What is MRP in SAP ? – SAP Business One Module

What is MRP in SAP ? – SAP Business One Module

What is MRP in SAP Business One?

Material requirement planning (MRP), SAP Business One module is indispensable. It allows businesses to calculate material acquisition and plan purchase and production orders that are required to meet production plans and consumer demand. MRP runs on three basic parameters – supply, demand, and existing stock. MRP is one of the most important SAP Business One feature.

In brief, material requirement planning (MRP) is an inventory management system that helps businesses optimize their production process and drive efficiency. MRP minimizes the manual guesswork required to tackle the complex challenge of manufacturing. SAP Business One, the reliable ERP trusted by over 83,000+ businesses globally, implements MRP like second to none.

MRP – SAP Business One Module:

Before diving into MRP, certain prerequisites must be defined in SAP Business One

1. Item Master Data: To successfully run MRP in SAP Business One several key fields in item master data must be properly maintained viz. type of item (purchase, inventory item & sale item), inventory level (minimum, maximum), order interval, lead time, planning method & procurement method.

2. Bill of Material (BOM): The Bill of Materials (BOM) plays a central role in the MRP (Material Requirements Planning) process in SAP Business One – especially for manufactured (Make) items. The BOM specifies what components (raw materials, semi-finished goods and intermediate items) are required to produce a parent item (finished or semi-finished product). MRP uses this structure to calculate dependent demand for components based on the demand for the finished product.

3. Forecasts: In SAP Business One, Forecasts are used in the MRP (Material Requirements Planning) module to help anticipate future demand – beyond actual sales or production orders – so businesses can plan proactively. It is also treated as Make to Stock planning.

MRP Wizard in SAP B1:

Now that the above prerequisites are in place, we are ready to launch the MRP wizard in SAP B1 ERP for Manufacturing. To do so, navigate through Modules → MRP → MRP Wizard.

1. Scenario Creation: Create a new scenario with ‘name’ and ‘description’ in the MRP wizard. You also have the option to select a pre-existing scenario.

2. Define Parameters: Next, you need to enter the basic parameters of;

i) Planning Horizon: It is the period for which you wish to plan. Enter the start date and the end date.

ii) Warehouses: Choose the warehouses to be included (in case of multiple).

iii) Order Type: Define whether you want to plan for a production order, purchase order, or both.

3. Choosing Items:

Select the items or groups that you wish to include in the planning. Also, define item-specific details such as minimum stock level, lead time, and lot size.

4. Define Data Sources:

Choose demand sources to consider – sales orders, forecasts, and production orders. Simultaneously, also define supply sources – current inventory levels, open purchase orders, and existing production orders.

5. Set Planning Parameters:

Define the general parameters of;

i) Order Interval: For placing of purchase or production order (check all 3)

ii) Lot Size: Define order quantity

iii) Reorder Point: For reordering when a stock drops below a certain limit

6. Review Parameters:

Check whether the set parameters are in order. Verify rounding rules for order quantities and configure safety stock levels.

7. Execute:

Run the MRP wizard and let it do its job. It might take a while depending on the parameters.

8. Review Recommendations:

Review the recommendations provided for production orders, purchase orders, and inventory transfers. You may also modify the quantity, dates, and other details before your approval.

9. Convert Recommendations:

Take action to convert recommendations into actual purchase orders, production orders, and inventory transfers. You will now have appropriate orders created and visible in the respective modules.

10. Reports:

You may review the MRP reports for inventory status, material shortage, or order recommendation summary.

Closing Thoughts:

Manufacturing businesses can derive great value from Material Requirement Planning, SAP Business One module. It can help to run simulations for accurate procurement and production under different scenarios, making businesses run reliably. It provides the flexibility to run lean without the risk of overstocking or stockouts. Reduce carrying costs for inventory by aligning production with demand. The MRP module in SAP Business One offers a significant edge to businesses for driving success in today’s competitive markets.

Your business need not be bogged down by inefficiencies of inventory. Give it the power of SAP Business One ERP and the MRP module to drive success. Implement SAP Business One with the trusted SAP B1 Partner – SoftCore Solutions. Our SAP Business One implementations span across 16+ industry verticals, and 10+ countries with over 700+ happy clients. Rise strong in your business with SAP Business One from SoftCore Solutions. Book a live demo.

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