In the earlier releases of SAP ERP, MRP referred to one specific planning tool. In contrast, SAP has already delivered many new features and tools related to MRP since the first logistics-inclusive release of SAP S/4HANA was launched in 2015.
In this blog post, we offer a basic introduction to these new concepts. They are among the most important innovations delivered in SAP S/4HANA.
Classic MRP
SAP S/4HANA and the latest releases of SAP ERP introduced a new MRP functionality called MRP Live, which was basically the same concept and the same logic, but improved for better performance on an SAP HANA database. Since then, the previously existing MRP and its transactions have become known as classic MRP to help differentiate between the versions.
Classic MRP has a set of transactions that you can use to plan your materials, allowing you to plan an entire plant, a single material, or a material and its components. It was entirely developed in ABAP, the SAP programming language used originally to develop SAP ERP, and it was designed to be executed in SAP GUI, the software installed on an end user’s computer to access SAP S/4HANA.
All the classic MRP transactions are still available and supported in SAP S/4HANA, but it is no longer the target architecture for the future. Although classic MRP can still be used in SAP S/4HANA, it is not recommended as a long-term solution; all the innovation in MRP will center on MRP Live.
Warning: A functionality of classic MRP called the MRP list has been included in the SAP S/4HANA compatibility pack, and companies will lose usage rights to the MRP list and its dependent programs, tables, and transactions after 2025.
Companies looking for a quick migration to SAP S/4HANA with minimal impact in the conversion project may consider classic MRP as a temporary solution, but a migration to the new MRP Live should be considered part of the future roadmap.
Learn more about the differences between classic MRP and MRP Live in this post.
MRP Live
MRP is traditionally executed as a background job overnight, planning all the changed materials within one or more plants. To calculate the shortages for each material, the system needs to read all the relevant planning elements, such as sales orders, purchase orders, and production orders. Basically, every document that may consume or receive a certain quantity of material into stock is relevant for MRP and should be read from the database. This means that MRP should select large chunks of data from the database, and because of that and the complex algorithms executed during the planning run, MRP may take a long time to complete.
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When SAP created the SAP HANA database, there was a huge opportunity to improve MRP performance using the power of SAP HANA’s in-memory parallelization. Therefore, SAP decided to improve classic MRP, pushing the MRP logic into the database layer and creating MRP Live.
MRP Live was first available in SAP ERP when running on the SAP HANA database, but it had to be activated with a business function. In SAP S/4HANA, MRP Live is active by default and is the recommended solution for materials planning.
Besides performance, MRP Live offers other benefits, such as the fact that there is a new transaction with more flexible selection criteria that replaces all the classic MRP transactions. Recall that SAP S/4HANA also brought the PP/DS functionality from SAP APO into its code; the new MRP Live is also capable of planning materials with PP/DS heuristics, which means that you can have a single planning run to plan all the materials.
Finally, another key advantage lies in what is to come. The new MRP Live has been defined by SAP as the future architecture, which means that all the innovation in this area will be focused on MRP Live, rather than classic MRP. Therefore, it is highly recommended that new SAP S/4HANA implementations use MRP Live as their default planning tool.
MRP Cockpit
Innovations in SAP S/4HANA were focused not only on MRP performance, but also on usability and user interface improvements.
In SAP ERP, the traditional user interface was SAP GUI, a program installed on the end user computer and used to access SAP ERP. In SAP GUI, you could run MRP and evaluate the results using different transactions—but a common complaint from end users was that those transactions were cumbersome and not intuitive or user-friendly.
SAP S/4HANA was designed with a strong emphasis on leveraging cloud computing technologies to support the future IT landscapes of companies running SAP. Therefore, there is a new web-based user interface called SAP Fiori. In SAP Fiori, the transactions have been replaced with applications, and there is a strong focus on usability and improving the overall user experience (even though you can still call old transactions in SAP Fiori). You can still use the old SAP GUI UI in SAP S/4HANA, but you can also access it through the web browser using different devices, like a tablet or a smartphone, by logging into the SAP Fiori launchpad.
A new set of MRP applications collectively called MRP Cockpit was delivered in the latest versions of SAP ERP. With SAP S/4HANA, these applications were enhanced, and new applications were created as an alternate way to evaluate MRP results. For the SAP Fiori applications of MRP Cockpit, SAP has placed a strong focus on identifying and resolving shortages that may lead to supply chain disruptions. This figure shows the Monitor Material Coverage app.
The SAP Fiori applications in MRP Cockpit were created with a role-based approach: different applications were designed considering the different roles of users that execute a business process step or transaction within the organization. SAP delivers standard business roles. For example, there is a generic role for the production planner, which will allow access to all the MRP Cockpit applications, but there is also a role specifically created for the planner responsible only for external procurement, which will only include the applications relevant for materials procured externally.
These SAP Fiori applications were also developed while focusing on improving the user experience and productivity and thus offer additional features, such as charts and visual highlights of issues.
SAP also keeps improving the apps; there are new features and improvements delivered in each SAP S/4HANA release. If you compare the MRP Cockpit apps delivered in the first release of SAP S/4HANA with the apps available in SAP S/4HANA 2023, you can easily spot improvements like new columns, new filters, and new action buttons to aid usability.
It is highly recommended to take advantage of these UI improvements and to use the SAP Fiori launchpad in any SAP S/4HANA implementation.
Demand-Driven MRP
Since MRP was introduced in SAP ERP, there have been incremental improvements, but no major change in the MRP logic. In the last decade, however, a new concept called demand-driven MRP (DDMRP) became popular in companies of different industries, and it was finally introduced in SAP S/4HANA 1709.
Traditional MRP is usually based on a forecast (or on an actual sales demand in MTO scenarios), and the lower-level products are planned according to those forecasted quantities. Any changes in the forecasted quantities for the finished products may lead to huge changes and exceptions for the lower-level products. If the forecasted quantities are incorrect, you may end up with excess stock or low service levels.
The new DDMRP tries to create stock buffers for strategic materials, allowing the demand to be fulfilled by the buffer. These stock buffers will protect the lower-level products from any changes to the finished products’ demand and help reduce the total replenishment lead time. Because the demand generally can be fulfilled by the buffer, DDMRP helps to increase service levels, keeping optimal stock levels for your products.
SAP S/4HANA offers a new set of SAP Fiori applications that will help classify and define which specific products should be buffered, automatically calculate the buffer quantities, and plan and execute the replenishment in order to maintain the buffer levels. Technically speaking, the new DDMRP is a new MRP type in which a maximum stock level, a reorder point, and a safety stock are automatically calculated by the system according to the average daily usage of each product.
Predictive Material and Resource Planning
Although MRP is basically an operational tool, you often need to carry out simulations to understand how a change to the demand plan will affect the MRP results. For example, you might need to understand if your suppliers will be able to provide enough raw material or if you will have enough capacity in your plant to manufacture the forecasted quantities.
In SAP ERP, a tool called long-term planning (LTP) was used for simulation purposes. It was basically a simulated MRP, with very similar transactions and results. Although LTP is still available in SAP S/4HANA, a new functionality called predictive material and resource planning (pMRP), released in SAP S/4HANA 1909, can also be used for simulation purposes.
pMRP provides an improved graphical interface and a strong focus on capacity simulations, and it can be used to validate a demand plan. It also can be used in conjunction with the new DDMRP, allowing a forecast to influence the DDMRP buffer calculation.
Editor’s note: This post has been adapted from a section of the book Material Requirements Planning with SAP S/4HANA by Caetano Almeida.
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