Re-Order Point Procedure

The ‘Re-Order Point’ is the level of inventory that triggers material procurement. Once the inventory falls below this level, you need to create the order proposal either manually or automatically by the system.

In the case of the manual re-order point procedure, you will define the reorder point and the safety stock in the material master. On the other hand, in the automatic re-order point procedure, the system will calculate the re-order point and the safety stock based on the next period’s consumption pattern.

What is EAN?

The ‘EAN (International Article Number),’ equivalent to the UPC (Universal Product Code) of the United States, is an international standard number for identifying a material, which SAP allows you to assign (done in the ‘Eng./Design or Units of Measure’ screen) to the materials. The EAN is normally assigned to the manufacturer of a material. Made up of a prefix (to identify the country or company from where the material originates), article number, and a check digit (ensures correctness of an EAN number so that no incorrect entries are scanned or entered into the system).

Product Hierarchy

Being useful for evaluation, pricing and reporting purposes, a ‘Product Hierarchy’ is an alphanumeric character string consisting of a maximum of 18 characters. It thus defines the product and its composition.

We maintain product hierarchy in the material master through following;

SPRO-> IMG-> Logistics – General-> Material Master-> Settings for Key Fields-> Data Relevant to Sales and Distribution-> Define Product Hierarchies

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Basic Overview of SD-MM Integration

The goods/services from a plant can be sold by one or more sales organizations. It is also possible that single sales organizations sells goods/services for several plants. When the sales organizations sells for more than one plant belonging to one or more Company Codes, then this is called inter-company sales, and will require you to make some special configurations in the system. A sales organization, attached to a Company Code, is further divided into distribution channels and divisions in SD. A division typically represents a product line, and is assigned to a material in the material master.

LIFO Valuation

Last-in, first-out (LIFO) is based on the principle that the last deliveries of a material to be received are the first to be used. If this is true, then no value changes occurs for older material when new materials are received. Because of the LIFO method, the older material is not affected by the higher prices of the new deliveries of material. If the older material is not affected, that means it is not valuated at the new material price. If the older material value is not increased, this stops any false any valuation of current inventory. Read more

MRP Processing Keys

NETCH, NETPL and NEUPL are three fundamentally different ways to schedule your MRP run:

  • NETCH – Net Change Planning
  • NETPL – Net Change Planning within Planning Horizon
  • NEUPL – Regenerative Planning

SAP is keeping track of changes that are relevant for planning a material (like sales order entry, purchase order entry, stock release, etc.). A planning relevant change signals to MRP that the material should run in the next NETCH or NETPL MRP run. MRP will thus only process those materials that underwent some type of planning relevant change. This can decrease processing time of the MRP background run when compared to processing ALL materials. Read more

MRP Guide

Through this material you will learn about MRP with an example under covered topics of Bill of Material, Workcenters and Routings with steps of

Creating Routings,
Creating Product Groups
Running MRP
Sales and Operations Plan
Transferring Sales and Operations Plan to Products
Creating Planned Orders with MRP Read more