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SAP MRP2 View

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SAP MRP 2 View

SAP MRP 2 View:

Procurement Type (Plant Specific):

Procurement type indicator defines how the material is procured. The following procurements
types are possible

E = material is produced in-house, F = material is procured externally, X = material can be both

produced in-house and procured externally X (to be used as an exception)

E.g. A material in Plant A will have this field as E (being produced in-house), where as the
same material in Plant B will have F if it is being externally procured.

You can not change the configuration for this field.

Note: Every Material needs to have a Procurement type.

Special Procurement Type (at Plant level):

Special procurement type is used for allocating a material for special procurements functions
such as:

a) Withdrawal from another plant:

For manufacturing a product in Plant 0001, you can withdraw a component directly from Plant
0002 (called a planning plant or the issuing plant). Dependent requirements for these
components are directly created in the issuing plant.

You can use withdrawal from alternative plant for both components produced in-house and
procured externally. A special procurement key is defined for both procedures and the issuing
plant is entered there. This special procurement key is assigned to that component which is to be
withdrawn from the plant 0002.

Dependent requirements for the component is created in plant 0001 as well as plant 0002 and
when the planned order for manufacturing is converted to a production order these dependent
requirements are converted to dependent reservations in both the plants.

MRP will show the dependent requirements with an MRP element called as Withdrawal from
alternate Plant

b) Production in alternate plant:

The planning of the product is carried out in the planning plant but it is actually produced in the
production plant. The product's BOM is created in the production plant.

The special procurement key has to be created in configuration.

The special procurement key has to be assigned to the assemblys material master of the
planning plant (MRP 2 view).

Production in Alternate Plant

Planning Plant Producing Plant
The special procurement key has to be
assigned to the assemblys material master of
the planning plant (MRP 2 view).

Step a) The Material requirement planning is

carried out for the assembly in the planning
plant.
 Step b) Planned order created in planning
plant

Step c) Routing of the production plant can Step c) BOM explosion can be carried out in
be used for scheduling this planned order. production plant for material requirement
planning.

Step d) Planned order Production order in

Planning Plant

Step e) Dependent Requirements are created

in production Plant

Step f) Dependent Requirements are

converted Dependent Reservations in
Production Plant

Step g) Production is started in Producing

Plant

Step h) Goods Receipt is created for the

production order of the producing plant in
Planning Plant

c) Planned Stock transfer

Values predefined are used to identify the unique route from the requesting to the supplying
plant in the same company code (which will be used for the Stock transport orders between two
plants)

It should be noted that the Special procurement type of this category has to be entered for the
material in the requesting or demanding plant.

In Customizing, when you would create a special procurement type for the requesting plant, you
would have to enter U for the fields Special Procurement and enter the supplying plant in
the plant field.

Planned stock transfers are MRP driven. A Shortage in receiving plant creates a Stock Transport
requisition or planned order in the receiving plant with a Purchase requisition raised on the
Supplying plant for release of these materials to the demanding plant for the requirement date.
Example - Z1 is the Special Procurement type predefined for materials requested by plant X
from plant Y (Plant Y Plant X).

This value Z1 is maintained for the material in the requesting or demanding plant and not in the
Supplying Plant.

The below table explains the step by step methodology of stock transfers:

Planned Stock Transfer

Plant X Plant Y
Step a) Requirement for -200 Units raised in
Plant X through MRP.

Step b) Stock Transport requisition or

planned order of type NB is raised in Plant
X to cover these 200 Units.

Step c) Purchase requisition or planned order

is raised in plant Y for -200.

Step d) Goods are procured or manufactured

in Plant Y to meet the 200 Units as per the
Procurement type indicator for the material
there.
Step e) The Stock Transport Requisition is
converted to Stock Transport order in Plant X
or the planned order is converted to Purchase
requisition (PR) and then the PR is converted
to Purchase order in plant X.

Step f) Transfer of goods through a transfer

posting with reference to the Stock Transfer
Purchase order is created once the goods are
available in Plant Y for transfer to plant X.

To do this, you can create a direct transfer

plant to plant and put the stock in transit or
you can create an outbound delivery and post
goods issue to the outbound delivery in Plant
Y.

Step g) At the Receiving Plant X, you have to

create a Goods receipt for the STO through
 MIGO against the Stock transport Purchase
order.

d) Phantom Item:

If a material is to be identified as the Phantom material, you have to enter a standard special
procurement type 50 in the material master of the plant where the material is defined a
Phantom.

e) Direct production (for Collective order processing)

Definition:

In direct production scenario, the whole assembly is collectively produced and the cost of
production is collectively calculated and booked on the highest level order. Along with cost of
production the scheduling is also carried out jointly for all the products in the hierarchy.

All the levels are connected to each other in a multi level collective order.

Restrictions:

a) Use is restricted to Made to Order Production.

b) Special Procurement key configuration:

In Customizing, the system creates a special procurement key for direct production as standard.
The special procurement key contains the procurement type E for in-house production and the
direct production field is selected.
You can create a further special procurement key by setting the special procurement type P for
Production in alternative plant as well as entering the production plant in addition to making the
direct production settings. The settings work in addition to each other and do not block each
other. This is how you create a multi-plant collective order.

c) Assigning of SPK to the Materials:

Assign the special procurement key 52, for direct production in the MRP 2 of the component.

You can restrict the use of the Collective design of direct production to a certain BOM. To
achieve this enter this key for the BOM items in the MRP data area.

d) Order type Configuration:

In order type configuration (Customizing for Shop Floor Control, by choosing Master data
Order Define Order Types) you can use the indicator Coll.ord.process to determine how
costs are to be settled in the collective order.

Also, if the indicator Collective order with goods movements is set, then the goods receipts
and goods issues between assemblies happen automatically. On Production of the Lower level
subassemblies, the goods receipt is created and the same is automatically goods issued to the
higher level order.

e) Planned order in direct production:

Planned orders for each level is created in the system and names them as Planned orders for
direct production. When you convert the planned order in to production order for higher level
all the dependent planned orders are also converted in to production.

Every planned order for direct production contains the number of the superior planned order as
well as the number of the leading planned order.

Illustration:

Materials Order Start Finish Auto Auto Cost Cost added

number Date Date Goods Goods of up to the
issue Receipt MFG higher
Level
Level 1 01 30th Dec 31st Dec GI GR 200 900
Level 2 02 28th Dec 30th Dec GI GR 400 700
Level 3 03 27th Dec 28th Dec GI GR 200 300
Level 04 25th Dec 27th Dec GR 100
4

Behavior of costs:

The confirmation of yield in the subordinate order has the result that costs are credited to the
subordinate order and costs are debited from the superior order. Goods receipt with reference to
the subordinate order would therefore lead to costs being debited twice from the superior order.
Batch Entry - Determination of batch entry in the process order:

Defines when batches have to be determined when using the PP/WM interface.

This indicator refers to the Raw Materials of an order, not to the FG of the order. You have the
following options:

The batches can be determined when the goods issue is posted.

The batches must be entered in the order before it is released.
The batches are determined automatically when the order is released

Back Flush Indicator:

Definition:

As a consultant or a user, you have to classify the components required in production as,
components whose:

Consumption is as per the standard Bill of Material or consumption of the component is totally
unknown.

Consumption is not exactly as per the Bill of Material or where the user would personally like to
create the goods issues.

In the second case, the components have to be issued to the order manually through the goods
issue transactions.

And in the first case, the components can be Backflushed (issue automatically in the
background) to the production order or process order.

A component identified as Back Flush component is automatically issued to the order when you
carry out a production order Confirmation or process order confirmations.

When you Carry out Production order or Process order Confirmation, and confirm a Partial or
Final Qty out of the Total Qty for the order, the system automatically issues the proportionate
Back Flush Component qty to the Order.

Illustration:
If you are producing 20 Pc of M1 and the Bill of Material for M1 has a component RM2 as
below:

RM2 = 2 Pc for every 1 quantity of M1 that is produced (To be Backflushed), then -

Step 1: Initial Order confirmations for 5 Pc for the order (of 20 pc)

Step 2: Auto Issue of Backflush items (RM2) in the background, that quantity required for
production of 5 Pc = 5 Pc X 2 Pc = 10 Pc.

Step 3: Optional - Editing the Backflush records before saving:

This automatic consumption of the backflush components happens in the background during the
production order or process order confirmations. Nevertheless you can manually go and edit the
quantities in the confirmation screen itself before saving the production order or process order
confirmations. To edit the entries you have to press the Goods Movement Button in the
confirmation main screen.

Lateral thinking

Thus we can conclude here that the goods movement screen in the confirmation transaction
behaves as a normal goods issue screen from where we can issue any component to the order
and not just backflush components.

Possible errors:

Since the backflush of components is executed in the background automatically by the system, it
is certainly possible that some errors may prop up. These errors can be due to:

The storage location is missing The storage location from where this backflush component is
to be consumed from is not defaulted for the material in the issue storage location of the MRP
views of the material.

The Batch Number is missing or it does not exist If the Component that is to be backflushed is
a batch managed component and the batch which is to be consumed is not allocated to the
component then the error may occur. It is advisable to create auto batch determination for these
components so that the system automatically allocates batches for consumption on the selection
or sort rule that is given in the batch determination procedure.

Stock is in deficit If the component that is to be backflushed is not available in the plants
storage location defined for the material, then the error is inevitable.

COGI:
These goods issue items which are in error after the production order or process order
confirmation, can be configured to go in to a Packet in system called COGI where all the
backflush errors will accumulate. This configuration exists in the order confirmation parameters
section.

This COGI entries can be cleared periodically once the personnel corrects the errors or brings in
stock for the material. If you select the entry in this screen and press the Bell Button you can
see the errors that have caused the entry to fall in to COGI. You can also see the error in the
record itself at the extreme far end of the screen.

After correcting the record you can press the save button so that the good issue is triggered in
the background and the item is consumed.

Issue Storage Location:

Definition:

In the case of a material produced in-house, this is the key of the storage location that is copied
to the planned order, production order.

If the material is a material that is to be consumed, then it is the issuing storage location to
which it is posted.

If the material is a material that is to be produced, then it is the receiving storage location to
which the receipt of the material is posted.

Lateral thinking

The issue storage locations for components can also be defined in the BOM Item data. The issue
storage location for a component in the BOM Item data takes the precedence over the material
master value. This means that you can change the issue storage location of a certain component
depending upon the material you are manufacturing.

Moreover you can also maintain Issue storage location for a material in the production version
of a material.

You can use your common sense and generalize that when you maintain the issue storage
location in the production version, it is the Goods receipt storage location for a material that is
being manufactured.
Storage location for External Procurement (EP):

It is a Default storage location for external procurement. It is a key of the storage location that is
proposed in the purchase requisition in materials planning for subsequent storage of the material
and receipt.

In-house production time (FG & SFG):

Definition:

It specifies the time in workdays needed to produce the material in-house. In-house production
time is independent of the order quantity.

The system requires the in-house production time to determine the planned dates for planned
orders in materials planning if the MRP is run at Basic dates.

On the other hand if MRP is run through lead time scheduling (parameters set in the MRP Run
screen) these dates are not considered at all. In that case the scheduling is done through the use
of Routing or Recipes.

Planned delivery time in days (RM & STO Procured):

Definition:

Number of calendar days needed to obtain the material or service if it is procured externally
right from the requisition time to the goods receipt time.

If you have multiple vendors for the material, you must specify an average value. The same
applies if you order the material from a fixed vendor that has varying delivery times.

Goods receipt processing time in days (for all Materials):

Definition:

This is a time required for goods receipt of a material at a given Plant and it does not include the
transportation time used bring the material till the plant.
For Finished Goods & Semi Finished Goods: Number of workdays required after receiving the
material from Production for inspection and placement into storage. It may vary for each
product.

For Raw Material & Semi Finished Goods: Number of workdays required after receiving from
the source for inspection and/or labeling before its further shipment or internal usage.

Schedule Margin Key:

Definition:

Key that the system uses to determine the floats required for scheduling an order. You define the
following floats with the scheduling margin key. The definition of the floats or the schedule
margin keys are through IMG.

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.

Safety Stock:

Definition:

Safety Stock specifies the quantity whose purpose is to satisfy unexpectedly high demand in the
coverage period. The risk of shortfalls is reduced by having a safety stock.

The safety stock defined here for a material in terms of quantity is an additional static
requirement and the system adds to this quantity as an additional requirement quantity. You can
use this along with manual reorder point planning as well.
Dynamic Safety Stock (Coverage Profile):

In place of defining a static or constant safety stock for a material, there is also a provision to
define a dynamic safety stock through the Coverage profile field.

The concept identifies the demand for a required period (as mentioned in customizing) and
calculates the average daily requirement. Then it uses this average daily requirement to calculate
the target stock for a target safety coverage period defined in customizing.

Example:

If the Demand over 10 weeks in future is 7000 Units and the safety stock coverage is required
for 2 days, then the system calculates the average daily requirement as 7000/ (10*7 factory
calendar working days) = 100 Units per day, which in turn means that for covering 2 days of
safety stock the required quantity will be 2*100 = 200 Units.

Therefore as soon as the stock falls below the Minimum safety stock calculated for minimum
safety coverage period, the system creates requirements for the dynamic safety stock.

Customizing required:

First we have to define in the Configuration section of MRP, a Coverage profile which
contains the following primary items:

The Demand for the number of periods which is to be used to calculate average daily
requirement = XX period

Period in terms of = Weeks/days/Months

The Target safety stock coverage = XX period

Minimum safety Stock coverage = XX period

Maximum safety Stock coverage = XX period

Minimum Safety Stock/Service Level:

Definition:

Minimum Safety Stock is the quantity that defines the lower limit for safety stock. This value
cannot be exceeded. The lower limit is checked if you use an availability indicator which shows,
according to customizing settings, if the safety stock is to be calculated again in a forecast. If the
safety stock is lower than this level in forecasting, the safety stock is automatically increased to
the value of the lower level. The safety stock must always be greater or equal to this lower level.

Service level is the system uses the service level to calculate the safety stock. The higher the
service level, the higher will be the safety stock calculated by the system to compensate for
additional consumption or delays in delivery.

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