R/3 System

MRP Areas

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Contents
Introduction ..........................................................................................................................................3
Basics....................................................................................................................................................4
MRP Up To Now ....................................................................................................................................4
MRP Areas.............................................................................................................................................5
Settings ..................................................................................................................................................6
The MRP Process.................................................................................................................................7
MRP Areas for Storage Locations..........................................................................................................8
Subcontractor MRP Area .......................................................................................................................8
Plant MRP Area .....................................................................................................................................9
Planning Strategies at MRP Area Level ...........................................................................................10
Multi-Plant Total Planning.................................................................................................................10
Scenarios............................................................................................................................................11
Stock Transfer Plant to MRP Area .......................................................................................................11
Subcontractor Third-Party Order Processing .......................................................................................13
Multi-Level Subcontracting...................................................................................................................13
Integration Sales and Distribution (SD)................................................................................................14
ATP Availability Check ......................................................................................................................15
Forecast and Long-Term Planning...................................................................................................16
Summary.............................................................................................................................................17

MRP Areas July 1999

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Introduction
The globalization of markets means that companies are forced to develop
their products quicker (time to market), to increase the variety of products,
and to react flexibly to changes in the market. This results in special
demands on modern MRP (Material Requirements Planning).
The main function of MRP is to guarantee the availability of materials by
monitoring stocks and to automatically create order proposals for
purchasing and production. MRP tries to optimize service levels but also
minimize costs and capital lock-up.
One of the demands on modern MRP is decentralized MRP for individual,
independent planning areas. This requirement is fulfilled by the
implementation of MRP areas. MRP areas are freely-configurable
organizational units within SAP R/3 with independent MRP.

Basics
MRP Up To Now
Up to R/3 Release 4.5 MRP took the following organizational units into
consideration:
q Plant
q Storage location

MRP Organizational Units

0080
0070

0100

Plant 1000

0060

0090

0050
0040

0110

0120

0030
0020

V 5013

V 5012

0010

Storage locations
Subcontractors
The lowest organizational unit was the storage location. However, this type
of planning was only based on reorder points. Deterministic or forecastbased planning was not supported at this level.
The plant was the central organizational unit for MRP and inventory
management. All requirements were combined in the planning run to create
procurement elements. If you wanted to plan a certain area separately, you
had to plan each plant individually.

Planning at Plant Level Without MRP Areas

Requirements for
assembly line 1

Requirements for
assembly line 2

Storage locations
0110-0120

Storage locations
0010-0040

MRP

In-house production

Other
requirements

Subcontractor
requirements

Storage locations
0050-0100

V5012

V5013

Planned orders
Purchase requisitions
Schedule lines

External procurement

The parameters in the material master record that control MRP for a material
were valid for the whole plant. It was not possible to differentiate between
different types of requirements nor physically separate consumption
locations.

MRP Areas
MRP areas were introduced with R/3 Release 4.5. They represent
organizational units, for which MRP is carried out separately. An MRP area
can include one or more storage locations of a plant or include just one
subcontractor. The materials involved are needed at the various different
production lines, shop floor areas, storage locations, or subcontractors.

MRP Areas

0080
0070

0110

0100

Plant
1000
1000

0060

0090

0120

A200

0050

A100

0040
0030

0020
V 5013

A400

V 5012

A300

0010

Storage locations
MRP areas

Subcontractors

You can define MRP areas within a plant and then carry out MRP
specifically for each area. This enables you to differentiate between different
types of requirements (spare parts or series, for example) in MRP, thus
providing more clarity, and to determine the respective consumer. It allows
you to provide the right quantity of materials at the right time for each
individual MRP area. For each MRP area, you can control the staging and
procurement of parts that are produced in-house or purchased. You can also
plan the provision of components for individual subcontractors.
You no longer need to segment plants to accommodate the decentralization
of logistical operations, for example.
You can differentiate planning for one particular material according to the
MRP areas; planning for a storage location MRP area can differ from that for
a subcontractor MRP area.
All MRP procedures are supported for MRP areas and you can display the
results of the planning run for each MRP area.

Settings
The existing planning file entries at plant level need to be converted to
planning file entries at MRP area level. This conversion can also be useful
even if you do not implement MRP areas. The new planning file improves
system performance during the planning run, especially when planning
several plants. The conversion creates a plant MRP area for each plant and
the existing planning file entries are copied into the new planning file. If you
assign a material to a new MRP area, a new record for this assignment is
written in the planning file.
In Customizing for MRP, you must activate MRP for MRP areas and create
the MRP areas for each plant. Once you activate MRP with MRP areas, this
type of MRP is active for all plants and cannot be reversed.
MRP does not actually change until you assign the materials that are to be
planned separately to MRP areas, one after the other. The only difference
before you assign materials to MRP areas is an additional field (MRP area
exists) in the material master. Each material can be assigned to one or more
MRP areas by creating an MRP area segment in the material master for each
MRP area. If you do not assign a material to an MRP area, the material
remains in the plant MRP area. You can delete the assignment of a material
to an MRP area as long as no postings for the material exist in that MRP
area. If you assign a material to a new MRP area, a new record for this
assignment is written in the planning file.
You can define individual MRP and forecast parameters for each MRP area
that you assign to a material. These can differ from those defined in the
material master at plant level. As an example, you can define different MRP
controllers for each MRP area that is assigned to a material.

The system automatically sets planning file entries resulting from changes in
MRP-relevant data at MRP area level in the same way that they were set at
plant level. For exceptional cases, you also have the option of creating the
entries manually.

The MRP Process

To plan independent requirements of a material, you can:
q Create a sales order with reference to a storage location. The customer
requirement is assigned to an MRP area via the storage location.
q Enter planned independent requirements in Demand Management,
specifying the MRP area. This is only possible if you use the make-tostock production planning strategy.
q Use forecast requirements for each individual MRP area of a material.
During the total planning run (please see unit 5), the system plans each MRP
area for every material and then plans the rest of the plant. You can also start
a total planning run for just one or several particular MRP areas (if you have
defined the scope of planning in Customizing). The system calculates the net
requirements for the material in the MRP area and whether they are covered
by the:
q stock that is available in that MRP area
q planned receipts for that MRP area.
If there is a shortage, the system creates an order proposal for the MRP area.
You display and process the results of the planning run for each individual
material and MRP area in the MRP list and the stock/requirements list. You
can select material for one or all MRP areas of a plant in the collective
display of these lists but the individual lists are calculated for each MRP
area.
The system can create delivery schedules for MRP areas during the planning
run. This is only possible if a valid vendor and a valid scheduling agreement
exist. The system reads the source list for each material during the planning
run. A delivery schedule is then assigned to an MRP area via the receiving
storage location that is entered in the scheduling agreement.
There are three types of MRP area:

MRP Areas for Storage Locations

This type of MRP area represents a storage location that is planned
separately from the rest of the plant.
A storage location can only be assigned to one MRP area. However, you can
group several storage locations into one MRP area. You do this when you
want to plan these storage locations together but separately from the other
storage locations in the plant.
This procedure can be used to plan the procurement and staging of
components on a particular production line, for example. The process is
shown in the graphic:

Planning at MRP Area Level

Requirements for
production line1

Requirements for
shop floor 2

Storage locations
0010-0040

Storage locations
0110-0120

MRP area 1

MRP
In-house production

MRP area 2

MRP
External procurement

Receipt (planned orders, for example) and issue elements (planned

independent requirements, sales orders, for example) are assigned via the
receiving and issuing storage locations. The system checks whether the
receiving or issuing storage location is assigned to an MRP area and then
assigns the receipt of issue element to this MRP area. If the system is unable
to determine a storage location, it assigns the element to the plant MRP area.

Subcontractor MRP Area

You use the MRP area for subcontractors to plan components that you
provide for a particular subcontractor from a specific plant separately from
all other requirements. Each subcontractor corresponds to one MRP area, as
shown in the following graphic.

MRP for each Subcontractor

Components to be provided
Subcontractor 1

Components to be provided
Subcontractor 2

MRP area 1

MRP area 2

MRP

MRP

Stock
Stocktransfer
transferfrom
from
plant
planttotoMRP
MRParea
area11

Third-party
Third-partyorder
orderprocessing
processing

During the planning run, the system explodes the assembly BOM and
determines the requirements of the components to be provided to the
subcontractor. The dependent requirements of the components to be
provided are only assigned to the subcontractor MRP area if the system
determines the subcontractor as the source of supply for the assembly.
You can set special procurement keys according to the requirements
situation. The system uses these keys to determine whether to
q create stock transfer reservations from the plant to the stock of material
provided to the subcontractor or
q create planned orders or purchase requisitions within subcontracting
third-party order processing.

Plant MRP Area

The plant MRP includes the entire plant with all its storage locations and
subcontractor stocks that are not planned separately. Once you have defined
separate MRP areas, the plant MRP area is reduced by exactly that number
of storage locations and subcontractor stocks.
This type of MRP area is always used for finished products and assemblies
that are intended for make-to-order or engineer-to-order production.
Independent requirements for finished products or assemblies are planned
using the planning strategy Planning without final assembly, for example. The
requirements can only be entered at plant MRP area level, where make-toorder production is planned.

Planning at MRP Area Level

Requirements for
assembly line 1

Requirements for
shop floor area 2

Plant
Subcontractor
requirements requirements

Storage locations
0010-0040

Storage locations
0110-0120

Storage locations
0050-0100

MRP

MRP

MRP

In-house production

V5012

V5013

MRP MRP

External procurement

Planning Strategies at MRP Area Level

Make-to-stock production is supported at MRP area level. That is to say,
MRP areas for storage locations or subcontractors can be used for finished
products, semi-finished products, and assemblies that are planned as maketo-stock production. The following types of make-to-stock strategies can be
used:
q Make-to-stock (anonymous)
q Gross requirement planning
q Planning with final assembly
q Planning at assembly level

Multi-Plant Total Planning

To avoid having to plan each plant individually, you can plan as many
plants as you want in one total planning run. You use the scope of planning
to define whether total planning is to be carried out for:
q One or more plants
q One or more MRP areas
q A combination of plants and MRP areas

10

The following graphic shows the dependencies involved:

Multi-Plant (Site) Total Planning

Plant 1000
stock transfer
Plant 2000

scope of planning
stock transfer

Plant 3000
A simplified example:
Plant 1000 produces mountain bikes. The wheels are produced in plant 2000
and the spokes for the wheels in plant 1000. Plant 1000 would carry out an
MRP run to determine the requirements for wheels. Plant 2000 would then
carry out an MRP run to determine the dependent requirements for spokes.
Plant 1000 would then have to re-run MRP to determine dependent
requirements for components of the spokes.
Previously, the planning sequence of the plants had to be defined exactly, so
that all requirements were planned correctly in the various plants. From
Release 4.5 it is sufficient to define the scope of planning. The dependencies
between plants or MRP areas are then automatically included and planned
in the total planning run.

Scenarios
Stock Transfer Plant to MRP Area
You can procure materials for MRP areas, whether they are for separate
storage locations or subcontracting MRP areas, by transferring stock from
the plant to the MRP area.
You can procure components that you provide to a subcontractor (for the
production of an assembly) by transferring stock from a plant to the
subcontractor MRP area, as shown in the graphic below:

11

MRP Area at Subcontractor Level :

Stock Transfer

Plant MRP Area

Delivery of assembly
MRP Area
subcontractor
Stock transfer of components to be provided

The system determines the subcontractor as the vendor for the assembly
(using the source list) and creates a purchase requisition. The assembly BOM
is exploded and the dependent requirements of the components to be
provided are assigned to the subcontractors MRP area. Based on the special
procurement key in the MRP area segment of the components to be
provided, the system determines that the components are to be procured by
means of stock transfer from the plant to the subcontractor MRP area. In this
situation, a stock transfer reservation is created.
Using MRP areas Storage Location MRP can use all MRP procedures
(instead of just the reorder point planning procedure).
The system creates a stock transfer reservation as a receipt element in the
MRP area concerned and a material reservation as an issue element in the
plant MRP area. The actual procurement is processed by the plant and the
stock transfer posting to the MRP area refers to the reservation.

Special Procurement Type:

Stock Transfer from Plant to MRP Area

Plant MRP area

Stock transfer of
components to be
provided

12

MRP area
storage locations

Subcontractor Third-Party Order Processing

You use this process for components that you provide to a subcontractor by
procuring them externally. The advantage is that the components are
delivered directly from the vendor to the subcontractor, as shown in the
following graphic.

Special Procurement Type:

Subcontractor Third-Party Order Processing

Plant MRP area

ord ers

Delivery
of assembly

MRP area
Subcontractor 2

s
er s
l iv nt
de on e
p
om

Vendor Z

The system determines Subcontractor 2 as the vendor for an assembly and

creates a subcontract purchase requisition. The BOM is exploded and the
dependent requirements of the components to be provided are assigned to
the MRP area for Subcontractor 2. You can then convert the purchase
requisitions to purchase orders, that is, subcontractor third-party orders.
When you display a subcontracting third-party order, the subcontractors
address is the delivery address. The components to be provided are
delivered directly to the subcontractor and goods receipt is posted to the
subcontracting stock.

Multi-Level Subcontracting
You can also use MRP areas to plan multi-level subcontracting. For example,
you order Assembly 1 at subcontractor X. Subcontractor X needs
Assembly 2 for his/her production, which he/she obtains from
subcontractor Z. Subcontractor Z needs the components to be provided
3, which were provided from Plant MRP area 1000.

13

Multi-Level Subcontracting

MRP area

Assembly 1

Co
mp
on
en
ts
to
be
pr
ov
ide
d

Subcontractor X

Assembly 2

Plant MRP area 1000

MRP area

3
Subcontractor Z

The system determines Subcontractor X as the vendor for Assembly 1 and

creates a subcontract purchase requisition. The BOM for Assembly 1 is
exploded and the dependent requirements of Assembly 2 are assigned to
the MRP area of Subcontractor X.
The system generates a subcontractor planned order (or purchase requisition
or delivery schedule) to cover the dependent requirements of Assembly 2.
The BOM for Assembly 2 is exploded and the system generates dependent
requirements for the components to be provided 3. These dependent
requirements are assigned to the MRP area for Subcontractor Z.
As the special procurement key is set in the MRP area segment of the
components to be provided 3, the system determines that the components
are procured by transferring stock from the plant to the MRP area for
Subcontractor Z.

Integration Sales and Distribution (SD)

Sales order
There are two possibilities to integrate MRP areas in sales orders:
q You can use a user-exit to update MRP areas in the sales orders with
your own MRP area determination, or
q The system can determine MRP areas by the storage locations in sales
orders.
Independent requirements are reduced each time goods issue is posted for a
delivery for a sales order.

14

Delivery
You can create an SD delivery and post goods issue when you are in the list
of stocks for a subcontractor. The delivery is used for delivering input
material to be provided to that subcontractor.

SD Delivery for Components to be

Provided to a Subcontractor
Vendor

Post
goods issue

Comp X1

Comp X2

Comp X3

Subco A

Create
delivery

Comp X4

ATP Availability Check

Once MRP with MRP areas has been activated, the ATP check is also
activated at MRP area level.
Storage location and subcontractor stock is not included in the ATP stock of
the plant MRP area. In addition, receipt and issue elements of separate MRP
areas are not taken into account in the plant MRP area.
A separate ATP check is carried out for each MRP area. The receipt and issue
elements are assigned to the correct MRP area based on the receiving and
issuing storage locations. There are two types of ATP check:
q ATP check without storage location check
This ATP check is single-level; it is only carried out within the MRP area.
No check takes place against the storage location entered in a sales
order, for example. If more than one storage location has been assigned
to the same MRP area, all stocks, receipts, and issues are taken into
consideration.
q ATP check with storage location check
If you have assigned several storage locations to an MRP area, you can
define an ATP check at storage location level. The system determines the
quantity available in the storage location and then the corresponding
MRP area. The result of the ATP check is the smaller of the two
quantities.

15

Forecast and Long-Term Planning

All the forecast models and automatic model selection are available for the
MRP area. You can carry out consumption-based planning at MRP area level
if you have created a material master record with valid MRP data and
forecast parameters. Consumption values are updated separately for each
MRP area. However, you can only carry out forecasting for MRP areas in
master planning and not online in the maintenance of the material master (as
for the plant area).

Selection
Interactive

Automatic

Constant model
Trend model
Seasonal model
Seasonal trend
model

Automatic model
selection

Models

Parameters

Basic value
Basic value
Trend value
Basic value
Seasonal indices

All different forecast models and the automatic

model selection are available for the MRP area.

All long-term planning functions are also available at MRP area level.

16

Summary
From R/3 Release 4.5 there are MRP areas. These enable the decentralization
of logistical operations (fractal factory) and also differentiate between
different types of requirements. Now storage locations can be grouped and
planned separately. For each MRP area you can control the staging and
procurement of parts that are procured in-house or purchased. With the
MRP areas you can also carry out subcontracting/third-party order
processing
You can use different forecast models and demand management on MRP
area level. Using long-term / simulative planning you can verify different
what-if scenarios.

Integration of MRP Areas in the Logistic Business Process

Master planning
Material forecast

Demand management

Long-term
planning

Procurement
Total, single, multi-level planning,
avail. check, MRP lists, stock reqm. lists,
order progress, pegged requirements

MRP

Sales and distribution

Sales

Shipping

All standard MRP procedures are supported at MRP area level. In Sales and
distribution you can create a sales order with determination to an MRP area.
Every delivery of a sales order reduces the independent requirement for an
MRP area.
Therefore, MRP areas are fully integrated in the logistic chain.

17