Midterm Flashcards
SAP Data Types
- Organizational Data
- Master Data
- Transaction Data
Organizational Data
is usually defined as part of the configuration process.
An example is a plant=1000, storage location=001.
Master Data
is relatively static or unchanged over a period of time.
Example, a customer name, address, telephone, fax, contact name, etc.
There are many master data objects in SAP.
Transaction Data
is the result from executing a transaction or data base entry. Transaction data will contain certain master data and organizational data elements. (data created in normal day running of business).
For example, customer A, ordered quantity B of material C for delivery of a specific date. This data will be entered in a sales order entry transaction.
There are many types of transaction data.
Name the types of data in any SAP ERP system
Organizational data, Master data, Transaction data
Plant: Definition
A plant is an organizational unit within a company.
A plant is a place where valuated goods and services are:
manufactured, stored, consumed, distributed.
A plant can be used to define a:
manufacturing facility,
central storage facility (distribution center),
corporate headquarters,
sales office
Which organizational level would be associated with the production and storage of valuated goods?
Plant
Storage Location: Definition
an organizational unit where various inventories or materials may be kept in a plant.
A storage location will typically but not always store:
raw materials,
component materials,
maintenance and repair (MRO) materials (-materials not consumed in product, ex. cleaning supplies).
Storage locations may also be referred to as a
warehouse
A material is
anything that can be used in trade {trade goods} (i.e. sold), produced, or consumed in a manufacturing process.
Some systems may refer to this as an item, part number, part, etc.
SAP’s term is material.
The Material Master
is the basic building block of all supply chain management activity.
A material may be described in SAP using many different parameters.
For example, you may describe a material by its description, weight, physical dimensions, inventory management policy, cycle time, etc.
The SAP material master object contains
over 900 parameters (fields) that may be used to describe a material.
Material masters are always defined with respect to
a material
AND
a plant
What is the main purpose of the MM (material master) for SCM?
1) basic building block
2) MM is a repository-bank has a repository where keeps $$ and the MM is where keep all the data you’d ever want to know in one place.
Transaction codes ending in
01–>
02–>
03–>
01–>create
02–>change
03–>display
Material Master Hierarchical Structure
covers the following organizational levels:
client
plant
storage location
The material master hierarchical structure makes it
easier to organize information on materials
and
minimizes data redundancy.
Material Master Client level
Material number
description
units of measure
technical data
(engineering/design data is managed mainly on a client level)
Material Master Plant level
MRP data
Work scheduling data
Purchasing data
Material master storage location level
stock quantities
Material master records are grouped according to:
industry sector
and
material type
the industry sector determines
which industry specific data appears in the material master record.
the material type determines
which departments can enter data and whether quantities and/or values are updated in inventory management.
TRUE OR FALSE:
A material that is built in more than one plant may share a common material master.
FALSE
A material description is an example of which level of the material master hierarchy?
client
A material master cost that will determine which departments may view and modify the data is
material type.
Material type
groups together materials that have attributes in common.
The material type controls
- which departments (views) are able to maintain material data.
- whether and how quantities and values are updated in the system
- whether the material is procured internally or externally
- which G/L accounts (for example, material stock account) are updated.
The industry sector determines
which branch of industry the material is assigned to.
The industry sector determines:
- which screens appear and in which order
- which industry-specific data appears.
Material Master: SCM Data views
Basic data view
Classification view
MRP view
Work scheduling view
Material Master Basic Data View
Material number multi-language descriptions base unit of measure cross-plant material status size, weight, and so on, drawing data indicator: configurable mat. indicator
Material master classification view
class type - 001 (material) class characteristic value
Material master MRP view
procurement type planning procedure (MPS, MRP, other) planning strategy lot size/safety stock rules indicator: backflushing plant-specific material status MRP group and controller Assembly/component scrap in-house production times indicator: repetitive manufacturing
Material master work scheduling view
issue unit of measure production scheduler indicator: batch management delivery tolerances in-house production times quality inspection indicator default receipt/issue storage location
Most SCM data is contained in the
MRP data views
The material master basic data view
contains client level data
The standard procurement type code used for buying from outside suppliers is?
F
F=
buy
E=
make
A company has two options for procuring materials: make or buy. Which MRP data view of the material master will the ERP system consider for this decision?
MRP 2
Which configurations are available for the material master?
- define new material types
- define display for data views by user-id
- re-orgainzation of data views
- determination of required fields
- definition of warning/error messages
Maintenance of the material master
- use of profiles to populate default value –a profile may be defined that will automatically populate certain MM fields with specific data.
- mass maintenance- allows mass changes to the MM by material type
- engineering change control-essential to document the history of changes to the MM.
The material management process-a number of business process difficulties in managing materials include
- inventory management–defining the best inventory policy and managing the inventory balance so there is adequate but not too much inventory.
- material selection–different material numbers that describe the same material. a material may be identified by more than one material numbers which means you are not getting the best price.
- material sourcing–too many sources for the same material. leads to not getting best price.
- inactive materials–having obsolete materials that are not currently in your products take up space on your database. purging inventory of inactive materials. identifying the replacement material.
- maintaining data in SAP–centralized vs decentralized data maintenance responsibility. inadequate IT security for data maintenance.
explain the role the material master plays in supply chain management
the material master is the central repository of all planning parameters for a specific material. Each supply chain department such as purchasing, scheduling, planning, will enter their planning parameters such as make or buy, lot size, lead time, plus many others.
if a material is defined at both a distribution center and a plant, what will be the procurement type field in the MRP 2 data view for each location?
For the plant, the procurement type will be E for in-house procurement.
For the distribution center, the procurement type field will be F for external procurement.
what is the purpose of the procurement type field in the MRP 2 data field?
to determine if the material is made in-house or bought from a supplier or in special cases, both.
The SAP ERP modules most related to the supply chain management are
PP (production planning)
SD (Sales & distribution)
MM (materials management)
The process of changing the performance without modifying the source code is called
configuration
Configuration is the process of
making (adapting) standard software to fit your business.
*does not change the source code though.
The number of tiers in the SAP ERP system
3 tiers
(R/3) Three-tier client/server architecture of SAP ERP system
Tier 1-client/user tier
Tier 2-application server
Tier 3-database serve
What is the highest organizational element in SAP?
client
The hosting university for this course is
the university of Wisconsin at Milwaukee
What is a client?
clients in SAP R/3
client=data
- A way to separate data in the system
- in some ways, a separate database
- also, a table entry
Name the four key organizational levels relevant to SCM
- client
- company code
- plant
- storage location
SAP SCM consists of several different applications.
What the two SAP SCM applications this course uses
- enterprise resource planning (R/3)
- Advanced Planned & Optimizer (APO)
ECC= ERP Central Component.
ECC (ERP) is the basis for a company’s software.
Enterprise resource planning (ERP) is the
integration of financial, manufacturing, & human resources on a single system=>cross-functional team.
1985 is when the first ERP systems started to become available.
- high initial cost (atleast $1million)
- high cost to maintain
- future upgrades
- training
- long implementation time (anywhere from 12-24 months)
enterprise (implies entire company->one system that meets needs of entire company) resource planning (ERP)
ERP systems are incredibly large, extensive software packages used to manage a firm’s business processes.
-Standard software packages must be configured to meet the needs of a company.
Database programs with following functions-input, storage/retrieval, manipulation, output.
Who are the big ERP software companies?
- SAP (Systems, Analysis and Products in Data Processing)
- Oracle (/PeopleSoft/J.D. Edwards (J.D. Orisoft))
- Microsoft (Great plains, aimed at smaller companies)
- Other minor players
True or False:
ERP applications such as SAP R/3 are used primarily for supply chain planning.
False
Non SAP SCM solution providers
- these applications may be integrated into SAP R/3 to form a “best of breed” solution-(includes some SAP software and some nonSAP software)
- The major companies in this arena are:
- -i2 Technologies
- -JDA (including formerly Manugistics)
- -Infor
- -Viewlocity
A joint engineering/marketing tool is the
Quality Function Deployment (QFD) or sometimes called the House of Quality.
In transition planning a company may employ the following strategies:
- price discounts
- promotions
- ramping down current production
- salvage sales to consolidators
NOT A STRATEGY–>false advertising
Transition planning (from old product to new product)
often a new product being introduced will be an enhancement to or a total replacement for an existing product.
Master data used in product definition process
material master bill of material master vendor master purchasing information record contracts scheduling agreements quota arrangements
Organizational data used in the product definition process
company code plant division sales organization distribution channel purchasing organization storage location warehouse
Product Definition Process (Diagram/Steps)
1) Understand customer specs.
2) Create engineering documents
3) define material sources
4) create material masters
5) Create BOM
Material masters is the
basic building block of supply chain management
Once the product is designed and the materials are defined, the next process is
the production definition process.
Leading edge companies use
Concurrent Engineering as a tool to reducing the overall product and production definition time.
A tool that may significantly reduce the time to market for a new product is
Concurrent engineering
In the production definition process,
a manufacturing company must first define its production process type before it can define more production details.
4 primary process types
- job shop
- process
- repetitive
- continuous
Job shop (production process type)
low volume
high variety
flexible equipment
intermitten production
Process (production process type)
medium volume
lower variety
flexible equipment
-intermittent production
Repetitive (production process type)
high volume
low variety
specialized equipment
Continuous (production process type)
very high volume
low variety
specialized equipment
continuous production
Master Data used in production definition process
work center routing (next 5 only for subcontracted services) -production resource tool(PRT) -purchasing information record -contracts -scheduling agreements -quota arrangements
organizational data used in product definition process
company code plant purchasing organization storage location warehouse
Production Definition Process (Diagram/Steps/flow?)
1) select process type
2) create work center masters
3) create routing masters
4) create PRT masters
5) link BOM to routing
6) link PRT to routing
the two major master data objects created in the production definition process are
work center
routing
Bill of material
is a complete, formally structured list of the components that make up a product or assembly.
the list contains a description and object number for each component, together with the quantity and unit of measure.
A bill of material will include the following for each component
material number
usage quantity
and unit of measure
-WILL NOT INCLUDE–>material supplier
True or False:
The BOM master is integrated with the sales order entry system
TRUE
name the three key organizational elements relevant to production planning
Company code
plant
storage location
BOM categories
material BOM sales order BOM WBS BOM document BOM equipment BOM Func. loc. BOM
BOM usage
production-operations engineering-technical data costing-price sales-order quantity plant maintenance-location data
area of validity
defines the valid uses of a BOM
BOM structure low level codes
low levels codes are stored on the Material Master.
Basic data 1 view in the information icon. they are used by MRP.
BOM structure
Header Item 1)sub-item 2)sub-item . . .
Which is NOT a valid level of the BOM master?
Client
-ARE valid levels of BOM master–>
header
Item
Sub-item
For a given plant, two different sets of component materials may be used to create the same material. In this case you would construct:
An Alternative BOM
and the BOMs constructed will have the same internal BOM number.
BOM technical types
Simple BOM
Alternative BOM
Variant BOM
The BOM technical type is stored
on the BOM header
Simple BOM
1 product with fixed set of material items
Alternative BOM
1 product with multiple sets of material items
Variant BOM
multiple products with multiple sets of material items.
Why use engineering change management?
monitoring and documentation of changes.
planning and execution at a specific point in time.
saving of several change states of the same object.
integration in the supply chain.
collation of changes that belong together: for different objects, for the same or different points in time, with special comprehensive documentation.
BOM reporting functions
Contents: BOM Explosion Structural display where-used lists BOM comparisons Mass changes product structure BOM browser
BOM deletion can be carried out using the
delete function deletion indicator. -You can: delete the entire BOM delete the item specified -BOMS can be deleted: without history with history using Engineering Change Management (ECH) =Authorization groups control who may perform a deletion.
The BOM Browser is a useful tool for
viewing BOMS
Types of purchasing master data in SAP ERP system
Vendor master purchasing information record contract scheduling agreement Quota arrangement
Vendor Master
contains the data of all vendors that a company conducts business with.
Purchasing Information Record
source of information on the procurement of a certain material from a certain vendor, like price, deliver, etc.
Contract
long-term agreement against which products or services are released (ordered, or called off) over a certain timeframe.
Scheduling Agreement
outline agreement on the basis of which materials are procured at a series of predefined points in time over a certain period.
No Purchase order is created**
Quota Arrangement
mechanism enabling the system to compute which source of supply is to be assignment to a requirement that has arisen for a material.
The vendor master consists of three levels of data
- general data
- company code data
- purchasing data
The vendor master general data
data that applies equally to each company code within your enterprise (address, telephone number, language in which you communicate with your vendor, etc.)
The vendor master company code data
data kept at company code level (payment transactions, number of control account, etc)
The vendor master purchasing data
data of importance with regard to your enterprise’s purchasing activities and which is kept at purchasing organization level (contact person, terms of delivery, etc)
Vendor Master Data
master records must be created for every vendor.
- contains centralized data for both MM (materials management) and FI (financial accounting)
- vendor master data can be entered from the MM or FI modules, or centrally.
- vendor master data is pulled from database when creating Purchase orders
True or False:
the vendor master is integrated to the sap financial accounting modules.
true
Partner roles
in the procurement process, there may be different business partners for different roles in the transaction.
-these partner roles are defined in vendor master data.
Purchasing information record contains
- data such as prices and conditions that you can store for the relevant purchasing organization or plant
- the number of the last purchase order
- tolerance limits for over deliveries and underdeliveries
- the planned delivery time (lead time required by the vendor to deliver the material)
- vendor evaluation data
- an indicator showing whether the vendor counts as the regular vendor for the material
- the vendor sub-range to which the material belongs
- the availability period during which the vendor can supply the material.
Purchasing information record allows buyers to
determine which materials have been previously offered or supplied by a specific vendor.
Contracts
a contract is a type of outline purchase agreement against which release orders (releases) can be issued for agreed materials when required during a certain overall time-frame.
Contracts may also be used for services.
-A purchase order is produced for each release order.
Scheduling Agreement
- can shorten processing times and reduce the amount of paperwork required for a material or services delivery
- one delivery schedule can replace a large number of discrete purchase orders or contract release orders
- scheduling agreements are used primarily for higher volume production when frequent deliveries are made by suppliers.
Quota Arrangements
- is an instrument used in sourcing administration.
- a quota arrangement divides the total requirement of a material over a period among certain sources of supply by assigning a quota to each source.
Which master data object does not require a purchase order to be created?
scheduling agreement
Vendor (supplier) evaluation
is the process of analyzing and assessing the performance of your external suppliers.
- it also constitutes a basis for vendor selection.
- venders are awarded scores for a number of different criteria. Vendors’ overall scores can be used to determine whether they are retired in or eliminated from your vendor base.
True or False:
purchase requisitions may be manually created.
TRUE
Purchasing Requisition Definition
a request by a user or a process such as MRP to the purchasing department for purchasing a material or service.
Purchase Order Definition
a purchase order is an official order sent by the company to a supplier for the delivery of materials or services
-a PO is a binding contract.
What purchasing object is an official document sent from a company to a supplier?
Purchase Order
Work Center Definition
an organizational unit that defines where a production activity should be carried out.
Work centers can be
machine(s)
people
production lines
Work centers have the following
defined capacity
shift start/end times
target utilization
A valid work center in SAP may consist of
people (employees)
machines
production lines
Example of work center
a location where value-added work needed to produce a material is carried out.
Work center categories
capacity planning routing SOP statistics plant maintenance quality management repetitive manufacturing production
Business process issues related to work centers
how to define your plant's work centers? definition of alternate work centers capacity planning setup time sequencing orders
Work center usages
- description
- location
- hierarchy
- scheduling
- -formulas
- -wait times
- costing
- -cost center
- -activity types
- available capacity
- -capacities (machine, personnel, set-up,…)
- -available capacity cycle (normal working, reduced working from/to,…)
- -shift sequences
- -shifts
- default values
Work centers determine
the place where the operation is to be executed.
Work center Data
General data default values for routing capacity data scheduling data costing and human resources data
Work center data basic data
-basic data
name and description
standard value key
work center default values for routing data
-default values
control key
standard text key
wage data
work center data capacity data
-capacity
available capacity
formula keys
work center data scheduling data
-scheduling
scheduling basis
wait and move times
formulas
work center data costing and human resources data
-assignment
cost center
activity types
formula keys
Work center integration
- scheduling->working time formulas
- cost center->activity types formulas
- work center (QM)->inspection characteristics
- routings->default values. standard value key.
- capacity planning->available capacity formulas.
- more control options: goods movements, confirmation,…
the standard value key and formula keys in the work center form
the basis for scheduling, capacity planning, and costing.
Standard values are the
planned activities to take place at a work center during the execution of an operation.
Control key=central control element in operations.
control key is a required field in operations.
control key can come from work center
-reference or
-default
which field in the work center will define the control elements for an operation performed at that work center?
control key
Standard text for operations
- definition:a template is a standard text.
- use:frequently repeated description of a production cycle.
- application:work center (default). work operation.
A setup time activity on a work center will be defined by its
standard value key
the valid capacity categories that may be defined for a work center include
storage
labor
machinery
What type of SAP data are factory calendars?
organizational
all factory calendars will NOT contain the
same public holidays.
Work center links
position
people
qualifications
cost center
Queue Time
is the time an order will wait until it is processed at the work center.
SAP uses queue time in scheduling.
SAP allows for 2 queue times to be entered for each work center:
- Standard queue time (used if order is on schedule)
- Min queue time (used if order is behind schedule)
Move Time
is the time required to move an order from one location to another location.
each work center is assigned to a location in a plant.
move time is define in configuration as a matrix.
Work Centers/Capacities -Reports
- Mass Changes->replace work centers with changes to the default values, standard values, and activity types.
- evaluations->
- -list of work centers.
- -cost center assignments
- -work center capacities
- -work center hierarchies
- -work center/capacity usage
- -change documents
SAP defines a Task List as
a series of steps or process flow that will complete a task.
Some examples of tasks involved in supply chain management are
production of materials
inspections of materials
maintenance of equipment
the task list that is most often used in a job shop production environment is a
Standard route
A task list is
an object that describes a list of things to be done.
SAP Task Lists
SAP R/3 supports the following types of task lists:
- Routing (used for job shop production)
- reference operation set
- rate routing(used for repetitive production)
- maintenance task list
- inspection plan
- standard network
- master recipe (used for process industry)
Routing-definition
a task list that enables you to plan the production of a material.
the various activities involved in completing a task are referred to as
operations
a routing must have
atleast 1 operation (i.e., activity) and as many as needed to describe the production process.
Each operation is assigned a number.
Each operation on a routing must reference:
- the work center where the activity will take place
- the time required to complete the activity at that work center.
Routings are integrated into which other SAP module(s)
Financials (costing)
Capacity planning
A routing MAY have
more than 10 operations.
Business process issues related to routings
- accuracy of operation times (setup, machine, labor, etc.)
- identification of alternate sequences
- confirmation steps
- planning for yield losses
- planning for rework
Routing usage
- production/assembly
- -times
- -control data/texts
- -PRTs
- -material
- -quality assurance
- scheduling
- capacity planning
- costing
- -production costs
- -production overhead costs
A routing group number is assigned
by SAP
One routing can be used to produce several materials.
A routing does NOT have a one-to-one relationship with a specific material.
Each material does NOT have its own unique routing
Scrap categories
component scrap
assembly scrap
operation scrap
Component scrap (Effects)
- increases required quantity of a component
- maintained in BOM or material master of component
Assembly Scrap (effects)
- increases required quantity of all components
- maintained in material master of assembly
Operation scrap (Effects)
- reduces operation quantity of subsequent operations.
- maintained in routing
A material may have multiple BOMs and/or multiple routings.
since there are some acceptable and some unacceptable combinations of BOM and routing, a method is needed to distinguish between the two.
Production Version is a method of
defining acceptable BOM/routing combinations and under what circumstances which should be used.
Production Versions are a hard requirement for several SCM solution areas:
- APO
- process solution (R/3)
- repetitive manufacturing (R/3)
The production version determines the various production techniques that can be used to produce a material; it specifies:
- the BOM alternative for a BOM explosion
- the task list type, the task list group, and the group counter for the allocation to task lists.
- lot-size restrictions and area of validity.
True or False:
A production version is required for discrete manufacturing (job shop)
FALSE
A production version will link which two master data objects together?
BOM and Routing
The areas of validity for a production version may be
lot size range and date range.
A production version may be viewed through the
material master
There are several different types of independent demand that may or may not be relevant to Material Requirements Planning:
- customer demand (sales orders)
- planned independent requirements (forecast)
- stock transport request
In effect, demand management acts as
a funnel to translate requirements or forecasts from a number of different sources to which Material Requirements Planning (MRP) and Master Production Scheduling (MPS) can plan.
The result or output of Demand Mangement is
a Net Requirement to MRP
Demand management is
directed and governed by fields in the Material Master, primarily the Requirement Strategy field.
The output from demand management will feed
MRP
Demand management in SAP primarily works with what type of demand?
independent demand.
Demand management - definition
planning of requirement quantities and requirement dates for finished products and important assemblies, and definition of the strategy for producing or procuring a particular finished product.
The output(s) from demand management are:
planned independent requirements (PIR)
net quantities
required dates
Production types
make to stock
make to order
assemble to order
Make to stock
in a make-to-stock strategy, inventories must be on-hand before the demand arrives.
the retail industry and many other industries use this strategy.
Make to Order
in a make-to-order strategy, inventories are not planned until an order arrives.
The aerospace and defense industry uses this strategy.
Assemble to order
in an assemble-to-order strategy, semi-finished and raw material inventories must be on hand prior to the arrival of actual demand.
However, finished product inventories are not planned until demand arrives.
The computer industry uses this strategy.
The planning strategy represents
the procedure for what triggers quantity and timing of production of a material.
A material production may be triggered by:
a forecast only
a combination of a forecast and a customer order
a customer order only
what determines the planning strategy deployed is the
businesses’ demand fulfillment method (i.e., make to stock, make to order, assemble to order)
The potential inputs into the demand management function in SAP include
material forecasts
sales plan
production plan
manual entry
Forecast consumption also known as forecast netting is
the process of automatically adjusting the forecast to reflect actual customer orders that have been received.
The objective of the forecast consumption is
to reduce the possibility of over-producing.
Planning strategies
- planning uses planned independent requirements.
- deliveries for sales orders are taken from the warehouse stock.
Make-to-stock Planning
- Planning with final assembly–>STR 40
- Make-to-stock Production–>STR 10
Strategy 10- Make to stock
- strategy 10 is appropriate when the following conditions exist:
- -product cycle time > time customer willingness to wait.
- -production volume is high and repetitive.
With strategy 10 Demand management will NOT consume.
it ignores any customer orders and allows the full forecast to be passed to MRP as net demand.
Strategy 40- Planning with final assembly
Strategy 40 CONSUMES forecast.
- planning at finished product level using plnd ind. reqmts.
- sales orders consume planned independent requirements.
A strategy group in SAP that will consume the forecast is
strategy 40
Demand management strategies are defined on
the material master.
Sales order
a sales order is a contractual agreement between a company and a customer to deliver material or services at an agreed price at a specific time.
Demand management will never
“consume” a sales order.
Available to promise
-one of the potential checks that can be performed during a sales order entry.
Available to promise (ATP) is
the calculated warehouse stock that is available to promise to any future customer (sales order).
ATP is a highly configurable function within SAP.
Stock/Requirements List (MD04)
is a very important transaction for supply chain management.
-it will display in ascending time sequence all the demands (requirements) and supplies (stocks) for a material.
Replenishment planning is a
major activity in any supply chain management business function.
A variety of replenishment planning techniques are available in SAP R/3 and APO.
All replenishment planning techniques basically attempt to answer the following questions:
- what materials to buy or make (what materials should be purchased or produced)
- how many to buy or make (how many should produce or buy)
- when material should arrive (when will new supplies be needed)
- when should we start making or buy the material (who should we buy from or where should we produce the material)
-DOES NOT ATTEMPT TO ANSWER–>how to store material made or purchases.
Replenishment planning techniques- basic techniques
visual re-order point master production schedule material requirements planning (MRP) distribution requirements planning (DRP) kanban
replenishment planning techniques-advanced techniques
linear programming
other heuristic-based techniques
independent demand
- generated by customer orders for finished product.
- fairly stable..after allowances for seasonal variations.
- requires inventory to be carried continually.
Examples of independent demand in SAP include
forecasts
customer orders
Dependent demand
- generated from higher level items
- lumpy..not dispensed uniformly.
- requires inventory just prior to need.
month 1:push mowers
month2: mulching mowers
month3: tractors
- –>special parts used for just one item.
Dependent demand is calculated from
higher demand.
Historical Handling of Dependent Demand
- Difficulty of ordering & scheduling assembled products…
- -Enormous task of…
- Setting up schedules
- Keeping track of large numbers of parts & components
- Coping with schedule & order changes
- –Using inventory techniques for independent demand
- –>excessive inventories!!
Material Requirements Planning (MRP)
computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, & raw materials
MRP supplies the answers to
what is needed
how much is needed
when is it needed
Material Requirements Planning (MRP)
Producing or purchasing the RIGHT materials
at the RIGHT time
& having them available at the RIGHT places
Material Requirements Planning (MRP)
- Creates schedules identifying…
- -Parts & materials required to be purchased or manufactured
- -Time of order release
- -Size of order or production quantity
- Keeps track of inventory levels
- Serves as link between inventory, purchasing & production
MRP assumptions
infinite capacity
fixed lead times
MRP Level-By-Level Planning
Ordering, fabrication, & assembly scheduled for…
- Timely completion of end items
- keeping inventory levels reasonably low
MPR Inputs: Master Production Schedule
time-phased plan specifying
timing & quantity of production for each end item
Master production schedule (MPS)
The master schedule states which end items are to be produced, when they are needed, & in what quantities.
The quantities in a master schedule come from a variety of sources, including customer orders, forecasts, & orders from warehouses to build up seasonal inventories.
The master schedule separates the planning horizon into a series of time periods or time “buckets,” which are often expressed in weeks.
However, time buckets need not be of equal length.
In fact, the near-term portion of a master schedule may be in weeks, but later portions may be in months or quarters.
Usually, plans for those more distant time periods are more tentative than near-term requirements.
MRP Inputs: Master Schedule
Cumulative lead time:
sum of lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly
MRP Inputs
- Bill of Materials (BOM): listing of all of raw materials, parts, subassemblies, & assemblies needed to produce one unit of a product
- Product Structure Tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels
Inventory records
include information on status of each item by time period
- Gross requirements
- Scheduled receipts
- –Make & buy parts
- Amount on hand
- Lead times
- Lot sizes
- And more …
MRP Processing
Gross requirements Schedule receipts Projected on hand Net requirements Planned-order receipts Planned-order releases
Assembly Time Chart
- Projected on-hand inventory: expected amount of inventory that will be on hand at the end of each period
- Gross Requirements: total expected demand for item or raw material in a time period without regard to amount on hand
Projected on-hand in period t=
(projected on-hand in period t-1) - (gross req. in period t) + (scheduled receipts in period t)
Assembly time chart-planned order receipts
Planned Order Receipts: quantity expected to be received by beginning of the period in which it is shown
assembly time chart-planned order releases
Planned Order Releases: planned amount to order in each time period (procurement or production)
- -Multiple of specific quantity (batch size)
- -Quantity needed at that time
MRP Controlling master data
how is a material to be planned in R/3?
- -based on independent requirements
- -additional control using requirements strategies (MRP3)
the value in the MRP type field on the material master that will allow standard MRP to run is
PD
If a fixed order quantity of 50 is defined as a lot size data value and there is a net requirement of 150 with no existing inventory then MRP will create
3 planned orders for 50 each.
Using basic scheduling, what master data object is read?
material master
the results of an MRP may be viewed through the
MD04 transaction.
the two major master data objects created in the product definition process are
material master and bill of material master
what master data is used in the product definition process
material master and BOM master
what organizational data types are used in the product definition process?
company code plant purchasing organization storage location warehouse
the material planning process is critical for
those industries where products contain many sub-assemblies and components.
absolute requirements for good material planning include
accurate Bill of materials accurate inventory balances accurate open order due dates accurate configuration management accurate forcasts
the primary objective of material planning is
to identify and resolve material shortages BEFORE they impact production.
