SAP Consumption-Based Planning

SAP Consumption-Based PlanningThe SAP Consumption-Based Planning (CBP) is a method to generate future product stock requirements based upon various parameters such as past consumption patterns or by setting minimum-maximum stock levels for a material. In this tutorial, which is a part of our SAP MM course, we will discuss the functions and advantages of implementing the CBP in SAP.

SAP CBP uses static methods such as manual reorder point maintenance in material master and dynamic procedure in which the SAP system can also perform calculations by using forecasting methods.

Three main objectives of CBP in SAP:

  1. Ensures material availability to align the production efficiently.
  2. Maintain minimum levels of stock to save costs.
  3. Better planning of manufacturing activities, schedules, and procurement activities.

SAP Consumption-Based Planning

CBP is an integral part of SAP Material Managementand it is managed through the below path in SPRO transaction:

SPRO → SAP Consumption-Based Planning → Implementation Customization guide → Material Management → Consumption-Based planning

Under CBP, there are three planning procedures defined to implement it:

SAP MM Consumption-Based Planning Procedures
SAP Consumption-Based Planning Procedures

Each CBP type is assigned to one of three procedures available in SAP.

This field is available in the MRP1 view of the material master.

  • ND – No planning. If the material does not come under the category of the MRP cycle, procurement of this material will be done through manual PR and PO creation.
  • R1 – It is used for time-phased planning.
  • VB – Manual re-order point planning.
  • VV – Forecast-based planning.

Let’s go through the detailed process of these three procedures.

Reorder-Point Planning in SAP Consumption-Based Planning

This procedure works for material and plant combinations. The re-order planning can be done in two ways:

Manual re-order point – MRP Type VB

In this procedure, the stock levels are calculated manually and the specific stock data is entered into the system, and then the system will create the purchase requisitions based on the saved data.

Automatic re-order point – MRP Type VM

An integrated forecast program is executed frequently, and the system updates the consumption and delivery patterns for material to determine the procurement needs.

In MRP1 view of the material master, the below fields are required to activate the re-order point planning:

  • Re-order point: The lowest stock count is always available in manufacturing to run the operations efficiently. Once the quantity falls lower than this level, the system automatically creates a purchase requisition.
  • Safety Stock: It is the desired stock level to be kept in inventory to avoid material dearth.
  • Maximum stock level:  It is the maximum stock we can procure for a material at a given time.
  • Lot Size: It defines how the system will calculate the batch quantity for which a single purchase order/planned order or production order is created at once. It could be dynamic, fixed, up to a maximum stock level, or as per the posting period or planning calendar.
  • Minimum Lot Size: It defines the minimum lot quantity which needs to be generated.
  • Maximum lot size: It defines the maximum lot size which should not be exceeded.

Points to be Noted:

  1. Re-order point considers the existing stock for material and plant combination, along with open purchase orders, safety stock, production orders, issuance/returns, lead procurement time, or firmed goods receipts.
  2. If further goods receipt is not required in case of returns, then the system will propose to cancel the upcoming GRs.

Forecast-Based Planning (FBP)

Unlike the above method of re-order point, this MRP procedure calculates the future requirements for a material based on past consumption data, and the forecasting program is used to produce the exact material requirements. A program is executed at regular intervals to adjust the consumption patterns and manage the requirements as per current needs.

After analyzing the requirements, the SAP forms a pattern that falls into the models shown below:

  • Constant model: the business has a constant pattern of consumption.
  • Trend Model: the increase in consumption for a specific period due to high business volume.
  • Seasonal Model: the high consumption for a particular period.
  • Trend Seasonal model: due to high seasonal business, the consumption pattern is high.

Period Pattern for FBP

Here, we can define the two points period outlines and periods to be included in the forecast program.

The period outline could be in weeks, months, days, or as per the posting period. It is mandatory to mention several periods to be considered for forecasting.

For instance, in the case of monthly forecasting planning, the starting set should be the first workday of the month to get the exact requirement on the initial day of the month for better planning.

Time-Phased Planning in SAP CBP

This plan is helpful if order day and delivery are fixed for material from a vendor. For instance, Monday is the order day for which will be received on Wednesday, and orders created on Thursday will not receive delivery until next Monday.

An MRP date is set in the system, which is set during material master creation, and it is returned to this date after every MRP run.

Usage of coverage profile range in Time-phased profile

Safety stock is calculated based on daily consumption, and this is maintained under the MRP2 view.

Let’s take an example to explain the concept of coverage profile range:

In the material master, the planned days’ field contains the value 3 which is in days, and deliveries are planned only on Thursdays. While calculating the final requirements, the system uses these 3 days as the interval between dates that are the current MRP date and the next MRP run date.

In this case, the interval starts on Thursday and ends on Saturday of the preceding week, including eight working days.

In the below data, the basic UOM of material is considered as “NOS” – Numbers.

Minimum Coverage Range 5 Days
Minimum Safety Stock 20 Nos
Target Range Date 7 Days
Target Safety Stock 200 Nos
Maximum Coverage Range 12 days
Maximum Safety Stock 300 Nos
  • No coverage range defined:
    • In the case of zero stock units and no goods receipts, the system will generate the requirements of 220 NOS from the forecast.
  • When coverage range is maintained:
    • If the current stock is zero, the system will add another 200 NOS as the required quantity, which must cover the next 7 days.
    • If the current stock is 200 NOS, the system will generate a procurement plan of 20 NOS, and then the remaining 40 pieces would only cover the next two days. The system takes up to target stock level in case of minimum safety stock level is not fulfilled.

The consumption-based planning run does not consider blocked stock in any case.

Final Thoughts

SAP Consumption-Based Planning is designed to manage the material quantities and stock levels strategically with the least manual intervention and be available in both ways, either manually or automatically. The only requirement is to maintain the correct material master to pull the right quantities in planned orders or requisitions through CBP. Specifically, in reorder point level planning, the wrong minimum and maximum stock levels can delay deliveries.

Did you like this tutorial? Have any questions or comments? We would love to hear your feedback in the comments section below. It’d be a big help for us, and hopefully, it’s something we can address for you in the improvement of our free SAP MM tutorials.

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