This process is used to run the replenishment requirement of all materials at a plant. Each plant will determine the frequency of running MRP – every other day, once a week. The purpose of MRP is to ensure the right material arrives at the right place at the right time. The MRP run is used to automatically generate planned orders or purchase requisitions enabling the replenishment of materials depleted by consumption and the planning of known requirements. The system tries to achieve a balance between optimizing needed materials and minimizing costs by keeping inventory levels at a minimum and having no stock outages.
When to Use?
Perform this procedure when a plant has the need to restock materials on their shelves. All plants will start with the reorder point planning method. In reorder point planning, procurement is triggered when the sum of plant stock and firmed receipts falls below the reorder point. The reorder point should cover the average material requirements expected during the replenishment time. Safety stock exists to cover both excess material consumption within the replenishment time and any additional requirements that may occur due to delivery delays. Therefore, the safety stock is included in the reorder level.
In manual reorder point planning, both the reorder level and the safety stock level are defined manually in the appropriate material master. The use of past consumption data (historical data) can be used to set reorder point levels. The material master is where the values for the reorder point (MRP 1 view) and for the safety stock (MRP 2 view) is entered.
Every time a material is withdrawn from the warehouse, the system checks whether this withdrawal has caused stock levels to fall below the reorder level. If this is the case, the system makes an entry in the planning file for the next planning MRP run for the material to be ordered.
The following document shows you step by step guide for overall processes mentioned above