What is the purpose of MRP calculations?

MRP offers various benefits in SAP to support the planning and procurement processes in an organization. The following are some of the benefits of SAP MRP. 1. Optimized Inventory 2. Improved Production Planning 3. Cost Reductions. 4. Enhanced Visibility 5. Accurate Demand Forecasting - this is now accompanied by multiple add ons 6. Streamlined Procurement Processes 7. Reduced Lead Times 8. Integrated Data:

How MRP Works? Include priority sales orders into MRP run. According to the BOM, MRP will generate the final requirement after calculating on hand raw materials, semi finished, finished and ready to use components vs required quantities for included sales orders into MRP run. Benefits of MRP: Easy and quick integrated list of required raw materials and components. Optimized planning for inventory management by not ordering excessive raw material or under planning of required components. Ready list of purchasing requirement for EDI review for the organization having SRM. Planners can plan Just in time deliveries of purchasing items for inventory and cost management. Production capacity planning for critical and not critical components.

The MRP is a key module that basically helps to check on the health of a supply chain. A well maintained parameters is the secret of a well functioning MRP software. It offers many advantages such as : - A data base for the BOM. - A delivery schedule according to materiel LT, batch size, security days and frequency of delivery. - Enhancing on time deliveries. - Reducing raw material. - Measuring inventory level. - A dashboard for procurement teams. - Visibility on forecasted demands that may improve savings. Whilst the pros list is longer, to make a good use of it a relevant input data accuracy is a must.

MRP is tool like a gun. Depend on the person who could fleksibel set up parameter. Due a change of environment. Sometimes with the spoil with this system, the track already mis from the target

With any MRP system, the data needs to be set up correctly throughout the BOM. The crucial data for both make and buy items are the leadtime, planned safety stock, and planning lot sizes. These items are critical to control production assembly and procurement functions within the plant. These items affect timing of raw material delivery, inventory, and production assembly to ensure on-time delivery to the customer. An MRP system is either driven by firm sales orders, planned forecast from sales or a combination of both. This drives the demand through the BOM backward scheduling the subassembly production and component’s. If the data is correct, the MRP system integrity will optimize production, labor capacity, and inventory.

> Identifying Requirements to meet the demand >Check inventory and resources >Scheduling Production >Identifying issues and adjusting it accordingly

Maintain Material Master Data: Material information accurate and updated Create Bill of Materials: Clearly define BOMDefine Work Centers and Routings: outline production processes (to get lead times/capacities) Set Planning Parameters: Lot size, safety stock levels, reorder points, and planning horizon Run MRP Planning: Execute MRP to analyze demand, inventory levels, and lead times, generating procurement proposals and dependent requirements. Review MRP Results: Analyze and review Convert Planned Orders: Monitor and Adjust: Integrate with Other SAP Modules: Continuous Improvement: Implement ongoing improvements based on insights gained from MRP results, refining parameters and processes to enhance efficiency and responsiveness.

> Stock > Purchase orders, production orders and sale orders >Safety stock, MRP type, Lot size, Proc type >Source of supply, Agreements, contracts.

Accordingly to my experience the main difficulty during implementation of any MRP systems is to enter in the system all the parameters that able MRP to run properly. MRP main parameters (list is not exhausting) to be entered in the system are: inventory, bill of material, customer orders, safety stock, purchasing/production lot, lead time, reorder point...

The biggest problem is the safety stock How do you determine safety stock levels 1 Minimum safety stock level for uninterrupted production versus cost of shut down of production (If you take chemical industrie cost could be very high. 2 Time to resume production (Hours? days? week?) combined by loss of business and long time effects of perceived "reliability" by customers. 3Draw back of higher inventory is the risk of variation of price of supply in time. For this reason all MRP systems have to be very carefully calibrated because one event can wipe out all years of accumulated advantages especially when cost of capital is low.

> Addressing the issues on time > adjusting schedules based on the need > Right lead times and source of supply > Demand with required dates > Monitoring exceptions and safety stocks

Supply chain management is one of the biggest risk areas of using MRP as part of your lean manufacturing strategy. In many cases, if you are working in a lean/JIT culture, you are shifting a big part of your inventory management to your vendors- so any sudden spikes (or drops) in demand have to be communicated asap to allow your suppliers to respond. Consequently, economic and geopolitical trends need to be continually monitored for risk elements that require real-time adjustment to managed inventory levels in your supply chain.

One thing I've found helpful is being able to do MRP multiple times a day. In this way the needs and output of the MRP are always aligned with changes in customer orders. Having to manage multiple outputs per day, however, requires robust data management and storage capacity, as well as considerable automation in sending orders to suppliers or to production.

Complex systems don't work efficiently (Dr Goldratt). The main task of management is to simplify the MPR system as much as possible without loss of efficiency, based, for example, on the following principles: 1) placing orders to suppliers as quickly as possible only with a forecast for the near future (dynamic buffer); 2) the longer the warehouse replenishment time, the higher the uncertainty; the main task is to focus on quickly replenishing actual consumption; 3) the concept of a central warehouse with frequent replenishment of branch warehouses according to actual demand

> SAP MRP with MRP Live > PPDS planning for detailed planning and scheduling > AATP- Advanced planning > IBP > Kinaxis Rapi response > Blue Yonder > O9

MRP started life in the 50s when supply chains/products were straightforward, local and customer tolerance time was low amongst other facts. How many tubes of toothpaste could you buy back then as opposed to now? There is a place for MRP but there are limitations and it causes so much noise due to the dependencies through the network and the BOM. Newer methodologies are available

I think one of the biggest things that MRP mandates is that the barriers between different parts of an organization be removed to facilitate the level of communication needed for it to work. Barriers that can reduce efficiencies in production and procurement as well as giving greater knowledge to customer facing teams, reducing the likelihood of overpromising and underdelivering.

Além de garantir todas as dicas do artigo, é importante saber o que fazer com os dados. Utilize as informa??es e indicadores gerados para a melhoria contínua.

The forecast gives only partial information We can assume that we will sell 1000 pcs next month, but it is not a fact, it is an average of sales. The main benefit of the forecast is not that, but that we know that we are unlikely to sell 2000 pcs. The average is not enough to make a decision. We kind of compromise - we choose what is more profitable for us - to satisfy 100% of demand, or to save money on excess inventory - if money is more important for us. Example: supermarket - what is more important to lose money on stale bread or not to satisfy "late" customers in bread. As a rule, they choose the second one. This once again confirms that forecasting is not enough to make a decision.

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