A Journey Through the World of SAP S/4HANA Production Planning and Manufacturing – Part 2
Material Requirements Planning in SAP S/4 HANA
Production planners have the task of assuring a material’s availability when needed. MRP (Material Requirements Planning) was designed to help with this task. Material planners need to have information about sales orders affected by material shortages, for which customers, and how much time is needed to solve the issue before the shortage causes a delay in delivery times.
MRP guarantees material availability by determining material requirements and shortages. These can be met by replenishment processes such as in-house production or external procurement. It procures or produces the requirement quantities on time, both for internal purposes and for sales and distribution, from the right supply source.
When Bill of Materials (BoM) are used, their entire structure regarding quantities and dates must be considered to have adequate and cost-effective planning. To do this, monitoring requirements and automatic creation of replenishment proposals for purchasing and production are involved in the process.
When using MRP, the system carries out net requirements calculation to determine whether a material shortage exists for a certain material. It compares existing requirements (such as sales orders, independent requirements, reservations, etc.) against inventory and existing or planned goods receipts. Replenishment is needed when requirements exceed inventory and planned goods receipts.
For in-house production, the system creates planned orders to produce the required quantities. These are later converted into production orders after operations planning.
For external procurement, the system creates a purchase requisition or schedule lines to indicate a need for purchasing goods. These purchase requisitions can later be converted into purchase orders or lines of a scheduling agreement.
A planned order can also be created for a material that has a mixed replenishment type. These planned orders can be converted either to a production order or a purchase requisition.
MRP Live is a new feature delivered in S/4HANA starting from version 1511.
With classic MRP, it was difficult to obtain real-time information of requirements, due to the time-consuming activity of MRP execution. For a single material that considers a total view of supply and demand across multiple sites, material planners would make decisions based on outdated information. Data was selected from different application areas and consumed a lot of database resources. MRP usually takes hours to complete, so it is common for it to be scheduled outside working hours. The approach was to process and validate each record selected from the database and afterward save it into an internal table, before selecting a new record from the database.
This logic worked very well with the old relational databases, but a particularly important feature in SAP HANA, parallelization, would be underutilized if the same logic were to be applied. Due to the multicore parallelization functionality that comes with SAP HANA several tables can be selected and processed at the same time. For this reason, SAP decided to redesign the MRP logic to achieve maximum performance using HANA database procedures. Now, the entire database selection is triggered at once and SAP HANA can use the power of parallelization to improve MRP performance.
This was how MRP Live came to be. It was recreated from scratch and a new version of MRP was made available which can be run with a new single transaction for most use cases. MRP Live is an optimized MRP run, executed directly on SAP HANA that can read stocks, material receipts, and requirements on the fly based on the new database table that holds material documents. It calculates shortages and creates planned orders or purchase requisitions in one database procedure.
To put it all together, MRP Live enables:
- Higher flexibility in the definition of planning scope since it allows to plan a single material across all plants or to plan a set of materials with all components;
- It determines the sequence in which materials should be planned across several plants;
- SAP HANA enables MRP to run faster and so more frequently, which leads to more up-to-date supply and demand information;
- It allows the material planner to identify and solve issues more quickly and a faster reaction to demand changes that reduce the risk of stockouts and means that you can reduce safety stocks.
In the next post of this series on Production Planning, we will discuss planning scenarios using PP/DS, APO, or SAP SCM.
Digital transformation requires a team experienced in SAP S/4HANA, which is why Avoras helps you take your business further. Stay connected if you want to know more about this topic and follow this journey throughout SAP S/4HANA PP and Manufacturing.