Consumption-Based Planning

consumption based planning

MRP: It guarantees the material availability

for manufacturing (Internal requirements) and

for Sales & Distribution for external requirement)

MPS: Master production schedules are

The main assemblies or end prod which is planned for extra care.

  • These MPS items are contributed to higher inventory
  • If there is a change in MPS item the whole MRP changes
  • A frequent change to MPS de-establishes the MRP

CBP: Procurements are triggered based on the past consumption parameters or forecast planning

  • When the stock value falls below a certain limit, based on the forecast values your procurement triggers
  • Based on the past consumption values you are planning your future procurement requirements

In CBP there are 3 procedures:

  • Re-order Point planning
  • Forecast based planning
  • Time phased planning

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 Re-order Point planning

Re-Order-Pointing

When the stock level falls below the ROP, the system suggests for procurement

RLT = Purchase process time + Planned time + Gr processing Time

Based on the past consumption data you can define ROP and safety stock

During the period of RLT excess consumption or excess demand is met by the SAFETY stock

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Note: When using the CBP your Inventory management should be current and active.

Your consumption pattern must be constant or consistent

- For CBP

i. Maintain MRP1, MRP2, and forecast views

ii. Define ROP and safety stock in Material master data

At ROP procurement triggers - Procurement Quantities are in LOTs

Quantity triggered for procurement is the net requirement

Generally, Maximum stock is not defined only ROP is defined

Lot Size Procedure: When net requirements are triggered those are converted into lots For this Lot sizing procedures are defined

  • Static Lot Sizing Procedure
  • Periodic Lot sizing Procedure
  • Optimum lot-sizing procedure

1. Static Lot Sizing Procedure:

Again these are 4 procedures

a) Fixed LOT: In MRP you have to mention the LOT size

b) LOT for LOT: Based on Order Quantity LOT size is created

c) Replenishment to maximum stock level: this is only one lot you have to define the maximum stock level

d) Fixed LOT with splitting and overlapping: you can allow the splitting and the overlapping of LOTs

2. Periodic Lot sizing Procedure

Here you can have

  • Daily – Daily requirements per day form a LOT
  • Weekly – all requirements generate over a period
  • Monthly - all requirements generate over a period
  • Periods of flexible length equal to posting periods
  • Freely definable periods as per planning calendar 
  • All lot sizes are allowed for splitting and overlapping

Based on the period all requirements generated over a period

3. Optimum lot-sizing procedure

a) Part period balancing

b) Least Unit Cost method

c) Dynamic Lot creation

d) Groff Reorder point planning [Costs: Storage Costs (For storing the inventory) Setup costs: Procurement Cost]

a) Part period balancing: Here the storage costs are equal, set up costs till the time requirements are gathered and formed as LOT

(Requirement x Price x Storage cost% x  time in storage) Average Cost =100 X 365

Requirement = Total Material requirement Price = Material Price Storage cost= 10 % of Base cost (Material cost) generally Considered in SAP Time in storage = in days

b) Least Unit Cost method: Storage costs should be greater than the setup costs The same formula for storage cost can be used here.

c) Dynamic Lot creation: The Storage cost + Proc. Cost should cover to create a LOT. The sum of the Storage cost + Proc. Cost should be the optimum

d) Groff Reorder point planning

a. You are expecting a saving.

b. The formula is

(Requirement x Price x Storage cost% x   time in storage) Average Cost = 2 x100 x 365

Here from storage and procurement, 100% savings are expected

Forecast based planning

Based on the past consumption values, the requirements are forecast for the future.

  • In the FBP when you plot a graph with a past consumption date, you can find a certain pattern in consumption
  • When you plot a graph of consumption over a period of time, SAP assumes the consumption pattern on one of the below models

Constant Model

constant-model

Trend Model: Some times you can see an increasing trend of consumption over a period of time due to the increase in the business. This is called Trend Model

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Seasonal Model: Consumptions are high only for a particular period

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Trend seasonal model: In this model Business seasonal consumption seasonally increases. This is called a Trend Seasonal model

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Time phased planning

This is used very rarely used

May be used in advance countries

Time-Phased-Pllaning

Planning Cycle: Vendor supplies material in this period Delivery cycle: Company receives the material in this period

From Tues day to Friday

i. The vendor waits for receipts for GR

ii. Goods at the plant and wait for GR

iii. If the receipt is not done on Friday, then it has to be done the next Friday.

iv. You have to plan the material accordingly.

MRP Master Data

MRP controller: He is a planner in the production department A Group or individual person responsible for easy planning We can create MRP controller as a 3 Digit alphanumeric code

MRP Group: You group deferent material and you plan as a group for easy planning Or Grouping certain material for easy planning

PPC calendar: Production Planning and Control Calendar defines when the MRP run take place

This calendar is created by the PP module

PPC Calendar is not required for CBP

MRP Procedure: It is pre-defined in the system, what type of planning you are adopting for MRP

Different Planning runs: Standard Indicators for planning run are

  1. Regenerative Planning (NEUPL)
  2. Net change Planning (NETCH)
  3. Net change Planning in Planning Origin(NETPL)

When you create a material with an MRP view, the material is automatically entered into the Planning. In the planning file one of the planning, indicators has to be set. NETCH indicator is set in the planning file then the system needs the low-level code

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Low-level code materials will be planned first.

Here 0001 code materials will be planned first

You have to see whether BOM explodes or not

Normally MRP is used for B&C Type of items

Any requirement from the previous run has to be deleted or included in the first planning. It is decided by the MRP controller

Net Requirement planning is the next step

To Get in-Depth Knowledge, Related Articles:

Inventory Management Stock Transfer In Sap MM