Page 297 -

Master Data 279

Because several BOMs can exist for the same material, the ERP system
must have a method to determine which BOM to use. The BOM selection
method in the material master identifi es the criteria the system should use to
select the BOM. Examples of criteria are lot size and validity date.

Availability Check Group
The availability check group defi nes the strategy the system uses to deter-
mine whether a quantity of material will be available on a specifi c date. The
most common method, called available-to-promise (ATP), considers a broad
range of elements representing both the supply of and demands for the
material. Supply elements include existing inventory, purchase requisitions,
purchase orders, and production orders. Demand elements include mate-
rial reservations, safety stock, and sales orders. The availability check group
informs the system which supply and demand elements to take into account
when determining availability. Because material availability is a concern in
many parts of an organization, the availability check group is used by multiple
processes. For example, the fulfi llment process uses it to ensure that materials
can be delivered to a customer on the requested delivery date, and the produc-
tion process uses it to ensure that materials are available before production
orders are released.

Strategy Group

Strategy group specifi es the high-level planning strategy used in production.
Production planning strategies fall into three broad categories: make-to-stock,
make-to-order, and assemble-to-order. We introduced the fi rst two strategies
in Chapter 6, in the context of the production process. Business Processes in
Practice 6-2 in that chapter presents examples of how Dell and Apple use
make-to-order and make-to-stock strategies, respectively. In this section, we
will extend the discussion of these planning strategies.
In the make-to-stock (MTS) strategy customer orders are fulfi lled from
an existing inventory of fi nished goods. The MTS strategy is usually employed
by fi rms that produce a high volume of identical products. This strategy reduces
the time required to fi ll customer orders because there is no need to wait
until the materials are produced. In addition, it enables the company to produce
goods at a constant rate and in optimum lot sizes, regardless of customer demand.
In SAP ERP the simplest make-to-stock strategy is net requirements planning
(strategy 10), in which the system generates procurement proposals based on
calculated PIRs without regard to CIRs.
A common variation to the make-to-stock strategy is planning with fi nal
assembly (strategy 40). This strategy is also based on PIRs. Unlike the
pure MTS strategy, however, this approach takes into account actual sales
orders through a procedure called consumption. We discuss consumption
modes in the next section.
In contrast to MTS, in a make-to-order (MTO) strategy the produc-
tion of the fi nished goods and any needed semi-fi nished goods is triggered by
a sales order. The company does not maintain an inventory of these mate-
rials. MTO is also referred to as sales-order-based production. In contrast to
MTS, MTO is used when each product is unique. For example, if GBI intro-
duced a line of high-end racing bikes designed specifi cally for individual riders,

31/01/11 6:42 AM
CH008.indd 279 31/01/11 6:42 AM
CH008.indd 279