Optimizing Working Capital with Smart MRP strategies by Rise with SAP S/4 HANA

For every expanding business, the automation of business processes becomes necessary as a unified strategy doesn’t fit every enterprise. Every industry is unique and possesses its own challenges and business environment. Business leaders must adopt proficient digital transformation vendors for seamless deployment and a sustainable future. The manufacturing industry comes under heavy industries and is prominent for the economy. The daily business operations are sophisticated and manual working leads to major errors, which overall prove to the business’s inefficiency, a highly automated workflow is highly indispensable. A Material Requirements Planning (MRP) system fast-tracks the business operations as it takes all major element of manufacturing processes altogether.

How MRP Works

Material requirements planning (MRP) is a system for scheming the materials and components needed to manufacture a product. It is based on what is required, quantity and when. The answers to these questions clarify what materials are needed, how many and when to fulfil the required demand and help facilitate an efficient and effective production schedule. The MRP controller executes MRP run in the SAP S/4HANA system, which considers different stock types of inventory, pending material receipts (Planned orders, production orders, purchase requisitions, purchase orders, stock transfer reservations and delivery schedule lines) and material requirements such as Sales orders, forecast requirements, planned independent needs, dependent requirements, stock transfer requirements and subcontracting requirements.

Importance of MRP ( Material Requirements Planning )

The objective of MRP is to ensure the right quantity of ingredients at the right time at the right location. It consists of three primary steps: taking cognizance of the materials and mechanisms, categorizing additional requirements and then scheduling their production or purchase. Material Requirements Planning empowers the enterprise multifaceted. It accelerates manufacturing operations’ efficiency, flexibility and profitability, leading to productivity across the workforce and significant cost savings. It is done primarily through specialized software, which provide clearer image for available inventory to expedite production process accordingly. When the business leaders are aware of the inventory levels, manufacturers respond more quickly to increased demand for their products and avoid production delays and inventory stockouts that can result in lost customers, contributing to revenue growth and stability.

Embracing Business Benefits

MRP gives businesses visibility into the inventory requirements needed to meet demand, helping the enterprise to optimize inventory levels and production schedules. Without this insight, companies have limited visibility and responsiveness, leading to out-of-inventory bookings, increased inability to meet demand and disruption in the product cycle. Accuracy of Stocks, procurement reporting accuracy, stocking strategy, lead times and operation times, manufacturing strategies, requirement Grouping and change management are significant benefits. This eliminates unwanted interference and consistency in the planning process. It also ensures the trust level in the inventory and process are at the peak and have a uniform view across the stakeholders with a view of realistic fulfilment dates.

Now, manufacturing enterprises depend heavily on MRP for robust supply chain management system to plan and control inventory, scheduling and production. Still, MRP is also relevant in many other industries, from retail to restaurants, to create a balance between supply and demand.

Robust Strategy Planning

Broadly, business planning strategies confide in the type of business and policies companies adopt to fulfil their customer needs. Make to Order and Make to Stock are significant elements to consider. Dissecting these provides a clear image of strategies and will eventually result in the best daily business operation management. The pre-planned system works best where lead times are comparatively shorter than the procurement times, but a personalized strategy is primarily required for smoother business operations. Adopting these blended strategies with flexibility to fulfill the customer’s delivery schedule is a win-win situation and the key to reducing working capital for improving the profitability of an organization. Taking these factors into account, enterprise should recraft these annual plans with optimistic, pessimistic and realistic views to help draw the procurement plans and inventory levels to maintain at the optimum level. Rise with S/4 HANA system helps set up various options for optimum results with its robust offerings to empower business strategies on multiple fronts.

How Mesprosoft optimizes Working Capital with Smart MRP strategies

Mesprosoft aims to improve our customers’ business processes by building good metrics and techniques using the world’s best software. Mesprosoft comprises extensive portfolio in SAP & information technology solutions and business processes globally. We offer a comprehensive suite of services covering the entire SAP lifecycle to empower customers in implementing, optimizing and enhancing value from their SAP investments. The extensive working portfolio encompasses widespread services highly capable of digital transformation for long-lasting success. The deployment process has been resourceful for smooth and swift SAP solution deployment. With deep industry knowledge and an integrated view of strategy, people, process and technology, we demonstrate our skills and expertise throughout our client engagement.

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Why S/4 HANA , who can afford it?

Improvements in Production planning – the hidden Goldmine for improving bottom line of manufacturing industries.

See the figures above, who doesn’t want and improvement here.
In fact every SAP implementation in Manufacturing industries start implementing expecting these benefits and end results often ends up with more excel work, more extended ledger and recruitment of people to enter data in SAP. Sounds Ridiculous?
There are several factors that leads to this and many of them are not rocket science.
A typical organization with proper implementation of production planning modules and supply chains improves 22% of Order fulfillment, do you know what it means in terms of better utilization, elimination of changeovers, and improvement in bottom lines – A simple Maths will reveal then, how important it is to have a proper SAP PP implementations.
A shortage elimination of 95% results in cascading effect on improvement of efficiency. Easier said than done this needs a lot of techniques and strategy to make the shop floor system driven.
Below are a few listed areas which we may touch upon

  • Stock Strategy
  • Planning Strategy
  • Dispatch Strategy
  • Maintenance plan
  • Tool Plan strategy etc.