What is reorder point in SAP PP-MRP - Material Requirements Planning?

SAP Term: reorder point

• Component: PP-MRP

• Component Name: Material Requirements Planning

• Description: Threshold value for available stock. If stock falls below this level, procurement proposals are to be generated. The reorder point is evaluated within the framework of consumption-based procurement for example, in the case of reorder point planning, which is available in in the ERP system and and in Production Planning and Detailed Scheduling in SAP-APO-PPS in SAP APO. The terms "reorder point", "reorder level", and "order point" are often used synonymously. What is considered as available stock depends on the application and context: In the case of reorder point planning in the ERP system, the available stock comprises the plant stock and firmly scheduled or fixed receipts. In the case of reorder point planning in SAP APO, you can specify whether non-fixed receipts are to be taken into account.

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• Key Concepts: 
  Reorder point is a term used in Material Requirements Planning (MRP) within SAP. It is the inventory level at which a company should order more of a particular item to maintain an adequate supply. The reorder point is calculated based on the lead time for the item, the desired safety stock, and the forecasted demand. 
  
  How to use it: 
  In SAP, the reorder point can be set up in the material master record for each item. The system will then automatically generate a purchase requisition when the inventory level reaches the reorder point. This helps to ensure that there is always an adequate supply of materials on hand. 
  
  Tips & Tricks: 
  It is important to set up accurate reorder points for each item in order to ensure that there is enough inventory on hand when needed. It is also important to review and adjust the reorder points periodically as demand and lead times can change over time. 
  
  Related Information: 
  The reorder point is closely related to safety stock, which is the amount of inventory that should be kept on hand in order to meet customer demand. It is also related to lead time, which is the amount of time it takes for an item to be delivered after it has been ordered.