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Production Planning and Material Requirements Planning (MRP)

2008 by SAP AG. All rights reserved. SAP University Alliance

Primary Function

Material Requirements Planning MRP


To guarantee material availability
Manages production or procurement of the required quantities of material on time both for internal purposes and for sales and distribution

System monitors stocks and automatically creates proposals for purchasing and/or production MRP initially proposes but human must convert proposal to concrete action

2008 by SAP AG. All rights reserved. SAP University Alliance

MRP


Locations for MRP Plant  Determines requirements for entire plant on planning run  Can exclude specified storage locations

MRP Area  Can set up a specific area for which planning will be carried out  Example: inventory maintained in Assembly operations area  Only this area is planned by MRP run

2008 by SAP AG. All rights reserved. SAP University Alliance

MRP Net requirements calculation

Calculates plant stock


Unrestricted use stock  Stock in quality inspection  Unrestricted consignment stock  Consignment stock in quality inspection


Incorporates
Goods receipts planned orders and purchase requisitions  Goods issues customer requirements, planned independent requirements, and reservations


2008 by SAP AG. All rights reserved. SAP University Alliance

MRP ATP- Available to promise quantity ATPATP = warehouse stock + planned receipts planned issues  Inventory Management: when creating/changing reservations to ensure goods movement will not jeopardize availability status of other issue elements already created and checked by system


SD: whether material is available on desired delivery date for sales orders MRP: planned order processing and production order processing, processing, to make sure material components are available for production of finished product

2008 by SAP AG. All rights reserved. SAP University Alliance

Quota arrangements For multiple source materials  Internal production or external procurement

MRP

System determines the sources of supply according to a quota file and assigns procurement proposals to sources  Allocation quota arrangement: every lot assigned to rotating sources of supply  Splitting quota arrangement: a lot is split among various sources of supply

2008 by SAP AG. All rights reserved. SAP University Alliance

MRP - Process
current inventory on order status forecasts recommended production actions

Inputs
master schedule bills of material planning rules
2008 by SAP AG. All rights reserved. SAP University Alliance

MRP process

Outputs

recommended procurement actions

Organizational Structure


Plant specific organizational units MRP controller Production controller / production scheduler / planner group Person responsible (financially) Non-plantNon-plant-specific organizational units Capacity planner

2008 by SAP AG. All rights reserved. SAP University Alliance

Bill of Material (BOM)




A complete list of the components (inputs) that are required to assemble a completed unit of goods (e.g., finished good) Could be for an intermediate production good (e.g., engines for car manufacturer)

2008 by SAP AG. All rights reserved. SAP University Alliance

Master Data - Bill of Material




Where is the BOM used? MRP uses the BOM to determine dependent requirements (exploding the BOM to identify raw material and subcomponent quantities required to complete production of a planned order) Controlling uses the BOM to calculate product costs Production (PP) uses the BOM to issue the proper quantities of components and raw materials to the shop floor

2008 by SAP AG. All rights reserved. SAP University Alliance

Work Center


Location where value-added work is valuepreformed Contains one or more of the following resources Equipment Operations People

2008 by SAP AG. All rights reserved. SAP University Alliance

Master Data - Work Center  Capacities are defined by the user Labor / machine / emissions / energy consumption

Used for capacity requirements planning, detailed scheduling and costing Capacity is assigned to a cost center HR assignments could include ...  Qualifications, Positions, People

2008 by SAP AG. All rights reserved. SAP University Alliance

Routing Sheet
 Recipe (plan) for activities  Ordered sequence of procedures required

to assemble a completed unit of goods  Contains the resources required to complete each step in the manufacturing process for a particular product or item.  Elements of a routing are ... Operations Material components used by each operation Production resources and tools Inspection characteristics
2008 by SAP AG. All rights reserved. SAP University Alliance

Routing


Routings will be used in Scheduling Costing Capacity planning Production orders Components to be used in the individual operations are assigned to the individual operations

2008 by SAP AG. All rights reserved. SAP University Alliance

MRP - Planned Orders




Planned Order - replenishment elements created by MRP Dependent demand based on BOM can be ...  Firmed: changes only recommended  Changed by the planner  Converted into a production order System assumes recommendations have been acted upon

2008 by SAP AG. All rights reserved. SAP University Alliance

Production Orders
Planned orders are converted into production orders  Used to specify What is to be produced When production is to take place Which capacity is to process the order How much production cost will be


2008 by SAP AG. All rights reserved. SAP University Alliance

Production Orders


When a production order is created


A

routing is selected, operations and selected, sequences are transferred to the order BOM exploded and the items are transferred to the order Reservations are created to hold items in stock Planned costs of order are generated Capacity requirements are generated in work centers Purchase requisitions generated for non-stock nonitems and externally-processed operations externally 2008 by SAP AG. All rights reserved. SAP University Alliance

Costs - $$  Planned cost of order ... Uses bill of material Uses routing Based on material master price for each component Allocated to cost elements

2008 by SAP AG. All rights reserved. SAP University Alliance

Costs - $$


Actual costs of order Uses bill of material Uses routing Gets updated when goods are issued to order or when purchased materials are received May include activity costs Updated at completion confirmation

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions  EXERCISE PP01: CREATE MRP VIEWS FOR RAW MATERIALS

Before raw materials can be used in manufacturing, the MRP views must be added to the material master record


If material master already created, MRP views are added to extend the record Determine the lot size of the order Set the production time required Set the safety stock Set the availability check Set the replenishment lead time for the material

The MRP views contain the data necessary to


    

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions




EXERCISE PP02: CREATE MRP VIEWS FOR TRADING GOODS

In some cases, trading goods are not only sold outright but they are used in the manufacturing process to create finished goods


For example: string is sold as a trading good but is also used in making a kite

Before a trading good can be used in manufacturing, the MRP views must be added to the material master record


If material master already created, MRP views are added to extend the record

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions




EXERCISE PP03: CREATE MRP & WORK SCHEDULING VIEWS FOR FINISHED GOODS

The MRP views are necessary to set the production data in the finished good master record Because finished goods are produced, there must be a work scheduling view included in the record to permit the system to schedule the production of this material

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions




EXERCISE PP04: CREATE BILLS OF MATERIAL

The BOM specifies what components are needed in order to produce the particular finished product


For example: to make a kite, one needs paper, wood, and string

The BOM also includes the quantities of each material needed to create the finished product


For example: to make a kite one needs 1 unit of paper, 1 unit of wood, and 150 units of string

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions  EXERCISE PP05: CREATE A ROUTING FOR FINISHED PRODUCTS

The routing indicates which operations must be performed to build the product and their order The routing specifies how much time will be required in each of the operations both for set up in order to get ready for production of one unit of product as well as the labor time required (it can also include machine time if machines are part of the operation) The materials to be used at each operation are also assigned to the routing so that the materials will be present for use when required

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions  EXERCISE PP06: DISPLAY LIST OF ROUTINGS




The routing created and the components assigned to each step are displayed in order to ensure they are correct

2008 by SAP AG. All rights reserved. SAP University Alliance

Flya Kite PP Transactions  EXERCISE PP07: RUN MRP SINGLE ITEM, MULTI LEVEL


The MRP system is executed (run) so that it will plan the production of the finished good

2008 by SAP AG. All rights reserved. SAP University Alliance