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Demand-Driven Replenishment in SAP Purchasing (MM)

If goods and services are not available in sufficient quantity, this can stop production and have a corresponding negative impact on sales. However, high warehouse stocks also tie up capital and cause costs. This book on consumption-based material require...



  • Introduction
  • 1 The basic principles of material requirements planning
  • 2 MRP procedures in consumption-based MRP
  • 3 Settings in the master data
  • 4 The planning run
  • 5 Evaluating planning
  • 6 The forecast
  • 7 Planning levels
  • 8 Customizing in MRP
  • 9 Summary
  • 10 Appendix
  • A The Author
  • B Disclaimer

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Ingo Licha






2.1 Manual reorder point planning

2.1.1 Definition

In manual reorder point planning, the SAP system compares the anticipated available stock with the reorder point in the material master. Using the MRP indicator VB in the material master, you assign the MRP procedure to the material (see Figure 1.4). With this type of MRP, you maintain the reorder point and the safety stock manually in the MRP 1 (reorder point) and MRP 2 (safety stock) (see Section 3.1) views.

The reorder point

The reorder point is a stock quantity. When this quantity is reached, or if the level of stock falls below this quantity, procurement should be triggered to ensure that the material is always available in sufficient quantity during the procurement process.

The safety stock

The safety stock is used to bridge the material requirements in the event of any delay in procurement (delivery delay or problems during production). It is part of the reorder point.

When the reorder point is reached or the stock available falls below this level, more of the material should be ordered. In an ideal situation, the goods receipt should be posted when the safety stock level is reached (see Figure 2.1).


Figure 2.1: Procurement in reorder point planning

To determine the reorder point, you need the safety stock, the replenishment lead time, and the consumption during the replenishment lead time. You use the following formula to calculate the reorder point:

Reorder point = safety stock + (daily requirement × replenishment lead time in days).

The safety stock figure and the reorder point come from the material master.

2.1.2 The replenishment lead time

The replenishment lead time is made up of the purchasing department processing time (set in the plant parameters in Customizing, see Section 8.2), the planned delivery time (material master), and the goods receipt processing time (material master), as shown in Figure 2.2.


Figure 2.2: Replenishment lead time

You maintain the purchasing department processing time in workdays. This figure indicates the time that the buyer needs to convert a purchase requisition from MRP into a purchase order. You maintain the figure in the plant parameters in Customizing as follows: Materials Management • Consumption-Based Planning • Plant Parameters • Carry Out Overall Maintenance of Plant Parameters, setting it at plant level (for the setting, see Figure 2.3). This time is not dependent on the material, as in principle, the same effort is required regardless of whether the order is for 100 tons of gravel or one screw.


Figure 2.3: Purchasing department processing time

The planned delivery time is the time that the supplier needs to deliver the material. For material produced in-house, this time is the time required for in-house production. In the material master, this field must be defined as a mandatory field. In contrast, in the purchasing info record, you can maintain a separate planned delivery time in the purchasing organization data for the combination of supplier, material, purchasing organization, and plant. For example, to deliver to a plant in Berlin, a supplier needs one day; to deliver to a plant in Heidelberg, the supplier needs three days. If the planned delivery time in the material master has different values to the planned delivery time in the purchasing info record, the rule “from specific to general” applies (see Figure 2.4).


Figure 2.4: Planned delivery time in the material master and purchasing info record

Due to the combination of material and supplier, the purchasing info record is the more specific master record. Therefore, to calculate the replenishment lead time, the value for the planned delivery time is taken from this master record. You maintain the planned delivery time in calendar days. This is because, for example, the transport of goods from abroad by ship does not stop at weekends or on public holidays.

You enter the goods receipt processing time in the material master record in the Purchasing view under Other Data (see Figure 2.5).


Figure 2.5: Goods receipt processing time

This value indicates the time required after delivery to check the material and transfer it to stock. The goods receipt processing time is specified in workdays because the goods receipt department is active only on these days.

2.1.3 The net requirements calculation

With the net requirements calculation, the SAP system checks whether a procurement proposal should be created in MRP at all. To do this, the system compares the reorder point with the anticipated warehouse stock (stock, purchase order, production orders, etc.) available. If the reorder point is the higher number, there is a material shortage. In this case, a procurement proposal is created for the previously defined lot size (see Section 3.1.2) (see Figure 2.6).


Figure 2.6: Net requirements calculation in manual reorder point planning

The anticipated warehouse stock available is made up of the warehouse stock and the open purchase order quantity (total). In Customizing, you use the plant parameters to define whether the following are also deemed to be anticipated available stock:

  • Stock in transfer
  • Blocked stock
  • Restricted-use stock

If these stocks are deemed to be anticipated available stock, they are added to the warehouse stock (see Chapter 8, Customizing).

The open purchase order quantity (total) includes the quantities from:

  • Purchase orders
  • Fixed purchase requisitions
  • Fixed planned orders

With regard to fixed purchase requisitions and planned orders, this means that these will definitely be converted into purchase orders and production orders. Furthermore, a planning run will no longer change the quantity or the scheduling for these items. However, you can still change them manually. You can recognize the fixing in the documents by the fixed ID indicator (Fixed ID) in the stock/requirements list, and the * (asterisk) behind the document number (see Figure 2.7).


Figure 2.7: Fixing of a procurement element (here, a purchase requisition)

2.1.4 Scheduling in manual reorder point planning

With manual reorder point planning, we know the time at which a procurement proposal is created: when the stock falls below the reorder point. The system now uses the replenishment lead time with forward scheduling to calculate when the material will be available: the availability date. Starting with the release date (the date on which a—where necessary, released—purchase requisition that can be converted into a purchase order is available), the purchasing department processing time is added. This produces the purchase order date, that is, the date of the purchase order. In the next step, the planned delivery time from the material master record or the purchasing info record is added to the purchase order date to produce the goods receipt date. Bringing the material to the respective storage location, checking the goods, and posting them to the SAP system takes further time, and therefore the defined goods receipt processing time is added. This produces the availability date: the date on which the material is posted and is available for further processing (see Figure 2.8).


Figure 2.8: Forward scheduling

The supplier is not generally defined yet when you perform the scheduling in the planning run. Therefore, the planned delivery time from the material master is used for the calculation. For the planned delivery time from the purchasing info record to be used, the supplier must already be known when the planning run is executed. To reflect this process, the purchasing info record must be maintained in the source list as the unique source of supply and must be marked as relevant for MRP (see Section 3.2.2).

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