Consignment Process Using MRP Area

[Ahmed-Zaidi]

In this blog, I am sharing my experience with a requirement where the same material can be procured through both direct Procurement and Consignment Processes using the Planning Process.  The aim is to assist newcomers in grasping the diverse dynamics of the Consignment .  To achieve this, an MRP Area must execute the Planning Processes separately using different parameters. I will use the standard Procurement Process via Forecast Planning or Planned Independent Requirements (PIR), and the Consignment Process will be managed by the Reorder Point method. By default, the Material "Coal" is already available with an MRP Area at the plant level (type 01). A new MRP Area (type 02) will be required to meet this requirement.

What is MRP Area?

The MRP area represents an organizational unit for which material requirements Planning is carried out independently. The following are the three different types of MRP area:

• Plant MRP Area.
• MRP Areas for Storage Locations.
• MRP Areas for Subcontractors.

Please note, MRP Area for Subcontractor is not in-scope of this blog.

Six Steps to complete this process:

• Define the MRP Area (type 02) at storage location level.
• Configure the material master with the newly created MRP Area.
• Assign different parameters to each MRP Area.
• View two MRP Areas for the same material with different parameters.
• Generate Planned Independent Requirements (PIR).
• Execute MRP using MD01N.

 1.   Define the MRP Area (type 02) for storage location level.

By default, system creates plant as an MRP Area.

Please note that “MRP Area” type 01 represents MRP Area at plant level that is already available by default as shown below.

Define MRP Area below plant level to meet the business requirement.

Please note that “MRP Area” type 02 represents MRP Area for Storage location level as shown below.

Assign storage location to MRP Area.

Please note that only storage location 5002 is assigned to MRP Area CONSIGN.

The below screen shows that material “COAL” is already extended at two different storage locations for the same plant as shown below.

2.   Configure the material master with the newly created MRP Area.

Configure material master “COAL” for MRP Area type 02.

As shown above, after MRP Area type 02 assignment for storage location in configuration, the “MRP area exits” check box is checked automatically. When click “MRP area” button, a newly created MRP Area “CONSIGN” is also shown above in the “Overview, Display MRP Area”.

3.   Assign different parameters to each MRP Area.

Parameters for MRP Area NJD1.

MRP1-View.

MRP2-View.

Parameters for MRP Area CONSIGN.

MRP1-View.

MRP2-View.

4.   View two MRP Areas for the same material with different parameters.

Material master “Coal” with MRP Area NJD1 is showing below.

Material master “Coal” with MRP Area CONSIGN is showing.

5.   Generate Planned Independent Requirements (PIR).

For the demo purpose, using  MD61, PIR is generated for MRP Area NJD1 as shown below.

Using MD04, generation of PIR can be confirmed as shown below.

Please note, for MRP Area CONSIGN, no PIR is required.

6.   Execute MRP using MD01N.

Using MD01N, Planning  is executed and as a result both Purchase Requisitions are generated.

Via PIR (Forecast).

Via Reorder Point.

                                          MRP Overview Flow Chart.