Analyzing Material Requirements Planning (MRP)

For the following lessons, we will focus on the Area Planning in SAP S/4HANA. The steps for Material Requirement planning will take place in the Production (PP) Module of SAP S/4HANA.

Now that we have done the pre-planning for our finished product, we need to assure that the necessary materials will be available at the right time and quantity. This is done in materials requirements planning.

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You have learned about the first 4 steps in MRP.

The fifth step in MRP is scheduling. Normally, MRP tries to cover demands using backward scheduling:

Backward scheduling is based on the following principles:

• The starting point is the requirement date of the finished product (for example, received as the material availability date of a sales order). Based on this material availability date of this element, the system carries out a backward scheduling over the whole BOM structure.
• Proposals are created to cover the net demand on each level of the BOM. The system calculates start and finish dates of the dependent requirements for the components and subcomponents during the BOM explosion. The start date of a component defines the end date of the related subcomponents.

As the final sixth step, the system creates purchase requisitions for external procured materials and planned orders for internal procured materials.

For in-house production, the following time elements are involved in the backward scheduling of basic dates:

• Goods receipt processing time. With backward scheduling, the system calculates the order’s start date by considering the goods receipt processing time for the planned order.

• In-house production time. The system calculates the order's start date by considering the in-house production time from the order finish date.

• Opening period. The opening period reflects the processing time the MRP controller requires to convert planned orders into production orders. It is then subtracted from the order start date. This leads to the opening date.

Scheduling for externally-procured materials works in the same way as the basic date scheduling for materials produced in-house.

Now you know all the steps of MRP. Paul summarizes them for you:

You can execute the planning run at two levels - as total planning for a plant or for an individual material. Also, you can execute a total planning run for several plants and MRP areas (planning scope).

It is possible to execute a single-item planning run for one BOM level only (single-level) or for all BOM levels (multi-level). Interactive planning of a material is also possible. Total planning for a plant encompasses all MRP-relevant materials for this plant and includes the BOM explosion for materials with BOMs.

You can execute total planning online or as a background job. To execute the total planning run as a background job, select a report variant to restrict it to the relevant plant, and schedule the job.

This makes it possible to combine several plants (or MRP areas) in a planning sequence as part of a planning run and to plan across plants in an overall planning run. Mutual dependencies, such as those caused by stock transfers, are automatically taken into account by the system.

With SAP S/4HANA, the MRP Live eliminates the danger of planning with obsolete data. MRP is a supply chain planning process used with other planning processes, such as Demand Planning, Supply Planning, Sales & Operations Planning, Production Planning, and Transportation Planning, all of which are used to manage the supply chain activity of the enterprise.

MRP is the process of matching enterprise-wide supply with actual and forecasted customer demand to identify potential material shortage situations and to recommend potential solutions.

Examples of supply include material in inventory, planned stock transfers, purchase orders, and good receipts from manufacturing. Examples of demand include customer sales orders and forecasts of future customer demand.

Supply and demand requirements are location-specific and MRP matching is performed to ensure that the materials are in the right location at the right time to fulfill customer demand.

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