SAP PP Process

*GeneralCBP is a branch of MRP dealing with all those materials whose planning is a function of their consumption, as opposed to how much is currently needed for production or to fulfill customer demandIn accordance with the above, we will use CBP for less expensive, less critical components. That is, those less expensive components that we usually purchase from external vendors (e.g., nuts and bolts).

*MRP Process

*MRP ProceduresHere you can see the main areas of CBP

*A Word About SAP Supply Chain Management (SCM-APO)When should you use CBP and when should we use SCM-APO?

*What Well Cover Main differences between MRP and CBPMaterials categorization the ABC approachReorder point planning; planning based on past consumptionTime-phased planningForecastingPlant MRP and MRP areasIllustration: Customizing plant parameters Illustration: Customizing MRP types and lot sizesIllustration: Customizing MRP areasWrap-up

*CategorizationCategorization of products is about defining thedelivery time and the delivery service for eachof the products in the product program. Categorization of the products is made from a categorization of the customers and the products they buy.Subsequently the categories for the finished products are then linked to the semi-finished and the raw materials respectively, and later also to suppliersWith categories at each level it is possible to create a very efficient supply chainProduct Categorization gives a superb basis for implementing Lean Manufacturing, by clearly showing the product priority when it comes to flow, inventory, planning, etc.

*ABC ApproachOne of the common practices for categorizing materials is the ABC approachIn principal, the ABC approach says: Categorize your materials according to the following simple rule:A A materials are the most expensive and critical materials in your organizationB B materials are the less expensive, less critical materials in your organizationC C materials are the non-expensive, non-critical materials in your organization

*When to Use CBPCBP deals primarily with the C materials that we purchaseOne of the purposes of CBP is to create Purchase Orders as automatically as possible in order to reduce manual intervention in the purchase processIt is possible to use transaction MIBC (ABC Analysis for Cycle Counting) as a basis for ABC categorization. However, it does not take into account the criticality of the material, and therefore manual work must still be performed.

*GeneralReorder point planning should be used with relatively constant consumption materialsIf the materials consumption is not constant over time, this method might result in excess stock (the need to keep high safety stock) or stock shortage (fluctuations)

*MethodologyReorder point quantity includes safety stock. The PO quantity depends on the lot size (e.g., fixed).

*CalculationMRP compares the quantity in stock + PRs + POs to the reorder point. There is a shortage if the total quantity is lower than the reorder point.

*Chart

*Forward SchedulingCBP calculates the availability date depending on lead times from todays date

*Add External Requirements to MRP calculation

*Planning Based on Past ConsumptionPlanning based on past consumption should be used for materials whose future behavior can be predicted by their past consumptionMaterials with short life cycle would therefore probably not be a good choice for planning using this methodGood candidates for planning using this method might be materials with relatively many consumption periods

*GeneralTime-phased planning should be used for materials that are delivered on specific datesThis method works similarly to reorder point planning the difference is that specific delivery dates are taken as parameterTo run this method, a specific calendar must be created and maintained

*How Time-Phased Planning Works

MethodologyTime-phased planning works almost the same way as reorder point planning, only with specific GR dates

*GeneralForecasting can be used to:Predict future consumption values from old onesCalculate safety stockCalculate reorder points

*Forecasting Methods

*Selection of Forecasting MethodsSelection is done in the Material Master

*Uses of Forecasting

*How Forecasting Works

*How Forecasting Works (cont.)

*Backward SchedulingForecasting calculates the date when we should start purchasing according to the requirement date

*Using Forecasting for Reorder Point Planning Calculation

*Plant MRP and MRP Areas

*Example 1

*Example 2

*Example 3

*Types of MRP Areas

*Configure CBP Forecast Views:Start by Activating the Material Master MRP

*Configure CBP Forecast Views:Start by Activating the Material Master MRP (cont.) There are other IMG activities for all that is on the screen, but all can be configured in a one-stop shop

*Effect of MRP Types

*Effect of MRP Types (cont.)

*Effect of Lot-Sizing Procedures

*Effect of Lot-Sizing Procedures (cont.)

*Tasks to Perform When Activating MRP Areas

*Tasks to Perform When Activating MRP Areas (cont.)

*ResourcesSAP courses www.sap.com/usa/services/education/index.epxSAPSCM - Supply Chain Management Solution OverviewSCM525 - Consumption-Based Planning and Forecastinghttp://help.sap.comConsumption-Based Planning (MM-CBP)http://help.sap.com/saphelp_erp60_sp/helpdata/en/7d/c2821c454011d182b40000e829fbfe/frameset.htmProduct Categorization (ABC categorization)www.flexinfonet.com/setprice.asp?page=34

*7 Key Points to Take HomeCategorize your materialsUse CBP for your C componentsMaterials with relatively constant consumption should be planned with reorder point planningMaterials with numerous consumption histories may make use of forecasting to predict their future consumptionMaterials with specified delivery dates may use time-phased planningForecasting may be used also to calculate safety stock and reorder points according to past consumption figuresCreating a new MRP type can be useful to control customized planning methodology as combination of standard methods

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SAP PP Process