MRP and Material Purchasing with SAP

By now, you have successfully created a production schedule for your LX model
Beach Cruisers. In this exercise you will see the effects of the MRP run from the
previous exercises, and create a purchase order for some materials to be used in the
Beach Cruiser production.

Part 1: View Stock/Requirements List

You have already seen that your LX Beach Cruisers have been scheduled for
production. Now let’s take a look at what the MRP run did for the materials needed for
the production of the Beach Cruisers.

From the SAP Easy Access User Menu: Logistics  Production  MRP 
Evaluations  Stock/Requirements List

The materials used for Beach Cruiser production are either purchased from an
external vendor, or produced by SOS. Let’s look at one of the externally purchased
materials. Enter BP-01 (this is the steering controller for the Beach Cruisers) in the
material box (your plant should already be entered for you), and click the enter button.
Examine the displayed stock/requirements list. You will notice that for every scheduled
date, 10 BP-01s are needed. If you think back to the BOM for your LX Beach Cruisers,
you will remember that each Beach Cruiser requires 2 steering controllers. You will also
recall that for every scheduled production day for your LX Beach Cruisers, 3 will be
made. By using these two pieces of information during the MRP run, the system
correctly (and automatically) determined that you need 6 steering controllers for each
production day. It is important to note that you never had to complete a separate
scheduling process for the steering controllers; the MRP function completed the task for
you. Return the SAP Easy Access User Menu using the green back button.

Part 2: Vendor Purchasing Information Records

As mentioned in part 1, the material BP-01 (steering controllers) are purchased

from an external vendor. In SAP, the information regarding individual part vendors are
kept in purchasing information records. This record holds information regarding the time
it takes a vendor to ship orders, the price a vendor charges, and minimum, maximum, and
standard order quantities. In class, you will have calculated an economic order quantity
for the steering controllers. Let’s enter that quantity in the purchasing information record
for a vendor.

From the SAP Easy Access User Menu: Logistics  Materials Management 
Purchasing  Master Data  Info Record  Change
 Click inside the Vendor box, and click the round gray selection button to the right
of the box. Make sure you are on the Vendors (general) tab, and click the enter button to
see all available vendors for SOS. When the vendor list displays, you will see that there
are several different vendors available for controls. The SOS purchasing employees have
contacted the different control vendors, and were able to make a deal with Cable Controls
Inc based on the order quantity SOS has determined best fits there needs. The other
vendors either could not ship the number of controllers SOS needed, or were too
expensive. Double click on Cable Controls Inc to select the vendor. You should see the
vendor number in the vendor box. Enter BP-01 in the Material box. The Purchasing org.
and Plant boxes should already be filled in. Click the enter button to display the
purchasing information record for Cable Controls Inc. Now click the Purch. Org. data 1
button at the top of the screen to see the data relevant to purchasing.

Upon examination of the Purch. Organization Data 1 screen, you will learn some
important information. It takes 1 day for Cable Controls Inc to deliver an order of
steering controllers, as indicated in the Plnd dely time (planned delivery time) box. The
Net price box shows the current price paid per steering controller ($20.00). You can also
see that there is no minimum, or maximum order quantities set. Currently, the standard
order quantity is set a 1 unit. Since SOS has determined that it would be beneficial to
order several steering controllers at one time (primarily to save on delivery and receiving
costs), enter your economic order quantity of 1033 in the standard qty and minimum qty
boxes. By doing this, you are telling SAP to always order 1033 steering controllers
instead of going through the added expense of ordering 1 at a time. We will leave the
maximum qty box empty for now, just in case we need to order a larger amount due to an
unexpected large order. Now click the save button to enter the change in the system.
Return the SAP Easy Access User Menu using the green back button.

Part 3: Convert Planned Order to Purchase Requisition

You will recall from part 1, that the stock/requirements list for the BP-01 material
shows several planned orders (PlOrd), one for each production day. Before creating a
purchase order from Cable Controls Inc, we need to convert one of the planned orders in
the stock/requirements list into a purchase requisition. This conversion is a safeguard
placed in the system to allow for unexpected changes. If for some unexpected reason
production will not be available on a previously scheduled day, the head scheduling
employee will simply refrain from converting the planned order for the steering
controllers on that date into a purchase requisition. This will prevent the system from
automatically updating inventory which does not need to be ordered. Now let’s create a
purchase requisition for some steering controllers.

Using the same procedure as before, display the stock/requirements list for the
BP-01 material. Locate the planned order (PlOrd) for the date of 12/15/2005. Click on
the small magnifying glass located to the left of this row.
A small window will appear giving you some information regarding the planned order.
You will see that the order will actually be sent to Cable Controls Inc a few days before
12/15/2005. The difference in the dates is to ensure that the steering controllers will be
available for production on the date you selected (12/15/2005). It would be somewhat
foolish to schedule steering controllers into production on the day they arrive. What
would happen if the delivery was late, or if some of the steering controllers were
damaged during transport? The Beach Cruiser production for that day would be less that
expected. To avoid this very expensive possibility, SOS scheduling has added a few days
for delivery, inspection, and receipt of the steering controllers. This is one very
important aspect of MRP.

At the bottom of the small scheduling window, you will see a -> Pur.req. button.
This button will take you to the planned order conversion screen. Click the -> Pur.req.
button now. On the Convert planned order to pur. req. screen, click the Assign supply
source button. Assigning the supply source (vendor) tells the system which vendor will
be used for the order. This in turn allows the system to apply information from the
proper purchasing information record. Enter 20 in the Storage location box so that the
SOS receiving employees know where the steering controllers should be sent and click
save. You will automatically be taken back to the stock/requirements list for the steering
controllers. Click the refresh button at the top of the screen, and note that your planned
order (PlOrd) has changed to a purchase requisition (PurRqs). Return the SAP Easy
Access User Menu using the green back button.

Part 4: Convert Purchase Requisition to Purchase Order

You have now successfully created a purchase requisition for the steering
controllers. This information will become available to the SOS purchasing staff. The
purchasing staff will review the purchase requisition, and upon approval, will convert it
into a formal purchase order to be sent to Cable Controls Inc.

Using the same procedure as before, display the stock/requirements list for the
BP-01 material. Locate your purchase requisition (PurRqs), and click the magnifying
glass to the left of the row. A small window will appear with a -> Purchase order button
at the bottom. Click on the ->Purchase order button to be taken to the create purchase
order screen. On the left side of the screen, you will see a Document overview box,
which lists your purchase requisition number under the heading “Open requisitions.”
Click on the purchase requisition number once to highlight it. Now click the adopt button
(looks like two small sheet of paper, and is located near the top of the Document
overview box) to copy the requisition information to the purchase order. As the purchase
requisition information is copied to the purchase order form, you should see a warning
appear at the bottom of the screen. Click on the warning message to see what it says.
The warning is reminding you that the purchase requisition was only for 10 steering
controllers, but your agreement with Cable Controls Inc is now for the number of steering
controllers you entered as the economic order quantity. Close the error message box, and
look at the PO quantity (purchase order quantity) on the purchase order form. SAP has
automatically adjusted the ordered amount to equal the economic order quantity. In this
way, SAP continues to make sure that the information used is always accurate and up to
date. Now click the save button. You will see a box asking you if you wish to save.
This box is appearing because of the difference in the requisition and order number, and
because the system does not have an order output device configured. In an actual
business setting, an output device at the Cable Controls Inc office would be configured so
that your purchase order would automatically be faxed or e-mailed to the vendor. Click
save on the pop-up box. You should automatically be returned to the stock/requirements
list for the steering controllers. Click the refresh button (Looks like two blue arrows in a
circle near the top of the screen) and note that your purchase requisition (PurRqs) has
now changed to the abbreviation for Purchase Order. Click the magnifying glass to the
left of the purchase order row, and record the Purchasing doc. Number for next time.
Return the SAP Easy Access User Menu using the green back button.

Purchase order number: __________________