SAP Inventory Optimization Days – 2023

Inventory Planning and Optimization: Safety Stock Simulation and Inventory Planning in SAP IBP IBP

April 25th, 2023 (London)

Ferenc Gulyássy, SAP

PUBLIC
Concept of the SCM Consulting Solutions of SAP

Projects SCM Consulting Solutions

SAP Consulting

Business Requirements

Customer
SAP Framework

▪ More than 50 Add-Ons (no interface!) to SAP

available since more than 15 years Software like SAP ECC, S/4HANA, APO and IBP
▪ Available for all customers in var. industries
▪ Maintained by SAP via OSS
more than 1000 installations
▪ Option to co-innovate with SAP

delivered in SAP namespace ▪ Extendable by customers through various

embedded options (BAdIs, Exits, Enhancement
points, …)
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Inventory Planning and Optimization: Options

ECC resp. S/4HANA

▪ No adv. Inventory Positioning

▪ Basic Inventory Sizing (SL)

ECC resp. S/4HANA

MRP Monitor
▪ Adv. Inventory Positioning
RLT
Safety Stock Simulation
▪ Adv. Inventory Sizing (SL)
▪ Inventory Planning (ML)
▪ Optimization (SL) IBP
IBP for Inventory
▪ Adv. Inventory Positioning &
Sizing (ML Optimization)
SL = single level
ML = multi level
© SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
Inventory Planning and Optimization: Basic Options in ECC and S/4HANA

Simple Classification like ABC can be used

ECC resp. S/4HANA → No real decision support → Mainly manual

▪ No adv. Inventory Positioning

▪ Basic Inventory Sizing (SL)

▪ Simple Statistical Approach (only uncertainty of

demand)
▪ Time-dependent approach based on
Requirements
▪ No Simulation
SL = single level
▪ Manual safety time definition
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Inventory Planning and Optimization: SCM CS Options -
Inputs
▪ 12 Out-of-the-box classification methodologies
▪ Flexible classification based on hundreds of KPIs + Master Data
▪ Stocking Proposals based on network dependencies,
requirements, capacity utilization, supply risk, …

ECC resp. S/4HANA

MRP Monitor
▪ Adv. Inventory Positioning
RLT
Safety Stock Simulation
▪ Adv. Inventory Sizing (SL)
▪ Inventory Planning (ML)
▪ Optimization (SL)

Lead Time Determination (SL + ML)

SL = single level
based on historical data
ML = multi level
© SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
Inventory Planning and Optimization: SCM CS Options

ECC resp. S/4HANA

▪ Various adv. Statistical methods (Uncertainty of demand, lead
time, scrap, inventory accuracy)
MRP Monitor
▪ Adv. Inventory Positioning
RLT ▪ Demand-driven basic method and adv. Methods (also time-
dependent)
Safety Stock Simulation
▪ Adv. Inventory Sizing (SL) ▪ Spontaneous consumption method
▪ Inventory Planning (ML) ▪ Dynamic adjustments (self learning)
▪ Optimization (SL) ▪ Safety Time
▪ Flexible formulas

▪ Space and/or budget

▪ Costs
SL = single level ▪ Profitability
ML = multi level
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Inventory Planning and Optimization: SCM CS Options –
Lead Time Determination as Input

ECC resp. S/4HANA

MRP Monitor
▪ Adv. Inventory Positioning RLT
Safety Stock Simulation
▪ Adv. Inventory Sizing (SL)
▪ Inventory Planning (ML)
▪ Optimization (SL)

SL = single level
ML = multi level
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Pillars of Safety Stock Simulation

Inventory Optimization as process

Mass-Maintenance

Dynamic Buffer Level

Static Buffer Level Safety Time Consideration/
Simulation Simulation Creation
▪ Statistical Methods ▪ Plan-
▪ RLT method
with/without Service- driven/deterministic
Level Opt. (Space, ▪ RLT Variability method dynamic buffer level
Budget, Profitability,
Determination of Costs) ▪ RoC method ▪ Calculation based on
Financial Impact Coverage Profile
▪ Demand-Driven Methods ▪ Formulas
▪ Reorder-point-based
▪ Spontan. Cons. (ToC)
dynamic buffer level
▪ Dynamic Adjustments (with CMT-DDP)
▪ Formulas

Consumption, Requirements, Master Data, …

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Buffer Planning with SSS: Process

Create Release
Validate What-If-
Inventory Inventory
Inputs Analysis
Plan Plan

▪ Forecast Errors ▪ Static ▪ Simulate ▪ Maintain

Inventory Master Data
▪ Lead Times ▪ Analyze
Plan
implicit target ▪ Create Time-
▪ LT Uncertainty
▪ Dynamic service level Dependent
▪ Consumption Inventory + financial Buffer Levels
Plan impact
▪ Buffer Profiles
▪ Dynamic
▪ …
Adjustments

© SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC

System Demo

© SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC

Digital Business Planning
Customer centric and Resilient Planning
Customer experience and demand sensing incorporated in
predictive modeling for higher service levels, overall
responsiveness and forecast accuracy

Sales &
Operations Inventory
Synchronized planning
Planning Synchronization of planning processes on strategic, tactical
and operational level down to production and transportation
planning and scheduling across the organization and trading
Response partners with advanced analytics and simulation
Demand & Supply

Advanced planning and Machine Learning

Demand State-of-the-art planning methods for demand-driven, profit
Available to Driven optimized, and self-learning supply chains, enabling faster
Promise* Replenishment*
Production decision making and touchless operations with increased
Planning & automation
Detailed
Scheduling*

Real-time visibility into extended supply chain

Visibility to extended supply chain from source, make, deliver,
and operate to understand impact and execute adjustments in
a timely manner

* Also available embedded in S4/HANA

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Inventory Planning and Optimization: IBP for Inventory

IBP for Inventory

▪ Adv. Inventory Positioning &
Sizing (ML Optimization)

SL = single level
ML = multi level
© SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC
System Demo

© SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC

 Visit us:

Thank you. www.sap.com/scmcs

Contact information:
Ferenc Gulyássy
Business Processes Principal Consultant
Supply Chain Management
SAP Consulting

SAP-Platz 1
D-40882 Ratingen

Germany Write us:

[email protected] [email protected]
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