R/3 SystemMRP Areas

®

©Copyright 1999 SAP AG. All rights reserved.

No part of this brochure may be reproduced or transmitted in any form or for anypurpose without the express permission of SAP AG. The information containedherein may be changed without prior notice.

Some software products marketed by SAP AG and its distributors containproprietary software components of other software vendors.

Microsoft®, WINDOWS®, NT®, EXCEL®, Word® and SQL-Server® are registeredtrademarks of Microsoft Corporation.

IBM®, DB2®, OS/2®, DB2/6000®, Parallel Sysplex®, MVS/ESA®, RS/6000®, AIX®,S/390®, AS/400®, OS/390®, und OS/400® are registered trademarks of IBMCorporation.

OSF/Motif® is a registered trademark of Open Software Foundation.

ORACLE® is a registered trademark of ORACLE Corporation, California, USA.

INFORMIX®-OnLine for SAP is a registered trademark of Informix SoftwareIncorporated.

UNIX® and X/Open® are registered trademarks of SCO Santa Cruz Operation.

ADABAS® is a registered trademark of Software AG.

SAP® und SAP-Logo®, R/2®, R/3®, RIVA®, ABAP®, SAP-EDI®, SAP BusinessWorkflow®, SAP EarlyWatch®, SAP ArchiveLink®, R/3 Retail®, ALE/WEB®, BAPI®,SAPPHIRE®, Management Cockpit®, SEM®,are registered trademarks of SAP AG inGermany and in several other countries all over the world.

All rights reserved.

Design: SAP Communications Media

SAP AG · Neurottstraße 16 · 69190 Walldorf · Germany

Contents

Introduction ..........................................................................................................................................3

Basics....................................................................................................................................................4

MRP Up To Now ....................................................................................................................................4

MRP Areas.............................................................................................................................................5

Settings ..................................................................................................................................................6

The MRP Process.................................................................................................................................7

MRP Areas for Storage Locations..........................................................................................................8

Subcontractor MRP Area .......................................................................................................................8

Plant MRP Area .....................................................................................................................................9

Planning Strategies at MRP Area Level ...........................................................................................10

Multi-Plant Total Planning.................................................................................................................10

Scenarios............................................................................................................................................11

Stock Transfer Plant to MRP Area .......................................................................................................11

Subcontractor Third-Party Order Processing .......................................................................................13

Multi-Level Subcontracting...................................................................................................................13

Integration Sales and Distribution (SD)................................................................................................14

ATP Availability Check ......................................................................................................................15

Forecast and Long-Term Planning...................................................................................................16

Summary.............................................................................................................................................17

MRP Areas · July 1999

This and further reading on the respective topics can be foundin the media centers on our homepage.

http://www.sap.com

3

IntroductionThe globalization of markets means that companies are forced to developtheir products quicker (time to market), to increase the variety of products,and to react flexibly to changes in the market. This results in specialdemands on modern MRP (Material Requirements Planning).

The main function of MRP is to guarantee the availability of materials bymonitoring stocks and to automatically create order proposals forpurchasing and production. MRP tries to optimize service levels but alsominimize costs and capital lock-up.

One of the demands on modern MRP is decentralized MRP for individual,independent planning areas. This requirement is fulfilled by theimplementation of MRP areas. MRP areas are freely-configurableorganizational units within SAP R/3 with independent MRP.

4

Basics

MRP Up To NowUp to R/3 Release 4.5 MRP took the following organizational units intoconsideration:

q Plant

q Storage location

MRP Organizational Units

Plant 1000

V 5013 V 5012

Subcontractors

0050

0060

0090

0100

0070

0080

0020

0010

0030

0040

01200110

Storage locations

The lowest organizational unit was the storage location. However, this typeof planning was only based on reorder points. Deterministic or forecast-based planning was not supported at this level.

The plant was the central organizational unit for MRP and inventorymanagement. All requirements were combined in the planning run to createprocurement elements. If you wanted to plan a certain area separately, youhad to plan each plant individually.

5

Planning at Plant Level Without MRP Areas

MRPPlanned ordersPurchase requisitionsSchedule lines

In-house production External procurement

Requirements forassembly line 1

Storage locations0010-0040

Subcontractorrequirements

Storage locations 0110-0120

Requirements forassembly line 2

Other requirements

Storage locations 0050-0100

V5012 V5013

The parameters in the material master record that control MRP for a materialwere valid for the whole plant. It was not possible to differentiate betweendifferent types of requirements nor physically separate consumptionlocations.

MRP AreasMRP areas were introduced with R/3 Release 4.5. They representorganizational units, for which MRP is carried out separately. An MRP areacan include one or more storage locations of a plant or include just onesubcontractor. The materials involved are needed at the various differentproduction lines, shop floor areas, storage locations, or subcontractors.

Plant 1000

A100

MRP Areas

0020

0010

0030

0040

MRP areas

10000050

0060

0090

0100

0070

0080

Storage locations

A200

A300A400

Subcontractors

V 5013 V 5012

01200110

6

You can define MRP areas within a plant and then carry out MRPspecifically for each area. This enables you to differentiate between differenttypes of requirements (spare parts or series, for example) in MRP, thusproviding more clarity, and to determine the respective consumer. It allowsyou to provide the right quantity of materials at the right time for eachindividual MRP area. For each MRP area, you can control the staging andprocurement of parts that are produced in-house or purchased. You can alsoplan the provision of components for individual subcontractors.

You no longer need to segment plants to accommodate the decentralizationof logistical operations, for example.

You can differentiate planning for one particular material according to theMRP areas; planning for a storage location MRP area can differ from that fora subcontractor MRP area.

All MRP procedures are supported for MRP areas and you can display theresults of the planning run for each MRP area.

SettingsThe existing planning file entries at plant level need to be converted toplanning file entries at MRP area level. This conversion can also be usefuleven if you do not implement MRP areas. The new planning file improvessystem performance during the planning run, especially when planningseveral plants. The conversion creates a plant MRP area for each plant andthe existing planning file entries are copied into the new planning file. If youassign a material to a new MRP area, a new record for this assignment iswritten in the planning file.

In Customizing for MRP, you must activate MRP for MRP areas and createthe MRP areas for each plant. Once you activate MRP with MRP areas, thistype of MRP is active for all plants and cannot be reversed.

MRP does not actually change until you assign the materials that are to beplanned separately to MRP areas, one after the other. The only differencebefore you assign materials to MRP areas is an additional field (MRP areaexists) in the material master. Each material can be assigned to one or moreMRP areas by creating an MRP area segment in the material master for eachMRP area. If you do not assign a material to an MRP area, the materialremains in the plant MRP area. You can delete the assignment of a materialto an MRP area as long as no postings for the material exist in that MRParea. If you assign a material to a new MRP area, a new record for thisassignment is written in the planning file.

You can define individual MRP and forecast parameters for each MRP areathat you assign to a material. These can differ from those defined in thematerial master at plant level. As an example, you can define different MRPcontrollers for each MRP area that is assigned to a material.

7

The system automatically sets planning file entries resulting from changes inMRP-relevant data at MRP area level in the same way that they were set atplant level. For exceptional cases, you also have the option of creating theentries manually.

The MRP ProcessTo plan independent requirements of a material, you can:

q Create a sales order with reference to a storage location. The customerrequirement is assigned to an MRP area via the storage location.

q Enter planned independent requirements in Demand Management,specifying the MRP area. This is only possible if you use the make-to-stock production planning strategy.

q Use forecast requirements for each individual MRP area of a material.

During the total planning run (please see unit 5), the system plans each MRParea for every material and then plans the rest of the plant. You can also starta total planning run for just one or several particular MRP areas (if you havedefined the scope of planning in Customizing). The system calculates the netrequirements for the material in the MRP area and whether they are coveredby the:

q stock that is available in that MRP area

q planned receipts for that MRP area.

If there is a shortage, the system creates an order proposal for the MRP area.

You display and process the results of the planning run for each individualmaterial and MRP area in the MRP list and the stock/requirements list. Youcan select material for one or all MRP areas of a plant in the collectivedisplay of these lists but the individual lists are calculated for each MRParea.

The system can create delivery schedules for MRP areas during the planningrun. This is only possible if a valid vendor and a valid scheduling agreementexist. The system reads the source list for each material during the planningrun. A delivery schedule is then assigned to an MRP area via the receivingstorage location that is entered in the scheduling agreement.

There are three types of MRP area:

8

MRP Areas for Storage LocationsThis type of MRP area represents a storage location that is plannedseparately from the rest of the plant.

A storage location can only be assigned to one MRP area. However, you cangroup several storage locations into one MRP area. You do this when youwant to plan these storage locations together but separately from the otherstorage locations in the plant.

This procedure can be used to plan the procurement and staging ofcomponents on a particular production line, for example. The process isshown in the graphic:

Planning at MRP Area LevelRequirements forproduction line 1

Storage locations0010-0040

Storage locations 0110-0120

Requirements forshop floor 2

MRP

In-house production External procurement

MRP

MRP area 1 MRP area 2

Receipt (planned orders, for example) and issue elements (plannedindependent requirements, sales orders, for example) are assigned via thereceiving and issuing storage locations. The system checks whether thereceiving or issuing storage location is assigned to an MRP area and thenassigns the receipt of issue element to this MRP area. If the system is unableto determine a storage location, it assigns the element to the plant MRP area.

Subcontractor MRP AreaYou use the MRP area for subcontractors to plan components that youprovide for a particular subcontractor from a specific plant separately fromall other requirements. Each subcontractor corresponds to one MRP area, asshown in the following graphic.

9

MRP area 2MRP area 1

MRP for each SubcontractorComponents to be provided

Subcontractor 1

MRP

Stock transfer from plant to MRP area 1

Stock transfer from Stock transfer from plant to MRP area 1 plant to MRP area 1

Components to be provided Subcontractor 2

Third-party order processing Third-party order processingThird-party order processing

MRP

During the planning run, the system explodes the assembly BOM anddetermines the requirements of the components to be provided to thesubcontractor. The dependent requirements of the components to beprovided are only assigned to the subcontractor MRP area if the systemdetermines the subcontractor as the source of supply for the assembly.

You can set special procurement keys according to the requirementssituation. The system uses these keys to determine whether to

q create stock transfer reservations from the plant to the stock of materialprovided to the subcontractor or

q create planned orders or purchase requisitions within subcontractingthird-party order processing.

Plant MRP AreaThe plant MRP includes the entire plant with all its storage locations andsubcontractor stocks that are not planned separately. Once you have definedseparate MRP areas, the plant MRP area is reduced by exactly that numberof storage locations and subcontractor stocks.

This type of MRP area is always used for finished products and assembliesthat are intended for make-to-order or engineer-to-order production.Independent requirements for finished products or assemblies are plannedusing the planning strategy Planning without final assembly, for example. Therequirements can only be entered at plant MRP area level, where make-to-order production is planned.

10

Planning at MRP Area LevelRequirements forassembly line 1

Storage locations0010-0040

Subcontractorrequirements

Storage locations 0110-0120

Requirements forshop floor area 2

MRP

In-house production External procurement

MRP

Plant requirements

Storage locations 0050-0100

MRP

V5012 V5013

MRP MRP

Planning Strategies at MRP Area LevelMake-to-stock production is supported at MRP area level. That is to say,MRP areas for storage locations or subcontractors can be used for finishedproducts, semi-finished products, and assemblies that are planned as make-to-stock production. The following types of make-to-stock strategies can beused:

q Make-to-stock (anonymous)

q Gross requirement planning

q Planning with final assembly

q Planning at assembly level

Multi-Plant Total PlanningTo avoid having to plan each plant individually, you can plan as manyplants as you want in one total planning run. You use the scope of planningto define whether total planning is to be carried out for:

q One or more plants

q One or more MRP areas

q A combination of plants and MRP areas

11

The following graphic shows the dependencies involved:

Multi-Plant (Site) Total Planning

stock transfer

stock transfer

scope of planning

Plant 1000

Plant 2000

Plant 3000

A simplified example:

Plant 1000 produces mountain bikes. The wheels are produced in plant 2000and the spokes for the wheels in plant 1000. Plant 1000 would carry out anMRP run to determine the requirements for wheels. Plant 2000 would thencarry out an MRP run to determine the dependent requirements for spokes.Plant 1000 would then have to re-run MRP to determine dependentrequirements for components of the spokes.

Previously, the planning sequence of the plants had to be defined exactly, sothat all requirements were planned correctly in the various plants. FromRelease 4.5 it is sufficient to define the scope of planning. The dependenciesbetween plants or MRP areas are then automatically included and plannedin the total planning run.

Scenarios

Stock Transfer Plant to MRP AreaYou can procure materials for MRP areas, whether they are for separatestorage locations or subcontracting MRP areas, by transferring stock fromthe plant to the MRP area.

You can procure components that you provide to a subcontractor (for theproduction of an assembly) by transferring stock from a plant to thesubcontractor MRP area, as shown in the graphic below:

12

MRP Area at Subcontractor Level :Stock Transfer

Plant MRP AreaMRP Area

subcontractor

Stock transfer of com-ponents to be provided

Delivery of assembly

The system determines the subcontractor as the vendor for the assembly(using the source list) and creates a purchase requisition. The assembly BOMis exploded and the dependent requirements of the components to beprovided are assigned to the subcontractor’s MRP area. Based on the specialprocurement key in the MRP area segment of the components to beprovided, the system determines that the components are to be procured bymeans of stock transfer from the plant to the subcontractor MRP area. In thissituation, a stock transfer reservation is created.

Using MRP areas Storage Location MRP can use all MRP procedures(instead of just the reorder point planning procedure).

The system creates a stock transfer reservation as a receipt element in theMRP area concerned and a material reservation as an issue element in theplant MRP area. The actual procurement is processed by the plant and thestock transfer posting to the MRP area refers to the reservation.

Plant MRP area

MRP areastorage locations

Special Procurement Type:Stock Transfer from Plant to MRP Area

Stock transfer ofcomponents to be

provided

13

Subcontractor Third-Party Order ProcessingYou use this process for components that you provide to a subcontractor byprocuring them externally. The advantage is that the components aredelivered directly from the vendor to the subcontractor, as shown in thefollowing graphic.

delive

rs

delive

rs

compo

nents

compo

nents

ord

ers

ord

ers

MRP area Subcontractor 2

Plant MRP area

Vendor Z

Special Procurement Type:Subcontractor Third-Party Order Processing

Deliveryof assembly

The system determines Subcontractor 2 as the vendor for an assembly andcreates a subcontract purchase requisition. The BOM is exploded and thedependent requirements of the components to be provided are assigned tothe MRP area for Subcontractor 2. You can then convert the purchaserequisitions to purchase orders, that is, subcontractor third-party orders.

When you display a subcontracting third-party order, the subcontractor’saddress is the delivery address. The components to be provided aredelivered directly to the subcontractor and goods receipt is posted to thesubcontracting stock.

Multi-Level SubcontractingYou can also use MRP areas to plan multi-level subcontracting. For example,you order “Assembly 1” at subcontractor “X”. Subcontractor “X” needs“Assembly 2” for his/her production, which he/she obtains fromsubcontractor “Z”. Subcontractor “Z” needs the “components to be provided3”, which were provided from Plant MRP area “1000”.

14

Multi-Level Subcontracting

MRP area

Subcontractor X

Plant MRP area 1000Assembly 1

Components to be provided 3MRP area

Subcontractor Z

Ass

embl

y 2

The system determines Subcontractor “X” as the vendor for Assembly 1 andcreates a subcontract purchase requisition. The BOM for “Assembly 1” isexploded and the dependent requirements of “Assembly 2” are assigned tothe MRP area of Subcontractor “X”.

The system generates a subcontractor planned order (or purchase requisitionor delivery schedule) to cover the dependent requirements of “Assembly 2”.The BOM for “Assembly 2” is exploded and the system generates dependentrequirements for the “components to be provided 3”. These dependentrequirements are assigned to the MRP area for Subcontractor “Z”.

As the special procurement key is set in the MRP area segment of the“components to be provided 3”, the system determines that the componentsare procured by transferring stock from the plant to the MRP area forSubcontractor “Z”.

Integration Sales and Distribution (SD)

Sales order

There are two possibilities to integrate MRP areas in sales orders:

q You can use a user-exit to update MRP areas in the sales orders withyour own MRP area determination, or

q The system can determine MRP areas by the storage locations in salesorders.

Independent requirements are reduced each time goods issue is posted for adelivery for a sales order.

15

Delivery

You can create an SD delivery and post goods issue when you are in the listof stocks for a subcontractor. The delivery is used for delivering inputmaterial to be provided to that subcontractor.

SD Delivery for Components to beProvided to a Subcontractor

Vendor

x

x

x

Comp X1

Comp X2

Comp X3

Comp X4

Subco A

Post goods issue

Create delivery

ATP Availability CheckOnce MRP with MRP areas has been activated, the ATP check is alsoactivated at MRP area level.

Storage location and subcontractor stock is not included in the ATP stock ofthe plant MRP area. In addition, receipt and issue elements of separate MRPareas are not taken into account in the plant MRP area.

A separate ATP check is carried out for each MRP area. The receipt and issueelements are assigned to the correct MRP area based on the receiving andissuing storage locations. There are two types of ATP check:

q ATP check without storage location checkThis ATP check is single-level; it is only carried out within the MRP area.No check takes place against the storage location entered in a salesorder, for example. If more than one storage location has been assignedto the same MRP area, all stocks, receipts, and issues are taken intoconsideration.

q ATP check with storage location checkIf you have assigned several storage locations to an MRP area, you candefine an ATP check at storage location level. The system determines thequantity available in the storage location and then the correspondingMRP area. The result of the ATP check is the smaller of the twoquantities.

16

Forecast and Long-Term PlanningAll the forecast models and automatic model selection are available for theMRP area. You can carry out consumption-based planning at MRP area levelif you have created a material master record with valid MRP data andforecast parameters. Consumption values are updated separately for eachMRP area. However, you can only carry out forecasting for MRP areas inmaster planning and not online in the maintenance of the material master (asfor the plant area).

Basic valueBasic valueTrend valueBasic valueSeasonal indices

Constant modelTrend model

Seasonal modelSeasonal trend

model

InteractiveInteractive

ModelsModels ParametersParameters

Automatic modelselection

AutomaticAutomatic

SelectionSelection

All different forecast models and the automaticmodel selection are available for the MRP area.

All long-term planning functions are also available at MRP area level.

17

SummaryFrom R/3 Release 4.5 there are MRP areas. These enable the decentralizationof logistical operations (fractal factory) and also differentiate betweendifferent types of requirements. Now storage locations can be grouped andplanned separately. For each MRP area you can control the staging andprocurement of parts that are procured in-house or purchased. With theMRP areas you can also carry out subcontracting/third-party orderprocessing

You can use different forecast models and demand management on MRParea level. Using long-term / simulative planning you can verify differentwhat-if scenarios.

Master planning

Material forecast Demand management Long-termplanning

Sales and distribution

Procurement

MRPTotal, single, multi-level planning,

avail. check, MRP lists, stock reqm. lists, order progress, pegged requirements

Sales Shipping

Integration of MRP Areas in the Logistic Business Process

All standard MRP procedures are supported at MRP area level. In Sales anddistribution you can create a sales order with determination to an MRP area.Every delivery of a sales order reduces the independent requirement for anMRP area.

Therefore, MRP areas are fully integrated in the logistic chain.