Consumption Based Planning in SAP

In Consumption Based Planning, SAP uses the past consumption data to calculate the future requirements. There are three procedures within MRP:

1. Re-order point planning

2. Forecast based planning

3. Time phased planning

Re-order point planning

§  Procurement is triggered when the sum of plant stock and firmed receipts fall below the reorder point

§  The reorder point is calculated as the material demand during replenishment lead time

§  The Safety Stock (SS) takes care of both excess material consumption within the replenishment lead time and additional requirements that may occur due to supply delays.

Where:
z = service factor based on desired service level
L = average lead time
σD =standard deviation of demand
D = average demand
σL = standard deviation of lead time

We can use Manual Reorder Point or Automatic Reorder Point

§  Manual Reorder Point: The planner manually enters the reorder point and the safety stock in the individual material master record. It corresponds to the MRP type VB.

§  Automatic Reorder Point: The system calculates the reorder level and the safety stock level using past consumption data of the material to forecast future requirements. It corresponds to the MRP type VM.

 Forecast based planning: 

Forecast-based planning is also based on material consumption. Like reorder point planning, forecast-based planning operates using historical values and forecast values and future requirements are determined via the integrated forecasting program. However, in contrast to reorder point planning, these values then form the basis of the planning run. The forecast values therefore have a direct effect in MRP as forecast requirements.

The forecast, which calculates future requirements using historical data, is carried out at regular intervals. This offers the advantage that requirements, which are automatically determined, are continually adapted to suit current consumption needs. The forecast requirement is reduced by the material withdrawal so that the forecast requirement quantity that has already been produced is not included in the planning run again.

§  It is also based on historical data -the past material consumption data- and future requirements are determined by the forecasting program

§  Here the forecast values are used in MRP as the forecast requirements

§  Based on the consumption pattern the system changes the forecast requirements for future

§  MRP type needs to be entered as VV

Time phased planning:

§  In this MRP procedure, the date of the planned requirement should coincide with a known date, such as the date when the supplier delivers

§  Requires that the material forecasting be completed for the material

§  MRP type needs to be entered as R1

§  This is used specially in case if the planning cycle is known.

§  The materials planned using this is given an MRP date in the planning file.

§  This date is set when creating the material