Material Requirements Planning (MRP) is a vital planning engine used in SAP to calculate which materials or components should be produced or procured, the quantities required, and the dates by which they should be available. The primary function of MRP is to ensure material availability for production, facilitating on-time delivery to customers.
Material Requirements Planning (MRP) In SAP PP
SAP offers several standard MRP types to cater to different planning needs:
| MRP Type | Description |
|---|---|
| PD | Standard MRP |
| P1 | MRP with Fixing Type 1 |
| P2 | MRP with Fixing Type 2 |
| P3 | MRP with Fixing Type 3 |
| P4 | MRP with Fixing Type 4 |
Note: MRP Types P1 to P4 incorporate a fixing or firming type. The fixing type determines how order proposals are firmed and scheduled when working with a planning time fence during the planning run.
Fixing Types Explained
| Fixing Type | Description |
|---|---|
| 0 | No firming; the system can adjust procurement proposals within the planning time fence. |
| 1-4 | Varying levels of firming to protect procurement proposals within the planning time fence from automatic changes. |
Master Production Scheduling (MPS)
Master Production Scheduling (MPS) is similar to MRP but focuses on materials that significantly impact the company’s profitability or dominate the production process due to their use of critical resources.
Key Features of MPS
- Focus on Critical Materials: Items marked as ‘A’ parts in the ABC classification (high consumption value) are planned with extra attention.
- Separate Planning Run: MPS is run before the standard MRP run, ensuring that master schedule items (MSI) are correctly planned.
- Single-Level Planning: Conducted without a Bill of Materials (BOM) explosion.
Standard MPS Types in SAP
| MPS Type | Description |
|---|---|
| M0 | MPS with Fixing Type 0 |
| M1 | MPS with Fixing Type 1 |
| M2 | MPS with Fixing Type 2 |
| M3 | MPS with Fixing Type 3 |
| M4 | MPS with Fixing Type 4 |
Note: Materials planned with MPS are not included in the normal MRP run and require a separate transaction in SAP.
Consumption-Based Planning (CBP)
Consumption-Based Planning (CBP) uses past consumption data or historical data to calculate future requirements through material forecasts or static planning procedures. Unlike MRP, demand elements like sales orders do not influence CBP directly.
Categories of CBP
- Reorder-Point Planning
- Forecast-Based Planning
- Time-Phased Planning
1 Reorder-Point Planning
Procurement is triggered when the sum of plant stock and firmed receipts falls below the reorder point.
MRP Types for Reorder-Point Planning:
| MRP Type | Description |
|---|---|
| V1 | Manual Reorder Point with External Requirements |
| V2 | Automatic Reorder Point with External Requirements |
| VB | Manual Reorder-Point Planning |
2 Forecast-Based Planning
Future requirements are determined based on historical consumption data.
MRP Type:
| MRP Type | Description |
|---|---|
| VV | Forecast-Based Planning |
3 Time-Phased Planning
Used when materials are procured at specific time intervals. For example, if a vendor delivers every Monday, you can accumulate the weekly requirement and send a cumulative order.
MRP Types for Time-Phased Planning:
| MRP Type | Description |
|---|---|
| R1 | Time-Phased Planning |
| R2 | Time-Phased with Automatic Reorder Point |
| RR | Time-Phased Replenishment with Dynamic Target Stock |
| RS | Time-Phased Replenishment Planning |
Reorder Point in Planning
When using reorder-point planning, it’s essential to maintain the reorder point:
- Manual Reorder-Point Planning: The MRP controller manually sets the reorder point.
- Automatic Reorder-Point Planning: The system updates the reorder point automatically at defined intervals.
Action: Whenever stock falls below the reorder-point quantity, the system generates a procurement proposal during the next planning run.
Lot Sizing Procedures
Lot sizing determines the quantity to be procured or produced during the planning run. The MRP run calculates the exact order quantity based on the selected lot size.
Types of Lot Sizing Procedures
- Static Lot Size
- Periodic Lot Size
- Optimum Lot Size
1 Static Lot Size
Procurement quantity is calculated based on specified quantities in the material master.
- Fixed Order Quantity
- Lot-for-Lot Order Quantity
- Replenishment to Maximum Stock Level
Example: If the fixed order quantity is 100 units, every procurement proposal will be for 100 units, regardless of actual demand.
2 Periodic Lot Size
Groups requirements over a specified time interval (days, weeks, or months).
- Daily Lot Size
- Weekly Lot Size
- Monthly Lot Size
Example: Using a weekly lot size, all requirements within a week are combined into a single procurement proposal.
3 Optimum Lot Size
Creates optimal lots by minimizing costs like setup costs and storage costs.
- Part Period Balancing
- Dynamic Lot Size
- Groff Reorder Procedure
Purpose: Balances ordering and holding costs to determine the most cost-effective procurement quantity.
Key Fields in Lot Size Data
Based on the selected lot size procedure, additional fields become relevant:
Minimum Lot Size
- Definition: The minimum quantity allowed for a procurement element.
- Impact: If the net requirement is below this value, the system increases the procurement proposal to meet the minimum lot size.
Example:
| Scenario | Quantity (pcs) |
|---|---|
| Minimum Lot Size | 50 |
| Requirement | 40 |
| Stock Availability | 15 |
| Net Requirement (Requirement – Stock) | 25 |
| Procurement Proposal Generated | 50 |
Explanation: Although the net requirement is 25 pcs, due to the minimum lot size of 50 pcs, the system creates a procurement proposal for 50 pcs.
Maximum Lot Size
- Definition: The maximum quantity allowed for a procurement element.
- Impact: If the net requirement exceeds this value, the system splits the procurement proposal into multiple lots.
Example:
| Scenario | Quantity (pcs) |
|---|---|
| Maximum Lot Size | 50 |
| Requirement | 125 |
| Stock Availability | 5 |
| Net Requirement (Requirement – Stock) | 120 |
| Procurement Proposals Generated | Three lots: |
| 50 pcs | |
| 50 pcs | |
| 20 pcs |
Explanation: The system creates two procurement proposals of 50 pcs each and a third proposal of 20 pcs to cover the total requirement.
Maximum Stock Level
- Definition: The maximum allowed stock quantity for the material in the plant.
- Usage: Relevant when using the “Replenish to Maximum Stock Level” lot-sizing procedure (e.g., HB).
Purpose: Prevents overstocking by capping the quantity to the defined maximum level.
Assembly Scrap
- Definition: A percentage representing expected scrap during production.
- Impact: The system increases the procurement quantity to account for anticipated scrap.
Example:
| Scenario | Quantity |
|---|---|
| Requirement | 100 pcs |
| Assembly Scrap | 10% |
| Calculated Scrap Quantity | 10 pcs |
| Procurement Proposal Generated | 110 pcs |
Explanation: To meet the requirement of 100 pcs and account for 10% scrap, the system proposes 110 pcs.
Conclusion
Understanding Material Requirements Planning (MRP) and its associated concepts is crucial for effective material management in SAP. By selecting appropriate MRP types and lot sizing procedures, organizations can optimize procurement and production processes, ensuring material availability while minimizing costs.