Exploring the Concept of MRP and getting introduced to MRP Live

You now know the basic concepts of material requirements planning (MRP). Let’s proceed with the actual execution of MRP, the MRP run. In the past, an MRP run took a few hours or the whole night. With SAP S/4HANA Cloud Public Edition, the Bike Company can use MRP Live, which enables fast and more frequent planning runs per day. Watch the following video to learn more:

As shown in the video, the Bike Company can still use the classic MRP function. In this course, we will focus on the new MRP Live functionality.

With MRP Live, the Bike Company can either plan all materials for all plants, product groups, MRP controller, and material scopes, or they can execute based on a preselection. Watch the following video to learn more:

In addition to the scope selection outlined in the previous video, the Bike Company can also define additional parameters considered during the planning run. The following video introduces you to the different parameters:

Now, you know the most important concepts in MRP. To finish this lesson, we will follow the Bike Company example in order to set up and execute an MRP run.

Material requirements planning takes current and future sales as its reference point. The planned requirement quantities trigger the MRP calculation. In MRP, the requirements elements include sales orders, planned independent requirements, material reservations, the dependent requirements created by exploding the BOM, and so on.

If the MRP run determines shortage quantities, the system creates procurement proposals: Purchase requisitions and planned orders are internal planning elements that can be changed, rescheduled, or deleted at almost any time. With in-house production, the system creates planned orders for planning the production quantities. When planning is complete, planned orders can be converted into production orders.

With SAP S/4HANA Cloud Public Edition, the MRP Live concept is enabled to eliminate the danger of planning with obsolete data.

Material Requirements Planning (or MRP) is a supply chain planning process used with other planning process 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.

Material Planners are challenged with potentially dozens of material shortage issues each day, and need to identify, prioritize, and focus on the most important issues first.

They need to know which sales orders are affected, for which customers, and how much time is needed to solve the issue before the shortage affects fulfillment.

With traditional MRP, Material Planners could be making material decisions based on outdated information, because there was no real-time, single view of material issues, taking into account a total view of supply and demand across multiple sites based on current information. They have only had visibility to materials shortages from a site specific and material point of view.

Identification of critical material shortages based on outdated information made real issues harder to detect, and increased the opportunity for poor decision making.

Today, the MRP Planning Run is a resource-intensive batch process, which involves thousands of materials in hundreds of physical locations. It performs hundreds of thousands of database reads from across multiple database tables in ERP. The process typically takes hours to execute, so it is typically run once a week, once every couple of days, or over night

On completion, it creates a "snapshot" of the existing material situation across all the locations in an enterprise. The snapshot is immediately outdated after new supply and demand activity occurs.

MRP Live refers to the migration of the traditional MRP Planning capability to run on SAP HANA.

MRP on SAP HANA provides the ability to run the MRP faster and, therefore, more frequently. This means more real-time visibility to a broader set of supply and demand data from across the enterprise, including the combination of sales order, inventory, and procurement information into a single view.

The solution immediately calculates and highlights the material issues that need to be addressed across thousands of material stock situations.

The process is faster, is streamlined, and is less manually intensive, which allows the Material Planner to identify issues more quickly and find better solutions to material shortage issues.

SAP S/4HANA Cloud Public Edition, the ability to identify and make decisions to solve material shortage issues is greatly improved.

• More frequent MRP runs provides more timely and accurate material stock information.

• It provides a single, real-time view of material shortage information across sites without having to navigate across multiple ERP transactions.

• There are views of material shortages from a sales order, inventory, and procurement point of view, instead of just a material view.

• There is ability to simulate recommended solution viability and effectiveness in real time across sites and thousands of material situations.

These improvements make the Material Planner much more effective.

For each material, it provides real-time visibility to the stock situation and indicates when a stock level will become insufficient or critical.

It provides a personalization capability to allow the Material Planner to filter on certain types of materials and have different and customized views of shortages.

It performs recalculation of thousands of material situations in real time.

It not only suggests potential solutions but, using SAP S/4HANA Cloud Public Edition, also provides the ability to evaluate the potential viability and results of a solution, before it is applied.

In Production Planning, planned orders and purchase requisitions inside the replenishment lead time have to be "released" to the shop floor and the purchasing department respectively. On completion of production, the amount of product produced and raw materials and resources consumed need to be "confirmed".