[SAP] Planned Independent Requirement [Plan to Produce Study]

This is a pilot of article that I try to post in English, not in Japanese.
Until the last post, I had been writing posts in Japanese because I am native Japanese speaker, however I realized that contents that I had included in my posts could be easier to be read/understood as they had been in English, rather than Japanese.

Though some people say it's not true, but I understand Information Technology is essentially born in countries whose primary languages are English. So, there is always difficulty in translating IT terminology into Japanese, to some extent.

Today I would like to look at "Planned Independent Requirement". In Japanese, it is translated as "計画独立所要量", it's really difficult to understand.

To explain what is planned independent requirement, we need several new words which seem to be still unfamiliar and hard to understand.

That's why I am trying to describe it in English in this post as pilot. I would like to check which is better way to explain/understand at the end of this post.

What is Requirement in Production Terminology?

First of all, we should check the definition of requirement. That is, a set of information for material describing "How many material are required".

To be a little bit more precise, requirement includes following items

  • Material "What is required"
  • Quantity "How many the material are required"
  • Delivery Date "When the material should be available for use"
  • Plant and Storage Location "Where the material should be located"
  • Usage/Purpose "For what usage/purpose, the material are required"

Usage and purpose could be specific sales order, production order, or else.

Independent and Dependent Requirement

Requirements are separated into 2 types, which are independent and dependent.

Independent requirement is a requirement for material itself, and dependent requirement is a requirement which is found as a result of breaking down the independent requirement.

For example, let's say we are manufacturer of air-plane. When we receive firm order from one of our client for one air-plane, of course we need to deliver the air-plane.

Here, our factory needs at least one air-plane before the requested delivery date. This is independent requirement.

However, to manufacture the air-plain, we need several components. The requirement for these components are the dependent requirement. You can see that the requirement for components are dependent on the requirement of Kit, which means air-plane in this case.

In SAP, you can use Tr-code: MD04 to display requirements.

How we forecast requirements

For production efficiency, it is really important to forecast requirements. As you may already noticed from the previous example, the past sales order could be used for forecasting requirements.

SAP has modules for forecasting, other than PP (production planning), and the latest one is now called as IBP (Integrated Business Planning). Previously, it was SPP (Service Parts Planning).

*Detail of how we define demand forecasting model is not in scope of this post.

There are a lot of forecasting tool in market, so it is still quite popular to have non-SAP forecasting system forecasting and SAP retrieving the forecast data as independent requirements.

How Requirement are Planned

Case planner check, and not check

When the requirements are confirmed as material planner saying "We need to prepare material/stock for this requirements", the requirements needs to be planned, by in-house production or external procurement.

Especially for the requirement based on Sales order, it is useless to confirm the requirement is valid or not, so the planner would not actually check the requirement in detail but material planning would be directly initiated. It means, sales order would directly creates Planned Independent Requirement.

However, for the case such as one of the Sales representative is requesting to have additional 100 products for the future sales opportunity, the planner needs to check the background. It is because, if the opportunity is not actually realized as firm order, the additional 100 products would not be sold, impacting balance sheet. If it was approved by the planner, that request would be captured as Planned independent requirement manually.

You can create Planned Independent Requirement manually via Tr-code: MD61.

How Material Planning is initiated

As a result of requirements calculation, it would be determined which location (plant and storage location) has expected shortage in stocks.

For the shortage, in-house production or external procurement is started in accordance with the pre-defined parameter in Material master. For those material which needs to be manufactured, in-house production is the way to solve the stock shortage, so in this case, production order would be generated.

On the other hand, if the material is not produced internally, external procurement is started and purchase order is generated.

Production order, or purchase order would be generated as MRP (Material Requirements Planning) functionality runs.

Look back/Comments

To be honest, it was much easier for me to write down explanation in English rather than doing so in Japanese.

For IT, consulting related topics, it might be better to continue this approach to post in English for brushing up my writing skill, and to make it more readable/understandable.


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