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to plan on a plant level, but either on a multi-plant level or 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

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

Prerequisites
 We have entered the special procurement key Subcontracting in the material master (MRP
2 view) of the assembly.
 We have created a production version in 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 version in the purchasing info record for the
subcontractor.
 We have entered the subcontractor in 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/agreement indicator 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 record and 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.
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 component all 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 BOM only, 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 requirements of 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

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 key Direct procurement

This process is like the direct production process.

 using the item category Non-stock item.

We recommend the process using the special procurement key.

Prerequisites
 For the plant and/or for an MRP group, we have defined when the 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 item for the components in the BOM, which are to be
procured directly.
 If we want to use direct procurement for a particular component all 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 BOM only, 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 item for 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.

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