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Curtiss-Wright Training (Santa Clarita)

Planning Session June 24-25-26, 2009

Introduction
Presentation introduction
Vincent Malpart 7 years of SAP experience, 3.5 as a consultant Modules PP & MM

Who are the participants? What do you expect from this course?

Training Objectives
At the end of this class, you will be able to:

Better comprehend planning process, master data used, MRP concepts and exception messages management. and more specifically, to:
Manage Material Master for planning. Understand MRP Concepts. Understand planning process and run MRP. Manage exception messages (MRP results).

Agenda for the Planning Session


8:00 a.m. 9:30 a.m. Master Data: Material, BOM, Routing 9:30 a.m. 10:00 a.m. MRP Concepts Break 10:15 a.m. 12:00 p.m. Planning process, MRP Execution & MRP tools Exercise #1 Lunch 12:45 p.m. 2:15 p.m. MRP tools & exception messages Break 2:30 p.m. 4:00 p.m. MRP tools & exceptions messages (contd) Exercise #2 4:00 p.m. 5:00 p.m. Various, questions & answers

Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

Master Data
Material Master (MM01-02-03)
Basic Views Sales Views Purchasing View MRP Views (Planning) Forecast View Work Scheduling View General Plant Data / Storage Views Warehouse Management Views Accounting / Costing Views

Master Data
Material Master
Purchasing View 4 MRP Views Forecast View

Plant dependent views

Master Data
Material Master MRP 1
Key containing special control parameters for the total planning run Key that determines whether and how the material is planned The PTF specifies a period within which no automatic changes are to be made to the master plan

Responsible for material planning for the material (group) Lot size parameters

Master Data
Material Master MRP 1
Lot Size
Method/procedure used to determine the quantities of the procurement proposals You can define minimum and maximum lot sizes, as well as rounding procedure (multiple of ) 3 types of procedures: 1. Static: lot for lot (EX), fixed (FX), 2. Periodic: daily, weekly, monthly, planning calendar 3. Optimum: delivery costs vs. storage costs
Best Practices for MRP nervousness minimization through BOM levels: Finish products: Fix lot size Semi finished: Fix/Periodic lot size Raw: Periodic lot size
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Master Data
Material Master MRP 2
Define how material is procured Default value in planning and production (GR)

Define more precisely the procurement: Subcont.., STO, Phantom assembly, etc.

Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. Acts as a requirement for MRP.

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Master Data
Material Master MRP 2
In-house Production Time (days)
Number of workdays to produced the material in-house.

Planned Delivery Time (days)


Number of calendar days needed to obtain the material or service if it is procured externally. The planned delivery time is used to calculate the delivery date and the release date

GR Processing Time (days)


Number of workdays required after receiving the material for inspection and placement into storage.

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Master Data
Material Master MRP 2 Scheduling Margin Key
Opening periods for Planned Order conversion
Number of workdays subtracted from the order start date to determine the creation date It flags the date at which the Planned Order should be converted into a Production Order

Float time before and after production (floats are not taken into account when running MRP with basic dates (only with lead-time scheduling)

Release period
Number of workdays between the planned start date and the date for releasing the order (program in background)
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Master Data
Material Master MRP 2 Safety Stock
Fix quantity (requirement) Can be defined in terms of time coverage (consumption-based planning)
Consumption-based planning procedures use past consumption data (historical data) to calculate future requirements with the help of the material forecast or static planning procedures. Service level is then used in the calculation. The net requirements calculation is triggered when stock levels fall below a reorder point or by forecast requirements calculated from past consumption data.

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Master Data
Material Master MRP 3

Planned Independent Requirement parameters (PIR)

Checking Group for ATP

Checking Group (Material) + Checking Rule (Functional) = Scope of check, which indicates which MRP elements are included in the ATP.

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Master Data
Material Master MRP 3 Strategy Group
The strategy group gathers all the planning strategies that can be used for a particular material. The planning strategy represents the procedure used for planning a material and is (technically speaking) controlled by the MRP types, for example: MTO, MTS, etc.

Demand Management
The consumption mode determines whether consumption is to be carried out as backward or forward consumption, or whether both consumption types are allowed. The consumption period (either forward or backward) is specified in workdays and is valid from the current date. Sales orders, material reservations, dependent requirements then consume the PIR quantities that lie within the consumption period: before (for backward consumption) or after (for forward consumption) the requirements date.
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Master Data
Material Master MRP 3

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Master Data
Material Master MRP 4

Percentage of scrap that occurs during production of the material, if the material is a component. Usually maintained at the component level in the BOM.

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Master Data
Bill of Materials / Single level (CS01-02-03)
Structured list of the components that make up a product or assembly. External procurement: subcontracting

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Master Data
Bill of Materials : Alternative item (CS0102)
Alternative item group is used to group together alternative items in a BOM. Any of the materials in the alternative item group could be included in the assembly. These items are known as alternative items in the BOM.
Alternative Item Group

Priority (ranking order) Strategy Usage probability

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Master Data
Bill of Materials : Alternative item (CS01-02)
Priority (ranking order)
The priority of an item within an alternative item group determines the sequence in which material components are reserved in the production order.

Strategy (only relevant in the production order)


1- According to usage probability (manual changes possible)
The first material in the ranking order that is supplied 100% on the requirement date is reserved in the required quantity (material B).

2- Withdrawal if 100% availability


The first material in the ranking order that is supplied 100% on the requirement date is reserved in the required quantity (material B). E.g.

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Master Data
Bill of Materials : Alternative item
Usage probability
Material requirements planning (MRP) plans the alternative items according to usage probability. If you use the usage probability to determine the withdrawal posting (strategy 1), the quantities are proposed according to the usage probability (at least 1%). You can change the proposed quantities. E.g.

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Master Data
Bill of Materials : Phantom item
Definition
The phantom assembly represents a logical grouping of materials. These materials are grouped together from the construction point of view and are all maintained together. From the production point of view, however, these materials are normally not assembled. The phantom assembly is also used as an entry aid.

Prerequisites

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Master Data
Bill of Materials : Phantom item
BOM Explosion with Phantom Assemblies
Master Data: Create BOM for phantom material

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Master Data
Bill of Materials : Phantom item
BOM Explosion with Phantom Assemblies
Master Data: Insert phantom material as a component in a produced material

Phantom item indicator

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Master Data
Bill of Materials : Phantom item
BOM Explosion with Phantom Assemblies
Production order component list & reservations

Phantom components Phantom item indicator

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Master Data
Multi-level BOM (CS11-12-13)

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Master Data
Work Center (CR01-02-03) Operations are carried out at a work center. In the SAP 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

Work centers are 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.
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Master Data
Routing (CA01-02-03)
A routing is a description of what operations (process steps) have to be carried out and in which order to produce a material (product). Each operation contains:
Work center Time to produce

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Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

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MRP Concepts
What is MRP?
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. - SAP Answer to 4 fundamental questions:
What to order? Quantity to order? When to order? When to schedule delivery?
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MRP Concepts
The planning processes need to be aligned and integrated to bring value to the enterprise.
Deliverables

Valid plan?
Sales & Operation Planning

Sales Plan (family, SKU) statistic Sales Plan - management Production Plan (0-24 months)

S&OP

Rough-Cut Capacity Planning (bottleneck) Level Plan (3-12 months) Action Plan medium/long term

Monthly
Master Production Plan (Finished Good) Master Production Plan (Semi-finished)

Master Planner

Master Production Scheduling

MPS

Detailed Capacity Analysis (work center) Finite Capacity Scheduling (1-12 weeks) Action Plan short/medium tem

Weekly
Procurement Plan (raw material)

Production Planner

Material Requirement Planning

MRP

Material Availability Check

Buyer Planner

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MRP Concepts
MRP generates planned orders and/or purchase requisitions when the required quantity of material exceeds the quantity on hand and on order.

MRP
For all materials that need to be produced

Planned Orders

Purchase Requisition
converted to

For all materials that need to be procured

Production Order

Purchase Order

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MRP Concepts
Planned Order
Procurement proposal (supply) Created by MRP, but can also be created manually Link to a BOM, and possibly a Routing (Lead Time Scheduling) Can be manually modified or deleted at any time Once manually modified, a planned order is automatically firmed (can be manually un-firmed)
Firming at header and component levels MRP will not change a firmed planned order The firming indicator can be changed manually

Create dependant requirement on components To be converted into a Production Order

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MRP Concepts
Purchase Requisition
Procurement proposal (supply) Created by MRP, but can also be created manually Can be manually modified or deleted at any time Once manually modified, a Purchase Requisition is automatically firmed (can be manually un-firmed) Vendor can already be assigned (Source List) To be released, possibly approved and assigned to a vendor To be converted into a Purchase Order

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MRP Concepts
Planning 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.

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MRP Concepts
Planning with MRP Areas
Only the stocks from the storage locations or subcontractor assigned to the respective MRP area are taken into account. Procurement elements are created by MRP Area.

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MRP Concepts
Prerequisites
Reduction of MRP turbulences
Accurate Master Data Accurate Planning parameters (Lot size, LT, etc.) Accurate Inventory Plan all requirements Safety stock for unexpected requirements Efficient Vendor relationship (lead time)

Garbage IN = Garbage OUT!!

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MRP Concepts
To run a Class A MRP you will need:
98% + precision on BOM item 95% + precision on Routing operations 95% + precision on MRP parameters 98% + precision on inventory level E.g. 95%*70%*90%*75% = MRP is accurate at most 45%!

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Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

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Planning Process
1. 1.Check Checkthe thePlanning Planning File File

2. 2.Net NetRequirements Requirements Calculation Calculation

7. 7.Exception ExceptionMessages Messages Creation Creation

MRP

3. 3.Procurement ProcurementQuantities Quantities

6. explosion and 6.BOM BOM explosion and

Dependent requirements Dependent requirements Determination Determination

4. 4.Scheduling Scheduling

5. 5.Procurement Procurement Proposal Proposal

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Planning Process
1. Planning File (MD20-21)
The planning file contains a list of all materials relevant to the planning run. If MRP Type <> ND => Material/Plant automatically in Planning File.

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Planning Process
2. Net Requirement Calculation
The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage, the system creates a procurement proposal.

During the net requirements calculation, the system determines the shortage quantities and material shortage dates.

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Planning Process
3. Procurement Quantities
If material shortages have been determined for requirement dates during Net Requirement Calculation, the system calculates the receipt quantity in the lot-size calculation. Lot-size relevant data (from Material Master) are taken into account:
Minimum lot size & Maximum lot size Rounding value Scrap factor, etc.

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Planning Process
4. Scheduling
During scheduling, the system determines start and finish dates for the procurement elements of materials that are produced inhouse and for materials that are procured externally.

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Planning Process
5. Procurement Proposals
Procurement proposals are used to procure the shortage quantity. Procurement proposals are internal planning elements that can be changed, rescheduled or deleted at any time:
purchase requisition planned order delivery schedule lines are fixed elements, which must be followed, and are only part of the procurement proposals in a broader sense

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Planning Process
6. BOM Explosion and Dependent Requirement Determination
The bill of material is exploded for every new procurement proposal for an assembly during the planning run. Dependent requirements, which mean the required quantities, are determined for all the assemblies and components needed to produce the product.

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Planning Process
7. Exception Messages Creation
Exception messages are meant to inform you of an important or critical event (for example, start date lies in the past, safety stock has been exceeded). By means of the exception messages, you can easily sort out any materials that you need to reprocess manually. Special search and selection functions are available for this in the evaluations for MRP (see section 4: Evaluation of the Planning Run)

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Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

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MRP Execution
Planning Run (MD01-02-03)
Settings

The total planning run can be limited to materials that fulfill certain predefined criteria

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MRP Execution
Processing key: NEUPL
The system plans all the materials that are contained in the planning file Usually NOT USED on a daily basis!!

Processing key: NETCH


The system only plans materials that have undergone a change relevant to MRP since the last planning run such as : New requirement, PP Master data, change of stock, etc.

Strongly recommended

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MRP Execution
Recommendations Usually, MRP (full plant) is run daily or twice a day in Background: NETCH mode. For specific requirements, Single-Item Planning Run is used (MD02-03). Sequence of planning:
Finished products (MPS); e.g. on Monday Semi-finished products; e.g. on Tuesday Raw products; e.g. on Wednesday

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MRP Execution
Exercise #1

Run MRP and check planned orders and purchase requisitions : dates, quantity, etc. Change Scheduling Margin Key (MM02) Run MRP and check again planned orders.

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Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

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Evaluation of MRP Results


MRP Elements
Demand / Requirements
Forecasts / Planned Independent Requirements (PIR) Sales Orders Dependent Requirements Reservations, etc.

Procurement proposals
Planned Orders Purchase Requisitions Schedule Lines, etc.

Firm elements
Production Orders Purchase Orders

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Evaluation of MRP Results


MRP Elements
MRP Elements
IndReq IndReq CusOrd CusOrd PurRqs PurRqs POitem POitem OrdRes OrdRes PrdOrd PrdOrd SubReq SubReq ShpgNt ShpgNt Sales Salesforecast forecast Customer Customerorder order Purchase Purchaserequisition requisition Purchase Purchaseorder order Reservation Reservationfor forproduction productionorder order Production ProductionOrder Order Requisition Requisitionfor forsubcontractor subcontractor Shipping Shippingnotification notification

Description

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Evaluation of MRP Results


MRP Elements

MRP Elements
DepReq DepReq Delvry Delvry SchLne SchLne PldOrd PldOrd

Description
Dependent Dependentrequirement requirementfrom fromdisplay display Customer Customerdelivery delivery Schedule Scheduleline line Planned Plannedorder order

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Evaluation of MRP Results


MRP Elements
Dependant Requirement vs. Reservation
BOM : Material A made of material B
Conversion Planned Order (A) Production Order (A)

Dependent Requirement (B)

Reservation (B) Dependent Requirement (B)

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Evaluation of MRP Results


Once the Planning Run, the results need to be evaluated
2 main activities:
1) Identify the materials that require attention (and possibly manual interventions) 2) Understand the planning situation of a material

Tools for these activities are:


Stock Requirement List MRP List

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Evaluation of MRP Results


Stock Requirement List (MD04)
The most up-to-date stock and requirements situation is displayed. Changes made after the planning date are displayed directly, so the list is therefore DYNAMIC.

MRP List (MD05)


Displays the stock/requirements list situation at the time of the last planning run.

Screen layout is basically the same

Changes that are made after the planning date are not taken into consideration, so the list is STATIC. More messages could be determined.

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Evaluation of MRP Results

Individual display
(Displays one list at a time)

Collective Display
(Displays multiple lists according to selection parameters)

Stock Requirement List

MD04

MD07

MRP List

MD05

MD06

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Evaluation of MRP Results


SAP Menu

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Evaluation of MRP Results


Individual access (MD04 / MD05)
Navigation Settings

Materials to analyse

Planning situation

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Evaluation of MRP Results


Functionalities
MRP Date Exception message(s) and rescheduling date proposal Access to MRP Element directly Pegged requirement Display requirements individually/grouped Display at goods receipt date Show End of replenishment lead time
if Available qty < 0 before end of LT = Potential PROBLEM!!

Additional information on Vendor and Customer

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Evaluation of MRP Results


Functionalities
Material Master ATP Quantities (CO09) Processing indicator (sort criteria) Stock overview (MMBE) Filter Material memo Alternative unit of measure Expand header details Settings
Display, dates, default values, ATP, Navigation Profile

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Evaluation of MRP Results


Objectives
Use of MD06 to analyse materials with important exception messages Use of MD06 to review Days of coverage of stock Use of processing indicator

Proactive planning / KPI tool for PP/MM

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Evaluation of MRP Results


Collective access (MD06 / MD07)

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Evaluation of MRP Results


Exception message per group

Days of supply / Range of coverage

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Evaluation of MRP Results


Important Exception groups: 3, 7 & 8 (SAP std) Important Exception messages Priority 1
10 & 30 - Reschedule in (Lateness in planning) 98 - Error with MRP

Priority 2
04 & 07 - Finish date in the past (lateness in GR)

Priority 3
15 & 20 - Reschedule out / Cancellation 02 / 05 & 03 / 06 - Opening/Start date in the past 52 - No BOM selected / 62 - Problem with scheduling

Priority 4
96 - Stock level below Safety stock 64 - Production finish after order finish Others
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Evaluation of MRP Results


Range of coverage (working days)
Days' supply without receipts
The days' supply displays the number of days that a material will cover if only current plant stock is taken into account.

First receipt days' supply


The receipt days' supply indicates how many days a material will last if the system takes current plant stock and specific, predefined receipts into account.
Prod. Order, Firm Planned orders, Assign planned order to production version (REM), QM Lot

2nd receipt days' supply : id.

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Evaluation of MRP Results


Range of coverage (working days)
If negative value

there is a requirement in the past not replenished

If days of supply = 999.9 ???

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Evaluation of MRP Results


Traffic Light

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Evaluation of MRP Results


Functionalities
Sort : Menu Edit > Sort Individual analysis: TO TAKE ACTION on MRP Elements:
Update production order date Delete production w/o sales order Inform sales for production delay Backorder Etc.

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Evaluation of MRP Results


Individual analysis
Select list in sequence of priority
Different selection criteria:

Click on

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Evaluation of MRP Results


Recommendations
Periodic check of important targeted exception messages Periodic check of Days of coverage Check is improved if done closer to MRP run (first thing in the morning) Actions have to be taken by planners/buyers Other departments have to be aware of planning changes

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Evaluation of MRP Results


Conclusion
Master Data is very important!! Exception management KPI tool for PP/MM Periodic checks: Once a week to startmore often as required Help to keep supply processes in control and as close as possible to reality!!

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Evaluation of MRP Results


Exercise #2

Setup settings for MRP List Analyze exception messages

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Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

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Demand Management
Planned Independent Requirements (MD61-62-63)

Enter individual Material or Product Group (list of material)

Select Planning Horizon

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Demand Management
Planned Independent Requirements (MD61-62-63)
Save

Periodic Requirements

When saved in the Active version, PIR become MRP relevant.

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Demand Management
Planned Independent Requirements
MD04 (before MRP)

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Demand Management
Planned Independent Requirements
MD04 (after MRP)

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Sections

1- Master Data

5- Evaluation of MRP Results

2- MRP Concepts

6- Demand Management

3- Planning Process

7- Important Transactions

4- MRP Execution

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Important Transactions
SAP Terminology
Material Master BOM Routing Work Center MRP Planning Run Stock Requirement List / Collective MRP List / Collective Planned Order Purchase Requisition Purchase Order Planned Independent Requirements

SAP Transactions
MM01-02-03 CS01-02-03, CS11-12-13 CA01-02-03 CR01-02-03 MD01-02-03 MD04-07 MD05-06 MD11-12-13 ME51N-52N-53N ME21N-22N-23N, ME57 MD61-62-63

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