Demand-Driven Planning – Step 5 – Visible and Collective Execution

⇨ The advanced MD04 is a new and effective way of managing the day-to-day operational activities in the MRP post processing.

⇨ MD04 is a frequently used standard transaction which gives planners an overview of demand, inventories, and goods received.

⇨ SCM consulting solutions provide an advanced version of this transaction as an add-on, which features a range of additional functions including information for demand-driven approach.

In the series of articles on demand driven planning with SAP ECC, we covered the first four steps in Demand Driven Planning — Strategic Inventory Positioning, Buffer Management(buffer profile and buffer level determination), and dynamic adjustments, and Demand Driven Material Requirements Planning (DDMRP). This article will focus on the fifth and the last step according to the Demand Driven Institute, called Visible and Collective Execution.

In the Visible and Collective Execution (MRP Post-processing) step, we analyze the result of MRP planning.

The MRP run creates corresponding planned orders for the planned independent requirements as receipt elements to cover the requirement at the level of the finished product 1FG_MH_100 (Image 1). This is referred to as transaction /SAPLOM/MD04.

Image 1: Advanced MD04 for the finished product 1FG_MH_100 after the MRP run

These planned orders trigger dependent requirements on the next BOM level, semi-finished material 2SFG_MH_100, which the MRP run in turn tries to cover. Since this is a material with MRP type DD, planning now takes place according to DDP logic. The MRP planning run compares the calculated net flow position with the Top of Yellow (TOY) buffer. If the net flow position is less than TOY, a supply element is created that increases the stock level to the top of green (TOG). This logic can be seen in Image 2.

Image 2: Result of Demand-Driven Planning for Material 2SFG_MH_ 100

The MRP run creates a planned order for material 2SFG_MH_100 for 362 pieces. This can also be seen in Advanced MD04 (Image 3). This is referred to as transaction /SAPLOM/MD04.

Image 3: Advanced MD04 for the finished product 2SFG_MH_100 after the MRP run

In the figure, further planned orders of type DDP Preview have been created. These are preview elements that ensure that the dependent requirements can be passed on to the next BOM level (Image 4).

Image 4: Generation of Preview Elements in DDP Planning

In the DDP view in Advanced MD04, both the net flow position and the status have been adjusted on the basis of the net flow position (Image 5).

Image 5: Demand-Driven Planning View in Advanced MD04 After the MRP Run

The net flow position is now 419, which means that the material is assigned to the green zone.

Qualified Spike Demand 

Future requirements can be taken into account in the DDP logic. If there is particularly high demand for a material, a spike threshold is defined depending on the average daily usage, which is used to recognize that it is a spike demand. You can also define a horizon for determining the peak demand. In this case, only demands that exceed the spike demand threshold value within this horizon are considered as top-level demands (Image 6).

Image 6: Identify Qualified Spike Demand

Both the spike demand threshold and the spike demand horizon are defined in the material master on the SCM CS 2 tab page (Image 7).

Image 7: Material Master: SCM CS 2 Tab – Setting Peak Demand Values

Now that DDP planning has been introduced with the SAP consulting solutions in SAP ERP and SAP S/4HANA, the equivalent in the SAP S/4HANA system, demand-driven replenishment (DD), is to be introduced.

Demand Driven Planning makes the life for the planer easier. The planner gets an effective priorization system which provides more transparency and leads to planer to the issues directly. MRP exception management becomes less important although you can still use it in addition.