MATERIAL PLANNING PROCESS

Material planning is concerned with answering three basic questions:
What materials are required
How many are required
When are they required?

1. INTEGATED BUSINESS PROCESSES WITH ERP SYSTEMS PRESENTED BY: NEHA GAUTAM(15609076) GARIMA GUPTA (15609035) MATERIAL PLANNING PROCESS 7/5/2016 1

2. INTRODUCTION Material planning is concerned with answering three basic questions: What materials are required How many are required When are they required ? Objective: To balance the demand for materials with the supply of materials so that an appropriate quantity of materials is available when they are needed. Figure 8-1: A basic material planning process 7/5/2016 2

3. MASTER DATA Master data includes: Bill of material Product routing M aterial master Product group . Procurement Type - indicates whether a material is produced in-house via the production process or obtained externally via the procurement process, both, or none . Figure 8-2: Material master data for material planning Figure 8-3: Consumption-based planning MRP type specifies the production control technique used in planning. Consumption-based planning, Materials requirement planning2 (MRP) Master production scheduling (MPS ). MATERIAL MASTER Data related to MRP and work scheduling divided into four views . 7/5/2016 3

4. M aster production scheduling (MPS) , which utilizes a process similar to MRP but focuses exclusively on the requirements for the top-level items in the BOM . Figure 8-5: MRP vs. MPS Scheduling Times In-house production time Setup time Processing time Interoperation time Planned delivery time GR (goods receipt) processing time. Planning Time Fence Companies establish a period of time in which the ERP system is not allowed to automatically change procurement proposals . Lot Size Key- A lot size is the quantity of material that is specified in the procurement proposals generated by the material planning process. 7/5/2016 4

5. Bill of Material(BOM ) identifies the materials needed to produce a finished good. A vailability check group defines the strategy the system uses to determine whether a quantity of material will be available on a specific date. The most common method, called available-to-promise (ATP ) Strategy group specifies the high-level planning strategy used in production. Production planning strategies fall into three broad categories: make-to-stock, make-to-order , and assemble-to-order. Consumption Mode When a CIR consumes PIRs, it reduces the quantity of PIRs by the quantity of the CIR. This process is called consumption. In backward consumption, customer requirements consume PIRs that are dated prior to the time of the customer requirements. In forward consumption, customer requirements consume PIRs that occur after the date of the CIR. The consumption period indicates the number of days, before or after, from the CIR that PIRs can be consumed . PRODUCT GROUPS- products are aggregated into groups. A proportion factor is a measure of how much the item influences the product group. 7/5/2016 5

6. Figure 8-7: GBI product groups Figure 8-9: The material planning process The first step in the process is sales and operations planning (SOP ) . SOP is a forecasting and planning tool that businesses use to enter or generate a sales forecast. SOP creates a production plan at the product group level. Requirements must be translated into PIRs for the individual materials in the product group ( Disaggregation ). The PIRs for the individual materials are then transferred to demand management , where they are revised and refined. MRP, creates specific procurement proposals. MATERIAL PLANNING PROCESS 7/5/2016 6

7. STEP ONE: SALES AND OPERATIONS PLANNING Figure 8-10: Elements of the SOP step Figure 8-11: Data in the SOP step SOP is triggered when the organization wishes to revise its production plan. In standard planning a company uses predefined planning models. With flexible planning a company uses tools to develop more complex planning models that contain far greater levels of detail. Data Most critical data are a sales plan, existing inventory levels, and inventory requirements . 7/5/2016 7

8. Tasks The tasks in the sales and operations planning step include creating the sales plan , specifying inventory requirements, and creating a production plan . The interface to complete the tasks in SOP is a simple-to-use spreadsheet-like tool. Figure 8-12: Standard SOP planning table 7/5/2016 8

9. STEP TWO : DISAGGREGATION This step translates the plans into the plans for the finished goods in the product group hierarchy . Figure 8.13 ELEMENTS OF THE DISAGGREGATION STEP 7/5/2016 9

10. STEP THREE : DEMAND MANAGEMENT It calculates revised PIRs for the materials using the PIRs from SOP (after disaggregation), actual customer orders (CIRs) from the fulfillment process, and data from the material master regarding planning strategies . Figure 8.14 ELEMENTS OF THE DEMAND MANAGEMENT STEP 7/5/2016 10

11. STEP FOUR : MATERIAL REQUIREMENT PLANNING It calculates the net requirements for materials and creates procurement proposals—to make or buy the necessary materials—that ensure that the organization will have sufficient material available to cover its requirements. Figure 8.15 ELEMENTS OF THE MATERIAL REQUIREMENT PLANNING STEP 7/5/2016 11

12. Tasks in the MRP step. These steps are performed automatically by MRP. 7/5/2016 12

13. REPORTING Important tools that convey information about the planning situation: the stock/requirements list, the MRP list, and t he planning result report. 7/5/2016 13

14. CHAPTER SUMMARY Material planning is one of the most complex processes in an organization. The main objective of material planning is to balance the supply of materials with the demand so that a sufficient supply of materials are available when they are needed. Material planning is concerned with answering three basic questions: What materials are required; (2) how many are required; and (3) when are they required? Material Planning Process SOP Disaggregation Demand Management Material Planning Process Reporting in material planning is limited to relatively few reports but includes three important tools to obtain information about the planning situation: the stock/requirements list, the MRP list, and the planning result report. 7/5/2016 14

15. THANK YOU 7/5/2016 15