With an accurate model of your business in place, you can leverage the potent tool to figure out how to get the materials you need, making or selling products in time. In the following article, we shed light on how to use the Wizard to execute an MRP run in SAP Business One and how to work with the provided data.
We will run through a basic MRP run in SAP Business One for a multilevel bill of materials. It focuses on the core steps of this process: selecting a scenario for your MRP run, choosing items, specifying inventory data sources, providing documents, executing the MRP run, and taking action. Besides, you will find out what consuming forecast and order consolidation are.
We can help you integrate SAP Business One with your business. Contact us for further information.
The basic MRP routine in SAP Business One involves proceeding through the following steps:
That’s it. The process seems to be intuitive and easy to execute. However, there are numerous small nuances associated with each step. Below, we describe the complete picture of how to execute an MRP run in SAP Business One using three examples, including an MRP run with a multilevel bill of materials. Here, we detailly cover each step to provide a better understanding of the logic behind the SAP Business One MRP.
Since complex products are usually associated with bills of materials that cascade for several levels, SAP Business One lets you perfectly plan the desired number of materials and the particular time when these materials will be required for each level. The system analyzes a sequence of documents, in which one bill of materials refers to another bill of materials, and so on. Let’s explore the core steps of executing an MRP run for this particular case.
You can launch your first MRP run under Main Menu -> MRP -> MRP Wizard.
Here, a simple welcome window displays. It guides you to a list of existing scenarios, each of which defines the scope of the MRP run. In our example, we analyze a bill of materials with two levels.
We assume that our example is associated with the following conditions at the time of the MRP run:
With the help of the MRP run, we determine the number of items necessary to fill the order. Below, you can see the Scenario Details window of the MRP Wizard. It displays straight after the welcome window.
As you can see, the window is divided into two sections: Planning Horizon and Display Preferences. The first one contains fields that describe the report length as well as holiday consideration preferences. The second one shows several ways of sorting your items. Choose Assembly Sequence for Bill of Materials.
In our example, the run has a 31-day planning horizon. It analyzes all demand sources from December 01 to December 31. Next, it calculates the production and purchase orders needed for all items from the bill of materials.
Note that you can use the Save Scenario button to save the settings used in this MRP run for further usage.
As you’ve probably guessed already, this step requires selecting items that should be included in the SAP Business One MRP run. The system lets you choose either all items or specific ones. In the second case, you can define a range, item groups, or properties as selection criteria.
Note that updating the planning parameters for the selected items is possible. Press the Update Selected Items button to do that. It is also necessary to mention that this change is only applicable to this MRP run. It doesn’t update any master data.
Also, you can include Preferred Vendor and User Defined Fields for items in the expanded selection criteria under Item List -> Selection Criteria. This action delivers additional flexibility since you can be more specific with the item selection inside MRP.
After selecting items, you need to decide on which inventory data sources to use. SAP Business One enables you to select which storage locations and warehouses to include in the MRP run.
The Run By section lets you choose between the following two options:
During this step, you have to specify the types of documents used to calculate supply and demand for products. They usually include:
Besides, you decide which inventory level to consider. Note that running the MRP wizard by warehouse lets you generate documents to either the item’s default warehouse or to the warehouse where the demand is triggered from.
Also, you can choose particular documents to use in the run.
You can execute your MRP run by clicking the Run button in the lower right corner. It is available on any MRP Wizard window. As a result, the current inventory and demand for products are calculated, reporting whether you have enough materials on hand.
et’s return to our example. The MRP run for the conditions we specified above, displays the following recommendations:
The MRP Results window lets you drill down the master data for each item via the orange navigation arrows. Also, it is possible to examine existing purchase, sales, and production orders, view the inventory levels and review demand forecasts.
Hit the Recommendations tab to see any recommended versions of production orders needed to create the items for the sales order.
Click the Save Recommendations button to make your recommendations visible in the order recommendation report. Note that this step doesn’t create the production and purchase orders recommended in the report.
Let’s explore the final step of the MRP process in SAP Business One. The system lets you use the order recommendation report to create the new production and purchase orders required to satisfy the current demand. You can take the following actions:
In the example above, we peruse how the MRP analysis looks backward from the due date of order. It begins with the lead time for the items in a sales order and then cascades other lead times in bills of materials for components. As a result, the MRP run determines whether all materials can be obtained on time.
Another vital aspect of an SAP Business One MRP run is that it reduces forecasted quantities to avoid a situation when your inventory unintentionally becomes too high. Excess inventory is often a result of an annual, quarterly, or monthly forecast. A company plans production following the forecasted quantities and also adds actually ordered quantities exceeding actual needs.
However, SAP Business One provides the ability to address this issue. The system offers a feature that reduces forecasted quantities by actual order quantities, adding only the net forecast quantity (forecast minus ordered quantity to the MRP run.
Since forecasts are considered sources of demand for MRP, it is necessary to manage them properly. For instance, you make a forecast that orders for 50 units will come in during a certain period. The SAP Business One MRP treats it as actual orders, generating production orders.
Let’s assume that an actual order for 10 units occurs. MRP adjusts the forecast downward by the 10 units ordered. Consequently, you address the issue of excess inventory. In SAP Business One, this process is called consuming the forecast.
Let’s consider another example:
The setting is 7 days forward. It means that the app searches 7 days forward from the due date to look for forecast quantities to consume. In this case, the MRP analysis works as described below:
SAP Business One lets you create sales forecasts either manually or automatically. You can do that under MRP -> Forecasts.
Next, the Documents Data Source step of the wizard lets you choose the forecast from the drop-down list.
Also, note that there are three ways to manage your forecasts in the Forecasts window:
You can set up forecasts in SAP Business One as follows:
Watch this video for further information on how to execute an MRP run in SAP Business One:
In addition to other features described above, the MRP functionality of SAP Business One empowers you to consolidate orders. Consequently, quantities are purchased in amounts that ensure the highest discounts.
Let’s assume that the more Lexmax memory boards you purchase, the higher the discount is. Thus, the MRP functionality consolidates any needed orders for any Lexmax memory boards up to a specified order amount to maximize the discount.
Thus, the Order Recommendation report provides the ability to confirm the creation of production orders, purchase orders, purchase quotations, purchase requests, and inventory transfer requests. At the same time, you can adjust quantities, dates, and vendors there. Use the Form Settings to choose the consolidation options.
If you use SAP Business One for HANA, the system provides you with an exclusive feature called Intelligent Forecast. It leverages built-in models based on statistical calculations to predict trends and seasonal factors. These statistical calculations include:
The system automatically chooses the selection, taking into account the best algorithm to be used. Thus, the Intelligent Forecast generates results that can be used in the MRP Wizard.
In addition to that, SAP Business One provides the ability to use the what-if-analysis. Consequently, it is possible to adjust abnormal past transactions to achieve more precise predictions.
Now, when you are familiar with the SAP Business One MRP, let’s summarize its core aspects in the following checklist: