SAP Integrated Business Planning for Inventory is really worth?

Inventory maintenance is the biggest challenge in any organization. SAP Integrated Business Planning for inventory allows you to lower your stocking cost while maintaining your customer service levels.

The inventory application helps manage uncertainty in the supply chain by determining the amount of safety stock to hold at stocking locations within the supply chain. Safety stock absorbs uncertainty, allowing you to maintain customer service levels. Inventory optimization determines the optimal safety stock for each stocking location and recommends targets, based on the following: Demand from customers and demand uncertainty (direct demand) and the impact that has on internal replenishment orders (indirect demand and indirect demand uncertainty)

• Forecast error and its impact across the supply chain
• Lead times and their variability, replenishment frequency and lot sizes
• Target service levels at customers

Use case of inventory.

• Multi-stage inventory optimization across all stages of supply chain, compensating for uncertainties in demand forecasts, supply timing and supply quantity
• Prescribe inventory targets to minimize inventory costs while buffering for uncertainty and meeting customer service targets
• Execute what-if analysis to identify supply chain improvement opportunities.

Benefits

• Improve customer service levels
• Maximize the efficiency of inventory and working capital
• Improve planner productivity, standardize planning processes
• Standardize the inventory target-setting process at each tier within the supply chain to feed operational plans
• Reduce production and distribution costs

Frequency

• Weekly
• New safety stock plan, merchandising stock, cycle stock, on-hand stock, pipeline stock and target inventory position plans at the end of every week

Global (Multi-Stage) Inventory Optimization Operator

• Global (multi-stage) inventory optimization operator to recommend safety stock across all products and locations of the supply chain. The optimization minimizes your total safety stock holding cost while ensuring that all customer service level targets are met. The operator: Optimizes safety stock globally and simultaneously across all products and locations of a supply chain while considering demand uncertainties, supply uncertainties, supply quantity, lead times, costs, and service levels.
• Propagates forecast and forecast variability to stocking nodes that have customer demand.
• Propagates forecast and forecast variability to internal (upstream) nodes of a supply chain network.
• Optimizes internal service levels between internal (upstream) nodes of the supply chain network.
• Calculates safety stock targets, backorders, and average expedited quantities.
• Calculates values for the whole supply chain network. and does not support planning filters

Decomposed (Single-Stage) Inventory Optimization Operator

Decomposed (single-stage) inventory optimization operator to calculate recommended safety stock and target inventory position values locally for each product-location combination.

Because some of the inputs to the Decomposed (single-stage) inventory optimization operator are outputs of the Global (multi-stage) inventory optimization you must run the Global (multi-stage) inventory optimization before running Decomposed (single-stage) inventory optimization.

The operator is used to:

• Run simulations when you want to determine the impact on recommended safety stock for local changes to input key figures.
• Produce missing data when you have an individual node of the supply chain with incomplete inventory data.
• Calculate values for a scope defined by the planning filters or excel view filters.

Best Regards,

Lingaiah