3 Planning Process External procurement In-house production Planning Run Planned OrderConversionProductionOrderPurchaseRequisitionScheduleLineCan be automatic
4 Planning Process Planned Order: Recommendation by the MRP planning process of quantity and timing of production or purchase orderProduction Order:Actual order given to shop floor to commence production. May be electronic or paper. Can include production details (routing, quality requirements, drawings, instructions, etc.)
5 Planning Process Purchase Requisition: Request to purchasing to create purchase orderPurchase OrderRequest to vendor to supply materialsSchedule LineDirect request to vendor for materials, covered by scheduling agreement (blanket PO)
6 Reorder Point Processing LotSizeSafety StockTimeReplenishmentLead Time
7 Reorder Point Processing When the inventory level for a product that is planned using consumption-based planning reaches the ROP, an order for the material is NOT created automaticallyConsumption-based planning uses the Material Requirements Planning (MRP) planning process to create purchase ordersThe MRP planning process is typically run overnight on a daily basisHistorically, might have used weekly runsTime until MRP planning run is executed should be considered in ROP calculation (daily runs, add 1 day to lead time)
8 Forward Scheduling for External Procurement (Release Date)TodayPurchase OrderDateGoods ReceiptAvailabilityProcessing TimeFor PurchasingPlanned Delivery TimeReplenishment Lead Time
9 MRP Planning ProcessFor a company with thousands of materials to plan, the computing resources needed to calculate material plans can be significantTo make sure that:Only those calculations that are necessary are performed:Only on materials that need planningTwo “filters” are used:Planning Run TypePlanning Horizon
10 Planning Run Types NETCH: Net change in the total horizon In the MRP Planning Process, materials are planned if there have been any:Changes in material stocks (receipts, issues)Addition of purchase requisitions, purchase orders, planned orders, dependent requirementsChanges in Material Master Data (Lot Size, ROP, etc.)
11 Planning Run Types NETPL: Net change in the planning horizon Same at NETCH, EXCEPT:Changes must occur within the planning horizonPlanning horizon keeps MRP planning process from making plans for future periods that:Do not impact current operationsWill be made irrelevant through the dynamics of business
14 Planning Run Types NETUPL: Regenerative Planning Plans all materials for total planning horizonGood idea to run this option regularly (e.g. every weekend), even though it is more resource intensiveCustomizing changes don’t trigger planning under NETCH or NETPL“Time passage” problem with NETPL
15 NETPL: Potential Problem Planning HorizonNETPLTodayPassage of time is not an “event”Would require monitoring to detectPlanning HorizonNETPLTodaySolution: Run NETUPL
16 Planning File A Planning File entry exists for each material Keeps track of changes that would require material to be planned under NETCH or NETPL optionsMRP Planning process looks at planning file entries for each material to see if it should be planned
18 Planning Run Options Planning Run Type: NETCH NETPL NETUPL Create Purchase Req:1 – Purchase Requisitions2 – Purchase Requisitions in Opening Period3 – Planned OrdersDefined by Schedule Margin KeyUsu. does not impactconsumption-based planning
19 Planning Run Options Create MRP List: 1 – Yes 2 – Depending on Exception Messages3 – NoPlanning mode:Determines how system deals with previousplans (planned order, purchase requisitions)Scheduling:Determines level of detail in schedulecalculation for production ordersDisplay results before they are savedLets planner make changes before theresults are saved
20 Planning Run Options With consumption-based planning in practice: You would not run MRP for a single material, but do it as part of a group (MRP Area based on storage location)You would have it scheduled to run automaticallyYou would have it either:Create purchase requisitions automaticallyCreate schedule lines
21 Net Requirements Calculation Reorder PointStockFirm PlannedOrdersPurchaseOrder Proposalfor Lot SizeShortageFixed PurchaseRequisitionsHow does safety stockfigure into this process?
22 Exercise: Material Master Data MRP Type:VB sets consumption-based planningReorder pointLot size:FX is fixed lot sizeFixed lot size:Quantity in an order
23 Exercise: Material Master Data Plnd delivery time:Vendor part of lead timeSchedMargin key:Sets opening period, among otherthingsSafety stock:Desired stock level whenreplenishment order arrivesHow does it work in SAP R/3?
24 Exercise: Stock/Requirements List Your one-stop shopping location forall things material
25 Exercise: MRP Planning Run MRP control parameters:Planning run parametersdiscussed previously
26 Exercise: MRP Planning Run Planning run results displayed:Purchase requisition created
27 Exercise: Purchase Requisition Can easily create purchase order from S/List
28 Exercise: Purchase Order Purchase order screen is where the requisition is converted to a purchase orderVendors selectedPrice determined
29 Exercise: Receive Purchase Order Goods Receipt Screen:In practice, could just be a bar-code scanLinks receipt to purchase orderTell SAP R/3 system where goods havebeen stored
30 Exercise: Goods Issue Goods Issue Screen: When goods are issued, something hasto absorb costs (project, productionorder, cost center)In this case, we will charge costs to thewarehouse cost center (P020)What is the downside to charging to acost center?
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