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Consumption-based Planning
Material Planning
SAP Terms
Material Planning
(MRP Procedures)
Independent Demand
(Consumption-based
Planning)
Reorder point
planning
MRP-Material
Requirements Planning
Forecast-based
planning
Time-phased
planning
SAP Exercise
Manual reorder
point
Automatic reorder
point
Planning Process
In-house
production
External procurement
Planning Run
Planned Order
Conversion
Production
Order
Can be
automatic
Purchase
Requisition
Purchase
Order
Schedule
Line
Planning Process
Planned Order:
Recommendation by the MRP planning process
of quantity and timing of production or purchase
order
Production Order:
Actual order given to shop floor to commence
production. May be electronic or paper. Can
include production details (routing, quality
requirements, drawings, instructions, etc.)
Planning Process
Purchase Requisition:
Request to purchasing to create purchase order
Purchase Order
Request to vendor to supply materials
Schedule Line
Direct request to vendor for materials, covered
by scheduling agreement (blanket PO)
Lot
Size
Reorder Point Processing
Reorder Point
Safety Stock
Replenishment
Lead Time
Time
Reorder Point Processing
When the inventory level for a product that is planned
using consumption-based planning reaches the ROP,
an order for the material is NOT created automatically
Consumption-based planning uses the Material
Requirements Planning (MRP) planning process to
create purchase orders
The MRP planning process is typically run overnight
on a daily basis
Historically, might have used weekly runs
Time until MRP planning run is executed should be
considered in ROP calculation (daily runs, add 1
day to lead time)
Forward Scheduling for
External Procurement
Replenishment Lead Time
Availability
Date
Planned Delivery Time
Goods Receipt
Processing Time
Goods Receipt
Date
Purchase Order
Date
Today
(Release Date)
Processing Time
For Purchasing
MRP Planning Process
For a company with thousands of materials to
plan, the computing resources needed to
calculate material plans can be significant
To make sure that:
Only those calculations that are necessary
are performed:
Only on materials that need planning
Two “filters” are used:
Planning Run Type
Planning Horizon
Planning Run Types
NETCH: Net change in the total horizon
In the MRP Planning Process, materials are
planned if there have been any:
Changes in material stocks (receipts,
issues)
Addition of purchase requisitions,
purchase orders, planned orders,
dependent requirements
Changes in Material Master Data (Lot
Size, ROP, etc.)
Planning Run Types
NETPL: Net change in the planning horizon
Same at NETCH, EXCEPT:
Changes must occur within the planning
horizon
Planning horizon keeps MRP planning
process from making plans for future
periods that:
Do not impact current operations
Will be made irrelevant through the dynamics
of business
Planning Run Types
NETCH
Planning Horizon
NETPL
Time
Planning Horizon
Order/
Requisition
Requirement
Plant Parameters: Planning Horizon
Planning Run Types
NETUPL: Regenerative Planning
Plans all materials for total planning horizon
Good idea to run this option regularly (e.g.
every weekend), even though it is more
resource intensive
Customizing changes don’t trigger planning
under NETCH or NETPL
“Time passage” problem with NETPL
NETPL: Potential Problem
NETPL
Planning Horizon
Today
Passage of time is not an “event”
Would require monitoring to detect
NETPL
Planning Horizon
Today
Solution: Run NETUPL
Planning File
A Planning File entry exists for each material
Keeps track of changes that would require
material to be planned under NETCH or
NETPL options
MRP Planning process looks at planning file
entries for each material to see if it should
be planned
Planning File
Low-level
Code
NETCH
Indicator
NETPL
Indicator
Planning Run Options
Planning Run Type:
NETCH
NETPL
NETUPL
Create Purchase Req:
1 – Purchase Requisitions
2 – Purchase Requisitions in Opening Period
3 – Planned Orders
Defined by Schedule Margin Key
Usu. does not impact
consumption-based planning
Planning Run Options
Create MRP List:
1 – Yes
2 – Depending on Exception Messages
3 – No
Planning mode:
Determines how system deals with previous
plans (planned order, purchase requisitions)
Scheduling:
Determines level of detail in schedule
calculation for production orders
Display results before they are saved
Lets planner make changes before the
results are saved
Planning Run Options
With consumption-based planning in practice:
You would not run MRP for a single material,
but do it as part of a group (MRP Area
based on storage location)
You would have it scheduled to run
automatically
You would have it either:
Create purchase requisitions automatically
Create schedule lines
Net Requirements Calculation
Reorder Point
Shortage
Order Proposal
for Lot Size
Fixed Purchase
Requisitions
Firm Planned
Orders
Purchase
Orders
Stock
How does safety stock
figure into this process?
Exercise: Material Master Data
MRP Type:
VB sets consumption-based planning
Reorder point
Lot size:
FX is fixed lot size
Fixed lot size:
Quantity in an order
Exercise: Material Master Data
Plnd delivery time:
Vendor part of lead time
SchedMargin key:
Sets opening period, among other
things
Safety stock:
Desired stock level when
replenishment order arrives
How does it work in SAP R/3?
Exercise: Stock/Requirements List
Stock/Requirements List:
Your one-stop shopping location for
all things material
Exercise: MRP Planning Run
MRP control parameters:
Planning run parameters
discussed previously
Exercise: MRP Planning Run
Planning run results displayed:
Purchase requisition created
Exercise: Purchase Requisition
Can easily create purchase
order from S/List
Exercise: Purchase Order
Purchase order screen is
where the requisition is
converted to a purchase
order
Vendors selected
Price determined
Exercise: Receive Purchase Order
Goods Receipt Screen:
In practice, could just be a bar-code scan
Links receipt to purchase order
Tell SAP R/3 system where goods have
been stored
Exercise: Goods Issue
Goods Issue Screen:
When goods are issued, something has
to absorb costs (project, production
order, cost center)
In this case, we will charge costs to the
warehouse cost center (P020)
What is the downside to charging to a
cost center?