MRP And Forecasting Views In SAP Material Master And MRP .
MRP and Forecasting Viewsin SAP Material Masterand MRP Org. StructureLOG-MD-004LOG-MD-004October 7, 2008LaGOVVersion 1.01Updated: 10/02/2008
Agenda Logistics, Ground Rules & IntroductionWorkshop ObjectivesProject Overview/TimelineBusiness Process Review––––––As Is Process DiscussionsSAP terms glossaryProcess improvement opportunitiesSAP concepts & functionalityLeading practicesEnterprise readiness challenges Action Items QuestionsFriday, November 07, 20082
LogisticsBefore we get started .Friday, November 07, 20083
Ground Rules Has everybody signed in? Everybody participates – blueprint is not aspectator sport Silence means agreement Focus is key – please turn off cell phones andclose laptops Challenge existing processes and mindsets Offer suggestions and ideas Think Enterprise Ask questions at any time One person at a time please Creativity, cooperation, and compromiseFriday, November 07, 20084
Introduction Roles Process Analyst and Functional Consultant (IBM) –lead and facilitate the discussions and drive designdecisions Documenter (State Employee) – take detailed notes tosupport the formal meeting minutes to be sent by theProcess Analyst to all participants for review and feedback Team Members (LaGov) – provide additional support forprocess discussions, address key integration touch points Subject Matter Experts – advise team members on thedetailed business process and participate in the decisionsrequired to design the future state business processRound the Room IntroductionsNamePositionAgencyFriday, November 07, 20085
Project Phases Strategy & Approach DefinedProject Team Training Friday, November 07, 2008 Development & Unit TestingIntegration TestingEnd-User Training MaterialsBusiness Process DefinitionDevelopment Requirements Go BusinessPreparationFive Key PhasesProject Go-Live SupportPerformance TuningUser AcceptanceTechnical TestingEnd-User TrainingConversion6
Tentative Project Timeline Tentative implementation dates are planned as follows:FunctionalityMay – June 2008Budget PrepOctober 2009DOTDFebruary 2010Core Modules All AgenciesJuly 2010Additional ModulesJanuary 2011July 2008August – Dec 2008Project Start-UpBlueprintFriday, November 07, 2008Tentative Implementation DateJanuary 2009Phased deploymentwill beconfirmed/updatedbefore completionof Blueprint activities!7
Blueprint Schedule - Tentative Please refer to the handout for the upcoming BlueprintSessionsFriday, November 07, 20089
Blueprint Objectives1. Review and discuss the current or As-IsBusiness Processes: Which helps to drive out the business requirementsAs well as the integration points with otherprocesses2. Define Master Data Friday, November 07, 2008Address key integration pointsSupport organizational requirementsConsistent and appropriate use of data fields10
Blueprint Objectives3. Define Future or To-Be Business Processesbased on: Best Practices inherent in SAPIntellectual capital from other SAP implementationsState business requirements4. Identify Development Requirements: Forms Reports Interfaces Conversions Enhancements WorkflowFriday, November 07, 200811
Blueprint Objectives5. Understand and communicate any OrganizationalImpact / Enterprise Readiness Challenges6. Gather system Security Authorizations and Statewide Training RequirementsFriday, November 07, 200812
Today’s Workshop Objectives1.Overview of general Inventory Replenishment and MRP concepts2.Review and discuss the current or As-Is replenishment processes andlogic3.Define key MRP Material Master data: MRP typesLot sizingLead time elementsMRP controllerOrganizational levels4.Review SAP MRP functionality and control data – system demo5.Review SAP Forecast functionality6.Determine forecast applicability based on consumption historyFriday, November 07, 200813
FUTURE CONSIDERATIONS MRP/Forecasting Material Master and Org. Elements:––––––––––Friday, November 07, 2008MRP typesLot sizing proceduresSpecial procurement keysLead time elements to be appliedUse of MRP Areas or Storage Location MRPDefinition and use of MRP ControllerLocations where MRP appliesUse of statistical forecastFunctional development objects requiredConversion requirements and logic14
Project ScopeSystems to be Replaced DOTD– PIMS (Purchasing Inventory Management System) DPS– VENICE WILDLIFE & FISHERIES– PARADOXFriday, November 07, 200815
AS-IS Process FlowFriday, November 07, 200816
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Overview of GeneralInventory Replenishmentand MRP ConceptsFriday, November 07, 200821
Overview of General MRP ConceptsOverview of Inventory Control - Purpose of Holding InventoryDifferent scheduling techniques can be used with different inputs for demand. Theselection of the input will impact the logic used to generate the planning requirements.Demand inputs can come from:Forecast The anticipated quantity that will be required at some time in thefuture (push-based)Replenishment A quantity that equals the difference between a fixed targetinventory level and current inventory (pull-based)Make-to-order The exact quantity that is needed for orders (pull-based)Friday, November 07, 200822
Overview of General MRP ConceptsOverview of Inventory Control - Purpose of Holding InventoryInventory is used as a buffer between uncertain and variable demand and supply.SupplyInventoryDemandWith variations and uncertaintyin quantity and timeActing as bufferWith variations and uncertainty inquantity and timeInventory Functions Decouples operations Allows for mismatches between supply and demand rates Helps maintain stable business operations when the Supply Chain is unreliable Allows for unexpected demands (size or timing) Allows for deliveries which are smaller or later than expected Maintains service levels to customersFriday, November 07, 200823
Overview of General MRP ConceptsOverview of Inventory Control - Inventory VariationWould you plan these two products differently?Product ADemandProduct BavgTimeFriday, November 07, 2008DemandavgTime24
Overview of General MRP ConceptsQuantityFixed Quantity System - Constant Demand, Constant Lead-time andConstant SupplyIf demand, lead-time and supply were all constant, the reorderquantity would always bring inventory up to the same iday, November 07, 200825
Overview of General MRP ConceptsFixed Quantity System - Uncertain DemandQ Even though the reorderquantity is fixed, demanduncertainty causesinventory levels to fluctuateand may result in the use ofsafety stock to coverdemand over the eFriday, November 07, 2008Time26
Overview of General MRP ConceptsFixed Quantity System - Uncertain Lead-timeEven though the reorder quantity is fixed, lead-time uncertainty causes inventory levelsto fluctuate and may result in the use of safety stock to cover demand over varying eFriday, November 07, 2008Lead-timeTime27
Overview of General MRP ConceptsFixed Quantity System - Uncertain SupplyQuantityEven though the reorder quantity is fixed, supply uncertainty causes inventory levelsto fluctuate and requires safety stock.QReorderLevelQQSafetyStockProduction quantitydoes not equal QTimeLead-timeFriday, November 07, 200828
Overview of General MRP ConceptsFixed Quantity System - Uncertain Demand, Lead-time and SupplyQuantityThe combined effects of uncertain demand, lead-time and supply results in higher safetystock and higher average inventory levels as well as greater inventory variabilityReorderLeveldemand variability safety stockSafetyStocklead-time variability safety stocksupply variability safety stockTimeFriday, November 07, 200829
Overview of General MRP ConceptsMin / Max System DefinitionA Min / Max System is used when individual customer orders can take the stock level wellbelow a reorder level. Instead of using a fixed order quantity and reorder level, the Min / Maxsystem uses a target inventory level (TIL) and reorder level (ROL). When the stock level getsclose to the reorder level, a quantity is scheduled to bring inventory back up to the targetinventory level. The higher inventories reduce the chance that one order will take inventoriesbelow the reorder level.StockTILROLTimeFriday, November 07, 200830
GLOSSARYFriday, November 07, 200831
SAP MRP Glossary Friday, November 07, 2008MRP – Material Requirements PlanningPlant – An organizational unit that:– Can be a distribution center– Can be a manufacturing or maintenance facility– Holds inventory separate from other plants– Is the default organizational level for MRP– Can be set as the valuation level for materialsMRP Area – An organizational unit for which material requirements planning is carriedout independently. It is a subdivision of a plant and can have one or more storagelocations assigned.Storage Location – An organization unit that allows the differentiation of materialstocks within a plant. From an MRP perspective all storage locations are included in aplant MRP unless:– It is excluded from MRP– It is set to run storage location MRP – simple reorder point and fixedreplenishment quantity only.MRP Controller – An organizational unit that is assigned to each material in a plantand forms the basis for running MRP reports and managing MRP order proposals.32
SAP MRP Glossary Friday, November 07, 2008MRP Type – Controls which procedure is to be used to plan a material and whichMRP parameters can be entered when maintaining a material master record.Special procurement type – Can be used to override the procurement type in thematerial master or define the procurement type more precisely – for example stocktransport order.Lot size – Controls lot-sizing procedures that serve to calculate the procurement(purchase order) quantities.Reorder point – When stock falls below this quantity, the system flags the material forrequirements planning.Safety stock – Specifies the quantity whose purpose is to satisfy unexpectedly highdemand in the coverage period.Purchasing processing time – Time required to convert a purchase requisition into apurchase order.Planned delivery time – Number of calendar days needed to obtain the material orservice if it is procured externally.Goods receipt processing time – Number of workdays required after receiving thematerial for inspection and placement into storage.Storage location MRP indicator – An indicator used to either exclude storagelocations from material requirements planning at plant level or to plan separately.33
SAP Forecast Glossary Friday, November 07, 2008Forecast formulas – System provided formulas for:– Forecast models– Evaluation of the forecast– Calculation of reorder level and safety stockForecast model – Indicator that defines on which forecast model the system bases itscalculation of future requirements of the material.Period indicator – Indicator specifying the periods in which the material'sconsumption values and forecast values are managed such as months, weeks ordays.Historical periods – The number of historical values the system uses for the forecast.Forecast periods – Number of forecast periods forwards the system createsPeriods per season – Number of periods in a seasonal cycle in statistical forecasting.Initialization periods – Number of historical values that should be used forinitialization of a forecast. It can be fewer than the number of historical periods.Initialization indicator – Number of calendar days needed to obtain the material orservice if it is procured externally.Tracking limit – Value that specifies the amount by which the forecast value maydeviate from the actual value.34
SAP MRP FunctionalityFriday, November 07, 200835
MRP FunctionalityDefinitionMaterial Requirements Planning (MRP) isa term for all the actions necessary to createproduction and procurement plans formaterials in a plant.Friday, November 07, 200836
MRP FunctionalityMaterials Planning ProceduresPlanningProceduresConsumptionBased PlanningForecastBased PlanningDeterministicMRPReorder PointPlanningManualReorder PointAutomaticReorder PointFriday, November 07, 200837
MRP FunctionalityConsumption-Based MRP and Deterministic MRP Differences Deterministic MRP– Using the plan/forecast for the higher levelassembly and MRP BOM Explosion– Using the forecast for unplannedadditional requirements Consumption-Based MRPReorder Point– Manual reorder point planning– Automatic reorder point planning– Forecast-based planningSafety StockStartDateDeliveryDateTimeNo Materials PlanningFriday, November 07, 200838
MRP FunctionalityPlan Driven MRPPlant Stock-Safety stock Receipts (purchase orders, firmed procurement proposals, production orders)-Requirements quantity (e.g., planned independent and customer requirements,material reservations, forecast requirements for unplanned additional requirements) Available StockNet Requirements Calculation for deterministic MRPIn MRP, requirement quantities are maintained in the system as planned independent requirements,customer requirements, dependent requirements, material reservations as well as forecast requirements. Thesystem checks every requirement and forecast to determine whether they are covered by availablewarehouse stock or receipts (purchase orders, firmed procurement proposals, production orders and so on).FeaturesAvailable stock is calculated as follows: A shortage occurs when the requirement quantities are greater than expected receipts and stockquantity. The system specifies the date of the issue (for example, customer requirement, plannedindependent requirement, reservation, forecast requirement) as the requirements date.Friday, November 07, 200839
MRP FunctionalityReorder Point PlanningPlant Stock Open order quantity (purchase orders, firmedplanned orders, firmed purchase requisitions) Available stockNet Requirements Calculation for Reorder Point PlanningIn reorder point planning, the net requirements calculation is only carried out once the stock level has fallenbelow the reorder level. Issue elements, such as, customer requirements, planned independentrequirements, or reservations are displayed and are not included in the net requirements calculation.FeaturesAvailable warehouse stock is calculated as follows: When available warehouse stock falls short of the reorder level then the shortage quantity is thedifference between these two The system specifies the date of the planning run as the requirements date Safety stock is ignored when calculating the shortage quantity. However, if stock should fall belowthe safety stock level, the MRP controller receives an exception messageFriday, November 07, 200840
MRP FunctionalityForecast Driven MRPPlant Stock- Safety Stock Receipts (purchase orders, confirmed purchase orders)- Requirements quantity (forecast requirements) Available StockNet Requirements Calculation for Forecast-Based PlanningThe basis of forecast-based planning is the forecast of the total requirements. The system only considers theforecast requirement quantities as issues. Other issue elements, such as, customer requirements, plannedindependent requirements, or reservations are displayed and are not included in the net requirementscalculation. The system checks every forecast requirement to determine whether it is covered by availablewarehouse stock or receipts (purchase orders, firmed procurement proposals).FeaturesAvailable stock is calculated as follows: A shortage occurs when the requirements quantity is greater than expected receipts The system specifies the forecast requirements date as the requirements date. In this case, itassumes that forecast requirements are needed at the beginning of the period. This means that therequirements date is the first workday of the respective period.Friday, November 07, 200841
MRP FunctionalityPrerequisites for Material Requirements PlanningPlantMaterialMRP ActivatedValid MRP TypeValid Material StatusMaintained MRPDataFriday, November 07, 200842
MRP FunctionalityMaster DataDemand/ROPInclude in MRP?MRP ProcessHow many are needed?How many are instock - create orderproposals?MRPSchedule ordersMake or buy?Lot size?Stock/Requirements ListFriday, November 07, 2008MRP List43
Key MRP Master DataFriday, November 07, 200844
Key MRP Master DataMRP Type A key that controls the MRP procedure (deterministic MRP orreorder point) to be used for planning a material It contains additional control parameters (e.g., for using theforecast for the materials planning and for firming procurementproposals) Is plant specific to a material or MRP areaFriday, November 07, 200845
Key MRP Master DataSample MRP Types For Plan Driven Materials: PD (MRP) - This setting looks at real-time demand placed on a material tocalculate the necessary requirements For most consumable materials, there are several options: VB (Standard Reorder Point Planning) – You define a reorder point and thesystem will ONLY check your ACTUAL INVENTORY to determine if you areBELOW this reorder point VM (Automatic Reorder Point Planning) – System calculates the safetystock level and reorder point quantity dynamically based on the statisticalforecast V1 (Reorder Point Planning with external requirements) – You define areorder point and the system will look at inventory as well as actual firmrequirements within lead-time For Materials that do not require any planning: ND (No Planning) – Example, reusable materials, obsolete materials, etc.Friday, November 07, 200846
Key MRP Master DataLot-sizing Procedure Is used to calculate the purchase order and production orderquantities (lot sizes) Are divided into three groups Static Period OptimumFriday, November 07, 200847
Key MRP Master DataSample Lot-sizing Procedures EX (Lot-for-Lot) – looks at actual production lots and generatesquantity requirements based on these production schedules FX (Fixed Lot) – uses a fixed quantity strategy that will always beproposed when a requirement is generated HB (Replenish to Max Stock Level) – uses a strategy that will lookat current stock level and replenish back to a max level – Min/Max TB (Daily lot-size) – groups requirements by the day WB (Weekly lot-size) – groups requirements by the weekFriday, November 07, 200848
Key MRP Master DataSpecial Procurement Keys An indicator in the material master record that defines externalprocurement or in-house production of the material moreprecisely Examples of possible special procurement types are Stock transfer Production in another plant Vendor consignmentFriday, November 07, 200849
Key MRP Master DataLead Time Elements Number of calendar days needed to obtain the material or service Total lead time has the following elements Purchasing processing time Planned delivery time Goods receipt processing timeFriday, November 07, 200850
Key MRP Master DataMRP Area An organizational unit within a plant for which you can carry out materialrequirements planning separately Can include one or several storage locations within a plant Can be used to manage inventory items supplied to a subcontractor forassembly activities By defining MRP areas, you can carry out MRP specifically for each area a particular production line separate storage locations subcontractor stockFriday, November 07, 200851
MRPORGANIZATIONALDATAFriday, November 07, 200852
Key MRP Org DataSimple MRP functionality is available at the Storage Location level.For storage location X,the reorder level wasset to 50 pieces.Since stock at thestorage location X (30)has fallen below thereorder level, a stocktransfer reservationamounting to the fixedlot size (50) wascreated.At the same
Define key MRP Material Master data: MRP types Lot sizing Lead time elements MRP controller Organizational levels. 4. Review SAP MRP functionality and control data – system demo 5. Review SAP Forecast functionality 6. Determine forecast applicability based on consumption history.
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Module MRP - Calculate Requirements Datasheet Name MRP Overview Page 3 of 18 2. Settings & Parameters Settings for MRP can be found within the System Manager's Settings within the MRP Tab. Figure 1 - Navigating to MRP Settings The settings within the settings menu are used as the default value for MRP Calculations, and most can be toggled on
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MRP indicator VB in the material master, you assign the MRP procedure to the material (see Figure 1.4). With this type of MRP, you maintain the re-order point and the safety stock manually in the Mrp 1 (reorder point) and Mrp 2 (safety stock) (see Section 3.1) views. The reorder point
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Time MRP Time of last MRP run for material at SLoc Stock at L QOH at last MRP run ROP Reorder Point for material at SLoc Max Maximum stock level for material at SLoc MRP Type MRP Type (Indicates if material is relevant for material requirement planning. Ie. ND vs. VB) SP type Special procurement
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