SAP R/3 Material Management Overiew

The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions or delivery schedules). This target is achieved by using various materials planning methods which each cover different procedures. Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values.

Consumption-based planning procedures are simple materials planning procedures which you can use to achieve set targets with relatively little effort. Therefore, these planning procedures are used in areas without in-house production and/or in production plants for planning both B- and C-parts and operating supplies. Consumption-based planning is integrated in the Materials Management component.

In consumption-based planning, the following MRP procedures are available reorder point procedure, forecast-based planning, Time-phased materials planning, and creation of procurement proposals.
The type of procurement proposal to be created automatically in the planning run depends on the procurement type of the material. For in-house production, the system always creates a planned order. For external procurement, the MRP controller can choose between a planned order and a purchase requisition. If the MRP controller chooses a planned order, it then has to be converted into a purchase requisition in a separate step so that it is made available to Purchasing. The advantage of creating a planned order is that the MRP controller has more control over the procurement proposals. The purchasing department cannot order the material until the MRP controller has checked and converted the order proposal. If a purchase requisition is created, it is immediately available to the purchasing department which then takes over the responsibility for material availability and warehouse stocks.

Planning at plant level or for MRP areas
As materials planning is usually carried out at plant level, all available stock in the plant (from now on described as available warehouse stock ) is taken into account during planning. However, stocks from individual storage locations can be excluded from requirements planning or they can be planned independently. These stocks are then not included in material requirements planning at plant level. On the other hand, consignment stocks from the vendor are always included in MRP. You can also carry out MRP for individual MRP areas. You can define the MRP areas. This means, for example, that you can group several storage locations into one MRP area and carry out MRP for this MRP area.

Requirements of materials or services can be reported to purchasing by means of purchase requisitions. Each purchasing document is subdivided into two main areas: the header and individual items. Each document will contain a header and can contain several items.
The header contains information relevant to the whole document . The items specify the materials or services to be procured. For example, information about the vendor and the document number is contained in the document header, and the material description and the order quantity are specified in each item. The additional data provides extra information about the item, and has no direct connection with the item procurement data. Additional data includes, for example, account assignment data (such as cost center and G/L account) and the PO history for an item, which contains information on already recorded goods and invoice receipts relating to the item.

Each item in a purchasing document represents a unit of procurement. Purchasing operations (involving requisitioning, ordering and follow-up processes) occur on an item-specific basis.
How does the SAP System Differentiate Between Purchasing Documents? In the SAP System, the different kinds of purchasing document are distinguished from one another by means of the document type. The latter determines the relevant number range and the fields that are offered to you for data maintenance purposes, for example. The relevant document type appears as a default value when you create a purchasing document.
Document types are defined for RFQs, purchase orders, and contracts, for example. The standard SAP system includes certain document types. However, your enterprise can also define its own.

How are Purchasing Documents Numbered?
Each document is assigned a unique number. This number can be assigned internally or externally, depending on the policy of your enterprise. Internal number assignment means that the system assigns the number. External number assignment means that the person creating the document must supply it. Alphanumeric assignment is only possible in the latter case.

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