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material planning is one of the most complex processes within an organiza-
tion. It uses data from many other processes, and it generates procurement
proposals, that is, proposed methods of acquiring materials. These proposals
are typically in the form of purchase requisitions or planned orders. Purchase
requisitions, which we discussed in Chapter 4 (procurement), are requests to
purchase materials. Planned orders, discussed in Chapter 6 (production), are
requests to produce materials.
A simplifi ed material planning process is depicted in Figure 8-1. The
process begins with sales and operations planning (SOP), which uses strategic
revenue and sales objectives established by senior management to create spe-
cifi c operations plans. The demand management step translates these plans
into requirements for individual materials. Requirements specify how many
of the materials are needed and when they are needed. These requirements
are then used by the materials requirements planning (MRP) step to generate
the fi nal procurement proposals for all materials. These proposals trigger the
production or procurement processes that make or buy the needed materials.
Ultimately the company uses these materials to execute the fulfi llment process.

Figure 8-1: A basic material planning process

The organizational data relevant to the material planning process are cli-
ent, company code, plant, and storage locations. Because we have considered all
of these concepts in previous chapters, we will not discuss them in this chapter.
The next section describes the master data related to the material planning pro-
cess. This section is followed by a detailed discussion of process steps. We con-
clude the chapter with a discussion of reporting as it relates to material planning.

MASTER DATA
The master data relevant to material planning are bill of material, product
routing, material master, and product group. We discussed bills of material
and product routings in detail in Chapter 6. Recall that materials are used
in nearly all processes and that material master data are grouped by process,

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