1. Consumption-based Planning

2. Requirements Planning
Material Planning
Material Planning
(MRP Procedures)
SAP Terms
Independent Demand
(Consumption-based
Planning)
MRP-Material
Requirements Planning
Reorder point
planning
Forecast-based
planning
Time-phased
planning
SAP Exercise
Manual reorder
point
Automatic reorder
point

3. Planning Process External procurement In-house production Planning Run
Planned Order
Conversion
Production
Order
Purchase
Requisition
Schedule
Line
Can be automatic

4. Planning Process Planned Order:
Recommendation by the MRP planning process of quantity and timing of production or purchase order
Production Order:
Actual order given to shop floor to commence production. May be electronic or paper. Can include production details (routing, quality requirements, drawings, instructions, etc.)

5. Planning Process Purchase Requisition:
Request to purchasing to create purchase order
Purchase Order
Request to vendor to supply materials
Schedule Line
Direct request to vendor for materials, covered by scheduling agreement (blanket PO)

6. Reorder Point Processing
Lot
Size
Safety Stock
Time
Replenishment
Lead Time

7. Reorder Point Processing
When the inventory level for a product that is planned using consumption-based planning reaches the ROP, an order for the material is NOT created automatically
Consumption-based planning uses the Material Requirements Planning (MRP) planning process to create purchase orders
The MRP planning process is typically run overnight on a daily basis
Historically, might have used weekly runs
Time until MRP planning run is executed should be considered in ROP calculation (daily runs, add 1 day to lead time)

8. Forward Scheduling for External Procurement
(Release Date)
Today
Purchase Order
Date
Goods Receipt
Availability
Processing Time
For Purchasing
Planned Delivery Time
Replenishment Lead Time

9. MRP Planning Process
For a company with thousands of materials to plan, the computing resources needed to calculate material plans can be significant
To make sure that:
Only those calculations that are necessary are performed:
Only on materials that need planning
Two “filters” are used:
Planning Run Type
Planning Horizon

10. Planning Run Types NETCH: Net change in the total horizon
In the MRP Planning Process, materials are planned if there have been any:
Changes in material stocks (receipts, issues)
Addition of purchase requisitions, purchase orders, planned orders, dependent requirements
Changes in Material Master Data (Lot Size, ROP, etc.)

11. Planning Run Types NETPL: Net change in the planning horizon
Same at NETCH, EXCEPT:
Changes must occur within the planning horizon
Planning horizon keeps MRP planning process from making plans for future periods that:
Do not impact current operations
Will be made irrelevant through the dynamics of business

12. Planning Run Types NETCH NETPL Order/ Requisition Planning Horizon
Requirement
Time
Planning Horizon
NETPL

13. Plant Parameters: Planning Horizon

14. Planning Run Types NETUPL: Regenerative Planning
Plans all materials for total planning horizon
Good idea to run this option regularly (e.g. every weekend), even though it is more resource intensive
Customizing changes don’t trigger planning under NETCH or NETPL
“Time passage” problem with NETPL

15. NETPL: Potential Problem
Planning Horizon
NETPL
Today
Passage of time is not an “event”
Would require monitoring to detect
Planning Horizon
NETPL
Today
Solution: Run NETUPL

16. Planning File A Planning File entry exists for each material
Keeps track of changes that would require material to be planned under NETCH or NETPL options
MRP Planning process looks at planning file entries for each material to see if it should be planned

17. Planning File
Low-level
Code
NETCH
Indicator
NETPL
Indicator

18. Planning Run Options Planning Run Type: NETCH NETPL NETUPL
Create Purchase Req:
1 – Purchase Requisitions
2 – Purchase Requisitions in Opening Period
3 – Planned Orders
Defined by Schedule Margin Key
Usu. does not impact
consumption-based planning

19. Planning Run Options Create MRP List: 1 – Yes
2 – Depending on Exception Messages
3 – No
Planning mode:
Determines how system deals with previous
plans (planned order, purchase requisitions)
Scheduling:
Determines level of detail in schedule
calculation for production orders
Display results before they are saved
Lets planner make changes before the
results are saved

20. Planning Run Options With consumption-based planning in practice:
You would not run MRP for a single material, but do it as part of a group (MRP Area based on storage location)
You would have it scheduled to run automatically
You would have it either:
Create purchase requisitions automatically
Create schedule lines

21. Net Requirements Calculation
Reorder Point
Stock
Firm Planned
Orders
Purchase
Order Proposal
for Lot Size
Shortage
Fixed Purchase
Requisitions
How does safety stock
figure into this process?

22. Exercise: Material Master Data
MRP Type:
VB sets consumption-based planning
Reorder point
Lot size:
FX is fixed lot size
Fixed lot size:
Quantity in an order

23. Exercise: Material Master Data
Plnd delivery time:
Vendor part of lead time
SchedMargin key:
Sets opening period, among other
things
Safety stock:
Desired stock level when
replenishment order arrives
How does it work in SAP R/3?

24. Exercise: Stock/Requirements List
Your one-stop shopping location for
all things material

25. Exercise: MRP Planning Run
MRP control parameters:
Planning run parameters
discussed previously

26. Exercise: MRP Planning Run
Planning run results displayed:
Purchase requisition created

27. Exercise: Purchase Requisition
Can easily create purchase order from S/List

28. Exercise: Purchase Order
Purchase order screen is where the requisition is converted to a purchase order
Vendors selected
Price determined

29. Exercise: Receive Purchase Order
Goods Receipt Screen:
In practice, could just be a bar-code scan
Links receipt to purchase order
Tell SAP R/3 system where goods have
been stored

30. Exercise: Goods Issue Goods Issue Screen:
When goods are issued, something has
to absorb costs (project, production
order, cost center)
In this case, we will charge costs to the
warehouse cost center (P020)
What is the downside to charging to a
cost center?