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CHAPTER 4 The Procurement Process 269
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CHAPTER
CHAPTER

The Material Planning Process 1

LEARNING OBJECTIVES
After completing this chapter you will be able to:
1. Explain the master data associated with the material planning
process.
2. Analyze the key concepts associated with material planning.
3. Identify the basic steps in the material planning process and the
data, documents, and information associated with them.
4. Effectively use SAP ERP to execute the basic steps in the mate-
®
rial planning process.
5. Extract and evaluate meaningful information about the material
planning process using the SAP ERP system.

aterial planning at GBI historically has been very informal. Planning
for various types of materials has not been integrated with other pro-
Mcesses. Instead, the company acquires or produces materials when it
needs them. As GBI has expanded to include more facilities, materials, and cus-
tomers, however, this informal planning has created myriad problems for the
company. Inventory levels are rarely what they should be—too much in some
cases, not enough in others. On several occasions, customers have expected
products to be available sooner than GBI could provide them. The results of
this lack of overall planning and coordination have been increased costs due
to expedited procurement or production, unplanned expenses resulting from
storing excess inventory, and lost sales. GBI’s management fully understands
that failing to plan adequately is equivalent to planning for failure. Their strat-
egy for alleviating these problems is to implement an effective material plan-
ning process at GBI.

1 The contents of this chapter were prepared with the expert assistance of Dr. Ross Hightower of
the Mays Business School at Texas A&M University.
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