MRP and Forecasting Views MRP and Forecasting Views MRP and Forecasting Views in SAP Material Master in SAP Material Master in SAP Material Master and MRP Org. Structure and MRP Org. Structure and MRP Org. Structure LOG- -MD MD- -004 004 LOG LOG-MD-004 October 7, 2008 October 7, 2008 October 7, 2008 LaGOV LaGOV Version 1.01 Updated: 10/02/2008
Agenda Logistics, Ground Rules & Introduction Workshop Objectives Project Overview/Timeline Business Process Review – As Is Process Discussions – SAP terms glossary – Process improvement opportunities – SAP concepts & functionality – Leading practices – Enterprise readiness challenges Action Items Questions Friday, November 07, 2008 2
3 Before we get started ... Logistics Friday, November 07, 2008
Ground Rules Has everybody signed in? Everybody participates – blueprint is not a spectator sport Silence means agreement Focus is key – please turn off cell phones and close laptops Challenge existing processes and mindsets Offer suggestions and ideas Think Enterprise Ask questions at any time One person at a time please Creativity, cooperation, and compromise Friday, November 07, 2008 4
Introduction Roles Process Analyst and Functional Consultant (IBM) – lead and facilitate the discussions and drive design decisions Documenter (State Employee) – take detailed notes to support the formal meeting minutes to be sent by the Process Analyst to all participants for review and feedback Team Members (LaGov) – provide additional support for process discussions, address key integration touch points Subject Matter Experts – advise team members on the detailed business process and participate in the decisions required to design the future state business process Round the Room Introductions Name Position Agency Friday, November 07, 2008 5
Project Phases Five Key Phases Preparation Realization Preparation Business Blueprint Go Live Support Project Final and • Strategy & Approach Defined • Development & Unit Testing • Go-Live Support • Project Team Training • Integration Testing • Performance Tuning • End-User Training Materials • Business Process Definition • User Acceptance • Development Requirements • Technical Testing • End-User Training • Conversion Friday, November 07, 2008 6
Tentative Project Timeline Tentative implementation dates are planned as follows: Functionality Tentative Implementation Date Budget Prep October 2009 DOTD February 2010 Core Modules All Agencies July 2010 Additional Modules January 2011 May – June 2008 July 2008 August – Dec 2008 January 2009 Project Start-Up Phased deployment will be Blueprint confirmed/updated before completion of Blueprint activities! Friday, November 07, 2008 7
Blueprint Schedule - Tentative Please refer to the handout for the upcoming Blueprint Sessions Friday, November 07, 2008 9
Blueprint Objectives 1. Review and discuss the current or As-Is Business Processes: • Which helps to drive out the business requirements business requirements • As well as the integration points integration points with other processes 2. Define Master Data • Address key integration points • Support organizational requirements • Consistent and appropriate use of data fields Friday, November 07, 2008 Friday, November 07, 2008 10 10 10
Blueprint Objectives 3. Define Future or To-Be Business Processes based on: • Best Practices inherent in SAP • Intellectual capital from other SAP implementations • State business requirements 4. Identify Development Requirements: • Forms • Reports • Interfaces • Conversions • Enhancements • Workflow Friday, November 07, 2008 Friday, November 07, 2008 11 11
Blueprint Objectives 5. Understand and communicate any Organizational Impact / Enterprise Readiness Challenges 6. Gather system Security Authorizations and State- wide Training Requirements Friday, November 07, 2008 Friday, November 07, 2008 12 12 12
Today’s Workshop Objectives 1. Overview of general Inventory Replenishment and MRP concepts 2. Review and discuss the current or As-Is replenishment processes and logic 3. Define key MRP Material Master data: • MRP types • Lot sizing • Lead time elements • MRP controller • Organizational levels 4. Review SAP MRP functionality and control data – system demo 5. Review SAP Forecast functionality 6. Determine forecast applicability based on consumption history Friday, November 07, 2008 13
FUTURE CONSIDERATIONS MRP/Forecasting Material Master and Org. Elements: – MRP types – Lot sizing procedures – Special procurement keys – Lead time elements to be applied – Use of MRP Areas or Storage Location MRP – Definition and use of MRP Controller – Locations where MRP applies – Use of statistical forecast – Functional development objects required – Conversion requirements and logic Friday, November 07, 2008 14
Project Scope Systems to be Replaced DOTD – PIMS (Purchasing Inventory Management System) DPS – VENICE WILDLIFE & FISHERIES – PARADOX Friday, November 07, 2008 15
16 AS-IS Process Flow Friday, November 07, 2008
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Overview of General Inventory Replenishment and MRP Concepts Friday, November 07, 2008 21
Overview of General MRP Concepts Overview of Inventory Control - Purpose of Holding Inventory Different scheduling techniques can be used with different inputs for demand. The selection of the input will impact the logic used to generate the planning requirements. Demand inputs can come from: Forecast = The anticipated quantity that will be required at some time in the future (push-based) Replenishment = A quantity that equals the difference between a fixed target inventory level and current inventory (pull-based) Make-to-order = The exact quantity that is needed for orders (pull-based) Friday, November 07, 2008 22
Overview of General MRP Concepts Overview of Inventory Control - Purpose of Holding Inventory Inventory is used as a buffer between uncertain and variable demand and supply. Inventory Supply Demand With variations and uncertainty Acting as buffer With variations and uncertainty in in quantity and time quantity and time Inventory Functions Decouples operations Allows for mismatches between supply and demand rates Helps maintain stable business operations when the Supply Chain is unreliable Allows for unexpected demands (size or timing) Allows for deliveries which are smaller or later than expected Maintains service levels to customers Friday, November 07, 2008 23
Overview of General MRP Concepts Overview of Inventory Control - Inventory Variation Would you plan these two products differently? Product A Product B avg avg Demand Demand Time Time Friday, November 07, 2008 24
Overview of General MRP Concepts Fixed Quantity System - Constant Demand, Constant Lead-time and Constant Supply If demand, lead-time and supply were all constant, the reorder quantity would always bring inventory up to the same level. Quantity Q Q Reorder Quantity Reorder Level Time Lead-time Friday, November 07, 2008 25
Overview of General MRP Concepts Fixed Quantity System - Uncertain Demand Q Even though the reorder Q quantity is fixed, demand uncertainty causes Reorder Quantity inventory levels to fluctuate Level and may result in the use of safety stock to cover demand over the lead-time. Safety Stock Lead-time Time Friday, November 07, 2008 26
Overview of General MRP Concepts Fixed Quantity System - Uncertain Lead-time Even though the reorder quantity is fixed, lead-time uncertainty causes inventory levels to fluctuate and may result in the use of safety stock to cover demand over varying lead- time. Q Quantity Reorder Level Q Safety Stock Lead-time Lead-time Time Friday, November 07, 2008 27
Overview of General MRP Concepts Fixed Quantity System - Uncertain Supply Even though the reorder quantity is fixed, supply uncertainty causes inventory levels to fluctuate and requires safety stock. Q Reorder Quantity Level Q Q Safety Stock Production quantity does not equal Q Time Lead-time Friday, November 07, 2008 28
Overview of General MRP Concepts Fixed Quantity System - Uncertain Demand, Lead-time and Supply The combined effects of uncertain demand, lead-time and supply results in higher safety stock and higher average inventory levels as well as greater inventory variability Quantity Reorder Level demand variability safety stock Safety lead-time variability safety stock Stock supply variability safety stock Time Friday, November 07, 2008 29
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