In this blog post, we’ll look at the MRP 1 view in SAP S/4HANA systems.
You maintain material master views with Transaction MM02 or by following the menu path in SAP S/4HANA: Logistics > Production > Master Data > Material Master > Material > Change > Immediately. Select the MRP 1 tab to display the screen shown in this figure.
The fields that are most relevant to costing are in the General Data and Lot Size Data sections. We’ll consider each section in turn.
General Data
In the General Data section, let’s examine fields relevant to costing.
Base Unit of Measure
You manage stocks of a material in the Base Unit of Measure. The system converts all quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. You can use alternative units of measure, for example, for purchasing and sales.
Alternative Units of Measure: You enter alternative units of measure in the material master by clicking the Additional Data button in the previous figure and then selecting the Units of measure tab.
Material Status
An entry in the Material Status (plant-specific material status) field determines if you cost the material. Plant-specific material status can also be used for purposes other than costing, such as to issue a warning or error message when a purchase or production order is created for discontinued materials. You can view the list of possible settings behind plant-specific material status with configuration Transaction OMS4 or via IMG menu path Controlling > Product Cost Controlling > Product Cost Planning > Material Cost Estimate with Quantity Structure > Settings for Quantity Structure Control > Material Data > Check Material Status.
Discontinued and Obsolete Materials: You typically set a plant-specific material status for discontinued and obsolete materials:
- Another material will replace discontinued material after the remaining inventory is consumed. You can allow discontinued material to be costed, but you might want to issue a warning or error message when creating a purchase order. The Discontinued parts section in the MRP 4 view allows you to enter the material number that you can use in materials planning to replace the discontinued material as its warehouse stock is depleted.
- Obsolete materials aren’t intended for further use. This can arise, for example, if the material is outdated or has a design problem. Typically, you may decide to scrap or sell the remaining inventory. In the case of obsolete material, you can set the plant-specific material status to display either a warning or an error message during costing if the material is contained in the bill of materials (BOM) of an active assembly.
You can also use the plant-specific material status to restrict the use of new parts during different stages of developing or phasing out a product.
Valid From
The Valid from field indicates the date the plant-specific material status is valid. For example, if you block a material from purchasing with the material status, you cannot create purchase orders after the valid from date.
ABC Indicator
The ABC Indicator determines the importance of the material during cycle counting based on consumption:
- A: Important part, high consumption value
- B: Less important part, medium consumption value
- C: Relatively unimportant part, low consumption value
You can configure the ABC Indicator by following the IMG menu path Logistics – General > Material Master > Settings for Key Fields > Extend ABC Indicator. Now, let’s discuss the Lot size data section of the MRP 1 view.
Lot Size Data
MRP determines proposed quantities and dates for manufacturing and purchase orders so you can meet the needs of independent requirements such as customer sales orders. MRP uses information from the Lot size data fields of the MRP 1 view to calculate the quantity and date of proposed orders.
Example 1: Lot Size Data: A customer places an order for a quantity of 120 items, due for delivery one year from the date you place the sales order. MRP determines the following proposed orders:
- Requisition or purchase orders for components
- Manufacturing orders for assemblies
MRP also determines the quantity (lot size) and the date to create each order. The quantity and date depend on the quantity of components in stock, work center capacity, and requirements generated by other sales orders. The following are the two proposals in this example:
- One manufacturing order for a quantity of 120 during the next year
- Manufacturing orders with a quantity of 10 each month over the next year
You can manually change system-generated requirements as required.
Let’s examine the fields most relevant to costing in the Lot size data section of the MRP 1 view.
Fixed Lot Size
You use the Fixed lot size field to enter the quantity that you’ll order in the event of a shortage. Two possible scenarios are:
- If the shortage is less than the fixed lot size, you’ll order the fixed lot size quantity.
- If the shortage exceeds the fixed lot size, the quantity ordered will be in multiples of the fixed lot size.
Pharmaceutical and food industry companies often use fixed lot size to ensure that the batch size always matches certified quantities. You can also use fixed lot size to determine batches involving pallets or tank contents.
Note: You cannot use the Fixed lot size field with Minimum Lot Size or Maximum Lot Size entries.
Assembly scrap increases production order plan quantity to compensate for the scrap quantity. Assembly scrap in combination with fixed lot size instead reduces the production order yield quantity, while the plan quantity remains fixed.
Example 2: Fixed Lot Size: You define a fixed lot size of 50 pieces for an in-house product. The system can only create production orders with a procurement quantity of 50 pieces each to cover requirements. To cover a requirement of 100 pieces, you must produce 125 pieces altogether, considering an assembly scrap of 20%. The system creates 3 receipts, each with 50 pieces, while the yield of each receipt is 40 pieces.
Assembly Scrap
You can enter a value in the Assembly scrap (%) field to indicate the percentage output from manufacturing orders that doesn’t meet required production quality standards. You determine this number from your production statistics of scrap rates and update it before each costing run.
A costing run is a collective processing of cost estimates. The Assembly scrap (%) field only appears in the material master. You can set the Net ID indicator on the BOM item Basic data tab to ignore assembly scrap for a component.
Note: Assembly Scrap: You can access more detailed information on assembly scrap in Production Variance Analysis in SAP S/4HANA (SAP PRESS, 2023).
Editor’s note: This post has been adapted from a section of the book Product Cost Controlling with SAP S/4HANA by John Jordan and Janet Salmon.
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