Consumption-Based

Planning
(MM-CBP)
Consumption-Based Planning
The central role of MRP is to monitor stocks and in particular, to automatically create
procurement proposals for purchasing and production

Consumption-based planning is based on past consumption values and uses the

forecast or other statistical procedures to determine future requirements.
It is triggered when stock levels fall below a predefined reorder point or
by forecast requirements calculated using past consumption values.
Implementation Considerations
Consumption based Planning procedures are used in areas without in-house
production and/or in production plants for planning both B- and C-parts and operating
supplies.
The prerequisites for implementing consumption-based planning are:
If you use forecast requirements, the consumption pattern should be fairly constant or
linear with few irregularities.
Your Inventory Management must function well and should always be up-to-date.
Integration
Consumption-based planning is integrated in the Materials Management component. You
can access the consumption-based planning functions from the SAP Easy Access Menu by
choosing Logistics-> Materials Management-> Materials Planning-> MRP.
MRP Procedures
In consumption-based planning, the following MRP procedures are available:
A) Reorder point procedure
B) Forecast-based planning
C) Time-phased materials planning

Reorder Point Planning

Use - In reorder point planning, procurement is triggered when the sum of plant stock
and firmed receipts falls below the reorder point.
Features
The reorder point should cover the average material requirements expected during the
replenishment lead time.
The safety stock exists to cover both excess material consumption within the
replenishment lead time and any additional requirements that may occur due to
delivery delays. Therefore, the safety stock is included in the reorder level.

The following values are important for defining the reorder point:
* Safety stock
* Average consumption
* Replenishment lead time

The following values are important for defining the safety stock:

Past consumption values (historical data) or future requirements

Vendor/production delivery timelines
Service level to be achieved
Forecast error, that is, the deviation from the expected requirements
Manual Reorder Point Planning
In manual reorder point planning, you define both the reorder level and the safety stock
level manually in the appropriate material master.

Automatic Reorder Point Planning

In automatic reorder point planning, both the reorder level and the safety stock level are
determined by the integrated forecasting program.
The system uses past consumption data (historical data) to forecast future requirements.
The system then uses these forecast values to calculate the reorder level and the safety
stock level, taking the service level, which is specified by the MRP controller, and the
material’s replenishment lead time into account, and transfers them to the material master.
Since the forecast is carried out at regular intervals, the reorder level and the safety stock
level are continually adapted to the current consumption and delivery situation. This means
that a contribution is made towards keeping stock levels low.
Reorder Point Planning Procedure
Prerequisites
1. In MRP 1 view, select MRP type VB.
2. In MRP 2 view, enter safety stock.
Process Flow
1. The continuous monitoring of available warehouse stock within reorder point planning is carried out in Inventory
Management.
2. Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock
levels to fall below the reorder level. If this is the case, the system makes an entry in the planning file for the next planning
run.
If a material is returned to the warehouse, the system checks in exactly the same way whether the available
warehouse stock exceeds the reorder level again. If this is the case, an entry is made in the planning file, which
acts as an indicator for the planning run to delete any unnecessary procurement proposals.
If planned receipts are no longer required due to material returns, for example, then the system will suggest
that these receipts should be cancelled. In this case, the MRP controller in cooperation with Purchasing or
Production must check whether the purchase order or the production order can be cancelled.
3. The system then calculates the net requirements. The system compares the available stock at plant level (including
safety stock) plus the firmed receipts that have already been planned (purchase orders, production orders, firmed purchase
requisitions and so on) with the reorder point. If the sum of the stock plus receipts is less than the reorder point, a material
shortage exists.
5. The system then calculates the procurement quantity according to the lot-sizing procedure defined in the material
master.

6. For reorder point planning, the system supports the Fixed lot size and Replenish up to maximum stock level lot-
sizing procedures.
You can also use period or optimum lot-sizing procedures for reorder point materials. In this case, you must calculate
future requirements using the forecasting functions. The forecast values are then interpreted as requirements.

7. The system then schedules the procurement proposal, that is, the system calculates the dates on which the purchase
order has to be sent, or when production has to begin and the date on which the vendor has to deliver the goods or by
which production has to have the goods ready.

Reorder Point Planning with External Requirements

Use
In reorder point planning, an entry is only created in the planning file and the net requirements calculation is only carried out
if stock levels fall below the reorder point.
To avoid overplanning, sales orders, dependent requirements, reservations and so on are not usually included in the net
requirements calculation as these future requirements are already planned with the reorder level. However, to guarantee that
the MRP controller is informed of current issues, the system displays sales orders, dependent and manual reservations and so
on.
In certain circumstances, however, it is necessary to include such external requirements in the net requirements calculation for
reorder point materials.
Integration
The indicator for taking external requirements into account is set in Customizing in the IMG activity Check MRP type for
the individual time-phased MRP procedure.

Features
Sales orders and manual reservations are included in planning during the replenishment lead time . In Customizing you can
also enter settings for the respective MRP type, so that
•sales orders and manual reservations are included in planning not just during the replenishment lead time but during the
whole horizon.
•alongside sales orders and manual reservations various other requirements are taken into account in the material
requirements planning.