Why Is Automating Procurement & Material Requirement Planning (MRP) So Important?
Automating Procurement & Material Requirement Planning (MRP) to increase efficiencies, optimize inventory performance, and improve production and scheduling is not only possible in today’s VUCA environment, it’s a must. Organizations that leverage SAP automated procurement, MRP and sourcing functionality are able to decrease manual intervention by 50% or more.
The benefits of automating Procurement & MRP are significant. When procurement managers can accurately plan, automate, and manage material availability using SAP, greater efficiency and lower costs are achieved.
To win with MRP, supply and demand must be balanced, exception messages (that alert you to issues that need corrective action) must be kept to a minimum, and dates must accurately reflect supply chain capabilities.
To grasp the optimization benefits derived from Procurement & MRP efficiencies, organizations must commit to utilizing best practice, effectively leverage SAP and align business behavior and business rules. Leveraging SAP includes an understanding of how master data drives MRP rules, presents exceptions when there is a potential breakdown and empowers process performance and analysis.
With this understanding, inventory needs can be determined in advance, materials procured systemically, products produced to meet forecasted needs, and every step of the process producing predictable outcomes that can be measured. When used optimally, automated Procurement & MRP leads to higher levels of efficiencies and the most favorable utilization of manufacturing and production resources along with decreased inventory levels and capital cost.
How Does Procurement & MRP Processes Work?
When an educated team follows the right processes and utilizes the tools and trusted data, the entire Procurement & MRP process flows end-to-end like a well-oiled machine with real-time data enabling effective decision-making, reporting, and monitoring of supply chain performance.
Procurement and production planning teams can focus on exceptions to what’s needed and when it’s needed, gaining visibility into lead times, optimizing raw material usage and stocking levels, reducing lead times and improving product and service levels.
Challenges When Automating Procurement & MRP
Organizations that fail to unite around using their SAP system as their single source of truth and taking advantage of standard capabilities often get bogged down with labor-intensive manual intervention and “touching” each purchase request (PR) and purchase order (PO). With a heavy reliance on spreadsheets and manual processes, there is a great risk of increased errors, loss of supply chain visibility, and lack of insight-to-action capabilities.
In this state, frustration often results with a lack of automation, accountability, and ownership. Inefficient time commitments translate to less collaborative negotiating, a lack of discovery in finding alternative sources, and a squandering of material usage. Not surprisingly, lead time, procurement cycle time, and supplier costs increase.
What Is the Benefits of Procurement & MRP?
In today’s rapidly changing environment, increasing efficiencies through automation and managing materials based on real-time insights are key components of an agile supply chain. Reveal's value-driven oVo® methodology educates organizations on how to setup automated procurement processes and leverage MRP to achieve tangible results. By setting up optimized lot sizes, scheduling agreements, coverage profiles and other strategies inside SAP, businesses will begin to recognize the real rewards of an agile, efficient supply chain.
Whether it’s optimizing supply chain performance or implementing additional SAP functionality, Reveal helps organizations improve internal business processes, educates users, and deploy the smart use of SAP to achieve sustainable, tangible value. By challenging organizations to move away from being transactionally driven and move towards information-users that manage the process and apply knowledge, improvements in agility, service, cost, and inventory performance are achieved.