Transcript Chapter 1
Chapter 8
Material Planning Process
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Learning Objectives
1.
2.
3.
4.
5.
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Explain the master data associated with the material
planning process.
Analyze the key concepts associated with material planning
Identify the basic steps in the material planning process and
the data, documents, and information associated with
them.
Effectively use SAP® ERP to execute the basic steps in the
material planning process.
Extract and evaluate meaningful information about the
material planning process using the SAP ERP system.
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Material Planning
Answers three basic questions
What materials are required?
How many are required?
When are they required?
Main objective is to balance the demand for materials with
the supply of materials.
Demand: fulfillment and production processes.
Supply: procurement and production processes.
Other processes -- asset management, project systems,
warehouse management -- also affect demand and supply
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Material Planning
One of the most complex processes within an organization
Outcome is procurement proposals
Internal procurement: planned orders
External procurement: purchase requisitions
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A Basic Material Planning Process
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Organizational Data
Client
Company code
Plant
Storage location
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Material Master
Views discussed for other processes
Basic data
Purchasing related
Sales related
Accounting related
Views highly relevant to material planning
MRP views – plant specific
Work scheduling – plant specific
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Material Master Data for Material
Planning
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Material Master: Procurement Type
In house or internally (production process)
Externally (procurement process)
Both
None
GBI
Finished goods: both
Raw materials: externally
Semifinished goods: internally
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Material Master: MRP Type
Identifies which production planning technique to use
Consumption-based planning
Materials requirements planning (MRP)
Master production scheduling (MPS)
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Material Master: ConsumptionBased Planning
Derives requirements based on historical consumption data
Reorder point planning
Replenishment lead time
Safety stock
Forecast-based planning
Time-phased planning
Use of low-value materials
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Consumption-Based Planning
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Reorder Point Planning Example
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Independent and Dependent
Demand
Independent demand
Demand is based on customer (external) demand
Finished goods, trading goods
Calculated based on actual and forecasted sales
Actual sales orders = customer independent requirement (CIR)
Calculated demand = planned independent requirements (PIR)
Dependent demand
Demand is dependent on the demand for another material
Seimfinished goods, raw materials
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Material Master: MRP and MPS
Materials requirements planning (MRP)
Derives dependent requirements based on independent
requirements
BOM explosion
Can plan for all levels in the BOM
Master production scheduling (MPS)
Optional step, similar to MRP
Derives dependent requirements only for the first level
(component) in the BOM
Executed first for critical finished goods
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MRP vs. MPS
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Material Master: Lot Size Key
Procedure to determine the lot size of each procurement
proposal generated by material planning
Static procedures: fixed quantity based on
Fixed lot size = predetermined fixed quantity
Lot-for-lot = exact quantity required
Replenishment up to maximum stock level
Period lot sizing procedures: combine requirements from
multiple time periods
Optimum lot sizing procedures: EOQ, EPQ
GBI
All materials: lot-for-lot
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Material Master: Scheduling Times
Task is to estimate the time needed to procure the necessary
materials.
Common estimates are:
In-house production time
Planned delivery time
GR (goods receipt) processing time
In-house production time is further divided into:
Setup time
Processing time
Interoperation time
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Material Master: Planning Time Fence
Used to prevent ERP systems from automatically changing
procurement proposals during a specific period of time
Changes can be made manually
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Material Master: BOM Selection
Method
A single material can have multiple BOMs.
The BOM selection method identifies the criteria the ERP
system should use to select the BOM.
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Material Master: Availability Check
Group
Defines the strategy the ERP system uses to determine whether a
quantity of material will be available on a specific date
Most commonly applied method is available-to-promise (ATP)
Considers a broad range of elements (MRP elements) representing
both supply and demand for the material
Supply elements: current inventory, requisitions, purchase orders,
planned orders, production orders, etc.
Demand elements: sales orders, safety stock, material reservations,
etc.
Availability check is used by many processes
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Material Master: Strategy Group
High-level strategy used in production
Make to stock (MTS)
Net requirements planning (Strategy 10): proposals based only
on PIR without regard to CIR
Planning with final assembly (Strategy 40): similar to Strategy
10, but takes sales orders (CIR) into account via consumption
Make to order (MTO)
No inventory
Sales order (CIR)-based planning
Sales orders trigger production
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Material Master: Strategy Group
Assemble to order (ATO)
Planning without final assembly (Strategy 50) or subassembly
planning
Finished product is made to order (CIR)
Components are made to stock (PIR)
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Consumption
When a strategy includes both PIRs and CIRs, the CIRs are
said to consume the PIRs.
Proposals are not created by simply adding CIRs and PIRs
Example 1
Example 2
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Before Consumption
PIR
CIR
50
60
50
40
After Consumption
PIR
CIR
0
60
10
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Consumption Mode
Forward consumption
Backward consumption
Consumption period
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Consumption Modes
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Demo 8.1 Review MRP and Scheduling
Views for a Material
Review MRP and scheduling views for a material
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Product Groups
Products with similar planning characteristics or similar
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manufacturing processes are placed into a product group.
Products are aggregated into groups from the lowest level to the
highest level.
Lower-level groups can be nested within higher-level groups.
The lowest-level product group in any hierarchy consists of
materials, either finished goods or trading goods.
Materials and product groups can be members of more than one
group for different planning scenarios.
Each member of a product group is assigned a proportion factor.
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GBI Product Groups
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Product Groups at Apple Inc.
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Demo 8.2 Review GBI Product
Groups
Review GBI product groups
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The Material Planning Process
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Sales and Operations Planning
SOP is triggered when the organization wishes to revise its
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production plan.
SOP can also be triggered by unexpected events; for
example, changes in the overall economic outlook.
SOP uses data from a variety of sources to produce a
production plan.
SOP can generate several versions of the production plan
based on assumptions concerning economic growth.
SOP can be either standard or flexible.
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Elements of the SOP Step
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Data in the SOP Step
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Tasks
Tasks in the SOP step include:
Creating the sales plan
Specifying inventory requirements
Creating operations (production) plans
Evaluating the feasibility of the operations plans
The interface to complete the tasks in SOP is the planning table, a
simple-to-use spreadsheet-like tool.
The production plan that is generated from SOP is based on:
Synchronous to sales
Target stock level
Target day’s supply
Stock level = 0
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Standard SOP Planning Table
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GBI SOP Example
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Outcomes
One or more versions of the production plan
No financial implications
No material movements
Therefore no FI, CO, or material documents are created.
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Demo 8.3 Create an SOP for the
Bicycles Product Group
Review creating an SOP for the bicycles product group
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Disaggregation
The plans from SOP must be translated into plans for the
finished product in the product hierarchy (disaggregation).
Disaggregation is triggered when a new production plan is
created.
Organizational data (e.g., plant) and master data (e.g., product
groups) from the production plan are used to calculate
requirements for the materials in the product group.
These requirements are then transferred to the demand
management step for further planning.
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Elements of the Disaggregation Step
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Data in the Disaggregation Step
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Tasks
The primary task in the disaggregation step is to translate the plans
generated for product groups during the SOP step into plans for
the materials contained in those groups.
Disaggregation can be completed for the entire product group
hierarchy or for one or more levels of the hierarchy.
Either the production plan or the sales plan can be disaggregated.
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Tasks
Disaggregate the production plan to the next level
Disaggregate the sales plan to the next level
This becomes the sales plan for the next level.
Then, calculate the production plan for that level.
Disaggregate the sales plan to the material level
Calculate the production plan for the materials.
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GBI Disaggregation Example
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Outcomes
Calculate the PIRs for each planning period
These requirements are then transferred to demand
management
No financial implications
No material movements
Therefore no FI, CO, or material documents are created.
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Transfer PIRs to Demand Management
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Demo 8.4 Disaggregate Production Plan
and Transfer to Demand Management
Review disaggregate production plan and transfer to demand
management.
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Demand Management
Demand management calculates revised PIRs for the materials
using:
PIRs from SOP after disaggregation
Customer orders (CIRs) from the fulfillment process
Data regarding planning strategies from the material master
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Elements of the Demand Management
Step
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Data in the Demand Management
Step
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Tasks
The primary task is to create revised PIRs for the materials.
Which procedure a company uses to calculate these requirements
depends on the production planning strategy defined by the
strategy group in the material master.
Demand management is carried out automatically by the ERP
system.
The MRP controller monitors the results using a variety of reports
and makes adjustments as needed.
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Outcomes
PIRs for each material included in planning
PIRs represent requirements for the materials for specific
quantities and specific dates.
No financial implications
No material movements
Therefore no FI, CO, or material documents are created.
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Materials Requirements Planning
SOP: plans at the product group level
Demand management: plans at the material level (FG, TG)
MRP: plans for materials (FG, TG), components (SFG), and raw
materials (i.e., for all levels of the BOM)
MRP calculates the net requirements for the materials.
MRP creates procurement proposals - to make or buy the
necessary materials.
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Materials Requirements Planning
Activities that affect material availability in different processes:
Procurement: purchase requisitions, purchase orders, and goods
receipts
Fulfillment: sales orders, deliveries, and goods issues
Production: planned orders, production orders, material
reservations, and goods receipts and goods issues
These activities, called MRP elements, are used by MRP for
calculating net requirements and generating procurement proposals.
MRP can be executed for one plant, for multiple plants, or within
MRP areas.
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Materials Requirements Planning
Master Production Schedule (MPS)
Optional
MPS items are high-impact items.
Materials planned by MPS are typically finished goods.
Materials are flagged as master schedule items.
After planning the master schedule items, MPS creates
dependent requirements for the first-level components in the
BOM of the MPS items.
After MPS, MRP plans for the remaining materials in the BOM.
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Elements of the MRP Step
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Data in the MRP Step
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MRP Procedure
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Check Planning File
Determine which materials must be planned.
Any change to an MRP-relevant material generates an entry in
the planning file.
Changes in material master (e.g, scheduling times, safety stock)
Changes to an MRP element
Finished goods are planned first, followed by BOM components
and then raw materials.
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Calculate Net Requirements
Determine whether there is a need to procure material.
Net requirement calculation takes into account all of the relevant
MRP elements to determine if a shortage of materials exists.
If the MRP type is consumption-based planning, then the formula
is:
Available stock = Plant stock + Receipts
If the MRP type is MRP or MPS, then the formula is:
Available stock = Plant stock – Safety stock + Receipts – Issues
If available stock is negative, procurement proposals are generated.
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Determine Lot Size
Lot size procedure is used to determine the quantity to be
included in the procurement proposals.
Data needed to calculate lot size are included in the material
master: lot size key
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Scheduling
Determines whether the material can be procured by the
required date
Two types:
Backward scheduling
Forward scheduling
Data needed for scheduling are included in the material master.
ERP systems initially use backward scheduling; if not
successful, they then shift to forward scheduling.
In backward scheduling the MRP controller can manually
adjust the schedule.
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Backward Scheduling
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Determine Procurement Proposal
Purpose is to determine the type of procurement proposal to
generate
Internal : planned orders
External: three options
Create purchase requisitions
Create planned orders, which are converted to purchase requisitions
Create schedule lines
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Procurement Proposals
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Determine Dependent Requirements
For in-house procurement
MRP generates dependent requirements for the component
by exploding the BOM
Single-level MRP: Process is terminated after this initial step.
Multilevel MRP: Calculations are performed for all levels.
Assemblies have their own BOMs, and MRP creates dependent
requirements for the components in their BOMs.
Creating dependent requirements can also make entries in
the planning file, which causes further processing.
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BOM Explosion
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BOM for Off-road Bikes
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MRP Control Parameters
Processing key
NETPL: Planning in planning horizon
All materials for which MRP-relevant changes have been made in the
planning horizon
Least time consuming
NETCH: Net change to total horizon
Planning for all materials for which MRP-relevant changes have been
made
NEUPL: Regenerative planning
Planning of all MRP-relevant items
Most time consuming
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MRP Control Parameters
Output of the MRP procedure
Creation of a purchase requisition
MRP (1) always creates a purchase requisition for externally procured
materials
MRP (2) creates planned orders
MRP(3) creates purchase requisitions only in the opening period and
creates planned orders after the opening period
Schedule lines applies to scheduling agreements
Option (1) not to create schedule lines
Option (2) to create them only during the opening period
Option (3) to create them only within the planning horizon
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MRP Control Parameters
Output of the MRP procedure
Create MRP list
Determines whether the system will create the MRP list
Creates the MRP list only for materials for which exception messages are
generated
Planning mode
Determines how previously created procurement proposals will be handled
Adjusts the quantities and dates of existing proposals, or discards the existing
proposals and creates new ones
Scheduling
Should the ERP system calculate only basic dates using the scheduling times
in the material master?
Should the ERP system perform lead time scheduling using the more detailed
times in the routing?
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Outcomes
Procurement proposals
Purchase requisitions
Planned orders
Both trigger procurement and production processes
No financial implications
No material movements
Therefore no FI, CO, or material documents are created.
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Demo 8.5 Run MRP
Review run MRP
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Reporting
Reporting options for material planning are not as extensive
as those in other areas.
Three very important tools for reporting the planning
situation:
Stock/requirements list
MRP list
Planning result report
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Stock/Requirements List
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Exception Message
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Material Availability in the
Stock/Requirements List
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Stock Statistics
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Demo 8.6 Review
Stock/Requirements List and Related
Reports
Review stock/requirements list and related reports
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Stock/Requirements List -- MRP List
Comparison
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Demo 8.7 Review MRP List
Review MRP list
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Planning Result Report
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Demo 8.8 Review Planning Result
Report
Review planning result report
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