S4525 · Consumption-Based Planning and Forecasting in SAP S/4HANA · Unit 1

Unit 1: Introduction to Consumption-Based Planning

This unit explains what material requirements planning (MRP) is supposed to achieve, which procurement proposals it produces, which prerequisites must exist before it can run, and how the consumption-based procedures (reorder point, forecast-based and time-phased planning) differ from demand-based MRP. These fundamentals are the vocabulary for every later unit.

Lesson 1 · Introducing the Material Requirements Planning (MRP) Process

After this lesson you can

Explain what MRP does and what results a planning run produces
Name the factors that decide which procurement proposal is created
List the prerequisites that must be in place before planning

Key concepts

MRP has one main job: keep an eye on stock levels and, whenever a shortage is foreseen, generate procurement proposals automatically so that purchasing or production can act in time. The planning run concentrates purely on shortage situations. Anything the run cannot solve on its own (for example a date that already lies in the past) is reported to the MRP controller as an exception message rather than silently ignored.

A planning run can create three kinds of procurement proposal. They differ strongly in how "binding" they are:

Procurement proposal	Character	Typical follow-on
Planned order	Internal, non-binding planning element. Can be changed, rescheduled or deleted by the next run at almost any time.	Converted to a production order (in-house) or to a purchase requisition (external).
Purchase requisition	Internal, non-binding request to purchasing. Also freely changeable by MRP unless firmed.	Converted to a purchase order (manually or automatically).
Scheduling agreement delivery schedule line	Binding: it is part of an outline agreement and is communicated to the supplier, either as-is or via forecast/JIT delivery schedules.	Transmitted to the supplier; goods receipt against the scheduling agreement.

Note that a planning run never creates a purchase order directly, nor production orders, sales orders or outline agreements. Purchase orders always arise in a second step from a requisition.

What decides the type of proposal?

Two factors work together:

Procurement type (material master, MRP 2 view, plant level): E = in-house production, F = external procurement, X = both possible. Because it is a plant-level field, the same material can be produced in one plant and bought in another.
The planning run method: SAP S/4HANA offers MRP Live (optimized for SAP HANA, MD01N) and classic MRP (the ERP-style run, e.g. MD01, MD02, MD03). Their behaviour for externally procured materials differs.

Material	MRP Live	Classic MRP
In-house produced (`E`)	Planned orders	Planned orders
Externally procured (`F`), valid scheduling agreement exists	Always schedule lines	Depends on the creation indicator for schedule lines (none / only schedule lines / within opening period)
Externally procured (`F`), no scheduling agreement	Always purchase requisitions	Depends on the creation indicator for purchase requisitions: planned orders, purchase requisitions, or requisitions only within the opening period

In classic MRP a planned order for an externally procured material is just an intermediate step: it must first be converted into a purchase requisition before purchasing can create a purchase order from it.

Process flow

Stock / consumption situation→Planning run (MRP Live or classic)→Planned order / PR / schedule line→Production order or purchase order

Prerequisites for consumption-based planning

Three things must exist before a material can be planned automatically:

MRP areas – the organizational unit in which planning happens. A plant MRP area exists automatically for every plant; storage location and subcontractor MRP areas are optional and defined in Customizing (see Unit 2).
Plant parameters – plant-specific planning settings such as number ranges for planned orders/requisitions, purchasing processing time and which stocks (e.g. blocked stock, stock in transfer) are included, maintained with OMI8.
MRP data in the material master – the MRP views (MRP 1–4) at plant level, optionally refined at MRP area level, created e.g. with MM01 / changed with MM02.

Configuration (IMG)

SPRO › Materials Management › Consumption-Based Planning › Plant Parameters › Carry Out Overall Maintenance of Plant Parameters (OMI8)

SPRO › Materials Management › Consumption-Based Planning › Master Data › MRP Areas › Define MRP Areas

Differences to SAP ERP

In SAP ERP, MRP had to be activated per plant and MRP areas had to be switched on explicitly. In SAP S/4HANA every plant is automatically MRP-relevant and MRP areas are always active – there is nothing to activate. After a system conversion from ERP, report PPH_SETUP_MRPRECORDS fills the new planning file table with the operational MRP records, and any total dependent requirements must be cleaned up beforehand because neither MRP Live nor classic MRP in S/4HANA supports them (HANA is fast enough to read individual dependent requirements, so cumulated totals are obsolete).

Newer releases (2021–2025)

The planning file in S/4HANA is held in the new table PPH_DBVM (replacing ERP's MDVM/MDVL). SAP positions MRP Live (MD01N, Fiori Schedule MRP Runs) as the strategic run; classic transactions remain available for features MRP Live does not yet cover. Suppliers used as sources or subcontractors are maintained as Business Partners via BP, and material numbers can be up to 40 characters.

Exam focus

Proposals MRP can create for an external material: purchase requisitions and scheduling agreement schedule lines (classic MRP can optionally create planned orders). Never purchase orders.
Factors that determine the proposal type: procurement type and the run method (MRP Live vs classic).
Procurement type values: E in-house, F external, X both.
Schedule lines are binding; planned orders and requisitions are not.
Prerequisites: MRP areas, plant parameters, MRP views in the material master. No MRP activation needed in S/4HANA.

Lesson 2 · Outlining MRP Procedures

After this lesson you can

Distinguish demand-based from consumption-based planning
Describe reorder point, forecast-based and time-phased planning
Choose a suitable procedure for a given material

Key concepts

The MRP procedure of a material is set through the MRP type in the material master (MRP 1 view), separately for each plant or MRP area. Hence one material can be planned with reorder point planning in one plant and forecast-based planning in another. There are two families of procedures:

Aspect	Demand-based (MRP)	Consumption-based (CBP)
Trigger for net requirements calculation	Actual and planned requirements: sales orders, dependent requirements, reservations, stock transfer requirements, planned independent requirements, safety stock	Stock falling below a reorder point, or forecast requirements derived from past consumption
Data basis	Current and future requirements	Historical consumption (forecast) or static thresholds
BOM explosion	Multilevel; generates dependent requirements for components	No reference to the master plan; no dependent requirements are generated for consumption-planned components
Effort	Higher (requirements must be maintained)	Low; easy to implement
Suitable for	High-value A parts, strongly fluctuating demand	Lower-value B and C parts with fairly steady consumption

The consumption-based procedures

Procedure	Standard MRP type	How it works
Manual reorder point planning	`VB` (with external requirements: `V1`)	The MRP controller enters reorder point (and safety stock) manually. When stock available for MRP (plant stock + fixed receipts) drops below the reorder point, a proposal is created.
Automatic reorder point planning	`VM` (with external requirements: `V2`)	Same trigger logic, but the forecast program calculates reorder point and safety stock.
Forecast-based planning	`VV`	Proposals are created when cumulated forecast demand up to a date exceeds cumulated firmed receipts (stock, production orders, POs, firmed planned orders and requisitions) up to that date. No planned independent requirements needed.
Time-phased planning	(a time-phased MRP type with a planning cycle, e.g. `R1`)	A variant of forecast-based planning: also uses history to estimate demand, but the material is only planned on fixed days defined by a planning calendar.

The reorder level should be large enough to cover the average consumption expected during the replenishment lead time (RLT), plus safety stock.

Process flow – a mixed BOM

Imagine an in-house assembly planned demand-based, consisting of two components: A (demand-based) and B (consumption-based). A multilevel run proceeds top-down:

Sales order for assembly→Planned order for assembly→BOM explosion: dependent requirement only for A→A covered by its own planned order / PR→B checked only against its reorder point

The key lesson: consumption-based components are invisible to the BOM explosion as far as requirement creation is concerned. Their replenishment is driven solely by their own stock/forecast logic. If components themselves have BOMs, explosion continues level by level until the lowest level is planned.

Choosing a procedure

As a rule of thumb, the higher the material value and the more erratic its consumption, the more demand-based planning pays off; cheap, steadily consumed items are good candidates for consumption-based procedures (combine with an ABC/XYZ analysis).

Exam focus

The MRP type controls the MRP procedure; it is maintained per plant / MRP area.
Consumption-based planning relies on past consumption; external requirements (sales orders, reservations) are generally not planning-relevant.
External requirements can be included only in reorder point and time-phased planning – not in forecast-based planning.
In demand-driven planning, planned requirement quantities trigger the net requirements calculation.
Standard MRP types: VB manual ROP, VM automatic ROP, V1/V2 ROP incl. external requirements, VV forecast-based, ND no planning.

Unit summary & exam focus

MRP watches stock and creates planned orders, purchase requisitions or schedule lines. The procurement type and the run method (MRP Live vs classic) determine which. Planning needs MRP areas, plant parameters and MRP views. The MRP type selects between demand-based and consumption-based procedures; the latter (reorder point, forecast-based, time-phased) are simple methods suited to B/C parts.

T-codes in this unit

T-code	Purpose
MD01N	MRP Live planning run
MD01	Classic MRP total planning
MD02	Classic single-item, multi-level planning
MD03	Classic single-item, single-level planning
OMI8	Overall maintenance of plant parameters
MM01	Create material (MRP views)
MM02	Change material
BP	Maintain business partner (supplier)
ME59N	Automatic creation of POs from requisitions (follow-on step)

Self-check questions

Can a planning run create a purchase order directly?
Answer
No. MRP creates purchase requisitions (or schedule lines, or in classic MRP optionally planned orders). A purchase order is always created in a second step from the requisition, e.g. with ME59N.
Which two factors decide which procurement proposal is created?
Answer
The procurement type in the material master (E/F/X) and the planning run method (MRP Live or classic MRP with its creation indicators).
What does MRP Live create for an external material with a valid scheduling agreement?
Answer
Always scheduling agreement delivery schedule lines; for all other external materials it creates purchase requisitions.
Why are planned orders and purchase requisitions called non-binding while schedule lines are binding?
Answer
Planned orders and requisitions are internal and can be changed or deleted by subsequent runs; schedule lines belong to an agreement and are communicated to the supplier.
In which consumption-based procedures can external requirements be considered?
Answer
Reorder point planning (via the "include external requirements" indicator, e.g. MRP types V1/V2) and time-phased planning – not forecast-based planning.
In a multilevel run, does a consumption-based component receive dependent requirements from the BOM explosion?
Answer
No. Dependent requirements are generated only for demand-based components; the consumption-based component is replenished via its reorder point or forecast.
Must MRP be activated per plant in S/4HANA?
Answer
No. All plants are MRP-relevant by default and MRP areas are always active.