Consumption-based Planning: Forecastbased

SAP Username Name GBI-229 ________________________ Ririn Hutagalung _________________

When consumption-based planning is configured using reorder-point planning, the SAP system creates a planned order or purchase requisition whenever the inventory level for the material falls below the reorder point, and the reorder point must be determined by the user. In addition to requiring the user to determine the reorder point manually, the reorder point method will not perform particularly well when there is a change in the demand for the materialfor example if there is seasonal variation in the material demand, or demand for the material is increasing or decreasing over time. To address this problem, consumption-based planning can be configured to use forecasts of material demand to estimate consumption, and this estimated demand can be used to create planned orders.

2.1 Create Forecasting View for Raw Material

To use forecast-based planning, it is first necessary to create the forecasting view for the material. To do this, follow the menu path: Menu Path Trans Code Logistics Production Master Data Material Master Material Create (Special) Raw Material MMR1

Enter RAW-### for material and select Retail for Industry Sector then click on Select view(s). The material RAW-### already exists, and we want to add the Forecasting view for this material. In the SAP system, we do this by creating the view rather than changing the material. When we enter RAW### for material, the system will find this (existing) material, then create the new views we select.

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Select the Forecasting view, then click on enter icon ( ) and another pop-up window will appear. Enter DL00 for Plant, then click on enter icon ( ) and the SAP system will create a Forecasting view for your material:

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Click on Consumption vals

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Click on Consumption vals icon ( the following screen:

), which will produce

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Note that usage of 330 raw materials from the first consumption-based planning exercise have been recorded. Note that monthly data is being recorded.

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Note that the use (consumption) of 330 raw materials from the first consumption-based planning exercise have been recorded. An advantage of an integrated information system like SAP is that material usage is automatically recorded for forecasting purposes. Note that the figure under Total consumption is presented with a grey background. This figure is updated by the SAP system as material is issued. As a result, SAP does not want the user to adjust this figure. However, in forecasting it is common to want to make an adjustment to historical sales figures to produce a better forecast. It may be that sales were low in a particular period because of a random occurrence like bad weather. In this case, a better forecast could probably be obtained by correcting the sales value that was low due to an event that was unlikely to occur in the future. To accommodate this, SAP provides a Corrected value column where the user can enter a value other than the actual usage (consumption) for forecasting purposes. Click on the Main data icon ( ) icon to return to the Forecasting view.

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Enter J for Forecast model (automatic model selection) and change the Period Indicator to W (weekly), then click on the Enter icon

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Enter J for the Forecast model. This choice will let the SAP system select the forecasting model after it analyzes the historical data to determine whether trend or seasonal patterns exist. Our consumption data is currently being collected on a monthly basis. This choice was made because of a default setting on the MRP 2 view of the material master when we created the material in the first consumption-based planning exercise. Monthly data is probably not a sufficiently small time increment for our purposes. Change the entry from M (monthly) to W (weekly) so that data is collected on a weekly basis. Click on the enter icon ( ), which will send these new values to the SAP server and produce the following message:

Click on the exclamation mark icon

Click on the exclamation mark icon to get more information:

Read the error message, then close the Performance Assistant

Messages with an exclamation mark ( ) are warnings, which means we can ignore them if we choose. That doesnt mean that we arent making a mistake, but the SAP system will let us proceed. In this case, the warning message lets us know that we are changing the time period for consumption data AND consumption data already exists. It also lets us know that we can correct consumption valuesthat is, we can enter manually correct the consumption values. Close the Performance Assistant, then click on the Consumption vals icon ( ) again. This will produce another error message about existing consumption values:

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Click on the enter icon ( ), which will take us back to the consumption values screen, only this time we can enter values:

The period gives the week and year. The current period is the first listed.

Enter the Total consumption values shown.

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Enter 10 weeks of Total consumption values as shown above, then click on the save icon ( ).

2.2 Change Planning Method

To change from reorder-point planning to forecast-based planning, we need to change planning parameters that were set on the MRP 1 view of the material. To do this, follow the menu path: Menu Path Trans Code Logistics Production Master Data Material Master Material Change Immediately MM02

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Enter RAW-### for Material, then click on the Select view(s) icon ( ). This will produce the following pop-up window:

Select the MRP 1 view

Select the MRP 1 view, then click on enter icon ( will appear.

) and another pop-up window

Enter DL00 for plant, then click on the enter icon and the MRP 1 view will appear:

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Change MRP type to VV, then click on the enter icon

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We want to change the MRP Type from VB (Manual reorder point planning) to VV (Forecast-based planning). Enter VV in the MRP Type and click on the enter icon ( ) and the following message will be displayed:

The warning message reminds us that the reorder-point is not used with forecast-based planning. While we could leave the value for the reorder-point in the material master, it is a better practice to delete this value (Why? Do you agree?). Click on the save icon ( ) to save the change to the planning method.

2.3 Stock/Requirements List

We can review the status of our material by following the menu path: Logistics Materials Management Inventory Management Menu Environment Stock Stock/Requirements List Path Trans Code MD04

The material we just created should be entered by default. If not, enter material RAW-### and plant DL00, then click on the enter icon ( ) and the following screen will appear:

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Click on the detail icon for the Purchase Requisition

Note the following information message at the bottom of the screen:

Because we want to use forecast-based planning, we need to have a forecast. We will do that after we delete the existing purchase requisition so that we can
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clearly see how forecast-based planning works. Click on the detail icon ( ) for the Purchase Requisition, which will produce the following pop-up window:

Click on the change icon

Click on the change icon ( ) to get the following screen:

Click on the Item overview icon to open the Item overview panel

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If the item overview panel is not open, click on the Item overview icon ( open it:

) to

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Click on the row selection icon, then click on the delete icon to delete this purchase requisition
Select the row with the raw material, then click on the delete icon ( will get the following warning: ). You

Select Yes

Click on Yes, then click on the save icon ( ) and you will return to the Stock/requirements list. Click on the refresh icon ( ) and the purchase requisition will be removed.

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2.4 Run Forecast

Leave the Stock/Requirements list open and create a new session by clicking on the new session icon ( ). We will use the new session to generate a forecast for our material. To do this, follow the menu path: Logistics Production Production Planning Materials Forecast Menu Forecast Individual Forecast Execute Path Trans Code MP30

Enter RAW-### for Material and DL00 for Plant, then click on the enter icon ( ). This will produce the following screen:

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Click on the Execute icon to execute the forecast

This screen shows us the forecast values that were entered in the material master, and also informs us that we dont have any forecast yet

Click on the Execute icon ( following pop-up:

) to execute the forecast. This will produce the

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Dont worry about the date selection. Click on the enter icon
Dont worry about the Last forecast date. Click on the enter icon ( forecast results will be displayed: ) and the

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Click on the save icon (

) to save these results.

Then switch to the Stock/Requirements list and click on the refresh icon ( The forecast demand for the material will now be displayed:

).

Note that forecast requirement for first week is adjusted based on time left in the week SCM Gasal 2012/2013
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2.4 Run MRP Planning

Now that the forecast has created demand for the material, we can generate planned orders using the MRP process. To run the MRP planning process, switch to the other session and follow the menu path: Logistics Production MRP Planning Single-Level, Menu Single-Item Path Trans Code MD03

This will call up the following screen:

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Use the default planning values, select Display results before they are saved, then click on the enter icon

Select Display results before they are saved so we can see the planning results immediately, then click on the enter icon ( ) and the following message will appear at the bottom of the screen:

Depending on the situation, production planning can take a lot of computer resources, so SAP is just reminding you to make sure that you have everything set correctly. Click on the enter icon ( ) a second time, and a screen very similar to the Stock/Requirements screen will be displayed:

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Note that planned orders have been created to keep the available quantity positive
Click on the save icon ( ) to save these results, then switch to the Stock/Requirements list and click on the refresh icon ( ).

With forecast-based planning, material requirements and production/purchase orders are handled in essentially the same manner as finished products planned using MRP. Demand is forecast, then planned orders are generated to meet this demand. Forecast-based planning can be made to run automatically by grouping all materials together that are planned using this method, then generating forecasts and then running MRP for all materials in this group on a regular basis (e.g. weekly).

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Print a copy of this Stock/Requirements List. Put you name on it, and hand it in.

Is there any situation in which this approach can not be used? Explain!

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