MRP: Material Resource Planning

1. MRP: Material Resource Planning Contents: • MRP Fundamentals • MRP Wizard

2. MRP:Unit Objectives At the conclusion of this unit, you will be able to: • Describe the complete MRP Process in SAP Business One • Managesales forecasts in the system • Use the MRP wizard • Display the list of all MRP recommendations with the order recommendation report

3. MRP:Business Scenario • You are selling items that have to be produced and other items that have to be purchased. • You do not always have enough of them in stock. However, you want to make sure that you can serve your customer’s needs as often and as fast as possible. For this reason, you have to plan ahead. • You want to be able to react quickly. On one side, you need to createsales forecasts while on the other side, you need to see what your stock, receipts, and requirements looks like. • You want the system to make recommendations about how you should react to different situations concerning various items.

4. MRP Fundamentals:Topic Objectives At the conclusion of this topic, you will be able to: • Describe the fundamentals of MRP such as the bill of materials processing, the lead time, and the item master planning data

5. MRP Overview • Item master record:Procurement Methodfield on the Planning Data tab to define whether an item is a produced item (Make) or a purchased item (Buy). stock / receipts Purchase Order 30 pcs. before MRP-run: this is the current inventory status and planned forecasts for a purchased item. Stock 20 pcs. time Sales Forecast 30 pcs. Sales Order 40 pcs. Sales Forecast 50 pcs. requirements Material Requirements Planning stock / receipts Purchase Order 30 pcs. after MRP-run: the MRP-run creates recommendations for purchase orders (P.O.*) to be able to fulfill the requirements. P.O. *) 30 pcs. P.O. *) 20 pcs. P.O. *) 20 pcs. Stock 20 pcs. time Sales Forecast 30 pcs. Sales Order 40 pcs. Sales Forecast 50 pcs. requirements

6. MRP BOM Processing before MRP-run: There is a requirement for 10 skateboards from a sales order. The skateboard is a produced item. The board, the wheels and the axis are purchased items. Skateboard Wheels 4 pcs. Board 1 pc. Axis 2 pcs. Sales Order Skateboard 10 pcs. Material Requirements Planning after MRP-run: The MRP creates recommendationsfor aproduction order for the skateboard and recommendations for purchase orders for all the purchased items. Production Order Skateboard 10 pcs. Purchase Order Wheels 40 pcs. Purchase Order Axis 20 pcs. Purchase Order Boards 10 pcs.

7. MRP Lead Time Lead Time (in item master record on the Planning data tab) - is the number of days to calculate how long it takes to produce an item Skateboard Lead Time: 10 days Wheels Axis Board Sales Order Skateboard Delivery Date: 30.11. Material Requirements Planning Production Order Skateboard Purchase Orders boards, wheels, axis stock / receipts time 10 working days 30.11. 16.11. Sales Order Skateboard MRP Requirements boards, wheels, axis requirements

8. Item Master: Planning Data Item Master Data Item Number P1001 Description Skateboard … Planning Data Planning Method MRP / None Procurement Method Make / Buy Order Interval Weekly / Monthly / … Order Multiple 12 Minimum Order Qty. 10,00 Lead Time 10 Days None = not planned and no production order and purchase order recommendations are created for the item)

9. Forecasts - to planpurchase and production in advance, even before you receive actual sales orders Item Skateboard Start Date 01.09. EndDate 31.12. View monthly stock / receipts 31.12. 01.09. 01.10. 01.11. 01.12. time Sales Forecast Skateboard 50 pcs. Sales Forecast Skateboard 40 pcs. Sales Forecast Skateboard 20 pcs. Sales Forecast Skateboard 60 pcs. requirements

10. Forecasts – Setting in Administration module

11. MRP Input / Output Input Inventory Forecast Parent Production Order – expected receipts Sales Order / AR Reserve Invoice Planning Data from Item Master Purchase Order / AP Reserve Invoice – expected receipts Parent Dependant Requirement Bill of Material Material Requirements Planning Output Production Order Purchase Order

12. MRP Wizard:Topic Objectives At the conclusion of this topic, you will be able to: • Work with MRP wizard • Run MRP in the SAP Business One system

13. MRP Wizard Process MRP Wizard Step 1 Step 2 Step 3 Step 4 MRP Scenario Scenario Details Data Source MRP Results create a new or select an existing scenario define the planning horizon and the items define the data source • Item • Initial Stock • Receipts • Gross Requirements • Final Stock MRP- Run Existing Stock Purchase Orders Sales Orders Production Orders Minimum Stock Level Forecast Warehouses Scenario Description Simulation Planning Horizon Items Display Preferences MRP Scenario Name Description Order Recommen- dation Report Purchase Orders Production Orders

14. MRP Results MRP Results Planning Horizon 25.09. - 30.09. Display after MRP # Item No. Past… 25.09. 26.09. 27.09. 28.09. 29.09. 30.09. 1 P1001 10 Initial Stock Receipts Gross Requirements 10 click Final Stock dead periods - its lead time is too long to permit timely procurement Pegging Information – P1001 Item Code P1001 Source Type Due Date Quantity 17 Sales Order 28.09. 10

15. Order Recommendation Report Order Recommendation Create Order Type Item Quantity Due Date Vendor Purchase Order A1019 40 21.09. S1007 Purchase Order A1020 200 21.09. S2100 Production Order P1001 50 15.10. Purchase Order SupplierS1007 Delivery Date 21.09.Item No. A1019 Quantity 40 • >>From MRP Wizard, choose GoTo  Open Order Recommendations • >>Choose MRP  Order Recommendations Production Order Product No.P1001 Due Date 15.10.PlannedQuantity 50

16. MRP:Unit Summary You are now able to: • Describe the complete MRP Process in SAP Business One • Manage sales forecasts in the system • Use the MRP wizard • Display the list of all MRP recommendations with the order recommendation report