mode 3 - Deleteand recreate planning data, for the R-F1## at plant 1000.


b) Once in the S/R list select, Single-item, Multi-level MRP

c) Return to the S/R list and select Refresh (update)

5. Review view the S/R list for R-B2## at plant 1000. On what date do thedependent requirements end?

Answer: Varies, but it is the date that the available balance goes to zero.

6. On what date do the dependent requirements begin for R-B22## as it relates tothe R-F1## demand?

Answer: Varies, but it is the day after the inventory balance hit zero for theR-B2##.

Task 2: Parallel DiscontinuationEngineering has just realized that by changing the fly wheel, R-B2##, you will need tochange out the hollow shaft, R-B3##. R-B3## will be replaced by R-B33##. Sincethe fly wheel is the more expensive part, make it the primary for the discontinuation.However, it is important that they be changed out at exactly the same time or therewill be problems in production.



2. What is the current on hand inventory for R-B3##?

a) 50 pcs




3. From the Stock/Requirments list, change the material R-B3## at plant 1000 sothat it will be replaced by the R-B33## when the inventory runs out on theR-B2##. Save the material.

a) Menu Path: Environment→ Change material, select the MRP 4 view

b) Enter the following values:

Field ValueDiscontinued Indicator 3 - Dependent

Parallel discontinuedpart/material

Eff. out Leave Blank

Follow up Material Leave Blank

c) Select Save.




4. In another session, change the bill of material for the R-F1## at plant 1000.Adjust the BOM by adding the two new components, R-B22## and R-B33##(use same item info as other parts). Use the discontinuation functionality in theBOM, to phase out R-B2## and R-B3## by the new components you added tothe BOM. Use discontinuation/follow groups 01. Save the BOM changes

a) Follow Menu Path: Logistics→ Production→ Master Data→ Bills ofMaterial→ Bill of Material→ Material BOM→ Change (CS02)

b) Enter R-F1## at plant 1000, BOM usage 1.

c) Select the rows for R-B2## and R-B3## and select Item

d) In the Basic Data view, select the Discontin. data button

e) Enter in the Discontin. group 01, and select back

f) Select Next item

g) In the Basic Data view, select the Discontin. data button

h) Enter in the Discontin. group 01, and select back

i) Select Back to return to the item overview screen

j) From the item overview screen, add the following

Item No. Item Cat. Component Qty Uom0060 L - Stock R-B22## 1 pc0070 L- Stock R-B33## 1 pc

k) Now select the rows for R-B22## and R-B33## and select Item

l) In the Basic Data view, select the Discontin. data button

m) Enter in the Follow-up group 01, and select back

n) Select Next item

o) In the Basic Data view, select the Discontin. data button

p) Enter in the Follow-up group 01, and select back

q) Select Save.




5. Execute a single-item, Multi-level planning run with planning mode 3 - Deleteand recreate planning data, for the R-F1## at plant 1000. Make sure to selectalso plan unchanged components indicator !


b) Once in the S/R list select, Single-item, Multi-level MRP

c) Return to the S/R list and select Refresh (update)


Answer: Varies, but it is the date that the available balance goes to zero.


Answer: Varies, but it is the day after the inventory balance hit zero for theR-B2##.


Answer: Varies, but it is the date that R-B2##, even though there is inventory left


Answer: Varies, but it is the day after the inventory balance hit zero for theR-B2## and the R-B3##.



Lesson Summary

You should now be able to:� Demonstrate how to phase in a product using Simple Discontinuation� Demonstrate how to phase in a product using Parallel Discontinuation� Explain how Engineering Change Management works With Discontinuation.

Related InformationRelated OSS notes:

� 510291 MD02 in the simulation mode: Discontinued part� 132623 Discontinuation after consumption:missng rqmts divrsion� 121360 MRP: Discontinued parts vs. alternative item� 77408 Discontinued parts and safety stock� 73467 Discontinued parts with distribution key� 71482 Discontinued parts and make-to-order production� 68341 Discontinued parts and SLoc planned separately


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Demonstrate how to phase in a product using Simple Discontinuation� Demonstrate how to phase in a product using Parallel Discontinuation� Explain how Engineering Change Management works With Discontinuation.




1. Discontinuation replaces materials when the demands are from sales orders.Determine whether this statement is true or false.□ True□ False

2. In dependent/parallel discontinuation all materials are replaced when theirinventory levels reah zero.Determine whether this statement is true or false.□ True□ False

3. What are two types of discontinuation?Choose the correct answer(s).□ A Aggregate□ B Parallel□ C Partial□ D Simple□ E Disaggregate

4. Would you use discontinuation functionality if you were discontinuing the use ofa material but not replacing it with another material?

5. What must be set in the material master of a material to be discontinued throughsimple discontinuation ?



486Answers

1. Discontinuation replaces materials when the demands are from sales orders.

Answer: False

Demand from sales orders will not automatically be repositioned. Exceptionmessages may be generated.

2. In dependent/parallel discontinuation all materials are replaced when theirinventory levels reah zero.

Answer: False

When the inventory of the "lead" material reaches zero, all materials will bereplaced. Although some may still have inventory, everything in the group mustbe replaced at the same time.

3. What are two types of discontinuation?

Answer: B, D

Simple and parallel discontinuation are available

4. Would you use discontinuation functionality if you were discontinuing the use ofa material but not replacing it with another material?

Answer: No. Discontinuation would not be appropriate.

5. What must be set in the material master of a material to be discontinued throughsimple discontinuation ?

Answer: The discontinued parts indicator must be set to �1�You must enter a follow-up material.define an effective out date.


Unit 10487 Effects of Inventory in the Planning Run

Unit OverviewIn this unit, you will be introduced on how inventory can affect the planning run.Based on how your organization handles a quality inspection process in SAP ERPmay dramatically affect the outcome of the planning run.


� Explain the concept of stock types in SAP ERP� Explain how in transit stock types are used in production planning� Explain how configuration of stock types can influence the planning run.� Demonstrate modeling Quality inspection stock and its affect on MRP� Demonstrate modeling the use of QM lots and its affect on production.

Unit ContentsLesson: Stock Types in Production Planning ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .584

Demonstration: Quality Inspection Stock.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .587Demonstration: In-Transit Stock in the Planning Run ... . . . . . . . . . . . . . . . . . .589Demonstration: Blocked Stock in the Planning Run ... . . . . . . . . . . . . . . . . . . . .592

Lesson: Modeling Quality Inspection in Production planning .. . . . . . . . . . . . . . . .595Demonstration: Usage Decision .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .600Exercise 19: QM lots in Production Planning .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .601


Unit 10: Effects of Inventory in the Planning Run SCM240

Lesson:488

Stock Types in Production PlanningLesson Duration: 30 Minutes

Lesson OverviewThis lesson covers the goods receipt of ordered goods into the warehouse and theeffects that this goods receipt has on Inventory Management and Production Panning .


� Explain the concept of stock types in SAP ERP� Explain how in transit stock types are used in production planning� Explain how configuration of stock types can influence the planning run.


Business ExampleDuring the manufacturing or procurement of materials, when received into inventorya product may go through various stages. Stages such as quality inspection, hold,restricted , scrapped or available for use. Examine you can use the SAP ERP systemto visualize the different scenarios respective to production planning.

Overview of Stock types in SAP ERPOnce material has been received into inventory, planners still need to consider itsimpact on planning for any down stream process. One has to consider how the receiptof a raw material or sub assembly will impact production, or how the receipt of afinished good in production will affect the delivery process for a sales order or stocktransfer.

After material request was generated via the planning run, the replenishment is postedin to inventory by performing a goods receipt. Some of the delivered goods are postedto the quality inspection stock. The checked quantity is later released with a transferposting to the unrestricted-use stock.


SCM240 Lesson: Stock Types in Production Planning

Figure 171: Goods Receipt Sources

Goods receipts can happen through man different means. No matter what the methodof receipt, one must always consider how it will affect the next business event.

Often times stocks can consist of different �statuses�. This will tell a company that aparticular block of inventory can be used anywhere, quality is suspect, material is onhold for further disposition. Instead of using different material numbers or creatingdifferent stock locations, companies can take advantage of stock types in SAP ERP.



Figure 172: Valuated Goods Receipts

For goods receipts, you decide which stock type a quantity is posted to. The stocktype is relevant for determining the stock available in Materials Planning and is usedfor withdrawals in Inventory Management. You can post a goods receipt for thewarehouse into three stock types:

� Unrestricted-use stock (no usage restrictions)� Quality inspection stock (available from an MRP perspective, but no withdrawals

are possible for consumption)� Blocked stock (not usually available from an MRP perspective and no

withdrawals are possible for consumption)

Caution: Do not confuse the valuated stock type blocked stockwith thenon-valuated goods receipt blocked stock (otherwise known as GR blockedstock).

In the purchase order and material master, you can plan whether the material is to beposted to the quality inspection stock. When the goods are received, you decide thestock type to which the material is posted.

You always use movement type 101 to post goods receipts for a purchase order tovaluated stock. You can enter a stock indicator, such as the movement type, at itemlevel for the goods receipt, enabling you to differentiate between different stock types.



You can post withdrawals for consumption only from unrestricted-use stock. Fromquality inspection stock and blocked stock, you can withdraw only one sample, scrapa quantity, or post an inventory difference.

Figure 173: Transfer Postings

If you want to withdraw goods from blocked stock or quality inspection stock forconsumption, you first have to carry out a transfer posting to unrestricted-use stock.You use the movement type to control the stock types involved in the transfer.

When you carry out a transfer posting, the stock type, batch number, or materialnumber is changed. A transfer posting can also involve an actual physical stocktransfer.

As for all goods movements, the system also creates a material document duringtransfer postings to show the transaction in the system. The system generatesaccounting documents only if a change in valuation is involved (for example, stocktransfer from plant to plant).

Demonstration: Quality Inspection Stock

Purpose



System DataSystem:Client:User ID:Password:Set up instructions:1. Goto the material R-F1## in plant 1000.

2. Identify this is a Finished good that requires mfg. Go to the Work Schedulingview and point out the Inspection Stock indicator.

3. Select the Inspection stock indicator and save.

Cross-Plant Stock in PlanningTransfer In the case of a plant-to-plant stock transfer, the plants between whichmaterial is transferred can belong either to the same company code or to differentones. As a general rule, cross-plant stock transfers can only be booked out ofunrestricted-use stock.

Figure 174: Stock Transfer Plant to Plant



In the case of the one-step procedure, the goods issue and goods receipt are posted ina single material document. You must therefore enter all relevant data, such as thematerial, issuing plant, issuing storage location, receiving plant, and receiving storagelocation in this one step. The movement type (in the standard system) is 301.

In the case of the two-step procedure, when removing the material from storage(movement type 303), you must specify the receiving plant in addition to the materialand the issuing organizational levels. This is necessary because valuation of the stocktransfer takes place when the material is removed from storage and posted to stockin transfer at the receiving plant. You can either enter the put away (placement instorage, movement type 305) with reference to the material document of the stockremoval or enter all data manually. As a result of the put away, the quantity is bookedout of stock in transfer and into unrestricted-use stock at the receiving plant. Valuationof the put away is not necessary, since the stock in transfer and the unrestricted-usestock at the receiving storage location belong to the same plant.

In the case of Stock Transport Order Without Delivery, his type of stock transferinvolves not only Inventory Management but also purchasing at the receiving plant.The process begins in the receiving plant with the entry of a stock transport order inthe purchasing department. A goods issue referencing this stock transport order is thenentered in the issuing plant. The quantity booked out is initially managed as stock intransit at the receiving plant. The process is ended by the posting of the goods receiptagainst the stock transport order at the receiving plant.

The stock in transit is shown in the material master record in the plant stock viewfor the receiving plant.

A special report for the analysis of transit stocks is available in the InventoryManagement menu under Environment→ Stock→ Stock in Transit (MB5T).With thisreport, you can select transit stocks for the receiving or issuing plant, for example.

Stock in transit is also displayed in the Stock Overview (MMBE) and the WarehouseStocks of Material report. In the Warehouse Stocks of Material report, stocks in transitand stocks in transfer are summarized at plant level in a stock line without a storagelocation.

Demonstration: In-Transit Stock in the Planning Run

PurposeDemonstrate how in transit stock is used in the calculation of MRP.

System DataSystem:



Client:User ID:Password:Set up instructions:1. Using Tcode MB1C, receive into inventory 30 pcs of the R-F1## in plant 1000

storage location 0001. Use Movement type 501 - receive into unrestricted stock



4. Using Tcode MB1B, Transfer 20 pcs of inventory of the R-F1## in plant 1000to the receiving plant 2400. Use Movement type 303 - Transfer Posting Plantto Plant remove from storage

5. Access the S/R list for R-F1## plant 2400. Review the on-hand inventory noticethe increase and review the details of it by double clicking on the Stock MRPelement.

6. Point out that it is currently being used to calculate your on-hand inventory.

7. Production → Material Requirements Planning → Planning → MRPCalculation → Stocks → Define Availability Stock in Transfer/BlockedStock/Unrestricted Stock

8. Remove the Stock in Transfer indicator for plant 2400, and save.

9. Exit and re-enter the S/R list for R-F1## at plant 2400. and notice the change tothe On-hand balance.

10. Review the on-hand inventory and review the details of it by double clicking onthe StockMRP element. Note the 20 pcs are still in transfer.

11. Using your icon access the stock overview report.

12. Using Tcode MB1B, Transfer 20 pcs of inventory of the R-F1## in plant 2400.Use Movement type 305 - Transfer Posting Plant to Plant receive into storage

13. Refresh S/R list for R-F1## at plant 2400. and notice the change to the On-handbalance is now 20 pcs due to the receipt.

14. Review the on-hand inventory and review the details of it by double clicking onthe StockMRP element. Note the 20 pcs are still in inventory



Stock Types in MRPDuring the net requirements calculation process, on-hand stock is one of the inputvalues. This is determining the starting point of the net requirements calculation

Figure 175: MRP Relevant Stock

The stock available for planning combines the following stock from all the storagelocations that belong to this plant or MRP area and are not excluded from MRP orplanned separately: Stock that is usable without restrictions, quality inspectionstock, consignment store stock that is usable without restriction, and consignmentstore stock in quality inspection. These will be included in the planning runcalculation.

In the Customizing a company can decide wether certain stock types are relevant forplanning. In the IMG,Production→MRP→ Planning→MRP Calculation→ Stocks→ Define Availability Stock in Transfer/Blocked Stock/Unrestricted Stock, you candefine for each plant whether or not the stock in transfer from plant-to-plant stocktransfers is included in the plant stock, whether the blocked stock or restricted stockfor batches is included in plant stock.

If the quantity available for planning is less than zero, a material shortage exists.MRP reacts to material shortages by creating new procurement proposals, that is, bycreating purchase requisitions or planned orders, independent of the procurement type.The suggested procurement quantity results from the lot-sizing procedure that is setin the material master.



Demonstration: Blocked Stock in the Planning Run

PurposeDemonstrate how blocked stock is used in the calculation of MRP.

System DataSystem:Client:User ID:Password:Set up instructions:1. Using Tcode MB1C, receive into inventory 2 pcs of the R-F1##. Use Movement

type 505 - receive into blocked stock


3. Point out that it is currently being used to calculate your on-hand inventory.

4. Production → Material Requirements Planning → Planning → MRPCalculation → Stocks → Define Availability Stock in Transfer/BlockedStock/Unrestricted Stock

5. Remove the Block Stock indicator for plant 1000, and save.

6. Exit and re-enter the S/R list for R-F1## at plant 1000. Notice the change tothe On-hand balance.

7. Review the on-hand inventory and review the details of it by double clicking onthe StockMRP element. Note the 2 pcs are still in blocked stock inventory.

8. Using your icon access the stock overview report.



Lesson Summary

You should now be able to:� Explain the concept of stock types in SAP ERP� Explain how in transit stock types are used in production planning� Explain how configuration of stock types can influence the planning run.


SCM240 Lesson: Modeling Quality Inspection in Production planning

Lesson:496

Modeling Quality Inspection in Production planningLesson Duration: 30 Minutes

Lesson OverviewYour company wants to use a process for quality assurance in both production andprocurement. How your company models the quality assurance can directly affect theaccuracy of production planning and execution. In this lesson you will learn several�general� concepts on modeling the quality assurance process.


� Demonstrate modeling Quality inspection stock and its affect on MRP� Demonstrate modeling the use of QM lots and its affect on production.

This is lesson is not to discuss QM in detail, but how QM can help companiesmodel the exact process of Quality assurance as it relates to planning and executingreplenishment. If customers wish to know more details direct them to the followingclasses:

� PLM 400 - Quality Mgmt (5 days)� PLM415 - QM in Procurement (3 days)� PLM420 - QM in Discrete Mfg (2 days)� PLM421 - QM in the Process Industry (3 days)

Business ExampleDuring the receipt of manufactured or procured materials into inventory, a productmay go through various stages. Stages such as quality inspection, hold, restricted ,scrapped or available for use. Examine you can use the SAP ERP system to visuallythis process and show it�s affect on the inventory and planning situation.

Overview of QM in LogisticsQM processes can be triggered by different events. Standard processes (for example,inspections during production, goods receipt inspections) are planned in advance andare triggered regularly.



Event-controlled processes occur spontaneously ( such as defects in production,damaged goods at goods receipt ) ; the problems that occur can be recorded andprocessed in a quality notification. In addition, you can monitor critical valuesusing the information system and if necessary, trigger tasks via the Workflow. Thedata collected in planned and event-controlled processes (such as, the number ofcomplaints) is evaluated in the information system.

Figure 176: Planned Processes

An inspection can be triggered at different stages in the logistics supply chain. Thisleads to the creation of an inspection lot. Triggers can include:

� Goods movements (goods receipt, stock transfer, goods issue)� Orders (production orders, maintenance orders, delivery)� Deadline monitoring (batch monitoring)� Source inspections

The inspection lot forms the basis for inspection processing. It contains all the datafor the inspection (such as material, order, inspection specifications, inspection lotsize, quantity to be inspected or if required QM order).

You record inspection results for this inspection lot. The usage decision specifieswhether the goods are accepted or rejected, based on the results of the inspection.

Caution: When receiving production into quality inspection stock without aQM lot, planners have no idea when the inventory will actually be available.For net requirements calculation purposes quality inspection stock is available



immediately for planning. The only way to over come this short fall is to usethe Available to Promise (ATP) functionality. Within ATP companies candecided if they would like to consider quality inspection stock for use ina particular business event.

Quality Management in ProcurementQM is integrated in different stages of the procurement chain (when procuringrequired materials).

You define automatic decision-making criteria to ensure that your company receiveshigh-quality goods (for example, vendor evaluation, goods receipt inspection). If, forexample, vendors� goods are blocked as a result of poor quality, the system does notpropose these vendors and marks them as blocked. In addition, the inspection scopecan be controlled using dynamic modification, based on the quality of the deliveredgoods.

The quality information record procurement contains data relating to the vendorrelease, certificate control, certification and quality assurance agreements.

You can use a vendor/manufacturer release to ensure that a vendor only delivers goodsfrom a specific manufacturer.

You define a certificate requirement for a material, by using an indicator in thematerial master.

QM at goods receipt controls, for example, whether:

� The goods are posted to inspection stock� Inspection lots are created at goods receipt� The delivery or invoice is to be blocked as a result of a complaint (such as

a missing certificate)



Figure 177: Processing Inspections at Goods Receipt

When goods are received, an inspection lot ( inspection type 01 or 05 ) is created forthe goods based on the available information (such as quality info record procurement,inspection specifications, current quality level, and so on).

If QM in procurement is active for a material, the system checks whether the QMsystem entered for the vendor in the vendor master record or quality informationrecord procurement is certified and whether this system complies with the QM systemrequirements that are defined in the material master. If this is the case, no inspectionlot is created and the goods are posted directly to the warehouse (skip for certifiedvendor).

The goods are posted to inspection stock and are released for use or blocked,depending on the inspection results and the usage decision. The transfer posting of thestock occurs automatically when the usage decision is saved.

Quality Management in ManufacturingIn production, the QM component provides you with important information aboutthe current quality of the manufactured goods (statistical process control) and ifnecessary, you can intervene with quality notifications (Workflow link) to implementcorrective actions.



QM inspection planning is integrated in the production planning functions. Inspectionoperations are included in the routing (production planning in discrete manufacturing)or in the master recipe (production planning in the process industry). Inspectionsduring production are controlled using the inspection operations that are contained inthe routing or the master recipe.

When an order is completed, corresponding goods movements are triggered.

Figure 178: QM at Goods Receipt of Production

� Goods receipt from production into the warehouse. When the goods are receivedat the warehouse, they become stock-relevant and are posted to inspectionstock. Once the quality inspection has been completed and the goods have beenaccepted with the usage decision, they can be posted to unrestricted-use stock.

� Delivery

When a production or process order is released, an early goods receipt inspectionlot (inspection lot origin 04) can be generated. This inspection lot is createdindependently of whether an inspection lot with origin 03 exists for the relevant order.

The immediate inspection lot at goods receipt represents a new combination forinspection lots: One inspection lot is created for each combination of order, batchand storage location.

Once the goods have been received, the inspection lot becomes stock-relevant andcan be used to manage stock. When defining the inspection type in the materialmaster, planners can include an Average Inspection Duration. This will be used toplan the actual delivery into �un-restricted � stock which can then be used in downstream process.

Note: This situation is very important to sub-assemblies and finishedgoods. When ATP is preformed your company can choose to include qualityinspection stock during the ATP check. Inspection stock can be allowedduring the ATP check, however is not available during the actual goods issue.



Often times companies will include the quality inspection time into the Goods Receipt(GR) processing time in the material master or include it in the floats before andafter production (scheduling margin key). Again these values of are no value todown stream processes, since once the receipt has been completed, it is available forplanning or use if not using quality inspection stock.

Demonstration: Usage Decision

PurposeDemonstrate how usage decisions can affect QM lots

System DataSystem:Client:User ID:Password:Set up instructions:1. Perform either the procurement exercise or the production exercise

2. Make the usage decision for your inspection lot. Use the selected sets availablein the system for usage decisions, and choose UD code A2. For the amount thatis being inspected, transfer the inventory to various stock types/accounts:

3. Logistics→ Quality Management→ Quality Inspection→ Inspection Lot→Usage Decision→ Record (QA11)

4. Enter the inspection lot number on the initial screen

5. Since this is an inspection lot without planned inspection characteristics, thescreen Record Usage Decision: Defect Overview appears. Make the usagedecision with UD code A2. Select this UD code using the field-related inputhelp. Drill down under 01 - Goods receipt , and select A2 Accept, Stock inBackground.

6. Select the Inspection lot tab and enter the total amount but divide it amoungst thedifferent categories. Note the quantities on the board. Save the results.

7. Review the S/R list and note the inspection lot is gone. Review the stockstatistics if you put any inventory in Blocked stock.

8. if necessary Logistics→ Quality Management→ Quality Inspection→Inspection Lot→ Processing→ Display (QA03)



503 Exercise 19: QM lots in Production PlanningExercise Duration: Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate how quality inspection stock is used in the planning run� Demonstrate how QM lots in procurement can impact the planning run� Demonstrate how QM lots in production can impact the planning run

Business ExampleYour company has decided to model in the SAP ERP quality assurance process thatyour manufactured and procured items go through. However, as a planner you needto see the impact of various methods of modeling quality assurance to ensure thatplanning will not be impacted negatively pending the outcome of certain methods.



1.

Data Date ValueInsp w/ mat spec DeselectInsp. w/ task list DeselectAutomatic Assgn. DeselectCheck Chars Deselect

Data Date ValueInsp w/ mat spec DeselectInsp. w/ task list DeselectAutomatic Assgn. DeselectCheck Chars Deselect



Task 1: Quality Inspection Stock in PlanningSince your quality management process is currently handled in a separate LaboratoryInformation System, you want to explore limited functionality in SAP ERP. In doingso, you want to separate the inventory that will be processed, for days at a time, by thelab. Set up your material R-F1## so that any replenishment receipt will be processedas quality inspection stock. Investigate what affect this will have on the planning run.

1. From the Stock/Requirements list, change the material R-F1## at plant 1000 sothat all receipts will go into quality inspection stock. Save the material.

2. From the Stock/Requirements list for R-F1## at plant 1000, convert the firstplanned order to a production order and release. Refresh the S/R list and notethe production order number.

3. Perform a final confirmation, at the order level for the production of R-F1##.

4. Use the Stock/Requirements list to review the inventory situation for R-F1## atplant 1000.

.

5. What is the current inventory situation?

6. What stock type is represented by on-hand inventory ?

Task 2: QM Lots in Procurement (Time Permitting )Since your quality management process is currently handled in a separate LaboratoryInformation System, you want to explore limited functionality in SAP ERP. In doingso, you want to separate the inventory that will be processed for no longer thanthree days at a time by the lab. Set up your procured material R-T2## so that anyreplenishment receipt will be processed as a QM lot. Investigate what affect thiswill have on the planning run.

1. Use the Stock/Requirements list to review the inventory situation for R-T2## atplant 1000.




2. What is the current inventory situation ?

3. From the Stock/Requirements list, change the material master for R-T2## atplant 1000. In the Quality Management view, create an inspection type 05 -Inspection for other Goods receipts. Make sure you set an average inspectionduration of 3 days.

4. In another session, enter an Other Goods receipt for 500 pcs of R-T2## at plant1000, storage location 0001. Use movement type 501.




5. Return to the Stock/Requirements list (refresh will not work), for R-T2## atplant 1000. Do you see an increase in inventory?

6. Check the stock statistics, does it show the 500 pcs in quality inspection stock?

7. Why doesn�t the inventory show up?

Task 3: QM Lots in Production ( Time Permitting )Since your quality management process is currently handled in a separate LaboratoryInformation System, you want to explore limited functionality in SAP ERP. In doingso, you want to separate the inventory that will be processed for no longer than 5days at a time by the lab. Set up your manufactured material R-F2## so that anyreplenishment receipt will be processed as a QM lot. Investigate what affect thiswill have on the planning run.





2. What is your current inventory situation ?

3. From the Stock/Requirements list, change the material master for R-T2##at plant 1000. In the Quality Management view, create an inspection type 04- Final Inspection at GR from Production. Make sure you set an averageinspection duration of 5 days.

4. From the Stock/Requirements lists for R-F2## at plant 1000, convert the firstplanned order to a production order and release. Refresh the S/R list and notethe production order number.

5. Perform a final confirmation at the order level for the Confirm production ofthe R-F2## you just created.

6. Return to the Stock/Requirements list (refresh will not work), for R-F2## atplant 1000. Do you see an increase in inventory?

7. Check the stock statistics, does it show any pieces in quality inspection stock?

8. Why doesn�t inventory show up?



Solution 19: QM lots in Production PlanningTask 1: Quality Inspection Stock in PlanningSince your quality management process is currently handled in a separate LaboratoryInformation System, you want to explore limited functionality in SAP ERP. In doingso, you want to separate the inventory that will be processed, for days at a time, by thelab. Set up your material R-F1## so that any replenishment receipt will be processedas quality inspection stock. Investigate what affect this will have on the planning run.

1. From the Stock/Requirements list, change the material R-F1## at plant 1000 sothat all receipts will go into quality inspection stock. Save the material.

a) Menu Path: Environment→ Change material, select the Work Schedulingview

b) In the Work Scheduling view select the Insp. stock indicator

c) Select Save.

2. From the Stock/Requirements list for R-F1## at plant 1000, convert the firstplanned order to a production order and release. Refresh the S/R list and notethe production order number.

a) Double click on the first planned order.

b) Select to convert to a production order.

Select Release Order.

c) Select Save and note the production order number as it appears in themessage bar at the bottom of the screen.


3. Perform a final confirmation, at the order level for the production of R-F1##.



c) Select the final confirmation radio button and select Save.





.


5. What is the current inventory situation?

Answer: Inventory has been increased by the amount of production received.

6. What stock type is represented by on-hand inventory ?

a) From the Stock/Requirements list, double click on the StockMRP element.

b) Answer: By setting the Inspection Stock indicator all receipts are placedinto quality inspection stock. QI stock is MRP relevant.

Task 2: QM Lots in Procurement (Time Permitting )Since your quality management process is currently handled in a separate LaboratoryInformation System, you want to explore limited functionality in SAP ERP. In doingso, you want to separate the inventory that will be processed for no longer thanthree days at a time by the lab. Set up your procured material R-T2## so that anyreplenishment receipt will be processed as a QM lot. Investigate what affect thiswill have on the planning run.

1. Use the Stock/Requirements list to review the inventory situation for R-T2## atplant 1000.


2. What is the current inventory situation ?

Answer: On-hand Inventory is 1000 pcs.




3. From the Stock/Requirements list, change the material master for R-T2## atplant 1000. In the Quality Management view, create an inspection type 05 -Inspection for other Goods receipts. Make sure you set an average inspectionduration of 3 days.

a) Menu Path: Environment → Change material, select the Qualitymanagement view

b) In the Quality managment view, select the Insp. setup button.

c) Select Create inspection types

d) Select inspection type 05 - Inspection for other Goods Receipt

e) Select the Active indicator and then select Details

f) Enter and Average Inspection Duration of 3 days, and deselect theParameters listed above.

g) Select Continue. Enter through any warning messages.

h) Select Save.

4. In another session, enter an Other Goods receipt for 500 pcs of R-T2## at plant1000, storage location 0001. Use movement type 501.

a) Follow menu path: Logistics→ Materials Management→ InventoryManagement→ Goods Movement→ Goods Receipt→ Other (MB1C)

b) Enter Movement type 501, plant 1000, and storage location 0001, andpress ENTER

c) Enter your material R-T2## and a quantity of 500 pcs

d) Press Enter and select Save

Enter through any messages about missing parts.

5. Return to the Stock/Requirements list (refresh will not work), for R-T2## atplant 1000. Do you see an increase in inventory?

Answer: No, the on hand balance has not increased.

6. Check the stock statistics, does it show the 500 pcs in quality inspection stock?

Answer: Double click on the stock statistics. Yes 500 pcs are in QI stock.




7. Why doesn�t the inventory show up?

Answer: If you look at the details of the Stock/Requirements list you will see anew MRP element 3 days from the current date. This is due to the inspectiontype 05 creating a QM inspection lot. The Average inspection duration allowsplanners to account for when the material will be available for use.

Task 3: QM Lots in Production ( Time Permitting )Since your quality management process is currently handled in a separate LaboratoryInformation System, you want to explore limited functionality in SAP ERP. In doingso, you want to separate the inventory that will be processed for no longer than 5days at a time by the lab. Set up your manufactured material R-F2## so that anyreplenishment receipt will be processed as a QM lot. Investigate what affect thiswill have on the planning run.



2. What is your current inventory situation ?

Answer: On-hand Inventory is 0 pcs.

3. From the Stock/Requirements list, change the material master for R-T2##at plant 1000. In the Quality Management view, create an inspection type 04- Final Inspection at GR from Production. Make sure you set an averageinspection duration of 5 days.

a) Menu Path: Environment→ Change material, select the Quanlitymanagment view.

b) In the Quality management view select the Insp. setup button.

c) Select Create inspection types

d) Select inspection type 04 - Final Inspection at GR from Production

e) Select the Active indicator and then select Details

f) Enter and Average Inspection Duration of 5 days and deselect theParameters listed above.

g) Select Continue

h) Select Save.




4. From the Stock/Requirements lists for R-F2## at plant 1000, convert the firstplanned order to a production order and release. Refresh the S/R list and notethe production order number.

a) Double click on the first planned order.

b) Select to convert to a production order.

Select Release Order.

c) Select Save and note the production order number as it appears in themessage bar at the bottom of the screen.


5. Perform a final confirmation at the order level for the Confirm production ofthe R-F2## you just created.



c) Select the final confirmation radio button and select Save

6. Return to the Stock/Requirements list (refresh will not work), for R-F2## atplant 1000. Do you see an increase in inventory?

Answer: No, the on hand balance has not increased.

7. Check the stock statistics, does it show any pieces in quality inspection stock?

Answer: Double click on the stock statistics. Yes, these is inventory in QI stockthat is equivalent to the quantity that you confirmed.

8. Why doesn�t inventory show up?

Answer: If you look at the details of the Stock/Requirements list you will see anew MRP element 5 days from the current date. This is due to the inspectiontype 04 creating a QM inspection lot. The Average inspection duration allowsplanners to account for when the material will be available for use.



Lesson Summary

You should now be able to:� Demonstrate modeling Quality inspection stock and its affect on MRP� Demonstrate modeling the use of QM lots and its affect on production.


Unit Summary SCM240

Unit SummaryYou should now be able to:� Explain the concept of stock types in SAP ERP� Explain how in transit stock types are used in production planning� Explain how configuration of stock types can influence the planning run.� Demonstrate modeling Quality inspection stock and its affect on MRP� Demonstrate modeling the use of QM lots and its affect on production.




1. Unrestricted use stoock is the only stock considered in the planning run.Determine whether this statement is true or false.□ True□ False

2. When a quality check is performed, the results are recorded for a specific


3. When a goods receipt is done for a product requiring inspection it is put intowhat inventory status?

4. Inventory in the quality inspection stock is available for planning.Determine whether this statement is true or false.□ True□ False



516Answers

1. Unrestricted use stoock is the only stock considered in the planning run.

Answer: False

Unrestricted is always considered. However any of the three statuses below mayalso be configured for consideration in the planning run.Stock in Transfer, Blocked Stock, restricted use stock

2. When a quality check is performed, the results are recorded for a specificInspection Lot.

Answer: Inspection Lot.

3. When a goods receipt is done for a product requiring inspection it is put intowhat inventory status?

Answer: Quality Inspection Stock

4. Inventory in the quality inspection stock is available for planning.

Answer: True

Quality inspection stock is included in the net requirements calculation.


Unit 11517 Component Availability

Unit OverviewThe unit will introduce you to the concept of Available-to-Promise (ATP) in SAP ERP.Here you will learn how to look at planning from a multi-level perspective, versusthe single-level approach that the planning run takes.


� Explain the purpose of Available to Promise (ATP) in planned orders.� Demonstrate how to execute (ATP)� Explain the steps to configure ATP in the planned order� Demonstrate the configuration of the checking group� Demonstrate the configuration of the check rule� Demonstrate the configuration of the check control� Demonstrate the configuration of the scope of check.

Unit ContentsLesson: ATP in the Planned order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .617

Demonstration: Interactive ATP ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .621Demonstration: Planned order ATP.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .622Demonstration: Availability Overview ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .624Demonstration: Collective availability check ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . .629


Unit 11: Component Availability SCM240

Demonstration: Availability Check .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .630Exercise 20: Availability Checking in the Planned order .. . . . . . . . . . . . . . . . .633

Lesson: Configuration of ATP .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .640Demonstration: Demo Check Group .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .644Demonstration: Demonstrate the Check Rule Table.. . . . . . . . . . . . . . . . . . . . . .645Demonstration: MRP Check Control Settings .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .646Demonstration: Demo scope of check... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .649


SCM240 Lesson: ATP in the Planned order

Lesson:518

ATP in the Planned orderLesson Duration: 45 Minutes

Lesson OverviewIn order for planners to perform to a high level of efficiency, planners need to havesome type of check mechanism to review their production plan in the short term. Inthis section you will learn how ATP works and execute a collective ATP check and aninteractive ATP check.


� Explain the purpose of Available to Promise (ATP) in planned orders.� Demonstrate how to execute (ATP)


Business ExampleDuring the course of planning, several assumptions will be made. One of thoseassumptions that will happen in the planning run is that components will always beavailable. Since planning runs will typically be executed in background jobs, you needto ensure that the components will be available against the requirement dates set bythe parent orders. Execute available to promise on planned orders to see how this mayimprove the planning process for your pump product lines.

Available to Promise OverviewHigh customer service is one goal that most companies share. While some lookto outside customers, other parts of the business must consider serving internalcustomers. Using Available-to-Promise (ATP) companies try to acknowledge the



need of product, prior to it�s actual consumption. The goal of ATP is to provide aconfirmation to both internal and external customers as to whether or not they cansupport the requirement being placed on the organization.

� Sales and Distribution: Sales orders and Deliveries� Production Planning: MRP - Planned orders� Production Execution: Production/Process Orders� Materials Management: Inventory Mgmt - Goods movements

During the material availability check, the system makes sure that requirements arecovered by stock or by planned receipts. You can therefore recognize at an early date,for example, when creating the sales order, whether a material will be available forthe requirements date or whether you have to make extra planning arrangements toguarantee material availability. Using the material availability check contributestowards increasing the accuracy of planning and the service level for creating salesorders as well as for the internal production process.

The availability check using ATP logic is a cross-application component. It can beaccessed from the business application areas listed below:

� Sales and distribution: You can check whether the material is available onthe desired delivery date when creating sales orders and also when creatingdelivery notes.

� Planned order: You can execute the availability check for the components of aplanned order. This may be necessary when converting the planned order intoa production order or beforehand, if you want to make sure that the necessarymaterial components are available for the production of the finished product.

� Production/Process orders : When processing production orders, you cancheck whether the necessary material components are available for production ofthe finished product.

� Inventory management : When creating or changing reservations as well as atgoods issue, you can use the availability check to ensure that a goods movementwill not jeopardize the availability situation of other issue elements alreadycreated and checked in the system. A missing parts check can be run at goodsreceipt.



Figure 179: Availability Check

The Available-to-Promise (ATP) check has several applications. Among others,you can use it in sales orders, production orders, or during goods movements. As aresult, when you create a sales order, the system checks, within the framework of theATP check, whether or not there is enough stock available in the warehouse for therequired material. It can also check if receipts, such as production orders or plannedorders, are scheduled before the desired date. If the reply is positive, the sales ordercan be confirmed.

Along with the availability check according to ATP, forecast planning exists as analternative (choose in the customer requirements class).

Figure 180: Availability Check Using ATP Logic



When performing an availability check using ATP logic, the system checks whether ornot all issues are covered by existing receipts and if open quantities from the receiptsare available to cover newly received issues. These quantities, which have not yetbeen assigned, are added to obtain the ATP quantity.

In the availability check using ATP logic, the system checks whether or not therequirement quantities are covered by specially defined receipt and goods elements orby a specific stock. If you can confirm a quantity for the requirement date, this quantityis flagged as confirmed in the requirement and the ATP quantity of the component�sstock or receipt is correspondingly reduced. In the next availability check, you canonly confirm requirements for the amount of the remaining ATP quantity.

The system copies the result of the component check to the planned order header asthe confirmed quantity and the order confirmation date.

Note: The ATP quantities are not calculated across planning segments and donot take any periods into account.

The values displayed in the two transactions stated (MD04 , MMBE) cannot be usedfor understanding and for controlling the results of an availability check.

Instead, you must use Transaction CO09 (Availability Overview). This transactionshows the development of the available quantities exactly the same way as it is takeninto account in the availability check, that is, according to the ATP logic. In contrastto this, Transaction MD04 interprets the data found according to the MRP logic andTransaction MMBE displays only the currently available stocks. In general, both canand will cause (depending on the settings in the scope of inspection) differing values.

So that the information in Transaction CO09 also corresponds to the informationduring a check, you must enter the exact checking rule which is also used within theavailability check on the selection screen of the transaction. It is relatively simpleto determine the availability check at least in the production order by selecting therespective component on the component overview and call in the menu entry �Settings-> Availability�. In the dialog box generated, in addition to the scope of inspection setalso the checking rule is displayed in the header. Alternatively, a check can only beinitiated (also in the other order types named) for the component considered. In thiscase, the system displays a dialog box �Date overview� from which you can display,among other things, the scope of inspection.



Demonstration: Interactive ATP

PurposeGoal of this demo is to show how ATP works for a sales order, which is the simplest toexplain.

System DataSystem:Client:User ID:Password:Set up instructions:1. From the Stock/Requirements list select R-F2## at plant 1000.

2. In another session, execute VA01 - Create sales order

Field ValueOrder type OR

Sales Organization 1000Distribution Channel 10

Division 00

Sold-to 1000

Ship-to 1000

Po Number ##

Rqd Deliv. Date One month from today(press Enter)

Material R-F2##

Order Qty 150 pcs

3. When all information is entered, press the enter key.

4. The result will be a delivery proposal. This is using the production plan to�confirm �the sales order.

5. To review the details of the ATP situation, select ATP Quantities

6. Compare this report to the stock requirements list/production plan.



7. Select the delivery proposal button.

8. Optional upon returning to the sales order overview, enter another line item forsame product, line item date one week earlier, qty of 50.

9. From the delivery proposal select ATP Quantities.

10. Point out the previous line item.

11. Accept the proposal.

12. If students need to see the confirmations select the line item and the selectSchedule lines for items.

13. To see the SD dates due to float select the line and then select Shipping details.

Demonstration: Planned order ATP

PurposeDemonstrate the interactive planned order component ATP

System DataSystem:Client:User ID:Password:Set up instructions:1. Review the stock requirements list for R-F2## at plant 1000.

2. Select the first planned order on the list and go into change mode.

3. From the planned order header screen select Check Component Availability.

4. All materials should be available.

5. Return the header screen, but notice the Firming indicators are set.

6. Select Save

7. Select another planned order and execute a similar ATP check.

8. Notice the yellow lines since not all components will be available.

9. Select one of the yellow line items and then select Check Availability torun a component ATP.



10. Note the proposal date, and select ATP Quantities.

11. Note the planned order�s, that you previously checked, dependent requirementhave consumed the 10 pcs of inventory.

12. Exit order without saving.

Availability OverviewThe availability overview enables you to see the ATP situation for a particular materialin a defined plant. The availability check is run using a selected checking rule. Youcannot change the displayed data.

Figure 181: Availability Overview

You can call up the availability overview using the transaction CO09 or from therelevant application component. Logistics→ Production→ MRP→ Environment→Availability overview or can be accessed from the MRP or Stock/Requirements listEnvironment→ ATP Quantities.



When entering the transaction you will specify the material (which has the checkgroup) the plant and the check rule. The check rule can be entered manually or it willbe picked up from the MRP group or the Plant parameters.

The Availability Overview screen is divided into three sections:

� n the upper section, the system displays information about the check.� In the middle section, there is an aggregated display of product availability

on a plant level. By using this, you can determine quickly whether there is amaterial shortage.

� In the lower section, the system displays the daily availability situation of theselected material in a plant according to the scope of check. For each date andMRP element, the system displays a totals requirement with a receipt quantity(for stocks and receipts) or a requirement quantity, a committed quantity (onlyfor requirements) and a cumulated ATP quantity. The system uses negativeindicators to display the requirements. The data is sorted chronologically andstarts with the plant section (if no special stocks are displayed). If necessary, thestorage location section, batch section and batch storage location section follow.

By selecting Scope of check, users can see what MRP elements when into determiningthe ATP quantities.

Demonstration: Availability Overview

PurposeDemonstrate to users the current status of the ATP quantity

System DataSystem:Client:User ID:Password:Set up instructions:1. Logistics→ Production→ MRP→ Environment→ Availability Overview

2. Enter your material R-F2# at plant 1000. Leave the check rule blank.

3. Explain the results of your previous check. Note the ATP is Zero until newproduction occurs well into the future, due to the sales orders entered in thelast demonstration.



Collective Availability CheckIn the collective availability check you can check whether the components requiredare available for several planned orders simultaneously. This is particularly usefulif you want to convert several planned orders simultaneously, for example, and youwant to check beforehand if and by when the components are available. Logistics→Production→ MRP→ Planned Orders→ Collective Availability Check (MDVP)

Figure 182: Collective ATP

To be able to carry out the collective availability check, you need a profile order view.In the standard system the profile order view 000001 is used. The profile controlsthe formatting of the overview list with the planned orders selected (field selection,field sequence). You can create your own profile in Customizing for MRP, underProduction→ MRP→ Planning→ Procurement Proposals→ Planned Orders→Carry out collective availability check, or you can copy and change the profile 000001.

Note: One of the configuration settings for the profile is sorting criteria. Thismay have an impact on the results of the ATP check.

You can carry out the collective availability check in two ways:

� in the foreground� in the background



The system checks all orders which are selected on the list. The check is carried outin the order in which they are displayed. During the background check, the systemautomatically selects all orders before the check.

When entering the overview screen, the system will display various information aboutthe orders. Users need to pay particular attention to the following fields:

� CFc - Confirmation factor� DDf - Difference in days between order finish date and overall confirmation date� RC - Result of Availability Check

The CFc and DDf will be calculated for all existing orders that haven been check, andthe RC will be populated as a result of the check.

The Confirmation factor ( CFc The) = confirmed order quantity / order quantity. Thecomponent with the greatest difference between the open quantity (requirementsquantity - quantity withdrawn) and the component quantity confirmed by theavailability check determines the confirmed order quantity. The Confirmed orderquantity = (confirmed component quantity / open quantity) * order quantity

The DDf is the Difference between the planned basic finish date and finish dateconfirmed by the availability check. The confirmed finish date is calculated using thecomponent with the largest difference (in factory calendar days) between requirementsdate and confirmed date: confirmed finish date = basic finish date + confirmed datecomponent - rqmts. date component

The RC is the result of the availability check for each order:

� 01 - the order can be fully confirmed� 02 - the order cannot be fully confirmed� 06 - the order has no material components� 07 - availability check not allowed with current order status� 08 - order was locked at the time of the check by another user and was not

checked� 09 - order could not be checked

When executing the collective availability check users will have two options:

� Reset availability data� Execute availability check



When resetting the availability data has the effect that the following data is deleted:

� The confirmed quantity in the material components� the missing parts indicator (only production order)� the overall confirmation date in the order header� the confirmed quantity in the order header

Also, the system status "FMAT" (missing material availability) in the productionorder is reset.

When using the execute availability check indicator, you use to specify that anavailability check is carried out, for the type of check individual is defined; that is, theavailability check for each material is carried out depending on the check group. Ifyou want to carry out another type of availability check then you must change to thechecking mode. You can define for planned orders whether these are fixed or not.

Figure 183: Collective ATP Check Mode

The selection controls how the availability check is to be carried out for a material.You have three options:

� Individually: If selected individually then the availability check is carriedout for each material depending on the settings in the checking group. If it isspecified in the checking group for example that the material is always checkedagainst planning then a check is always carried out against planning.

� All materials with ATP check: If you select ATP check all then the availabilitycheck is carried out for all materials as an ATP independently of the settingsin the checking group.

� All materials with planning check: If you select Planning check all then theavailability check is carried out for all materials as a check against planning.The check against planning cannot be carried out if the checking group has theindicator No checking against planning.



Firm planned orders: If this selection is active, planned orders for which componentsare available according to the availability check are firmed. This means that theplanned orders are firmed for the planning run and will not be changed automatically.The components are also firmed which means that the BOM is not re-exploded in thenext planning run. If this selection is not active, the planned orders are not firmedafter the availability check.

Check availability (Note: 123848 Internal documentation collective availability check

Release 3.0D - 3.0E: Only ATP check

Release 3.0F - 4.70: ATP and planning check (the planning check is not used bycustomers)

Release 3.1G - 3.1I: Memory check (during ATP check). The memory check canalso be activated in Release 3.0F via Note 84185 (however, in this case it is alwayschecked with memory, the choice as it is given in Release 3.1G does not exist). ->The memory check was also activated once by Bosco Weisin a 3.0D System for Tulip.However, this is very work-intensive. Therefore, no note exists for this.

During memory check, the stock/requirements situation (table �MDPSX� in program�SAPLM61X�) is read only once from the database for every material and then storedin the memory for following checks (�READ_MEMORY� and �FILL_MEMORY� inthe LM61XF52). The confirmed quantities generated during the check are insertedinto �MDPSX�. This inserting (�FORM INSERT_SORTED_MDPSX_MEMORY� in�LM61VF62�) is carried out cumulated on the requirements date with �DELKZ� �KM�.

As of Release 4.0A, the memory check described above is no longer available in thisform, but the ATP server which has been introduced in this release offers similarfunctions. The ATP server has been realized as a separate process on one of theapplication servers of an R/3 system. There, aggregated versions of Tables RESB(material requirements/reservations from planned and production orders) and VBBE(schedule lines for the customer order item) are permanently kept in the main memoryand updated by the corresponding applications in case of changes. Since this savesmany database accesses in corresponding scenarios, a high degree of performance isgained. For more information regarding the use and setup of the ATP server pleaserefer to Note 99999.

Error:

Many customer messages for the collective availability check are either consultingquestions or refer to errors which also occur in an individual check. You should searchfor notes with key word �collective availability check�.



In the collective check, the same modules are used which are also used duringan individual check via Transaction CO02 (CO_ZA_AVAILABILITY_CHECK)or Transaction MD12 (MD_CHECK_KOMP_VERFUEGBARKEIT).Therefore,you first should always check whether the error also occurs during the individualcheck. If yes, the error can, in general, not be within function module(CO_ZA_AVAIL_CHK_ORDER_MULTI).The exception is the incorrect callingup of the modules. Therefore, the call of �CO_ZA_AVAILABILITY_CHECK� forproduction orders as well as �MD_CHECK_KOMP_VERFUEGBARKEIT� forplanned orders should be compared during the individual and collective check.

Demonstration: Collective availability check

PurposeDemonstrate collective availability check for planned orders.

System DataSystem:Client:User ID:Password:Set up instructions:1. Logistics→ Production→ MRP→ Planned Order→ Collective Availability

Check (MDVP)

2. Enter your part R-F2## at plant 1000 use profile 000001, and Execute

3. Notice that your planned order from the first demonstration is confirmed at 100%.

4. Select all the orders and select Check availability.

5. Return to the stock requirements and review your results.

Availability Checks During Independent RequirementCalculationFor made-to-order planning strategies it is not possible to check against inventorysince their will be none. However when using strategies 50, ( 52 - MTS ), 60, andsome others, you created independent requirements to trigger production planning.This type situation makes it possible to check against some time of planned receipt inmake-to-order production.



Figure 184: Availability Check with Planned Independent RequirementsAllocation

In the check against planned independent requirements, the system only checksagainst the unconsumed planned independent requirements quantities. This meansthat no ATP quantities, receipts or stocks are included in the availability check.

The check by planned independent requirements allocation determines whether or notsufficient planned independent requirements have been planned to cover a customerrequirement.

In this check, the system uses the consumption mode, such as backward consumptionin the above example and the corresponding consumption periods.

You can define the type of availability check to be carried out using the requirementsclass in the strategy. For technical reasons, when using SAP R/3 strategy 50 (planningwithout final assembly), you can only carry out the availability check against plannedindependent requirements. When processing the sales order using SAP R/3 strategy60 (planning with planning material), you can check against the planned independentrequirements of the planning material.

Demonstration: Availability Check

PurposeSet the availability check



System DataSystem:Client:User ID:Password:Set up instructions:1.

Note: You can find settings for the availability check in Customizingand in this case refer to SAP R/3 Enterprise.

First, show the various types of availability checks SAP R/3 strategy 50 (check againstplanned independent requirements):

Customizing: Production→ Production Planning→ Demand Management→Planned Independent Requirements→ Planning Strategy→ Define StrategySelect Strategy 40 then select Details - Availability check selected (→ATP)Exit out of Strategy 40 and select Strategy 50 Availability check deselectedand assignment indicator active (→ check against planned independentrequirements)

2. Demonstrate where the availability check for sales orders is set: Customizing:Sales and Distribution→ Basic Functions→ Availability Check and Transferof Requirements→ Availability Check→ Availability Check with ATP Logicor Against Planning



527 Exercise 20: Availability Checking in thePlanned orderExercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Demonstrate and interpret the results of a sales order ATP check� Demonstrate the impact of an interactive ATP check on a planned order� Demonstrate how to perform a collective ATP check

Business Example[Enter a business example that helps the learner understand the practical businessuse of this exercise.]

Data Date ValueOrder type ORSales Org 1000Dist. Chnl 10Division 00Data Date ValueSold-to 1000Ship-to 1000PO No. ##Rqd Deliv. Date One month from today(press Enter)Data Date ValueMaterial R-F2##Order Qty 150 pcs

Data Date ValueProfile: Order view 000001Profile: Component view: 000001Basic Order Start Date (Relative) to 25



Task 1: ATP in the Sales OrderYour organization has determine that several of your pumps will be placed in inventoryat plant 1000 in anticipation of a large volume of local sales. You have received aforecast via the S&OP Process, which was used to initiate a MRP run. Enter a salesorder to see how your production plan will be used to influence ATP.

1. Review the Stock/Requirements list for R-F2## at plant 1000.

2. In another session, Create sales order with the following data. Don�t save untiltold to do so.

3. Did your order quantity get confirmed?

4. Accept the delivery proposal and enter an additional line item for R-F2## for 50pcs and change the date to one week earlier.

5. Did the new line item that was a week earlier get confirmed. Select the ATPQuantities for more details.

6. Accept the delivery proposal and SAVE the order.

Task 2: ATP in the Planned OrderAs you get closer to developing a production schedule you need to insure thatthe components are available for some of your finished good and sub-assemblyproduction plans. Execute several interactive ATP checks on individual plannedorders and interpret the results.


2. From the Stock/Requirements list for R-F2## at plant 1000, select the firstplanned order in the list and perform a component ATP check. Do not savethe order until told to do so.




3. What was the result of the check?

4. Return the header of the planned order, has anything changed ?

5. Save the planned order.

Task 3: Collective ATP for the Planned OrderAs you get closer to developing a production schedule you need to insure that thecomponents are available for some your finished good and sub-assembly productionplans. Due to the amount of materials you are responsible for planning, you need toexecute a collective ATP check for all orders five weeks out.

1. Execute a �interactive� collective ATP check for R-F2## at plant 1000. Limitthe check to orders whose �order start� date is approximately five weeks out.



Solution 20: Availability Checking in thePlanned orderTask 1: ATP in the Sales OrderYour organization has determine that several of your pumps will be placed in inventoryat plant 1000 in anticipation of a large volume of local sales. You have received aforecast via the S&OP Process, which was used to initiate a MRP run. Enter a salesorder to see how your production plan will be used to influence ATP.


a) Logistics→ Production→ MRP→ Evaluations→ Stock/Requirementslist (MD04)

2. In another session, Create sales order with the following data. Don�t save untiltold to do so.

a) Follow menu path: Logistics→ Sales and Distribution→ Sales→ OrderCreate (VA01)

b) After entering you material and quantity press the enter key.

3. Did your order quantity get confirmed?

Answer: No, due to a lack of inventory the system proposed a delivery schedulebased on future receipts.

4. Accept the delivery proposal and enter an additional line item for R-F2## for 50pcs and change the date to one week earlier.

a) Select Delivery proposal.

b) In line item 0020 enter the R-F2## and a quantity of 50, tab over to theFirst date and enter a date a week earlier. Press Enter.

5. Did the new line item that was a week earlier get confirmed. Select the ATPQuantities for more details.

Answer: Yes, but it was delayed. This is due to the previous line item blockingthe inventory.

6. Accept the delivery proposal and SAVE the order.

a) Select Delivery Proposal

b) Select Save.




Task 2: ATP in the Planned OrderAs you get closer to developing a production schedule you need to insure thatthe components are available for some of your finished good and sub-assemblyproduction plans. Execute several interactive ATP checks on individual plannedorders and interpret the results.


a) Logistics→ Production→ MRP→ Evaluations→ Stock/Requirementslist (MD04)

2. From the Stock/Requirements list for R-F2## at plant 1000, select the firstplanned order in the list and perform a component ATP check. Do not savethe order until told to do so.

a) Select the first planned order in the list and select Details of Element

b) Select Change

c) From the header of the planned order, select Check Component Availability

3. What was the result of the check?

Answer: Varies. If you received all green lines then all components wereavailable. If any yellow lines appeared, then your materials are not availableuntil a later date. If you received a red line, can not confirm the order at allsince no supply is currently expected.

4. Return the header of the planned order, has anything changed ?

Answer: Yes, due to a successful availability check the planned order headerand all components (BOM) were firmed. This means that the next planning runcan not delete or change the planned order.

5. Save the planned order.

a) Select Save.




Task 3: Collective ATP for the Planned OrderAs you get closer to developing a production schedule you need to insure that thecomponents are available for some your finished good and sub-assembly productionplans. Due to the amount of materials you are responsible for planning, you need toexecute a collective ATP check for all orders five weeks out.

1. Execute a �interactive� collective ATP check for R-F2## at plant 1000. Limitthe check to orders whose �order start� date is approximately five weeks out.

a) Logistics → Production → MRP → Planned Order → CollectiveAvailability Check (MDVP)

b) Enter the parameters indicated and select Execute.

c) Select Select all, and then select Check Availability.

d) In the pop up window select Check availability.

e) Exit the transaction.



Lesson Summary

You should now be able to:� Explain the purpose of Available to Promise (ATP) in planned orders.� Demonstrate how to execute (ATP)



Lesson:534

Configuration of ATPLesson Duration: 30 Minutes

Lesson OverviewIn this lesson you will focus on understanding the concept of how configuration ofATP is setup in SAP ERP in regards to Planned orders.


� Explain the steps to configure ATP in the planned order� Demonstrate the configuration of the checking group� Demonstrate the configuration of the check rule� Demonstrate the configuration of the check control� Demonstrate the configuration of the scope of check.

This section will be up to the instruction to determine length of delivery due to itscomplexity. Based on the previous units it would be beneficial to at least showstudents the Scope of check in order to better understand ATP.

Business ExampleIn order for your planners to effectively use ATP, they must understand how theconfiguration is structured in order to take advantage of the flexible functionality.Review the configuration of ATP in order to use it to your planners advantage.

Configuration of ATP OverviewThe setup of the availability check is the same for all applications. The ATPfunctionality consists of :

� Checking (ATP) Group� Check rule� Check Control� Scope of Check


SCM240 Lesson: Configuration of ATP

Figure 185: Settings for the SAP R/3 Availability Check

These settings are controlled via configuration, however several will be applied asmaster date.

Checking GroupThe checking group that is entered in the SAP R/3 material master (MRP 3 view)enables you to group materials according to checking properties. Users need to keepin mind that if checking results are specific to a group of materials, the check groupwill allow you to control what types of receipts are relevant for ATP. While this is aconfiguration setting the check group will be combined with the check rule to definea very specific type of check.



Figure 186: Checking Group Configuration

The following options exist for the checking group:

No checkMaterial whose material master has a checking group entered in which thisindicator is set (checking group KP is delivered this way in the R/3 standardsystem) is never included in a material availability check. This setting makessense, for example, for materials that are planned via a KANBAN process.Since in this situation the KANBAN control makes sure that enough materialis always available, it does not make sense to carry out a material availabilitycheck for these materials. You can also use this setting, for example, forlow-value materials that for performance reasons should not be included inthe availability check.

Note: However, bear in mind that with this setting, they will neverbe included in the availability check, neither for the created order norfor the released order (nor for an availability check from anotherapplication, for example, the sales order).

Blocking the confirmed quantitiesIf this indicator has been set, the quantities confirmed during an availabilitycheck are blocked by special entries in the enqueue server so that availabilitychecks taking place at the same time do not assign these quantities again. If thisindicator is set, the availability check runs a little slower since the enqueue serverhas to be queried additionally for every component and accepted confirmationshave to be written to the enqueue server, however on the other hand this preventsany problems with checks that are carried out simultaneously.

Accumulation



You can enter four different values in the Accumulation field: Initial (blank), 1,2 or 3. These four different values are used to control two different functionsindependently of each other. These two functions are the accumulation and alsothe �Online-vs-Batch� check.This function is controlled via the low-order bit so that the values initial and 1define via this function. Value 2 then acts as initial, and value 3 acts as value 1 inrespect of this function. Whether the system checks with (1) or without (initial)accumulation makes a difference if the total of the confirmed quantities is greaterthan the quantity of the receipts (including stocks). If the check is carried outwithout accumulation, the system displays the value 0 (zero) as the accumulatedATP quantity, for example, in Transaction CO09. With accumulation, the invoiceis still used even if negative accumulated ATP quantities are created.

If the Accumulation field is set to value 3, then the check with accumulationis activated on the one hand (see preceding section). On the other hand, theavailability check calculates differently, depending on whether the check is calledfrom a transaction creating an order (for example, Transaction CO01) or from atransaction changing an order (for example, Transaction CO02). If the check iscalled from a change transaction, it runs as normal, only the confirmed quantityof the requirements is used for the reduction of the accumulated ATP quantity.If, however, you call the check from a creation transaction, the actualrequirement quantities are used for the reduction of the accumulated ATPquantity regardless of any available confirmed quantities. This normally meansthat in this scenario less material is available for the confirmation. Therefore,an availability check in this mode delivers very �pessimistic� results which seeall other available requirements as completely confirmed. A confirmation iscarried out for the reservation being checked only if material is neverthelessavailable. It is essential here to make sure that the setting for the scope of thecheck is made correctly. If, for example, the secondary requirements (that is, thematerial requirements of the planned orders) are taken into account in the scopeof check, even though a material availability check is never carried out in theplanned order, the secondary requirements have no effect on the accumulatedavailable quantity (since the confirmed quantities are zero) during a check froma change transaction. If, however, you call the check from a creation transaction,the accumulated available quantity is reduced by the requirement quantities ofthe secondary requirements.In this context, the transactions for the planned order conversion (TransactionsCO40, CO41, COR7, COR8 ...) are regarded as change transactions becausethe requirements were already created by the planned order. This logic wasimplemented by Note 107895 to prevent confirmed quantities that were alreadydetermined in the planned order from being cancelled again during the plannedorder conversion on account of cumulation type 3. However, if you nevertheless



prefer to check in �create� mode also during the planned order conversion, youmust implement the modification specified in Note 338051. If you do not wantto use cumulation type 3 at all for the production control without being able toadjust the checking group correspondingly (for example, because this controlis required for the sales order processing for this material), you can deactivatethis function completely by using the modification described in Note 338075.These modifications, however, impact on production orders as well as processorders, networks and maintenance orders.Note that the described logic represents the currently implemented system statusfor deciding when the system should check against the requirement quantities andthe confirmed quantities (Transactions CO01/CO02/CO40). However, there maybe the need in the future to change this logic in order to align business processes.

Demonstration: Demo Check Group

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. From the S/R list review the MRP 3 screen and point out the checking group.

Remind users that it is on a Plant specific view. In addition it also sits on severalother views but they all populate the same field/table in the data base.

2. Demo the check group configuration: IMG→ Production→ Shop Floor Control→ Operations→ Availability Check→ Define Checking Group.



Checking Rule

Figure 187: Check Rule

The check rule is a key for a specific business process. There are no values that pertainto the check rule. However, when you combine the checking group and checking ruleyou can define a specific check for availability of inventory or production. The usageof he check rule is defined in the check control tables.

Demonstration: Demonstrate the Check Rule Table

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. IMGmenu path: Production→Material Requirements Planning→ Procurement

Proposals→ Planned Orders→ Define Availability Check for Components

2. Select the checking rulle option.



3. Point out to users there are no control parameters associated with the check rule.

Check ControlThe checking control allows you primarily to determine application-specific, whichscope of check should be used. The specification of the checking rule is used for thisand no ATP availability check can be carried out if it is missing. The check control ishandled differently for each application:

� Sales and Distribution (Hard Coded)� Materials Mgmt - Stock Transport Order (Configurable; Document/Order type)� PP - Planned Orders (Configuration; assigned to MRP group or Plant)� PP - Production/Process orders (Configuration; assigned Plant/Order

Type/Business Event)� MM - Material Movements (Configuration; assigned Transaction code)

The check rule can be defined in the IMG via the following menu paths:

MM/Inv - Material Management→ Inventory Management→ Goods issue/transferpostings→ Setup Dynamic Availability check

MM/Stck Transfer -Material Management→ Purchasing→ Purchase Orders→Setup Stock Transfer Order→ Assign Delivery type and Check rule

SD - Hard coded by SAP!

PP/MRP - Production→ MRP→ Procurement Proposals→ Planned orders→Define Availability check for components

PP-Prod. Order - IMG→ Production→ Shop Floor control→ Operations→Availability check→ Define Checking Control

Note: For MRP the check rule can be define at the plant or the MRP grouplevel. MRP group has a higher priority than the plant.

Demonstration: MRP Check Control Settings

Purpose



System DataSystem:Client:User ID:Password:Set up instructions:1. Follow the IMG menu path: Production→ MRP→ Procurement Proposals→

Planned Orders→ Define Availability Check for Components

2. Demonstrate the plant and MRP group settings.

Scope of CheckThe connection between the checking group and the checking rules is made byentering this into the scope of check (Customizing application). Here you define forwhich stocks, issues and receipts the combination is valid as check instructions.

Figure 188: Scope of Check Configuration



Through the use of the checking group which is assigned to the material master, andthe checking rule that can be assigned via configuration (SD exception), plannerscan dictate the specific input into the ATP check. The check rule is modeling thebusiness event or activity.

Note: With different combinations planners can get very specific with theATP checks. In regards to MRP related checks for materials who have verydurations between production runs, they may not want to include plannedorders. Materials with long Durations between runs may need to considerplanned orders. Through the use of a different check rule or checking groupthis can be accomplished, since each combination can point to a differentscope of check.

The scope of check is used to set which stock types as well as which dynamic receiptand issue types are to be taken into account in the availability check (= requirements).In particular you must take into consideration here the following fields from the pointof view of the production order, process order, network and maintenance order:

� With dependent reservations : The dependent reservations are the materialrequirements for production orders (or process orders ...), however theyare not the material requirements for planned orders. As a rule it makes nosense to check reservations for production orders but at the same time notto take the requirements of other production orders into account. Hence, youshould not set this field to �Do not check� until you have carefully checkedthe requirements and the resulting consequences. The setting �Only includewithdrawable reservations� normally only makes sense for checking releasedorders (a reservation is withdrawable if the assigned operation is released) butthere can also be exceptions.

� Check without replenishment lead time : If the check with replenishment leadtime is activated (caution: The field must not be set in this case!), the availabilitycheck may run more efficiently in some cases. This is particularly true if therequirements date of a reservation lies after the end of the replenishment leadtime (defined in material master). In this case, the availability check can instantlyreport complete availability of the material without actually checking the ATPcalculation. This behavior is based on the definition of the replenishment leadtime: up to the end of the replenishment lead time, every required quantitycan in theory be procured by the respective material. However, note that youmust create a corresponding receipt (for example, through an MRP run) despiteconfirmation of the material requirements using the replenishment lead time.The availability check itself does not trigger any procurement!

Though the check taking into account the replenishment lead time is in certaincases significantly faster than the regular check (in particular if there are verymany receipts and issues to be taken into account, and/or if the requirements



date of the component is very far in the future), the results are not as accurateas for the regular check. In certain circumstances, there might be no plannedreceipt to cover the confirmed quantity, and only the assumption that the materialcan be procured by this certain date. Whether this inaccuracy can be acceptedor not (or, for example, only for created orders but not for released orders)needs to be clarified with the customer in cooperation with the consultants withunderstanding of the implemented process.

� No storage location check : You can use this to prevent the check at the levelof the storage location (if it exists in this reservation). There are performanceadvantages to this since otherwise the system carries out the check both at thelevel of the storage location and at the level of the plant. For example, it makessense to omit checking at storage location level if, scattered over the entire plant,there is a separate storage location at every work center from which the requiredmaterials are to be taken. However, these storage locations always are refilledonly shortly before the actual start of manufacturing from a central storage inthe plant so that normally they have no excess stocks which can be used forconfirmation. Instead, the availability check should only check whether therequired quantities are available �anywhere in the plant� (that is, in general in thecentral storage). In this situation, it would make sense to deactivate the storagelocation check (that is, set the switch).

Demonstration: Demo scope of check

Purpose

System DataSystem:Client:User ID:Password:Set up instructions:1. From the S/R list for T-B1## at plant 1000, change a planned order

2. Execute a component availability check.

3. From the ATP results screen select one item and preform a component checkagain.

4. From the �component �results screen select the Scope of check to review whatMRP elements were considered during the ATP check.



5. Since your T-T2## is in QI stock, change the scope of check so QI stock isnot included.

6. Rerun the check and see if the results are different.



Lesson Summary

You should now be able to:� Explain the steps to configure ATP in the planned order� Demonstrate the configuration of the checking group� Demonstrate the configuration of the check rule� Demonstrate the configuration of the check control� Demonstrate the configuration of the scope of check.


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Explain the purpose of Available to Promise (ATP) in planned orders.� Demonstrate how to execute (ATP)� Explain the steps to configure ATP in the planned order� Demonstrate the configuration of the checking group� Demonstrate the configuration of the check rule� Demonstrate the configuration of the check control� Demonstrate the configuration of the scope of check.




1. What is the purpose of available to promise checking?

2. The available to promise check is not limited to sales requirements.Determine whether this statement is true or false.□ True□ False

3. In what scenario will ATP not check against existing supplies and inventories.

4. The control setting of what supply and demand elements are considered in theATP check are configured in theFill in the blanks to complete the sentence.

5. Determining which scope of check is used is dependent on a combination oftwo things. What are they?



544Answers

1. What is the purpose of available to promise checking?

Answer: Available to promise check comfirms that the required materials willbe available when requested. If the materials are not available it will confirm anappropriate date when the material is to be available.

2. The available to promise check is not limited to sales requirements.

Answer: True

Available to promise check can also be done for components of manufacturingorders (planned or converted). Or for certain inventory movements.

3. In what scenario will ATP not check against existing supplies and inventories.

Answer: By nature checking existing inventory and supplies wouldn�t makesense in certain planning strategies. For example: In strategies 50, 52 & 60 theATP check is done against planned independent requirements.

4. The control setting of what supply and demand elements are considered in theATP check are configured in the Scope of Check.

Answer: Scope of Check.

5. Determining which scope of check is used is dependent on a combination oftwo things. What are they?

Answer: Which Scope of check that is used is dependent on the availablilitycheck field in the material master and the checking rule.


Unit 12545 Simulating the Production Plan

Unit OverviewThis unit discusses the process of simulating a demand program, create long-termplanning scenarios, and executing long-term planning. The unit also explains therelationship between long-term planning and operative MRP.


� Discuss the usage of long-term planning� Execute long-term planning

Unit ContentsLesson: Long-term planning requirements ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .658

Demonstration: Transfer Firm Planned Orders.. . . . . . . . . . . . . . . . . . . . . . . . . . . .679Exercise 21: MRP Run ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .681


Unit 12: Simulating the Production Plan SCM240

Lesson:546

Long-term planning requirementsLesson Duration: 50 Minutes

Lesson OverviewIn this lesson, you will learn about the usage of long-term planning. You will also learnhow to execute and evaluate long-term planning using different planning scenarios.


� Discuss the usage of long-term planning� Execute long-term planning

Discuss the need for long-term planning. Next, explain the various planning scenarios.Then, discuss the process of executing and evaluating long-term planning.

Business ExampleThe Precision Pump company constitutes a number of independent business unitsfor manufacturing pumps. As the planning manager, you need to calculate capacityrequirements and the requirement of purchased parts based on various differentprojection scenarios.


SCM240 Lesson: Long-term planning requirements

Overview of Long-term Planning

Simulative Planning Areas

Position in the Functional Environment

You can define deviating routings or BOMs for long-term planning.

� Routing: You can define deviating settings for a particular scenario in theCustomizing activity �Define scheduling parameters for planned orders�.

Customizing→ Production→ Material Requirements Planning→ Planning→ Scheduling and Capacity Parameters→ Define scheduling parameters forplanned orders.

For each plant, order type, production control, and scenario: Individualselection-ID and scheduling parameters for long-term planning/simulation

� BOM: When you define the scenario, you can enter a deviating BOM selectionID, which controls a BOM with a specific usage for long-term planning.

� Simulating the impact of a future demand program throughout all BOM levelcodes

� Leveling capacity� Planning costs� Preview for Purchasing� Preview for Inventory Management

In long-term planning, future demand programs are simulated within a planning run.This allows you to calculate of capacity requirements, activity type requirement of thecost centers, and of the requirement of purchased parts.

The demand programs that can be simulated may include planned independentrequirements and/or sales orders.

You can evaluate the simulation with regard to material requirements planning,capacity planning, order volumes, purchasing budget, cost center planning, andinventory controlling. Following the evaluation of the simulative planning results,you can replace the current demand program with the preferred version in long-termplanning and can continue it there.

You can transfer the data for external procurement to the purchasing informationsystem using a special report and evaluate it there.



Future stock is derived from the predefined requirements and future receipts. Youcan transfer the data determined for the requirements/stock situation by long-termplanning to Inventory Controlling and evaluate it there using standard analyses.

The data determined in long-term planning for the activity requirements may be passedonto the Cost Center Accounting as planning data. This allows you to determine theproduction costs for each cost center and the products. The activity requirements thatare determined in long-term planning can be passed onto Cost Center Accountingusing an individual report after completion of long-term planning. The planningdata of the cost centers is updated whereby the requirements activity is determinedfrom the routing data. Cost Center Accounting displays how many activities theproduction has planned.

Figure 189: Simulative Planning Areas

The principle of long-term planning is to simulate different versions of the demandprogram. The simulation can take into account operative data (for example, masterdata, sales orders, purchase orders, production orders). The simulation can be used tooptimize the demand program and the production and procurement data with regard tomaterial requirements planning, capacity planning, order volumes, purchasing budget,cost center planning, and inventory controlling.

In long-term planning, you set up independent �planning areas�, which you cansubsequently integrate into operative planning. Within these planning areas, separatesimulation stock data is calculated and maintained which can be used to carry out



planning in scenarios. An individual simulative planning area exists for each scenarioin the system. Operative data can be copied to or referenced (taken into account) byone or more simulative planning areas.

You can execute simulative planning for the long or short term. There is no timerestriction for the execution of long-term planning. The planning periods for long-termplanning and operative planning should correspond so that business inconsistenciescan be avoided.

Figure 190: Position in the Functional Environment

Long-term planning can be executed on the basis of operative master data: BOMs,routings, work centers, and material masters. This means you do not have to createany new operative data.



If you want to simulate situations that use differing master data, you can also createspecial master data for long-term planning:

� You can create special long-term planning routings and run simulationswith regard to lead-time scheduling and capacity planning. To do this, youmust maintain a routing selection ID that controls the long-term routing inCustomizing. This selection ID is assigned to a scenario, that is, a simulativeplanning area, in the Customizing IMG activity �Define scheduling parametersfor planned orders�.

� In addition, you can use special long-term planning BOMs. To do this, youdefine a special usage for long-term planning in the Customizing IMG activity�Define BOM usages� and define the allowed material types for the BOM headerand BOM item for this usage. In the Customizing IMG activity �Define order ofpriorities for BOM usages�, you then maintain a BOM selection ID that calls upthe long-term BOM. This selection ID is assigned to a simulative planning areawhen creating the scenario in the field �BOM selection ID�.

The tools available for long-term planning are used in the same way as are the tools inoperative planning. Thus, very little additional training is required for these tools.

You can exclude BOM items from long-term planning using the explosion controlindicator in the individual items.



Planned Independent Requirements

Figure 191: Simulative Planned Independent Requirements

Several planned independent requirements versions can be created for one material.

Planned independent requirements versions can be created using the following:

� The sales and operations plan of a material or a product group� The results of flexible planning from sales and operations planning� Forecasting� Planned independent requirements of other materials� Planned independent requirements versions of the same materials� Manually

A planned independent requirements version can be set as active or inactive. Inactiveversions are created for simulation purposes. Only active planned independentrequirements versions are taken into account in operative planning.

If, according to the settings in the scenario, sales orders are included in the simulativeplanning area along with planned independent requirements, then MRP plans in thesimulative planning area using the same logic as in operative planning.



Planning Scenarios

Planning Scenario (1)

Consumption-Based Materials

Planning Scenario (2)

If the indicator �Include firm receipts� is set, the following elements are included inthe simulation: QM inspection lots, purchase orders (incl. shipping notification),scheduling agreement schedule lines (incl. shipping notification), production orders(including capacity requirements), dependent and independent reservations, transportcalls for stock transport orders and for stock transfer reservations.

If the indicator �consider sales orders� is set, the following elements are included inthe simulation: Sales orders, customer inquiries, customer quotations, SD schedulingagreement (also external service providers), contracts, deliveries, external sales orders.

You maintain quota arrangements in operative planning and set them up using thequota arrangement usage in the material master for operative and long-term planning.You administer separate data for the quota-allocated quantity and quota rating inoperative planning and for each scenario in long-term planning.

Figure 192: Planning Scenario (1)



When creating a planning scenario, you can set defaults for certain settings for thescenario by selecting one of the default setting choices on the Create PlanningScenario screen. Options include� Long-term planning�, �Gross long-term planning�,and� Short-term simulation�. You can change these defaults at any time. You can alsocopy the settings from another scenario.

If you have selected the indicator �Gross long-term planning�, the system suggestscontrol parameters with which you plan requirements quantities for cost evaluationand budgeting purposes without taking into account operative available stocks,material-specific lot sizes, or scrap.

The settings and items you define in the planning scenario include:

� The plants for which the simulation is to be carried out,� The planned independent requirements versions (active or inactive) to be used

in the simulation,� What opening balance (stock) the simulation is to assume (zero stock, safety

stock, plant stock at the time of planning, average plant stock),� Whether to include firm receipts (purchase orders, production orders and

reservations) in the net requirements calculation,� Whether dependent requirements for consumption-based materials, KANBAN

materials and bulk materials are created,� Which version of the available capacity is used in the simulation.

Figure 193: Consumption-Based Materials



Consumption-based materials are not planned in MRP because no dependentrequirements are created for these materials. In consumption-based planning,materials are not replenished during the MRP run until stock falls below the reorderpoint or in forecast-based planning, until the forecasts for future consumptionrequirements are not covered.

In long-term planning, dependent requirements can be created for consumption-basedmaterials, bulk material, and KANBAN materials, that is, the material is planned inthe scenario as though it were a material planned using MRP. You are thus providedwith a preview of the procurement quantities that are necessary to satisfy the simulatedindependent requirements.

You can analyze the forecast more closely in the Purchasing Information Systemin the long-term planning evaluations.

Figure 194: Planning Scenario (2)



In the planning scenario you also set :

� Whether the system should work with direct production, that is, whether duringplanning it should create a collective order for materials that are to be produceddirectly. When using direct production in long-term planning, only the headerorder can be changed and not the subordinate orders in the collective order.

� Whether the long-term planning should be executed as gross requirementsplanning and whether the calculation of scrap in the long-term planning run isto be deactivated.

� Whether long-term planning BOMs should be used.� Whether firm planned orders from operative MRP should be copied to the

long-term planning (firm planned orders can be changed) and whether firmpurchase requisitions for operative planning (these cannot be changed) should betaken into account in the simulative planning area.

� Whether the planning time fence is also to be effective in long-term planning formaterials that are affected by a planning time fence in MRP.

� Whether sales orders are taken into account in long-term planning. (Thesecannot be changed from long-term planning.)

� Whether make-to-order production or individual project planning is to beexecuted for the materials of the corresponding strategy. Make-to-order planningpresupposes that sales orders with a requirements type for make-to-orderplanning are taken into account. If the indicator �Make-to-order and projectplanning� is not set, the sales orders with a make-to-order planning requirementstype are ignored in the scenario.

Executing and Evaluating Long-term Planning

Transfer Firm Planned Orders

All firmed planned orders are always transferred, which means that a transfer periodcannot be defined; the temporary end of the transfer period is the latest order end dateof the operative planned order.

Only the planned order headers are transferred (copied). Any changes to componentsor capacity requirements that exist in operative planning are not copied.

Long-term and Operative Planning

Using a figure, explain the difference between activating a planned independentrequirement from the scenario and activating the corresponding planned independentrequirements in the planned independent requirement maintenance. Use the followingnumerical example:



The transfer period is to be from June to September.

Version 00 (current operative production schedule, active):

July 100 pieces Aug. 100 pieces Sep. 100 pieces

Simulative version 20 (assigned to scenario 020, not active):


Result of activating the scenario: Version 00 is replaced by the figures from version20 within the transfer period:

Version 00 (operative production schedule, active):


Version 20 remains unchanged and inactive.

Result of setting version 20 to active in the planned independent requirementmaintenance: The master production schedule is the sum of all active plannedindependent requirements, and is now the result of:

Version 00 + version 20 (both active):


Transfer Firm Planned Orders (1)


When you transfer firm planned orders (from long-term planning to operativeplanning), you must define a transfer period (in contrast to transferring firm plannedorders to long-term planning).

Long-Term Planning: Start Data

Long-Term Planning: Resulting Data

These are repetitive in nature and summarize the opportunities for transferring data tolong-term planning and transferring resulting data to operative planning.



Figure 195: Executing Long-Term Planning

A planning scenario must be released before long-term MRP can executed. Once theplanning scenario is released, planning file entries for all materials of the plants thatare assigned to the planning scenario are created in the background. Each scenariothus has its own planning file entries for long-term planning.

Depending on the settings in the scenario, external requirements and fixed receiptsare included in the long-term planning along with the assigned planned independentrequirements. The indicator �Include sales orders� establishes that sales orders,scheduling agreements, contracts, and deliveries are taken into account. The indicator�Include firm receipts� refers to the inclusion of production orders, purchase orders,schedule lines, reservations, transport releases, and QM inspection lots.

Operative data that flows into long-term planning cannot be changed in the simulativeplanning area. This does not include firmed operative planned orders: The orderheaders for firmed planned orders (that is, basic dates and order quantity) are copiedto the simulative area. (You control the transfer of firm planned orders in the initialscreen of the planning run.)

Only (simulative) planned orders are created in long-term planning. You can executelong-term planning as total planning, single-item planning, single-item planning insimulative mode, or using the planning table from repetitive manufacturing.



After evaluating and checking the simulative planning results, the planned independentrequirements version can be activated in the planning scenario and can be given a newversion number. Once activated, the planned independent requirements version iseffective for operative planning. You can also transfer simulative planned orders fromlong-term planning to operative planning.

Integration with operational planning data

Note: Many of the slides have been made �print only�.�� This is due tothe overlap between Long term planning and many of the other sectionspreviously covered. However it is good reference material for the students.

Transfer Firm Planned Orders

All firmed planned orders are always transferred, which means that a transfer periodcannot be defined; the temporary end of the transfer period is the latest order end dateof the operative planned order.

Only the planned order headers are transferred (copied). Any changes to componentsor capacity requirements that exist in operative planning are not copied.

Long-term and Operative Planning

Using a figure, explain the difference between activating a planned independentrequirement from the scenario and activating the corresponding planned independentrequirements in the planned independent requirement maintenance. Use the followingnumerical example:

The transfer period is to be from June to September.

Version 00 (current operative production schedule, active):


Simulative version 20 (assigned to scenario 020, not active):


Result of activating the scenario: Version 00 is replaced by the figures from version20 within the transfer period:

Version 00 (operative production schedule, active):


Version 20 remains unchanged and inactive.



Result of setting version 20 to active in the planned independent requirementmaintenance: The master production schedule is the sum of all active plannedindependent requirements, and is now the result of:

Version 00 + version 20 (both active):




When you transfer firm planned orders (from long-term planning to operativeplanning), you must define a transfer period (in contrast to transferring firm plannedorders to long-term planning).

Long-Term Planning: Start Data

Long-Term Planning: Resulting Data

These are repetitive in nature and summarize the opportunities for transferring data tolong-term planning and transferring resulting data to operative planning.

Figure 196: Long-Term Planning: Start Data



The following can flow into the simulative planning area:

� Active or inactive planned independent requirements version� Sales orders� Operative, firmed planned orders� Firmed purchase requisitions� Production orders� Purchase orders

Figure 197: Long-Term Planning: Resulting Data

The following can be copied from the simulative planning area to the operativeplanning area:

� Activated planned independent requirements versions� Firmed simulative planned orders for materials procured externally even as

purchase requisitions or schedule lines.



Figure 198: Transfer Firm Planned Orders

You can copy firmed planned orders from operative MRP to the simulative planningarea. Only the planned order headers are copied during the copying process. Changesto components of planned orders that have been made in operative planning are notcopied. With simulative planning, the planned order components are created againaccording to the BOM selected in the simulative planning run.

The firmed planned orders are copied per material by the simulative planning runin the simulative planning area. During this process, all firmed planned ordersare selected for each material of a BOM structure and are adopted (copied to thesimulative planning area). These are also firmed in long-term planning but can bechanged manually there.

The order finish date of the planned order that was selected and copied last is savedas the temporary end of the copying period for each material. The copying period isdetermined by the firmed operative planned order that is furthest in the future.

When copying a firmed planned order from operative planning, all firmed andunfirmed simulative planned orders in the simulative planning area with order finishdates within the copying period are deleted.



Figure 199: Planning Levels for Capacity Data

Capacity data can be calculated on different levels:

� In the operative MRP at detailed scheduling level� In the long-term planning at detailed scheduling level, whereby the data is

separate for each scenario� In the sales and operations planning at rough-cut planning level

The capacity evaluations for operative MRP and long-term planning are executedseparately. Only capacity requirements which arise from production orders consideredas final receipts in long-term planning are included in the capacity evaluation of thecorresponding scenario.



Figure 200: Capacity Check with Overload Display

The same functions for capacity planning are available in long-term planning as inmaterial requirements planning.

Capacity planning can be called from planned order processing, the planning result ofsingle-item planning, or from the stock/requirements list.

In the capacity check of the stock/requirements list, the available capacity, the totalcapacity requirements independent of materials and the capacity requirements of thismaterial are displayed in periods for each work center and capacity category. Overloadsituations are highlighted in color. The overload function calculates the maximum loadfor each work center and capacity category and the overload is highlighted in color.

A planning run with the scheduling indicator 2 �lead-time scheduling and capacityplanning� is a prerequisite for the capacity check. The planning run with schedulingindicator �1� (basic-date scheduling) does not reduce capacity requirements.



Figure 201: Long-Term and Operative Planning

The operative demand program results from the total of all active planned independentrequirement versions.

A planned independent requirements version can be activated in two different ways:

By setting the active indicator of the planned independent requirements version: Theoperative planning is the total of all active planned independent requirements versions.Therefore, this procedure is the equivalent of an addition to the plan up to now.

By �activating� in the scenario: The source planned independent requirementsversion is copied to the target planned independent requirements version. During theactivation, if an already active version has been selected as the destination versionfor the transfer and the periods overlap in which the source and destination versionsof planned independent requirements exist, the independent requirements of thedestination version in the overlapping periods are overwritten by the independentrequirements of the source version.



Figure 202: Transfer Firm Planned Orders (1)

Following the simulation, you can adopt firmed simulative planned orders of asimulative planning area in the operative planning (copied to the operative planningarea). In the operative area, you can create purchase requisitions or schedule lines formaterials procured externally.

This type of copying is carried out for a material in the transaction �interactivesingle-item planning� of operative MRP. In the subsequent screen of the planningresult, the copying function is started using the function �Edit→ Copy simulativeplanned orders�. You explicitly define the start and finish of the copying period forthis process.

All firmed planned orders with order finish dates within the selected period are copiedfrom the simulative planning area to the operative planning area. In the operativeplanning area, all firmed and unfirmed planned orders, with an order finish date withinthe copying period are deleted, so that only the copied planned orders in the operativeplanning remain in this period.

If operative planned orders were converted into production orders before the transfer,the production orders still remain after the transfer of the planning results and thecopied firm planned orders are added to them which would therefore result in doublingthe replenishment. You can avoid unnecessary double procurement if you convert theplanned orders into production orders before the start of the simulative planning andhave defined in the planning scenario that all firmed receipts are taken into account inthe long-term planning.



Figure 203: Transfer Firm Planned Orders (2)

Following the simulation, you can adopt firmed simulative planned orders of asimulative planning area in the operative planning. For materials procured externallyduring the transfer into the operative area, you can create firmed purchase requisitionsor firmed schedule lines for simulative planned orders of the order type �NB�.

To do this, you enter the respective creation indicator in the initial screen of interactivesingle-item planning in the MRP menu in the fields �Create purchase requisition�and �Schedule lines� (purchase requisitions or schedule lines, schedule lines in theopening period or purchase requisitions in the opening period).

The creation of schedule lines requires that the scheduling agreement item is alreadyentered in the firmed simulative planned order before the transfer. This is achievedby maintaining the scheduling agreement item as MRP-relevant before the long-termplanning run in the simulative area.

After the transfer, the firmed planned orders, purchase requisitions, and schedule linesare displayed in the planning result. Once you save the planning result, the transferto operative planning is closed.

If there were non-firmed purchase requisitions and schedule lines in the copyingperiod in operative planning, these are deleted during the transfer of the planningresult, and the purchase requisitions and schedule lines that were created during thetransfer are used in the operative planning. If the purchase requisitions and schedulelines were firmed in the operative planning, they are still used after the transfer of the



planning result. You can avoid unnecessary double purchase requisitions and schedulelines, if you have defined in the planning scenario beforehand that all firmed receiptsare taken into account in the long-term planning.

Demonstration: Transfer Firm Planned Orders

PurposeTo demonstrate the transfer of firm planned orders

System DataSystem:Client:User ID:Password:Set up instructions:1. Complete the exercise first! The Exercise steps must be completed before you

can proceed with following demo steps.

2. Call stock/requirements list for material R-F1## that is to be planned in scenario##. Firm planned orders: Set the manual firming date to the last day of thecurrent month + 11.

3. Display and explain the transaction for transferring firm planned orders tooperative planning (transaction �Single-item, Interactive� for material R-F1##,Edit→ Copy Simulative LT planned orders).

Execute function: Material R-F1##, source scenario 0##, interval to copy = 1stof current month +6 to last day of current month + 11.

4. Display the result: Firmed planned orders were copied from long-term planningto the operative planning; purchase requisitions are generated in the openingperiod for the planned order depending on the requisition creation indicator inthe �interactive single-item planning�.



565 Exercise 21: MRP RunExercise Duration: 25 Minutes

Exercise ObjectivesAfter completing this exercise, you will be able to:� Create a scenario for long-term planning� Execute and evaluate a long-term planning run

Business ExampleA future demand program needs to be simulated for pump R-F1## in plant 1000,and a capacity consideration should also be made. Dependent requirements forconsumption-based materials should also be calculated in order to check the existingframework agreement with the vendor.

Task: Create and evaluate a �what-if� planning scenario.You will need to create simulated demand to proceed with planning a specific�what-if� scenario. Once the demand is entered, a planning scenario will be created.You will then run long term planning and evaluate the results.

1. Create inactive planned independent requirements for material R-F1## in plant1000 (version ##) using data from the table below. Use the long-term planningmenu. Set the planning period to monthly.

Currentmonth +

7

Currentmonth +

8

Currentmonth +

9

Currentmonth +

10

Currentmonth +

11

Currentmonth +

12350 350 350 350 300 450

Hint: Make sure that the active indicator is not set.

2. Create a planning scenario in order to simulate the planning of the inactiveplanned independent requirements (version ##). Assign this scenario to plant1000. Release and save the scenario.

Number of the scenario: 0## (## = group number)

Text of scenario: Long-term scenario ##




Use the settings indicated below:

Planning Period (From) Current month +7Planning Period (To) Last day of month + 12Opening stock 1 - Safety StockDep. rqmts for reorder point SelectConsider sales orders Do not selectSwitch off planning time fence SelectUse direct production Do not selectUse make- to-order and projectplanning

Do not select

Include firm recepts Do not selectInclude firm purchase requisitions Do not selectInclude firm planned orders Do not select

3. Review the stock/requirements situation of material number R-F1##, plant 1000,and scenario 0##.

Hint: It is a good idea to call the stock/requirements list for the scenarioin a separate session, because you will use it to constantly monitor theplanning progress.

4. Does the system display the planned independent requirements for the version## that flow into scenario 0## in the list? _________

5. Do the planned independent requirements that flow into scenario 0## appearin the operative stock/requirements list that you call from the MRP menu?_________

Why (not)? ________________________________________

6. Execute long-term planning for material R-F1## in plant 1000 and scenario0##. Later, you want to look at the capacity situation in scenario 0##, whichis relevant for the production of material R-F1##, therefore the capacityrequirements should be created in long-term planning.








Also plan unchanged components. Select

7. Did the system create procurement elements to cover your planned independentrequirements? ____________

8. Switch to material R-T3## in the stock/requirements list for scenario 0##. Whatis the MRP type of the material and what significance does this have?

____________________________________________

Did long-term planning create dependent requirements?

________

9. Activate the planned independent requirements version ##. These requirementswill now be available for operative planning. Use the transaction Changeplanning scenario to activate the planned independent requirements.

Starting from the long-term planning menu, you Choose Activate IndependentRequirements. In the dialog screen that follows, select planned independentrequirement version ## and as the target version enter the planned independentrequirement version number 00. For the transfer period, the system suggests theperiod that you had entered as the planning period in the scenario. Delete theindicator for Test mode, select the indicator Create list and then the buttonActivate.

10. Call the operative stock/requirements list. Are the LSF requirements that youcreated in long-term planning displayed? _____________

In which planned independent requirement version are these requirementsDisplay the element from the list in order to answer the question?

_________



Solution 21: MRP RunTask: Create and evaluate a �what-if� planning scenario.You will need to create simulated demand to proceed with planning a specific�what-if� scenario. Once the demand is entered, a planning scenario will be created.You will then run long term planning and evaluate the results.

1. Create inactive planned independent requirements for material R-F1## in plant1000 (version ##) using data from the table below. Use the long-term planningmenu. Set the planning period to monthly.

Currentmonth +

7

Currentmonth +

8

Currentmonth +

9

Currentmonth +

10

Currentmonth +

11

Currentmonth +

12350 350 350 350 300 450


a) Menu path: Logistics→ Production→ Production Planning→Long-Term Planning→ Planned Independent Requirements→ Create

b) Enter data on the initial screen as follows:

Material R-F1##Plant 1000Version ##Planning Period M

c) Select enter. On the Plnd.Ind Reqmts Create: Planning table enter themonthly projections per the table.


Save the planned independent requirements.

2. Create a planning scenario in order to simulate the planning of the inactiveplanned independent requirements (version ##). Assign this scenario to plant1000. Release and save the scenario.




Number of the scenario: 0## (## = group number)

Text of scenario: Long-term scenario ##

Use the settings indicated below:

Planning Period (From) Current month +7Planning Period (To) Last day of month + 12Opening stock 1 - Safety StockDep. rqmts for reorder point SelectConsider sales orders Do not selectSwitch off planning time fence SelectUse direct production Do not selectUse make- to-order and projectplanning

Do not select




Include firm recepts Do not selectInclude firm purchase requisitions Do not selectInclude firm planned orders Do not select

a) Menu path: Logistics → Production → Production Planning →Long-Term Planning→ Planning Scenario→ Create

b) Enter the scenario and description. Confirm your entries with Enter andmake the following settings:

c) Enter the settings required above.

d) Assign plant 1000 to the scenario, by choosing plants , followed

by new entry . Make the respective entry and Confirm.

e) Assign your Planned independent requirements (version##)to the scenario by choosing Planned Independent

Requirements , followed by new

entry . Make the respective entry and Confirm.

f) Release and save the scenario using . Confirm thatyou wish to release the scenario and create the planning file entriesimmediately.

3. Review the stock/requirements situation of material number R-F1##, plant 1000,and scenario 0##.

Hint: It is a good idea to call the stock/requirements list for the scenarioin a separate session, because you will use it to constantly monitor theplanning progress.

a) Menu path: Logistics → Production→ Production Planning →Long-Term planning→ Evaluations→ Stock/Requirements List

4. Does the system display the planned independent requirements for the version## that flow into scenario 0## in the list? _________

a) Planned independent requirements of version ## displayed: Yes




5. Do the planned independent requirements that flow into scenario 0## appearin the operative stock/requirements list that you call from the MRP menu?_________

Why (not)? ________________________________________

a) Independent requirements also in operative stock/requirements list: No

Reason: Only active planned independent requirement versionsare taken into account and displayed in operative planning. Theindependent requirement version ## is, however, not active.

6. Execute long-term planning for material R-F1## in plant 1000 and scenario0##. Later, you want to look at the capacity situation in scenario 0##, whichis relevant for the production of material R-F1##, therefore the capacityrequirements should be created in long-term planning.





Also plan unchanged components. Select

a) SAP ERP menu path: Logistics→ Production→ Production Planning→Long-Term Planning→ Long-Term Planning→ Single-Item, Multi-LevelPlanning (MS02)


c) Select Back twice to return to the main menu.

7. Did the system create procurement elements to cover your planned independentrequirements? ____________

a) Review the stock/requirements list for material R-F1##, scenario ##.

Menu path: Logistics → Production→ Production Planning →Long-Term planning→ Evaluations→ Stock/Requirements List

b) Procurement elements created: Yes

8. Switch to material R-T3## in the stock/requirements list for scenario 0##. Whatis the MRP type of the material and what significance does this have?




____________________________________________

Did long-term planning create dependent requirements?

________

a) MRP type of material R-T3## can be seen directly in the header dataof the S/R List:

VB: Reorder point planning

Dependent requirements created: Yes Dependent requirements werecreated, for this material, because in the planning scenario, we selected theindicator to create dependent requirements for reorder point materials.

9. Activate the planned independent requirements version ##. These requirementswill now be available for operative planning. Use the transaction Changeplanning scenario to activate the planned independent requirements.

Starting from the long-term planning menu, you Choose Activate IndependentRequirements. In the dialog screen that follows, select planned independentrequirement version ## and as the target version enter the planned independentrequirement version number 00. For the transfer period, the system suggests theperiod that you had entered as the planning period in the scenario. Delete theindicator for Test mode, select the indicator Create list and then the buttonActivate.

a) Menu path: Logistics → Production → Production Planning →Long-term planning→ Planning scenario→ Change (MS32)

b) Access your planning scenario 0##.

c) Select Activate Independent Requirements

.

d) Enter data per the table below and select Activate.

Check box - Version SelectTarget Version 00From Month+7To Month+12 (last day)Test Mode Do not selectCreate List Do not select




10. Call the operative stock/requirements list. Are the LSF requirements that youcreated in long-term planning displayed? _____________

In which planned independent requirement version are these requirementsDisplay the element from the list in order to answer the question?

_________

a) LSF requirements displayed: Yes

Planned independent requirements version: 00



Lesson Summary

You should now be able to:� Discuss the usage of long-term planning� Execute long-term planning


SCM240 Unit Summary

Unit SummaryYou should now be able to:� Discuss the usage of long-term planning� Execute long-term planning




1. Where are the settings for long-term planning defined?

2. Identify the true statements:Choose the correct answer(s).□ A Sales orders must be included in the simulated plan.□ B The PTF can be deactivated for the long term plan.□ C Dependant requirements for Kanban and bulk materials can be

created in the planning scenario.□ D Using the current stock level is optional□ E Planned Independent requirements can be transferred to the operative

plan

3. The principle of long-term planning is to simulate different versions of thedemand program.Determine whether this statement is true or false.□ True□ False

4. On which level are the capacity data calculated while executing long termplanning?

5. Operative data that is used in the long-term plan (ex. sales orders, Productionorders, firm purchase requisitions and firm planned orders) can be changed inthe simulative planning area.Determine whether this statement is true or false.□ True□ False



578Answers

1. Where are the settings for long-term planning defined?

Answer: Settings are made in the planning scenario.

2. Identify the true statements:

Answer: B, C, D, E

Sales orders do not have to be included. Setting in the planning scenario.

3. The principle of long-term planning is to simulate different versions of thedemand program.

Answer: True

The principle of long-term planning is to simulate different versions of thedemand program. It can optimize the demand program.

4. On which level are the capacity data calculated while executing long termplanning?

Answer: Capacity data is calculated on detailed scheduling level whileexecuting long term planning.

5. Operative data that is used in the long-term plan (ex. sales orders, Productionorders, firm purchase requisitions and firm planned orders) can be changed inthe simulative planning area.

Answer: False

Only firmed planned orders can be changed in the simulation.


SCM240 Course Summary

Course SummaryYou should now be able to:


inventory process� Gain detailed working knowledge of MRP/MPS in SAP ERP� Demonstrate how to configure MRP in SAP ERP


IndexAAssembly level planning, 206ATP check, 619Available to PromiseATP, 617

BBackward scheduling, 421Basic scheduling, 424Bill of material, 141BOM explosion, 425, 447BOM explosion date, 468BOM Explosion number, 474CCapacity leveling, 277Company-code clearingaccount, 381

Consumption, 203Control parameters, 155DDynamic safety stock, 308EException messages, 72FFinal assembly, 228Firming period, 278Forward scheduling, 423IItem categorystock transfer, 380

LLead-time scheduling, 439

lot size, 522Lot-size, 460Low-level code, 133MMaterial master record, 207maximum quantity, 524MPS items, 275MPS schedule, 278MRP elements, 49MRP group, 123MRP list, 53NNet requirements calculation,300

OOrder Report, 43PPegged requirements, 45Phantom assembly, 208Planned independentrequirements, 231

Planning file, 157Planning horizon, 159Planning run, 134, 232Planning segments, 34Planning without finalassembly, 225

Procurement proposal, 419Procurement type, 374, 420Production version, 464Qquota arrangement, 511


Index SCM240

quota arrangement usage, 514quota base quantity, 517quota-allocated quantity, 517RReceipt days� supply, 85Reduction, 444requirement splitting, 521Requirements class, 256Requirements/stock overview,380

Rescheduling horizon, 302Routing, 468SSafety stock, 308Safety time, 327

Sales order, 207Selection rules, 48source determination, 493source list, 535source list requirement, 536Special procurement key, 374Stock in transit, 381Stock transfer, 367, 376Stock transport order, 376, 380Stock transport schedulingagreement, 380

Supplying plant, 375TTransfer posting, 367


FeedbackSAP AG has made every effort in the preparation of this course to ensure the accuracyand completeness of the materials. If you have any corrections or suggestions forimprovement, please record them in the appropriate place in the course evaluation.


scm production planning

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