Add buffer for dependent requirements

[Former Member]

Client wants to do advance one yearly planning for raw material.The current practice by client is that for every finished product they do BOM explosion and calculate the Raw material (Purchased Items) requirement. Then for every purchased item they add some percentage buffer to it for accounting material loses due to various reasons (scrap, overconsumption, theft etc., ). This increased requirement is passed by production planning dept. to stores. Stores in turn modify the quantity based on their logic (club requirements from various sources, add their own buffer etc.). Then store creates the purchase orders.

Now in SAP we have given yearly lot size, and strategy 10. After running plant level MRP, dependent requirement are getting generated. System is creating one PR for full year dependent requirements. How can I now add buffer given by Production Planning department and stores so that my ordered quantity for raw material increases by some predetermined percentage?? I thought of adding scrap in material master, but client is not accepting that. If I add scrap then system will suggest more material issue to the production order which client do not want.

Is there any other way to address this point please?? Can someone help please? Any help will be highly appreciated.....

[Former Member · Accepted solution]

Hi,

One option could be using a rounding profile; this helps to set the PR quantities to some limit values for certain intervals. You create rounding profiles in customizing and assign to materials in MRP2 screen. In general, adjusting PR quantities may offer more possibilities than requirement quantities if you do not want to deal with scrap.

Edited by: Özgen Canan on Jun 3, 2011 12:29 PM

[Former Member]

Dear Özgen Canan,

Thanks for the reply.

Client will not accept anything short of giving the buffer in percentage to the requirement quantity. How is this requirement met in any industries. Suppose the total dependent requirement generated by the MRP is 100, and for that system has created a PR for 100 (one year advance planning). In any industry you cannot have consumption of 100 exactly. I mean that actual consumption will definately be more than 100 due to various reasons (loss, quality problem, over consumption, theft etc). Client knows this from his experience and has arrived at some percentage (in some cases it is as high as 25%). There must be some way to address this in SAP....... But I do not know how

[Former Member]

PPQM,

The practice of not maintaining component scrap in the system, but then over-ordering components, is mostly considered a poor practice, leading to overstocking. Last time I used that method was before I had access to an MRP system.

However, to meet this requirement of your client, enter Assembly Scrap in the Material master (MRP1 tab) of the components. It has no effect on the issue of components to the higher level production order.

You also might want to give some additional business advice to your client. The business practice of allowing everyone to have their own planning buffers, and 'clubbing' requirements from non-MRP sources, will always lead to excess stock. Better practice is to have EVERYONE declare their needs to one central group, and then have that group maintain all the requirements, and all the approved buffers, in MRP, in one and only one place, for all to see.

Best Regards,

DB49

[Former Member]

There must be some way to address this in SAP....... But I do not know how 😞

Sure there is a way.... since your client is not willing to accept the standard practice of managing this via 'maintenance of scrap value', you can do this via a Z program.

Create a Z table, where each dept. can maintain their "buffers" then in your Z program read these buffers along with other demands & carry out MRP in the custom program.

With the above program in place, you would ensure a lifetime kind of contract with the client. Once the contract bills start to rise, your client will automatically switch to the standard practice & disband their long held custom practice (something akin to getting enlightenment, albeit an expensive one). It will then dawn onto them the benefits of working with good planning practices.

Take the above with a pinch of salt, but sometimes you need to drive home the facts in a 'Non-standard way'