Topics Covered -

• Material Requirement Planning (MRP) Overview
• Explaining SAP MRP Types and Usage
• Understanding MRP System and Calculations
• Stock Management and Replenishment Strategy
• Creating Material and Reorder Planning
• Lot Sizes and System Configuration
• Material Type Issue and MRP Transactions
• System Calculations and Stock Management
• Lot Size Procedures and MRP Types
• VB vs V1 in Reorder Planning
• Purchase Order Block Functionality

Summary

Material Requirement Planning (MRP) Overview

Parminder led a combined session for PP and MM teams on Material Requirement Planning (MRP). He explained that MRP is a tool that identifies shortages and determines the quantity, timing, and location of material procurement or production. He emphasized that MRP is crucial for companies with large businesses and complex supply chains. Parminder also clarified that MRP is not just for manufacturing but can be applied to buying and selling scenarios. He discussed the importance of understanding demand and supply, and how MRP can help manage stock levels. He also touched on the concept of 'planned independent requirements' (PIRs) and how they relate to demand. The session ended with a discussion on how MRP can create purchase requisitions or planned orders based on procurement types and quota arrangements.

Explaining SAP MRP Types and Usage

Parminder explains different types of Material Requirements Planning (MRP) in SAP systems. He focuses on two main types: PD (forecast-based planning) and VB (reorder-based planning). PD is typically used for finished goods and materials directly linked to them through the bill of materials, while VB is often used for indirect materials like safety equipment, tools, and spare parts. Parminder emphasizes that the choice between PD and VB depends on whether a material has a forecast and its importance in the supply chain. He also mentions that some indirect materials may not require planning at all, especially if they are non-stock items or don't have material codes.

Understanding MRP System and Calculations

Parminder led a discussion on the workings of the Material Requirements Planning (MRP) system, specifically focusing on the Demand Driven MRP (DDMRP) type. He explained the importance of understanding the parameters of the system, such as safety stock, reorder point, and maximum stock level. Parminder also emphasized the role of consultants in guiding the business on how to calculate these parameters and maintain them. He used the example of a material with a replenishment lead time of 10 days and a consumption rate of 100 units per day to illustrate how to calculate safety stock and reorder point. The conversation ended with Parminder encouraging the team to understand the system and its calculations to effectively manage the procurement process.

Stock Management and Replenishment Strategy

Parminder discussed the importance of understanding the level of stock needed for a product, the maximum stock level, and the replenishment strategy. He explained that the system should trigger a purchase requisition when the stock level falls below a certain threshold, and the quantity ordered should be based on the lot size. Parminder also differentiated between common raw materials and high-value materials, suggesting that common materials can be planned using a replenishment strategy, while high-value materials should be planned based on forecasts. He also clarified that the terms'replenishment time' and 'lead time' are synonymous in business terms. The conversation ended with Parminder encouraging participants to ask questions and promising to run a scenario in the next session.

Creating Material and Reorder Planning

Parminder provided a brief overview of how to create a material and demonstrate the reorder based planning in the system. He explained the process of creating an SGC, VP material, and maintaining the MRP views, purchasing view, and accounting views. Parminder also discussed the use of storage locations, plants, and storing the baseline using the unit of measure. He highlighted the importance of maintaining the reorder point and the MRP controller, which can be used for filtering and grouping materials. He mentioned that he would discuss the planning time fence in a subsequent PP planning session.

Lot Sizes and System Configuration

Parminder discussed the procedure for determining lot sizes in their system. He explained that for VB, a maximum stock level is used, and if this falls below a certain threshold, a purchase acquisition of 2,000 is created. He also mentioned the use of minimum and maximum lot sizes, which can be used to manage vendor supply quantities and purchase order sizes. Parminder also highlighted the importance of not altering standard configurations in the system, as this can have unintended consequences. He mentioned that he would identify and block the access of those who have made unauthorized changes to the system.

Material Type Issue and MRP Transactions

Parminder discussed a material type issue, revealing that he had mistakenly selected a different material type. He then demonstrated how to run an MRP (Material Requirements Planning) transaction, explaining the differences between MRP live and the standard classic MRP. Parminder also discussed the use of regenerative planning and lead time scheduling, emphasizing the importance of adapt planning data to avoid unnecessary deletion of purchase acquisitions. He concluded by showing how the system created four purchase acquisitions for a quantity of 500.

System Calculations and Stock Management

Parminder explained the system's calculations and how it determines stock levels. He demonstrated how the system buys stock in lots, with a maximum lot size of 500, and how it creates purchase requisitions when the stock falls below the reorder point. Parminder also clarified the concept of safety stock and how it affects the system's calculations. Raji sought further clarification on the concept of lot size, which Parminder explained as the quantity in which stock is bought or produced.

Lot Size Procedures and MRP Types

Parminder explains different lot size procedures in MRP, focusing on fixed lot size (FX) and H1. For FX, the system creates purchase requisitions of a fixed quantity when stock falls below a certain level. For H1, the maximum stock level is considered. Shameer inquires about varying minimum order quantities (MOQ) and delivery times for different suppliers. Parminder clarifies that these factors are considered when selecting vendors in the purchase requisition, and can be maintained in the purchasing info record (ME11). The discussion then moves to MRP types, particularly V1 and VB, which differ in their inclusion of external requirements within the replenishment lead time.

Vb vs V1 in Reorder Planning

Parminder explained the difference between Vb and V1 in the context of reorder-based planning. Vb considers only the current stock on hand, while V1 takes into account open demand within the replenishment lead time. He illustrated this with an example where a sales order was open, and the system would consider the stock level as 300 (current stock minus open demand) instead of 500 (current stock on hand). This would trigger a purchase requisition. Parminder also clarified that Vb is a consumption-based planning, while V1 is a type of Mrp. He assigned a task to the team to practice Vb-based Mrp type planning and submit a document detailing their findings.

Purchase Order Block Functionality

In the meeting, Manjunath raised a question about the block function in the vendor general data, specifically regarding the purchase order block. Parminder guided him to share his screen and the issue in the Telegram group for further assistance. They also discussed the configuration of the total block and the impact of the block on the purchase order. Parminder suggested that the block functionality only works for materials activated for the QM module. Manjunath confirmed this and expressed his gratitude for the clarification.