SAP MRP

What is SAP MRP - Material Requirement Planning Overview

Material Requirement Planning (SAP MRP) is a tool which helps in planning the requirement
quantities and schedules of a given material. Thus guaranteeing material availability, for the
material on which you are carrying out MRP on, and also guaranteeing availability of the
components of all the BOM levels below.

Apart from assuring material availability, Material Requirement planning (MRP) also carries out
scheduling of the procurement proposals using the lead times for the materials/components.
When the material is an internally manufactured material, it will use the lead times or operation
lead times from the routings/recipes and when the material is an external procured material, it
will fetch the lead times or delivery times for the material defined at an appropriate place in the
tool/system. Scheduling of the procurement proposals not only derives the capacity loading of
the orders on the workcenter but it also calculates the delivery dates of the components that
would be requried for manufacturing (delivery date = start date of processing).

The output of MRP proposes procurement proposals (planned order or purchase requests) so as
to gaurantee material availability and at the same time schedule the procurement proposals using
delivery lead times for the materials/components. Material requirement Planning can be run
for purchased materials or finished saleable materials or subassemblies (semi-finished) used in
production.

While the Material Requirement Planning in SAP ECC (SAP MRP), derives a plan for the
materials and helps the planners and supervisors to purchase, produce or sell. It offers all the
possible planning methods available in the market like the reorder point planning for the
consumption based planned materials, lot for lot MRP planning for the demand based planning
materials, forecast based planning methods which uses the past historical figures to extrapolate
the future requirements (again a consumption based planning material).

SAP material requirement planning or SAP MRP, uses the following factors in its planing run:

• Planning strategies - made to order or made to stock or its variations

• Planning types - type of the MRP run, i.e., consumption based planning methods or
demand based planning methods and net requirement planing or gross requirement
planning
• lot sizing procedures set for the material
 • Master data such as BOM or Routings/Recipes, quota arrangements, souce list, vendors,
purchase info records. customer masters etc, and transaction data such as sales orders,
forecast, planned independent demands (forecasted demand)

Types of Demands in an Organization

The following are the various types of demands:

A) Planned indepedent Demand or Forecasted Demand:

An organization runs on external demands (visualized demands or forecasted demands) for its
products. When you talk a product that is usually stocked and delivered to the customer from
their, it is a typical case of made-to-stock scenario. Such type of organizations forecast their
future demands based on historical sales, current market popularity of the product, various
environmental factors, seasons, etc. Production from such planned independent requirement is a
usual characteristics of a made-to-stock scenario.

SAP also offers tools for forecasting the future demand using the historical data and playing
various other fators on it. SOP or Sales and operation planning is one such tool in SAP, where
you can forecast future demand using past historical information for a pre-selected organizational
structure, for example, you could have the system pull in the historical information for a given
organizational segment llike Sales oragnization, Sales Division, Distribution Channel, Material
or for a Sales office, Sales division, Material group. The forecast carried out the sales
information from specially defined sales information structure can be used as planned
independent demand for production over the forecasted period.

B) Demand from Sales order or Customer orders

On the other hand, you could also have the demand coming in from sales orders and the
production initiated thereafter, such scenarios are typical make-to-order and they are specially
designed for production or purchase of high value material or for products whose design is
supplied by the customer and a given organization is in the business or mere production or when
the product is designed by the product development after the order is placed by the customer and
then the production is initiated.

All the above cases are typical make-to-order and such demands come in through sales orders.

Note - The Sales orders demand coming in for a made-to-stock material is fulfilled using the
existing stock, whereas the sales order created for a make-to-order material can never be satisfied
using any existing inventory as the inventory created for the material would have been produced
for fulfilling other customer orders.
Evolution of MRP - Material Requirement Planning

The concept of Material Requirement planning (MRP I) was designed as a tool to help planners
with the derivation of the quantities of various material or components that would be required for
satisfying a demand and at the same time for deriving the capacity based plan for loading the
orders for production on the shop floor. The concept which started as a less integrated mainframe
tool has evolved over the years since 1960, from the time it was first designed, to now, where it
is tagged as Material Resource Planning (MRP II), a much stronger integrated version of the first
MRP, integrating it with the finance, human resource, purchasing and production modules of a
business. It also had much stronger and complex codes to take care of a few constraints in
capacity and material planning.

The MRP II jargon later took on to be called as ERP or Enterpise resource planning with the
greatest possible integration with a central database server, storing all the integrated data there
for making the information and data available across the business, across business modules and
across its vendors/suppliers and customers. With the evolution of ERP (a superior clone of the
evolved MRP II) businesses took it as the most wildest tool that they could have to make their
business run smoothly, in a much integrated fashion without loosing any information or spoling
the intension of the information when it flows across the business.

SAP came across as the very first few companies which evolved the concept of MRP II in to
ERP and earning for themselves a growing business by selling this new concept. Companies and
businesses across the world made use of this ERP tool and the standard processes offered to
profit themselves.

Material Requirement Planning in SAP Vs SAP SCM:

The SAP R/3 or ECC has a MRP system that plans for material and capacity (schedules) without
considering any constraint and by assuming availability of infinite capacity for the work centers.
This gap of SAP ECC was later-on removed with the help of an add-on or a plug-in
introduced by SAP for the advanced planning of requirements; it was called SCM - APO
(Supply Chain Management - Advanced Planning Optimizer). This tool worked on much
complex and much supreme heuristics with the capability of planning based on finite capacity
and constraints. The SCM - APO had modules such as Demand planning which was a superlative
version of Sales and Operation Planning (SAP - SOP) in SAP ECC, Supply Network Planning
which allowed planning across plants and across geographical locations and allowing businesses
to place orders for production or procurement across the global based on time and cost contraints
and the PPDS module (Production planning and detail scheduling) which was a detailed version
of SAP ECC plant level MRP based Production planning with more brainy heuristics
codes which could consider multiple contraints and finite based planning situations in one
planning run.
Difference between Made-to-order and Made-to-stock

Made-to-stock Scenario:

If a material is defined as a made-to-stock material, i.e., materials which are not marked with any
strategy types or strategy groups in the SAP material master MRP 3 view or materials which are
marked with collective requirements in the MRP 4 screen, the system calculates the material
requirements through the use of a pretty simple algorithm; where it takes into account the stock
in the storage locations, the receipts expected for the materials through purchase or production
and the incoming demands.

In a made-to-stock scenario, the incoming customer requests are fulfilled from the inventory.
The made-to-stock products are normally the consumer products or products which have a
monopoly market and are sold out of the existing inventory. Such products are developed and
produced continuously over the years till the product comes to the end of its life cycle.

In such scenarios, the shop floor or the production team never knows, for whom the product is
being produced. The customer demands and the market situations can only be forecasted and
used as a basis for future production. In SAP the forecasted quantity is evidently used in a form
of planned-independent-requirement.

Made-to-stock production quantities are entered in SAP through the use of “Planned independent
requirements” (transaction code MD61) which are subsequently planned by SAP MRP run. The
planned independent requirements can be entered manually or the requirement can be pulled in
from forecast or it can be pulled in from the sales and operation information structures
(information structures which carry the sales information at levels defined by the organization).

Made-to-order Scenario:

In cases where the material is defined as made-to-order, i.e., materials which are marked with a
made-to-order strategy in the MRP 3 view of the SAP material master and marked with
individual requirements in MRP 4 view, the system calculates the material requirements through
the use of an algorithm which takes in to consideration the receipts expected for the material
through purchase or production and the incoming sales order demands. Here the system does not
take into account the storage location stock of the material (since the stock in the storage location
for the material is always tagged for a customer order and cannot be used anywhere else).

In a made-to-stock scenario, the incoming customer requests are accepted and produced
thereafter and ultimately delivered to the very customer. The example of such a scenario can be
high end products like jewelry or high end equipments or very costly product. These products are
normally configured by the customer and the order is produced according to the customer
requirements or by the design provided by the customer. The Sales order is created or configured
according to the customer requirements and passed on to the production team.
In such a scenario, the tracking of the sales order from its creation to planning to production to
inventorying to delivery can be easily tracked unlike in made-to-stock scenarios, where the
incoming sales orders are not tracked in the plant, but are fulfilled by the existing stocks.

SAP MRP Configuration

The following are the Major Configuration items explained in detail:

a) Activating MRP and Planning File Entry

b) SAP MRP Plant Level MRP Parameters Configuration
c) SAP MRP, MRP Group Level Parameters Configuration
d) Configuring SAP MRP Types
e) Configuring SAP MRP Scope of Planning for the Total Planning Run
f) Configuring SAP MRP Planning time fence and Roll Forward Period
g) Configuring SAP MRP Areas
h) SAP MRP Dynamic Safety Stock (Range of coverage Profile)
i) Configuring SAP MRP Days Supply and Receipt Days Supply

Activating MRP and Planning File Entry

a) Activating SAP's Material Requirements Planning (MRP)

This configuration allows you to choose the plant for which you would want to activate SAP
Material Requirement Planning (SAP MRP). Activating MRP for the plant allows one to use the
SAP MRP tool for the plant. SAP Transaction code OMDU and the SAP path is Logistics >
Production > MRP > Planning File Entry > Activate MRP and Set up Planning File

b) Activating Planning File Entries for a Plant

Activating Planning file entry for the plant (through a variant that can be rescheduled) allows
you to collect all the material in a planning file list, which has an MRP Type in the material
master MRP 1 View (other than MRP Type XO)

The process of recording a planning file entry for a material, can be run periodically using a
batch job scheduling method. The transaction code to set up the variant and period scheduling is
OMDO and the Path for activating the planning file set up is Logistics > Production > MRP >
Planning File Entry > Activate MRP and Set up Planning File

All the entries in the planning file will have a “change indicator” specifying that a material has
undergone a change (change in receipts elements or issues elements). This indicator will help
you to choose only those materials that have undergone a change, through the use of planning
key called “Net Change Planning” when running MRP.
The planning file record for a material also has a “net change planning in the current horizon”
field which will be set if the change in the materials receipt or issue element is valid in the
planning horizon. This indicator will help you choose only those materials which have
undergone a change in the planning horizon; through the use of a planning key, in an MRP run,
called “Net change planning in the planning horizon”.

Plant Level configuration for MRP

SAP MRP is run at plant level or at a group of plant level (called as scope of planning), thus the
MRP configuration is done at Plant level.

The configuration done for SAP MRP at Plant level would also be true for SAP Consumption
Based Planning (SAP CBP) settings.

Transaction code OPPQ takes you in to the SAP MRP configuration called as – Plant Parameters
for Material Requirement Planning. The Path which can be used is Logistics > Production >
Material Requirement Planning > Plant Parameters > Carry out Overall Maintenance of Plant
Parameters.

The Transaction code for Consumption Based planning is OMI8 and the Path is Logistics >
Materials Management > Consumption Based Planning > Plant Parameters > Carry out Overall
Maintenance of Plant Parameters.

Fig MRP - Config 1

In the transaction code for Plant level parameters for SAP MRP, you should first input the plant
and press the maintain button.

If you have already maintained the configuration for the parameters, then it states so, if you
haven’t then it simply says – “To Maintain” next to the parameter

Fig MRP - Config 2

Following are the parameters that need to maintain as a part of SAP MRP/CBP Configuration:

a) Number ranges

The number range ID’s are maintained for the following objects:

the Planned orders

the reservations,
the dependent requirements,
the simulative dependent requirements,
the purchase requisitions,
the MRP Lists,
In this section only the number range ID’s are maintained. While the actual number range is
configured, for the number range ID, using a transaction code OMI2 (for the above mentioned
objects created in the planning run). One can also use the transaction code OMI3 for the objects
created manually in the front end.

Every number range interval, created using OMI2 and OM13, has an ID, which can be allocated
to the objects at plant level, i.e., every plant can have a different number range for the objects
mentioned above.

b) Availability Check rule for Backorder Processing

As per standard SAP, the Availability checking rule for the backorder processing is “PP”,
though you can have your own availability check rules created or configured.

Every Availability checks rule (availability checking scope defined) has a set of receipts
(Purchase orders, Production orders) and issues (Sales orders, dependent requirements,
reservations, planned independent requirements etc) which are to be considered or not to be
considered during the SAP availability checks.

To have the checking rule work along with the configuration, you should have the Availability
checking groups maintained in the material master. The Checking groups are configured to be
associated with the checking rules (checking scopes).

The availability checking rule (checking rule scope) has to be maintained, for a given SAP
functionality and it has to be assigned to the availability checking group maintained in the
material master. The SAP functionalities that use availability checks to check the availability of
the header materials as well as components at the plant at the time of sales order creation, the
availability checks of the header material at the time of sales order delivery, the availability
checks for components in production – thus reporting the missing parts list, the backorder
processing etc.

c) Reporting

This configuration is used for the following purposes.

• To configure the objects, which are to be considered in the calculation of the “receipts
days supply” like the production orders/process orders, firmed planned orders, purchase
orders, assigned planned orders, firmed purchase requisitions, QM Inspection lots,
reservations, safety stocks

• To configure the reporting of “periods totals” in terms of a defined period (day, week,
month, periods as per planning calendar) of in Stock requirement list, MRP list, simulative
MPR or interactive MRP
d) MRP Controllers

This is a mandatory configuration. Here you can configure the list of MRP controllers for the
plant. A MRP Controller is a person or a group of people, which is responsible for planning a
material or a given list of materials.

You have to assign the MRP controller to the Material Master MRP 1 View, so as to delegate the
responsibility of the planning and evaluation of planning for that material.

e) Floats

Floats are buffers in the total lead time, that are provided in production/process order or in the
planned orders created manually or during an MRP run. The schedule margin key is used in the
Material Master MRP 2 View. It is used in MRP as well as in production order.

The floats are defined using the scheduling margin key.

Opening period: Number of working days between the date that the order is created and the
planned start date. This time is available for the MRP controller to convert a planned order into a
purchase requisition or a production order.

Float after production: Number of working days between the scheduled finish date and the order
finish date; used as a float in production scheduling.

Float before production: Number of working days between the order start date and the scheduled
start date; used as a float in production.

Scheduling release period: Number of workdays between the planned start date and the date for
releasing the order. If the order release indicator is set, the production order is released by a
background program that takes all dates into account.

Plant Plant Margin Opening Fl. Before Fl. After Release

Name Key Period (In Production (In Production (In Period (In
Days) Days) Days) Days)
0001 0001 001 5 2 2 5
0001 0001 002 5 3 3 5
0001 0001 002 5 4 4 5

f) Special Procurement

The special procurement function helps you to configure and assign special procurement to the
materials which can be used during an MRP run while creating the procurement proposal.
The special procurement functions are withdrawal from alternate plant, production in alternate
plant, subcontracting, direct production, phantom item planning,

Example: For Stock Transfer from Plant C001 to Plant C002

Create the Special procurement key (Key number = 12 as an example) in the plant C002 with the
procurement type as “F” and special procurement as “U” (Stock transfer) and the special
procurement plant as “C001”. Normally when creating the special procurement key use Z, Y or
X to the Key number, so instead of having Key number as 12, we could have something like Z2
or YA etc.

Fig MRP - Config 3

Similarly for Withdrawal from Alternate plant, you could have a Configuration as below:

Fig MRP - Config 4

Similarly for Subcontracting, you could have a Configuration as below:

Fig MRP - Config 5

Similarly for Production in alternate plant, you could have a Configuration as below:

Fig MRP - Config 6

g) Conversion for Planned orders

In this configuration parameter, you can maintain the production order type or the process order
type, which the system should use as default during the planned order conversion. Setting
defaults in the plant parameters configuration allows the system to fix and select the order type
for a plant during the conversion process.
Note: This can be a useful tool when you are using one production order type and one process
order type, but if you are using multiple production/process order types, then you should not be
maintaining defaults here.

Also for the purchase requisition conversion, you are given an option in the configuration to
define the maximum number of planned orders that can be converted in to Purchase requisition.

Fig MRP - Config 7

g) Dependent Requirements availability check

When carrying out the availability check for each of the components in a MRP BOM explosion,
the system needs to know the availability checking scope rule. Again we would maintain the
standard Checking rule as PP or you could alternatively configure one for yourselves.

h) BOM/Routing Selection ID

This configuration parameter is really important and it is mandatory to maintain one, since it
helps selection of BOM and task lists in the planned orders. Though there is one more place in
the planned order Scheduling parameters MRP configuration, where you can maintain the
selection ID for selection of the Task lists (Routing/Recipe/Rate Routing).

A selection procedure is set to select BOM or Routing/Recipe on priorities set for the BOM
usage or for the task list types and the task list status. Knowing the selection procedures allows
the MRP run to select the right BOM and task list for the planned orders.

In other words, you could have the BOM Selection being set for selection of the Production
BOM Usage first and if a BOM for the material with the Usage – production (Usage = 1), is not
found, you could have the system search for a BOM of universal Usage (Usage = 3).

Similarly, you could have a task list of type Routing or Recipe or reference operation sets
selected and set in priorities of selection (1st – Routing, 2nd – Reference operation sets, 3rd, which
has a Status Released for all purposes or released for costing) etc.
h) Scheduling of Planned orders

This configuration parameter is really important and it is mandatory to maintain one. It allows
you to set the control parameters for scheduling of planned orders of type LA at a given plant
and for a given MRP Controller. You can leave the MRP controller as “*” to have the scheduling
parameters true for all the planned orders across all the MRP controllers.

The following control parameters can be configured here:

• The Routing/Recipe Selection ID, specifying the routing/recipe that would be selected
for detailed scheduling, as per the priorities set for task list type and task list status.

• The Detailed scheduling, using the task list is only carried for the scheduling Horizon
mentioned, i.e., if the planned orders dates lie beyond the scheduling horizon, then the basic
date scheduling is used where the in house production times from the material master is used.

• Allow Scheduling Indicator allows the planned orders to be scheduled using the detailed
scheduling or basic date scheduling, either of the two, depending upon the availability of the
task list and scheduling type selected for the MRP run.

• Generate Capacity requirements indicator allows generation of the capacity

requirements for the work centers and loads them accordingly. The loading of the work
centers is as per the use of the work center determined through the scheduling carried out.

• The Task list selection, scheduling horizon, scheduling indicator and the capacity
indicator can also be set for rough cut planning used for Long term planning purposes.

• The next configuration parameter talks about the configuration of the selection of the
type of scheduling level that should be used for adjusting the basic dates of planned orders.
The various options available are rate based scheduling, lead time scheduling, scheduling
using takt times.

• The Adjust planned order dates configuration option allows you to readjust the
scheduling results or the basic dates every time you carry out Scheduling. Though there is
one more scheduling configuration option provided by the system for overwriting/adjusting
the existing basic dates by the new dates arrived at, through rescheduling (using the
scheduling level as mentioned).

The system not only offers an option to adjust the basic dates for the planned order arrived at
by using the scheduling level set, but it also setting the dates of the dependent requirements
to the operation start date or the order start date.

This configuration not only adjusts or sets the dates of the header planned order and the
dependent planned orders, but it also generates capacity requirements for the same.
 See below for the details of adjusting dates in scheduling and adjusting dates for capacity
requirement generation:

• You can adjust the Basic Dates of the header planned order using the scheduling
level and adjust (or set) the dependent requirements to the start of the header planned
order

• You can adjust the Basic Dates of the header planned order using the scheduling
level and adjust (or set) the dependent requirements to the start of the respective
operation to which the dependent requirements are assigned to

• You can decide not to adjust the Basic Dates of the header planned order arrived
at by using the scheduling level and at the same time not-adjust (or not set) the
dependent requirements to the start of the header planned order

• You can decide not to adjust the Basic Dates of the header planned order arrived
at by using the scheduling level and at the same time not-adjust (not set) the
dependent requirements to the start of the respective operations to which the
dependent requirements are assigned to

• You are also provided an option to configure the scheduling type – whether forward or
backward scheduling. It is a normal behavior for the standard system to have this configured
as “backward scheduling” so that SAP MRP (material requirement planning) never misses
the customer delivery date or order availability date. An option is also provided to not-to-
schedule, any orders during the breaks set in the factory calendar.

• Start date in the in the past options allows you to push the start date of the planned
orders to a certain number of days in past. If the order start date goes beyond the number of
days allowed, then the system uses the concept of ‘today’s scheduling” and sets the start date
of the planned order to today’s date and carrying out forward scheduling there-after.

• One of the scheduling parameters is “reduction measures”, used to reduce the total order
lead time in circumstances designed. You can avoid configuration of reduction measures, if
you are not using it.
 Fig MRP - Config 8

i) Default Values for External Processing

For external purchasing, one can maintain the default lead time required for conversion of
Purchase requisition into purchase order, using the planned delivery lead times from the purchase
info record or purchasing agreement. So as to use the planned delivery times from the purchase
info record, one should also maintain the source list for the material, with the same vendor in the
source list and the purchase info record.

Using the planned delivery times from the material master or from purchase info record, is
totally a decision of the consultant. It is indeed a nice additional option provided by SAP for
using the lead time from info records.

j) Planning Horizon

Maintaining a planning horizon helps the system to plan only those demands, which fall in the
planning horizon starting from today. When an MRP Run is taken, the planning horizon is
number of work days as mentioned (let’s say 180 days) from today’s date; the system would not
plan any orders whose start date lies beyond this horizon.
k) Available stock for net requirement calculations

SAP MRP offers you a choice to select the most controversial stock types, in its net requirement
calculations. The stock types are – stock in transfer (stock in transfer is considered as stock at the
receiving plant as it is already issued from the sending plant), blocked stock, restricted batch
stock (stock of batches marked with restricted batch)

Fig MRP - Config 9

l) Option to trigger direct Production in MRP or in production planning

j) Allowing start date in the past

MRP Group Level configuration for MRP

The entire configuration that is created as a part of SAP MRP Plant level parameter in the above
steps can be also set for an MRP Group. You can group materials using MRP Groups. Each of
the MRP Group can have its own MRP Parameter set. You can set the MRP group in the
material master MRP 1 View.

MRP Group can be maintained using transaction code OPPR or the transaction path – Logistics
> Production > MRP > MRP Groups >

Advantage of working with MRP Groups:

Working with MRP groups can be convenient for a plant or an organization, since by assigning
the MRP groups to a set of materials, would allow planner to configure these materials (through
MRP Groups) to behave in a certain manner for planning purposes. In other words, all the
materials in the group would then have a unique planning method or unique planning features.
Thus the organization can device multiple MRP groups with their own planning features and
characteristics rather than having one set of planning features set at the plant level. The group
could have its own unique:

Strategy group,

Conversion order types,

Planning horizon,

Planning time fence and roll forward periods,

BOM and task list selection ID’s,

Direct procurement parameters,

Planned order scheduling parameters,

Start number of days allowed in the past

Availability checking groups,

Strategy Groups

The strategy groups can be set for a given MRP group at a given plant. The strategy group
consists of a number of planning strategies assigned in a sequence of priorities. In other words,
the strategy groups, groups together the relevant planning strategies of a material. If you don’t
see the default strategy groups, then we would have to manually maintain the strategy groups on
the materials MRP 3 view. Defaulting the strategy groups is a nice idea when the strategy groups
would remain the same across all the materials which would be assigned with a given strategy
group.

For example:

A material can have the priority 1 strategy as Made-to-Stock (planning strategy 40) and then
priority 2 planning strategy as Made-to-Order (planning strategy 20). Assigning this “strategy
group” for a MRP group in the MRP Group Parameters configuration and then subsequently
assigning the MRP Group to the material master would make the material work on a planning
strategy 40 and planning strategy 20 in a sequence of priority.

The primary strategy for the material is 40 – Made-to-stock while the secondary strategy is 20 –
Made-to-order, which means that every time you plan or produce a material or create a sales
order for the material it will always primarily work as a made-to-stock material. Nevertheless,
you can also make to material work as a made-to-order material, by changing the requirement
type – “KE” of the material in the sales order procurement tab, to suit for made-to-order, which
the system would allow since the material’s secondary planning strategy is made-to-order.

Configuration of SAP MRP Types

In all probabilities, MRP Types is not something which one should configure in SAP; it is used
as a standard configuration. Nevertheless, a consultant should know the importance of MRP
types and the involved pre-configured parameters.
 Fig MRP - Config 10

a) MRP Procedures

MRP Procedures defines the type of MRP to be used – Reorder point planning methods, Material
requirement planning or demand based planning methods, Forecast based planning methods,
Time phased planning methods, MPS and the no planning procedures to mark a material with a
MRP types that does not plan a material at all.

b) Firming Type

In the category of MRP procedure called – MRP or demand based planning method and MPS,
SAP offers 8 different MRP types with Firming namely P1, P2, P3, P4 and M0, M1, M2, M3,
M4.

When working with the planning time fence, one needs to set the firming methods & the
scheduling methods of the procurement proposals within the planning time fence.
 Firming type 0 1 2 3 4

P1 P2 P3 P4
MRP Types M0
M1 M2 M3 M4

Firming Methods for Procurement Proposals in the Planning time fence

No Firming of Procurement Proposals within the

planning time fence X

Automatic Firming of Procurement Proposals

within the planning time fence X X

Manual Firming of Procurement within the

planning time fence (No Automatic Firming of the
X X
procurement proposals )

Treatment with New Order Proposals in the Planning time Fence

Automatic Creation of New Procurement

Proposals to cover the shortages within the
planning time fence. But the dates of these new
X X
Procurement Proposals are pushed outside the
planning time fence

No New Procurement Proposals created to Cover

the material shortages within the planning time
X X
fence

c) Include External Requirements

The inclusion of external requirements in net requirement calculations is available to be set,

when you are working with reorder point planning based MRP types. Actually there are 2
options in this field, i.e., include external requirements in the total planning horizon or restrict
the inclusion of the external requirements only within the replenishment lead time.

For example:

If the external requirements are set to be considered in the total horizon (of 7 weeks) then in the
today’s MRP run, the Customer demand will be considered as it falls in the planning horizon and
it will reduce the warehouse stock proportionately which would trigger the reorder point
planning procurement once the stock falls below the reorder point.
If the external requirements are set to be considered in the Replenishment lead time, let’s say the
Replenishment lead time is 1 week, then in that case, only in a MRP run triggered one week
before the start date of the external demand, this customer demand will be considered, thus
triggering reduction in warehouse stocks.

Fig MRP - Config 11

SAP also offers an option to select the additional external requirements that should also be
included in the net requirement planning calculations like the - components supplied to the
vendor in a subcontracting case, reservations set for the components in a production order,
reservations of components in plant maintenance orders, requirements to satisfy the Stock
transfer order to another plant, stock transfer requisitions created for Stock transfer orders,
requirements raised because of stock transfer delivery schedules.

c) Forecasting for MRP

Forecasting MRP Types have a “forecasting indicator” as obligatory, unlike other MRP types
which normally have the forecasting indicator set to optional.

Also the historical data is updated in the material master as total consumption (planned
consumption plus unplanned consumption) or unplanned consumption. When the consumption is
planned as per the MRP reservations, planned consumption is updated and when the
consumption is not planned as per the reservation or is greater than the reservation quantities,
then unplanned consumption is updated.

In MRP type configuration, you have an option of choosing the type of historical consumption of
a material to be used for planning whether total consumption (planned + unplanned
consumption) or unplanned consumption.

After choosing the historical date type, you should configure, the type of forecast requirements to
be considered in MRP planning run, whether total consumption (planned + unplanned
consumption) or unplanned consumption.

The reduction method for forecast requirements is also configurable. The default is reduction by
consumption.
d) Planning method

The MRP type offers you to plan the materials in an external system, like the MRP Type X0.
The indicator called the planning method allows you to choose external planning so as to plan
materials in the external system.

e) Automatic Calculations

You can have the safety stock and the reorder point calculated automatically by the system, when
you are using the automatic reorder point planning methods. In the automatic calculations the
system uses the forecast data
Configuring SAP MRP Scope of Planning for the Total Planning Run

SAP provides an option to plan multiple plants together or multiple MRP areas in one planning
run in a sequence. Transaction code OM0E can be used for configuration or the logical SAP path
– SAP Customizing Implementation Guide > Production > MRP > Planning > Define Scope of
Planning for Total Planning, can be used to configure.

• Step 1 – Define the Name of the Scope of planning run

• Step 2 – Define the plants or MRP areas to be included in the planning run arranged in a
sequence. The sequence is defined by the first field called

Configuring SAP MRP Planning time fence and Roll Forward Period

The transaction path to configure the planning time fence and roll forward period is: SAP
Customizing Implementation Guide > Production > Material Requirements Planning > Planning
> MRP Areas > MRP Calculation > Define Planning Time Fence and Roll Forward Period

Planning Time Fence:

The planning time fence is the number of work days, within which you can protect the master
plan (or in other words the procurement proposals of a master plan) from being disturbed or
changed from any automatic changes (of an MRP Run). The procurement proposals are firmed
so as to protect them from any changes. The firming of the procurement proposals (planned
orders, purchase requisitions, delivery schedules) in the planning time fence prevents the
proposals in the time fence from being adopted in the next planning run.

In other words, in the planning time fence, the system does not create or delete any procurement
proposals nor does it changes the existing proposals.

The system calculates the time fence from today’s date plus the “number of days mentioned as
planning time fence” in the material master or in the MRP configuration (where you can define
the planning time fence for plant or for a given MRP group). It is needless to say that any new
requirements are not included in this time period nor the existing requirements are changed.
MRP carries its usual planning outside this fence without interrupting this fenced period.

Configure Planning Time fence and Roll Forward Period

Plant MRP Group Planning Time fence Roll forward Period

0001 0001 14 3-
0001 0002 14 2-

It is logical that any procurement proposal lying outside this fence would start moving in to the
fence one by one; when the fence moves ahead on the time scale. When they move in to this
fence, they are automatically firmed for protection.

Firming for automatically created procurement proposals:

The automatically created procurement proposals in the MRP Run are not firmed by the system,
so that they are available for adjusting dates and quantities in the next planning run, in cases
where there is change in BOM or task list.

You can though manually firm the planned orders individually or collectively using transaction
code MD19

Note - Automatically created planned orders in the planning time fence are only remain firm till
they are in the planning run.

Firming for manually created procurement proposals:

For manually created or changed procurement proposals or even when you reschedule the
planned order in the graphical planning table, the system always marks them with a firming
indicator. Though you can remove or delete this firming indicator.

Firming for component’s planned orders:

In case of a planned order, you can manually firm it by selecting the “firming planned order
Indicator” in the planned order header. And in order to make sure that the BOM levels below are
not exploded or changed in a planning run, you have to set the “firming components indicator”
See the below Example – Planning time fence is 3 days.

Planning
Start
Date
Today – Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8
Day 1
Planning time fence
Planned Planned Planned Planned Planned Planned Planned Planned
Order 1 Order 2 Order 3 Order 4 Order 5 Order 5 Order 6 Order 7
Auto Auto Auto Not-firmed Firmed Not-firmed Not-firmed Not-
Firmed Firmed Firmed firmed
Next
Planning
Start Date
Planning time fence
Planned Planned Planned
Order 4 Order 5 Order 5
Auto Firmed Auto Auto
Firmed Firmed

Roll Forward Period

The Roll Forward Period adds the functionality of automatic deletion of firmed planned orders,
from the master plan. It also creates new proposals to cover any requirements pending during the
MRP run. This period can be defined for number of days in past or future. The system deletes all
the firmed planned orders that lie before the roll forward period.

Using the roll forward period, you can have the system delete all useless old firmed planned
orders, which otherwise the system would never had deleted, since they were firmed. This allows
for reorganizing the planned orders.

Configuring SAP MRP Areas

Long ago, SAP MRP was only at the plant level or at MRP controller level (activated through a
user exit). Then SAP came up with the concept of running MRP at MRP areas. You can define
your own area for which you want to run MRP without disturbing other areas.

Running MRP for MRP Areas: For running MRP at a MRP area, you would have to create a
scope of planning in MRP configuration, which contain the MRP area or a set of MRP areas
arranged in sequence of planning.
Assigning MRP areas: To have the “MRP Areas” work, you have to activate the MRP areas and
then create them and then assign them to the material master MRP 1 view. If a MRP area is not
assigned to the material, then it will work as per the plant level MRP area.

Configuring MRP areas

Step 1: Activate MRP Area: Use the transaction path: SAP Customizing Implementation Guide
> Production > Material Requirements Planning > Master Data > MRP Areas > Activate MRP
for MRP Areas

Step 2: Define MRP Areas: Use transaction path: SAP Customizing Implementation Guide >
Production > Material Requirements Planning > Master Data > MRP Areas > Define MRP Areas

Types of MRP Areas:

Plant MRP Areas: You can create one MRP area for several plants, so that when you run the
MRP for this MRP area, the run is for all the plants configured in the MRP area.

Storage Location MRP Areas: You can create MRP areas for several storage locations at a
plant. You cannot use one storage location in multiple MRP areas.

Subcontractors MRP Areas: You can create MRP areas for several subcontractors for a plant.
You cannot use one subcontractor in multiple MRP areas.

Configuring SAP MRP Dynamic Safety Stock (Range of coverage Profile)

The Range of coverage profile is configured for the use of Dynamic safety stock for a given
material. The range of coverage configuration contains the parameters for the calculation of the
dynamic safety stock. The dynamic safety stock is a stock calculated based on the average daily
requirements for a period rather than the actual requirements over the period, therefore it is more
statistical value rather than an absolute value.

Safety stock as we know is used to cover the fluctuations in the requirements, so is the dynamic
safety stock, the only difference being, the safety stock is an absolute value provided directly for
a material whereas the dynamic safety stock is calculated by the system on the basis of the
coverage period and average daily stock calculated internally by the system.

The Dynamic safety stock is calculated in every planning run.

The transaction path is: SAP Customizing Implementation Guide > Production > Material
Requirements Planning > Planning > MRP Calculations > Define Range of Coverage Profile
(Dynamic Safety Stock)
Range of coverage Configuration:

Fig MRP - Config 12

Configuration for calculation of average daily requirement for a period

Period indicator - Indicate the type of period, whether week or month or according to PP
planning calendar. (Let’s say it is W – Week)

Number of Periods – Number of periods used to calculate the average daily requirements (Let’s
say it is 13 Weeks)

Type of Period length – It defines the number of days in the period, if the period length is in
terms of workdays, then the factory calendar work days are considered, if the period length is in
terms of calendar days then it is considered in terms of Gregorian calendar, and if it is terms of
standard days, then you would have to enter the number of days in a period in the configuration
(Let’s say that the configuration was done with workdays and the factory calendar has 7 days per
week)

Therefore Average daily requirement =

= Requirements in the period (Requirements in 13 Weeks – Lets say 910 Units) / (Number of
Periods – Lets say 13 Weeks) * (Number of days in the period – Lets say 7 days)

= 910 / (13*7)

= 10 Units
Configuration parameters for calculation of Dynamic Safety Stock for the Range of Coverage

You can define 3 different range of coverage – minimum, maximum, and target range of
coverage, which is used to calculate 3 different stocks using the average daily requirements
(range of coverage multiplied by the period length). The Target range of coverage defined here
would be used to calculate the Dynamic Safety Stock for the period of the coverage.

The Period of the coverage is specified in the configuration. The coverage’s and the periods for
which they should work for, are defined for 2 separate period lengths and the 3rd period length is
for the rest of horizon.

In the example, we have defined the safety stock to cover a period of 7 days (minimum, target
and the maximum range of coverage). The minimum, target and the maximum stock is calculated
for the average daily requirement over the respective coverage periods.

You can check the minimum, maximum, target stock levels, minimum range of coverage,
maximum range of coverage, target range of coverage in the MRP List or Stock requirements
list’s “Period Total Display” Section.

As per our example, for the first period of 13 weeks, all the 3 stocks levels – minimum,
maximum, and target stock levels would be 70 Units and for the next period of 26 weeks it will
be 70 units as well and for the rest of the horizon it will be 70 units again.

Normally when the available stock falls below the minimum stock level, SAP planning run,
would immediately create planned orders to suffice at least the target stock level. For example if
the minimum stock level is 30 and the maximum is 80 and the target stock is 50 units, then if the
available stocks fall below the 30 units mark, SAP creates a procurement proposal for 50 units to
reach back to the target stock level. Whereas in the example below, all the 3 stocks types are 70
units, therefore when the stocks fall below the 70 units, the system will try to raise a procurement
proposal to reach back to 70 units.

As per our example in the configuration screen shot –

Dynamic safety stock

Dynamic safety stocks Dynamic safety stocks
formula summarized as = Dynamic safety stocks
for the 1st period of for the 2nd period of 26
Average Daily Stock * for the rest of the
13 weeks weeks
Range of coverage Horizon

Minimum safety stock 70 Units 70 Units 70 Units

Target safety stock 70 Units 70 Units 70 Units

70 Units
Maximum safety stock 70 Units 70 Units
Another Example of Dynamic Safety Stock

Fig MRP - Config 14

• Step a) Demand for 8 Weeks = 800

• Step b) Average Daily Requirements
= 896 Units of Demand for 8 Weeks / (8Weeks * 7 Days Per Week)
= 896/(8*7)
= 896/56
= 16 Units
• Step c) Calculation of Safety Stock for the coverage period

As per our example in the configuration screen shot –

For the first period, when the stock falls below 32 units (minimum Stock Level), the SAP MRP
run would create the procurement proposals (Let’s Say planned order) for a quantity to suffice at
least the target safety stock level or the dynamic safety stock level = 8 Units.

Dynamic safety stock

Dynamic safety stocks
formula summarized as Dynamic safety stocks Dynamic safety stocks
for the 1st period of 8
= Average Daily Stock * for the 2nd period of 8 for the rest of the
weeks
Range of coverage weeks Horizon

Minimum safety stock = 2 * 16 = 32 = 2 * 16 = 32 = 2 * 16 = 32

Target safety stock = 5 * 16 = 80 = 5 * 16 = 80 = 5 * 16 = 80

Maximum safety stock = 7 * 16 = 112 = 7 * 16 = 112 = 7 * 16 = 112

Configuring SAP MRP Day's Supply and Receipt Day's Supply

The days of supply is not a mandatory configuration, you can only configure the days supply if
you feel the SAP pre-configured ones are not what you want.

SAP offers 2 types of evaluations in SAP, the days supply and the receipt day’s supply.

In the SAP MRP Evaluation transactions such as stock requirement list or MRP list, the days
supply would calculate the number of days on the time axis, till the material requirements can be
satisfied purely by the current available stock.

While the Receipt Day’s supply would indicate how long would the current stock and the
expected receipts would cover the requirements. There are 2 receipt day’s supply evaluations
offered by SAP called as the receipt day’s supply 1 and receipt days supply 2. SAP offers a
configuration to select the receipts elements for receipt day supply 1 and 2 evaluations. There is
also an option to have the receipt day’s supplies to be calculated when the stocks fall below the
safety stock or below the current available stocks.

The days supply values or the receipt days supply values can be correlated with the range of
coverage concept. These tools comes with traffic lights – red, yellow and green which offer
warnings to the MRP Controllers/users and lets him/her strategically know when the material
stock would be totally consumed out, which would help the planner to foresight and take
necessary actions in advance.

The transaction path for the same is SAP Customizing Implementation Guide > Production >
Material Requirements Planning > Evaluations > Define Receipt Elements for Receipt Days'
Supply

Fig MRP - Config 13

 Receipt Receipt
Number of Days Stocks will Cover the Requirements Day’s Supply Day’s Day’s
Supply 1 Supply 2
Consider Current Stocks only in calculation of Days Supply
Only Consider Current available Stocks to cover
X
Requirements
Consider Receipts also along with Current Stock in Calculation of Days Supply

Firmed Planned orders, Planned orders assigned with Production versions, Purchase orders, Schedule
lines, Firmed Purchase Requisitions, Receipt Reservations, Shipping Notifications

Consider all the possible receipt elements along with the

plant stock
X
Example – Firmed Planned orders, Planned orders
assigned with Production versions, Purchase orders,
Schedule lines, Firmed Purchase Requisitions, Receipt
Reservations,
Consider all the Most Certain receipt elements along
with the plant stock
X
Example - Production order, Shipping Notifications,
QM Inspection Lots

Example for Days Supply and Receipt Days Supply:

Days’ Supply for Material M1 on Today = 3 days

(Receipts are not considered)

Stock Balance Left after covering

Day Requirements Available Qty
Requirements

Today - 20 Current Stock = 100 100 – 20 = 80

2nd Day - 30 Stock Available = 80 80 – 30 = 50
3rd Day - 50 Stock Available = 50 50 – 50 = 0 (Stock = 0)
4th Day - 52
5th Day - 40
6th Day - 20

Days’ Supply on Today = Coverage’s Considering without the receipts = 3 Days Exactly
 Receipts Days’ Supply for Material M1 on Today = A little more than 4 days
(Receipts are also considered – This example can be for Receipt Days supply 1 or 2)

Stock Balance Left

Day Reqmts Expected Receipts Available Stock after covering
Requirements

- Firmed Planned order = 10

Today Production order = 5 Available = 100 (100 + 15) -20 = 95
20 Total Receipts on day = 15

2nd - Total Receipts on day = 0

Available = 95 (95 + 0 ) – 30 = 65
Day 30

3rd - Production order = 25

Available = 65 (65 + 25) – 50 = 40
Day 50 Total Receipts on day = 25

- Planned order = 8
4th
Production order = 5 Available = 40 (40 + 13) – 47 = 6
Day 47 Total Receipts on day = 13

5th - Planned order = 5 (1 + 5) – 40 = - 34

Available = 6
Day 40 Total Receipts on day = 0 Shortage

6th -
Day 20

Receipt Day’s Supply on Today = Coverage’s Considering the receipts

= 5 – 1 + (6/40) = 4 + 0.15 = 4.15 Days