SAP MRP SAP MM PP Material requirement planning

1. MRP is a production planning and inventory control
system used to manage manufacturing processes. It
helps to check the availability of materials in a
storage location. It is a system which is used to plan
manufacturing activities, purchasing activities and
align delivery schedules. The reports generated by
this process help the company to decide whether
the materials required for production are available
in the organization or need to be procured from
outside.

2. Content
 Traditional Material MRP – (Material requirement
Planning) types
1) Net requirement calculation
2) Lot size Procedures
3) Procurement types
4) Scheduling
5) BOM explosion
 CBP – Consumption Based Planning
types
1) Reorder point planning.
2) Forecast based planning.
3) Time based planning

3. Dependent & Independent requirement
Independent requirement is nothing but the requirement coming
from sources other than materials. This requirement is not
depending on any other material's requirement.
Example: PIR,CIR,Sale order materials.
Dependent requirement is nothing but the requirement from the
header material or some other material. This requirement is
purely relying on its header material.
Example: Components of BOM
The same material could have dependent requirement as well as
independent requirement. Example: If the material is getting a
requirement from its header thru MRP run then it is dependent
requirement. Same material if it gets some other requirement by
creating PIR, CIR, sale order then it is independent requirement

4. Material Requirement Planning
 MRP run or planning run is an engine which is
used to fill the demand and supply gap.
 Issues and Receipts are called MRP Elements.
Issues include PIRs, dependent
 requirements, order reservations, sales orders,
issuing stock transfer orders, etc. Receipts
 include production orders, purchase requisitions,
purchase orders, open production orders,
 receiving stock transfer order, schedule lines, etc

5.  1. Traditional Material
Requirements Planning (MRP)
In traditional Material Requirements
Planning (MRP), sales order, planned independent
requirements, reservations, dependent requirements that are
created by BOM explosion, and so on are planned
directly as requirements. The materials planning procedure
will create procurement proposal only if these requirements
will result in shortage of material stocks at a certain time.
There are no other requirement that can trigger a
procurement proposal. This procedure is used in “PD-MRP”
MRP Type in
standard SAP R/3.
MRP is especially useful for the planning of finished
products and important assemblies and components (A
materials)

6. Five Steps Of MRP Process
 1) Net Requirement Calculation
 2) Lot-Size Procedures / Calculation
 3) Procurement Types / Proposal
 4) Scheduling
 5) BOM Explosion

7. Net Requirement Calculation
 If a material shortage occurs then the system
calculates a net requirement.
 Available Qty is Stock-Safety Stock.
 Net requirement = Total requirement - Avail Qty.
 You can define the available part of the safety stock in
a MRP group.
 New order proposals are not created until stock levels
have fallen below the available portion of safety stock.

8. Lot size Procedures
 a) Static lot sizing - Lot-to-lot order quantity
- Fixed lot size
– Replenish up to maximum stock level
 b) Periodic lot sizing –Daily lot size
–Weekly / Monthly lot sizing
–Flexible periods according to planning calendar
 c) Optimum lot sizing – Part period procedure
– Least unit cost procedure
– Gross reorder procedure
– Dynamic lot size creation
-Net requirements are used in lot size calculations to determine the
quantities of the individual order proposals
-For period or optimum lot-sizing procedures, several net requirements
are clubbed together in one order proposal.
 Lot sizes can be restricted by using options
- Define maximum or minimum lot size
- Rounding value functions

9. Procurement types
 Procurement types define whether a material is produced
in-house or procured externally.
 If the procurement type is “E” then the system always
uses in-house production time.
 If the procurement type is “F” then the system always
uses Planned delivery time
 All other types of procurement like stock transfer, sub-
contracting, production in other plant are carried out
using special procurement key.
 Procurement key & special procurement key are available
in MRP-2 screen of material master.

10. Scheduling
 Backward Scheduling -The goods receipt processing time
specifies the number of workdays required by the stores
person to check the material received & to place it in stock.
1. In-house production time is calculated by adding
lead time & the floats before & after production.
2.The opening period represents the processing time
required by the MRP controller for converting the planned
orders.
 Forward Scheduling- The system schedules forward starting
from the basic start date.
1."today" scheduling: The system carries out forward
scheduling using the current date as a basic start date.

11. BOM explosion
 In BOM explosion, the system calculates the
components or assemblies required for the
appropriate BOM.
 The key date for evaluation of the BOM (Explosion
date) is the order finish date of the planned order .
 Using the lead time offset in the BOM you can
displace the dependent requirements date of a specific
component.

12.  2. Consumption Based Planning
(CBP)
Consumption-based planning (CBP) is a materials planning
procedure based on past consumption values that determine future requirements by
using forecast or other statistical procedures.
 Originally, in CBP,
planned independent requirements or dependent requirement will not be considered
in the net requirements calculation. Instead, it is triggered when stock levels
fall below a predefined reorder point or by forecast requirements calculated
using past consumption values. So, all the planned independent or dependent
requirements in a certain period of time should have been considered before
(when set the reorder point or calculate the requirement
forecast).
 Consumption-based planning procedures are simple materials
planning procedures which we can use to achieve set targets with relatively
little effort. Therefore, these planning procedures are used in areas without
in-house production and/or in production plants for planning both B- and C-parts and
operating supplies.
 There are three procedures in Consumption Based
Planning (CBP), which are:

13. Consumption Based Planning
Types
 Reorder point
 Forecasting based
 Time phase

14. THANKS