Materials Planning Procedures in SAP MM (MRP & CBP)


This documentation covers the details of Materials Planning Procedures in SAP MM (MRP & CBP)

Basically, there are two types of standard materials planning procedures in SAP,
which are:
1. Traditional Material
Requirements Planning (MRP)

In traditional Material Requirements
Planning (MRP), sales order, planned independent requirements, reservations,
dependent requirements that are created by BOM explosion, and so on are planned
directly as requirements. The materials planning procedure will create
procurement proposal only if these requirements will result in shortage of
material stocks at a certain time. There are no other requirement that can
trigger a procurement proposal. This procedure is used in “PD-MRP” MRP Type in
standard SAP R/3.
MRP is especially useful for the planning of finished
products and important assemblies and components (A materials).

2. Consumption Based Planning
(CBP)

Consumption-based planning (CBP) is a materials planning
procedure based on past consumption values that determine future requirements by
using forecast or other statistical procedures.

Originally, in CBP,
planned independent requirements or dependent requirement will not be considered
in the net requirements calculation. Instead, it is triggered when stock levels
fall below a predefined reorder point or by forecast requirements calculated
using past consumption values. So, all the planned independent or dependent
requirements in a certain period of time should have been considered before
(when set the reorder point or calculate the requirement
forecast).

Consumption-based planning procedures are simple materials
planning procedures which we can use to achieve set targets with relatively
little effort. Therefore, these planning procedures are used in areas without
in-house production and/or in production plants for planning both B- and C-parts
and operating supplies.

There are three procedures in Consumption Based
Planning (CBP), which are:

a.Reorder
point planning

In reorder point planning, SAP checks whether the
available stocks are below the reorder point that has been set for the material.
If they are, SAP will create procurement proposal.

We can determine the
reorder point manually (“VB-Manual reorder point planning” MRP Type in standard
SAP R/3) or, it can also be calculated automatically using the material forecast
(“VM-Automatic reorder point planning” MRP Type in standard SAP R/3).

The
reorder point should cover the average material requirement/consumption expected
during the replenishment lead time (procurement processing time + planned
delivery time + GR processing time). Besides the average consumption, we also
should consider safety stock. The safety stock exists to cover both excess
material consumption within the replenishment lead time and any additional
requirements that may occur due to delivery delays. Therefore, the safety stock
is included in the reorder level.

The following values are important for
defining the safety stock:

  • Past consumption values (historical data) or future requirements
  • Vendor/production delivery timelines
  • Service level to be achieved
  • Forecast error, that is, the deviation from the expected
    requirements

In standard SAP R/3 system, besides “VB – Manual
Reorder Point” and “VM – Automatic Reorder Point” MRP Type, there are also other
MRP Types that have reorder point as its basis to calculate requirement with
additional procedure which count external requirement (sales order and manual
reservation) as a requirement. The MRP Type are: “V1-Manual reorder point with
external requirements” and “V2-Automatic reorder point with external
requirements”.

b.Forecast-based
planning

In forecast-based planning, historical data is used in the
material forecast to estimate future requirements. These requirements are known
as forecast requirements and are immediately available in planning.

The
forecast, which calculates future requirements using historical data, is carried
out at regular intervals. This offers the advantage that requirements, which are
automatically determined, are continually adapted to suit current consumption
needs.

This procedure is used in “VV-Forecast-based planning” MRP Type in
standard SAP R/3.

c.Time-phased materials
planning

In time-phased planning, historical data is also used in the
material forecast to estimate future requirements. However, in this procedure,
the planning run is only carried out according to predefined intervals. If a
vendor always delivers a material on a particular day of the week, it makes
sense to plan this material according to the same cycle, in which it is
delivered.
This procedure is used in “R1-Time-phased planning” MRP Type in
standard SAP R/3.

Besides all procedures that have been explained above,
in SAP R/3 system we can create other procedures according to our own needs. We
can do it through configuration with SPRO T-code.