Material requirement planning (MRP) is the heart of the production planning process. MRP matches the demand and the supply and proposes the best methods for executing the production process. The output of the MRP run is the procurement proposals.
There are two main procurement proposals in SAP. These are the plan order and purchase requisitions.
Plan order is generated through MRP for materials that are produced in-house. Plan orders are converted into production orders when the manufacturing starts. The second procurement proposal which MRP generates is the purchase requisitions. Purchase requisitions are generated for materials that are procured from external parties. These include mainly the raw materials. Purchase requisitions are converted into purchase orders.
When the MRP is executed, the BOM will be exploded. Based on the planning strategy of the materials, a procurement proposal will be generated. There are three processing keys used for MRP.
NETCH : net change planning considers materials that have undergone an MRP relevant change after the last MRP run. An example of MRP relevant change is the increase of stock in the system.
NETPL : net change in the planning horizon is similar to NETCH but it works for a defined planning period.
NEUPL : regenerative planning executes MRP for all the materials in the system, irrespective of MRP relevant changes.
