Do You Need The DDMRP Functionality Offered in S - 4HANA - SAP Blogs

9/2/2020 Do you need the DDMRP functionality offered in S/4HANA?
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Ann Hustis
August 3, 2020 8 minute read
Do you need the DDMRP functionality o ered in S/4HANA?

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19 Likes 4,875 Views 26 Comments
I love SAP. But I’m having a hard time understanding the excitement for Demand Driven MRP (DDMRP)
functionality that SAP rst o ered in its S/4HANA 1709 version. I’ve studied DDMRP and have had many
discussions with colleagues. We cannot see how DDMRP solves planning problems that weren’t already
solved with classic MRP functionality we’ve had since the R/3 days! DDMRP requires the use of Fiori apps;
additional master data; and a new way of doing exception monitoring so the functionality requires a lot more
know-how. In my 10 years of SAP PP optimization consulting I have never seen a client use even classic MRP
functionality correctly! Why throw additional functionality at them?
Manufacturing companies are in business to make and deliver products on-time and at a pro t to
customers. They are not in the business of keeping up with the latest SAP o ering.
In this blog I’ll discuss how DDMRP solves various planning problems and how classic SAP has solved the
same problems since its early days. I assume the reader already knows how DDMRP works. If not, please
watch this excellent YouTube video by Caetano Almeida who is a Support Architect at SAP. Please start
watching at 21:41 when Caetano begins talking about S/4HANA 1709. https://www.youtube.com/watch?
v=g2JmSkuUAxw
I will refer to the product structures below. LT = lead time
ROH1 would be a good candidate for DDMRP because it has a long lead time and consistent usage.
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9/2/2020 Do you need the DDMRP functionality offered in S/4HANA? | SAP Blogs
Two product structures
Here is a summary of the planning problems solved by DDMRP and an equivalent solution that has been in
SAP since the R/3 days.
Planning Problem Solutions that have been in SAP since Solution using DDMRP in
R/3 S/4HANA starting at
release 1709
The “forecast is always wrong” Use the correct planning strategy Use DDMRP MRP type D1
leading to high inventory of to decouple the
some components. components’ plan from the
nished goods forecast.
Want to reduce noise in the For PD planned materials use safety
planning of low-level stock that is partially relevant to MRP
components.
Want to shorten the critical path Use consumption-based planning for

some low-level components (detailed
below).
Or use Kanban planning with an MRP

signal at any BOM level (not detailed
below).
Below are detailed explanations for each point.
“The Forecast is always wrong”

One of the things that DDMRP promises to x is the cumulative error on the planned quantity of lower level
components. This is often described as the bullwhip e ect. If FERT1 and FERT2 are planned with Strategy
40 Planning with Final Assembly you will likely hold too much inventory of ROH1 a component common to
both structures. This is because strategy 40 plans demand as the higher of the VSF forecast or the sales
orders.
If you forecast 100 PC of FERT1 and 50 PC of FERT2 but have sales orders of 130 PC and 10 PC respectively
you will plan 180 PC of FERT (130 PC + 50 PC). If ROH1 is used 1:1 with FERT you will plan 180 PC of ROH1.
But you need only 140 PC of ROH1 for upcoming sales.
The DDMRP solution will use MRP type D1 on ROH1 and plan it independently; “decoupling it” from the
forecast on the FERTs. You will maintain inventory of ROH1 based on its average daily usage keeping the
dynamic bu er quantity satis ed.
The classic SAP solution is to use a more tting planning strategy. So many clients don’t use any make-to-
stock planning strategies other than Strategy 40. What a shame!
If you need to plan capacity at your FERT work centers then Strategy 63 Planning with a Planning Material is
more suitable for the product structures above. You will plan 150 PCs of the “FERT family”; this is known as
a Planning material. See process ow screen shot below from the Demand Management PP-MP-DEM
document found here in the SAP Library:
https://help.sap.com/erp_hcm_ias2_2015_02/helpdata/en/29/24bf53d25ab64ce10000000a174cb4/fra
meset.htm
Process Flow for Planning Strategy 63
To choose the correct planning strategy you will answer these two questions:
1. With which quantities will you forecast: individual FERTs or the family of FERTs?
2. Where will you stock the assembly prior to the receipt of the sales order: the FERTs, the HALBs or the
ROHs? See Stock keeping at di erent BOM levels diagram below.
Stock keeping at di erent BOM levels
Let’s assume you’ve o ered your customer a 10-day lead time.
Using correct master data settings, you will stock only HALB1 based on the forecast for the FERT family
because it and its ROHs have long lead times. MRP will plan 150 PCs of HALB1 because you’ve forecasted
150 PCs of the “FERT family”. If you sell 130 PC of FERT1 and 10 PC of FERT2 you will have only 10 extra PCs
of HALB1 and nothing extra of the other HALBs and ROHs. Therefore, you hold lower overall inventory
compared to Strategy 40.
HALB2, HALB3, ROH3 and ROH4 will be planned once the sales orders for FERT1 and FERT2 are entered.
This is not a problem because with a 10-day lead time you can purchase ROH3 and ROH4 and make HALB2
and HALB3 in time.
Or, if you do not need to plan capacity at your FERT work centers because capacity is always available then
consider using planning Strategy 70 Planning for Sub Assembly instead. Enter 150 PCs of VSFB forecast for
HALB1. MRP will drive you to stock HALB1 prior to the receipt of the sales orders for FERT1 and FERT2.
Once the sales orders are entered you will procure ROH3, ROH4, HALB2 and HALB3. Again, you have time
because your promised lead time to customer is 10 days. Here is a link to planning strategy 70 in the
Demand Management PP-MP-DEM document found in the SAP Library:
https://help.sap.com/erp_hcm_ias2_2015_02/helpdata/en/29/24bf53d25ab64ce10000000a174cb4/fra
meset.htm
Choose a planning strategy that allows you to stock at the cheapest/most exible BOM level while still
meeting the promised lead time to customer
Reduce noise (exception messages) on lower level components

Another thing that DDMRP promises to x is the high volume of exception messages you get on ROH1 when
the quantity or date of the demand for FERT1 and FERT2 changes. This is because by using the DDMRP
type D1 on ROH1 you decouple its planning from the BOM structures above it.
With classic MRP Plan on Demand (MRP type PD) when you increase the quantity of the FERT demand or
move it to a sooner date, the scheduled supply element such as a purchase order for ROH1 is hit with
exception message 10 which tells the planner to “expedite supply”.
But classic SAP already has a solution to this problem. Again, unfortunately, not used by most clients!
Make Safety Stock partially relevant to MRP
Within con guration you can make safety stock partially relevant to MRP. So, for example, if you con gure
safety stock 60% relevant to MRP it means that you can dip up to 60% into safety stock without causing
MRP to create a procurement element, or hit a scheduled receipt with exception message 10. Here is the
con guration setting within MRP Group:
OPPR Carry Out Overall Maintenance of MRP Groups
Let’s say you plan ROH1 with MRP type PD and you’ve set a safety stock level of 110 PC. Consider this
situation for the Stock Requirements List if safety stock is not partially relevant to MRP (the SAP delivered
setting). See the screen shot below.
Stock Requirements List with standard behavior of safety stock
Two purchase requisitions were created, one to satisfy safety stock and the second to satisfy the dependent
requirement. Exception Message 30 tells the planner to convert to a purchase order immediately and
expedite. Exception Message 96 tells the planner the stock has fallen below the safety stock level.
Once you con gure safety stock to be 60% relevant to MRP you can partially dip into safety stock without
MRP creating a purchase requisition. See screen shot below.
Stock Requirements List with safety stock con gured to be 60% relevant to MRP
Consider this Slug material to be ROH1 in our product structure. The demand for the FERTs can increase
slightly or be scheduled to a sooner date without causing MRP to create a purchase requisition. When the
safety stock level is eventually breached by demand that exceeds 60% of 110 PC a single purchase
requisition will be planned to satisfy both the dependent requirement and to bring the safety stock level
back up to 110 PC.
Shorten the critical path

Use consumption-based planning
Just like planning strategy 40 doesn’t suit all make to stock demand planning, MRP type PD doesn’t suit all
supply planning. Consider using consumption-based planning on materials where it makes sense. Usually
these will be at the lowest level of the BOM structure, the ROH materials. In the table below we can see a
general rule of thumb where each MRP type might be used.
Table of MRP Type usage:
There are two main types of consumption-based planning:
1. Reorder point planning – good for short lead time components
2. Consumption forecasting – good for long lead time components that have predicable usage; they are
widely used meaning that they occur in several BOMs.
When component materials are planned using either form of consumption-based planning the demand
signal is cut o as seen in the revised product structure below. The three ROH materials are planned in their
own little worlds.
Product Structure with Consumption Planned ROHs
The critical path also known as the total replenishment lead time to make FERT1 is now only 22 days (2 +
20) since all ROH materials are planned by consumption-based planning; they are considered to always be
in stock. If all materials were planned with MRP type PD instead, the critical path would be 57 days (2 + 20 +
35).
MRP Type V1 requires the planner to set a reorder point in the material master such that once it is
breached you will not run out of inventory before the new supply arrives. For this the planner must
consider the lead time of the material and the expected usage during the lead time. You can nd the
expected usage from SAP report MC42 Range of Coverage based on Usage.
MRP Type VV requires a material forecast (demand) to be generated (usually based on historical
consumption using a model such as seasonal, trend, seasonal-trend, constant, etc.). MRP runs to provide
planned supply elements to satisfy the material’s forecast. Dynamic safety stock also known as range of
coverage pro le is often used with VV planning to cover spikes in demand.
Another added bene t of consumption-based planning is that it forgives capacity overloads. If the FERT
and/or HALB work centers are overloaded you will not carry excess inventory of ROH materials.
Summary
Supply chains are all di erent, hence planning problems are diverse. To address this, SAP has o ered a
largeModerator
Alert toolbox of planning functionality since the R/3 days. Clients choose the best solutions for their needs.
As consultants we should encourage them to exhaust classic solutions rst before introducing new
functionality such as DDMRP because it is not cheap. It requires the use of Fiori apps, additional master
data and additional processing know-how.
Assigned
I won’t o tags
er a glass of water to a drowning man!
MAN Material Requirements Planning | MAN Production Planning (PP) | SAP Demand
Management | #DDMRP | #S/4HANA |
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26 Comments
You must be Logged on to comment or reply to a post.
Dominik Tylczynski
August 3, 2020 at 9:17 am
That is a great piece of writing. I especially appreciate you showing how classic SAP MRP addresses
challenges in supply chain planning, the challenges that supposedly only DDMRP is able to solve.
Looks like classic MRP is such a powerful tool. We just need to use it correctly and explore it’s various
features.
Dominik Tylczynski
Like(2)
Ann Hustis | Post author
August 3, 2020 at 10:56 am
Thank you Dominik. And thank you again for peer-reviewing it. You’ve been my mentor for several years.
Like(1)
Dominik Tylczynski
August 3, 2020 at 12:21 pm
Likewise, I’ve learned a lot from you and still do!
Like(1)
R Brahmankar
August 3, 2020 at 1:28 pm
Hello Anne,
Indeed a nice and very useful piece.
Manufacturing companies are in business to make and deliver products on-time and at a pro t to
customers. They are not in the business of keeping up with the latest SAP o ering
On this point, I couldn’t agree more
And planning strategy 63 planning with a Planning Material is good when forecast is capacity.
This strategy is often used to manage a simple but e ective method of capacity planning.
For planning of dependent materials where you have a long lead time you can de ne dummy BOM for
planning material with critical assembly and raw materials.
As you will have the forecast on planning material and MRP will create procurement and production of
critical assembly and raw materials as per planning material BOM.
When actual sales orders come for nished goods which can use it and plan also short lead time products
which is not a part of planning material BOM.
However if your capacities for nished goods production lines are always full then you have no need of
planning material BOM you can directly use nished goods for planning.
Only disadvantages of planning strategy 63 is that ATP check is against the forecast (PIR) without supply
elements.
Best Regards,
R.Brahmankar
Like(2)
Thanks for your comment Rupesh.
When you say, “Only disadvantage of planning strategy 63 is that ATP check is against the forecast (PIR)
without supply elements”, I don’t see that as a big disadvantage; it just requires careful planning.
If the production planner ensures that he has capacity for all planned orders within the capacity planning
period (CM01 for let’s say the next 9 weeks) and the material planners are driving purchases to be receipted
in-time by closely monitoring their exception messages and tra c lights (MD06/MD07) then the ATP check
against the forecast will be robust.
If either the production planners or the material planners spot a problem in week 7, 8 or 9 they must deal
with it now by: adding production capacity; subcontracting some production; purchasing from an alternate
vendor; or as a last resort reducing the forecast before a sales order is promised against it.
Thanks again for your comment. I appreciate it!
Like(2)
R Brahmankar
Hello Anne,
What you said is right, however when I talk about planning I considered SD, PP and MM. So when sales
orders come for nished goods it consumes a forecast of planning material and which performs the ATP
check it will be against the PIR of planning material.
During an ATP check against planning, you can only carry out the con rmation against unused planned
independent requirements and not against stock or inward movement.
Now consider the scenario if you have a scheduling agreement where all schedule lines perform the ATP
check and consume the forecast and if the new sales order comes with the earliest requirement will remain
uncon rmed in this case. So in that case we need to con rm against replenishment lead time with a xed
date and quantity which does not represent the real capacity situation.
In the sales order, the availability check is carried out with planned independent requirements for the
planning material. For this, the sales orders for all materials that are consumed against the same planning
material which also lead to performance and consumption issues if you have large sales volume and high
number of FG material assignment to planning material.
For frequently asked questions and problems in this area please have a look on SAP note.
622299 – Consulting: Availability check against planning
Apart from these limitations as per my experience with strategy 63 it is one of the best suitable planning
strategies.
Best Regards,
R.Brahmankar
Like(1)
Pulla Rao Tulava
Interesting, very good insights, thanks for sharing..🙂
Like(2)
Sharat Sugur
Hello Ann,
Very rich content and thought. Nice blog and unlocking many questions. Thank you for sharing.
Like(2)
Raj Krish
Ann, interesting article indeed… We tend to think new solutions are way better than the existing ones, but
your article describes classic MRP has way more functionality than the new DDMRP. thanks for sharing
Like(1)
Juan Pablo Blanco Zerlin
One of the best post I’ve ever read. Thanks for the explanation Ann!
Like(2)
Whoa! So nice. Thank you Juan!
Like(0)
Pradeep Kumar
Hello Ann.
First of all thanks for sharing wonderful blog comparing classic MRP and Advanced DDMRP, and point out
general Planning problems.
I agree, still classic MRP has powerful planning procedure , when it is used e ectively,and
customer should be matured enough in classic MRP before implementing DDMRP.
Thanks for discussing about planning strategy planning with plan.Mat 63, it is very good planning strategy
to plan capacity and common / non variable parts ,but pre assumption is stock level for variable parts
should be taken care, other wise customer delivery date can be met, since Regular sales ATP check is not
performed considering stock and inward receipts.
Like(2)
Mike Murray
This is excellent work. I am currently an IT Director, but a former MM/PP consultant, and am constantly
battling the business on why they need to use the “latest and greatest” when I am certain they don’t even
use what they have properly. One more piece of information in my toolkit.
Thanks!
Like(1)
Martin Preiss
Excellent article. All of it. And especially the part about ‘Make safety stock partially available’. This function
indeed should be used much much more often.
Like(1)
Rizky Octavianto
Hi Ann,
I have a problem understanding this part:
‘If you forecast 100 PC of FERT1 and 50 PC of FERT2 but have sales orders of 130 PC and 10 PC respectively
you will plan 180 PC of FERT (130 PC + 50 PC). If ROH1 is used 1:1 with FERT you will plan 180 PC of ROH1.
But you need only 140 PC of ROH1 for upcoming sales.’
Can you please explain? why is the planning output for FERT 180 PC instead of 150?
Thank you in advance
Like(1)
August 8, 2020 at 11:28 am
Hi Rizky,
Thank you for your question.
When you plan independent requirements (PIRs) with Planning Strategy 40 Planning with Final Assembly,
MRP will plan supply to the HIGHER of the PIRs or the sales orders, within the consumption period set on
the Material Master.
In my example above the requirements for FERT1 is 130 PC because the sales order is higher than the PIRs
of 100 PC. The requirement for FERT2 is 50 PC from the PIRs because it is higher than the sales orders of
10 PC. So the sum of these requirements is 180 PC.
Here is a link to SAP Help on Planning Strategy 40:

https://help.sap.com/viewer/74c0b3a391174482a66a3a23bb28c10d/6.17.14/en-
US/3923bf53d25ab64ce10000000a174cb4.html
Please look at paragraph 5: Requirements from the sales orders are passed on to production and can lead to
changes made to procurement if the requirements from the sales orders exceed the planned independent
requirement quantities. If there is insu cient coverage of components (the sales order quantities exceed the
planned independent requirement quantities), the sales orders cannot be con rmed. The system therefore
automatically adjusts the master plan.
The reason that Strategy 40 is used so widely is that it is exible. If your forecast is too low the sales orders
will add to the plan.
Contrast this to Planning Strategy 10 Net Requirements Planning where the requirements are only the PIRs.
The sales orders are shown on the Stock Requirements List as information only; they do not in uence the
demand.
I have a fantastic PDF document written by SAP called Demand Management (PP-MP-DEM) that explains in
detail (all 214 pages) all of the planning strategies. Please let me know if you’d like me to email you a copy.
I hope this helps. Please feel free to ask any follow up questions.
Like(1)
Rizky Octavianto
Hi Ann,
Thank you so much for the explanation, it’s really enlightening. I’ve been in two SAP PP implementation and
I have not yet learned anything about planning because it’s often overlooked here in Indonesia and I would
love to be able to change this one day if I can progress as a consultant.
Please do share me the document (PP-MP-DEM) if you would mind, my email is

[email protected]. Would love to dig deeper into this part of SAP PP.
Thank you again, this is a really great article. Hope you’ll have a good day.
Like(0)
Perfect. I just sent it to you!
Like(0)
Shanmugam Sathiyamurthy
August 9, 2020 at 11:00 am
Excellent and comprehensive document to show how Demand Driven Planning can be implemented with
traditional MRP itself. I love this document.
Incidentally, I suggested solution almost in this line (other than using strategy 50 instead of 63) and all
down the level BoM with approach explained here.
As expressed here, many features in standard MRP line strategies 50,63, 70, Reorder Planning, Schedule
Margin Key, Planning Horizon, Maximum stock level, Safety stock availability, automatic reorder point
calculations, availability check parameters, standard missing parts reports CO24, are not being utilised by
many users. I explain the feature of all these parameters to my client and they are excited to use them and
started to realise the bene ts.
If you don’t mind can you share the document on Demand Management (PP-MP-DEM) and my email
address is [email protected]
Like(1)
August 9, 2020 at 11:28 am
Thanks for your comment Shanmugam.
I emailed you the document.
All the best.
Like(0)
Rohit Nagdeve
August 10, 2020 at 11:37 am
Dear Mam,
Great article.
Thanks a lot for sharing.
Please mail me the document (PP-MP-DEM)
[email protected]
Kindly consider.
Thanks in advance.
Like(1)
August 10, 2020 at 11:57 am
Thank you Rohit!
I just emailed the document to you.
Like(1)
Rohit Nagdeve
August 10, 2020 at 12:04 pm
Dear Mam,
Received the document.
Thanks a lot.
Like(0)
Puneet Puri
August 20, 2020 at 11:00 am
Hi Ann
Thanks for sharing ground level reality .Even we are also using 10/20 for FERT & 70 for HALB and share
safety stock for ROH with one enhancement to Enable MSL functionality in demand based planning. But
still believe that these are some ground level challenges and SAP has provided various Exits,Badi & Con g
to resolve it as per industry practice.
BR
Like(0)
Arturo García Díez
August 24, 2020 at 7:11 am
Hi Ann, excellent article. Thanks for sharing your knoweledge.
I’m interested on the document PP-MP-DEM Could you shared with me the document
([email protected])
Thanks in advance.
Arturo.
Like(1)
August 24, 2020 at 1:55 pm
Hello Arturo,
I emailed it to you just now.
Regards,
Ann
Like(0)
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9/2/2020 Do you need the DDMRP functionality offered in S/4HANA?

Ask a Question Write a Blog Post Login

Do you need the DDMRP functionality o ered in S/4HANA?

19 Likes 4,875 Views 26 Comments

I will refer to the product structures below. LT = lead time

Two product structures

Want to shorten the critical path Use consumption-based planning for

Or use Kanban planning with an MRP

Below are detailed explanations for each point.

“The Forecast is always wrong”

Process Flow for Planning Strategy 63

Stock keeping at di erent BOM levels

Let’s assume you’ve o ered your customer a 10-day lead time.

Reduce noise (exception messages) on lower level components

Make Safety Stock partially relevant to MRP

OPPR Carry Out Overall Maintenance of MRP Groups

Stock Requirements List with standard behavior of safety stock

Shorten the critical path

Table of MRP Type usage:

There are two main types of consumption-based planning:

1. Reorder point planning – good for short lead time components

Product Structure with Consumption Planned ROHs

Management | #DDMRP | #S/4HANA |

Related Blog Posts

S/4HANA Demand Driven MRP (DDMRP) Functionality

SAP S/4HANA Demand Driven Material Requirements Planning

SAP S/4HANA vs ECC MRP Essential Changes

DepReq not considered in DDMRP S/4 HANA

Predictive Material and Resource Planning in SAP S/4HANA (pMRP)

how to set up material valuation in MRP run (S/4HANA)

You must be Logged on to comment or reply to a post.

August 3, 2020 at 9:17 am

Ann Hustis | Post author

August 3, 2020 at 10:56 am

August 3, 2020 at 12:21 pm

Likewise, I’ve learned a lot from you and still do!

August 3, 2020 at 1:28 pm

Indeed a nice and very useful piece.

On this point, I couldn’t agree more

Ann Hustis | Post author

August 3, 2020 at 1:51 pm

Thanks for your comment Rupesh.

Thanks again for your comment. I appreciate it!

August 4, 2020 at 8:08 am

Pulla Rao Tulava

August 3, 2020 at 3:37 pm

Interesting, very good insights, thanks for sharing..🙂

August 4, 2020 at 2:10 pm

August 4, 2020 at 9:30 pm

Juan Pablo Blanco Zerlin

August 4, 2020 at 9:31 pm

Ann Hustis | Post author

August 4, 2020 at 9:42 pm

Whoa! So nice. Thank you Juan!

August 5, 2020 at 5:35 am

August 5, 2020 at 2:26 pm

August 7, 2020 at 1:22 pm

August 8, 2020 at 9:15 am

I have a problem understanding this part: