From the global point of view the Supply Chain Planning can be divided in three major steps:
- Forecasting
- Demand Management
- Material Requirements Planning
Forecasting Overview
In the Bike Company example, past sales order quantities are used to predict the future demand of 200 bikes. Market intelligence and events like trade fairs also contribute to the forecast. The demand plan is then derived into planned independent requirements, which guide procurement and production planning.
Demand Management Overview
Demand Management is the management of planned independent requirements and their interaction with real customer requirements. The demand program serves as input for material requirements planning.
The following main methods are available for including customer requirements into planning:
- Make-to-Order Production: Each sales order item is planned separately.
- Make-to-Stock Production: Production can be triggered without specific sales demand.
Material Requirements Planning Overview
Material Requirements Planning (MRP) is the first step of production planning within a short-term horizon. It usually follows the demand management during a (nightly) background job in case of a shortage.
During MRP execution, the system creates a coverage element (planned orders or purchase requisitions). Therefore, a hard-coded planning algorithm is used. In addition to the conventional MRP planning procedure, there is a further solution approach in SAP S/4HANA, the so-called MRP Live.
Capacity Requirements Planning Overview
Capacity requirements planning (CRP) involves evaluating the available capacity of work centers or resources and matching it with the production requirements.