Material Requirements Planning (PP-MRP)

Implementation Options
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.

The MRP component (PP-MRP) assists and relieves MRP controllers in their area of
responsibility.

The MRP controller is responsible for all activities related to specifying the type, quantity,
and time of the requirements, in addition to calculating when and for what quantity an order
proposal has to be created to cover these requirements.

The MRP controller needs all the information on stocks, stock reservations, and stocks on order
to calculate quantities, and also needs information on lead times and procurement times to
calculate dates. The MRP controller defines a suitable MRP and lot-sizing procedure for each
material to determine procurement proposals.

Integration
You must first create the master data to be able to work with the MRP component. To do this, you
require the following components:

• material master (LO-MD-MM)

• bills of material (LO-MD-BOM)

When you use MRP for in-house production, you also need the following components if you want
to determine production dates:

• work center (PP-BD-WKC)

• routings (PP-BD-RTG)

You also need the following components:

• demand management (PP-MD-DEM)

You need the 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.

• sales and distribution, if necessary

Features

MRP at Plant or MRP Area Level

You can plan material requirements at plant level or for different MRP areas. With MRP at plant
level, the system adds together stocks from all of the individual storage locations, with the
exception of individual customer stock, to determine total plant stock.

The requirements are combined in the planning run and procurement elements are created for
these pegged requirements with unknown sources. Individual storage locations can be planned
separately or be excluded from planning.

In the case of material requirements planning on an MRP area level, only the stocks from
the storage locations or subcontractor assigned to the respective MRP area are taken into
account.

Only the requirements in this MRP area are combined and procurement elements are created for
them. This enables you to plan material requirements specifically for certain areas.

Lot-Sizing and MRP Procedures

The most common lot-sizing procedures are available in the system and you can easily integrate
user-defined formulas.

You can use MRP or consumption-based planning as the materials planning procedure.

Automatic Planning Run

The automatic planning run in MRP determines any shortages and creates the appropriate
procurement elements.

The system generates messages for critical parts and unusual situations so that you can rework
the planning results in the specific area with problems.

Read more: Material Requirements Planning (PP-MRP) - Wikipedia NewForum

Bills of Material in Production Planning

The Production Planning application component provides a solution for both the production plan
(type and quantity of the products) and the production process. Preparations for production
include the procurement, storage, and transportation of materials and intermediate products.

Bills of Material in Production Planning

Bills of material (BOMs) and routings contain essential master data for integrated materials
management and production control.
In the design department, a new product is designed such that it is suitable for production and for
its intended purpose.

The result of this product phase is drawings and a list of all the parts required to produce the
product. This list is the bill of material.

German standard (DIN) number 199, part 2, number 51, defines a bill of material as follows:

A bill of material is a complete, formally structured list of the components that make up a product
or assembly. The list contains the object number of each component, together with the quantity
and unit of measure.

A bill of material can only refer to a quantity of at least 1 of an object.

The graphic below shows some components of a bicycle that are included in a BOM.

Bills of material are used in their different forms in various situations where a finished product
is assembled from several component parts or materials.

Depending on the industry sector, they may also be called recipes or lists of ingredients.
The structure of the product determines whether the bill of material is simple or very complex.

Read more: Bills of Material in Production Planning - Wikipedia NewForum

How are Bills of Material Used in PP?
The data stored in bills of material serves as a basis for production planning activities such as:
 • A design department (working with CAD) can base its work on bills of
material. You can also create a BOM in the R/3 System from your CAD
program, via the SAP-CAD interface.

• A material requirements planning (MRP) department explodes bills of material

on a certain date to calculate cost-effective order quantities for materials.

• A work scheduling department uses bills of material as a basis for operation

planning and production control.

• A production order management department, uses bills of material to plan the

provision of materials.

The data stored in bills of material is also used in other activities in a company such as:

• Sales orders

As an aid to data entry. You can also create and maintain a BOM specifically for a sales
order (variant configuration).

• Reservation and goods issue

As an aid to data entry

• Product costing

To calculate the costs of materials required for a specific product

This simultaneous use of BOM data in different areas of a company illustrates the advantage of a
system based on integrated application components.

Links between application components facilitate continuous data exchange between

different application areas, giving all users access to the latest data at all times.

Read more: How are Bills of Material Used in PP? - Wikipedia NewForum

Single-Level BOMs

You can break down large and complex product structures into a number of related units. Each
unit can be represented by a BOM, referred to in this documentation as a single-level BOM.

A single-level BOM describes one or more assemblies by means of component quantities. In the
following, the term single-level BOM will be shortened to BOM.

In practice, a single-level BOM is often a collection of standardized assemblies. A single-level

BOM can be either a complete machine or an individual part.
You can use single-level BOMs to define one-time solutions for recurring tasks. Once you have
defined your solution in the form of a single- level BOM, you can use it whenever you need it and
combine it with other BOMs as required.

The graphic below shows single-level BOMs for a men’s racing bicycle for
different levels of the production process.

Read more: Single-Level BOMs - Wikipedia NewForum

Assemblies

A group of semi-finished products or parts that are assembled together and form either
a finished product or a componentof a finished product is known as an assembly.

An assembly is identified by a material number and generally functions as a single unit.

The graphic below shows the assembly " GEARS" , a Derailleur gear system that is made up
of four components.

A product defined as an assembly, such as the Derailleur gear system in the graphic
above , can in turn be used as a component in another assembly, such as MRB01 Men’s
racing bicycle (see graphic in topic Single-Level BOMs).

The term "assembly"comes from material BOM applications. In document

structures (in document management applications) this term refers to a coherent
grouping of a quantity of documents and texts.
Phantom Assemblies

A phantom assembly is a logical (rather than functional) grouping of materials.

• From the design point of view, these materials are grouped together to form
an assembly. The components of a phantom assembly are grouped together
to be built into the assembly on the next level up the product structure.

• From the production point of view, these materials are not actually assembled
to form a physical unit.

Assembling a pair of gearwheels

Engineering/design view: one assembly
Assembly view:

Gearwheel 1 goes into the driving gear

Gearwheel 2 goes into the output gear
You can define the special procurement key phantom assembly in the material requirements
planning (MRP) data of the material master record for a material.

Dependent requirements for the superior assembly are passed directly down to the components
of the phantom assembly, skipping the phantom assembly.

Planned orders and purchase requisitions are also produced only for the components of the
phantom assembly.

Read more: Assemblies - Wikipedia NewForum

Work Center

Definition
Operations are carried out at a work center. In the R/3 System work centers are business
objects that can represent the following real work centers, for example:

• Machines, machine groups

• Production lines

• Assembly work centers

• Employees, groups of employees

Use
Together with bills of material and routings, work centers belong to the most important master
data in the R/3 production planning and control system. Work centers are used in task
list operations and work orders.

Task lists are for example routings, maintenance task lists, inspection plans and standard
networks. Work orders are created for production, quality assurance, plant maintenance and for
the Project System as networks.
Data in work centers is used for

•
• Scheduling

Operating times and formulas are entered in the work center, so that the duration of an
operation can be calculated.

•
• Costing

Formulas are entered in the work center, so that the costs of an operation can be
calculated. A work center is also assigned to a cost center.

•
• Capacity planning

The available capacity and formulas for calculating capacity requirements are entered in
the work center.

•
• Simplifying operation maintenance

Various default values for operations can be entered in the work center.
The following graphic illustrates the use of work center data.
Use of work center data

Structure
A work center is created for a plant and is identified by a key. The work center category, which
you define in Customizing the work center, determines which data can be maintained in the work
center.

The data is grouped thematically together in screens and screen groups. Examples of such
screen or screen groups are:

•
• Basic Data

•
• Assignments (to cost centers, Human Resource Management System (HR))

•
• Capacities

•
• Scheduling

•
• Default values

•
 • Hierarchy

•
• Technical data

Integration

Task Lists
Work centers are assigned to operations in task lists. If you change default values in a work
center, the changes are effective in the task list if a reference indicator has been set for the
default value.

Work Center Hierarchies

Work centers can be arranged in hierarchies. These are important in capacity planning. You use
hierarchies to cumulate available capacities and capacity requirements in a hierarchy work
center.

Assignments to Objects in the Human Resource Management System

A Logistics work center can be assigned to either an organizational unit or a work center in the
Human Resource Management System (HRMS). Assignments to other HR-objects, for
example employees or qualifications, can be maintained via the HR work center.

Read more: Routings (PP-BD-RTG) - Wikipedia NewForum

Scheduling Data in Work Centers

You can enter the following scheduling data in work centers:

•
• Scheduling basis

The scheduling basis is a capacity whose operating time is to be used

for scheduling orders.

•
• Formulas
 You use formulas to calculate the execution times of operations in production orders
using standard values, or to calculate the internal processing times in networks and
maintenance task lists.

•
• Interoperation times

•
• Dimension and units of measure for internal processing operations

Read more: Scheduling Data in Work Centers - Wikipedia NewForum

Costing

Use
You have to enter data for costing, if you want to cost the activities performed at the work center.
Internal activities and business processes that are used when a product is produced at the work
center can be settled to the product.

Integration
The data for costing is evaluated in the CO - Controlling application. You can find further
information in the documentation for Product Cost Planning (CO-PC-PCP) under Work
Centers in Costing.

Features
A work center can

•
• use resources from a cost center

In this case, the work center is linked to cost center accounting, which enables you to
model the processes in your company according to responsibilities and functions.

You can select activity descriptions from the following texts: Standard value key, activity
types, in Customizing freely defined text (Production -> Basic Data -> Work Center ->
General Data -> Standard Value -> Process Alternative Activity Descriptions).

If you use integrated incentive wages and logistics, then here you can define from which
incentive wage earner the corresponding activity type is displayed.
You can find further information in the documentation for Cost Center Accounting (CO-
OM-CCA)

•
• use resources from a business process
 In this case, the work center is linked to Activity based controlling, which enables you to
model the processes in your company according to activities in a cross-function manner.

You can find further information in the documentation for Activity-Based Costing (CO-
OM-ABC), particularly under Method of Quantity Consumption (Pull) .
Costing data is always entered for a certain validity period. Data that you have already entered
for another valid ity period is overwritten.

Read more: Costing - Wikipedia NewForum

Work center hierarchy

Work centers can be grouped into a work center hierarchy. Apart from the top of the hierarchy -
the hierarchy root - every work center in the hierarchy is subordinate to another work center.

One work center can exist in several work center hierarchies.

A work center hierarchy can include several plants.

Work center hierarchy

Use of Work Center Hierarchies

Work center hierarchies are used in capacity planning to cumulate available capacity and
capacity requirements.
You can cumulate available capacities from subordinate work centers to a superior work
center level in order to determine the total available capacity for the superior work center.
 In your factory you have several lathes. You create a higher-level work center,
called "Machine center 3", which you use to cumulate the available capacity of
several lathes.
Portraying Hierarchies
You can display a hierarchy in work center maintenance or hierarchy maintenance as a list or a
graphic.

•
• As a list

The work centers that belong to a hierarchy are listed together with their hierarchy level.
Refer to Displaying Hierarchy Structure as a List

•
• As a graphic

The hierarchy graphic displays the hierarchy as a tree. Refer to Calling up a Hierarchy
Graphic

In work center maintenance you can only display the hierarchy structure, in hierarchy
maintenance you can also edit the structure, for example you can delete or change work
center assignment.

Read more: Work center hierarchy Locate the document in its SAP Library structure
Work centers - Wikipedia NewForum
Formulas
You use formulas in the work center to calculate the following data in costing, scheduling
and capacity planning:

• Costs

• Execution times for production orders

• Internal processing times for networks and maintenance orders

• Capacity requirements.

In the R/3 System you can

• use predefined SAP formulas

 • define your own formulas.

You can create formulas in Customizing Work centers under Define formulas for work
centers.
Relationships between work centers, routings and formulas
The following graphic illustrates the relationships between work centers, routings and formulas for
costing, scheduling and capacity requirements calculation.

Formulas are entered in the work center; they take their values from the work center (formula
constants) and the routing (standard values, general operation data and user-defined fields.

Relationships between work centers, routings and formulas

Costs
In production orders each of up to six standard values in a work center can be assigned an
activity type and a formula with which the costs of the operations conducted in the work
center are calculated.

For networks and service orders an activity type and formula can be defined.
Execution Time
You use formulas to calculate execution time and consequently the duration of operations, which
you need to schedule production orders

You can calculate the execution time for each operation segment separately (setting up,
processing and tearing down) by assigning a formula to each of these segments. The execution
time for the whole operation is the sum of the execution times of the individual segments.

You can however just assign a formula to one segment (for instance processing), in which you
take into account the durations of the other segments.

If you do not assign a formula to an operation segment, the execution time of this segment will be
set to zero.

The program checks that the formula has the dimension "time".

Internal Processing Time

Formulas are used to determine internal processing time for scheduling networks and
maintenance orders, for example. If you do not enter a formula, the system will use the time given
in the network or maintenance order.
The program checks that the formula has the dimension "time".

Capacity Requirements
You can assign a formula to each operation segment (setting up, processing and tearing down) to
calculate the capacity requirements. The capacity requirements for the whole operation are then
calculated from the individual segments.

If you do not assign a formula to an operation segment, the execution time of this segment will be
set to zero.

You can also use a formula to calculate capacity requirements for internal processing in a
network or a service order.
If you do not enter a formula, no capacity requirements will be determined.

For more information about this section, see:

Formula Parameters
Rules for Maintaining Formulas

Read more: Formulas - Wikipedia NewForum

Routings (PP-BD-RTG)

Purpose
Routings enable you to plan the production of materials (products). Therefore,
routings are used as a template for production orders and run schedules as well as
as a basis for product costing.
Integration
In order to You also require the components
Plan the usage of materials Material master (LO-MD-MM)
Plan the use of work centers Work centers (PP-BD-WKC)
Plan the external processing of Purchasing (MM-PUR)
operations
Plan quality inspections that Quality planning (QM-PT)
accompany production
Prepare cost calculation according Controlling (CO)
to routings
Plan and to document changes to Engineering Change Management (LO-
routings ECH)
Classify routings Classification system (CA-CL)
Automatically calculate the planned CAPP Standard Value Calculation (PP-BD-
values for the activities to be CAP)
produced

In the R/3 System, routings have the same basic structure as the following objects:

•Master recipes
•Inspection plans
•Maintenance plans

•Standard networks
Therefore, routings are cumulated with these objects under the superordinate
term Task list.
Features
In a routing you plan
•The operations (work steps) to be carried out during production
•The activities to be performed in the operations as a basis for determining dates,
capacity requirements, and costs

•The use of materials during production

•The use of work centers
•The quality checks to be carried out during production

Read more: Routings (PP-BD-RTG) - Wikipedia NewForum

Business Object - Routing (Generic)
Definition
A routing is a description of which operations (process steps) have to be carried out and in which
order to produce a material (product). As well as information about the operations and the order
in which they are carried out, a routing also contains details

about the work centers at which they are carried out as well as about the required production
resources and tools (includes jigs and fixtures). Standard values for the execution of individual
operations are also saved in routings.
Routings (generic) consist of the following objects:

• Routing
• Rate routing
• Reference operation set
• Reference rate routing

Use
A routing is used as a source for creating a production order or a run schedule header by
copying.

Structure
A routing is composed of a header and one or more sequences. The header contains data that
is valid for the whole routing. A sequence is a series of operations.
Operations describe individual process steps, which are carried out during production
(see Routing graphic)
A routing is identified by its group and group counter.
 Routing

Integration

Group and Group counter

Routings within a group are distinguished by their group counter.
In the graphic the three routings in group A are identified by their group counter 1,2 or 3.
 Group
Assignment of a material to be produced to a routing
Before you can produce a material with a routing, you have to assign the material to the routing.
The routing and the material can exist in different plants.
According to the task list type, a routing can

•
• Have one or more materials to be produced assigned to it.

(This is relevant for normal routings and rate routing that are used directly for producing a
material.)
You do not have to assign a material to a routing. However, you cannot use the routing
(rate routing) in a production order or run schedule header, until you have done so.

•
• Have no material to be produced assigned to it

This applies to reference operation sets and reference rate routings that can only be used
as part of a routing or rate routing.
Assignment of material components to operations
If a bill of material (BOM) has been assigned to a routing, you can assign its components to the
routing operations.

In general the BOM assigned to a routing is the material BOM for the material to be produced by
the routing (see Assignment of Materials graphic)You can also assign BOMs to reference
operation sets or reference rate routings.
 Assignment of Materials to be Produced and Material Components

Read more: Business Object - Routing (Generic) Locate the document in its SAP
Library structure - Wikipedia NewForum
Routing Structure and Navigation

Use
According to how detailed the data in the routing is, it is assigned to different levels in the
structure. There are clear and uniform navigation routes, with which you can arrive at any screen.

See also:
Business Object - Routing (generic)

The following graphic illustrates the navigation levels and some of the navigation routes for
routings.
The individual data can be found on the following levels:

• On the initial screen you enter data that is required to identify or select
routings.
• On the header overview the routings in a group are displayed.
• The header contains data that is valid for the whole routing. For instance,
information about

•
o The status and use of the routing
o General parameters for quality checks during production
o The validity period

You can call up the following information from the header:

•
o Details about assignments of material component to the routing. That
is, about the materials that are produced by the routing.
o A long text for a more detailed description of the routing

• The sequence overview contains, for instance,

•
o The sequences, that are a group of process steps in a routing
o The sequence category, whether the sequence is a standard
sequence, a parallel sequence or an alternative sequence.

• The operation overview contains, for instance,

 •
o Operations and sub-operation, which describe the process steps in the
routing
o The work center where they are carried out
o A short description of the process step

The operation overview is the central screen for routing maintenance. From here you
can branch to the header, the detail screens for operations and sub-operations as well as
other overviews for routings.

• On the detail screens for operations and sub-operations you can find data
that is relevant to individual operations or sub-operations, such as,

•
o Details about external processing or personnel qualifications
o Standard values and other information for scheduling
o Parameters for quality checks during production

• Further overview screens exist for the assignments and assignments to each
operation or sub-operation. An overview is presented of the following objects
that are relevant for a process step:

•
o Material components
o Work centers
o Production Resources/Tools
o Inspection characteristics
o Trigger points

• The additional information for each assignment or assignment is contained on

the relevant detail screen. This could be scheduling data for work centers or
control indicators for inspection characteristics.

Read more: Routing Structure and Navigation - Wikipedia NewForum

Maintaining Routings and Rate Routings

Purpose
This process describes how to create or change a routing or rate routing.
Editing a routing is often a very simple process consisting of only a few steps, which can all be
carried out by a single person.

Sometimes however, the process is more complicated, for instance if the production of a material
is planned by several departments according to their own business points of view.
This process documentation describes those aspects of editing routings and rate routings that are
generally the most important. Possibly some of the steps described here are not so important for
your individual needs.

For more detailed information about the individual process steps, refer to the special
process documentation

Prerequisite
For information about the prerequisites for individual process steps, refer to the relevant
process documentation.

Process flow

This process is valid for both routings and rate routings. For simplicity’s sake only
routings are discussed in the following topic.

1.
2. You create a routing by first entering only the data that is absolutely
essential.

3. If required, you can assign one or more materials to the routing.

You can also assign materials in the first step. This could be useful, if for instance you
know from the start that a certain material is to be assigned to the routing.

You can also assign materials later. However you can only carry out certain steps after
you have assigned material to a routing.
4. You edit the routing header.
5. You design the basics of the production process by creating one or more
sequences of operations
6. According to your needs, you can carry out the following steps in which ever order you
like.

1. – You plan the usage of material components in production.

– For in-house operations you plan the use of work centers.
2. If you want to schedule a routing (see process step 9), enter the following detailed data
for the operations:
3. – For in-house operations you enter standard values and if necessary user fields with
extra data that is not included in the standard system.
– For externally processed operations you enter the details of the vendor. You can do this
by entering a purchasing info record. (See general operation data.)

Please note that this data is also taken into account in product costing and capacity
planning

4. If you intend to inspect the quality during production, you enter the
inspection specifications and if necessary the PRTs that you need as test
equipment.
5. You check the consistency of the routing data.
6. You schedule the routing.
If necessary you transfer the scheduling results to the material master record of the
 material to be produced. This data forms the basis for determining basic dates in material
requirements plannin

7. After you have finished editing the routing, you release it for use
in production orders and/or costing. You set this status in the general header
data.
8. You save the routing.

Read more: Purpose This process describes how to create or change a routing or rate
routing. E - Wikipedia NewForum