Aligning MRP Software with Manufacturing Needs

SAP VC Integration with Production Planning (PP) Key Integration Steps: 1. Configuration Profiles: • Define Profiles: Set up configuration profiles in SAP VC to manage configurable products. • Create Dependencies: Establish dependencies and rules linking product configurations to BOM and routing. 2. Master Data Setup: • Material Master: Configure materials with necessary views (SD, MRP, Production). • BOM: Create a super BOM with all potential components. Use dependencies to select components based on configuration. • Routings: Develop super routings covering all operations. Dependencies determine necessary operations for each configuration. 3. Variant Configuration in Sales: • Sales Orders: Configure products in sales orders to specify characteristics. The system selects appropriate BOM components and routing operations. 4. Transfer to Production Planning: • Planned Orders: Sales order configurations transfer to planned orders in PP, generating production orders with specific components and operations. • Production Orders: Convert planned orders to production orders, tailored to customer configurations. 5. Integration Points: • MRP Run: MRP considers configurations to generate planned orders. • Capacity Planning: Ensure capacity planning accounts for different configurations. • Shop Floor Control: Use production orders to manage and control shop floor operations. Benefits of Integration: • Customization and Flexibility: Extensive customization without separate BOMs and routings for each variant. • Efficiency: Streamlined manufacturing process with production orders linked to customer configurations. • Accuracy: Reduced errors through automated BOM component and routing operation selection. • Cost Reduction: Fewer master data records needed for different product variants. Implementation Tips: • Testing: Test integration scenarios to ensure configurations influence BOMs and routings correctly. • Training: Train sales and production planning teams on handling configurable products. • Monitoring: Continuously monitor the integration to ensure smooth operations and address issues promptly. By following these steps, SAP VC can be effectively integrated with PP, enhancing manufacturing processes and meeting customer-specific requirements efficiently.

This week I've been talking a lot about the MBOM and its critical place in your business Many people assume the EBOM captures most of a product’s cost. In reality, for complex assemblies; think aircraft, fighter jets, automobiles, or heavy machinery - the EBOM can be just 40–75% of the total cost What’s often ignored are the consumables, tooling & fixtures that can add another 10–30% If these aren’t in your MBOM, it’s not a true reflection of total product expense   The MBOM as an Operations Hub When the MBOM resides in ERP, integrated with MRP, every department gains clarity Procurement knows precisely what to purchase & at what intervals Production lines see the exact requirements for both parts & supporting materials Finance gets real-time insight into true costs—including tooling wear, fixture replacements & overlooked expenses   The Invisible Costs What happens to all those costs that never make it into the MBOM? They drift, usually handled in ad-hoc ways on the shop floor Operators or supervisors buy consumables from separate budgets, or they borrow from adjacent cost centers This leads to hidden expenses & messy financial reports. Without a complete MBOM, your final cost structure is off, your forecasting is unreliable & your margins at risk   Why It Matters Realistic Demand Planning MRP runs off a more accurate BOM, factoring in not just part counts but also the supplies needed for each operation. This prevents painful shortages & overstock Better Supplier Coordination When tooling or fixtures require lead times, an up-to-date MBOM triggers earlier communication with vendors. No last-minute orders or idle lines waiting for parts Improved Cost Control Finance can spot the true drivers of product cost. If consumables are spiking, you can renegotiate supplier terms or explore alternative materials How to Fix the Gaps Define Clear Ownership Someone needs to own the process of adding all non-EBOM items into the MBOM. This might be a collaborative effort between engineering, manufacturing & supply chain Set Up Structured Data Processes Use your PLM/ERP system to create a standardized method for capturing consumables, tooling & fixture details. Manual entries lead to errors. Automation & digital checklists help Run Regular Cost Reviews Pull reports that show aggregated expenditures for all items linked to production, not just engineering components The Bottom Line A fully fleshed-out MBOM is one of the most effective ways to see your true costs & keep operations humming. It bridges the gap between design specs (the EBOM) & day-to-day manufacturing needs It saves headaches in procurement, aligns your entire supply chain & boosts confidence in your financial models   When EBOM covers only a fraction of total expenses & you leave the rest to guesswork, you increase the chance of hidden costs, disruptions & supply chain chaos. Elevate the MBOM within your ERP & let MRP leverage that insight - your teams & bottom line will thank you.

Embarking on Precision: SAP Production Planning Configuration In the intricate tapestry of SAP, Production Planning (PP) Configuration stands as the linchpin for organizations seeking to optimize manufacturing processes. This vital facet empowers businesses to tailor production planning based on their unique requirements, seamlessly integrating technology with operational strategies. Unlocking SAP PP Configuration's Essence: Master Data Tailoring: In PP Configuration, configuring master data is pivotal. This involves defining elements like materials, work centers, and bills of materials (BOM). Material Master Configuration: Defines material characteristics and procurement details. Work Center Configuration: Specifies work center details for efficient planning. BOM Configuration: Outlines the structure and components for precise planning. Routing Precision: Routing is a critical element in production planning. Configuration involves defining the sequence of operations, involved work centers, and necessary resources. Operations can be configured with details like work center assignments, machine times, and setup times. Linking resources to operations ensures comprehensive planning. Production Versions Mastery: Configuring production versions is crucial for managing different production scenarios. Involves defining parameters like lot size, production quantity, and alternative BOMs or routings. MRP Excellence (Material Requirements Planning): Configuration involves defining planning parameters to ensure material availability for production. Setting up MRP groups, planning types, and execution parameters ensures a systematic material planning process. Configuring Success: Transaction SPRO Start: Access the SAP IMG (Implementation Guide) via transaction code SPRO—the gateway to PP configuration. Step-by-Step Configuration: Navigate through the IMG structure to the Production Planning node for various configuration steps. Execute each step, customizing settings based on organizational needs. Rigorous Testing and Validation: Rigorous testing is essential to validate the effectiveness of configured settings. Conduct end-to-end testing scenarios to ensure seamless integration with other SAP modules. Benefits of SAP PP Configuration: Tailored Planning: Customize production planning to meet specific business requirements and industry nuances. Resource Optimization: Optimize resource utilization by configuring work centers, routing, and production versions. Streamlined Operations: Enhance operational efficiency by configuring MRP parameters for accurate material planning. In essence, SAP PP Configuration is the architectural foundation empowering organizations to sculpt a production planning strategy aligned with their unique needs. As businesses navigate the dynamic manufacturing landscape, mastering the art of PP Configuration becomes a strategic imperative for achieving operational excellence and staying ahead in the competitive realm.

SAP MRP Strategy Parameter Configuration ✔️ The configuration of MRP (Material Requirements Planning) strategy parameters in SAP is crucial for defining how materials are planned, produced, and managed in relation to customer demands and stock levels. The main focus is on strategies such as Make-to-Stock (MTS), Make-to-Order (MTO), Assemble-to-Order (ATO), and Engineer-to-Order (ETO), each with their own set of parameters and configuration nuances. SAP MRP strategy parameters define how materials are planned, produced, and managed based on business requirements such as Make-to-Stock (MTS), Make-to-Order (MTO), and Assemble-to-Order (ATO). Key parameter: Strategy Group – Found in Material Master (MRP3 Tab), it determines the primary planning method (e.g., MTS with Strategy 10, MTO with Strategy 20, ATO with Strategy 40). Requirements Class and Type – Control how planning and order consumption occurs; managed via customizing and assigned through the requirements type. Consumption Mode and Periods – Specifies how sales orders consume planned independent requirements (PIRs), set as backward, forward, or both, with defined days in Material Master. MRP Type – Chooses the basic planning logic (e.g., manual reorder point, forecast-based, automatic); set in Material Master (MRP1 Tab). Lot Size and Safety Stock – Establish how much to order and keep in inventory, configured in Material Master (MRP2 Tab). Individual/Collective Indicator – Determines whether planning is for individual sales orders or grouped collectively; set in Material Master (MRP2 Tab). MRP strategy parameters can also be managed at the MRP Group level to apply consistent settings across multiple materials. Common transaction codes: OMDU (MRP activation), OPPQ (plant parameters), OMI8 (consumption-based planning maintenance). Proper configuration ensures that SAP plans production and procurement aligned with demand, stock, and strategic business goals. → Defines material planning strategy (MTS, MTO, ATO, ETO) → Set Strategy Group in Material Master (MRP3 Tab) → Assign Requirements Class & Type via customizing → Configure Consumption Mode & Periods (forward/backward days) → Select MRP Type (manual, forecast-based, etc.) → Set Lot Size & Safety Stock in Material Master → Choose Individual/Collective Indicator (MRP2 Tab) → Can be managed at MRP Group level for consistency → Use key transaction codes: OMDU, OPPQ, OMI8

Mastering MRP in SAP PP – A Breakdown for Learners and Practitioners Planning materials in manufacturing doesn’t have to feel overwhelming. SAP’s Material Requirements Planning (MRP) helps businesses answer three core questions: ✔️ What materials do I need? ✔️ How much do I need? ✔️ When do I need them? Let’s simplify MRP for anyone diving into SAP PP or brushing up on the essentials—with config TCodes, real-life cues, and planning logic! 1. What Is MRP? MRP = Smart planner for materials. It ensures you have the right materials, in the right quantity, at the right time, using stock data, lead times, and demand. Think of it like planning a dinner: Check what’s in the pantry (stock) Count the guests (demand) Create a shopping list (planned orders) 2. Key MRP Elements in SAP Materials Required (Demand): Sales Orders Production Orders BOM Components (dependent requirements) Reservations Materials Received (Supply): Purchase Orders Planned Orders Schedule Lines Production Orders Formula: Requirement – Stock – Incoming = Shortage → MRP Proposal 3. Lead Time & Lot Sizing Lead Times include: Planned delivery time In-house production time Goods receipt processing time Lot Sizes include: Fixed (e.g., always produce 100 pcs) Minimum/Maximum Rounding values (multiples of 10, etc.) 4. Safety Stock Your insurance buffer. Helps prevent stockouts due to unexpected demand or delays. 5. Types of MRP Runs in SAP Net Change (NETCH / NETPL): Only materials with changes (inventory update, master data change) get planned. Run with: MD01 and choose the appropriate processing key. Full Regeneration (NEUPL): Plans everything from scratch, regardless of changes. Usually run weekly (e.g., Fridays). Single Item Planning: Plan individual material on-demand with MD02 or MD03. Background Scheduling: Use SM36 or MDBT to schedule nightly batch runs. 6. MRP vs MPS MPS (Master Production Scheduling): Top-level planning (e.g., finished goods) MRP: Plans components to meet MPS demand MPS run first (MD41), then MRP kicks in. 7. MRP Areas (Decentralized Planning) Use MRP Areas to plan at department/storage-location level: Defined in OMIZ Assigned in material master (MM02 → MRP 1 View) Supports focused, mini-plant-style planning 8. Configuration Must-Knows Create/Change Material: MM01, MM02 Create BOM: CS01 Create Routing: CA01 Create Work Center: CR01 Define MRP Types: OMD0 Define Lot Size Procedures: OMI4 Define Planning Horizon: OMI1 Assign MRP Controller: OMCY Manage Planning File: MD20, MD21, MD22 9. Real-Life Scenario: You're assembling laptops. BOM contains RAM Stock low on RAM MRP run (MD01) generates planned order Planner reviews in MD04 and converts to PO That’s MRP in action—automated, real-time, data-driven. If you find it useful, please For more insightful content follow ARUN KUMAR KASINATHAN #SAPPP #SAPLearning #MaterialPlanning #ManufacturingExcellence #MRP #SAPERP #DigitalTransformation #ProductionPlanning #SAPConfiguration #SAPBOM