20th of April, 2000

The World without MRP

is not Enough !

Olivier Flament
 2

World without MRP is not Enough…. Training’s map

Introduction Planning Levels - Overview

Master
Data

Planning MTS MTS (10,11)

Strategies
MTS
Planning w. Final Assembly (40)
vs
MTO (20)
MTO
Planning w/o Final Assembly (50)

The World without MRP is not Enough !

 3

Planning Levels - Overview

CO/PA Region 1 Region 2

Profitability SIS Forecast
analysis

Feedback / Corrections
SOP
Sales & operations
Product group
planning

Demand Product 1 Product 2

management

MPS
Master production Long -term
scheduling planning
Master planning

MRP
Assembly Assembly
Material
requirements ..
planning Part
. R

 SAP AG

The World without MRP is not Enough !

 4

Production Planning cycle

Master
Production
Scheduling
Long-Term Material reqmts
Planning planning

Production
Demand Capacity
Capacity Stock
Stock control
Management

Sales and
operations Settlement
planning

Controlling
Controlling
 SAP AG

The World without MRP is not Enough !

 5

Master Data for Production Planning

•Organizational Elements
•Material Master
•Bill of Material (BOM)
•Work Center
•Routing

•Costing Data (Cost Center)

The World without MRP is not Enough !

 6

Organizational elements for PP

Client

Company Code 1000 1100

Plant 1000 1100

Storage location 0001 0002 0002 0088

 SAP AG

The World without MRP is not Enough !

 7

Material Master for PP: Material type

Raw material ROH - Raw material

Trading goods
HAWA - Trading goods
Semi-finished Operating supplies
HALB - Semi-finished product

Finished product Non-stock material

HIBE - Operating supplies

FERT - Finished product

Other Other
NLAG - Non-stock material

 SAP AG

The World without MRP is not Enough !

 8

Material Master for PP: “PP” views

M
ate
ria
lMa
ste
r:D
ataS
tru
ctu
re

B
asicd
ata

•Ma
terial
•D
escription
•U
nito fM e
asure

M
RP W
orks
che
d u
lin
g A
ccou
ntin
g
•M RPtype
•Procurement ty p
e
•L
otsiz
etim
es •P
ric
econ
tro
l
•M RPc on
troll
e r
•Tole
ranceda
ta •P
ric
es
•Lotsizekey
P
lant1
000 P
lant1
000 P
lant100
0
P
lant2
0 0
0 P
lant2
0 0
0 Plant20
00
Plant300
0 Plant300
0 P
lant3
000

SA
PAG

The World without MRP is not Enough !

 9

Material Master for PP: MRP view

Example fields:
•Procurement type
•Planning Strategy (Strategy group)
•MRP controller
•In-house production time
•MRP type
•Lot size key

The World without MRP is not Enough !

 10

Planning Strategy:
Make-to-Stock versus Make-to-Order
Raw
Mat
Semi Finish
Sub Finish Final Product Customer
Supplier Assembly Assembly
Raw
Mat
De-coupling Point

MTS Plan : Make to Stock Sales Order

MTS Plan w/o Final Assembly Sales Order Info

ATO Assemble to Order

Sales Order Info

MTO Produce Make to Order
The World without MRP is not Enough !
 11

Planning Strategy: MTS strategies

Planning with
Final Assembly

Make-to-Stock
Planning

Make-to-Stock
Production

 SAP AG

The World without MRP is not Enough !

 12

Planning with Final Assembly (planning strategy 40)

•Planning with final assembly

•Sales and Operations planning (SOP)
•Demand Management (DM)
•Materials Requirements Planning (MRP)
•Consumption by sales orders

The World without MRP is not Enough !

 13

Planning with Final Assembly (Planning Strategy 40)

General features
• Planning is done at the finished product level
• Procurement and production are initiated after planning
• Sales orders consume the forecast quantities
• Forecast quantities that are not used increase the warehouse stock
• Additional requirements automatically adjust demand program

The World without MRP is not Enough !

 14

Planning with Final Assembly: Consumption Process

Independent Sales Demand
Reqts. Orders Program

Time
Time Time
Time Time

Forecast
Comparison
Total
Planning quantities
Requirements
vs.
Master Plan
Sales Sales orders

Orders

The World without MRP is not Enough !

 15

Production Planning cycle: Sales and Operation Planning

Sales and Operations Planning

Master
Production
Scheduling
Long-Term Material reqmts
Planning planning

Production
Demand Capacity
Capacity Stock
Stock control
Management

Sales and
operations Settlement
planning

Controlling
Controlling
 SAP AG

The World without MRP is not Enough !

 16

Sales & Operations Planning

Create Sales Plan

Create Production
Plan

Disaggregate Planning
Values

Transfer Planning Values

to Demand Management
R

 SAP AG

The World without MRP is not Enough !

 17

Sales and Operation Planning: Creation of a sales plan

Creating a Sales Plan

Sales Information System CO / PA module Forecast

Information CO/PA
CO/PAfield
fieldname
name
Information
Version Version
Version
Version
Measure
Measure From
From
From From Measure
Measure
- -Sales
Salesquantity
quantity To
To
To To - -Sales
Salesquantity
quantity
- -Returns
Returns

SOP Planning Table

Un 05/1999 06/1999 07/1999 …

Sales PC 1000 1200 900

Value OP From To

Sales 5 %+ 01/1999 12/1999

Production
Target stock 10 = 01/1999 12/1999
R
Target supply

Distribution Direct - manual

 SAP AG

The World without MRP is not Enough !

 18

Production Planning Cycle: Demand Management

Demand Management
Master
Production
Scheduling
Long-Term Material reqmts
Planning planning

Production
Demand Capacity
Capacity Stock
Stock control
Management

Sales and
operations Settlement
planning

Controlling
Controlling
 SAP AG

The World without MRP is not Enough !

 19

Demand Management: Input/Output

Demand Management

SOP SOP Copy

Manual Material
Sales Production another
entry Forecast
Plan Plan plan

Demand Program

Planning levels: Planning options:

 Material  Horizon
 Product group MPS / MRP  Period splits
 Versions  History

 SAP AG

The World without MRP is not Enough !

 20

Demand Management: Stock/Requirement List

Material Material 1
Plant CSPL MRP Type PD Material Type FERT

MRP Elements
Date MRP Element R-Date EM Recpt/Rqu’d qty Available qty
01/31/97 Stock 100

02/15/97 PrdOrd 100000783 07 100 200

02/21/97 IndReq VSF 400 200-

02/26/97 PlOrd 100000790 200 0

The World without MRP is not Enough !

 21

Production Planning Cycle: MRP

Material Requirements Planning

Master
Production
Scheduling
Long-Term Material reqmts
Planning planning

Production
Demand Capacity
Capacity Stock
Stock control
Management

Sales and
operations Settlement
planning

Controlling
Controlling
 SAP AG

The World without MRP is not Enough !

 22

Planning procedures: consumption based vs. MRP

Planning procedures

Reorder point
MRP planning

Automatic Material
reorder point reorder point

The World without MRP is not Enough !

 23

Re-Order Point Planning

Reorder Point Planning ( ROP)
+ In reorder point planning, procurement is triggered when the sum of
warehouse stock and firmed receipts falls below the reorder point
+ ROP, Safety stock 700
Lot Arrives Lot Arrives
600
 Reactive approach

 Lead times are fixed (focus on start dates) 500

Reorder
 Order quantities are generally fixed Inventory Point Lead Time
400
 No time phasing of demand

300
Order Order

200

100
Safety Stock
0
0 2 4 6 8 10 12 14 16 18 20 22
Weeks
The World without MRP is not Enough !
 24

MRP Overview (1): The cycle

Sales
MRP Orders

Dependent Planned Ind

requirements Requirements

Reservations Planned
order

Convert

Purchase Schedule
Production requisition line
order

Purchase
order
Warehouse
R

 SAP AG

The World without MRP is not Enough !

 25

MRP Overview (2): The Bill of Material

Sales order /
Finished Planned Ind Requirement
product Planned order

Dependent requirement
Assembly 1 Assembly 2
Planned order

Raw Raw Raw Dependent requirement

material 1 material 2 material 3 Purchase requisition
R

 SAP AG

The World without MRP is not Enough !

 26

MRP Net Requirements Calculation

Net Requirement= Supply +Stock-Demand

Lot size Shortage

Sales Orders
Planned orders
Planned Independent
Production orders Requirements
Compare
Purchase requisitions Dependent requirements

Purchase orders Reservations

Warehouse stock Safety stock

Supply Demand R

 SAP AG

The World without MRP is not Enough !

 27

Lot-sizing Procedures
Static lot-sizing procedures
- Lot-for-lot order quantity
- Fixed lot size
- Replenish up to maximum stock quantity

Period lot-sizing procedures

- Daily lot size
- Weekly lot size
- Monthly lot size
- Lot size according to accounting period
- Lot size according to MRP planning calendar

Lot size limitation

- Minimum lot size
- Maximum lot size
- Rounding quantity/partial lot size

The World without MRP is not Enough !

 28

MRP Date Calculation

MRP Date Calculation

Order Order
start date finish date
Finished Planned Order
Product

Assembly 1 Planned Order

Assembly 2 Planned Order

Raw Mat 1 Purchase Req

Raw Mat 2 Purchase Req

Raw Mat 3 Purchase Req

Time Required
R Date

 SAP AG

The World without MRP is not Enough !

 29

Basic Dates: Backward Scheduling

Opening In-house Goods receipt

Period production time processing time

Planned
Order start Order finish Availability
opening
date date date
date

Backward
Today Schedule

 SAP AG

The World without MRP is not Enough !

 30

Basic Dates: Forward Scheduling

Opening In-house Goods receipt

Period production time processing time

In-house Goods receipt

production time processing time

Order start Order finish Availability

date date date

Forward
Schedule
Today

 SAP AG

The World without MRP is not Enough !

 31

Time elements summary

Order lead time SD processing time

Float bef . OP OP OP OP ........ OP Float after GR Pick / Load Transit

Prod . 0010 0020 0030 0040 0099 Prod . Proc Time Pack
OS SS SF OF AD LD GI DD

In house Production lead time

Order dates Time elements

OS Order start date Lead time for
SS Scheduled start date order or operation
SF Scheduled finish date Float times
OF Order finish date Execution time -operation
In house Production
AD Availability date
lead time Interoperation times
LD Load date
GI Goods issue date Processing times in
DD Desired delivery date Sales and Distribution
R

 SAP AG

The World without MRP is not Enough !

 32

Planning Time Fence (1)

Planning time fence (example: 15 days)

The planned order is In the automatic planning

here only if it is run, the new planned
manually rescheduled order is scheduled at the
Firm
Planned by the MRP controller end of the planning time
Order fence.

Time

End of planning time fence

Today
Existing New
Requirement Requirement

Firming
Firming period
period

 SAP AG

The World without MRP is not Enough !

 33

MRP Total Planning

Planning types

 Plan all materials in a plant

 Plan only materials that have

undergone a change relevant to
planning

Receipts
Planning horizon

Time  Unlimited, or
Issues
Planning  Defined time length
horizon R

 SAP AG

The World without MRP is not Enough !

 34

MRP List and Stock/Requirements List

Stocks

MRP Material
Stock /
List requirements
Requirements
planning Reqmts
List

Receipts

 SAP AG

The World without MRP is not Enough !

 35

Sales and Distribution in Production planning cycle

Master
Production
Scheduling
Long-Term Material reqmts
Planning planning

Production
Demand Capacity
Capacity Stock
Stock control
Management

Sales and
operations Settlement
planning

Sales and
R

Distribution Controlling
Controlling
 SAP AG

The World without MRP is not Enough !

 36

Sales and Distribution

Sales Order

Sold-to: Customer A
Purchase order: XYZ
Delivery date: 10 May 1999

Item Material Quantity

10 T-F101 100
Pump

Customer

Availability
Consumption
check R

 SAP AG

The World without MRP is not Enough !

 37

Availability Check

Planned orders

AA A = 120 PC
BB
B = 90 PC

01 May 01 June

Sales orders

11 22 1 = 100 PC
2 = 100 PC

10 May 20 May

Allocation
Sales order 1:
10 May 100 PC
AA 11
22 BB
Sales order 2:
20 May 20 PC
Completely Partially
R

01 June 80 PC
confirmed confirmed

 SAP AG

The World without MRP is not Enough !

 38

Consumption logic (1)

Planned independent requirements

Time

Sales orders

 SAP AG

The World without MRP is not Enough !

 39

Consumption logic (2)

Planned
independent Backward consumption only
requirements

Time

Customer
Backward consumption PB
requirements period PB

Forward consumption only

Time

Forward consumption PF
period PF

Backward / forward consumption

1 2

Time R

PB PF
 SAP AG

The World without MRP is not Enough !

 40

Make-to-Order

Make-to-Order
Make-to-Order
Planning
Planning

Make-to-Order
Make-to-Order Planning
Planning without
without
Production
Production Assembly
Assembly Final
Final Assembly
Assembly
Processing
Processing

Repetitive
Repetitive Production
Production Project
Project
Manufacturing
Manufacturing Order
Order

 SAP AG

The World without MRP is not Enough !

 41

Make-to-Order Production

Material X Material X

Sales Order A Sales Order B

D D
e e
l Material Requirements Planning l
i i
v v
e e
r
Production Production r
y y

Customer Stock Customer Stock

 SAP AG

The World without MRP is not Enough !

 42

Planning without Final Assembly (Strategy 50)

 SAPAG

The World without MRP is not Enough !

 43

Planning without Final Assembly: Sales Order

2.
.5. 4. 1.

MRP
Sales
Final assembly

PC
PC Planned ind .
order reqmt
MRP

Warehouse stock: Warehouse stock:

6. Hard disk Motherboard

Production
3.

 SAP AG

The World without MRP is not Enough !

 44

Stocking Level

Sales Planned ind .

PC
PC
order reqmt
High value
added

Stocking
Warehouse
Warehousestock:
stock: Warehouse
Warehousestock:
stock: level
Hard
Hard disk
disk Motherboard
Motherboard
Low value
added

 SAP AG

The World without MRP is not Enough !

 45

Flexible Determination of Stocking Level

Strategy
Strategy group
group 50
50
PC
PC

Individual/collective
Individual/collective
== 11 or
or ‘blank’
‘blank’

Stocking
Warehouse
Warehousestock:
stock: Warehouse
Warehousestock:
stock:
level
Hard
Harddisk
disk Motherboard
Motherboard

Stocking
level

Individual/collective = 2

 SAP AG
}
bj
.
t
c
e

The World without MRP is not Enough !

 46

Reference

 SAP training LO 050 course material (available in

MCS InfoKiosk SAP database)

 SAP training LO 210 course material (available in

MCS InfoKiosk SAP database)
 SAP MRP Strategies Made Easy Book (available on
sapnet)

The World without MRP is not Enough !

 47

The End...

If you still have any question...

The World without MRP is not Enough !