What is MRP in SAP PP?

Material Requirement Planning (MRP) is a powerful SAP functionality designed to ensure efficient material availability. It integrates with Materials Management (MM), Sales and Distribution (SD), and Production Planning (PP) to streamline material requirements for businesses. MRP ensures the right materials are available in the right quantity, at the right time.


Why is MRP Essential?

MRP FunctionalityBusiness Impact
Customer Order FulfillmentEnsures on-time delivery by aligning material availability with order requirements.
Demand ForecastingCombines historical data, open orders, and planned requirements to anticipate needs.
Efficient Stock ManagementAvoids overstocking or understocking of raw materials and finished goods.

How Does MRP in SAP PP Work?

  1. Total Demand Calculation:
    • Sources: Open sales orders, planned independent requirements (PIRs), and manual forecasts.
    • Example: A company estimates it will need 1,000 units for the upcoming month.
  2. Stock Availability Check:
    • Evaluates existing stock, open purchase requisitions (PRs), and planned purchase orders (POs).
    • Determines shortages based on current inventory and scheduled receipts.
  3. Shortage Handling:
    • For finished goods: Generates planned orders for production.
    • For raw materials: Creates purchase requisitions for procurement.

MRP Calculation Example

Let’s illustrate with an example.

CategoryUnits
Total Demand1,000
Stock Availability500
Planned Receipts300
Shortage200

Scenario: Order Fulfillment

A customer orders 150 units for delivery on October 20th, 2024. Here’s how MRP ensures fulfillment:

StepAction TakenStatus
Check Stock100 units available.Shortage: 50
Check Planned ReceiptsOpen PO for 60 units, delivery on October 18th.Stock OK.
Final DecisionConfirm delivery of 150 units on October 20th.Fulfilled.

Key Formula in MRP

Shortage=Total Demand−Available Stock−Planned Receipts\text{Shortage} = \text{Total Demand} - \text{Available Stock} - \text{Planned Receipts}

Example:

  • Total Demand: 1,000 units
  • Available Stock: 500 units
  • Planned Receipts: 300 units
  • Shortage: 1,000−(500+300)=2001,000 – (500 + 300) = 200 units

SAP T-Codes for MRP Operations

T-CodeFunction
MD01Run MRP for all materials at the plant level.
MD02Run MRP for a specific material in a plant.
MD04Stock/Requirements List.
MD05MRP List (Static).

Legacy and Evolution

SAP introduced MRP over 25 years ago, making it a cornerstone of material planning systems. With advancements like MRP Live, the process is now faster and more responsive to real-time changes.


In the next post, we’ll explore How MRP Integrates with SAP Systems for dynamic demand planning and stock management.