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R3 MRP Logic

The purpose of MRP is to guarantee material availability by planning for procurement or production of required quantities.
Sales Orders Planned Ind Requirements

Material Reqmts Planning


Dependent Reqmts

Reservations Planned Order

Convert Purchase Requisition Purchase Order Schedule Line

Production Order

Warehouse

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 2

R/3s MRP is for unconstraint-based planning, APO is for the constraint-based planning

Finished product

Sales order / Planned Ind Requirement Planned order

Assembly 1

Assembly 2

Dependent requirement Planned order

Raw material 1

Raw material 2

Raw material 3

Dependent requirement Purchase requisition


R

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 3

How the Planning Run Works


Net Requirements Calculation ---> Lot Size Calculation ----> -------> Scheduling --------> BOM Explosion -----> -------> Quota Arrangement
Net Requirements Calculation
1. Determine Available Warehouse Stock 2. Determine Planned Receipts (after considering existing issues and receipts) 3. Calculate the Shortage Quantity

Lot Size Calculation


Determine the lot size of each plan order. R3 Lot Sizing falls into 3 categories : Static Lot Size, Optimum Lot Size or Period Lot Size

Procurement Type & Scheduling


In-house Production or External Procurement & Backward Scheduling or Forward Scheduling

BOM Explosion
Determine the valid BOM for explosion

Quota Arrangement
A lot can further be split by quota arrangements (MM will cover this)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 4

Rescheduling Check for Firmed Receipts


Exception message
Receipts Reschedule in

Exception message
Reschedule out Time

Tolerance
Reqmts

Tolerance

Tolerance

In-house production time + Goods receipt processing time + Rescheduling horizon

Firmed receipts: production order, purchase order, firmed planned order


The planning run will not automatically displace firmed receipts.
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 5

Overview: Net Requirements Calculation

Net Reqmts Calculation


Lot-size calculation Procurement type

Scheduling BOM Explosion

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MRP: Net Requirements Calculation


MRP will compare the requirement and supply to get a shortage gap. A comparison is made between warehouse stock and the appropriate receipts and issue. In the net requirements calculation, a difference is made between reorder point planning, forecast-based planning, and MRP. In each procedure, the system calculates available stock differently.

Lot Size

Shortage

Sales Orders Planned Orders Planned Ind Reqmts Production Orders Purchase Requisitions Purchase orders Warehouse Stock Supply
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 7

Compare

Dependent Reqmts Reservations Safety Stock Demand

MRP Procedures
controlled by MRP type in material master (MRP 1 view)

MRP Procedures

Consumptionbased

MRP
Deterministic Planning

Reorder point planning


W/ or W/O Requirements

Forecast-based planning

Time-phased planning

based on consumption in the past


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 8

Master Data
Material Master (Important Ones) MRP Group (MRP1) - Group common MRP materials together MRP Type (MRP1) - Planning Method. Reorder Point (MRP1) - For Reorder Point Planning Methods Planning Time Fence (MRP1) - Restrict Planning Activities within the TimeFence Planning Cycle (MRP1) - Only for Time Phased Planning MRP Controller (MRP1) - Planner for the material Lot Sizing (MRP1) - Lot Size determination Storage Cost Indicators (MRP1) - For Optimum Lot sizing Only Ordering Costs (MRP1)- For Optimum Lot Sizing Only Assembly Scrap (MRP1) - For Assembly Scrap Only Procurement Type (MRP2) - Make or Buy Indicator. Special Procurement (MRP2) - For stock transfers, phantoms etc. Quota Arrangement (MRP2) - Splitting of Quota for internal and/or external procurement (MM will handle this)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 9

Master Data (Contd)


Material Master (Important Ones) Lead Times (GR and Planned Delivery Time) (MRP2) - Receiving and Purchasing Lead Times Scheduling Margin Key (MRP2) - How external or internal procurement is scheduled Safety Stock (MRP2) - Safety Stock Forecast (MRP3 and Forecasting) - Mainly for Forecast Based Planning, ReOrder Point Planning and Time Phased Planning Planning Strategy (MRP3) - Mainly for Finished Goods - to be decided by APO Availability Check (MRP3) - ATP logic for components - to be decided by ZL. For Finished Goods - to be decided by APO. Discontinuation (MRP4) - Discontinuation by material across all BOMs Component Scrap (MRP4) - Component Scrap Requirements Grouping (MRP4) - Group requirements for planning or display Storage Location MRP (MRP4) - Only if storage MRP is required

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 10

How the Planning Run Works Per MRP Type

Reorder Point Planning (REORDER) (MRP Type VB, Reorder Level) When Available Stock falls below reorder level, planned orders are generated in the planning run to order up to reorder level. Safety Stock requirement is just for information

Available Stock = Plant Stock + Receipts


Reorder Point Planning + Requirements (REORDERREQS) (MRP Type V1, Reorder Level) When Available stock falls below reorder level, planned orders are generated in the planning run to order up to reorder level. Safety stock requirement is just for information. The difference here is that sales orders and reservations are also taken into account. Available Stock = Plant Stock + Receipts - (Sales Orders + Reservations)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 11

How the Planning Run Works Per MRP Type


Forecast Based Planning (FORECAST) (MRP Type VV, Create Forecast) System only considers forecast requirements (any other requirements are not considered). Planned orders are proposed when available stock is less than forecast requirements. Available Stock = Plant stock - Safety Stock + Receipts - Forecast Requirements Time Phased Planning (TIMEPLAN) (MRP Type R1, Planning Cycle, Create Forecast) Material is planned according to same cycle in which it is delivered ie the material is not planned during the normal MRP run. The material have to be planned using a separate MRP run. Available Stock = (Plant stock - Safety Stock + Receipts - Forecast Requirements) within the planning cycle. MRP Planned (PDFORECAST) (MRP Type PD, Optional Create Forecast) System checks every requirement to determine whether they are covered by available warehouse stock and/or receipts. Available Stock = Plant stock - Safety Stock + Receipts - All Requirements

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Quantity and Time Floats

Safety stock Safety stock partially available Dynamic safety stock Safety time

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Safety Stock
Safety stock: To be set in material master (MRP 2) or in the MRP area segment

Stock Available quantity for planning

Safety stock (not available for planning)

Time

Reqmt
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 14

Receipt

Safety Stock Partially Available


Safety stock partially available : set in MRP group Available quantity for planning

Stock

Portion of safety stock available Safety Portion of safety stock not available for planning

Statistical safety stock from material master

Time

Reqmt

Receipt

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 15

Dynamic Safety Stock (1)

Stock
Maximum stock

Target stock

"dynamic safety stock

Minimum stock

Replenish to target stock if falls below minimum stock

Exception message for firmed order proposals , otherwise adjustment

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 16

Dynamic Safety Stock (2)

Dynamic Safety Stock and Range of Coverage Profile


Period 1 Period 2 Period 3 Period 4 Reqmts
Average daily requirements Average daily requirements Average daily requirements

Time

Days

Maximum stock
Target stock Minimum stock Time
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 17

Range of Coverage Profile: Intervals (1)


Definition of range of coverage profile in Customizing, assignment in material master

Interval 1

Interval 2

Interval 3
Time Reqmts

Maximum stock

Target stock Minimum stock Time


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 18

Range of Coverage Profile: Intervals (2)

Periods with deviating range of coverage


Interval 1 Reqmts Interval 2 Interval 3 Time

20.12.2000 10.12.2000
Maximum stock

Target stock
Minimum stock Time

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 19

Safety Time
Safety time: To be set in material master (MRP 2) or in the MRP area segment

28.03.
Receipts

30.03.

2 workdays
Time

Reqmts

Safety time

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 20

Safety Time in Multi-Level Production


Defined using the safety time indicator in the material master (MRP 2) or in the MRP area segment + Finished product Safety time Ind reqmt Ind reqmt

Time

+ Components Time

Dep. reqmts

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 21

Period Profile for the Safety Time


Definition of period profile in Customizing, assignment in material master

Receipts

Safety time Reqmts

Safety time

Safety time

Time

2 workdays

4 workdays

2 workdays

12.12.2000
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 22

20.12.2000

Overview: Lot-Size Calculation

Net Requirements Calculation

Lot-size calculation
Procurement type

Scheduling BOM Explosion

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 23

Overview of Lot-Sizing Procedures


Definition in Customizing Entered in Material master

Lot-sizing procedures
Static procedures Period procedures Optimum procedures

Lot-for-lot order quantity

Daily lot size

Part period procedure

Fixed lot size


Replenishment up to maximum stock level

Weekly lot size

Least unit cost procedure Groff reorder procedure Dynamic lot size creation

Monthly lot size Flexible periods according to planning calendar

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 24

Static Lot-Sizing Procedures

EX

Lot-for-lot order quantity (exact to the day)


Quantity
Receipts Reqmts Time

FX

Fixed lot size

HB

Replenish up to maximum stock level

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 25

Period Lot-Sizing Procedures

TB

Daily lot size

WB Weekly lot size

MB Monthly lot size

Period length

Period length

Period length

Receipts Time

Reqmts
Period 1 Period 2 Period 3

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 26

Lot Size According to Planning Calendar

PC

Period Lot Size Acc . to Planning Calendar

July 2000
Mon Tue Wed Thu Fri 1 8 15 22 2 9 16 23 3 10 17 24 4 11 18 25 5 12 19 26 Sat Sun 6 13 20 27 7 14 21 28

Time Period 1 Period 2 Period 3

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 27

Optimum Lot-Sizing Procedures

Many deliveries / High order costs

Minimal stockkeeping/ Minimal storage costs

Few deliveries / Low order costs

More extensive stockkeeping/ Higher storage costs

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 28

Long-Term Lot Size

Exact analysis Short-term

Reqmts preview Long-term

Lot-for-lot order quantity

Monthly lot size

Reqmt

Receipt

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 29

Planning Run Executed Regularly

1 1
2 months ago
For 2 months, no events required a change in planning, so not planned during NETCH + NETPL! Problem

2 2
Today

Possible Solution: Maximum MRP period (MRP group)


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 30

Additional Restrictions

You can use these additional restrictions to further define lot sizes :

Short Term and Long Term Lot Size (SHORTLONGTERMLOT) (Lot Size Key LL)

Minimum Lot Size


Maximum Lot Size Rounding Value

Rounding Profile

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 31

Overview: Scheduling

Net Requirements Calculation

Lot-size calculation

Procurement type Scheduling


BOM Explosion

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 32

Procurement Types

Procurement Types

In-house production

Stock transfer

External procurement

Production in own plant

Production in another plant

Subcontracting

Vendor

Reservation in another plant Procurement types Special procurement types


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 33

Components Components

Scheduling

The following times are taken into account : processing time required by purchasing department (workdays) planned delivery time of the material (calendar days) goods receipt processing time (workdays) These times will be used to determine the release date of the planned order or purchase requisition.

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 34

Backward Scheduling for In-House Production

Planned order
Opening period
In-house production time Goods receipt processing time
MRP 2

Lot-size dependent: MRP 2 Scheduling margin Lot-size independent : work scheduling key (MRP 2)

Time

Opening date

Order start date

Order finish date

Availability date

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 35

Forward Scheduling for In-House Production


Automatic, if order start date is in the past during backward scheduling

Today Planned order


In-house production time
Goods receipt processing time

Time

Order start date

Order finish date

Availability date

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 36

Scheduling for External Procurement


Order start date Order finish date

In-house production time

...

Processing time for Purchasing


Customizing Plant parameters

Plnd delivery time


Non-vendor-specific: Material master Vendor-specific: Outline agreement or info record

...
Time

Release date
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Delivery date

Scheduling in Production Planning

Basic Scheduling
Separate scheduling for planned orders Exact to the day Basic dates calculated Order finish date

Periods

Order start date Opening date Basis for in-house production or replenishment lead time Improved performance No calculation of capacity requirements

Lead Time Scheduling


Used for production orders and routings Based on basic dates: MRP

Order header

Arbeitsvorg nge

Materialkomponenten

manual Target dates calculated (scheduled dates) Target start date Target finish date Basis for in-house production or operations Capacity requirements calculated Exact to the second

Fertigungshilfsmittel

Kosten

Plan Soll Ist

100 20 50

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 38

Order Dates for Basic Scheduling


Scheduling ind. =1, no capacity requirements
Backward scheduling
OS

Reqmts date Reqmts date Product Product

Product
OD OS OF

Assembly
OD OS OF

Available

Raw material
OD
OS OF

Available Available
Opening period Goods receipt processing time Time

OF

Order start date Order finish date

OD

Opening date

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 39

Lead Time Scheduling


Scheduling ind. = 2, capacity requirements are calculated

1 1
OS
Float before production
Scheduling margin key

Planned order
OF
Operations Operations (from routing) (from routing) Float after production
Scheduling margin key

2 2
OS
Order start date Production Production start date start date

10

20

30

OF
Production Production finish date finish date Order finish date

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 40

Scheduling : Significance of In-house Production Time


Calculation of planned dates Requirements date
OS OF

In-house production time from material master

Wrong in-house production time in material master?

10

20

30

40

50

Float before production

Lead time scheduling using routing

Float after production

Calculation of order dates In-house prod. time greater than scheduling in routing In-house production time shorter

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 41

Order Dates for Lead Time Scheduling

Backward scheduling
OD

OS

PS

PF

OF

Product

10

20

30 Assembly 2 in routing assigned operation 30

Assembly 1

10

20

30

Assembly 2

10

20

30
Time

OS

Order start date Order finish date

OD PS PF

Opening date Production start date Production finish date

Opening period Goods receipt processing time

OF

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 42

Changing Dependent Requirement Dates


Order start date

Planned order
Determining components

Finished product

Component 1
Dependent reqmts w/o lead time/lead-time offset

Component 2

Dep.. reqmts Dep reqmts Lead time Lead time Lead time

+
Lead-time offset BOM maintenance

Time

Dep.. reqmts Dep reqmts Lead-time offset Lead-time offset

Note: the lead time and lead-time offset are not taken into account in the lead time scheduling!
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 43

Overview: BOM Explosion

Net Requirements Calculation Lot-size calculation Procurement type Scheduling

BOM Explosion
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BOM Explosion

Target

Usage quantity /dates

Dependent reqmts quantities and dates

Items relevant to production

Component selection
Change status of alternative BOM Selection of Alternative BOM Selection of BOM usage

Explosion date

Lot size

Usage

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 45

Summary: BOM Selection

BOM usage by selection ID


Selection method indicator
1 Explosion date

Lot size

2,3

Production version

Customizing for BOM explosion


Order start Order finish BOM explosion number

Alternative BOM selected


Customizing for BOM explosion
Order start Order finish BOM explosion number

Change status of alternative BOM determined


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 46

Selection of BOM usage

BOM Selection ID
Planned order
Priority 1 2 Usage

Production
Engineering

Used if no valid production BOM exists

Production BOM

Engineering BOM

Costing BOM

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 47

Selection of Alternative BOM

for multiple BOMs

Order quantity Order quantity (Lot size) (Lot size)


Alternative selection indicator in material master

1
2, 3

Explosion date Explosion date

Production version Production version

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 48

Selection by Order Quantity (Lot Size)

(Selection method indicator = blank)

Multiple BOM
Alternative 1 Lot-size range 0 -10 pieces

Small lot
A B

Planned order
Large lot

Alternative 2 Lot-size range 11 - 10,000 pieces

A
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 49

Selection by Explosion Date

Customizing

Planned order
BOM explosion using

Order start date


of a planned order

Order finish date of a planned order

BOM explosion number (gross date)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 50

Selection by Order Start

(Selection method indicator = 1)


Order start
Order 1

Order start
Order 2

Alternative BOM 1

Alternative BOM 2

Alternative BOM 3

Time

Valid from (relevant to planning from)

Valid from (relevant to planning from)

Valid from (relevant to planning from)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 51

Explosion Date Using the Order Finish Date


Order finish Order finish

Order 1

Order 2

Alternative BOM 1

Alternative BOM 2

Alternative BOM 3

Time Valid from (relevant to planning from) Valid from (relevant to planning from) Valid from (relevant to planning from)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 52

Explosion Using the BOM Explosion Number

1.2.2000

BOM explosion no. xxx Order for product BOM explosion no. xxx Order for assembly 1 BOM explosion no. xxx Order for assembly 2

BOM explosion no. xxx


Alternative finished products Alternatives for assembly 1 Alternatives for assembly 2 Gross date
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 53

Selection by Production Version

(Selection method indicator = 2 or 3)

Production version 1 Production version 2 Material master


Routing

BOM

Describes production procedure

Work center (Line production)

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 54

Defining the Change Status Using the Order Start Date


Order start Order start
Order 1 Order 2

Time

Explosion date

Explosion date

Time
Change status 1 Technical change Change status 2 Change status 3

Technical change

Same alternative BOM


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 55

Defining Change Status Using the Order Finish Date


Order finish
Order 1 Order 2

Order finish

Time Explosion date Time

Explosion date

Change status 1 Technical change

Change status 2

Change status 3

Technical change

Same alternative BOM


SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 56

Defining Change Status Using BOM Explosion Numbers


BOM explosion no. xxx Order for product

1.2.2000

BOM explosion no. xxx Order for assembly 1 BOM explosion no. xxx Order for assembly 2

BOM explosion no. xxx


Change status for product Change status for assembly 1

Change status for assembly 2

Gross date
SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 57

Other MRP Functions

Planning Time Fence Discontinued Parts

Alternative Parts
Single and Multi Level Pegging Multi-Plant Planning

Storage Location/MRP Area


Blocked Storage Location Other Special Procurement

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 58

Planning Time Fence


Plan is protected from changes within the planning time fence. End date of time fence determined from planning date. You can configure system as to how you want the orders to react within the time fence. Outside the time fence, system creates order proposal as usual. When new orders move into the time fence, they may be firmed automatically depending on how the system is configured. Firming Types for MRP Planned Materials :

Orders Moving Into Firming Types TimeFence Type 1 Firmed Type 2 Firmed Type 3 Not Firmed Type 4 Not Firmed

New Order Proposals Creation Outside Time Fence No Orders Created Outside Time Fence No Orders Created

New Order Status Not Firmed NA Not Firmed NA

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 59

Carrying Out the Planning Run

Planning File Types of Planning Run


Regenerative (NEUPL)
Net Change Planning (NETCH) Net Change Planning in planning horizon (NETPL)

Planning Mode Creation Indicator MRP Group vs Plant Parameters

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 60

Evaluating the Planning Run


MRP List By Material MRP List Collective Display Stock Requirements List By Material

Stock Requirements List Collective Display


Compare MRP List against Stock Requirement List Planning situation for Material - (same as stock requirement list ie latest situation for a material)

Planning result for material - (the last MRP run for the material) - you can compare your current plan against long term planning scenarios or stock requirements list here.
Situation (all plants) - Review planning situation (ie stock requirement list) for material for all plants Order Report - Review your orders in the order report Pegged Requirements - Review Pegging

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 61

Important Configurations
Most Important : Production-->MRP-->Planning File Entries -->Activate MRP and set up planning file This Configuration should be done before materials are mass created in a new plant
Plant Parameters MRP Groups MRP Types Special Procurement Types Stock Availability Lot Size Calculation Define Floats Define External Procurement BOM Explosion / Determine Routing Define Storage Location/MRP area per Plant Procurement Proposals

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 62

Implementation Decisions

Group materials with common planning profile together. Decide an MRP Type for each group of materials. Decide what the lot sizing should be for each material/group of materials. Decide for each material, whether you require safety stock and if safety stock is required, what method of planning the safety stock ? Which material require quota arrangements ? What are the materials that have to be procured from another plant ? Are there any storage locations to be blocked from planning ? Are there storage locations/MRP area needed to be planned separately ?

SAP AG 2001, A Business View of mySAP Financials, GBU FIN - 63