MATERIAL REQUIREMENT PLANNING

The main function of material requirements planning is to guarantee material availability, that is, it is used to procure or produce the requirement quantities on time both for internal purposes and for sales and distribution.

This process involves the monitoring of stocks and, in particular, the automatic creation of procurement proposals for purchasing and production.

In doing so, MRP tries to strike the best balance possible between Optimizing the service level and

Minimizing costs and capital lockup.

So, when MRP run is carried out using PD (normal planning) as MRP type, the PLANNED ORDERS are generated according to the demand mgmt (Planned Independent requirements).

The MRP controller checks the scheduled dates of the planned orders and converts them into the production orders.

Material requirements planning take current and future sales as its reference points. The planned and, depending on planning strategy, actual requirements trigger the MRP calculation.

In MRP the requirements include sales orders, planned independent requirements, material reservations, the dependent requirements created by exploding the BOM and so on.

In case of in-house production the system creates planned orders for planning of production quantities. When planning is complete planned orders can be converted into production orders.

In case of external procurement the system creates either a planned order or directly creates a purchase requisition or a schedule line for a pre-existing scheduling agreement for planning the external purchase order quantity.

DEMAND

ELEMENTS

MRP RUN

PLANNED ORDER

PURCHASE REQUISITION

DEMAND FROM USER DEPARTMENTS

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Create the master data to be able to work with the MRP component. To do this, we require the following components:

Material master Bills of material

When you use MRP for in-house production dates we require Work center

Routings

Demand Management component to define requirement quantities and requirements dates for finished products and important assemblies. Demand Management also determines the strategy you are to use for planning, procuring, or producing a certain finished product.

MRP control parameters Transaction code: MD02

Various control parameters are available for the total planning procedure and for single-item planning and multi-level planning, which you can set in the initial screen of the planning run.

You use these parameters to determine how the planning run is to be executed and which results are to be produced.

The control parameters include:

• Planning run type

o Regenerative planning --NEUPL o Net changing planning– NTECH

Net change planning in the planning horizon ---NETPL

• Creation indicator for procurement proposals for materials that are procured externally

For materials procured externally, purchase requisitions will be generated and for the material produced in-house, planned orders will be generated.

• Creation indicator for MRP lists It defines whether MRP lists are to be created or not.

• Planning mode

Determine how the system is to deal with procurement proposals (planned orders, purchase requisitions, scheduling agreement lines) from the last planning run, which are not yet firmed, in the next planning run.

• Scheduling

Scheduling is based on lead time scheduling.

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During the planning run, the system analyzes the requirements that exist for the planned materials and creates procurement elements that cover these requirements. The evaluations in the component display all receipt and issue elements for a material in the form of a table and enable you to gain a quick overview of the stock/requirements situation for the material as well as to branch into the editing function for the MRP elements for this material.

MRP Out put

The following evaluations are available for analyzing the planning result:

MRP list (MD02)

Stock/requirements list (md04)

Planning result (corresponds to the MRP list with individual evaluation layout)

Planning situation (corresponds to the stock/requirements list with individual evaluation layout)

CAPACITY PLANNING

Capacity planning comprises the following partial components:

The Objective of Capacity Planning’s to ensure optimum utilization of resources

• Capacity evaluation

In the capacity evaluation, available capacity and capacity requirements are determined and compared with each other in lists or graphics.

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• Capacity leveling

The objectives of capacity leveling are:

Optimal capacity commitment Selection of appropriate resources

In most applications, you can use two types of planning table (graphical and tabular versions) to display the capacity situation and to carry out capacity leveling.

CONSUMPTION BASED PLANNING

Consumption based planning is based on consumption values and uses forecasts or statistical procedures to determine future requirements. Consumption based planning is characterized by its simplicity and is mainly used for low value items. Manual reorder point planning is a typical process in consumption based planning.

PLANNED ORDER PROCESSING

Manually Transaction code: MD11

The MRP controller enters a planned order manually. He determines which material is to be procured, the required quantity, the date required, and whether the material is to be procured externally or internally.

Automatically Transaction code: MD02

During the planning run, the system automatically determines the materials to be procured as well as the required quantity and the required date.

After the planned order is created either manually or automatically a planned order profile is allocated and data is processed. The data would include: material, plant, order quantity and

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be carried out. Saving the planned order creates a purchase requisition, planned load, creates dependent requirements and allows the processing of the planned order.