Material Requirements Planning

Material requirements planning (MRP) is a planning alternative that calculates requirements for parts using information from master scheduling, manufacturing structures, and inventory data. The calculation is based on the existing inventory balance, and all sources of material supply and demand such as shop orders, customer orders, purchase orders, production schedules, shop order by-product supply and distribution orders. Planning methods controlling the planning data are entered for a part.

The purpose of MRP is to calculate the demand for parts in a phased manner based on information such as shop orders, customer orders, and part structures, to ensure that the demand is met. MRP results in order proposals for the parts that need to be manufactured and purchased.  Order recommendations are calculated using the appropriate lead time offset and lot sizing rules, considering both values when the parts need to be available and in specific quantities. MRP also generates suggestions for re-planning existing shop orders and purchase orders as well as recommendations to best meet the demand with new shop orders, production schedules, purchase requisitions, and supplier schedules. MRP will also consider by products as supplies, if it was set and defined as a supply in MRP in product structure and shop orders.

MRP starts by calculating the lowest level on which the parts exist in the structures. A part that is not a component of another structure, but is only a parent part, has the lowest level, zero (0). Zero-level parts are usually sales parts. A part that is a component of a parent part is at level one, a sub component of a component is at level two, and so on. This level coding is necessary for accurate MRP, estimates, and calculations of product families and product codes. Before the MRP calculation takes place, existing unreleased supply orders (such as purchase requisitions, shop proposals, production schedules, supplier schedules) which were created by MRP in a previous run of MRP are deleted. Action messages are generated for each part to draw the planners' attention to parts requiring actions such as rescheduling supply orders.

Note: If any of the product structures include an intermediate or sub-assembly part which is planned by MS, then special attention is required to ensure that these demands are considered by the MRP calculation when it creates supply proposals for the component parts. It will be necessary to run the site MRP calculation for a second time, run the selective MRP process for the component parts, or Run MRP for Components from the Master Schedule by Part page.

Rules for MRP

To perform a material requirements planning (MRP) calculation, you must have entered parts with on hand quantities and structures into the system. Also, some forms of supply and demand such as customer orders, shop orders, and purchase orders must be associated with these parts. Beyond these basic requirements, many other factors affect MRP. These factors are listed below. You should be aware of them before performing an MRP calculation.

Control Parameters for MRP

Control parameters determine the conditions for running MRP, including:

Information in the Shop Calendar

The planning of MRP start times depends on the information that you entered in the shop calendar. Only work days can appear in the calendar. Weekends and holidays are not counted when setting the start time for MRP.

Site Level Attributes that control how MRP plans parts

The selections that you make in the Manufacturing tab of the Site page determine how the system processes the part during MRP. Selecting the Use Rel Purch Reqs in Planning setting causes MRP to not delete purchase requisitions in status Released at the start of the MRP run. These are viewed as supply later in the MRP process.

Lead Time Information in the Inventory Part Register

You specify the lead time and lead time code for each inventory part in the Acquisition tab of the Inventory Part page. This information controls how the system processes the part when it is in demand. The lead time code determines whether the system creates a manufacturing or purchase proposal to fulfill the demand for the part. The default supply type on the Planning Data tab of the Inventory Part page determines the type of proposal: requisition, order, or schedule. 

Planning Data in the Inventory Part Register

The information that you enter in the Planning Data tab of the Inventory Part page determines how the system processes the part during MRP. The planning method and lot size values determine how demand is processed. During MRP, the system does not process parts with a planning method of B (Order Point Planning), C (Replenishment Level), or N (Next Level Demand). The value in the Proposal Release field determines whether the system creates order proposals or any type of supply, such as shop requisitions, purchase requisitions, production schedules, or supplier schedules. When generating proposals, the manufactured/acquired split percentages defined on the Planning Data tab will be considered if you want to generate proposals for both in-house and outside sources to obtain the supply. 

Part Structures

Before starting MRP, you must enter the structures of the parts that will be manufactured. These structures must have a structure type of Manufactured, meaning standard manufacturing. Also, they must be valid at the time of manufacture. MRP breaks the structures down into their components for the calculated start date. Note that MRP works with structures for the standard part, which is the one without a variant or serial number.

Master Scheduling

You may perform master scheduling (MS) before running MRP. MS processes sales parts, typically end products, configurable parts, spare parts, and options. Unlike MRP, MS allows you to plan your requirements based on the sales forecast.

The information retrieved from MS is the demand for forecast parts. The system creates demand on levels below Level 1 using a product structure breakdown. If a master-scheduled part is inactive, the system processes it as if it were a non-master scheduled part in MRP.

Within the demand time fence, only existing shop orders can generate demand in MRP. Between the demand and planning time fences, MRP receives demand from both existing shop orders and the fixed master schedule. The information that MRP retrieves outside the planning time fence comes from existing shop orders and the fixed and variable master schedules. Only shop order requisitions originating in the master schedule are broken down.

Planning Networks

You can perform MRP for single sites, or alternatively execute MRP for a planning network in support of a multi-site supply chain environment.Defined on the Planning Network page, the planning network is comprised of two or more sites working together in an integrated supply chain.  Parts supplied from another site are defined as multi-site planned part in the Supplier for Purchase Part page, indicating that the supply comes from an internal supplying site. MRP plans requirements across the sites, and generates distribution orders for the material move requirements.

MRP Horizon

You can select the MRP Horizon in Date if you want to run the MRP process just considering open supply and demand orders within the entered horizon. The default value of MRP Horizon in Date is blank and that means that MRP will run for the entire horizon. Similarly you can select MRP Horizon in Days when you schedule the Perform MRP.
It is not recommended to use MRP Horizon less than the Cumulative Lead Time of the end products.

Phases of MRP calculation

  1. Remove previous MRP calculation results.
  2. Snapshot of static planning data. This also includes inventory quantity on-hand.
  3. Snapshot of supply and demand information.
  4. Main MRP process. Parts are processed by low level code, which consists of:
  1. Generate supplier schedules.

MRP also supports the concept of multi-site planning through the use of planning networks with material transfers executed using distribution orders. Multi-site planning can be used when two or more sites interact in a single supply chain, and parts being distributed to a demand site from a supplying site. Multi-site planned parts are defined as supplied from an internal supplier corresponding to the supplying site. MRP can be run for an entire planning network consisting of two or more sites, with requirements for the multi-site parts organized into distribution requirements, and an order recommending the transfer of materials within the network. When MRP is run for a planning network, multi-site planned parts are considered within  the low level calculation, that is the site-to-site transfer representing a level within an overall multi-site structure.

MRP can plan components for a selected set of part(s). This is called selective MRP. Between MRP execution cycles, any changes in the supply/demand situation are not reflected in the MRP results until site MRP is run again. When there are such changes, if the planner is aware that the supply/demand situation of a certain part has changed and that the current MRP results should be recalculated, it can be done so by executing selective MRP for the part. The outcome is that the results for the part and its lower level assemblies and components are recalculated so that they reflect the actual changes in the supply/demand situation. The advantage is since selective MRP only deletes and regenerates results for the affected set of parts, the MRP results that were created for the larger set of parts remain unchanged and can be used by the planner.

When MRP is performed for a selected set of part(s), the independent demands and dependent demands which were created in the last MRP run will be considered as the demand for the part(s). MRP logic will then delete and recalculate the supplies and explode the results in to the lower structure levels.

Note: Independent demands that are coming from other higher level parts in the last MRP run may not reflect the real demand situations due to the fact that the demand supply situation may be different from the last MRP run. Therefore planners need to be aware about this fact and should take necessary actions in order to take correct results. For example, if there are lot more demand supply changes which may affect the selective MRP run, running a full site MRP and then running a selective MRP to plan a subset of parts is a safer approach.

Planners can perform MRP for certain low levels. All parts in the given low level code will be planned by MRP. Planners can take actions and re-plan demand and supplies based on MRP results for the level. The next level can be planned by running selective MRP for low level n..n+1 where n is the low level code for the first selective MRP run. Then run selective MRP for n..n+2 and so on. This incremental way of planning each level will enable the planner to focus more on each level and plan them in detail. After being satisfied with all the steps, the last step would be to run a full site MRP to balance supplies and demands for the entire site according to the manual planning adjustments performed during planning each level. It is not advisable to run selective MRP for level n if there is no fresh calculation for level n -1 exists.

Note: It is advisable to perform selective MRP for low levels without any other selection criteria. For example, even though running selective MRP for low level code n..n+1 only for the product family PF1 will yield correct results, but the results might look confusing. Therefore the planner has to be cautious when analyzing the results as well.

Consideration of shelf life expiration date in Planning

MRP will be considering future expiration stocks of an inventory parts if the Mandatory Expiration Date flag is checked for the part and it plans MRP receipts accordingly.

During MRP execution, MRP calculates beginning on hand reducing all the expired qty up to system date. This will further be affected if Minimum Remaining Days for Planning defined for the part in Acquisition tab in Inventory Part,

Before inventory stock get expired it will be consumed by demands fall before the expiration date, This is also affected by the Minimum Remaining Days for Planning, if such stock is remaining even after consumed by demands, the remaining qty will be expired and will be visible in IFS application as a demand with an MRP source type MRP Inventory Lot Expiration. These demands are only visible and reduce the projected on hand qty by remaining qty to be expired on that particular date

Beginning on hand =   250-10-15

MRP Inventory Lot Expiration demand exists on 2017/04/02 for a qty of 5

MRP Inventory Lot Expiration demand exists on 2017/05/03 for a qty of 5 (qty of 20 will be consumed by the demand which exists before the expiration)

Inventory stock going to be expired on 2017/06/26  for a qty of 5 (full qty will be consumed by the demand which exists before the expiration). Hence no MRP Inventory Lot Expiration Demand displayed on this date.

MRP Supply and Demand Sources

MRP Source Description MRP Usage
MRP Internal exploded MRP demand Yes
MS Child Master schedule component demand Yes
Order Entry Demand from customer order line Yes. No project specific orders are considered
Material Requisition Demand material requisition line Yes. No project specific orders are considered.
Purchase Order Supply from the purchase order line demand from the purchase order lines Yes. No project specific supply or demand is considered.
Shop Order Supply from the shop order demand from the Shop Order component Yes. No project specific supply or demand is considered.
Work Order (Maintenance) Demand from the work order Yes
PM Action (Maintenance) Demand from the PM action maintenance plan lines Yes
MRP Inventory Lot Expiration Demand from the future expiration stock Yes. On Hand Qty gets affected
Dynamic Order (DOP) Demand from unpegged DOP order Yes
Reorder Point Demand of components to an open requisition, created from the re-ordering point calculation. Yes
Production Schedules Demand from production schedule components. Supply from production schedule Yes
Request Quote Supply from purchase requisition in the Request For Quotation status Yes. Only standard planned items
Spare Part MRP spares Yes
Customer Schedules Demand from customer schedule Yes
Project Delivery Demand from project delivery. Yes. Only standard planned items
Customer Quotation Demand from customer quotation Yes
Project Misc Demand Demand from project misc demand. Only standard planned items are considered.
Request Manual Supply from manually entered purchase requisition No
Shipment Order Supply from shipment order. Demand from shipment order. Yes, however shipment orders from or to remote warehouse with default part availability control not nettable will not be considered.
Transport Task Supply when between sites. Yes. For a transport task there will never be rescheduling MRP messages, like Late Order or Early Order.