Making Material Resource Planning (MRP) work for you in S/4HANA

Posted by Sasi Padmanabhan on 06-Oct-2020 11:04:18

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(4-5 min read)

Conceptual Details

The term “Predictive” should not be confused with use of any “machine learning” or “artificial intelligence” capabilities but needs to be related with simulation capabilities. The simulation capabilities help planners to take decisions with changed conditions. One of the goals in S/4Hana, is to deploy most of these functionalities as part of Fiori Apps. This means there are no transaction codes that run the process. The whole process is covered by two Fiori Apps.

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The primary objective of providing this functionality is to identify potential capacity issues and evaluate the possible options to resolve these issues in advance. This being done in a simulative environment helps planners to evaluate different options. It helps planners to take suitable decisions based on changed/simulated conditions. The biggest advantage of this process is there is no requirement to maintain separate master data or extra unique configurations.

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Classic Long-Term Planning and PMRP (Predictive MRP)

The classic ERP had a concept of Long-Term Planning functionality built in. The PMRP, is closest to that functionality but is unique in its offerings. SAP terms it as a successor of this functionality, however not with identical functionality. We have compared at a high-level some key differences.

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Business background

In today’s digitally disruptive market, from a mid/long-term horizon perspective planners are requested to check the feasibility of uplifted product forecast. This feasibility check needs to be carried out considering availability of capacity and supply. This facilitates avoiding stock-out situations during marketing campaigns.

From a purchasing perspective, these simulations help renegotiate existing contracts, identify new suppliers, enable supplier collaboration initiatives.

From a capacity planning perspective, helps plan extra shifts or portray the need of extra capacity. An advanced communication to employees and shop floor helps prepare for the expected production volumes and the loading of machines.

Expectation from ERP

The expectation from the next generation ERP tool is to have a simplified approach to solve these challenges. SAP S/4 Hana, the next generation ERP system has come up with a new functionality known as PMRP (Predictive Material Resource Planning). In the past there was a concept known as Long Term Planning in SAP ERP which was used to address some of these concerns. The process had its own limitations.

High level Process step details

At a high level the below are the process steps that are encompass the total process.

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The first two steps of the above process is covered by the App, “Schedule pMRP simulation”

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This App facilitates to define the scope as to which plants, materials, MRP controllers, BOM’s and task lists need to be considered as part of this process. Once the scope is defined, it is scheduled as a background job. When the background job is executed it performs relevant calculations and creates all the data required for simulation activities. All the simulation is based on existing master data without requirement of maintaining extra master data.

The second APP, “Process pMRP simulations”, helps carrying out rest of the activities mentioned in the above process.

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Through intelligent use of colours, the time buckets with potential issues are highlighted.

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There are provisions to identify issues with Bill of materials or production versions.

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In case of multiple production lines or production versions.

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it provides options to balance the load between them.

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The other options include visualisation of available capacity, and ability to simulate adjustments.

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Once the required set of adjustments are made, and the planner is happy they can confirm through releasing of this version.

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In this way planners visualize and prepare themselves in advance for potential changes in requirements.

Example Business use cases

Product Promotion: In case you are planning for a product promotion, this helps check if its feasible to produce the products against an increased forecast. This can help prevent stock outs situations during marketing activities.

Capacity Planning: It helps in advance to plan for extra staff, extra shifts or addition of capacity helping to prepare for expected increase in production volumes.

Purchasing decisions: From a strategic point of view, a renegotiation of purchasing contracts due to increase of scale, or identify potential new vendors related activities can be performed which shall help reduce purchase costs. From a operation point of view it helps create visibility helping in supplier collaboration activities.

DDMRP: In case of plants who have implemented the DDMRP philosophy, it helps in size the buffer levels.

Conclusion

At Olivehorse, we have extensive knowledge of the new functionalities that are being delivered as part of S/4 HANA the next generation ERP solution from SAP. If you have any questions on the S/4 Hana Road Map please do contact us.

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SasiSasibhushan Padmanabhan is a Senior SCM consultant. In total, he has 17 years of manufacturing and IT experience. SAP certified in the areas of S/4 Hana Production Planning and Manufacturing, SAP IBP, SAP-ARIBA Supply Chain Collaboration(SCC).