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Excerpt from Demand-Driven Replenishment in SAP Purchasing (MM) by Ingo Licha.
Manual reorder point planning
In manual reorder point planning, the SAP system compares the anticipated available stock with the reorder point in the material master. Using the MRP indicator VB in the material master, you assign the MRP procedure to the material (see Figure 1.4).
With this type of MRP, you maintain the reorder point and the safety stock manually in the Mrp 1 (reorder point) and Mrp 2 (safety stock) (see Section 3.1) views. The reorder point The reorder point is a stock quantity. When this quantity is reached, or if the level of stock falls below this quantity, procurement should be triggered to ensure that the material is always available in sufficient quantity during the procurement process.
The safety stock The safety stock is used to bridge the material requirements in the event of any delay in procurement (delivery delay or problems during production). It is part of the reorder point.
When the reorder point is reached or the stock available falls below this level, more of the material should be ordered. In an ideal situation, the goods receipt should be posted when the safety stock level is reached (see Figure 2.1).
To determine the reorder point, you need the safety stock, the replenishment lead time, and the consumption during the replenishment lead time. You use the following formula to calculate the reorder point:
Reorder point = safety stock + (daily requirement × replenishment lead time in days).
The safety stock figure and the reorder point come from the material master.
If goods and services are not available in sufficient quantity, this can stop production and have a corresponding negative impact on sales. However, high warehouse stocks also tie up capital and cause costs. This book on consumption-based material requirements planning (MRP) will help you to manage this conflict of interests. Despite materials required having different procurement lead times and specific storage properties, you can and must be able to respond to individual requirements. Using processes and examples from practice, you will learn how the consumption-based MRP procedures in SAP MM can support you in these tasks. This book is aimed at both beginners in the topic, as well as key users who want to familiarize themselves with basic customizing settings.
– Reorder point planning, stochastic and time-phased MRP
– Material master data, including lot sizes and how to calculate them
– Planning, planning process, stock/requirements lists (transaction MD04), and forecasts
– Customizing of the basic settings and processes
After completing his business studies degree, Ingo Licha worked for IT support at SAP AG both in Germany and abroad for several years. He is a certified SAP Solution Consultant SCM Procurement and since April 2009, has been working as a freelance SAP consultant and trainer. At SAP training partners, one of his areas of responsibility is SAP user and consultant training in the area of logistics. Since the summer semester of 2012, Ingo has also been working as a freelance associate lecturer at Ludwigshafen University of Applied Sciences in Germany, in the area “Business and International Programs”.