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MRP Planning Process

Dear SAP Friends,

In this blog will try to Explore different Planning Process used for Full filling Business Needs.

We use special planning processes, for below reasons

  • if we do not want to plan on a plant level, but either on a multi-plant levelor only for a part of a plant
  • if we want to work with special procurement types.

Special planning processes include

  1. Subcontracting
  2. Direct production
  3. Direct procurement
  4. Storage location MRP
  5. Planning with MRP areas
  6. Multi-plant/site planning
  7. Requirements grouping for individual project planning

As the Content is vast will split in to 2 Parts in First part will cover

Subcontracting

Direct Production

Direct Procurement

Storage Location MRP

Subcontracting

In subcontracting, the vendor is provided with materials (components), which he uses to produce the finished product.

Integration

  • From the point of view of materials planning, subcontracting is initiated by the special procurement key Subcontracting. The special procurement key is allocated to the finished product or the assembly in the material master ( MRP 2view) In order to plan specific material requirements for each individual subcontractor, we can use MRP areas. We can thereby create an individual MRP area for every subcontractor.

Subcontracting with Production Version

If an assembly is produced by different subcontractors or produced in-house with different BOMs , the system is to take this into account during the BOM explosion in the planning run.

Prerequisites

  • We have entered the special procurement key Subcontractingin the material master ( MRP 2 view) of the assembly.
  • We have created a production versionin the material master ( MRP 4 view) of the assembly, in which we have entered the alternative BOM relevant to the subcontractor/vendor.
  • We have entered this production versionin the purchasing info record for the subcontractor.
  • We have entered the subcontractorin the source list or in the quota arrangement for this assembly . If we do not use quota arrangements, we have to set the Record relevant to MRP indicator in the MRP column of the source list .
  • We have set the Scheduling info record/agreementindicator in Customizing for MRP in the IMG activity Define external procurement.

Integration

We can find the transactions for maintaining info records and the source list in the Purchasing menu, under Master data.

Features

  • Material requirements planning adopts the production version from the subcontractor’s purchasing info recordand explodes the corresponding alternative BOM that is defined in the production version. This also applies to planned orders and purchase requisitions.

Caution

The production version from the subcontractor purchasing record has a higher priority than the production version from the quota arrangement.

  • In Purchasing, when assigning the source of supply, the production version is copied from the subcontractor info record into the purchase requisition or purchase order and is used for selection in the BOM.
  • Production versions that we have entered in the quota arrangement are considered in MRP and Purchasing.

 

Direct Production

Use

If we do not use direct production, no link exists between the planned orders/production orders within the BOM structure. This means that the production order is scheduled individually, and costs are dealt with individually for every assembly and component (except for make-to-order production – here we can jointly consider the costs for several production levels). Once production is finished, the goods receipt for these components is posted in the warehouse so that goods issue of the components can be carried out for the production order of the superior assembly.

In contrast, the aim of direct production is to jointly regard scheduling and costing procedures for finished products, assemblies and components within a BOM structure.

The components that are produced directly relate to each other in a multi-level collective order by entering the respective superior and leading planned order or production order. The collective order can be scheduled together and the costs incurred for the collective order can also be dealt with together

A further advantage of direct production is the simplified process: Components that are produced directly are not placed in stock and are consumed directly by the superior production order. No manual goods receipt/issue postings are necessary. These postings are increasingly executed automatically during the confirmation of an operation in a production order.

Caution

Direct production does not consider available plant stock.

Prerequisites

  • If we want to use direct production for a componentall the time, we have entered the special procurement key for direct production in the material master for the component (MRP 2 view).
  • If we want to use direct procurement for a BOMonly, we have entered the special procurement key for direct procurement in the corresponding BOM item in the MRP data This entry overwrites the entry in the material master.

Note

If we have activated direct production in the material master, we can switch off direct production for a BOM, if we deactivate direct production in the MRP data area of the corresponding BOM item under Explosion type. This entry overwrites the entry in the material master.

Features

Direct production is always triggered in the planning run.

  • A special indicator is set internally for dependent requirementsof the components that are produced directly. This passes on the relevant information for direct production to MRP. During the planning of these components, the system creates corresponding planned orders for direct production for these dependent requirements. The system displays dependent requirements and planned orders for direct production in a separate direct production segment in the MRP list and the stock/requirements list.
  • When the planned order for the finished product is converted into a production order, all planned orders for subordinate components that are to be produced directly are automatically converted into production orders.
  • The system adapts planned orders for direct production to changes in date and quantity of the superior assembly, even if they are firmed, so that the consistency of the collective order is kept. Manual changes are reversed.

When firmed purchase requisitions for direct production are changed, the system automatically sends the MRP controller a mail with the data for the change

Direct Procurement

Using the direct procurement procedure, we can order BOM components for a planned order directly instead of via the warehouse.

Note

Direct procurement is also possible in connection with make-to-order production and engineer-to-order production.

There are two alternative processes:

  • using the special procurement keyDirect procurement

This process is like the direct production process.

  • using the item categoryNon-stock item.

We recommend the process using the special procurement key.

Prerequisites

  • For the plant and/or for an MRP group, we have defined whenthe direct procurement is to be triggered. In Customizing for MRP, we have set the indicator in the Direct procurement field of the IMG activity Settings for direct procurement as follows:
  • Indicator 1or 3 (these are identical), if direct procurement is to be triggered during MRP
  • Indicator 2or blank (these are identical), if direct procurement is only to be triggered after the conversion or creation of a production order.

Process Using the Special Procurement Key for Direct Procurement

  • We have set the item type stock itemfor the components in the BOM, which are to be procured directly.
  • If we want to use direct procurement for a particular componentall the time, we have entered the special procurement key for direct procurement in the material master for the component ( MRP 2 view).
  • If we want to use direct procurement for a particular BOMonly, we have entered the special procurement key for direct procurement in the corresponding BOM item in the MRP data This entry overwrites the entry in the material master.

Note

If we have activated direct procurement in the material master, we can switch off direct procurement for a particular BOM, if we deactivate direct procurement in the MRP data area of the corresponding BOM item under Explosion type . This entry overwrites the entry in the material master.

Process Using the Item Category for Non-Stock Item.

  • We have set the item type non-stock itemfor the components in the BOM that are to be procured directly. We have also entered an item number and a detailed long text for the BOM item.

This is the only possible process for materials without a material master.

Features

The system automatically triggers direct procurement at the selected time.

  • In the planning run, the system does not create dependent requirements for materials without a material master, but does create purchase requisitions directly for them. The system thereby copies the BOM long text into the purchase requisition. The system does not display the materials in the MRP list or stock/requirement list, because they do not have a material number and the system can only display materials with material numbers in these lists.

Note

We set the copying of the long text for the BOM item in Customizing for Purchasing in the IMG activity Define text types and copying rules.

  • For materials with a material master, MRP creates dependent requirements and (according to the creation indicator for the planning run) planned orders for direct procurement or purchase requisitions for direct procurement. The system displays these in a separate direct procurement segment in the MRP list and the stock/requirements list.
  • When the planned order for the finished product is converted into a production order, all planned orders for subordinate components that are to be procured directly are automatically converted into purchase requisitions.
  • The system adapts planned orders for direct procurement and purchase requisitions for direct procurement to changes in date and quantity of the superior assembly, even if they are firmed, so that inconsistencies in planning are avoided. Manual changes are reversed.

When firmed purchase requisitions for direct procurement are changed , the system automatically sends the buyer a mail with the data for the change

Caution

We can only make restricted changes to purchase requisitions for direct procurement. Changes to quantities and dates are not possible.

Storage location MRP

Material requirements planning is usually carried out at plant level. This means that the system calculates the plant stock (except for individual sales order stocks) as the total of the stocks at the individual storage locations. It may be necessary to exclude storage location stock from the plant’s MRP run, or we may want to plan certain stocks separately.

Example

  • A warehouse is geographically too far away from the production location that is planned with the storage location MRP.
  • The stock of a storage location is only available for service and not for production.

Integration

If we plan several storage locations together or also want to plan storage locations using MRP, we can plan with MRP Area

Key Features

The following options are available:

  • The storage location is to be planned separately. Fundamentally, separate storage location MRP is carried out using consumption-based planning . In this case, we must also define a reorder level and a replenishment quantity (fixed lot size) at storage location level. In so doing, it is possible to monitor this storage location’s stock automatically, and if the stock level should fall below the reorder level the storage location is also replenished automatically.

In the planning run, stock that lies in this storage location, and which is planned separately, is not contained in the available stock at plant level.

If a receipt element (planned order, purchase requisition, purchase order, production order, and so on) or an issue element (reservation, sales order) refers to either a storage location that is excluded from the planning run or one that is planned separately these elements are not taken into account at plant level.

Reservations and sales orders, which are planned in a storage location for which MRP is carried out separately, are not included when calculating plant stock. The net requirements calculation for these requirements is restricted to this storage location.

  • The storage location is excluded from the planning run. In this case, the storage location’s stock is not contained in the available stock at plant level, nor is it included in the planning run. The exclusion of storage location stock is only relevant to the planning run. We can, however, still make withdrawals from this stock.

 

in second Part will talk about

Planning with MRP areas

Multi-plant/site planning

Requirements grouping for individual project planning

 

Please share, Like and Comment anything else you want to share or add points.

Thanks & Regards

Ruthvik Chowdary

SME – S/4 HANA Manufacturing & Procurement

SAP Ariba P2P

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