Re Order Point planning - does it work from OrdRes only?

[rh203]

Hi,

I have been looking for a solution to create a more 'pull' - based procurement system for lower level materials within SAP in order to replenish components based on a set re-order point using confirmed process orders (OrdRes) rather than including all confirmed elements and Dep Req's as we currently do.

I had looked at the Kanban setup, however ROP planning appears to be match my requirements much more closely.

I have a few simple questions on the setup if someone would be so kind to help me understand ROP a bit better.
1) If I were to set up a manual ROP within SAP, plus a Safety Stock setting, would MRP only plan against confirmed elements (in our case, Process Orders) within the system or would it also include unconfirmed elements (Dep.Req's, in our case) in it's calculations?
2) If the answer to the above question is Yes, can we also ensure that MRP will run on DepReq's beyond the planning time fence (or other set time fence parameter) in order that the system calculates (un-firmed) schedule agreements for long term planning requirements (18-Month Supplier Capacity confirmation process)
3) What would be the normal method of setting up planning time fences for materials? Would we set up a 1-day time fence or would this depend upon our ordering patterns per supplier / code?

Thank you in advance for your support

[Ramarao]

>> Manual re-order point plus safety stock

Manual reorder point is just a static number, and the actual stock on hand should fall below it to trigger replenishment. This number should be greater than or equal to safety stock - so safety stock won't add on top of it.

>> 1) If I were to set up a manual ROP within SAP, plus a Safety Stock setting, would MRP only plan against confirmed elements?

"Confirmed" is not the word - that would actually mean "completed" process order. May be you mean "firmed" to distinguish it from "planned order" but the word process order itself means it is a firmed element (passing OrdRes rather than DepReq for its component materials). In fact there is a class of "firmed" planned orders (the true meaning of the term as defined by SAP) which are in a way in between the "unfirmed" MRP proposals and "converted" process orders (You can look at MRP output, firm them as first step, and then convert at a later time).

Anyways to answer your question, ROP won't consider either DepReq (firmed or unfirmed planned orders), or OrdRes (process orders). It strictly goes by stock on hand.

>> 2) If the answer to the above question is Yes, can we also ensure that MRP will run on DepReq's beyond the planning time fence

The answer was a no, therefore this question is invalidated.

>> 3) What would be the normal method of setting up planning time fences for materials?

SAP uses the term "planning time fence" in a very restrictive sense, and I get a feeling this is not what you're referring to.

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There is another MRP type termed "manual reorder point with external requirements" which probably is closer to your expected behavior. Settings inside this can allow or disallow planning for "reservations" and that too within the "replenishment horizon" - this is a time period defined per plant or per MRP group (and not per material) in customizing and it is not related to 'planning time fence" which is defined at material level within a plant inside material master. But to your point, there is not a way to include dependent requirements into the calculation here. Only order reservations, YES or NO. (and there are others, but not DEPREQs)

hope this helps

[rh203]

Hi Ramero,

Thanks very much for your reply - very helpful

In response to the 'confirmed' order question, you are correct - I do mean OrdRes (Firmed elements)

However, you do say that it is not possible to include these within the ROP calculation, but according to SAP's guide it is:

Reorder Point Planning with External Requirements

In certain circumstances, however, it is necessary to include sales orders and/or manual reservations in the net requirements calculation for reorder point materials. In this case, two further MRP types are provided in the standard system (an MRP type with manual reorder point planning and one with automatic reorder point planning). For these two MRP types you use the indicator Include external reqmts to indicate that sales orders and manual reservations in the replenishment lead time are to be included in planning. If you not only want these two requirement elements to be included in planning in the replenishment lead time but over the total planning horizon, you must change the indicator Include external reqmts in Customizing for MRP for the appropriate MRP type.
As of Release 4.0, it is possible to define which requirements, in addition to customer requirements and manual reservations, the system is to include in MRP when using these two MRP types. To define which requirements, select the appropriate fields in Customizing. You can choose from the following requirements:

Stock transfer requirements based on purchase requisitions, purchase orders and scheduling agreements for stock transfers
Dependent reservations based on production orders, maintenance orders and networks
Requirements for subcontracting[color=#4040FF][/color]

I understood that VB only looked at stock on hand, but V1 would take S/orders and OrdRes into consideration? - is this not correct?

[Ramarao]

Rh

You're right about VB vs V1 - you mentioned earlier about "manual ROP" which is VB to me - and I wrote about V1 towards the end of my earlier message please check.

-Ramarao (and not Ramero).

[rh203]

Hi Ramarao,

Apologies for the spelling previously

Thanks for your reply, the issue I am having is NOT that I want to include DepReq's in the ROP calculation - I do not want them considered in the calculation but I do want them to still be displayed within MD04.

The reason for this is that we use transaction ZC084 (Vendor Scheduling Report) in order to provide each supplier with a Monthly Volume outlook for each code sourced from them and without DEPREQ's flowing in the system, we cannot do this.

Is this something that can be enabled within customizing within SAP or is it completely impossible to do?

Thank you

[Ramarao]

Well, I think you need to word your question more clearly -- you asked about "MRP including unfirmed requirements" earlier, whereas now you're talking about "displaying".

creating dependent requirement is not part of "planning" but a prerequisite to it. for V1 MRP type I don't think a dependent requirement is even created in the system - because it is not relevant to planning. And to my knowledge, there is not a way for you to enable this.

And your "z" report is your own customized report, its not SAP standard so we do not know what it does.

But if you want to provide an outlook of demand to your suppliers, why are you using a V1 MRP type? This seems to be a flaw in the business process - and looks like a wrong tool is selected.

[rh203]

Hi Ramarao,

Apologies for not being clear - I'm learning as I go along with this one as I'm not a trained SAP KU so am trying my best .

As for your query as to why we would want to provide long-term requirements to suppliers when we are looking to operate using a ROP strategy, I completely understand what you are saying.

However, our business process requires us to confirm CAPACITY with suppliers (not firmed long-term orders), therefore meaning that having DepReq's flowing (but not being considered within MRP calculations) is essential to provide each vendor an 18-Month outlook for our planned requirements for which they can confirm capacity. Then, at the point of orders entering the critical lead times, we would trigger replenishment through a 'pull' scenario using ROP planning based on actual consumption.

I hope this makes sense

I noticed that someone mentioned from a google search that it may be possible by doing the following:

To get the dependant Requirements check you have allowed to put Collective Requirements 2 in MRP view 4 in the material master.The Bom level should be atleast 2 to get the dependant requirements.

Does anyone now if this is possible?

[Ramarao]

RH

There is a bit of mis-modelling here if you allow me to say it. "PLANNING" wise you need a look-ahead strategy and V1 falls short of it. Execution, however, you need something that can be triggered only when stock falls below a certain level.

MRP is mainly for planning - so using a V1 stragegy would be incorrect here. You need PD or some such normal MRP type- and then for CONVERSION (to production orders) you need a mechanism other than MRP - to me, Kanban with internal production looks like a good idea - something like, when a floor Kanban turns EMPTY it automatically creates a PRODUCTION ORDER and then next time when MRP runs it will reduce the open planned orders to that extent. You may even try P1,P2,P3 or P4 with planning time fence, along with Kanban triggered Production orders - so that no other planned orders even exist within the time fence (SAP help is quite good and at a very FUNCTIONAL (not technical) level about these topics, please read)

And "NO" to touching collective requirements indicator. That's another whole different concept and you don't need to get into that for the current question - I advise you to stay clear of it to keep focus on the current topic.

[rh203]

Hi Ramarao,

I completely agree with you, but...... We cannot physically get access to the Kanban transactions within our SAP setup. The company I work for is P&G and we are bound to Hewlett Packard and their KU's - we do not have access to Kanban as it is not supported by the business experts - hence the setup I am trying to put in place with our current MRP setup.

I hope this makes some sense

[Ramarao]

RH

You need to keep things separate in order to solve them one at a time. MRP type is for you to do planning ahead, not for triggering floor execution signal. Kanban is better suited for that (I do see a couple of "other" topics about Kanban from you) but whether you do Kanban or not for execution is not relevant for the current topic.

As far as current topic goes, using a consumption based V1 MRP type is not going to give you depdendent requirements in the system. If you need to get dependent requirements.

You may want to look at "storage location MRP" as an alternative to Kanban for the floor location - with a V1 in it. But the main plant level must have forward looking MRP type (P1 or P1-P4) to give a sense of DepReq that you need, to the suppliers.