Labs Module: Consumption-based Planning: Reorder Point

SAP Username Name GBI-093 Rana Fathiya Kusuma

1.1 Create Raw Material

Menu Path Trans Code Logistics Production Master Data Material Master Material Create (Special) Raw Material MMR1

Enter RAW-### for material and select Retail for Industry Sector, then click on Select view(s): Basic Data 1, Purchasing, MRP 1, MRP 2, MRP 3, Accounting 1. Then click on enter.

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Enter DL00 for Plant, then click on enter icon (

).

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Basic Data 1 View Description Unit of Measure Material Group

RAW-### EA BIKES

Purchasing Purchasing group

N00

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MRP1 MRP Type manual reorder point planning Reorder point MRP Controller Lot size fixed Fixed lot size VB 80 000 FX 400

MRP2
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Procurement type SchedMargin key Plnd delivery time Safety stock

external

F 001 2 30

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MRP3 Availability check

indv req

02

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Accounting 1 Valuation class Price control Standard Price

3000 (raw materials 1) S 8.5

Enter the data shown above, then click on the save icon (

) to save the new material master.

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1.2 Stock/Requirements List

Menu Path Trans Code Logistics Materials Management Inventory Management Environment Stock Stock/Requirements List MD04

Material RAW-### and plant DL00 should be entered automatically. If not, enter them, then click on the enter icon ( ).

Because this is a brand new material, the stock is 0. Because there should be a safety stock of 30 units, we are showing the available quantity as a negative 30, and there is an exception message.

Click on the exception message, then click on the search icon

To see what the exception message is, click on it and then click on the search icon.

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Exception message 96 notifies us that the stock level is below the safety stock level. Exception messages are particular useful when looking at a number of materials to see which need attention, and why. Close the list of exceptions by clicking on the close icon ( ).

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Click on the Create new session icon

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1.3 MRP Planning Run

We will want to keep the Stock/Requirements List open so we can quickly see the impact of planning procedures. Because the inventory for raw material is below the reorder point, the SAP system should create a purchase requisition that can be converted to a purchase order so that raw materials can be acquired. To create purchase requisitions for the raw materials, we need to execute an MRP planning run. We will do the MRP planning run for just this material, even though in practice it would probably be done for a group of materials (using an MRP Area) and would probably be scheduled regularly. To run the MRP planning process for a single material, follow the menu path: Logistics Production MRP Planning Single Level Single-Item Planning Menu Path Trans Code MD03 Enter material RAW-### and plant DL00. Use the default planning values, select Display results before they are saved, so we can see the planning results immediately, then click on the enter icon ( ).

The following message will appear at the bottom of the screen:

Depending on the situation, production planning can take a lot of computer resources, so SAP is just reminding you to make sure that you have everything set correctly. Click on the enter icon ( ) a second time and a screen very similar to the Stock/Requirements screen will be displayed.

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This screen shows us that a Purchase Requisition for 400 raw materials has been created as we are below our reorder point of 80 (and below the safety stock of 30 units as well). Click on the save icon ( ) to save these planning results.

Switch back to the session with the Stock/Requirements List. Click on the refresh icon ( ) to update the Stock/Requirements list. The Stock/Requirements List will now show the Purchase Requisition that was created by the planning run: 0010000320/00000

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1.4 Create Purchase Order from Purchase Requisition

Next, we need to convert the Purchase Requisition into a Purchase Order, which can be done from the Stock/Requirements List. To convert the Purchase Requisition into a Purchase Order, click on the details icon ( ), which will call up the following pop-up window:

Click here

Click on the icon to convert the Purchase Requisition to a Purchase Order, and make sure that the Purchasing Org. (US00), Purch. Group (N00) and Company Code (US00) are entered. Make sure the organizational data shown above is entered and drag the divider over to display more of the Document overview.

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Click on the Open requisition line in the Document overview, then click on the Adopt icon ( will copy data from the Purchase Requisition to the Purchase Order screen.

). This

Next, we need to assign a vendor to this Purchase Order. Click on the Vendor field, then search vendor ### Portage Material. Click on the enter icon to retrieve data on the vendor.

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As the material is new and has never been purchased, there is no pricing data available, so the SAP system will request pricing data. Enter 8.5 for the Net price and USD for the Currency,

then click on the enter icon (

) and a warning message will be displayed:

Cick on the enter icon (

) a second time, then click on the save icon (

).

Switch back to the session with the Stock/Requirements List and click on the refresh icon ( ) to update the data. Not much will change, except that the Purchase Requisition will now be shown as a POitem.

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1.5 Goods Receipt for Purchase Order

Next, we will assume that ### Portage Material has delivered on purchase order for 400 raw materials. We need to let the SAP system know this by performing a goods receipt. To do this, switch back to the other session and follow the menu path: Menu Path Trans Code Logistics Materials Management Inventory Management Goods Movement Goods Receipt For Purchase Order GR for Purchase Order MIGO_GR

Use the search Purchase Documents per Vendor to find your PO with purchasing organization US00 and purchasing group N00 to find your purchase order.

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Then click, execute (

on Where tab, please select the Item OK checkbox, enter raw material (RM00) for Stor. Loc, then click on the Post icon ( ).

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Switch to the Stock/Requirements list, then click on the refresh icon ( ) to see that the material is now available. Click on the refresh icon to see that the 400 raw materials are now in storage location 10.

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1.6 Goods Issue to Cost Center

When materials are taken out of inventory to be used, this information needs to be recorded and the cost of the materials removed needs to be attributed to a cost object, which can be a production order, a project, a customer order or a cost center. In general, costs should be assigned as closely to the activity that caused them, but for low cost items, the effort to attribute their cost to a particular cost driver may not be worth the effort. It can be debated whether raw materials fall into this category, but as it makes the exercise easier to issue the raw materials to a cost center, that is what well do. To issue raw materials to a cost center, follow the menu path: Logistics Materials Management Inventory Management Goods Movement Menu Path Goods Issue Trans Code MB1A Enter: Movement type 201 (consumption for cost center from warehouse) Plant DL00 Storage Location RM00 Then click enter.

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Enter the information shown above, which tells the SAP system that we are going to charge a cost center for the material, and will be taking the material out of storage location RM00, plant DL00. Click on the enter icon ( ). Enter NAPR1000 for the cost center, then 100 units of material RAW-### and click on the save icon ( ) and a message like the following will appear at the bottom of the screen:

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Switch to the session with the Stock/Requirements list and click on the refresh icon ( the changes? Available Stock berkurang menjadi 300 buah

). What are

1.7 Planning File and MRP Planning Run

Because we have made a change to the stock level of the material, there should be an entry in the planning file. We can check the planning file for this material by following the menu path: Menu Path Trans Code Logistics Production MRP Planning Planning File Entry Display MD21 ).

Enter RAW-### for material and DL00 for plant, then click on the execute icon (

This will produce the planning file entry for your material:
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Note that the goods issue created an entry in the planning file for both NETCH and NETPL planning options, respectively

The planning file entry means that the SAP system will check to see if a purchase requisition needs to be created the next time an MRP planning run is performed for the material. Perform an MRP planning run for the material by following the menu path: Logistics Production MRP Planning Single-Item, Single-Level Use the default settings, except select Display results before they are saved.

If you need more details on the MRP planning run, refer to Section 1.3. The results of the planning run should be like the following:
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Note that the planning run did not create any purchase requisitions. Planning file entries are made whenever a transaction is executed that COULD cause the creation of a purchase requisition (or planned order, for materials produced in-house). A planning file entry does not mean that plans will necessarily change, just that they might, so an MRP planning run should plan the material.

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1.8 Second Goods Issue to Cost Center

We will issue a second batch of raw materials to a cost center. To do this, follow the menu path: Logistics Materials Management Inventory Management Goods Movement Goods Issue Enter: Movement type 201 (consumption for cost center from warehouse) Plant DL00 Storage Location RM00 Then click enter. Again, enter NAPR1000 for the cost center, then 200 units of material RAW-### and click on the save icon ( ).

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Switch to the Stock/Requirements List and click on the refresh icon (

):

The inventory level, excluding safety stock, is 70 units. As the reorder point is 80 units, it would appear that an MRP planning run should create a purchase requisition. To see whether this is the case, perform a planning run again by following the menu path: Logistics Production MRP Planning Single-Item, Single-Level Use the default settings, except select Display results before they are saved. Again, if you need more details on the MRP planning run, refer to Section 1.3. The results of the planning run should be like the following:

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Note: No purchase requisition was created

Even though the available quantity is 70, which is below the ROP of 80, no purchase requisition was created. Is SAP broken? Is there a configuration setting missing? This question can be answered with a little investigation. To start the process, switch to the Stock/Requirements list. By doubleclicking on the material number, the material master will be displayed. Select the view MRP 2.

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Click the safety stock entry of 30 and click on the F1 key to get information about this data field:

In manual reorder point planning, which is what has been specified for this material, the safety stock value is assumed to be included in the reorder point figure. In other words, the way SAP has programmed reorder point planning, the ROP (Reorder point) of 80 that we entered in view MRP 1 is assumed to include the safety stock of 30, so we expect to consume 50 raw materials before the order is received. Thus, the demand during lead time is 50 and the reorder point of 80 INCLUDES a safety stock of 30 units. In terms of the Stock/Requirements list, the ROP is compared to the stock available INCLUDING the safety stock: An order is triggered

when this quantity goes below 80

Not this one

This is an important point. SAP could have chosen to subtract the safety stock entry from the stock level and compare that value to the reorder point, but they chose to make the safety stock entry an
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informational value. Both approaches are valid, and the important thing with any software is to be clear how things are calculated by testing it thoroughly.

1.9 Third and Final Goods Issue to Cost Center

To confirm that SAP compares the ROP to the stock level including safety stock, perform a final goods issue for 30 raw materials by following the menu path: Logistics Materials Management Inventory Management Goods Movement Goods Issue

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See Section 1.6 for details. Switch back to the Stock/Requirements list and click on the refresh icon ( ) to see that the stock level is now below the ROP:

Stock is now below the reorder point of 80

Perform a final planning run by following the menu path: Logistics Production MRP Planning Single-Item, Single-Level Use the default settings, except select Display results before they are saved. The results of the planning run should be like the following:

A purchase requisition is created by the planning run

Click on the save icon ( ) to save the plans. Switch to the Stock/Requirements List and click on the refresh icon ( ) to see that the newly-created purchase requisition.

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Click on the print icon to print the Stock/Requirements list to hand in.

Print out a copy of the Stock/Requirements list to hand in. As you do this, ponder the questions: What issues might there be when implementing this policy in a production environment? Kemungkinan human error ketika melakukan input data sangat besar. Jika terdapat kesalahan ketika input data, dapat mempengaruhi proses yang lainnya seperti salah menentukan kapan harus melakukan reorder lagi karena purchase requisition tidak muncul. Dalam lingkungan produksi yang sibuk, lebih baik mengimplementasi prosedur automatic reorder point atau forecast-based planning untuk menghindari miskalkulasi atau kesalahan input dari user ketika ingin menentukan kapan harus melakukan reorder. How will the data be collected? Data demand didapatkan dari hasil Forecasting. Data berapa jumlah reorder point dan berapa jumlah safety stock ditentukan sendiri oleh perusahaan. What could go wrong? Ketika demand sedang tinggi dan terjadi miskalkulasi penentuan waktu reorder barang sehingga dapat terjadi stockout karena stock dan safety stock tidak dapat memenuhi demand tersebut. Manager salah memperhitungkan jumlah barang yang sebenarnya dimiliki.

Jot down your answers to these questions on the printout.

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