Demand & Supply Planning Channel

10's, 15's and 20's: Oh My

Explore a planning scenario faced with a trifecta of exception messages

Exploring key requirements for successful ATP implementation

Order Fulfillment & ATP

SD; MM; PP

MD04; CO09

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, my name is Martin. In this video, we will be discussing the close relationship between ATP, MRP, and exception management. So often when we talk with clients, the focus is fixing ATP, but the only thing that fixes ATP is getting our supply in order. Our ability to quickly accurately provide available dates to our customers is essential. So Kristie, how do we make a promise and keep a promise? Well Martin, what can I say? It's easy peasy, one two threezy. If only. We know the accuracy of this information can be a clear competitive differentiator. We train our customers by our own actions, and in some cases they also have ERP solutions that respond to our performance. In this demo, we will walk through. Some common changes that might occur. And how it impacts the ATP check, including inventory counts, changes in dates. And conflicting business rules and behaviors. So often we hear clients talk about the idea that if only they could get ATP right, it would help to solve all of their supply side woes. And I'm here, unfortunately, to break some hearts, it's really about ATP being the customer of predictable and stable supply. So our ability to make and keep a promise to the customer is entirely reliant on our ability to have stable supply and to make that promise at a time when we can actually keep it. So what we're going to do today is actually go back through and revisit a common screen where we spend a lot of our time as planners and that is our stock requirements list. So, if you are working in customer service or sales support, my guess is you also have some familiarity with this screen, and depending on how reliable ATP is for you, tends to go hand in hand with how familiar you are with the screen. So when ATP is less reliable, you spend a lot of time here maybe even getting expertise that rivals your planning counterparts. So, it all starts with our ability to know what we have in stock and on hand, and in future videos we're going to go through this in great detail, but for right now, I just want to point out to you, if you see these little golden cubes here, the first place we want to start is, can we count on the inventory we actually have? And so some of the things that we would look at here, are things like, how often are we cycle counting? How often are we making significant adjustments to our inventory? Are we able to see things move through the quality inspection process and return to stock in a reasonable amount of time that's predictable and in line with when that quality inspection is supposed to be complete? So, for example, here you can see that we have 15 pieces in total that are in unrestricted use stock, that means on the shelf, ready to be available for customer orders. And then you can see we have 3 that is in block stock. And in SAP's world, block stock is stock that is not expected to be returned to unrestricted use stock and made available for the customer, whether that's external customer, sister facility where you're transferring goods, or even the manufacturing floor. It's assumed that something has to be done to that in order for it to be made back into unrestricted use stock. The likelihood of being able to use it is not good. We don't want to plan for it and we don't want to promise against it. And then we also have in quality inspection, so inventory that has come in, it's in the process of being reviewed, it is expected to return to unrestricted use stock and be good for use in manufacturing for the customer. And then you also see we have 15 pieces that are in returns, which also need to be inspected and brought back in. So overall, we have 41 pieces that we're planning on shipping out versus 15 pieces that we have available today and ready to go. So this is a good example of how we have to go through and look at the parts and understand what their status is. So if you know that you're getting good cycle counts, you're doing that regularly, the accuracy is good on a particular subset of parts, then we're in a place where we can start to really make and keep a promise. Now let's look at a different material. Let's look at this guy here. So the other thing we might be doing is we might be thinking about production that we have out there. So, you know, how reliable is our production schedule? For example, if we had orders that were in the past and needed attention, then we would want to make sure that we were making the MRP controller or the planner for that aware that we wanted to start to be able to promise against that production that is on the schedule. And so knowing that that schedule is able to be completed on time, or giving a reasonable, realistic, and actionable schedule to the manufacturing floor, is important before we can start to make a promise to the customer. And then if we were really good, and we had very, very accurate forecasts, or customer provided forecasts, we might even be able to go a little further out and start counting against things that are planned. But it's all a journey and it's a progression, and it's most important to understand is that ATP is reliant on predictable and stable supply, it is the customer of the supply plan. What are we trying to do with MRP? We are trying to supply the demand. What are we trying to do with capacity evaluation and leveling? Making sure that we have a schedule that's reasonable, realistic, and actionable. What are we doing with material availability check for manufacturing? Making sure the shop floor is set up for success and being able to produce that product and have it available to the customer. So all of these different pieces are integration points that come together in order to make sure that we are able to make and keep the promise. Making a promise or thinking about our reliability. So are we reliable or capable to serve? Are we capable based on the customer's requested date, and are we reliable once we make that promise and being able to keep it? And the more reliable we become, the better positioned we are to become capable for meeting the request date and the better positioned we are to be able to be successful for that customer and being able to meet their needs. So, ATP, available to promise, is reliant on predictable and stable supply. Being able to go through, group, and prioritize your materials and understanding what the reliability is of each of those different elements from what you actually have on hand, out through your schedule, and then ultimately what is planned. And knowing that, knowing the details of how that material or group of materials is performing is half the battle in terms of being able to set the right business rules that match our business behaviors with fewer exceptions and less manual intervention. Well that was a quick tour, but there's several other videos releasing on this topic. Let's summarize. ATP is a journey, and like most business rules in SAP, it's not one size fits all. Because ATP is the customer of predictable and stable supply. We will have differences across the product portfolio, and today we explored some common situations that can make getting ATP completely right every time, just a little bit challenging. And we also explored how to detect the exceptions and address them. If there's one message here, it's this. Don't give up. Focus on stabilizing your supply, start small, and manage the exceptions. Thank you Kristie. That is a huge topic. And I know we've got much more to discuss. The simple principle that ATP is reliant on predictable and stable supply is often overlooked. It takes a lot of the mystery out of the recipe for success and puts us back in the driver's seat. Focusing on supply and accurate ATP will follow. If you want to know more about this particular topic, this big topic, or any other topic that relates to MRP and ATP, please feel free to look at our other videos around.

Anatomy of a Source List

Master data record review for enhanced procurement support

Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, my name is Martin, and we know the best way to learn is by doing. So in this video, we're going to be reviewing the anatomy of source lists. Even when the source list is in use, it's often not used to its fullest potential. We thought this unsung master data hero is worthy of our discussion. So Dr. Kristie, why don't you tell us a little bit more about the anatomy of a source list? Sure thing, Martin. The source list is truly a powerful tool in the procurement toolkit. If you ever hope to take advantage of any form of automation or the more strategic sourcing tools like contracts or scheduling agreements or quota arrangements, getting your source list in order is a definite prerequisite. In fact, one could argue that it's really a prerequisite for strong value out of the MRP run for buyers. Let's jump in so I can give you a tour of. What that source list contains and how it's used. I'll highlight how we can monitor for exceptions and fix them. And lastly, what a well maintained source list actually looks like. Come on, let's go take a look. All right, let's jump right in and start to understand what the anatomy of a source list looks like. So you can see here I am in ME01, which is the place that we go to maintain our source list. And if you're thinking about your journey towards purchase order automation, where there is less touches involved, you're letting MRP do more of the heavy lifting in order to get your purchase orders out the door, this is a good first prerequisite to being in a position to do that because it allows you to control what sources are assigned for that particular material. So I've got my material and my plant in here, I'm going to go ahead and hit enter and that's going to pop me through to the actual source list. And yes, there are a variety of ways for you to be able to go in and maintain this, including just having the system go in and generate a record for you or going in and maintaining multiple source lists at the same time. But in this case, what I want to do is talk through the actual anatomy of what it is that you're seeing here. So the first thing that becomes really important is the validity dates, so if you think about this, this is a record of eligibility of your sources, so which sources are approved to provide this particular product? Which sources do we want to have automatically assigned and which ones do we want to have for reference? And you can control in the material master whether a source list is required or not and when you get a little further along in your automation journey, you're maybe using scheduling agreements, contracts, quota arrangements, or even the functionality that will automatically convert your purchase requisition into a purchase order. This is where you really want to make sure that you do have that requirement in the material master where you are saying, yes the source list is required. But first things first is you need to come in and set a validity period, and this is very dependent on how your qualification works for your suppliers if they are qualified for a finite period because there are requirements for you to go in and do a site visit or review documentation or get updated certificates from them or whatever the case may be that allows you to consider it a source to be qualified. This is where you would want to come in and maintain those effectivity days because they also then become available to you in reporting so that you can go through and say okay It's time for me to go in and do that review In this case, you can see that we had a couple of suppliers in a multi source situation from 2021 to 2023, and we had these two suppliers, 5595 and 1000, that were both qualified. In the middle of that, in June, from June until December of 2023, we actually switched sources to another supplier, 1472. So you've got your validity dates, you have your supplier number, and then next to that you have your purchase organization. Okay, so if you've got multiple purchase organizations, making sure that you've got that assigned properly so that you can go in and do spend analysis, run your PO reports, be able to go in and do that review. And then next door to that, typically a commodity is going to belong to the same purchase organization. And the next set is procurement plant, so let's say that in addition to external sources of supply, you also had within your own supply network, the ability to transfer products or produce and shift over, this is where you would assign that plant as well as you could have a mix of sources here that are available and you could choose then to split those volumes accordingly. Next door to that is the ordering unit. So if there's a variation from your ordering unit that is your base unit of measure or you're managing through alternative units of measure, here's your opportunity to have that as generally going to read from the associated document, so either a contract in this case, a scheduling agreement, that's where it's picking these up from or if you have something maintained separately in your purchase info record, that's where this is going to come into play. Next door to that is the agreement number. So, in this case, you can see that there was a agreement in place from March of 2021 through August of 2023. That's actually quite long for an agreement to be in place but this is what the source list is telling me right now and it has the item number. And this is smart, so the system's not going to let you put in a faulty document number here. In fact, you're able to come in, you can even go in and search. So if you click on this button here, it'll actually pop open the search window and it will help you to locate that particular document if you were to go in and run a search for it. You've got a variety of places, actually let me go back in there real quick and show you, if you do this little drop down here, you can see all the different options for how you might go through and search for that document, you might want to go in and look per vendor or for a particular material or be able to go in per agreement date. So there's a variety of different options here for you to be able to go in and conduct a good search, and then it will identify for you the item number. Now if you are working with central contracts, you do have that as an option here as well, so if you're consolidating your spend, maybe you have an agreement for across all of your plants and within a purchase organization, you're committed to X volume for X price or X lead time, this is where you're able to come in and manage that and then we get into some really fun things around pricing scales and controlling those price scales and how that's applying to your purchase orders as well as things like some rough cut capacity planning and being able to share information with your suppliers, being able to get centralized reports in the buyer negotiation sheet, all of that fun stuff as well. Now, next door to this is whether it is your fixed source of supply. So when MRP runs, if you want it to automatically assign a source of supply, this is where you're going to choose that. Now for this particular item, we have a quota arrangement in place, so within the quota arrangement effectivity period, which expired in the end of August, It would have managed that for us and managed the split. You can see that once we get out beyond it, there's no qualification requirements that the supplier can't continue on into the future. So you can see after that, MRP was just assigning to 5595. So at the expiration of all the other agreements that were in place, the arrangements, it's going to just go ahead and assign in the MRP run supplier 5595. Next door to that is really important, that is blocking. So if you need to block a particular supplier for a particular period of time, if you're no longer able to use that supplier, this is where you can come in and use the source list to basically disqualify that source for this particular material. Now this can be maintained at the business partner or vendor master level, however a lot of times it's for a particular material for a particular period of time. This is really important for compliance to be able to have a record of this information, so this is a nice way to be able to come in and maintain it. Next door to that is another very important setting, which is how MRP is supposed to regard the source. So it's going to tell you whether it is relevant to MRP. So if it is not, if it's a blank, then it's not going to go in and do something like look at that particular contract or scheduling agreement or purchase info record. This means it's very important that the information in the material master is accurate to what that supplier's lead time and MOQ and all of that fun stuff, everything is accurate and clean there because that's what it's going to read instead. And if you then assign the source after the fact and it goes through and it reads a scheduling agreement, a contractor purchase info record that has different master data. When you go to convert that requisition into a purchase order or when you go to assign the source and then pick up one of those other agreements, it's then going in here at that master data and sometimes you'll get a nasty surprise because they'll say your source list points you to a purchase info record and that purchase info record has 18 days of lead time, but the material master has 35. If that source was not valid, only when you convert it into the purchase order or you go in and assign the source and the requisition, are you going to pick up that master data so it can really throw off your planning. Very, very important. And here you have the opportunity to either get purchase requisitions or planned orders depending on how you're running your MRP, and then also whether you're going to get your schedule lines in place, and all of this works in conjunction to the settings that you have in place for your MRP run. All right, and then if there's an MRP area that is embedded in that document, then that's where you'll see that pop up as well, in this case, you'll see that for these very specific two documents up here. So that is one of the ways that we can go in and maintain and interpret the information in our source lists. And again, very important first step to getting going on your automation journey is going in here and providing that information but also incredibly helpful from a compliance or an auditing perspective to make sure that you have all this information in here and you've got good qualification programs in place that will help you with performance management and the source lists is one of the good backbones for being able to provide that information. So, my guess is you're not fully exploiting this today, so have a go at it and see if you can get some more mileage out of this very important and critical piece of master data. All right, so nothing to see here, that source list is no big deal. I think it's fair to say that in many businesses, and to many buyers and planners, it may in fact seem that way. But great things sometimes come in small packages, and the seemingly small master data record it certainly packs a punch when it comes to powering up your sourcing strategy, and it helps set us up for success and efficiency. Today we learned about. The various settings available in the source list. And their applicability to the various scenarios in planning and procurement. They aren't hard to maintain, and they are a gateway to so much good stuff. Yes, of course. Thank you Kristie. So often we find that organizations do not recognize how important the source list actually is. In many cases, the results have a great deal of unnecessary manual and offline work. Using a source list is one of the most important ways to keep SAP rules engine and MRP working and functioning as expected. So, it's a great way to build efficiencies, level of sourcing, and of course, keep everything moving in the right direction. So Kristie, once again, thank you. So, folks, if you want to learn more about source lists and procurement automation please feel free to check out our other videos and of course, if you have a burning question please submit it below.

Are We In Balance?

Strategize to correct supply chain imbalances

Demand & Supply Planning

DM; IBP; P2P; PTM

MD06; MD07

Assemble to Order

Align business rules within assemble to order operations

Demand & Supply Planning

DM; OTC; P2P; PTM

MD04; MD05; MM03

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, I'm Martin, in this video we will focus on how to take advantage of SAP's assembled to order capability. Planning strategy, assembled to order, can help organizations streamline the process for assembly type production lines, which allows for much greater flexibility in meeting customer demands, allowing them to better plan their production resources, raw materials and labor, and increase manufacturing efficiencies. So Kristie. Tell us a little bit about this assemble to order. Absolutely Martin. Assemble to Order is one of the many planning strategies available to us in SAP. Planning strategies represent a powerful feature when used correctly and a planning strategy controls how we react and respond to demand, and is one of the most critical master data settings we must consider. In this demonstration I'm going to focus on three key things. First, how an assemble to order strategy can set us up for success in delivering within a customer's tolerance time. Second, when planning with an assemble to order planning strategy might look like and how MRP responds when the strategy is in place. And third, some important things we may wish to consider when thinking through the BOM and positioning for pull. All right, before we jump into SAP, let's talk just a little bit about assemble or finish to order. So the goal of having an assemble or finish to order planning strategy is to allow us to do late point product differentiation. So we want to be able to shorten the overall lead time by positioning our inventory at a level of the bill of material where it makes sense. And when I say where it makes sense, I mean that that inventory is able to be used in a reasonable amount of time, that it allows us to convert into the finished product within the customer tolerance time, and that we're getting good investment through velocity of the use of that inventory. So in this example, if we were to start this product from start to finish, so going out and preparing all of our raw materials, bringing them in, going through quality inspection, getting them positioned, going through the production for the semi-finished good and then ultimately finishing it into the final product, it would take us 40 days. However, if we were to position our stocking level midway through the BOM, all of a sudden we are in a position where we will be able to service this within 5 days. And the way that SAP will react or respond to that is that it's going to stock up to that nearly complete portion of the BOM, so all the way through the semi-finished, and then at the last moment when we actually receive that customer order in, then we would be able to convert from that semi-finished into the finished good within the customer's tolerance time or their expected lead time. Okay, and we can make that determination at any level of the BOM and this is one of the many planning strategies that allow us to do late point product differentiation or to be able to consolidate our demand. There's a lot of different ways that we can approach this, we can have a planning material where we're able to deliver a forecast for an entire product family, we can have this case where we're actually going through and just saying, hey, we're going to forecast the finish good but we are going to delay that conversion into that final conversion or the sub-assembly until we actually receive the customer order in. So what does this actually look like in SAP? So let me go ahead and pop over, I'm going to go into my stock requirements list, and if you're looking for information on make to order and make to stock planning strategies, there's also videos on those, so make sure you go check those out. But here I am in my stock requirements list and what you're going to see is something that maybe looks a little bit different. So we have our sales orders at the top, and then down here we have a planned order and this is a normal planned order, you can see it says stock at the end of it, and this is going to be a convertible planned order. So if I go in and I actually try to convert this into a production or process order, I go through the rest of my process um, with that planned order, it's going to perform just as it normally would because this has been cleared for production because we have sales orders already in hand. Down below that you're going to see this blue line, it says pre-planning without assembly. So this from here on down, these are forecasted requirements, and our demand program is all about how we are going to react and respond to both our forecast and our actual sales orders or stock transfer requirements. And in this case, we're saying, until that customer order comes in, we are not going to execute final production, but we do want to make sure that we're driving our demand down onto the components and that each individual level of the BOM, we make the decision on whether we are going to stock it or wait for the customer order to come in. And in total, for that entire replenishment lead time, we need to make sure that we are positioned to be able to service the customers typically in a assemble to order finished order model. Also we are planning to promise against that forecast. So our forecast is really our lever for both planning our semi-finished or raw materials, depending on if we are going to stock or not, and then also in terms of being able to pass that demand down the chain. So here you're going to see planned orders with a little different indicator on the end, these are responding to the independent requirements, in this case it's a VSE versus a VSF, which is what many of us are probably more used to seeing, and if I go in to convert this planned order, it is only for the purposes of being able to drive that demand down to the semi finish or the components, and if I go in to try to convert it into a production order, it's going to actually tell me that this order type is not convertible. Okay, and so that's really good information to have if you're not sure what's going on, if it's below the blue line, it's not ready, it's not cleared from takeoff for manufacturing, and if it's above the blue line and it says stock on it, then you can actually go through and execute that process. Okay, the other thing that you can do is you can actually see how this is pegging down to the components by clicking on a supply element and then clicking on the order report. It's going to bring up for you the bill of material, and if you bring this down a little bit, you'll be able to see what the current status is. So you can see this guy's got exception messages all over the place, but you can see how we're flowing that demand through and then how we're actually triggering production as a result, whether it's based on that customer order or it's based on the forecasted replenishment. So we're positioned and poised for success when that customer order comes in. Very helpful planning strategy, very useful, and many of us are only using what we would call make to order or make to stock. So assemble or finish to order is also a great opportunity for us to expand and find that plan for every part because most of us are a mix of make to stock, make to order and assemble or finished order. So in summary we have covered how assembled to order allows for us to. Be able to have flexibility in our final assembly by being in control of the stocking level of the BOM while respecting the customer tolerance time. Allows manufacturing to produce to a pull signal from the customer. And supports throughput, revenue enablement, and the fruitful investment of time, resources, capacity, and working capital by moving us closer to our customer's needs for a better outcome for all. Wow thanks Kristie. I mean planning strategies is a big deal. Really needs to be understood. Using assemble to order, or ATO, can really help align customer flexibility with manufacturing efficiencies. So if you want to learn more about how to get the most out of your SAP system please check out our other videos and if you can find a video to an answer of a burning question you have please submit a suggestion.

Efficiently manage and rectify overdue purchase orders

MD04; MD05; MD06; MD07; ME22N

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. My name is Martin and transactional excellence is critical for a good supply chain. In this video we'll focus on PO housekeeping. When used correctly, utilizing housekeeping principles to clean overdue purchase orders can help organizations ensure that SAP has a true reflection of the incoming supply and associated financial commitments. Kristie, how would you tell us a little bit about how to do housekeeping for PO's? Sure. Martin. When we use housekeeping techniques to properly identify and clean overdue purchase orders, we are one step closer to being able to use MRP. We all know that MRP is a powerful planning engine when used correctly and in this demonstration I am going to focus on two things that will help us in taking the first step to get their. Letting the system do the heavy lifting on generating requirements and exceptions when supply does not serve the demand allows our buyers to rise above the orders. First up, how to identify past due purchase orders and when we're looking at something that is really old and moldy. Second, the proper way to clean them up and close them out and spoiler alert, it does not involve the trash can. So now let's go in and do a little bit of housekeeping. We want to go in and find some purchase orders that are past due and need to be cleaned up. So how we would identify these, there's lots of list displays that you probably use regularly if you're a buyer, but another way to do it is actually through exception monitoring and so you can see here I am in my exception monitor, I happen to be working in MD07 because that's going to be my live current picture of what is going on with my supply and demand and I'm going to come up here to binoculars and what this is going to do is it's going to identify various situations in the list so that I'm able to go in and find any overdue elements. So the reason why cleaning up these overdue elements is so important is that, the system believes that they are coming in today. Anything that is past due, it's going to live in this really naive world where it believes, oh, at any moment, at any moment this is coming in and you can see here we've got some dates on these MRP elements so anything that's related to supplier demand that are quite past due. And so the first thing that we want to do is go in and focus on, these particular purchase order items. So I'm going to click on this here and what that's going to do is it's going to actually highlight for me that we are looking for PO items that's what we're telling the system and then I'm going to put in a date range and what I likely want to do is work from the oldest to the newest. The oldest stuff is going to be the most obvious to close out and then as we move forward in time there's going to be a little bit more collaboration that has to be done with our suppliers to make sure that we aren't closing something out on our side that's open on theirs. So I'm going to go ahead and back this up by a few months I feel pretty safe that anything that is older than the end of last year is legitimately ready to be closed. Okay and there is a difference between needing to close purchase orders out, clean them up, versus adjusting the dates when we know that we have a new date that's been provided or we know that we're falling behind. I'm going to click on the selected stock requirements list you can see in the lower left hand corner of my screen, 69 materials were selected. I'm going to go ahead and click on this it's going to bring those in for me and what we're going to see is, especially when we're starting with our housekeeping, we're likely to see that we've got lots of different elements that are out here that are past due and when we see a combination of demand and supply, we want to make sure that we are cleaning the demand and then cleaning the supply. But in this case what I want to do is I want to go ahead and get this particular purchase order closed out, and you can see it's highlighted for me here. I'm going to double click on the element and what it's going to do is bring up some of the details. So I've got the purchase order document, I've got the delivery date, so when it was expected to be here, I then have any exception messages that are associated with it. So you can see that by doing housekeeping it's also going to help me with my exception monitoring because I actually have two different exception messages here. I've got a reschedule in to meet that past due demand and then I have a finished date in the past and so the importance of cleaning up the demand elements is that when MRP runs it will repropose additional supply. But at the very least, by getting the purchase order cleaned up we're getting rid of an element that MRP doesn't have any control over because it's firmed. So I can go right to this purchase order from here just by clicking on the pencil or the eyeglasses to view or change. I'm going to go ahead and go into change and what I want to do here is first let's look at the delivery schedule. This is down in the information for this particular line item. I'm down at the delivery schedule level and I can see that this was generated from a purchase requisition so that's how it originated, which is good to see and good to know, and then I can go over here and what I want to do is actually close this out. I don't want to delete the line item, I want to close it out so that it closes clean and we still have all of the necessary information associated with it. So that's my first and best option anywhere I can actually just go in and close it out is what I want to do and the way I'm going to do that is by clicking on the delivery tab and then what I want to do is I want to click on this delivery complete indicator. By ticking that tick box what's going to happen is it's going to say that as far as SAP is concerned we are not expecting to receive any additional inventory against this purchase order. The other thing that's nice about this is that should something happen and you find you do need to post against this purchase order, hopefully not something that that is sold, but should you find that you need to, with something that's more current, you can come in here and make it reeligible for delivery. Okay, but this is going to take it out of planning so it's no longer going to be expected to arrive any day now and it'll clean up the firmness of the elements so when we go back through and MRP is rerun against that demand and it's proposing the supply, it will be able to realign with that demand as it's getting cleaned up as well. So really important to go in and clean up these elements. When you go to post this, especially for your old stuff, you might encounter some error messages. So what you might want to do is go in and just run the check first and allow it to come back with any issues that you might be facing. That way if you need to reach out to someone else to help you to get these clothed or if you've got something that's stuck this will will help you identify what the problem is and get that resolved. Then once you've saved and you go back to MD04, if you hit refresh you'll see that purchase order is no longer showing there, it's been cleaned up and you can move on to your next element. Really easy way to go in and clean up your purchase orders. Just need to go in, review them and then click the tick box in order to show that this is no longer relevant for planning and we're not expecting to receive any additional material against this purchase order. So in summary we have covered how utilizing housekeeping techniques to clean overdue purchase orders allows us to. Have an accurate reflection of open orders with our suppliers and when they are expected to arrive. And use MRP to properly balance the supply plan with the demand plan and send us quality proposals for replenishment and actionable exception messages. Our buyers will be able to rise above the orders and look at the supply plan for their materials, overall sourcing strategy and their supplier performance. So not only are we keeping our supply chains relevant, we are also increasing cash flow, providing more accurate financial commitments, so thank you Kristie. If you want to learn more about how to get the most out of your SAP system, please check our other videos in the catalog and if you can't find a video to answer a burning question, please submit a suggestion.

Clean Overdue Purchase Requisitions

Efficiently manage and rectify overdue purchase requisitions

MD04; MD05; MD06; MD07; ME52N

Clean Up Aisle 4: COGI

Clean-up time: Step-by-step guide to reviewing and resolving COGI errors

7 min

New

SAP® ECC

Scheduling & Shop Floor

PTM

COGI; MMBE

Hey, welcome back supply chain superstars. Martin here, and today we're going after a super glamorous topic. Resolving errors in goods issues. Okay. Okay. Okay. I know it's actually is not the most glamorous of topics, but it is truly an important one. Having a clean and healthy system that reflects timely and completed transactional postings is a big part of having a system we can trust. Accounting for our inventory properly and knowing where it is located opens the doors to better quality and ATP. Our advisor for today is going to lead us on this quest, and to tidy our system is our friend Tom. Tom, tell us more about COGI errors and how we can actually use them to improve our system accuracy. Well, as it happens, Martin, not only are we going to talk about how to resolve COGI errors as they occur, but also how to reduce the number of errors we're getting in the first place. Like all cleanup after the problem has occurred, the investigation and cleanup is easier the quicker you get to it. In this case, sooner is much better. If you have a COGI error, SAP can't find the balance of materials that was to be issued to the manufacturing order in the place that it was supposed to be looking. So, we need to see if the quantity or location is incorrect and then get it pointed in the right direction. Let's get in the system and look at some examples. I'll tell you a story or two as we go. Now let's dive into SAP and take a closer look at COGI errors. We'll start by looking at the SAP menu and finding the transaction code for COGI. We start at the top in the Logistics folder. We drop to Production, drop down to Shop Floor Control, drop down to Confirmation, drop down to Reprocessing, and there you'll find the COGI. The other simple trick for finding COGI is just go into your menu, type in COGI, off you go into the transaction. As we enter the COGI transaction, we can clearly see that there is a number of search criteria we can do to limit the search for specific errors, specific plants, specific situations we might be looking for. In this example, we're going to just look at plant level COGI errors and make sure we understand the status of our COGIs for the entire plant. So we're going to go into plant 1000 and execute to look for COGI errors. As we enter, we see there are two COGI errors. And it's important to remember that we want to make sure our COGIs are up to date because there's impacts on the operation in our organization when COGI errors go unchecked. We have data accuracy issues. We'll have inventory discrepancies. We will have operational inefficiencies and we'll have a financial impact if we try to close our books at month end and COGI errors haven't been processed. So as we dive into this situation here we can see we have two COGIs. We'll highlight the first one and we'll discuss the details. As we can see here we have 300 pieces in our requirement for this error. It's also looking for these materials in storage location 1. So SAP expected there to be 300 pieces of this raw material in our storage location 1. Now as we dig a little deeper, we can look in the stock location situation for this material. As we look here, we can see we're in plant 1000, storage location 1, and we see we only have 12 pieces in unrestricted use. That means we did not have enough raw materials in the proper storage location for this confirmation. We can also see we seem to have plenty of raw material in other storage locations in the same plant. The issues we're facing here is that we've consumed 300 pieces but we haven't accounted for them in SAP. So now our raw material quantities are inaccurate. We also have the inefficiency of needing to go back now and fix this error, fix the process, and understand what happened. Was it a simple transactional error, or was there a process issue involved that caused this issue? Root cause analysis on that will be very important because as we fix those root causes and we understand what's causing these issues, they will not reoccur. Meaning, if we fix our process of transferring the right materials at the right time, this COGI error doesn't happen in the first place. So as we dig in and we look at these COGI errors and we need to understand why they happen in the first place, it'll help us prevent future COGI errors from happening in general. In this situation here, we may ask for a cycle count to determine, were raw materials taken from one of these other storage locations and brought to our storage location 1 without doing a transactional piece in SAP? If so, we do a simple transfer in the system to clear up the issue and the COGI will go away. So that's a simple example in the system how one COGI error can affect us in many ways. To recap, we needed 300 pieces, we consumed 300 pieces on the production order, yet SAP did not consume those materials. So now we're sitting here with 300 pieces inflating our inventory that aren't actually there because the situation wasn't resolved. So it is vastly important as we go into COGI that we make sure we have timely execution of our COGI errors, because it's going to keep our data system integrity accurate. It's going to help us by not wasting time chasing in root cause analysis, these errors and these issues. It will also help our financials closing at the end of the month, not having stuck processing errors that we need to correct before we can close our books. Listen, I know the after the fact cleanup task in SAP are no one's favorite. But if we make COGI cleanup a shift by shift or daily practice, we can start to get the value out of the messages. This is a type of exception monitoring and it's letting us know that we either have a process issue, a transactional timeliness issue, or a master data issue. Looking for trends leads us to making corrections that go beyond just that one error in processing. We can reduce the noise and improve the quality of our process flow and our data at the same time. We all benefit when the system is neat and tidy. And I can tell you, that as a planner, I want to know that all of these transactions went through and the system is clean, clear, and under control. Thanks for that walkthrough, Tom. No one wants to see stranded postings, especially as we cross periods. Let's make sure we act on these quickly and resolve them with process or data fixes to make things better over time. Thanks again, Tom. Hey folks, if you have more questions related to how to keep the house clean, please use the chatbot. It will recommend some videos for you to watch. But if you have a very specific question for us, please submit it below.

Comparing Key Figures With Dual Classification

Sharpen focus and identify crucial areas by comparing two essential figures

Hi there SAP and supply chain professionals, Martin here, and today, we're on a quest to unlock the hidden treasures in your SAP system. Okay, let's jump right into this video. We're going to be exploring one of my favorite features called dual classification. We're all looking for quality insights out of our SAP, right? The things that arm the business community to critically think, turn information into insights and insights into action. Dual classification is a powerful tool that empowers our teams to do just that. Man, I'm excited about this topic. Wayne, please take us away and share all your experiences on this particular topic of dual classification. Certainly, Martin. This is one of my favorites too. Dual classification allows us to compare two key figures to get some really smart work lists. In today's walkthrough. I'm going to briefly define what dual classification is. I'll show you one of the ways you can get to it. And I'll explain some of the different use cases. Let's go in and take a look. The dual classification capability in SAP can be accessed using multiple transactions in the logistics information system. For purposes of this analysis, I've run a MC.9 report at a material level of detail and I'm going to show you how this dual classification allows us to analyze the data across two dimensions simultaneously. This then allows us to evaluate that information based on these criteria, and certainly can indicate opportunities for improvement or understanding as the relationships between these two sets of data are explored. So if I look at this result, I've called it out at a material level of detail, choosing key figures, I can see on the right hand side here that there are still very many key figures I could have elected to use. On the left hand side of the screen are the figures I've decided to use and if I then go back and look at my dual classification capability, I can see that the relationship between two fields is dictated by those key figures I've selected to report out on, the report. I'd be really interested to understand in this analysis what my average stock on hand is versus or juxtaposed to unplanned consumption. In other words, those materials that have relatively high values on hand but also reflect relatively high values of unplanned consumption and what that might mean for us. So, if I execute that report now, here you will see that the unplanned usage value across the top axis and the average stock value down across the left axis. In this bottom quadrant, these 19 materials have both a high average stock value on hand relative to the basket of materials, but they also have a relatively high unplanned usage value on hand. That may indicate, for example, that some of my bills of material or my recipes need some attention because I'm consuming more or less than planned and that would be an interesting analysis to dive into. And by a simple double click on that 19, I can see those 19 materials here that have both a high average stock value as well as high unplanned usage value. In summary, by utilizing dual classification analysis in SAP, we can gain insight into specific combinations of classification, enabling better decision making and more targeted analysis. This functionality is particularly valuable in scenarios where data needs to be examined across multiple dimensions simultaneously to understand correlations or patterns that might not be evident when analyzing each classification independently. Welcome back. In today's walkthrough, we highlighted some important principles of dual classification. This is a piece of functionality that offers a good amount of utility. And versatility. It has many different applications and when applied correctly can help us drive insights into actions. I've used this functionality to support my curiosity and explore theories and what ifs to drive better supply chain outcomes. Today was the tip of the iceberg and sets us up for more discussion in the future. Oh Wayne, I enjoyed that so much. Thank you very, very much. As you said, it's a tip of the iceberg and we hope to inspire more curiosity in your exploration. So if you want to explore this topic and more, please check out our video catalogue and if you have some recommendations or some questions, feel free to submit them below.

Check material availability (MAC) at the converted production/process order stage

8 min

New

SAP® ECC

Scheduling & Shop Floor

PP; PTM

COHV; COMAC

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, this is Martin, and in this video we are going to focus on how to take advantage of SAP's material availability check when converting planned orders to production orders. When used correctly, converting the planned orders to production orders with material availability check capability, also known as ATP or available to promise for production, can help organizations automate the material availability checking process, making it more efficient and reducing the risk of production delays. Eacliffe that sounds like a mouthful, but help us out here. Sure Martin. Converted order ATP check is a powerful feature when used correctly and in this demonstration I'm going to focus on these four things. How to trigger plan order ATP check. Which plan orders to include in the ATP check. Be aware that SAP icon switches between material ATP and component ATP. And we'll also focus on the scope of check. It's basically which demand and supply elements are taken into consideration during the ATP check. The intent here is to use transactions COMAC to perform a component ATP check. That's an availability check for all components needed for production orders in a create status. The goal is to determine which orders can retain its current schedule dates versus identifying which ones need to be rescheduled out into the future due to one or more missing components. So let's go ahead and run this transaction. I'm going to run it for both production orders and plan orders. And what we get is the production schedule, that consists of released production orders, created production orders, and then planned orders. So here we are going to focus on created production, orders. The question is, can we support this schedule that's sitting here right now from a component perspective. So let's go ahead I'm going to do a select all, going to then check our settings to make sure we are doing an ATP check, so the settings looks good. Let's adopt that and what I'm going to do now is proceed and execute the availability check for the released orders, created orders, and the planned orders. So this is now complete, let me do a refresh but before I do that refresh, we can see that we have a status of, MANC, which is basically telling us right now that the check was not done prior to executing this transaction. Going to do a refresh and now we can see the status changed to, MACM and we can see that we did get some confirmation here from a ATP so we're a hundred percent good with everything that's on schedule so far. Let's take this production order, drill into it, and again, we see the status MACM. Let's take a quick look at the status, you can see, it's saying material committed and what this means is it's really talking about the components. The components are committed to this production order. Let's come back here and in fact let me come in here in change mode because in change mode I can also run ATP at the order level. You can do it from the header level where it says check material availability. Again, it's really talking about the components. It's unfortunate that SAP was not consistent in its name and convention, in some places it says material availability check, in other places it will say component availability check. But recognize it's these words are being used interchangeably. So what I'm going to do is I'm going to come to the component overview and you can see here there's also the possibility of doing the ATP check here and they use the label component rather than material. But the key reason I'm doing this, even though the check was done, I am doing this to show how the rules are applied in terms of what to consider when doing the ATP check. So let me run through this one component and I want to take a look at the scope of check and within the scope of check because we are dealing with a production order. The point is that we want the rules for the ATP check to be tighter than the rules we use for a planned order ATP check. So for a planned order we may say, look, take requisitions in the consideration, take planned orders in the consideration. But from a production or at least a created production order perspective, the expectation is things should have been ordered already or they should have been scheduled already. So in that case, look at purchase orders recognizing that delivery might be taking place within the next one or two days, or take production orders into consideration again recognizing that we might just be producing it slightly before we need to use it in the released production order. So through configuration we created a separate check-in rule and that check-in rule is basically to mimic what you would physically do if you were to do a manual check on, are we ready to execute this production order? The point is we have taken that manual process, automated it, reflected the business rules, within this checking rule and then that's applied to the ATP check. Again you can see what's confirmed, if there was a shortage that would be reflected here. In terms of shortage meaning there's insufficient inventory and or combination of inventory and other firmed supply elements are not available that results of that would be reflected here. So in summary, we have covered. How to do an ATP check for a converted planned order to a production order, show users how to trigger a ATP check for these orders. Show users which planned orders to include as part of the ATP check, and Make users aware that SAP uses two different icons, material ATP versus component ATP. Both meaning the same. Show users the scope of check, which basically defines which demand and supply elements to take into consideration as part of the ATP check. Thanks Eacliffe. Using this material availability check during the production creation stage can really help produce costly production delays. So if you want to learn more about how do you get the most out of your SAP system, please check out our other videos. And of course, if you have a question, please submit it below.

Coverage Profiles

Decoding inventory coverage days: A comprehensive understanding

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Martin here, and in this video we will focus on how to take advantage of SAP's coverage profile capability. A very underutilized feature in SAP. When used effectively, coverage profiles can help companies reduce the risk of stockouts and overstocking by ensuring that they have the right inventory coverage of products on hand when they need it. Kristie tell us a little bit about coverage profiles. Sure Martin. Coverage profiles provide a powerful feature when used correctly and in this demonstration I'm going to focus on three key things. First, the difference between static and dynamic safety stock governed by a coverage profile. Second, how a coverage profile drives dynamic safety stock coverage based on either usage or consumption. And third, where the coverage profile sits in SAP and some of the key decisions we need to make when we set the coverage profile up. All right, so let's talk a little bit about these coverage profiles that govern the way that our dynamic safety stock is calculated. So just as a refresher, this is a material that has a static safety stock value on it. Okay. So it's a predetermined, discreet value of 50 pieces. MRP is always going to try to make sure that we have the 50 pieces in reserve, it comes immediately off of our balance and it's very obvious when we're looking at our planning screen what that value is meant to be, it's right here for us, it's upfront and anytime we're falling below, it's giving us an exception message to let us know that we've violated that safety stock value. Dynamic safety stock a range of coverage is going to move around and adjust based on what is happening with that particular material across time. So it is going to actually move with the demand and so this is a different material and what you're going to see here, as this is the MRP list and the result of the MRP run we are carrying a positive balance, right? So it's not netting to zero. There's not a safety stock value that's specifically called out. We're not getting an exception message at the top that says that we're below, although we are getting an exception message that says we need to get this here sooner and the result of that is because of the coverage profile. So you can see here after this dependent requirement on 3/3, we have 29 pieces in stock. However, we're getting a message to move this particular purchase order in because it's not enough to be able to provide for the coverage we're looking for through the coverage profile. So think about a coverage profile and I'll go in and show you where it lives as setting your upper and lower control limits for that particular material in terms of how much coverage you would like to have and that coverage is going to dynamically recalculate based on what is going on with the demand. So it is how you are actually consuming or using that material will drive the amount of units that you need in order to maintain that target days of supply. So you see down here at the bottom in the net requirements calculation section of your MRP 2 view. You've got this thing called coverage profile. This is a little bit of configuration that has to happen in the background in order to set the rules for how this material is going to calculate and so you can see here these are very simple rules. There is a number of weeks you could do a number of days of coverage to be able to protect that particular material and then based on looking at that particular material's behavior you're going to choose the right amount of coverage as it relates to either your lead time or your opportunity to place orders with that particular supplier. So in this case, we're holding an additional week of coverage to protect us against variability or volatility in demand. Our lead time is 33 days but we're able to place orders with that supplier throughout the week so we can have several orders in flight if necessary and so this is giving us the protection that we're looking for. Now when we look at this we can see a lot more in the math section here if we go to the period total. So I'm going to click on that and I'm going to go so that you're able to see, I think in monthly buckets might be a little bit easier, so we can see our requirements, we can see what's planned to come in in terms of goods receipt and then we have all of these additional columns that we do not have when we're only looking at the static safety stock. Okay, all of these new pieces come into play and so we are trying to maintain, our target is 8 days of coverage, so we're trying to keep 8 days on hand and then it's calculating based on the average daily usage or average daily consumption, what is necessary in terms of units. We also have a minimum. We could also have a maximum, and those are your lower and upper control limits to make sure that your stock is staying in balance. So that's the additional inventory on top of your requirements you can expect to have. So we're going to see anywhere from 29 to 48 pieces is what our remaining balance should be after our poll and so if I go back to my periodic totals here or back to my individual totals here, I can now see on top of whatever my requirement is I'm driving to that additional balance based on that target number of days of coverage that I need to have in place in order to make sure that I am protecting against any additional variability or volatility in demand. I can also choose the horizon that I look at so if I have a very predictable item I can even that out across time based on average daily consumption. I could look in a more broad period, if it's something that tends to be really, really reactive, then I might want to go even broader with that. But I'm able to go in and maintain those averages for what the horizon is that I'm going to look at and then I can set my target and my minimum days of supply so that I have the appropriate coverage to protect this material and it will be dynamically recalculated across time. So in summary, we have covered how coverage profiles allow. SAP to dynamically recalculate values over a period of time that follow the demand. Allow us to set the horizon of values that we are looking for to ensure they are appropriate coverage for material is maintained. And lastly, keep the supply chain in alignment with those objectives to keep pace with this ever increasing VUCA world. Thanks Krisite. This feature is critical in creating a dynamic mechanism for managing the inventory needed in the supply chain and improved delivery performance. So if you want to learn more about how to get the most out of your SAP system please check out our other videos and if you can't find a video to answer a burning question, please submit a suggestion.

Utilize days of coverage analysis reports for effective inventory management

Demand & Supply Planning

DM; IBP; P2P; PTM

MD04; MD05; MD06; MD07

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Martin here and in this video we will focus on how to take advantage of SAP's days of forward coverage capability. Days of forward coverage is a critical statistic that allows the material planner to see how their plan is currently set to supply, and if they are at risk of long-term service level erosion or grossly over stocking. This is a very valuable insight to the health of your inventory and our supply chain. Kristie, take it away. Sure Martin. Days of forward coverage is a powerful feature when used correctly and in this demonstration I am going to focus on three key things. First, how to understand the days of forward coverage that appear in our exception and monitor and stock requirements list. Second, our options for how to define the different coverage statistics that we'll see there. And third, what value this can drive for the material planner and the overall quality of our planning processes. So now let's explore what this next section of the exception monitor is all about and that's this little middle piece here. This is helping us to understand how we are planning both for our current stock situation and then for our recovery. So if you think back to just some basic supply chain fundamentals, it's almost like looking at a pipeline report, so understanding how much stock that you have as of this moment in time and how long that's projected to last for you. How much stock you have based on firm elements so production orders, purchase orders, shipment notifications, those kinds of things and then how much stock you have with all of that plus planned elements. And what's really neat about the way that this is set up is that we can control what elements are considered in each bucket. So the first important decision to make is around this stock days of supply. So this is figuring out how long the current inventory on hand is going to last us and you can see here we're at the top of our screen, which means these are red lights, so we're in the negative right now. So we don't have enough inventory to cover our demand that is either due today or past due. So even though we have some stock on hand, in some cases it's not enough to to cover our current demand. So then the big question is okay, well what does it look like after I start to receive some replenishment? The first important decision that you have to make for your stock days of supply is whether that is going to calculate based on when you hit your safety stock level or whether it's going to calculate based on your physical stock level. So you can either set it to be a really early warning system based on your safety stock or you can have it evaluate based on what you currently physically have and whether that is, going to be used in either manufacturing or for transfer or use by the customer. So in this case we have this set up to consider what we physically have and then in the second bucket, we want to see how we're recovering and so this is going to be based on those firm scheduled items. Now you could break this out any way you would like, so you can choose what counts as that first receipt days of supply. So perhaps you want to consider only things that are totally firm like you've got a ship notification out there, versus a purchase order or purchase requisition. Same thing based on the status as you're moving through your production process so which MRP element is related to that. And then from there, you make decisions for the second receipt days of supply. So not the second time you're receiving a purchase order, but delineating what kinds of MRP elements, qualify. So plan, schedule versus actual and here you might choose things like purchase requisitions or planned order, so if I execute according to my plan, then what kind of shape am I in. So let's go ahead and look at this particular item. So right now we are at negative 5 days, let's call it 4.8 and then after we receive all the purchase orders that we have out there, we're going to be at 199.4 days. So I'm going to go ahead and click in here, and it always subtracts 1 day, so based on when things are needed it'll offset by a day based on the first time that you're going to run out of stock when you're in a negative situation. So we can see here this is our current planning situation, I'm going to put this in summary view because it's a little easier to understand what's happening and I'm going to look at it in terms of months. So you can see here we have that past due receipt that was planned to be here in January, so we need to clean that up, and then we have some more goods that are coming in February and March and then you can see we don't have any more replenishment happening until November. So that replenishment that's happening in November that is a purchase requisition, everything above this is a purchase order, so you can see that once we receive in these purchase orders, we're going to be covered for a little bit more than the next 6 months, so that's how it's calculating that 199 days of forward coverage based on our current receipt days of supply, and then from there, if we had some things that were in the near terms and it was split between purchase orders or purchase requisitions or production or process orders or dispatch planned orders versus regular planned orders, then we could start to delineate across those levels of firmness. So what do I currently have on hand? What do I have scheduled to come in? And then what do I have out there that is planned and I can work through and use those receipt days of supply buckets to help me understand what my recovery plan is and whether I am over or under ordering versus our current demand. So really helpful in trying to manage the balance of the supply chain but also really helpful in determining whether you're in a good place for recovery. So let's just scroll down to the bottom where we might see some more things in terms of our green lights. I want to get just where we're starting to bridge over. Okay? So this would be a good example here. Let me highlight this line for you so that you can see it. So we currently have 42 days on hand, and then we have, 76 after our next purchase orders are received. So that might be a good way for us to see if there are any issues. You can also see here down below that when we get into some of our planned replenishment, we have 42 but then we get into our purchase requisitions or our planned orders we're actually going to be in an overstock situation where we have more supply coming in than any future looking demand so we're going to actually run out of demand for this item based on our current plan. So those are the ones where we want to make sure that we have a, a full picture of the demand but B, if we have the opportunity to avoid, that replenishment and not actually place those orders we wanted to go through and take a review to see what's happening there. I bet as we're looking at these exception messages we're going to see some things that are related to the stocking situation if this is more than what we would expect to have on hand. So helpful tool not only for understanding your recovery plan, but also to help you evaluate the quality of your plan going forward and looking for opportunities to continue to refine your master data settings so that you're getting the best output possible from MRP and modeling those business behaviors into business rules which equates to master data in the system. So hopefully this is helpful for you. It's a really interesting way to be able to look at things and I think a really underutilized piece of functionality that's sitting right here for us in our exception monitor. So in summary, we have covered how days of forward coverage allows. A material planner to evaluate whether they are on the right path for replenishment. It won't tell us if we're on time, but it will tell us if we have the right quantities in motion. Second, set up of the statistics to include the right buckets of in-flight replenishment for each category will help us to make the quality of our planning better. And this is yet another way to proactively monitor how we are supplying the demand with an exception minded focus. Thanks Kristie. This is a huge help to ensure we don't run out of product anytime soon. So once again, if you want to learn more about how to get the most over SAP system, please check our other videos. And if you don't see the one you're looking for, please submit a suggestion.

Decoding Purchase Order Dates

Utilizing various date fields in purchase orders and confirmations

The best way to learn is by doing, welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here, and in this video we're going to focus on how we can decode SAP purchase orders dates to make the full use of this capability. Date management in SAP can sometimes be a tricky one. But the good news is there is a strong method to the madness. Kristie, tell us more about this strong method to the madness. Of course Martin. This is one of the most common questions we get from our clients and we have the decoder ring. In this demonstration I'll focus on three key things. First of all, what is the purpose of the different date fields available and what does SAP expect to happen with each of them? Second, when the dates are "locked in" from a performance management standpoint, so we know when we can make those changes. And lastly, the importance of keeping our dates, well, up to date. There are so many different dates on purchase orders that it can sometimes be really confusing on what we should update and when. So I'm going to try to go through the anatomy of the purchase order dates today and explain them so that you can see how they would interact with your business process and help to make our lives a little bit easier. So here I am in MD04, that is my stock requirements list. It's where I live and spend most of my time as a buyer and a planner and I'm going to come in here and take a look at this particular purchase order. I'll double click on it, and now I'm going to go in and just go into view and you can see here we've got a few different dates. Let's just start right from the top. At the top, I have a document date of June 9th of this year. Down below that at the item level, I have a delivery date of July 2nd. This is based on my lead time for this particular supplier and for this particular material from this particular supplier. And then down below that, now I'm at the schedule line level where I may have one or more entries here, and I have my statistical delivery date of the 2nd of July based on my lead time. This is the date I am going to measure my supplier's on time performance to. That is the purpose of this date. This date is not locked in until we have actually output our purchase orders, and that's a pretty common one that we'll hear from our clients. Folks will say that their stat date just keeps changing, and most of the time, if that's what's happening, it's because you have not actually successfully triggered the output. So whether you're sending it via PDF, via email, via EDI, you have to actually save that purchase order, creating it and putting it on hold will not lock in that statistical delivery date. And then you have your actual MRP relevant delivery date. So let's say your supplier lets you know that they are going to be late. Your manufacturing floor or your customer may be running ATP against this order. So it's very important that we know when this item is actually coming in. So if your supplier is going to be late, you would need to adjust your delivery date, your statistical delivery date, the date that you wanted it from your supplier based on their lead time would still stay the same. Now if the reverse happened and you asked your supplier to move the date in or move the date out and the supplier was able to accommodate that, then you could adjust the date you're measuring their performance to and in this case that would again be the statistical delivery date. So this is your vendor performance measure. This is what is actively happening in the supply chain. Now, we can take this a step even further, and if your supplier is providing order acknowledgements or ASNs to you, then there's no need to update the delivery date here. It will get updated in your confirmations and this really is the best case scenario. Your supplier is providing you updates on when that will be available, and if you are able to trust that information, then you can make a choice for that to be MRP relevant. So, it was supposed to deliver on the 2nd, the supplier is not going to be able to get it to us till the 5th. Then they would confirm the 5th back, and we have the opportunity to evaluate that and when it comes in, we'll get that most up to date information in MRP, and we'll see an exception message if it's misaligned with our supply, and then we can go back and have, or misaligned with our demand, then we can go back and have that conversation with our suppliers. So we can use exception monitoring to really be able to help us with that. And the other thing that can happen is that your supplier may be providing you with an ASN, and if that supplier is providing with the ASN, which would be an LA, then when they enter that information in, you'll get the inbound delivery, you'll see the status update in MRP, so it'll go from a purchase requisition to a purchase order to an acknowledged purchase order to a shipment notification. So now we're really getting some good signal in the supply chain for what's happening and maybe your supplier is going to need to take that quantity that you provided them and they can only give you 500 units on the second, and then you're going to get the other 700 later down the line, and that's actually going to come in on the 5th. Now, without having to go in and split that line on the purchase order, we're able to accurately reflect when the supplier is going to be able to deliver to us. So this is a great way to be able to receive information from your supplier, maintain the integrity of the data in your purchase order, and still let MRP know what the most current date and quantity information is. Then exception monitoring will tick in and let us know if we have a problem and if that supply is coming in too early or too late and we'll be able to see the status so that we can have the right conversation with the supplier based on where we are in the replenishment cycle in order to be able to either take an action or have a conversation for mitigating that kind of issue in the future. So, great way to do this without having to go in and start splitting purchase order lines or having purchase orders fall into the past simply because we're trying to manage our supplier performance. We really want to be able to measure that performance while still having the most up to date information for MRP and ATP so we're able to make an accurate promise to the manufacturing floor, to our sister facilities or to our customer. So that's a little more on the dates that are available to you and your purchase orders. So in summary, we have covered how decoding purchase order dates you will now be able to. Firstly, measure your supplier's performance with confidence. Second, track the status of your purchase orders. And lastly, keep MRP and ATP up to date and informed. Thanks Kristie. Having confidence in date management really makes it easier to manage the supply chain and collaborate more effectively. So if you want to know more about this video and other SAP system capabilities, please feel free to check out the other videos in this library and of course if you have a specific question please submit it below.

Decoding Purchase Requisition Dates

Optimize procurement: Leveraging purchase requisition dates effectively

Accurately representing dock-to-stock and end-of-line to stock time

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here, and in this video we're going to focus on how SAP plans for the time it takes to go from dock to in stock. This feature in SAP helps an organization ensure that it's properly planning for the activities that occur when a product is received from the production line, a sister facility, or an external supplier. So Kristie, tell us a little bit more about how to make the most out of this master data that governs SAP in terms of how to go from dock to stock. Absolutely, Martin. The master data field that governs planning for the time needed from receipt to availability is called the GR processing time. This is a commonly misunderstood field, and today I am going to show everyone three different things in this demo. First of all, where to maintain the goods receipt processing time and how to see its impact using the stock requirements list. Second, the purpose and value of this important master data field. And lastly, some of the common misuses that may need some attention in order to get the value out of proper planning. Okay, let's talk about dock to stock time. So, this is reflected in our goods receipt processing time, that's the master data field and the material master and you are going to find that on your MRP2 view. We'll go ahead and take a look at that in just a second. I know that all the different lead time breakdowns in SAP can become a little bit confusing, but they are so important in being able to accurately reflect our process flow and continuously improve the quality of that master data and those process performances to our customers. So all of those lead times accumulate up. So plan delivery time, goods receipt processing time, which includes quality inspection time, plus your put away time. Things like your picking and your staging and your loading and your transportation planning time for your sales orders and your stock transfer orders, all of the manufacturing related lead times, being able to break those down into buckets and have them be accurate is very important. And it's also very important that we don't buffer for variability in the process in those lead times. We want to make sure that we're handling that through a lot of the other tools, around our safety stock, our coverage profiles, our safety time, all of those other pieces. Really, these lead time buckets need to be broken down and to be as accurate as possible so we're accounting for those activities in the right way. So here we are in our stock requirements list and there's this button down at the bottom, it says GR, so the dates that you're typically seeing and your stock requirements dates list are the dates that things are expected to be available. So those are the dates that things like a material availability check or an ATP check are going to work off of. If I click this GR button, you'll actually see the dates will shift. So, we are expecting to receive these goods on the 2nd of July and the 5th of July, and then we will expect them to be available on the 7th and the 10th. Now, I'll show you how we tell whether those dates are calendar or working days, but we can sense here that there is a calendar coming into play because those are not the same amount of days and so if I actually look at my calendar for that first little piece of July, not only do we have a holiday that is occurring, but we also have a weekend. So, you know, if it's coming in early in that week and then we have some availability on Friday, we're then skipping the weekend and the next shipment is then available on the 10th. So the 8th and 9th must not be working days for us. So let me go ahead and show you where to find this information. Let's go into the Material Master, and get there in a variety of ways, we're going to go to the MRP2 view, and we're going to take a look at some of our lead times. So first of all we have our planned delivery time and it's very important to know whether your lead times are reflecting a factory calendar, a working day, or whether they're based on calendar days and an easy way to do that is just by going in and using your F1 key on your keyboard to bring up the information and in this particular case our planned delivery time because it's an external procurement is going to be in calendar days and that's because we do not know what the working calendar looks like for our suppliers necessarily. Or we may be having inventory that's moving across the water and of course that doesn't stop necessarily for weekends. So, it's factoring in the amount of time that it takes from the time we get that purchase order or scheduling agreement to the supplier till the time that it is actually going to receive on our dock and then that goods receipt time is then going to be the dock to stock, or if it's coming from manufacturing, from the production floor into stock. And so any activities that need to occur, so any type of put away or staging, anything related to our quality inspection, we want to make sure that all of those dates are aligned and so if I look at this field, same thing, I'm going to go to F1 and it's going to tell me that this is the number of working days required. So it's 3 working days and so it's going to look at the calendar that we have set up and it's going to tell us with 3 working days when that inventory is going to be available and this is critically important because it affects our ATP check, it affects our exception monitoring and our exception management, and it affects our ability to break down our processes and understand where there's opportunities for improvement. So it may seem like 3 days is not a big deal, but if you think about an extra day or 2 days that you could potentially work through your supply chain, that is a lot of additional inventory, it starts to really add up, so we want to make sure that this is accurate and correct and allows us just the right amount of time to be able to go through that process in a way that is reliable, so that we're able to then make our promises against it. So that's our dock to stock time, or otherwise known as our goods receipt processing time. So in summary we have covered how to properly reflect dock to stock. This allows you to be. Realistic in promising your material availability. Work to reduce the amount of time that it takes to go from dock to stock with continuous improvement activities. And lastly, avoid adding inventory unintentionally to your planning. Remember, lead time equals additional inventory. Thanks Kristie. By properly aligning our activities with the correct lead time buckets in SAP we can continue to improve our processes and our working capital. So if you want to learn more about how to get the most out of your SAP system please check out our other videos and of course if you have a burning question please submit it below.

Does That Safety Stock Make Sense?

Evaluate safety stock performance and investment with precision analysis

10 min

New

SAP® ECC

Demand & Supply Planning

MM; PP; DM

MD04; MM03; MC42; MC43; MC.9

Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here, and in this video we're going to focus on whether or not that safety stock level that we've said really make sense. Safety stock feature in SAP is intended to reduce the risk of stock outs due to volatility or variability in demand. As we know, the best way to learn is by doing. So, Kristie, tell us if the safety stock level we place in it is really the right level. I would love to Martin. It's always important to make sure that a safety stock level makes sense, and in this demonstration I'm going to focus on three key things. First of all, how to determine how much coverage that safety stock is actually providing. Second, some tips on how to set a safety stock that is meaningful and drives value. And third, what kind of care and feeding is required to ensure that that safety stock is set to remain as a positive contributor to the well performing inventory levels that your organization is looking for. Let's talk safety stock values in SAP. Okay, here we are and we are in MD04, which is the stock requirements list, looking at this particular material. This is a raw material that is serving production for this particular finished good. Raw materials may supply many, many different finished goods, in this case to keep it simple, it just is supplying one, and we can see that we have some ongoing demand in this case going out through the end of the year, and we have a safety stock set of 2,400 pieces and a current quantity available of 2,560. So what are some things that we want to consider when we think about safety stock? One of the things that we want to think about is lead time, so before we go anywhere else let's just check that out, and what I'm going to do is go in here and I'm just going to display material, I could also just double click on it or I could use the drop downs at the top. But for ease of use, let's go over here and let's talk about lead time. So the first thing I want to consider is my planned delivery time, so it's set to 21 days and planned delivery time, because we don't know what our supplier's factory calendars look like, is in calendar days. So this is 3 weeks of time here and then we have our goods receipt processing time which is 3 days, so 3 additional working days according to our factory calendar for this item to become available. So let's call it, you know, 3 1/2 weeks or so depending on how we hit the weekends in order for us to get this material replenished, so think about that. That gives us a good indication of what our full lead time looks like. Now, the other thing you want to consider is how often you are able to place an order with your supplier, so you do not need to cover your entire lead time, particularly on long lead time items. In order to be safe from a safety stock perspective, you want to also think about how frequently you're able to place orders and receive shipments from them. So maybe it's 120 days or 180 days, but you're able to place an order every week or every other week and you're receiving goods from them on a regular cadence. You do not need to cover the entire lead time in order to be safe from a safety stock perspective. There are loads of calculations online and also in actual books. I'll leave you to your own devices to look up some of those calculations, but there are a lot of different options there for how you might consider the variability and volatility involved and then also lead time. So the other thing that we want to do here is just get a good feel for how we're actually consuming or using this item. So I'm going to go over to my average daily requirements, so looking forward in time, and I like to look both forward and back. You might look at 90 days or up to 6 months, it depends on again, what the lead time of that product is, and I'm going to go ahead and put in here our plant, and the reason I look at both is because if they are significantly different from one another I want to make sure that I understand why. So if history is very different from what we're projecting in the future, how we've been using the material is very different from what the requirements look like, I want to make sure that I go through and evaluate that. So your two transactions here are MC42 to look back in time, or MC43 to look forward in time. We're looking forward and I'm going to go ahead and click the execute button, and what this is going to do for me is it's going to go out and calculate what my current coverage is and then also how much I'm planning to use on a daily basis looking forward. So I'm going to go ahead and click on the double line here and you'll see this is my range of coverage. So I have 2,560 units on hand, which includes 2,400 units for safety stock. That is meant to last me about 47 days. So between the safety stock plus the additional 160 pieces, if all goes according to plan, I'm covered for 47 days versus my lead time of 21 days, so 3 weeks plus my 3 days of factory calendar time to get through the goods receipt process or dock to stock. During that period I'm expected to use just about 55 pieces per day. Now, this is where it's getting meaty. I've got some pretty good information here in terms of my planned usage per day over the next 3 months to give me a good idea of what I might want to do with that safety stock, and if I compare that to how I've been consuming, that's going to give me something of a picture of variability or volatility. The other thing I can do is I can come in here and I can look at the detailed display. So I click on this, select my item first, click on this, and then it brings up a bunch of different pieces of information that I can look at, and what I'm most interested in right now is the stock level. So what I'm going to do here, because this item doesn't have a ton of history on it, is I'm going to go ahead and just show you some examples of other items that would give us a good indication. So the red line graph is always looking backwards in time , so that's that stock level looking back historically and on this particular item, you can see we've got tons of history, and I can see here, during that entire duration, we have never hit 0. Okay, so what we want to do is we want to look for our opportunities, so the lowest period in time, and what we can see here as well is that that stock level is starting to come up, right? It's starting to trend up and obviously there's a big buy here. So we'll ignore this piece as an outlier for now and just look at the rest of the pattern. But I can see here that really over the last almost 2 years, you know, I haven't gone much below this 7,000 piece line. So I've got some room potentially to bring that safety stock down. Let's look at another example. So in this case, we can see that we have some predictable consumption, although it looks like this is all over the place. This is showing us our goods receipt and goods issues accumulating across time and you'll notice that where there's a gap or there's some black space between the goods receipt and goods issue, that's when you will start to see that stock value begin to tick up and grow. So we want to make sure that as we're thinking about our safety stock, we are not causing ourselves to have additional dead stock, right? No dead stock rising. We want to make sure that we are covered and we're covering, but that is performing the way we would expect it to. Here's another good example. So you can see the safety stock level is just over that 700 piece line. Okay, so there's some times we are actually dipping into it and using it. That is okay, that's what it's there to do, is to help protect against the variability and volatility. But recently it's gone really, really high. So we are, for whatever reason, oversupplying versus our safety stock by quite a lot. So by managing this and monitoring it, we can work to bring that safety stock level down and then we get a good, repeatable pattern where we're still staying off the deck and not at risk of stock out but we're getting more frequent replenishment and we're starting to study that lot sizing so that we are reacting and responding to the demand in a better way. Anytime we set our safety stock, we want to be thinking about our inventory investment and make sure that we're monitoring it for performance. It's really important to look at the red line graph going backwards in time, as well as the green line graph going forwards in time. If you're not sure where to find this, you can find this in MD04 and what you will see here, I'm going to go ahead and close out of this guy and we'll just go back to where we were. If you go up to list and then graphic, this is where you're going to find that green line graph and the green line that we're looking at is the available quantity. So I'm going to go ahead and bring that up, and this is going to show how we are planning to replenish across time. That's where you would see that picture that we were just looking at, where it's showing us that out across time, this is what the new plan looks like. You want to make sure that you are not changing your safety stock with great frequency, but you do want to go in and evaluate it. So something like a quarterly or twice annually review, certainly looking every month for outliers, but then really going back through and doing a thorough recalculation of your safety stock. Now, this is for static safety stock, if you watch a few of our other videos, it will walk you through what happens with our dynamic safety stock, our range of coverage profile, so how many weeks of coverage we're providing, as well as safety time. But hopefully this gives you a little insight into how to look to see if your safety stock is performing well and the value you're considering matches well with your history. So in summary, we have covered how. Going through the process to calculate whether that safety stock makes sense will allow a buyer or planner to legitimately protect against volatility and variability in demand without creating undue burden on working capital. To be able to revise safety stocks as necessary and make informed decisions on where investment truly makes sense dependent on business conditions. And continuously review performance to make sure that safety stock is working and we aren't leaving dead stock behind. We always want to make sure we're investing wisely. Thank you Kristie. Once again excellent information. Setting those appropriate levels in safety stock is a challenge for most organizations. Thank you for highlighting the fact that there's a lot of key takeaways here around how to evaluate safety stock performance and to get the return on an inventory investment. So, if you'd like to know more about this particular product or topic and any other topics in SAP, please feel free to check out our video library otherwise put your suggestions in the box below.

Drawing Insights From Capacity Evaluation

Explore SAP's Capacity Evaluation to uncover constraints and opportunities

7 min

New

SAP® ECC

Production & Capacity Planning

PTM; DM; OTC

CM01; CM04; CM05

The best way to learn is by doing, so welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hello everyone, Martin here, and I'm thrilled to engage with you on some of the information insights that you can draw from capacity evaluation in SAP. This powerful area of SAP is often underutilized. So today, we'd like to show you some ways that it can be used to help with answering questions in your organization. To lead us through this walkthrough today is Tom, who has a ton of practical information and experience in this area. So, Tom, take us away and share a lot about capacity evaluation. Hey, Martin. Well, when we think of capacity evaluation, it's often around the challenge of either being over capacity or figuring out a run plan for a work center or resource that are not fully booked out. Both are good uses of this functionality. But today, I want to take it a little further and hopefully show something that is new to you. First, we'll go in and look at our work centers that have a current backlog that needs addressing. Next, I'll show you how to accumulate capacity and requirements to see what the planned recovery date or next bookable date for that work center looks like. And lastly, I'll extend the time horizon and change to monthly buckets for a longer term outlook. Let's go in and take a look. Now we're going to dive into SAP and look at capacity planning and how we can understand our current state of what's happening, and also future state of what's going to happen. We'll begin our journey today by looking at CM04. CM04 is going to show us any backlogged production that we have on a work center. So this list, if we come in here, I'm going to put in my work center, which is already limited in my plant. When I look at this work center in this plant and select the overview, it's going to pull up any backlog work that's on this work center for me to see. Now as I click deeper into this, just by double clicking in, I can see the requirements of what's out there that what my production is behind on. This allows me to focus on these orders first, knowing that we're behind in its tying up capacity that we did not plan for today because these are past due orders that have not been completed. So using this CM04 tool, we can understand where we're truly behind and what specifically the orders that we're behind on to get caught back up in production. Once we understand and know where we're behind and what's affecting past dues for capacity, we can now turn our attention to looking at a current state of capacity. For that, we'll go in and look at CM01. CM01, again, gives us the same sort criteria as we can look at a work center in a plant, or we can look at all work centers in a plant, just to know that is also an option. As we look at the standard overview for this one, we're going to see a much different picture. So instead of just showing us what we're past due on, it's going to show us current and future requirements as well. So as we can see here, clearly anything that's red shows that we're over capacity. That's a concern for the shop floor. We need to understand why we're over capacity and how we can overcome that situation. Whether that's going in and looking at the details again and understanding can I move any of these orders out to lighten the capacity load. Or do we need to work overtime to overcome those capacity requirements? The other thing I can do inside of CM01 is I can break it down into different buckets. Currently, we see we're looking at it in a weekly bucket. However, if I were just to go up to the general settings, I have the option in here to change the capacity into any buckets that I prefer. I can see right down here I have a selection of different periods. First we'll look at it in a daily bucket. If I look at it in a daily bucket, this allows me to understand on a daily basis how am I utilizing my capacity. It could be that I'm over capacity on Monday, but fine on Tuesday and Wednesday, which then I know I can smooth those requirements to the other days of the week. In this current example, we can see here we're over capacity on most days in the current periods, but I can go out and look and see, okay, what's the next day I can actually put orders in where my capacity is open again? And in this example, I can see out on 12/9, I have 88 percent of my capacity remaining. So again, I can possibly move orders out into these dates, or new orders can go in those dates because I have capacity. In the short term, if I can't move orders out, I'm going to need to work some significant overtime or possibly hire more employees. But this gives me a picture of when I can recover and when I can actually add new orders into my production. The other thing we'll look at now, as we look at longer term planning, we may want to look at this again in weekly buckets, which we already saw an example of, but if now I pull it up in monthly buckets, I can start to look out to the future to see, okay, how are my monthly buckets of capacity looking in the future? This allows me to have more of a long term planning picture of what's going on in my production environment. As I can see here I only have three months showing with loaded requirements. So when I go out to the third month, I've got plenty of capacity and I can add tons of orders and lots of production in that, and I'm getting a little tight in the month of December, but my current month is way over capacity and I need relief. But this allows me to have a picture as far out as I'm holding a forecast or customer orders, any requirements I can see in the system, I can evaluate how that looks on a long term basis. So when we look at capacity in SAP, we not only have the ability to look at past due requirements, current requirements, we can also look at it with future requirements to understand our capacity situation and what we have to do about it and what we have to do to resolve any issues. So I have to confess, today we only hit three features on my favorites list. There are more, but this is a good start. With the features we looked at today, we can start to draw some insight of capacity evaluation. Are we ahead, or are we behind? What is our current lead time to put more work on that work center or resource. And we can proactively identify challenges or opportunities as we look across the broader horizon. There's a lot here, and I hope you'll go back and see what you can find. Thank you, Tom. That's such good information, and it's really easy to navigate. But folks, the challenge is making sure that we have the right rules to give us the right information. If capacity evaluation isn't SAP's part of your process, there a number of other videos that you should explore. This is a great gateway between S&OP and S&OE. So folks, if you're looking to maximize the value in your SAP system, please check out our chatbot that will share with you what recommendations can provide, specifically on capacity evaluation as an example. Or if you have a specific question, please submit it below.

Dynamic Safety Stock

Maximizing efficiency with dynamic safety stock utilization

MD04; MD05; MD06; MD07

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, I'm Martin, and in this video we will focus on how to take advantage of SAP's dynamic safety stock capability. When used correctly, dynamic safety stock can help organizations maintain a optimal level of inventory to meet custom demand while reducing the risk of stockouts and overstocking. So Kristie, tell us more about this underutilized feature in SAP. Absolutely Martin. Dynamic safety stock is an underutilized and powerful feature when used correctly and in this demonstration I'm going to focus on three key things. How dynamic safety stock differs from static safety stock, and specifically how we can see those differences in the stock requirements list. How dynamic safety stock chases the demand and adapts across time. And lastly, where we set the settings that govern the type of safety stock we may wish to use. Okay, let's demystify the difference between the static safety stock and dynamic safety stock, a range of coverage features here in SAP. So you can see here I've got an item that has a static safety stock value, this is what we're all very used to seeing, it's 50 pieces, it's discreetly calculated. That information has either been entered into the system or we've allowed SAP to determine that for us but that is the discreet value that has to be reviewed on a periodic basis. It does not matter what is happening with the demand for this particular material, it's just always going to consider that 50 piece value that we have in there. So if you've got a really good plan for continuing to review your items and you're doing that consistently on an ongoing basis, and product lifecycle management is a big part of the way that you're evaluating that, there's lots of good places for static safety stock to be used. But an alternative to that is dynamic safety stock, a range of coverage profiles that allow us to dynamically calculate how much safety stock we need. So basically that safety stock value moves with an average daily usage or an average daily consumption value for that material. So we will cover the specifics of a coverage profile in another video, but right now what I want to do is just change this to dynamic that you're able to see what happens. Okay, so right now that 50 pieces comes right off the top, we've got our exception message and you can see that SAP is working to recover that and across time it's going to net us out to zero pieces, which really will mean that we'll have 50 pieces on hand to protect against any variability or volatility in demand. So let's change this now, I'm going to go to environment, I'm going to change my material and I'm going to go to the MRP 2 view, which is where all of the safety stock settings live and you'll see I've got the 50 pieces in here, I'm going to take that out. You see I've got safety stock, safety time, and my coverage profiles and I'm just going to go ahead and assign for right now coverage profile at random and then we'll talk about what these mean in just a few minutes in a different video. So I'm going to go to Z05 and what this is going to do is based on whatever it is I've set for how many days is my target and what kind of range I want to look at for my demand signal, I'm going to go ahead and hit save, and immediately when I hit refresh, watch for this value, hit refresh, the 50 pieces comes off because I made that change in my material master, some of my exception messages immediately adjusted based on that information and you can see now I am ready to go ahead and run MRP and you'll see there's a lot of adjustments that were made, I lost a lot of my exception messages, I've got to reschedule out because I just removed that safety stock as demand. So if you're wondering what kind of impact on your plans that safety stock has, you can see the immediate effects. So I'm going to go ahead and hit MD02 so that I can blow this through my BOM and what it's going to do is it's going to dynamically calculate across time how much safety stock is necessary and it's going to put that into my plans. I'm going to hit back now before I hit refresh just note the balances here. So as I go across time I'm just going to page down a little bit so we can see outside of our planning horizon. Look now, instead of netting to zero, you're going to see we've got some positive balances that are sitting out there. I'm going to hit refresh and you'll see that those balances are now adjusted based on the dynamic safety stock calculation. So I've asked for it to cover a certain number of days and so it's controlling that value for me. So where we had 50 pieces before, we now have things like 8 or 4 or 18. So it's working the plan based on that rate of pull for what we need to hold in safety stock. So we're basically setting a target days of supply and it's using that to make sure that we have sufficient forward coverage and when you go into your periodic review you'll be able to see you've got a bunch of new columns that were not there before and what this is doing is it's telling you what that target days is based on the rate of pull, what your minimum is, and then how it's going to re-trigger in order to ensure that you have the correct target stock balance in order to meet your minimum requirement for how many days on hand you'd like to have. Okay, all of this is configured into your coverage profile. We'll cover that in a separate video. But this is what the difference is between the dynamic and static safety stock, is that this safety stock value is going to recalculate across time based on that current or projected rate of pull and the number of days of coverage you've identified for that material. So in summary we have covered how dynamic safety stock allows you to be able to. Move and groove with the demand, sometimes gracefully and sometimes not so much. Review targets and period totals and see the overall expansion of statistics in your MRP list or in MD04. And protect against variability adaptively. Okay, thank you Kristie. Obviously a big step up from just static safety stock, but when used properly, it'll help improve and drive customer satisfaction, reduce stockouts, and increase visibility and agility in our supply chain. So if you want to learn more about how to get the most over SAP system please check out our other videos and if you can find a video to answer a burning question submit a suggestion.

Effectively handling group 7 - exception message 15

MD04; MD05; MD06; MD07

Exception Message 20

Effectively handling group 7 - exception message 20

MD04; MD05; MD06; MD07

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi Martin here, and in this video we are going to focus on SAP's exception message 20. The exception message indicates when we have supply coming in that is an excess of our plan for demand. Kristie, that sounds like it could be a problem. Tell us more. Absolutely Martin. Exception message group 7, exception message 20 is a powerful feature when we use it correctly. This is our opportunity for cost avoidance if we legitimately have more supply than demand and it's also a great way to double check if something unusual has occurred and we're missing part of our demand picture. In this demonstration I'm going to focus on three core things. Where and how to find materials that have one or more exception message group 7, exception message 20s associated with them. What a planning situation that has an exception message 20 looks like. And lastly, some considerations for how we might resolve and reconcile the planning for that material. All right, let's go see if we can find some of those cancel messages. So the way we're going to do this is we're in either MD06 or MD07 and I'm going to go ahead and click up on the binoculars here to find, and I'm going to look for that specific exception message number. So these are our 7 20 s that say cancel process and you can see we have a lot of these and at first when you're getting started on your journey to effectively use MRP you may see these pop up a lot, especially if your demand picture is not complete in SAP for MRP to reference. So the other reason this can occur is if usage has dropped off and we're not consuming as fast as we were forecasting to, we might start to see many more of these cancellation messages. This means that, it's not just a matter of rescheduling out, which would be a 15, but these are items where there is no future demand for that particular PO and you can see we have about 24 materials that were selected and we're going to go ahead and click into these and see what is going on. And so you can see down here at the bottom, we have several different schedule lines that are out into the future that are not currently needed in order to be able to meet our current demand picture. So we're over purchasing and so a cancellation message for procurement is an opportunity for cost avoidance and it also helps us in situations where maybe we are constrained in terms of supplier capacity, resources, and or material and so we really want to follow these and have the opportunity to go in and address them and clean them up. So, first of all making sure that we have a complete picture of the demand, but then once we're confident in that then we have an opportunity to go in and get these canceled and cleared. On the production side, it allows us to free up potentially capacity for other items that are a priority. So what I'm going to do is go ahead and go in here, we're going to modify the scheduling agreement. So if this was not yet firmed, then MRP would realign it for us but because these items are indeed fixed, that means that MRP is no longer going to touch. So we would need to come in here and clean these puppies up so that everything is neat and tidy and so I'm going to do that. And the nice thing, because this is a scheduling agreement, I can do several different line items at the same time. So let's say for example, we determined that we could need cancel this entry for 4 and the 2 and the 6 and the 2, I can come in here and balance those out. I'm just going to remove those schedule lines and when I do that you'll see they'll come off of the delivery schedule. I'm going to go ahead and save and it's going to track for me any changes, so no worries there and you can see now I've cleaned up all of my message 20s where I had the opportunity to cancel. Now my next opportunity is for some housekeeping, looks like we have some old order reservations that need to be cleaned up, and then we can realign the rest of the scheduling agreement. Let's take a look at another item here before we're complete. I can see here I've got a bunch of outdated independent requirements, so that's forecast that's out there and I'm going to go ahead and scroll down until I see the items in question and you can see here it's always going to be highlighted for me in blue. So I've got this item down at the bottom, I've got my exception message 20 and I can see I have a firm purchase requisition out there. So in order to close this out what I would do is I would double click on it because I'm not going to convert this into a purchase order beacuse it's not needed. I'm going to go ahead and click on change element, especially beacuse I haven't made a commitment to the supplier yet, it's just a purchase requisition and I'm going to go ahead and click on closed. That's going to close the purchase requisition out for me, I'll hit save and then I'll hit refresh and we'll see that item has disappeared. Let's look at one more and see if we have another situation. So let me go ahead and scroll down, I'm going to use this page down button to help me find the exception message that I'm looking for. Ooh, and this is a really, really, really awful planning situation that needs to be cleaned up and what you can see here is that more than likely I've accidentally run an automatic job and batch job that's gone out and it's firmed in and dispatched these planned orders for me. It's going way, way, way out into the future so that was more than likely not intentional. So I can now go through and I can clean these planned orders out and get them out of the way as well. So several different ways to go in and cancel, if that order has been placed with the supplier released to the manufacturing floor then obviously we need to coordinate with our partners before we go in and we action that cancellation request but we're able to go out and do that and make sure that we are getting those things cleaned up. If we are able to cancel or reduce quantity then that is our cost avoidance and our ability to free up time, space, materials, for the next thing that is needed by our customer, so a really good thing where we can coordinate to do it and certainly on any elements that are planned that have not yet been released to the manufacturing floor or have not yet been released to the supplier, going and cleaned up those planned elements that have been firmed is very important. Really there should be nothing in a planned state like purchase requisition that is sitting out there as a firmed element unless it's going through your release process. But other than that, we really shouldn't see those beacuse we won't allow MRP to do that heavy lifting and continue to realign those planned elements with our schedule as needed as we go through the process, it's a lot less work, it's a lot less clean up for us as we go through. So that's how we go through and resolve some cancel messages. So in summary we have covered. How exception Message 20 allows the buyer or planner to recognize when there's an incoming supply in excess of demand. Think through options for cost avoidance with your partners. And lastly, free up resources, capacity, material, and space for materials that are needed right now. We often hear from planners and buyers that they can't do anything with an exception message 20 because they have already committed to those goods. However, in this increasingly VUCA world that we live in our partners are often also constrained. It is certainly worth the conversation with our suppliers, our sister facilities and our manufacturing floor. Not only is that cost avoidance on the cost to make or procure, but it's also in the cost of what you're not able to get when you need that product right now, and the cost of carrying, or in some cases, writing off that inventory down the road. It's definitely time to negotiate. Okay, that's good to know. I love how this is a perfect example of how we can use the exception message to proactively notify us to do and perform the strategic part of our job, in this case, building strong relationships with partners so we can have these tough conversations later. Okay, so if you want to learn more about how to get the most of your SAP system please check in with other videos and of course if you have a question please feel free to submit it below.

Exception Message 30

Effectively handling group 7 - exception message 30

MD04; MD05; MD06; MD07

Exception Message 96

Effectively handling group 6 - exception message 96

MD04; MD05; MD06; MD07

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, it's Martin here, and in this video we are going to focus on SAP's exception message 96. One of my favorites, frankly, this exception message indicates where we have breached our safety stock level. So Kristie, tell us how big a deal this really is. Absolutely Martin. Exception message group 6 exception message 96 offers us powerful information when used correctly and in this demonstration I'm going to focus on three key things. First of all, where and how to find materials that have exception message group 6 exception message 96's. Second, how safety stock is viewed by SAP and MRP. And lastly, ways we can think about how to react to and resolve the planning situations with materials with an exception message 96. All right, let's see if we can go find some of those exception message group 6 exception message 96's that let us know that we've breached our safety stock level. I'm going to head over to MD07, this is the collective view for the stock requirements list or MD04 and I'm going to go ahead and run this for my whole plant. You're likely to run this for your particular MRP controller number, you can see it's prompting me to do that here, but I have only a few materials to worry about today. I always want to say yes to setting up lists beforehand that allows SAP to go out and collect all of the statistics for us so that we can use the find feature in order to find our exception message group 6 exception message number 96's. Now if you're ever not sure how to determine what the exception message, group number, or exception message number means, you can always click on this information button. It will take you in and give you the description for the particular exception message group. There's eight of them and exception message numbers and there's about 45 of those. So there's a good description here that lets you know, in this case, we're looking for 96,s stock has fallen below our safety stock level. That's our early warning system to let us know that we are below the designated buffer that we're trying to use to protect us against variability and volatility. Now to find this, I'm clicking on the binoculars and then I am clicking on update statistics so that it gets the information necessary to go in and find the particular materials with this condition in the list. Okay, so it's searching through all of those 270 materials and it's telling me that out of all of those, there are 9 that have occurrences of exception message group 6 exception message 96. And I'm going to go ahead and select that and then click on find exceptions. It will go through the list and find those 9 materials, and then I'll click on the selected stock requirements list to display it. I'm going to go ahead and turn on my overview tree because there's one material in particular I want to take a look at here, but what this does is generate my work list so you can see the 9 materials in question. I'm headed to QM001 and you can see here I'm meant to have 145 pieces of safety stock, there's my exception message number, anytime SAP finds something for us it highlights it for us in blue. So with the 14 pieces I have on hand, less my safety stock of 145, I am a negative value of 131 pieces. So what does my replenishment plan look like right now? Well, the good news is I have 30 pieces on hand that's sitting in QM-lot due to come off of inspection today, so hopefully I'll get those, that'll help a little bit. Following that though, I have 1 piece that's not due until the beginning of December. I'm going to check and make sure that's still real because it looks like 1 piece might be a straggler. After that I don't have anything until mid-December, that's 30 pieces, and then I have an additional good news, 30 pieces coming in on purchase order, that's going to take me to negative 40. So at that point, if I take 1 45 minus 40, I'll have 105 pieces on hand. After that, I have a planned order that hasn't been converted into a purchase requisition yet, and you can see SAP is encouraging me to do that and to try to get this on hand as quickly as possible. Safety stock always shows up as immediate demand, so it's going to recommend to you for rescheduling that you bring it in as quickly as possible, and because safety stock is meant to protect us against volatility and variability based on whatever that situation is, then you would evaluate what kind of actions or activities you might pursue in order to be able to bring that in more quickly and to deal with any type of associated costs with doing so. Now, what is concerning about this, as you can see, we have forecast out here for every month, but there is nothing left for December, which likely means we've oversold our forecast. We are in negative state below our safety stock, and we do not have enough on order to replenish this. So we need to take some actions here in order to get our plan to be whole and this exception message 96 will persist until we have sufficient stock back on hand. That's how SAP can help us to identify which materials need review, and also to help us see what the current replenishment plan is in order to supply that demand, as well as recommending what dates or quantities we need in order to be able to bring us back to a situation where we are in balance with our supply to meet our demand. So in summary we have covered how exception message 96 will allow you to. Identify materials that have eaten into their protection from volatility and variability. Work through and resolve the planning situation for that material. And lastly, provide an early warning system to help us take action and avoid stockouts before they happen. One other thing to note. It is critically important that we review our safety stock performance on an ongoing basis. This exception message is only helpful if the buffer is the right size for the rate of consumption versus the protection we are looking for and should especially be reviewed both seasonally and as our materials mature through their life cycle. So true, thanks Kristie. This message is critical when using safety stock as an inventory strategy. For folks that do use safety stock as a strategy please feel free to watch our safety stock videos as well. So if you want to know more about how to get the most out of your SAP system please check out our other videos and of course if you have a burning question please feel free to submit below.

Exceptions in Source Determination

Learn how to identify and resolve unsourced requisitions step-by-step

7 min

New

SAP® ECC

Contract & Supplier Management

DM; P2P

MD04; ME57; ME21N; ME01

Hello and welcome future supply chain experts. Martin here. And today we're going to explore how we can tap into the untapped potential of your SAP system. Okay, so let's get started. In this video, we're going to explore how to resolve a common exception in the procurement process, dealing with the requisition that has no source assignment, and where possible, resolving it for the longterm. Peyton, why don't you tell us more about this particular issue and explain to us about how to resolve these exceptions in source determination. Definitely, Martin. This is a good example of if you know, you know, how great it is to be able to use automatic source determination. So step one, we're going to go in and see how we can easily tell if we're getting a source assigned in the MRP run. Then, we're going to look at the results of the tool that will tell us if we're missing sources. Show how to assign a source manually, and then remind everyone about a key underpinning to source determination, the source list. Be the right kind of lazy and fix it once. So it works the next many times. Let's go in and take a look. Now let's dive in to finding whether or not a source has been assigned for a particular material, and also a little bit about source determination in general. So I've got a test material here, which is GTS-1400-710, and I'm going to look at it in the MD04 view to take a look at how you might be able to see if a source is assigned for a material from that view. So if we hit enter it will bring us here to this lovely demand picture. And if we hit the vendor button, now I have two columns with the vendor number and the vendor name that tells me that this is the source that's designated for this particular material. And in this case, I have a quota arrangement set up for this material, and so it's giving me the sources based on that quota arrangement and based on any outline agreements I may have assigned in the source list. However, if I look at this material, same material but dash 705, and I hit my vendor button, It tells me there's no vendor and that's because we haven't assigned a source for this material and designated it as fixed in the system. So how do we work with materials that may not have a source assigned? We can do that using the ME57 and so I'll go to the ME57 transaction. I have my purchasing group which is 002. My scope of list is A. The plant for me is 1,000. Those are the items I need in order to see those unassigned purchase requisitions under my buyer code. I can also run it by release date, so I can make sure that I put in, I only want to see things that are due for release today and before, and I'll execute that. So you can see here the GTS-1400-705 is on my ME57, it needs to be ordered, in order to assign it to a supplier, I can hit this assign manually button after I check the checkbox right here. And so that's what we'll do. And we want to put in our vendor number here. For me, it's going to be 2007. It asks me if the delivery date can be met because the delivery date is in the past. We can fix that in a minute. And it pulls in that info record for me, and I hit assign source of supply, go to my Assignments, and there's my without outline agreement, the 2007, I can double click on that. I've got Order Type NB, and hit enter, and now it brings me here, and I'm able to highlight the Open Requisition, hit the adopt button and now I have a purchase order for the requisition with the supplier assigned through the manual assignment in ME57. But if I know I'm going to order it from supplier 2007 every time, then I can use the source list in order to make sure that next time the source is assigned and I don't have to do a manual assignment over and over again when I know that I'm going to order it from 2007. And the way that we do that is we go to ME01 which is Maintain the Source List. My material is already in here from the previous transaction, and the plan is correct. Source lists are plant specific, so you'll have to put that plan in down there with your material. I'll hit enter, and I can see here that no source has ever been assigned for this particular material and so I'm going to do that now to save myself time in the future for the next time this material comes up. And so I'm going to put in today's date as the valid from date to make sure that I'm checking on my suppliers and evaluating how suppliers are doing, I'm going to let the end date be 12/31/2024, I'm going to put in my vendor, my purchase org, and I'll hit enter there. I can tell it here if I want that to be the fixed vendor every time that this comes up for order, and I do. And the way that I make it MRP relevant is by putting a 1 here, you can see the drop down, makes it relevant to MRP and gives me purchase reqs. And once I save that, the next time the system generates a purchase requisition for this part, it will automatically assign it to vendor 2007 through source determination. And so here we've looked at how we can go into MD04, we can see if a vendor has been assigned to a particular material just by using the vendor button. We can go into ME57 to do that manual assignment for things that we need to order that don't have a supplier designated and then to prevent having to do that again in the future, when we can, we can go into the source list, designate that vendor as the source, make it relevant to MRP and now we've saved ourselves time in the future. So all, in summary. Today we took a look at how to monitor for purchase requisitions with no source assigned. Then we reminded everyone of how the source list supports efficient flow of sourcing information and how we can use this to avoid Groundhog's Day when the next purchase requisition comes out. The last thing I'll mention today is that source assignment can happen even in a multi source environment. For more on that, check out our videos on quota arrangements. Thanks, Peyton. That was great. I think in the moment, it often feels fast as you just fix it manually. We're in a time crunch and we just want to get it done. But by fixing the underlying master data, assuming there's a rule we can apply, we can save time to prevent this error in the long run. Thanks again for sharing. Hey folks, if you want to know more about this particular topic, master data, lead times, etc, please check out our video catalog. And of course, if you have a specific question, feel free to ask the chatbot.

Excess Customer Stock

Detect and manage stranded stock in customer sales orders

6 min

New

SAP® ECC

Demand & Supply Planning

MM; PP; SD

MD04; MB52; MMBE

The best way to learn is by doing, welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here. And in this video, we'll be focusing on the tools SAP provides to help us identify stock stranded on a customer order. These tools in SAP help us to identify inventory that is at our customer without a current plan for use. This is very important so that we can redeploy the inventory to the business and get the best advantage out of our inventory and investment. So, Kristie, tell us a little bit about how SAP deals with excess customer stock. Absolutely, Martin. So when we talk about Exception Message Group 6, Exception Message 26, and we talk about Stock that is reserved for a customer order. That stock is stuck. It's held at ransom because it was produced for special use. So it sits there as though it's attached to the customer order, even if there's no longer a sales order that is open to consume it. So it's really important that we don't leave that inventory stranded. So what we're going to do in today's demo is we'll walk through how to identify these situations. We'll talk through some of the different reasons why this can happen. And also what you can do to try to get them resolved. It's very important that no inventory gets left behind, so we want to make sure that we're cleaning this up on a regular basis. Alright, let's talk about how to find stranded stock in SAP. So there's a couple of different places that we can look for this. The one we're going to highlight today is actually being able to find this via exceptions. So you'll see I'm in here, I'm in my exception monitor. So this is MD07, it's associated with my stock requirements list, so it's the collective view of that. And I'm going to go up here to the binoculars and I'll click on find. Yes, I want to update statistics so I get the most current information, otherwise it's going to come back through and it will just list everything without the actual numbers and I really want to be able to see that. And the exception message I'm looking for here is exception message group 6, exception message 26. This is excess stock in an individual segment. This means that there's inventory that is sitting in a specific bucket, and it's not accessible to other spots. So let's say, for example, it was stuck at a subcontractor, in this case, we're going to look at examples where it is in a customer specific stock, so it was supposed to be tied to a sales order, and there is product that is in excess of what that sales order requires. I have 23 occurrences of this, and I'm going to go ahead and say find exceptions, and there's a variety of things that can cause this to happen and a variety of different places where it can get stuck. Today's just an example of how to go through and find these. So you can see I have my material list on the left hand side, these are all the materials where there is inventory that is sitting in excess of demand in a particular location, and I'm going to go through and just grab a couple of these to take a peek at. Let's look at this guy right here AM2-520, and what you'll see here is down at the bottom, I have my Exception Message 26, SAP is always going to highlight for me in blue what it is that it's found that's related to my search. And I just have a piece that's left over, and this particular sales order has already been shipped, but we have an additional piece that was produced in relation to it that is still sitting out there. So if I go in here and I look at my document flow, I'll see we've actually gone through the entire process. We've issued our delivery out and gone through and completed the sales order, but we still have a piece of inventory that is hanging out there. So we need to go back through and clean that process up and figure out what we would like to do with that inventory, and so I'm going to go ahead and go through to the next one. You know, can it be used somewhere else? Does the customer still want it? Is the document status just not where it needs to be so it's not reflecting correctly? A similar situation here. And then we have one more, two pieces. So this is a great way to quickly identify where you have inventory that's stranded and you're able to go through and evaluate what it is that you can do either in terms of getting that document fully through the cycle, or if the inventory pieces are out there and they are not needed anymore for that particular document or for that particular supplier, going through that inventory and getting it to a place where it is indeed usable if it's usable for other customers or back at your plant if it's been off site of the supplier. Make sure that we're moving that through the process so we can make good use of that inventory. So, Exception Message Group 6, Exception Message 26 will help you to find your stranded inventory. Welcome back from the demo. Today we walked through where to find Exception Message Group 6, Exception Message 26. This is stranded inventory, so we want to make sure that we're going through and cleaning this up and moving it through the process. Now, if you have inventory that was produced or purchased to support a specific customer requirement, the next step would be to evaluate whether that customer will still take it, and if not, how we can repurpose that inventory or liberate it from being stuck to that particular sales document. This is very important. We don't want to leave any inventory behind. Martin, I'll hand it over to you to bring us home. Perfect, thank you Kristie. That was interesting, I love that there is a few different ways to get the information that will help drive root cause analysis, continuous improvement, and solid decision making. If you want to know more about this particular topic or any other topic related to how to get the best out of your SAP system, please feel free to check out our video catalog, or if you have any burning questions, submit your request below.

Excess Subcontractor Stock

Detecting excess stock at subcontractors: Identification strategies

MB52; MD04; ME20; ME20N; MMBE

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your system. My name is Martin, and in this video we're going to focus on the tools SAP provides to help us identify stranded stock at a subcontractor. These tools in SAP help us to identify inventory that is at our subcontractor without a current plan for use. This is very important so that we can redeploy the inventory to the business best advantage. Kristie. Tell us more about how we can use this feature in SAP. Hey Martin, thanks. This is a very important topic, no one likes stranded inventory. So in this demo I'm going to demonstrate three ways to locate this lonely inventory before it becomes old and moldy. First, we'll take a look at an exception message that is designed to identify this particular planning situation. Second, we'll look at a report for perpetual stock that will identify vendor provided stock or stock typo. And third, I'll pop into the subcontracting cockpit and highlight where we can find stranded supply with no demand. So there are several different places we can go to find stock that has been stranded at a subcontractor. So when we're talking about that, what we're really talking about is vendor provided stock or stock type O, where we have sent supply to a subcontractor, they are going to be performing some services on that particular material, maybe they're heat treating, maybe they're kitting, maybe they're doing any number of things and then they're returning that back to us. So we send the goods to them, they perform a service, and it's coming back in. It is not at all uncommon when we are looking at clients who have had subcontracting as a part of their supply chain to find lots of material that has been stranded at that subcontractor without any demand and oftentimes it's because of the timeliness of transactions or lack thereof or inaccurate material counts or material usage with those suppliers or master data issues related to the purchase order and the backflushing process when it's received back in. More to come on that but for right now what I want to do is show you a few different ways you can actually find that stranded stock. So you can see here, I've got a list of materials that I'm working through, I came in to MD07 and I looked for exception message number 26, part of exception group 6 and this lets me know when I have stock that is stranded in an individual segment. Individual segment can mean a wide variety of different things, but in this case I'm looking at the items that are stranded at a subcontractor. So we can see here, this is my subcontractor, this is my stock that is sitting there, and you can see it does not have any demand associated with it. So it's hanging out there as supply without a partner. Another good place for me to see this would be by looking at perpetual inventory. So running something like an MB52, I could look across the plant and find all of the special stock O. Another way to see it would be to come in here and go to my stock statistics, it will tell me exactly where I have stuff that is set at that particular supplier by coming in here and clicking on the stock overview. This is going to take me directly into MMBE for this particular item, and you can see that we've got units that are sitting out there at that particular subcontractor. So, I'm able to see what inventory is sitting where. Now, to know if it is actually needed or not, though, I do need to start from a place where I can see the demand that is needed. So, looking at it through stock requirements list or even better through the subcontracting stock monitor would be good places for me to go. So two different places there. I could go to ME20 or ME20N and I'll go ahead and navigate there for you right now. So ME20 and I think I'll actually go to the new one. I'll go to ME20N. And this is going to come in here and show me everything that is sitting out there. So I could run this without a material number in here, I could run it for a specific supplier, let's say I'm transitioning out of a particular vendor, I could put that information in here. I could look at specific requirements dates, but I'm going to go ahead and just look at this particular item. Go ahead and run that through and it's going to come back and it will show me exactly what the situation is. So I can see that I am in a positive stocking position, that I'm actually at two different suppliers, so I've got my 190 pieces that are sitting out at my first supplier, Vendor 1000, and then I have an additional 999 that are sitting out at this other supplier, and I have no demand for these, this inventory is just hanging out there. So that's going to help me to know if I have inventory that is in excess of my demand, I may want to go out and work through that process. It's a good way also to audit at the end of the month and see if there's any stranded inventory after the backflushing has occurred for the activities for that particular month and to true up that inventory on a regular and ongoing basis. From here, I can also navigate to my stock requirements list or back to MMBE through the stock overview and be able to see what specifically is going on this particular item. And again, I can run this by vendor, I can run it by requirement date, or I can run it by the specific components that are provided and get an idea of what is sitting out there that needs a little love. So in many cases it just needs to be transferred back or it needs to be processed out because it was not consumed in production for a variety of reasons. But again, taking a look at that master data, taking a look at the timeliness of the transactions will help to make sure that we get these things cleaned up and we don't have incorrect entries on our books. So in summary, we have covered how identifying excess subcontracting stock will. Allow a buyer or planner to make the best use of available inventory. Reduce storage, labor, and count requirements, lowering the cost to serve at our suppliers. And reinforce process discipline from planning to execution including the need to execute timely transactions and have clean and accurate master data. Ah, as always Kristie, great information, thank you very much. I love that there are a few different ways to get the information that will help drive root cause analysis, continuous improvement, and just good old solid decision making. If you want to learn more about how to get the most out of your SAP system please check out our other videos and if you can't find a video to answer the burning question you have please submit your suggestion below.

Fair Share Rules

Implement fair share rules: Equitable volume splitting across supply sources

Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, my name is Martin and in this video we're going to focus on SAP's quota arrangement functionality and specifically its fair share rules capability. This feature in SAP helps us reduce the risk in our supply chain and honor our commitments to our suppliers and internal manufacturing by enforcing fair share rules in sourcing. And as we know, the best way to learn is by doing so Kristie, how about you tell us a little bit more about these fair share rules in SAP? Fantastic idea Martin. Quota arrangements offer a great way to realize our dream big supply strategies in an effective and efficient manner. They can be a little challenging to get off the ground, but they are powerful when understood and used correctly. In this demonstration, I am going to focus on three key things. First, getting started with a quota arrangement. How do you get started? Second, how to enter fair share rules onto that quota arrangement, which is the most basic rule. And third, how to review the results once MRP has been run and decide if you like them or not. All right, ladies and gentlemen, let's jump in and take a look at this quota arrangement fair share rule functionality. So we know how important it is to be able to diversify our supply base and be able to have multiple sources of supply for the same material. So these are materials where the form, fit, and function are the same, regardless of which source it's coming from. And you can see here I am in MD04 and I am sitting just outside of my replenishment lead time. I have some purchase requisitions out here, and they are all assigned to a single supplier, in this case 5595. Now, what you may note is that there is a new field up here at the top that says quota arrangement. This is not part of my navigation profile, which is what's giving me these specific transactions, but this shows up as soon as this item is set up for quota arrangements. So after that master data is in place, you'll see the option here and I can actually go and navigate directly to my quota arrangement right from MD04. So I'm going to go ahead and do that, I'll click on this button, it's taking me into the header information for this particular quota arrangement and I can go into the detail, and I can see I have two suppliers set up here and right now 100% of the volume is set to go to vendor 5595 and what I want to show you today is how to change those fair share rules so that it will get redistributed across multiple suppliers. Now quota arrangements can help us with a variety of different constraints or a variety of different strategies in terms of honoring demands with splits between multiple sources but in this case we're going to start with the simplest one, which is just the fair share rule. So I'm going to go ahead and say maintain and I'll come in here and I'm just going to change this to a 50:50 split and I'll hit enter. When I put in 50:50 it does the calculation for me on percentages. You'll see my allocated quantity here when it was 100% assigned was 26,000 units to supplier 5595. Now I can go through and simulate, which we'll show in another video right from here and see what the effect is, but I'm going to actually go back through and run this through MRP so that you're able to see. I'm going to save, and it's going to take me right back to the stock requirements list. From here I'm going to go ahead and kick off an MRP run just for this particular material, go ahead and let that run through, and you'll see there were some changes here, so we had some planned orders changed, some purchase requisitions changed, and then some schedule lines created, because I have one of these suppliers set up on a scheduling agreement. I'll click the green back arrow and then I'm going to click refresh because MD04 is live as of the time you enter the transaction, so I'll hit refresh so it brings in the new data and you'll notice over here we now have alternating supply coming in from two different suppliers, so 1000 and 5595, and if I go back and take a look at my quota arrangement, just by clicking on this button here, and go back into the detail, and you'll see that that 26,000 is now redistributed and so it's aiming for a 50:50 split. We have one additional replenishment proposal that went to 5595 just because it's the first supplier listed in the list. And so the next piece of demand that comes in that would cause us to replenish is then going to go to supplier 1000 in order to be able to maintain those fair share rules. Pretty neat, it's an awesome tool that can help us to be able to honor our splits across suppliers and help us to manage through any risks or challenges we might have in the supply chain or even just being able to take advantage of some commercial terms that are favorable for us. So in summary, we have covered how utilizing quota arrangements to enact fair share rules allows you to. Effectively split volumes across sources, be they internal or external. Quickly enact or update the fair share percentages and see the results. And empower your sourcing team to dream big on the strategy, knowing that they have the tools to back it up. Thank you Kristie. This is such a common request from our clients. We've seen the downside of not feeling able to implement fair share rules to support a multi source environment. From loads of manual workarounds to not doing it all, to a massive material proliferation just to accommodate a different source providing material with the same form, fit, and function. There's so much opportunity here. So if you want to learn more about how to get the most out of your SAP system, please check out our other videos and of course if you have a particular question at heart please submit it below.

Fastest Velocity Materials

Identify high-velocity or frequently used materials by storage type

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your system. In this video, we're going to focus on identifying the fastest velocity materials in a warehouse. So Steven, we know the best way to learn is by doing so share a little bit about how SAP will do that for us. Of course Martin. Identifying the fastest velocity of materials is an important capability that can be leveraged for strategic purposes, such as slotting to increase efficiency and throughput within your warehouse. In today's video we will focus on the analysis of material transfer frequency and the material quantity flows to unpack hidden value in WM. In this video, I'll quickly demonstrate how to identify the fastest velocity or fastest moving materials in your warehouse. WM unfortunately doesn't have slotting built in. However, that does not mean we can't leverage WM to identify these fastest moving materials and perform a slotting decision or potentially put the fastest velocity material into a fixed bin. So in order to do so, the quickest way is going to be going into t-code LX14. LX14 is the analysis of material transfer frequency. Essentially just looking at your past TO data and how many times that material has moved out of a potential storage type. So the mandatory field here is going to be your warehouse number. We'll go ahead and leave all TOs populated and then the date range is what you'll need and you can go back spot really flexed this to seasonality if you would like, in this case, since this is our test system I'm going to go very far back, just from year 2000 all the way to today and then this would be your source storage type, where the material is coming from. We'll go ahead and I'll just leave that blank and execute it. It's very nice because it's just high level simply shows this material, here's the description moved out of that storage type 80 times within this date range. It is not accounting for the actual quantity. It's accounting for the number of times that is actually left 001 to somewhere else, could be a different storage type could be for a pick, etc. But really that's going to be your velocity, which is fantastic. It's also nice too because it sorts automatically in descending so you could just see your top materials that you have in a descending fashion there. I Would take these if I wanted to if these were important of re slotting these Identify whatever that this top I would take maybe a pareto approach my top 80%, and create these as fixed bins because I want these relocated specifically because of the fastest moving materials. So you could utilize this report in that way in order to utilize it from a slotting perspective. Another great transaction which uses an LIS infrastructure is going to be MCLD. MCLD is a little different. You'll need to enter a month date range there. So we'll go back again to the year 2000, and we're just going to leave this as 001 warehouse and execute this. What this shows is you get the capability of switch, drill down, drill down by, little different layout here, but it's very powerful because you can have multi warehouse numbers if you have multiple warehouses, but then it shows a total quantity moved. The three asterisks just simply are there because there's multiple units of measure. Not a consistent one, but now let's break this down and see what materials moved out of there. So we can go ahead and we'll go to switch drill down. You have many options of which you can drill into. You can go by type, where it came from, the stock placement, where the stock removal was from. We just want the material. So now it will populate the 45 materials that moved from that date range, but from a quantity perspective. So, unlike LX14, where it shows the total, or just a, that material was moved out, irrespective of the actual quantity, MCLD shows the quantity, or the pieces moved, really that unit of measure. It also has weight, time that the TR was created to transfer. So you have many, many options of what you could do here in MCLD from really the perspective of it took this time from here to here you could do so. You have many options too of what you could bring in. So again, you have, this is what's already populated here, but you have a lot of different, average weight moved, average move quantity, so many different options, we'll just go ahead and bring that in there, that you can throw in there and same thing as the other reports, you can save this in a variant if you really like this. But again, it's going to show the actual quantity moved. Another nice thing too is you have some graphs available to you if you, would like to see. We can just go ahead and select the move quantity and you could do time series graphs, you could just show this in different graphs that are embedded and already available to you all in the EWM. So, two different reports there, LX14 and MCLD that could be used to identify really your material velocity. So, in summary, we have covered how identifying the fastest velocity materials can be used for strategic decisions, such as slotting, to increase efficiency and throughput within your warehouse. Wow. Thanks Steven. Those standard velocity tools are pretty neat and I can certainly see how they can be used for strategic slotting. So folks, if you want to learn more about this and other warehouse management features and videos please check out our catalog and of course, if you have a question please submit it below.

Fixed Bin Maintenance

Explore use cases and maintenance of fixed bins in storage

Hi, Martin here and welcome to the video service that unlocks and reveals the hidden value in your SAP system. In this video, we're going to focus on SAP's fixed bin maintenance capability. So Steven, tell us a little bit about this. We know that learning by doing is the best way to do it, so share with us what you know. Absolutely Martin. Fixed bins are excellent strategies when utilized correctly. You can leverage SAP to make strategic decisions such as which bins material should be assigned to for put away and picking. Fixed bins do require some maintenance, so in this video, I'll demonstrate some strategies and transactions, both to help and assist with that. Fixed bins in a warehouse are very powerful, but they're very specific and come with a lot of maintenance. In this video, I'll quickly walk you through two reports. One in order to quickly find a material that has a fixed bin. The second is more of your everyday maintenance fixed bin report. The first one is going to be Tcode LS09. LS09 is simply, I have a part number, where is that fixed bin assigned? If you know a part number, I'll just enter one here, you just need to enter the warehouse number for the only required field and execute that, and it'll show you the warehouse number, that part, the storage type that it's in, and then the fixed bin. If you have min max data replenishment quantities, it would populate that as well, but this is just where that part is located or that fixed bin right here. It's showing up here in storage type 001, no fixed bin assigned because that part, this material is in that storage type as well, it's just not a fixed bin assignment and it's not located there. So good info if you want to just see some replenishment quantities and where this material has a fixed bin. The second transaction, probably where you want to spend a lot of time for maintenance purposes is going to be LX29. LX29 is extremely powerful and it comes with a lot of different check boxes, which all pull up different reports for specific reasons. So this first one just simply shows your bins that within a fixed bin storage type, that do not have an assignment yet. So they're fair game to occupy or to assign a material to it. So if you have new parts that come in and you want to locate them, you would execute this and it'll pull up all the bins that do not have anything located. The second one is going to be your bins without assignments that have stock. So probably not the best if you have a storage type that's a fixed bin and there's materials in there and you want to go ahead and get those assigned. So kind of a good report to run for maintenance purposes if you actually want to go and pull those materials and you want to make a decision with them, you either want to assign a fixed bin to it or you want to move it out of that storage type. With this you have storage bins with assignments and without stock, just simply there's that bin is located at this part it's just out of stock. This middle report, you have bins, that are assigned and stock. So similar to LS09, you could just enter this for a whole storage type in order to pull up all of your fixed bin locations that have stock. This next report is probably going to be the biggest one where you want to troubleshoot if you have problems. If your fixed bin, comes up with a scenario where you have warning messages versus a hard stop, this is where you want to go and troubleshoot a lot of this. So for example, when I was running a warehouse, we had the warning messages that If you tried to put away a material into another material's fixed bin, it would just give you a warning message essentially saying, are you sure you want to put this into this location, it's assigned to part 1, 2, 3, 4, 5. All you would have to do is blow through it and it would allow you to do the bin to bin. Then the issue is the next time that part comes in, there's already now that one part in there, so you want to absolutely go and clean this up, because it's telling you where all those incorrect materials are located. These last two, these overviews, are really with respect to mixed storage. So the first one, Overview of fixed bins multiple materials assigned not allowed, just says, hey you've got a storage type that allows mixed storage, you've got warning messages here, there's multiple parts assigned there, so you only want one in there. The second one is just the overview of mixed storage with the correct material assigned. So this is really a good use for kanbans for a lot of production supply areas. So if you have multiple parts that you want staged close to production, all within the BOM, you can have multiple parts all within that same bin. Same thing is you could utilize fixed bins really for kitting orders. Same use, if everything goes in a kit and you want all those materials all within one bin you can utilize fixed bins for that as well. So we'll just go ahead and I'll click all these and you could see which ones have data coming back. Okay, so the first one is going to be your materials that were, good to go, you could assign any materials to them. So they're in storage type 005. They have nothing assigned to them. So if you have a new part, you can go ahead and assign them. This one is that error. This storage type, 005 and this bin B-01 is assigned to this material. However, this material T-MS02 is actually there with this quantity. So again, this bin is assigned to here, this is actually in there. So you would want to pull this out, you could maybe run LS09 for this if it doesn't have a fixed bin already, you want to go ahead and assign it to maybe one of these but just definitely not this bin because it's already assigned to this. This is just simply saying yep, this is the fixed bin for it so very similar to LS09, here's the quantity, this is just it's out of stock, storage bin, here's the part and these other three are the ones that I mentioned without assignment with stock and here's really those mixed storage scenarios. So great, great report here, very powerful, you could use this in a lot of different ways. So as I mentioned, fixed bins are excellent if utilized correctly, but you do have to maintain them a lot. Especially in those last two scenarios for production for kitting even if you have very high velocity materials and you want to go and have a specific bin that's close, that's in the golden zone, that's a scenario where you want to use some fixed bins. In summary, we have covered fixed bin strategies maintenance, and how we can leverage WM to assist with our fixed bins. Thank you, Steven. That's good information. That was some really great stuff covered on fixed bins. And I can see the benefit on how these tools can help maintain them. So folks, if you want to learn more about this feature and others in your SAP system, check out our video catalog and if you have any suggestions, please submit them below.

Fixed Bin Replenishment Options

Explore various options and transactions for replenishing fixed bins

MM02; LP21; LP22; LP24

The best way to learn is by doing so welcome to the video service that reveals and unlocks the hidden value in your SAP system. Martin here, and in this video, we're going to focus on fixed bin replenishment options within the warehouse. Replenishment is a big part of the supply chain and can take form in many ways, such as replenishing specific plants, storage locations, and in this case, we will touch on how it occurs in the warehouse. So Steve, what are the different transactions you can use to replenish storage bins within the warehouse? Yes, Martin, there are a few different ways, and replenishment is one of my favorite topics within WM. It's one of my favorite topics because replens in my warehouse were critical in our environment to be proactive in keeping our storage bins full and healthy in our fast paced, high volume bins that maximize efficiency. What I wish I knew before was the different options and scenarios, what transactions to use based on what scenario I want replenishment to occur. So let's jump into SAP where I'll demonstrate how replenishments work. Which transactions to use. And what material master settings to utilize for your specific situation. In this video, we will cover the replenishment options that you get with fixed bins. In our previous video, we touched a little on just assigning a fixed bin and some strategies of when you would want to utilize fixed bins. In this will jump into how the replens work with fixed bin. So we'll first go straight into the Material Master, MM02. This material was our fixed bin material that we used last time. So we'll go with it on 100-600. I'm going to only select the WM1 and WM2 tabs. Really our replen data lives in that WM2 tab, but it's good practice just to populate both when dealing with WM data. Now, at the very minimum, you need your plant and warehouse number. Now, if you know your storage type for fixed bins, you have to enter that here. So I know it's 005 and now I'll go ahead and select it. It'll default to WM1 tab because we selected both. But again, that data lives on the WM2 tab. If we did not select that storage type, you would not get this additional tab of the fixed bin data in there. So from our previous video, all we did is we entered that storage bin for it, which is A02, now we could talk a little bit more about the quantities and the replen quantities behind there. So, I went ahead and put a maximum bin quantity of 100 there. So obviously that bin will not exceed 100. Put in a minimum quantity of 5. So anytime it drops below 5, it will then be eligible for a replenish, which there's a multitude of reports, which we'll get into here shortly. There's one additional tab here that we'll talk about right now is the replen quantity tab. So here you could enter data here and what that'll do is it'll replen in quantities or increments of this quantity, so in this case 5. You'll do this really, it's a good strategy if you know the case quantities, or if you don't want to break pack. So if I were to enter 5 there and it dropped below 5, it will then replen in increments of 5 to our max quantity. So it really takes that replen quantity and multiplies it until it reaches that max. You do not need to use this replen quantity though. If you just kept that as a blank, well now it'll take your current stock situation in the bin, so let's say that there was 10 in there, and it'll just fill it up to 100. So it create a TR and TO for 90 to fill the maximum quantity of a 100. So that's how the replens work with the replen quantity, your min, your max. The final thing I'll touch on is the control quantity. So control quantity is simply a plus or minus. So if I put a 50 control quantity in there, what this will do is if there's a open pick for this particular material in this bin for 49, it will pick it from this bin because it's below this control quantity threshold. If it's 50 and above, it will then go to a overstock bin to not deplete this fixed bin for a pick. So that's how control quantity comes into factor as well. So again, that's the replen quantity and and information that you get and options with fixed bin. So we'll jump into now the reports of how to generate some of these replens. So the first one that we'll touch on is going to be LP21. And LP21 is probably one of the most flexible ones because you get your storage bins, you can enter a range of bins and or materials and what's nice is this considers your open picks and put away. So it takes into consideration, if you have like a 916 or it registers those interims that are going to be put or picked from that bin, and then it will execute those replans. It'll create TRs first, and then obviously your TOs. It's nice to do this again in the foreground before, because you have that option of seeing those bins and then you could see all that information before you actually execute. So that's LP21. LP22 really takes into consideration planning and deliveries. So you can see here, you get some additional information, really that integration from SD. You can enter shipping points, and the biggest thing here is going to be your picking and GI dates. So it takes into consideration your future deliveries or picks, if you know your picking date and goods issue date range, and it'll replen those bins based on that as well. The final case here, two little bubbles are on your control quantity. So we just touched on control quantities, that plus or minus. So if you include this bubble on control quantity, it will take the consideration of those deliveries and that control quantity and then make the replenishment recommendation based on those two factors. If there's a pick there in the future and a replen. If you hit ignore, it will actually ignore that delivery and control quantity if it is there. So really LP22 is a good report to run proactively and really you want to do this probably after you're picking or,overnight before those deliveries or the picking begins, because then it's taking into consideration those bins, the transfer requirements are then created, and you want to execute those replens before that picking actually starts for this delivery. So that's LP22. And the final one that we'll touch on is going to be LP24. LP 24, is really good if you are using auto TO, it creates replens straight to the TOs. LP24 does not actually consider picking or put away. So it doesn't touch those interim storage types. It's just going simply off of your data in that WM2 tab, your min, your max in your current stock situation. So that's LP24. Covered a lot here in short round on replen options, they're LP21, 22, and 24. Depending on your current situation, will determine the best replen situation and report to run for you. Welcome back. In this demo, we've covered all things replenishment within a warehouse. I hope this video clarifies a lot of questions that may be out there. With and when to use which transactions. What master data to populate. And how to maximize the use of replenishments. Thanks Steve, it certainly did for me. And I can now see how these critical replenishments are within the four walls of a warehouse. So folks, if you want to learn more about this video and other videos, please feel free to check out our video catalog. And if you have a particular suggestion or something you'd like to know more about, please submit it below.

Fixed Bin Strategy

Overview of fixed bins, their use cases, and the location of master data in SAP

[00:00:00] Hey folks, Martin here, and we know the best way to learn is by doing so welcome to the video service that reveals the hidden value in your SAP system. Today, we're going to focus on a fixed bin stock removal strategy within the warehouse. Steve, I know that this is one of the many stock removal and picking strategies. I'm sure there are many benefits that come with the fixed bins. Please share. There certainly is, Martin. Fixed bin strategy also can come with a lot of maintenance, such as minimum quantities, maximum quantities, and replenishment quantities. These additional features to fixed bins are an extra layer of goodness. And if used correctly, can dramatically increase the efficiency in your warehouse. So let's get into SAP, where I'll demonstrate how these additional layers work with fixed bins. The first thing we'll do with fixed bins is identify the storage types where it allows fixed bins. From previous videos, you'll find out LX04 is where we want to start. [00:01:00] LX04 is titled the capacity used per storage type, but we're going to use it for something a little different. So I'm going to use my default warehouse as 001. Just go ahead and execute that, and you can see it just gives you the breakdown of all the storage types, the names, the percentages, kind of how many bins are within each storage type. But the real reason we're here is to find the rules behind there. You can see here, 005, just from the description, is fixed bin storage. But to find the rules behind that, just to verify, you'd select it here, hit storage type details, and then you can start to see the actual rules behind that storage type. So in this case, it does have a F or fixed bin put away strategy, and then a actual fixed bin removal strategy here. So, it's fixed to a material, it's going to allow a specific material to be assigned to a bin for picking and for stock removal. So [00:02:00] what we see here is we have 6 total bins, 4 are empty, 2 are occupied, and we know it's storage type 005. So let's find the materials that are in there, we're going to go ahead and hit the back arrow, back arrow, and we're going to go into LS09. LS09 can be used in a few different ways. If you have a material number and you just are curious if it has a fixed bin or not, you can go ahead and enter that there. It defaulted to my warehouse, we just found out storage type 005 is our fixed bin, so we'll just go ahead and populate that there. And then we just have our warehouse number, storage type, and let's execute this. What this does is shows you, in my warehouse 001, here's my materials that I have there. They are assigned to that fixed bin storage type, so they are allowed to be signed in that fixed bin storage type. They're all right here, 005, and if they have an actual bin specified here, [00:03:00] that means that is the fixed bin for that. There's additional data, which we'll touch on in the next couple screens here. You'll see you have your max, your min, and replenishment quantities. That is not populated, but if it was and we wanted to use that for replenishment purposes or really to kind of enhance our fixed bins, you would see that data there. So, let's just go ahead and pick this material, we know it's now assigned to this particular bin, A-02. I'm going to select that material, let's do a CTRL Y to bring up the plus, and now we have our material selected I hit CTRL C and then, just to view, this is going to be very critical for fixed bins, we'll go into the material master. In this case, I'll just go into the change view of MM02. We have our material populated there, 100-600. Then, the only relevant information that we really want [00:04:00] is the WM tabs, the Warehouse Management 1 and 2. So, go ahead and select both of those. we have our plants , warehouse number. The most critical part of a material master for fixed bins is, I'll show you very quickly, if you just enter, so we have our material here, we have our plant and warehouse defaulted, if I just hit this without selecting the storage type, it drills in on the WM1 tab, you see your information here, the stock removal, bulk, bulk. Warehouse Management 2, you only get this amount of data there. So, it's kind of taking a default, view of just a material in a warehouse view. So go back in there hit both, and now you'll populate your warehouse number, and we know storage type 005 Because this is what you'll want to do when setting or doing any information with fixed bins. [00:05:00] So, 005, now it brings up a different set of criteria. See this little box down here that did not exist before? Well, there's our fixed bin assignment. So, for any bin that you want, you would assign right there. If you wanted to assign a maximum quantity to it to say, hey, I can only fit 200, pieces in there, you would set that. A minimum quantity we'll talk about in a few replenishment videos coming up here. Rounding quantity, you get all these additional fields that you can enter that, that enhance your fixed bins. If you just want to leave them blank that is completely fine. The stock placement and stock removal strategy will still drive it to this bin but without this additional information, you won't enhance or really get those replens, all these additional levers work in conjunction with other fixed bin storage types or rules and or replenishment quantity. So that is fixed bins, [00:06:00] they're specific and really used for high velocity materials because you really want to be specific with where you actually place them because again, you are, you're picking the singular bin for that stock placement and stock removal. They're also used many times in the manufacturing realm for close to a production supply area or near like a work center where you want to keep that close, keep all those components close, that's another way fixed bins are typically used. Welcome back, in this demo. We've covered not only fixed bin strategy. But a lot of the additional features that come along with it. Especially the replenishment strategies. Yep. Thank you, Steve. Much appreciated. This was, of course, very informative, and I love learning about the additional layers of fixed bins and how they can drastically improve the warehouse efficiency. So, folks, if you want to learn more about warehouse management videos and SAP, please check out our other videos, but just general features and functions that [00:07:00] exist. And if you have any specific questions, please submit it below.

Forecast Consumption Backwards Only

Discover one of SAP's options for aligning actual demand with forecasted projections

10 min

New

SAP® ECC

Demand & Supply Planning

DM; P2P; PTM

MD04; MM03

Hey, welcome to the ultimate guide to maximize your SAP system. I'm Martin and today's video will help you unlock functionality you didn't even know existed. Okay, so shall we? Okay, in this video, Patrick is going to be our guide as we dig into another one of our forecast consumption modes. Today it's going to be backwards consumption only. I'm excited to hear more about this, when this particular consumption mode should be used, and how we should think about setting the horizon. Patrick, what do you have for us today? Outstanding question. Our forecast is never perfect, and while we should always be working on improving accuracy, we need to accept that we are likely to be wrong in either timing or quantity. The forecast consumption strategies that help us with demand management are a great way to help deal with this challenge. Today, we're going to explore. The consumption mode, backwards only. We'll discuss how to think through the number of days back we might want to allow. And for this consumption mode, we would want to think about materials where we have a tendency to under forecast, and we do not want to allow future periods to be consumed. A picture is worth a thousand words, so let's go in and explore together. So today we are talking about backwards consumption mode. Let me show you how to get there so I can explain it in greater detail. And if you ever worked with me, you know that I start virtually all of my SAP conversations from the MD04 screen. So let's get a quick overview of the current state on this material number before we start making changes. This specific material number has planned independent requirements loaded to represent the forecast. It also has some sales orders loaded. But let's switch our view to summarize the data in weekly periods. So here we can see in weekly periods that we've got a forecast of 22, 23 per week. It spans weeks 14, 15, 16, 17, 18, 19, 20, so every week's got a small forecast of 22 or 23. But then in week number 18, we have a requirement of 100. That's from our customer order that we saw on the previous screen. And so MRP is actually going to add that customer order to the planned independent requirements that are loaded and when MRP runs, it's going to try to bring in enough inventory to cover 123 pieces for both the forecast and the customer order. And in many cases, we don't actually want that to happen. So something we can do is we can actually go get into that consumption mode field and define how our forecast should be decremented when we get orders. So, let's get right to it. The first thing I want to do is I'm going to go click on the material number and move over to the MRP 3 tab, which is maybe not used as much as some of the other ones, so here's an opportunity for us to see what's here. The consumption mode that I've been talking about is actually populated down here and it controls the direction on the time axis in which the system consumes the forecast, and by that I mean it can look back and consume forecast, it can look forward and consume forecast, it can do both. So actually what I'm going to do is I'm going to show you the options. You have backward consumption only, and that's obviously a very good option, we're going to review that one today. You have the opportunity to do backward and forward, there's actually another video out there if you want to read and hear more about that. We can do forward consumption, which will consume demand in the future and you can do forward and backwards. So combining these fields in the right way for your business is obviously something you're going to want to evaluate. But for today's session, we're going to focus on backward consumption only. So, along with consumption mode, we want to make sure that we properly populate the consumption periods. So if we're using a backward consumption period, we want to make sure that our backward consumption period is, populated and the number that you put in there is critical to how the system works, obviously. But one main thing to be thinking about is that it is defined in work days. So when you define something in work days, you actually have to think about how your business runs. So if you run 5 days a week, if you put 5 days in there, your forecast will be consumed in the past for a week. If you put 10 days in there, your forecast will be consumed in the past for two weeks. So it's something to really carefully consider before you decide what number to put in there and honestly, your business practices and how things work will determine the right number. I've been with companies that use one week, two weeks, or even a month. In this case, you have to do what's best for you. So, let's actually go see what happens when we populate the backward consumption period for this material number. So, I'm going to navigate to the MM02 screen, change mode, then we're going to go to the MRP 3 tab, and we're going to go to the plant that we were just looking at, and we're going to go define the backwards consumption period. So let's start with one week or 5 days, let's save that and check through and once I've saved it, I want to go run MRP, which is again, just the best practice for me, I tend to run MRP after I make master data changes, and once that's done, we'll go right back to the MD04 screen. So here we are, MDO4, let's refresh the screen and look at that summarized weekly view again. So what we can see now is before, right, week 14, 15, 16, 17, 18, 19, all had some planned independent requirements. Well, now week 18, because we just put in that consumption mode backwards and a week backwards, it's actually decremented the planned independent requirements for that week because the forecast can be decremented for a week because we have requirements of 100 or a sales order. Let's make one more change just to show you how this worked, and now let's go change it from 1 week to 2 weeks. And same exact process, go right back here, we're going to go into our backward consumption periods and we'll change that to 10, so now we're looking back 2 weeks. Once it's done, we'll go run MD02, MRP again, just changing our settings, execute, execute, and now back to MD04. When we're finally back on MD04, let's take a look at that summarized view for weekly buckets, and what we see now is weeks 14, 15, 16 still have a forecast, week 17 is gone, that has been consumed by the order of 100 pieces, as has week 18. So as you can see, when we decremented 1 week, we took 23 pieces out of the forecast. When we decremented back 2 weeks, we decremented 46 pieces. If we wanted to go back 3 weeks and 4 weeks, the system would decrement the demand from planned independent requirements up to the quantity for the sales order. And so now that we've made those changes, MRP is not planning those sales orders on top of forecast, they're planning those sales orders in conjunction with the planned independent requirements that we just set. So one more thing that I want to discuss before we wrap it up is forecast bias, you've probably heard of it. So a forecast bias is the tendency to over forecast or under forecast. If a material is typically over forecast because sales is too optimistic, you might want to look at forward consumption periods and weighting them pretty heavily. But in this case, when we're talking about backwards consumption, I would probably, for materials that were typically under forecasted, I would want to weigh my backward consumption period heavily enough to leave future demand in the system so they can keep driving in material to support sales that will inevitably exceed the forecast. So the consumption mode will allow for a little flexibility in how orders come in, but it can truly help ensure that future periods will remain intact. So hopefully you found that helpful. I encourage you to go out there and try to use that consumption mode yourself. Hopefully you'll find that picking the right number of working days in conjunction with the right consumption mode will get you what you need and if not, we are here to help. That was a peek into how backwards consumption can be used to help manage volatility and variability in demand. We know we might be right for quantity over a period of time, but we might have trouble being exactly right in a particular period. This key feature helps us to manage risk that allows for roughly versus precisely right. Timing is everything, so it's important to think about your consumption periods in relation to your forecast split and the timing of your decisions around rolling forward or dropping forecast. And last but not least, we learned that this consumption mode is meant to allow for some slip in time, but vigilantly protects the next period's forecast. Hey Patrick, thank you. When you talk about this, I can hear the legacy of living it in your voice. It's nice to learn from someone who has been there and done that. I suppose the only question is whether you also bought the t shirt. Managing variability and volatility in the demand signal is a challenge for most organizations. However, when we look, we often find consumption is more predictable than not. Isn't that interesting? Okay, Patrick, thanks again for doing that. Okay, folks, if you want to learn more about this particular forecast consumption mode, there are quite a few videos on that, please check out our catalog. And, of course, if you have a specific question, feel free to use our chatbot.

Forecast Consumption Backwards and Forwards

Manage time and quantity variability with forward and backward consumption methods

11 min

New

SAP® ECC

Demand & Supply Planning

DM

MD04; MM03

Hey, everyone, Martin here. If you're all about maximizing the ROI in your SAP system, you've come to the right place. In this video, we're going to delve into the forecast consumption. And in this case, specifically backward and forward consumption. So often we hear from clients, well, if we could only get the forecast fixed, everything will be just fine. The truth is forecast is all about knowing the risk in the forecast and being prepared to manage it. Today, Patrick is going to take us and introduce us to one of the key features that can help us with this. Okay, please, Patrick, tell us more about what the forecast consumption mode of backwards and forwards offers us. You bet, Martin. I know from personal experience just how tricky demand management can be. Even with a decent quality forecast, it can be challenging if you don't have the right settings in place to help you deal with variance in either time, quantity, or both. So, let's [00:01:00] dive in and take a look. Today, we're going to touch on where we find the consumption mode and how to select it. Discuss how to set the number of days, in this case working days, to deal with that variability. And how to think about choosing the consumption mode based on the demonstrated bias. Let's go in and take a look. Today we are going to talk about some forecast consumption parameters. These fields are often misunderstood and they can make a significant impact on your supply chain if used incorrectly. First, I want to show you where to find the consumption mode so I can explain it in greater detail. I almost always start on the MD04 screen when evaluating planning parameters. So let's start there and do a quick overview of the data before we jump into the material master. We can see that this material number has a planned independent requirement loaded to represent the forecast. It looks like the forecast is roughly 23 pieces per week, April 1st, April 8th, April 15th, and so on and we can also [00:02:00] see a sales order for 100 pieces on May 2nd.Now, let's switch our view to summarize this data in weekly periods. We want to do this because we're going to make some changes to the system down the road, and this will give us an idea of what it looked like before we made those changes. So, here we have the planned independent requirements at a rate of 23 or so per week. We have requirements of 100 pieces on week 18 for that sales order that we looked at. And as MRP does its math, it says you need 23 this week, 23 this week, 23 this week, 22 this week, and then all of a sudden we need 23 pieces for planned independent requirements and 100 pieces to cover that sales order. So a total of 123 pieces there in week 18. So MRP is actually adding the customer demand to the forecast. Are we sure we want to do that? Let's leverage some built in functionality by letting the system [00:03:00] know how we want our forecast to be decremented when we get orders. Finally, we are ready to talk about consumption mode. So, the consumption mode controls the direction on the time axis in which the system consumes the forecast. Let me show you what I mean and then you can start using it as you see fit. So, from the MD04 screen, we're going to double click on the material number and then, we're actually going to navigate to the MRP3 tab. Maybe a tab that you don't use too often. So, in this case, we want to scroll and look into the planning section and there it is, consumption mode. So, before we start changing numbers, let's look and see what consumption mode does and we're just going to click into the field and look at some of the standard options. So, here we are, let's click, and let's see what the system is telling us. So, today's topic is actually going to focus on one of my personal [00:04:00] favorites, option 2, backward forward consumption. But before we can get to that one, I've used SAP in many industries, and it's always hard to predict when the orders are going to come in. If you have a steady flow of orders throughout the week, or if you have a month end push or a quarter end rush to hit sales quotas, these options can be extremely valuable tools and the reason that I said backward forward consumption is one of my favorites is it actually gives us some flexibility. So, let's start with a quick overview of backward consumption. With backward consumption, sales orders consume forecasted quantities that lie before the requirement state. And with forward consumption, sales orders consume forecasted quantities that lie after the requirement state. So naturally, with backward forward consumption, sales orders consume forecasted quantities that lie before the requirement state. And if the actual demand is not satisfied, the sales orders [00:05:00] then consume forecasted quantities that lie after the requirement state in order to satisfy the remaining demand. Too confusing? Let's try it out. So, the idea here is to start with backward forward consumption and then see how it changes that view that we looked at on our MD04 screen. So, let's quickly go over to MM02 and go into change mode and go to that MRP3 tab and then go to our plant and from here we're going to actually go in and we're going to update our consumption mode. Again, I'll show you the examples, backward forward consumption is the one that we want to use. But, this doesn't work by itself. Just defining the mode doesn't work by itself, you actually have to go in and tell the system how many periods backwards, how many periods forwards, you need to populate so that those orders can be [00:06:00] consumed. So, before we jump in there, we take a quick look at backward consumption periods and just show you all that this is populated in work days. So, when we populate our consumption periods, backwards and forwards, we want to make sure that we populate it in work days. So if your company works five days a week and you want to consume a week of forecast, you should populate five. Whereas in some other SAP date fields, we use seven calendar days to represent a week. So it's always best to double check before you load the data. Now, let's go take a look at those numbers, backward consumption, forward consumption and look at what happens when we actually populate them. So again, these are in work days. So we'll start with 10 work days backwards. So when a sales order comes in, it's going to look back two weeks to see if there's forecast. We'll do 10 work days forward, [00:07:00] so if it sees demand 10 work days in the past, it will delete that, and then it will look forward if it hasn't consumed all of the independent requirements, it'll look forward 10 more days, two more weeks to decrement the forecast. So I'm going to save this, I'm going to execute MRP , we will run the MRP , and then go back to our MD04 screen, and double click on our material number again, enter, and I'm going to go just refresh the screen. And take a look at that summarized view to show our weekly demand. Now, what you'll see here, is you have that forecast, 23 in week 14, 23 in week 15, 23 in week 16. Now there's nothing in week 17. There's nothing planned in week 18. There's nothing planned in week 19. And there's nothing planned in week 20. Because this 100 piece [00:08:00] order, when it came in, SAP said, Oh, we have a 100 piece order? Let's go back two weeks and remove the forecast, but the forecast there wasn't sufficient, so it deleted roughly 46 pieces and then it said, okay, well, I deleted 46 pieces in the past backward. Then it looked forward and said, let me go delete whatever demand I have in the next two weeks. And it deleted more so that weeks 17, 18, 19 and 20 were all zeroed out. And now, instead of planning for 123 pieces in week 18, the backward and forward consumption has allowed us to not overplan. Because we have this 100 piece order, while we were expecting to get orders at a rate of 23 per week, we can't always tell when those orders are going to come in. So, thankfully, by changing those parameters, MRP will now, again, replan for us, and we're not [00:09:00] expecting orders in week 17, 18, 19 and 20 because we just got this one order for 100. And it actually looks pretty good to me, right? I don't want to bring in my forecast and sales orders inventory. I want to just aggregate the whole plan and figure out how to proceed. So, one more thing that I think we should talk about is forecast bias. I'm not sure if you've experienced it, but generally speaking, forecast bias can be described as a tendency to either over forecast or under forecast, leading to a forecasting error. If a material is typically over forecast because the sales team is overly optimistic, I would probably weight my forward consumption periods more heavily. We don't know if those sales will materialize, so let's start reducing the future forecast as those orders come in. However, if a material is typically under forecasted, I would do the opposite and weight my backward consumption periods more heavily. Let me come back into MRP3 and just remind you where we're talking [00:10:00] about. So, when we see that, you want the system to keep driving in material to support those sales that will inevitably exceed the forecast because of that bias. So, I'm actually pretty confident that knowing how to properly leverage these fields will help you to smooth variability when you don't know exactly what day or week your orders will come in. And it gives you an opportunity to leverage standard SAP functionality in the best way possible for your specific business patterns. Whew! Okay. Welcome back. In today's chat, we covered a lot. We discussed the options for forecast consumption, and as a reminder, if backwards forwards consumption, the demand will be matched with the current period. Then work backwards. And lastly, work forward. We discussed how this helps to smooth the variability in timing and quantity. And, before I leave you, I just want to note the importance of thinking about consumption and maintenance, or the reorganization of the forecast. Both as key parts of [00:11:00] facilitating your demand management program. This is a great topic, and all that was just the tip of the iceberg. Okay, Patrick, thank you so much for taking this robust topic and really breaking it down for us in actionable steps. This is such a good start, guys. Go forward, be curious, and explore. Speaking of exploring, feel free to go check out our video catalog of all the different videos that exist. And of course, if you have a specific question, feel free to submit it below.

Getting Started With Vendor Consignment

Explore the essentials of vendor consignment receiving

Hey folks, welcome back, Martin here. Today we're introducing a topic that falls into the category of seems like a good idea, but also a lot of work. It's worth it. Today we're introducing the concept of vendor consignment. This is a great opportunity to work with your strategic partners to share in the responsibility for carrying inventory. Organizations who do this well are able to negotiate terms with their suppliers that are fair, equitable, and reasonable to manage. I'm going to hand it over to Dave, who will give us a high level orientation to vendor consignment and provide some insights into how we might get started with this program. So Dave, take us away. No time like the present, Martin. In today's dive into SAP, I'm going to take the time to provide a simple definition of vendor consignment. I will introduce you to one of the key concepts that help us identify consignment materials in the form of special stock. And I'll briefly outline what the typical consignment process might look like. All of this to be further explored in later videos. Today is just the start. Let's go in and let SAP assist with bringing this introductory orientation to life . Processing the MIGO goods receipt MIGO 101 goods receipt for the document I just created quantity I'm going to receive the full quantity in, this is going to be put into my consignment warehouse, check the item is OK, and, document is OK Item is posted. Now, I can check my inventory level to see where this item is, it's been receipted into my vendor consignment inventory, you can see it's sitting in unrestricted, but it's in vendor consignment, so at this point, it is unvaluated. Now I am at the point where I want to use up this material, I am ready to consume the material in my warehouse or my operation, I'll execute a transfer posting. The transfer posting does a 411 movement type, K. The material again, FG13, I can change the destination, what material is going to be posted to, or I can leave it the same, I can indicate what location I want to move it to, all in one transaction, so 1710. You go from location 71A, I'm going to keep it in the same location to keep this simple presentation. And I'm going to indicate who was my supplier. So at this point, I need to just insert the quantities that I'm going to consume, I don't have to consume the full quantity, but I'm going to consume it. And once I have completed the 411k, I can check my movements, and as you can see, the vendor consignment has now been moved into my own stock in location 171A. There are some significant benefits to a vendor consignment program when properly designed and qualified. It helps us to share in the burden of inventory risk and holding and brings our suppliers into deeper strategic partnerships. However, we need to carefully consider the materials we select and the terms we agree to. Consignment programs require diligent care and feeding to ensure that we've been great stewards of both our suppliers and our own investment. We need to make sure we're all on the same page for how much risk we're willing to take in terms of inventory stocking position, expected turns and associated terms of ownership and payment. Spending the time up front to focus on preparation sets the program up for success and eases the burden and anxiety of starting something new or expanding a fledging program that has yet to find its wings. That's awesome Dave, thank you. The importance of getting this right is often undervalued and it's a big missed opportunity for a lot of organizations. I'd wager most folks listening to this could uncover a hidden opportunity in their organization simply by reviewing some of the highlights from this video in their own business. Can't wait to hear about some of these outcomes. If you want to learn more about this particular topic or other videos about how to exploit your SAP system, please check out our catalog, and if you have a specific question, feel free to suggest it below.

Gross vs Net Requirements Planning

Deciding when to apply gross vs. net requirements planning

7 min

New

SAP® ECC

Demand & Supply Planning

MM

MD04; MD3

Factory Calendar Explained: Explore usage and activity options for optimized scheduling

How’s That Forecast Performing?

Exception monitoring to optimize forecast performance

11 min

New

SAP® ECC

Demand & Supply Planning

DM; SD

MD04; MD05; MD73

The best way to learn is by doing and so welcome to the video service that unlocks and reveals the hidden value in your SAP system. Martin here, and in this video, hold on, Kristie, are we serious? We think we can do this? You're telling me that we can actually get to see how our forecast is performing in SAP? Okay, if there ever was a topic that elicits the SAP salute, this and ATP are it. Yikes! Okay, deep breath, let's go. How are we going to do this? Show us the way Kristie. Well, Martin, I don't know if you know my history on this one, but I've always been on the supply side of the house and a manufacturing oriented person. Now, I've always had an appreciation for demand planning, but a few years back I decided to really get into it. I wanted to see what it felt like and oh man, is it a tough gig trying to predict the future. So please, give your demand planners a support, maybe a hug or a coffee, and take what we're about to share with you to help them and not to penalize them. SAP is constantly telling us about the quality of our forecast, and it does so in a bunch of different ways. There's also a variety of techniques that can help to mitigate and manage or capitalize on our forecast performance, and the more we understand about how our forecast is performing, the more effective we're able to be. Today we're going to focus on one such tool and we're going to go in and look at some of the exception monitoring that is really very specific to how the customer demand is lining up with the forecast. We'll also highlight consumption as a concept, but much more to come on this as a topic all of its own. Now what's really different about today is that we're going to go in and look at how our forecast is performing in the now. This is different from what you're probably used to, which is looking at the forecast, maybe a three or four month lag, to see how accurate you were at the time that you started your replenishment cycle. This is all about the now and being able to triage what is happening today. So let's go in and see what SAP is telling us about how our forecast is performing. So oftentimes our demand plan is actually developed elsewhere. So while we can develop an MRP plan directly in our ERP environment, oftentimes we're doing that through an advanced planning solution or even sometimes it's done offline through Excel and then it gets loaded into SAP. So, first of all, if you are in the category of it's getting done in Excel and loaded into SAP, or your forecast isn't being shared with SAP at all, that's definitely an opportunity and we'll do some videos that specifically talk about how to manage getting that forecast into the system. But once it's in here, no matter where it's coming from, whether it's generated directly in the ERP environment, you're uploading from an offline file or you have an advanced planning solution that's interfacing that information over. One of the things that is really important is being able to see how that forecast is actually performing. And one of the mechanisms from a master data perspective to control that is in the forecast consumption. So let's go in quickly and take a look at that and then we'll actually go through and I'll show you a tool for being able to see how that forecast is performing directly from the MRP or stock requirements list. So I'm just going to go into display material and on our MRP3 view, this is where we have several important pieces of master data. So you have two things, you've got your strategy group which is your planning strategy. So how do I expect to react and respond to my overall demand plan? So what am I meant to do with it? Am I making or buying to stock? Am I making or buying to order? Am I doing some sort of making or buying to a particular level of the bill of material and then converting it once I actually get a sales order in hand. But then the other thing that happens is that we set our consumption mode and then our backward and forward consumption period. So this is how we consume the forecast, so as sales orders or stock transfers or other sales documents, deliveries, quotations, etc. are processing through are they eligible to consume the forecast? And if so, what are the rules for how we want to manage that consumption, so that we have a complete look at our demand plan? And we could have a much more robust conversation about this, but just to quickly give you an idea, consumption mode, so I can look backwards only, so if I tend to be pessimistic about my forecast, meaning I oftentimes will oversell, then I may want to restrict to backwards only. If I am overly optimistic, then I would want to control my backwards and forwards consumption, but consume backwards first and then consume forwards. And then in some rare cases, I might want to consider forward consumption only and forward to backward consumption, but those are going to be less, less often. And it's really thinking through your bias towards whether you're optimistic or overly optimistic or overly pessimistic and then you want to set your thresholds. And this is because the beauty of demand planning is that we get the opportunity to get it wrong both in terms of time and quantity. So one of the ways that we can protect the supply chain is by setting our consumption parameters appropriately. So again, determining what mode to use and what periods are good choices based on that information and the way that we consider bias. Definitely an opportunity for other videos, but for this one, I just want to show you how it's then affecting our ability to monitor that information. But in this case, you can see I'm allowed to consume up to 5 days in the future, and again, this is going to be based on our working days, and then the same thing going backwards. So how far back in time am I allowed to go and look at the forecast? Okay, so once those parameters in place, those are the rules for how we are able to go in and consume that forecast and I always get this image of Pac Man in my head and it's out there and it's gobbling up the little white balls and eating those power packs as it goes through and the sales orders are trickling in and consuming that forecast. So, to see this, Environment, Total Requirements Display. And what this is going to show us is the forecast that's out here. So, here's all the different weeks. Here is the planned quantity, and if we had withdrawals, so the sales orders are actually shipping out the door, you would see that information here, and then what has been assigned, so what is being consumed against that forecast. So we have a forecast of 8, we have consumed all 8, these are the sales orders and the quantities involved. Then we have a forecast of 15, we have sales orders for 9, so we have a remaining open balance of 6, these are the sales orders that are involved. And so based on those dates thresholds, the consumption mode and the amount of days is going to control how this is going to peg. And it's going to always peg as close to the date as possible, and then it will start looking backwards and then forwards in this case because it's a 2, so it's looking backwards first and then forwards. And then we're controlling how far back and how far forward with the number of days. So this is one view to see what is open and remaining to sell, and you can see how far out those sales orders are coming in and what that looks like. And then you get the sales order number, the item number, and the schedule line number. So this is also a good way to see what's happening here, if you're starting to see 2's and 3's and you know that you've got partial deliveries that are going out, you're breaking up that sales order, might be opportunity to do something a little bit different with that. So then the other thing that we can do is we can come in here and we can look at the customer view. So now it's going to go down to just the customer orders and the customer orders we have in hand, and it's going to let us know if we have anything that cannot be pegged against an open forecast. You're going to either see red, yellow, or green here. Green means that it is able to completely allocate the requirement. Yellow means it was able to partially allocate the requirement and red means that there was no forecast for it to peg against because there's not anything that is within that consumption threshold where it can see that there's a forecast. So it's in addition to whatever your current demand plan is. So if you were overselling the forecast you're going to start to see a lot of reds or if your housekeeping is not so great you're going to see a lot of reds because you're going to have sales orders maybe that are really past due the forecast maybe it's been cleaned up and brought to current, there's nothing for it to peg against. Yellows mean you've got partial assignments, there's definitely a conversation that should be happening with the demand planning team if you're seeing that and then if everything is green all the time then you may find yourself in a situation where you're actually forecasting a little bit too much compared to the pace of the sales orders that are coming in. In any case, this is a way to quickly get that view and then have those conversations with your demand planning counterparts. So here in this customer view, status light, the requirements date, what type of element it is, then the document information, the planned quantity, what was able to be assigned, and the requirement date. Okay? So this is very, very helpful information looking at it in both views so people have that conversation and quickly go through and decide if your forecast is performing well or not. Whether it's too high, too low, make the adjustments or true up your master data in terms of consumption rules. Look for another video soon on the consumption mode and the day's threshold in conjunction with your bias and we'll talk through how to best get those settings in place. Welcome back. So if there's one good thing that SAP is great at. It's sharing what it's seeing. It doesn't matter if it's good or bad or ugly. We're going to get all the information and it's up to us to figure out what to do with it. Today we looked at. How our forecast is performing from the perspective of now. This is not an accuracy metric. This is an, are we okay, and how do we mitigate what's happening today in our execution horizon. It's a very different perspective that complements the forecast accuracy work you may already have in play. And we also touched some on how the consumption and bias, which are both two very important tools, help us to right the ship when things do go wrong, or help us to tighten things up opportunistically when they are going really well. Once again, Kristie, enlightening. Thank you so much. I know we'd all like a best in class forecast accuracy, but the truth is that most of us just simply don't have it. So I really enjoy these topics that just take and make simple things out of things that we can control, review, and react in spite of those demand planning challenges. It's also really important that we stop blaming others and do the SAP salute and call out others as the problem if we often are in control of our own destiny. So we really want to take that forward. So thank you guys for listening and of course, if you want to know more about forecast, forecast accuracy, we're going to have series of videos on that so please check them out and if you have a particular question please submit it below.

I Was Told There Would Be No Math: MRP

A concise guide on how MRP calculates necessities, quantities, and deadlines

The best way to learn is by doing so welcome to the video service that unlocks and reveals the hidden value in your SAP system. Martin here and in this video we're going to be discussing how MRP performs its calculations. Now I was told there would be no math, but I think we're all in trouble here. Good news is my co host today loves math. I'm almost afraid to turn her loose on this, but the good news is that MRP really operates at scale and not complexity. All the math is pretty straightforward here and is very helpful to understand. So, Kristie, take it away. Kristie: Oh, yes I am, I do love math, but one of the best things about MRP is that it does all of the math for us. However, there's nothing worse for a planner than not knowing what the planning engine is doing, it just breeds mistrust, so our diligent and skeptical minds. So let's dive in and I'll unpack and translate what MRP is actually doing. There's no great mysteries here, but it is very [00:01:00] helpful to understand. All right, let's look and see what MRP is doing for math here. So let's just start really simply up at the top. So this is our available quantity, in this case we have 87 units that are available for planning. And if we come down here, the first thing that's going to come off is our safety stock. Now in this case, MRP is viewing safety stock as a demand element, that's why it has a negative next to the number. And then the 78 pieces is 87 minus the 9 is 78. From there, it's going to start to pull through any other demand and supply elements based on the date that we see them, and from March 4th until April 1st, you can see everything we have is a demand element, and I know that because it has the negative sign against it and we can see this inventory slowly but surely running down until we get to the end of our replenishment lead time on 4/8 and it leaves us with a balance of 17 pieces. So all it's done so far is [00:02:00] deduct demand from the 87 pieces. Now, I'm going to go ahead and hit the page down up here, ~okay?~ and I can see here on 4/8 we have an additional 4 pieces in forecast that's coming out. On 4/15, we have another 5 that's taking us down to a balance of 8 pieces. Now, on 4/22 we have an additional demand for 7 and what is happening here is that in order to prepare for that demand, we actually have a planned order that is meant to start on the 16th and it's for 5 pieces and then the following week on the 25th we have an additional 5 pieces and then ~four weeks,~ 4 pieces happening the week after that and so on and so forth and so you can start to see we have planned order, forecast, planned order, forecast, planned order, forecast, planned order, forecast and it's going to continue to [00:03:00] follow the rules of our lot size key and our minimum order quantities as well as our lead time and our goods receipt processing time to balance our supply to our demand and to try to get our balance as close to that allowable minimum as possible because our safety stock has already come off. When we see a balance of 0 here, it actually means that we still have the 9 pieces of safety stock covered because that came off of our balance immediately and that is really important to know if you're using a static safety stock value. Now, If you are using ~um, ~ a range of coverage or coverage profile, then that will be the other piece is that you'll see that balance happening, but you're going to see the discrete numbers for it in your periodic totals, but you'll actually just see you're carrying more than 0 [00:04:00] pieces of inventory, and that's driven by how many days of supply you're trying to hold. The other thing, if you just noticed, I just hit the safety time button and we had positive balances before and that's because we had some safety time in place. So it was actually driving that inventory to arrive a little bit sooner. I've just turned safety time off so this is the purest view we can possibly get and you'll notice that as we're going through and we're doing all this supply to demand balancing now you'll see we're supplying to 0 pieces. So it's really 9 pieces in safety stock and so our balance is 0 ~um, of~ available inventory, so that's the minimum level that we're trying to plan to, so we're going to try to plan as close to 0 as possible. Now if I come in here and I actually make some modifications to this material, this is where it gets fun and where we would encourage you to play. So this is a lot for a lot, so this is stripped down so we can just see the balance, but I could do something like change it over to a [00:05:00] weekly bucket. And because we are in MD04, by the way, as soon as somebody makes an update to any of those demand elements as you're going through the day, if you hit refresh, you're going to see that. And once you adjust your settings here, if you go in and you run MRP, of course you'll be able to see those settings immediately as well. I could also do something like put in a minimum lot size, let's say of 9 pieces and I could hit save and now, if I go through and I just run MRP, I'm going to see that there will be some changes. You can see all these things that were adjusted, because this is a finished good, so it ran through the entire BOM. I could have run it single level too, just to get an idea of what was happening before I went ahead and released it out to all the other materials. But let's just keep an eye right now on what's going on with our quantities. So you can see, we've got some 5's, some 4's, some 8's in terms of replenishment, I'm just going to go ahead and hit this, and now you'll see we're starting to, turn safety time off, we're starting to run with a [00:06:00] little bit more of a positive balance and the reason for that is see, we now have this minimum lot size of 9 pieces. So as soon as we need to make, we're going to see that we'll have a minimum of 9 pieces each time. And so just by virtue of adjusting that minimum order quantity and changing to a weekly bucket, we would start to see the impact of that on our inventory balance. And it's very easy to go back through and check your settings and see what ~exactly~ is driving that . Because our forecast is in weekly buckets, the big adjustment there was purely in the lot sizing that we put in. We can start to see and understand what is happening with the inventory, and there's nothing magical about this, and if you start to see a number you're unsure of, then just back out one of the master data settings, go back to basics, and adjust from there, and again focusing on goods receipt, planned delivery time, the nature [00:07:00] of your lot size key, so whether that's a lot for a lot or fixed lot size, or if it's a periodic lot size like weekly or monthly lot sizes, you're going to see that impact here as well as your minimum order quantity and your rounding value. And that's going to be what helps to trigger what's happening. But again, negative numbers demand, positive numbers supply, and you can slowly but surely kind of follow the path through and understand exactly what is happening. Awesome. So no more black box. I'm only kidding, MRP is very, very far from an advanced optimization technique that's available in things like advanced planning solutions. Those can sometimes feel a bit black boxy. However, it is vitally important to understand how the system thinks, and today we went through a really basic example. What I would challenge all MRP controllers, all buyers and planners, and all the folks that support them, is that when you go in and you make a change to your planning, you think about how you would expect MRP to respond. And then you check your knowledge by walking through [00:08:00] the math, you'll be way more comfortable with what the system is doing, and you'll get a start on the place that we're working from in terms of refining the actual planning. It comes fun, yes I said fun. Martin: Brilliant Kristie, thank you. Being able to narrate the planning situation and understand that the system is doing very important MRP controller work day to day, understanding how the data and information flows in SAP is just going to drive optimization through the supply chain, second to none. So once again, thank you very much, Kristie. And folks if you want to know more about this and other topics related to your SAP system, check out our video log. Otherwise, please submit your questions below.

Identifying the Vendor Batch

Quickly identify the vendor batch for traceability and shelf life management

4 min

New

SAP® ECC

Quality & Batch Management

P2P; PTM

MD04; ME22N; MIGO; MMBE

[00:00:00] Hey, welcome back supply chain aficionados. Martin here with a brand new topic. Hot off the presses and built off a question from our client community. We've had a lot of interest in getting started in quality and batch management recently. And as we start to pick up momentum with managing multiple suppliers for parts that are largely the same form, fit or function, there's been a lot of additional interest in the vendor batches and how we see those in SAP. This is not the same as traditional batch management, where the batch assignment has many characteristics. This is rather an external reference of vendor provided information of an internally determined point of reference. However, if you aren't yet up and running on full batch characteristics, this might just be a place to get started. So to answer that question, we have Jake, who will give us a quick how to on finding the vendor batch number and a couple of places where it can [00:01:00] be seen. Jake, take us away, my friend. Hey, Martin. I love the intent behind this question. This question comes from someone who has a hurdle that they're trying to overcome in order to get their sourcing strategy into action and supported by SAP. It's a simple question, but we hope it'll have a big impact. So in today's walkthrough. I'm going to show you where and how a vendor batch can be referenced at time of goods receipt. I'll also then show you a couple of the places where we see that information for quick reference to create some needed visibility that persists across SAP. So let's jump in and have a look. Every once in a while, we have an opportunity to answer a quick question and today is that day. So here's what we're going to do. We're going to receive some goods. We have a purchase order that has an ASN against it. And that's great. We love advanced notification. So let's bring up trusty MIGO. I've got the inbound delivery right here. I'll enter that in, and now down below, we can head on over and put in the batch number if it didn't already pull [00:02:00] in for us from the inbound delivery. If they were really, really good, it may already be there for us, but if not, we can enter it here. The other thing we can do is enter in a date of manufacture or expiration. Once we've saved, we can now see this shows up for us in a variety of places. This is super helpful because sometimes we need very specific compliance or regulatory information associated with that lot, and sometimes we just need a simple reference that helps tie the batch to that particular supplier. For example, maybe I have a production run coming up, and I need to use up a batch from one supplier or data manufacturer before starting another. And this is a great way for me to build a foundation toward more robust characteristics. This could eventually lead to being able to automatically search for and select batches. Most importantly, though, this allows us to trace what came in from whom, where it is at this moment in our facility, and how it was ultimately used. And that is so very important. As you can see from our walkthrough today, vendor batches don't have a high [00:03:00] barrier to entry, but they do provide useful information that can help us with anything from compliance and regulatory concerns to simple informational cross references that can be a way point towards or be used in conjunction with a full set of batch characteristics if batch management is a path that you want to go down. They're quick to enter. Easy to reference. Have loads of use cases for recording and differentiating, where it matters. Over to you, Martin. Thank you, Jake. That's a good answer to a great question. Thank you, sir. If you want to learn more about this specific topic and other batch management topics, we have quite a list of videos around that. And of course, if you have a specific question for your business, feel free to submit it below.

Interim Storage Stock Without Movement

Overview of interim storage stock lacking movement

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here and in this video we're going to focus on materials in the interim storage types that have exceeded their allotted time within the warehouse activity monitor. So Steven, tell us why these materials cannot be in an interim storage. Absolutely Martin. Interim storage within the name of itself is temporary and it's not a permanent home in the warehouse for any materials. If the material has exceeded the time parameter in an interim storage type, it is simply contributing to a supply chain disruption. Materials hanging out here are generally in limbo on the receiving dock waiting to be put away or on the outbound dock, just picked, waiting to be PGI'd. In this video we will. Analyze this portion of the monitor. And review strategies to manage and take action on. In this video we will demonstrate the interim storage stock without a movement in the warehouse activity monitor. So first we'll go straight into the transaction of LL01. You'll populate your warehouse number in the required field here, go ahead and hit execute. You could go straight to the exact of what we'll be covering today, which is a stock and interim storage type, or in this case, just to get the overall view, which most users do go ahead and just execute here so you get the holistic view of everything and today we'll focus on the interim storage stock without a movement. You can see that there's 4 past due potential supply chain disruptions here. So you can either click this dropdown arrow here, which then displays the actual storage type and the description of where they're held up, or you could just double click straight onto the header line. You then get the description or the display of the 4 materials that are held up there. And this portion of the warehouse activity monitor is giving you plenty of information here to do some analysis. So you have your material, the biggest thing here is it's showing you the actual stock category status and that these are held up due to being in quality inspection. So, they're in quality, they need to pass inspection, and that's why they are in the temporary or interim storage type of 902, or in other words, the receiving dock. Since they are in an interim storage type, the storage bin is dynamic and showing the actual inbound or the goods receipt delivery document number here. So all these actually represent those inbound deliveries, you can see 2 of these right here are for the same material, the same document here. The biggest thing that you want to do here is to not go ahead and just try to confirm these. You want to do your due diligence or escalate as to why these are in quality. Transactionally, these are held up so you want to get to the bottom and really get to the key user of who was really doing this. So you could do that by double clicking the line here, it brings you straight into the actual quant of this material. You can dig a little further and actually get the document number, so you can look at the inspection lot. To do your inspection here to get that queue or that quality block off there, I'm going to hit the back arrow, you can also get the document number of the transfer order in LT21. It gives you the key user information of who has really created this, so in this case there's a name so you could do your due diligence there and then you can also look at your goods receipt document information here from that materials or the procurement side who's responsible for this material document here. One thing that's very underutilized in the warehouse activity monitor is going to be your notes. So if we're going to do investigation, you can click on the actual line and write notes Skinnell followed up with so on and so forth. You can then save that and really at that point you can have a running log of what is going on with these issues, because again, these are supply chain disruptions held up in a temporary or interim storage type that need to be resolved. So, in summary we have covered. How materials in interim storage contribute to supply chain disruptions. Push through the warehouse activity monitor and have surpassed the time allotment. These materials are late and need to be researched and promptly corrected. Thanks Steven. Great points on taking action on these materials that need to be moved on from the interim storage types. If you want to learn more about how to get the most out of your SAP system, please check out our other videos and of course if you have a burning question you can submit it below.

Introducing the Customer Fact Sheet

Explore account status and history beyond sales orders

7 min

New

SAP® ECC

Order Fulfillment & ATP

SD

VA03

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here, and in this video we're going to explore an often overlooked feature in SAP called the customer fact sheet. Kristie, this comes up over and over again, and most people don't even know it exists, take it away. Why yes I can, Martin. And I agree, this is a very underappreciated piece of functionality. When you're on the phone with a customer or trying to assist sales in preparing for their next meeting with the accounts, it's a fantastic asset to those kinds of conversations. Let's get into SAP and take a look. First, let's look at where we can find the customer fact sheet. Like most things in SAP, we can get to it in several different ways. We'll then take a cruise through the information available. And lastly, we'll touch on some of the ways to make great use of this information in conversations with the customer. Come on, let's go take a peek. Alright, so the customer fact sheet is super helpful when you are on the phone with a customer or you're getting ready to sit down with them and have a conversation where you want to rise above the individual transaction and into more of an account review. Or if you have the customer on the phone and they're asking you about multiple orders, you need to be able to quickly go through and see what their current status is. So here I am in a sales order and I am going to click right here on this guy. Okay, the piece of paper with the little person above it. And when I do, it takes me into something called the customer fact sheet and what this is really is the sales summary for everything that is going on with that particular customer. Now, if you are on the procurement side of the house and you happen to be listening to this video, it's very similar to what we would see in the buyer negotiation sheet, and really serves a similar purpose of being able to get a quick overview on what's going on with this particular account. Okay, and it's going to start with a bunch of just facts about the particular account, and then it's going to go into more of a review of what's actually actively happening today. I'm going to click on this little button that says info block. Okay, and what this does is this brings up all the different sections, now the quality of the information and the robustness of the information has a lot to do with how active that particular customer is and how well we're maintaining the information for them. You can see the kinds of information that is available, so the address and then anything around the classification of that customer. What kind of industry sector is it? Does it have a Nielsen ID? What other information or attributes are attached to that customer? Then down from there, you could see that some things around your performance measures, contact people, and then you get into things like the sales order information, your pricing, any of the rules for this customer around partial deliveries, anything around how we transport the goods to the customer, billing information, delivery conditions, partners, and then we start to get into the specifics around what is going on with their documents and then if there's been any type of messages that we've had to sit back and forth for quick resolution. And depending again on how robust this information is, the quality of the information will vary. But you also have things like back orders in here. So it's really nice to be able to come in here and take a look at this. So I'm going to go ahead and I'm just going to scroll through a little bit, just to give you a bit of a sense of what's here. So we've got some of this fact information up here at the header level. But then as we get a bit further down, now we're going to get into some of the more specific things. What are the pricing rules for this customer? If they have a particular price group that is assigned to it, what is their, procedure and what price list is it reading from? For shipping, what kind of delivery priority does it get? Is there a specific shipping condition? Is it eligible for order combination? Are you allowed to split batches? Is there a particular delivering plant that's assigned? Your partial deliveries, are you allowed to ship to this customer multiple times against the same sales document? Are you allowed to split that delivery up or is essentially is back orders allowed for this customer? And then what kind of transportation information do we have in place for them? What zone are they transporting from? So how are we determining that transportation information in time? Let's scroll down a little bit more here. So then we get into things like the Incoterms and the terms of payment for them. Any partner information, so sold to, bill to, payer, sales employee, shipped to, very important. All that information is maintained in here, and then your stat information. How much did we sell to this customer comparison of prior year to this year, and then, how many times did they order. So you can see this is a fairly high dollar value for a few orders that are in place. And then you can see, again, the specifics of those sales documents and what the current status is on those particular orders. So this can give you a quick look at what's happening. Then under Quick Info, it just gives you some of the stats, but really helpful here is it's going to take you through to any orders that are maybe blocked for delivery. So you can quickly go through and see what's happening there. You'll get an arrow if there's something for you for you to navigate to. You've got something that's blocked for billing you've got something that's going on there, you need to go in and take a look and then over here, your back orders and your open sales orders. And if you click on this, it actually is going to take you right through to the full list of open sales orders, which is probably very familiar to you, and then from there, you can go in and do a little bit of further exploration. But really nice to be able to quickly navigate through there and see where the problems lie and get everything rolled up and you can do it right from that sales order. So when you're talking to a customer about a particular order or line item, then you can quickly navigate through and see what else is going on in order to be able to evaluate if there's anything else that you need to do for that customer as long as you're in communication with them. Whether that's on the phone, via portal, or via email, it's a q uick way to go in and get some good analysis from the customer fact sheet. So now that we have introduced the customer fact sheet. We know what kind of goodness we can find there that will help us with all of those different ad hoc conversations, proactive account management, and preparing for account reviews. I remember the first time I saw this, I was surprised at how much information was available all in one place. It reminds me quite a lot of the buyer negotiation sheet on the supply side of the house. Thank you Kristie I mean the customer fact sheet does sound cool and is obviously very interesting for the folks that can actually use it to help communicate with their customers. Thank you. So if you want to learn more about this particular topic or any other topic related to SAP, please check out our video catalog and if you have a burning question submit it below.

Introducing the Sales Order Monitor

Proactive sales order monitoring across our area of responsibility for seamless efficiency

6 min

New

SAP® ECC

Order Fulfillment & ATP

OTC

VA06; VA03

Introduction to MRP Areas

Explore MRP areas: Unveiling key features and practical use cases

Demand & Supply Planning

MM

MD04; MD3

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, my name is Martin and in this video we're going to provide an introduction to SAP's MRP areas. This feature in SAP was offered in ECC and is now provided as standard in S/4HANA. It allows planners to have a better control of planning across storage locations and their subcontractors. This solution is quite robust and something that material planners will appreciate having in their toolkit. Kristie, tell us a bit more about this MRP area thing. Fantastic Martin. MRP areas represent an important capability when used correctly and in this demonstration, we're going to focus on three key things as an introduction. First, the types of MRP areas that are available. Second, the way we're able to differentiate our planning parameters by MRP area. And third, some of the most common use cases for MRP areas. This comes up as an opportunity at most of our clients and I'm excited to dive in. MRP areas are coming soon to a theater near you if you are moving to S4. It'll be just a standard part of the way the system is going to operate going forward. If you are on ECC, you may or may not have these enabled already. They are a great tool for when we need to have discrete planning parameters across different locations, we need to have a logical segmentation of our planning and replenishment. We're able to transfer goods back and forth. We get some nice sets of planning parameters that we can set individually at each location and there are a couple of different types of MRP areas that are available. One is to facilitate our relationships with our subcontractors. Our planning then starts to look a little bit more like if we were transferring across plants, we're able to receive goods directly into the subcontractor, they don't necessarily have to pass through our facility first. There's a lot of great advantages that come with being able to separate that out into the MRP area if you have a need for it and it makes sense for your process. The other thing that it's used for is if we need to differentiate across different storage locations or different parts of a plant and we need to be able to have more specific planning information there, it gives us that additional level of finiteness in our planning parameters versus what we can do from a storage location perspective. So if I come in here and I click on this little button, if MRP areas are enabled for you, you'll see that you have entries here already. I can see the different MRP areas that are out there. So if it is a 01, that simply means that it is a plant level MRP area. So that means we haven't broken it out, it's still performing like it did previously, it's your main location or your plant. Then from there we can have things like your subcontracting locations, which is what we're going to look at today. We've got a 03, this means that this particular location is set up for subcontracting and then a 02 would be if we were associating it with a specific storage locations. So, a couple of different options there. Really, the advantage is to be able to control things like replenishment, stocking levels, and different planning parameters and even the forecast information based on those different locations. So what I'm going to do here is I'm going to go in and take a look at this particular material. So this guy is set up with a couple of different scenarios here, and you'll see everything looks perfectly normal, right? This is stock on hand, this is my main plant, and then if I come in here this is actually also set up for another MRP area. So I'm going to go ahead and pull that up, it will tell me what I've got for options here, and this is my second one, so this is the actual supplier location. So, rather than seeing my planning all consolidated onto one screen, now I can do something that feels a little bit more like planning across locations in terms of replenishment. So, I have safety stock that is specifically held at the subcontractor and you can see I've got an exception message there. I have purchased requisitions for replenishment, I might be shipping either from my plant into this location or I could even have it coming in directly from my supplier, if appropriate. So that's nice, I'm able to default those addresses directly onto my purchase order. And if I go in and I take a look at this material, you'll see the types of planning parameters that are available to me. So if I come in here, this is my main plant but I'll see down here I have this MRP area exists, that means an MRP area has been assigned to this material. If I come into the MRP area, it will give me the information on specifically what it is and now I'm going to see what kinds of fields are available for me in terms of being able to set up specific replenishment or specific planning roles for that particular location. And again, storage location, subcontractors, whenever we need to do a logical segmentation of our planning and have different roles. So you can see we've got things like MRP type, if you're doing your order point planning, I could make sure that I maintain a specific level of supply. If I needed to replenish up to a particular stock level based on some sort of storage constraint, I could do that. I have my own lot size keys and MOQs and rounding values for this particular location, so all of those fields become available. If I come over here to my MRP2 view, I have a select number of planning parameters here as well. So I've got my planned delivery time, if I wanted to do something with the planning calendar, I have that as an option. Probably the most requested item is to be able to maintain some sort of safety stock or reorder point, two separate and distinct planning parameters. One on the MRP 1 view, one on the MRP 2 view here. In order to be able to maintain those minimums at a subcontractor and make sure that you're positioned for success, I can control my replenishment from plant to MRP area here, or MRP area to plant. I can also procure this externally if appropriate. I also then can implement forecasts, so if I need to do some consumption based forecasting for the replenishment of that particular MRP area, I am able to do that here as well. I can also enter a forecast from planned independent requirements through demand management for this particular MRP area. When MRP areas go into your system, they are either on or they are off. So as soon as you make the decision to transition, you will see the adjustments to your table structure, you will see the adjustments to your reports and you'll see it pop up here and there throughout the system. So it's really important to go through and test any customizations that you might have in place. It's a great use case for saying the importance of trying to work customizations and custom transactions out of your solution as much as possible. But you'll see those adjustments being made and so there's definitely a vetting process before you go and turn this on in ECC if it's not already in place for you. But once it's on, then it's just a matter of extension, and there's not a lot of complications for a planner or buyer, because you selectively choose at the material and plant level whether you're going to extend to a particular MRP area or not. So you're able to go through and control and set that up at the material plant level all the way through. So, really nice feature for planners, it's great to be able to, and buyers, it's great to be able to have that distinct set of planning parameters and be able to break this out in a logical way so that you can get these set up. It's actually quite powerful, you've got quite a lot of flexibility in being able to plan those locations now without having to set up a new plant to do that. Sometimes we'll see people break even the same physical location into multiple plants just to be able to accomplish a full set of planning parameters. Now, you don't have a full set, but you have a much more robust set of tools to be able to use here. And in S4, the data maintenance does become a lot easier so you have that to look forward to and if you're interested in that we have a webinar that's specifically talks through what's new in S4 for MRP areas, MRP live and all those kinds of good things, so make sure you go and check that out. I really think MRP areas offer an opportunity to solve a variety of long standing planning problems and I'm really excited to see them used more commonly in organizations. Remember too, that if you are going to or are on S4, this will be required for managing your vendor provided inventory at subcontractors. More to come on that in a future video. To summarize, MRP areas offer the opportunity for. Discrete planning parameters for each MRP area that is planned. They support replenishment from the plant and also from third parties. And last but not least, we're going there eventually, so we might as well start thinking about all of our use cases right now. As always Kristie, thank you. MRP areas certainly offer an opportunity to plan more discreetly and more efficiently. So if you'd like to know more about your SAP system capabilities or even just have a question please check out our other videos and submit any suggestions below.

Inventory Graphs and Analysis

Material analysis: Mastering historical graphing and in-depth analysis

The best way to learn is by doing. Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, my name is Martin, and in this video we will focus on how to take advantage of SAP's inventory graphs and analytic capability. Very much of an unknown feature in SAP yet incredibly powerful. When used correctly inventory graphs and analytics in SAP provide visualization of real time statistics and information on inventory levels, movements, consumption patterns and trends, which can really assist organizations make informed decisions on inventory management. Kristie, I'd love to know more about this cool feature. I'd love to tell you more Martin. I know you're excited about this one and so am I. This small demo represents the tip of the iceberg on one of the most valuable yet underutilized capabilities in SAP. Inventory graphs and analytics is a powerful feature when used correctly and in this demonstration I'm going to focus on three key things. Number one, one of the many places where we can access this information. Number two, some of the key figures and statistics that are available to us. And number three, the red line graph and what it's telling us. Okay, let's go in and take a look at some inventory graphs that will help us to analyze what is happening with this particular material. So this is one of the most undervalued and underutilized features in SAP and I'm really excited to show you a little bit of the information that is available. So we're going to go in here, I've already selected a plant and an MRP controller. You can do this from most any MC report both LIS or document evaluation. In this case I happen to be an MC48. I'm going to go ahead and click through here. This is telling me my current inventory value and then it's telling me about the contribution of that particular material to the grouping of materials that I've chosen, what the percentage contribution is of that value and then the accumulation. And I'm just going to pick one of these, we're going to go ahead and take a look and see what is going on with the red line graph. So I'm going to go to detailed display. Okay, so the purpose today of this demo is to talk about the red line graph that we're seeing here. If you're curious about these MC reports I am quite certain we'll have future videos that walk through them, but I'm going to go in here and just choose the stock level graph first. Okay, and I've chosen that and now I'm going to go ahead and bring it over because it's hiding on my other screen, here we go and I'll make that nice and big so that you can see. So what this is going to show us in the document evaluation reports if we access it from here, it's going to show us the entire history of the material. If we find it through MC.9, then we'll be able to throttle that to a particular period of evaluation, but let's go ahead and see what's been happening with this particular material across time. This was a 2020 material, that's when it started to have some activity and you'll see here, it's moving up and down across time but we can see that we recently have started to build quite a lot of inventory, so there was a very large goods receipt. So this is our stock level historically so looking backwards in time. Every time the inventory goes up, that means that we have received it in or cycle counted it in, or did something that increased our inventory level. Every time we see it go down, that's our consumption or our utilization. And then any point where we have just black underneath that is the stock that is on hand that is not currently being used and so the lowest point over the period of evaluation, this guy right here, this would be our dead stock or opportunity stock, so that's the lowest portion of the inventory that we would get down to our lowest inventory value. But recently we've done a large goods receipt. So as we're looking at this, what we're really looking for is the consumption predictable? If so, there's lots of things that we could do to make the planning of this material far more stable. So there are a couple of exceptions where there's some significant or more steep drops, and we're going to look at what the pattern has been across time to see if we adjust our supply pattern, if we could have a more stable and predictable rhythm. This guy is all over the place if you think of this like an EKG, there's a lot of movement that's going on here and what we would want to do is make this steadier and easier, and that's going to help to protect us a little bit more against volatility. I'm going to close this guy out. I want to show you one more here. Now let's look at our cumulative receipts and issues diagram. So there's a really cool correlation here that makes it easy to understand. So if you have a hard time kind of laying the lines across the graph to go is this predictable or unpredictable? The other thing you can do is look at the consumption versus goods issue. So over time as we accumulate, I'm going to put the legend on here for you, as we accumulate our goods receipts and goods issues, what we're going to see is that we develop some gaps. So as we're moving across time, you're going to see times when you get more of the black space, so more time delay between when we've issued and when we have received that inventory and so the longer the delay between the time it's received and the time it's issued out or used, you'll see the peak up at the bottom in terms of stock level. So biggest gap, highest gain, and stock level. So this is another really effective way to look at the history of the material to see what's happening. Did you know that also in SAP you can get future looking graphs? So in one of the screens that you are probably most familiar with as a buyer or planner MD04, you can actually go in and see what the future is going to hold. So let me go ahead and put this item in here and I'm going to go through and find my future looking graph. So this helps me to evaluate how replenishment is currently being planned. So how long is it going to take us to dig out of the situation we're in? If we're in a negative situation or if we're building inventory, how long is it going to take us to bring that inventory level down? And so I'm going to pop into this chart here and this is going to show us our projection over to the future. Now I'm expecting, because we just had that really large production that it's going to take us a while to bring that down and so you can see how long it's going to take us based on our current demand plan to exhaust that inventory and we're all the way out until the end of the year, which is probably the end of our forecast horizon. So as we're going forward, what are some ways that we could work to optimize the planning output so that MRP is giving us really good results? Are our business behaviors accurately reflected in our business rules, are our master data and SAP so we can start to really manage this inventory. And so every material has its story and this is a good way for us to go in and see what's been happening and then work on trying to improve the process going forward so that we've got a good flow of material that's available for our customers without overstocking or overusing our capacity, our materials, our labor, our freight, or our space. Okay, so really cool to be able to do this both forward looking and backwards looking to be able to go in and find these graphs and charts and see what is happening. So in summary, we have covered how inventory, graphs and analytics will allow you to. Review the history of a material. Identify opportunities for improving the planning for the future. And, quickly grab statistics that are invaluable to us as supply chain practitioners. I would've loved to have made better use of these features right from the start of my career. I used to do so much of this work manually and you know what's exciting? The analytics suite and dashboard and capabilities that come with us for in Fiori just keep building on what we see here. So it's great for us to get a start in using these today. Thanks, Kristie. Yes, definitely a feature that I think all of us would've liked to have known more about and as they say, a picture's worth a thousand words. So if you want to know more about these inventory graphs and even other SAP capabilities, please feel free to check out our other videos and of course, if there's a specific question you have, please submit it below.

Is Early Really Good?

Discover the pros and cons of outpacing the schedule

5 min

New

SAP® ECC

Demand & Supply Planning

PTM; P2P

MM03; MD04

Hello there SAP gurus, Martin here with another episode of Reveal TV in which we're going to be talking about early deliveries. I mean early sounds so much better than late, right? It's less to contend with, less impact. Sure it's not on time or in full, okay. So have you ever found yourself without space at the line or incoming to a warehouse or even a storage silo? Then early is not really as good as we think. So there you go Jason, I've already given you an example right off the top that shows that early might not really be as good after all. But could it really be that bad? You take it away. I think you just gave a great observation on when it's obviously not good there Martin. What I would propose is that the cumulative impacts of being early do impact our supply chain in significant ways, but perhaps, even more importantly, offer us opportunity. I'm a glass half full kind of guy who hates to see potential wasted, and early deliveries give us something we can go after. The not so good news is the cumulative impacts of early delivery in constrained spaces, unplanned burdening of resources, and tied up working capital. We're going to talk through some examples today, and then we'll wrap by how we can look to reward the right behaviors. So let's go in and take a look. Okay, so let's prove this out a little bit, because it feels somewhat counterintuitive. When we say a person is always early, that's a tick in their favor for reliability. I remember my band director from high school always used to say, "to be on time is to be early". So sometimes we view always early as better than always on time. Now, here we are talking supply chain and I'm telling you early isn't always better. Let's look at a couple of things. Imagine you have a plastic injection molding department, or maybe you're a chemical company and you have a tank farm. You've got SAP set up to manage the replenishment of those tanks, and you're watching carefully to make sure that your schedule is in line with what's actually happening. You can see here we've got a max stock level of 44,000 on this particular item. But if your supplier shows up early, there may be nowhere to go with that delivery and so then what do you do? Here's another example. You have some labor and equipment constraints in your warehouse, you've done the hard work to level load some of the inbound shipments from key suppliers by changing over to a planning calendar that allows you to manage the volumes delivered by the day of the week. You'll see in this case that our planning calendar says we're only going to take deliveries on Wednesday through Friday. If your supplier shows up early, it may disrupt the labor and equipment allocation and get in the way of the unloading or hot loading One more. In an effort to maximize efficiency, the team lead on the shop floor decides to pull ahead in order. You can see this guy here has already started even though it didn't need to start until next week on the 21st. So they may not be aware of a priority for custom orders and may have inadvertently used material that you really needed elsewhere. Or maybe producing that order early was at the expense of pushing another order back, making it late, for example, these guys here needed to start two days ago in order to meet this 11/15 date and they have yet to begin production. Sometimes an order will also be early if the floor doubts that material will arrive in time, so they move one order forward and push that order out. There's nothing worse than paying for expediting and then finding the line occupied when the expedited materials are ready to roll. There are always knock on effects to being early, and you need to define exactly what early, on time, and late mean to your organization. I would be remiss if I did not mention the cumulative impact on inventory and carrying costs. Take a look at your cumulative goods issue and receipts diagram sometime and see what's happening. I wholeheartedly agree that a supplier, sister facility, or manufacturing floor that is chronically early is better than one that is chronically late. Much better, in fact. But I do want us to start thinking about the next step, which is dialing in on time and focusing on making that the chronic behavior of all of our partners. Let's reward the right behavior. Early may be good in some situations, but it's definitely not really good. Early sounds good, especially when our supply chain is struggling and we're chasing demand. But the very best thing that we can do for our supply chain is make it predictable by adhering to the schedules we have put out for supplier deliveries, manufacturing, or stock transfers. When we want to set our expectations for early and late, clearly communicate them to all of our partners throughout the supply chain. And where there is consistent and reliable opportunity to reduce lead times, especially for those of us who haven't done so since the pandemic, we should update SAP with revised rules to stay more firmly in line with the behaviors. Thank you, Jason. There's some really important things to consider here. We want to make sure that we have consistent, reliable schedules that are up to date and well formed by the rules we have in the system. That keeps us investing time, space, and working capital on the best flow of materials to meet our customer needs. So once again, thanks a lot. Hey folks, if you want to know more about whether something's good or bad, please check out our other video catalogs. And of course, if you have a burning question, feel free to submit it below.

Is a Material Living Its Best Life

Boost planning quality with easy-to-access key performance indicators

10 min

New

SAP® ECC

Demand & Supply Planning

MM; PP

MD04; MM03; MC42; MC43; MC.9

Discover top KPIs that drive productivity and transform your team's performance

Hey folks, welcome to the video that unlocks and reveals the hidden value in your SAP system. This is Martin, welcome back to the conversation. Today we're going to dive into the tricky topic of KPIs. If you can't measure it, you can't manage it. We've all heard that before. It's about intentionally managing and improving what we have. In this Leaders Digest demo today, we're going to discuss what it takes to put KPIs to good, productive use. When we are looking for the right KPIs to drive our business, we have no further to look than our friend Sean. He is the master of balance and focusing on the widely important things. So Sean, can you help our leaders find some productive KPIs to dig into as we're looking to improve our teams and the use of SAP and ultimately have a path to achieving business outcomes? Sean, tell us more. So Martin, did you know that SAP is always talking to us? It's giving us so much information that sometimes it can be overwhelming. Oftentimes we don't know where to find what we're looking for. So as leaders, we actually force the team out of SAP and into an online report or spreadsheet. We ask them to spend time on pulling data out. And I'm here today to talk about driving activities back into SAP. There's no one metric to rule them all, but there are important KPIs that can be brought together to drive our improvements. As leaders, it's critical that we look for conflicts and help the team understand how to approach outcomes in an integrated way. The other point I'll make before we jump in. It's very important to target set the focus on getting metrics that are trending in the right direction. For some of those KPIs, it's not the discrete number that we're going after, rather it's a time phased incremental improvement. Right, so let's go in and take a look. Now my intention today is to spark some curiosity as to what some of the KPI summaries look like in SAP. For this, I'm going to look at the material analysis tool key figures that are available in one of our report options, MC.9. And so here I'm going to run this report, and we'll get some results in a moment. And from that for this exercise, what I'm going to do is I'm going to focus on a single MRP controller and let's choose 008. There it is, so we've highlighted 008. And what we want to do is open the key figures that are available to this report. So if I go to extras, show me all the key figures. There we go. Look at that. Now, before we look at some of the details, let's remind ourselves as leaders, we need to use KPIs productively , to focus the business on collaborative outcomes that are going to bring balance, direction, and buy in. And in that way, try to minimize or avoid competing KPIs. Several typical competing metrics within the supply chain management arena often arise due to differing goals between various departments and functions. Think for a moment on inventory turnover versus customer service level. So higher inventory turnover aims to reduce stock levels, while high customer service levels requires that we maintain a sufficient inventory to meet that demand. And if we take a look at these particular measures that are out here, down the bottom here, we can see the stock turnover. So the valuated stock turnover here is running at about 13.2. Wow. I would argue that 13.2 is a pretty good turns rate that we've got. So inventory turnover seems to be doing quite well here, but it is potentially one of those that runs into conflict with the customer service levels. Then you can think for a moment around production efficiency versus flexibility. Or we could argue cost reduction versus quality improvement. Maybe order fulfillment lead time versus manufacturing lead time. And then of course, the capacity utilization versus on time delivery, and in that regard, we see that quite often that maximizing capacity utilization can also lead to lower flexibility, and then that runs into conflict in ensuring a high rate of on time delivery and getting to those rates. Okay, so I think we get a good sense of the potential and how we can run into conflicting KPIs. So if we continue to look at some of the key figures here that are used to inform, direct, and report on around what these KPIs look like. Let's consider the valuated stock coverage, for instance, you see this one here, valuated stock coverage, that's our days of supply. Now, very often we have a days of supply metric that says we want to carry X number of days. And this is where that opportunity exists for us to check how well we are doing or how badly we might be doing against it. Are we achieving those goals? Are we way above? Are we down below it? What is the situation? Because we one, don't want to carry too much, but we also don't want to affect service levels at the end of the day. The second one we might want to think about is the link between total consumption, and let me take you up there. If we look here, total consumption, there it is. So we've got 63 million and against that, the valuated stock coverage. So where's my valuated stock coverage down the bottom here. Value added stock coverage of 36. So we can start to see a relationship between that and if we take it to the mean valuated stock value, which is this up here, mean valuated stock value of 1.2. That 1.2 against the total usage of 13 million. That's almost showing us the turns rate. Think about it. Consumption divided by average gives you a turns rate. So that's the 13 divided by the 1.2. Then of course we have safety stock. So safety stock we need to say well is our strategy correct? Are we running too high? Are we running too low? But we have an opportunity to use these key figures to tell us that. What about the number of cancellations? If we look up here, number of cancellations 876 cancellations. And so we would ask, were we unable to make it on time or meet the full demand of the customer? Do we need to have a metric where we're going to look at reducing cancellations? Those are part of the conversation that we need to have as we go forward. An interesting one as well here is around the valuated stock receipts value. So if we look here, our receipts value is at 17.863 and our issues value at 17.8. Well, that looks pretty good. Because it means that which we're receiving and that which we're issuing out is very close to one another. And if that's true, then it could suggest that we are not building excess inventory. And we might then want to say, well, hang on, is excess inventory a metric that we want to track? In some cases, very definitely, we want to track excess inventory. But this here shows us that those two seem to be in a similar place right now. What then about the unplanned quantities? So if we look over here, there are two measures in here. There's an unplanned quantity usage and there's an unplanned consumption of about 9 million dollars. And that starts to raise some questions. Why have we got unplanned consumption? Is this a reflection of a breakdown between my plan and my actual, and is this going to be something that we need to consider in terms of a metric going forward? So as we consider productive KPIs, an example that's been top of my mind recently is the challenge, or maybe it's the fun, of being a production scheduler. Now think about it, as a production scheduler you're charged with balancing service levels, inventory performance, and efficiency throughput. Not an easy ask, is it? By a long stretch. No, it isn't. But as a leader, what we need to do is we need to help in the conversations that guide our teams along all of these metrics that are out here. We need to encourage them to work hard, to improve the quality of planning and the use of SAP itself, not getting outside the system. And in that process, we need to empower our people to to make the right decisions for business improvement and then work with them to ensure KPIs are aligned rather than in conflict with them. And so folks, as a final thought, let's suggest that rather than just have a fixed target, that as leaders, we work with the team on the trending in the right direction and on incremental percentage improvements. I think that's the key. Incremental percentage improvements. And this will give them a gliding path to the desired outcome. It will increase motivation and certainly build success in our organizations. Wow. I really enjoyed that. Now here's some closing tips for those of you who are trying to lead and support your team. First, create good daily habits and find the impact on the metrics. Celebrate the small wins and be curious on how the team achieved them. Work on the problems and be curious about how you might remove the hurdles and support the team in their success. Watch out for stagnation though. It's likely means the daily habit hasn't yet landed where it needs to be. Your job, provide clarity, support, and be to the team showing genuine curiosity in their journey as evidenced in KPIs that are productive and drive to the outcomes that you're looking for. Hey, once again, Sean, thank you so much. The importance of getting this right is often undervalued and it's a big missed opportunity for a lot of organizations. I'd wager most folks listening to this could uncover hidden opportunities in the organization simply by reviewing some of the highlights from this video in their business. Can't wait to hear about some of these outcomes. So folks, if you want to listen to more Leader Digest related topics, check out our other video catalog. And of course, if you have a specific question, feel free to submit it below.

Leaders Digest: Transactional Data Integrity

Unlock performance potential by starting with a clean and healthy SAP system

DM; P2P; PTM; OTC; WM

MD04; MCPU

Martin: Hey folks, this is Martin and this is another installment of Leaders Digest where we are going to provide some insights to leaders in digest form. The topic we have for today is all about improving the quality of information in your system so that you can do the things like allow the system to produce realistic plans for you, or make a promise and keep a promise. It reduces noise, manual interventions, and improves clarity. It's incredibly important that we know how to foster a culture that values data as an asset that empowers decision making. Today is all about the integrity of our data. So Steven, what should our leaders know about transactional data integrity? Steven: Yeah, thanks Martin. Integrity is such a good descriptor for what we're trying to achieve with quality master data. Have you ever heard your team express that the system is lying to them? It's a common way to feel, but the truth of the matter is that if SAP's wrong, then it's because we have fed the system with incorrect or untrue data. Not the other way around. Keeping the system up to date with current information is a precursor for any digital transformation journey. When integrity is lacking, it is the bringer of chaos. And with each incremental improvement, we build trust. We shore up the foundation. And you as leaders have an awesome opportunity to promote awareness and drive focus within your teams to keep the system up to date and clean. You can build a culture that is invested in enablement and understands the cross-functional impacts, timely transactions, and visibility into upcoming demand and the requisite supply. Let's go in and take a look. Can we trust SAP? Well, yeah, it's a system, it has no bias, it only knows the facts, right? Now, can we trust the data in SAP? That's probably more of a a maybe, it depends. We hope so, and we can certainly validate the quality of the data. So if this is a right to play, a first step to conquer, to get the quality proposals for replenishment, making good on our promises and being able to drive insights from the system to make decisions in real time. Why is it so hard to get there? Well, first of all, data only gets better if you're using it. Now we're getting to it. Got a chicken and egg conundrum here, and team members lose faith when they try to keep the system up to date and there's not good cross-functional alignment in that effort. We succeed or fail as a team. It's the integrated nature of things. So here on my screen are some outdated demand elements, which are triggering exception messages for our planners and buyers. They can't hit a date in the past, so lose faith in the signal, which erodes their confidence in putting MRP to use in their day-to-day lives. Now signals lost, value gone, quality continues to decline, but the moment you can commit to using the information, the moment you focus on it and back it with daily work, so it becomes a habit, the healthier the quality becomes. If it's in use, it matters. Here. This is interesting. See this pattern of actual production in this candy cane graph. This measures our schedule adherence. All of the production seems to be happening at once. Then there's a gap and another slew of production comes through. I bet if we dug into the details, we'd find that we're batching our production reporting. There's several reasons why this happens, but I'll highlight two here. Lack of equipment or access on the floor, or reliance on a batch integration from an MES system, or lack of confidence in the ability to accurately report based on the quality of master data that supports production. This is a great opportunity to make improvements in focused bite-sized chunks, progress over perfection. There are many examples we can identify and improve the integrity of our transactional data. If you're looking for a place to start, check out our videos on housekeeping, COGI, the Sales Order Monitor, or the Warehouse Activity Monitor. These are all diagnostic tools that help us identify where we're hurting and break the work down in a way where the improvements are impactful and the team can start putting better quality data to use in their day-to-day lives. Here's one last tip. Without transactional data integrity, it's difficult to demonstrate that you have good controls in place. Taking steps here pays dividends to the integrity of your plans, financial controls, service levels, and inventory management. You can have a healthy system. We've seen hundreds of organizations achieve and sustain these gains. No one likes driving a car with dirty oil. It just never performs the way we want it to. And the worse it gets, the harder it is to clean up. When it's time to get serious about investing in data reliability as an asset, we recommend focusing on progress over perfection. Don't let your team get sidelined just because there's so much to do. Start small, create momentum. Let them see and feel the results. Show them that this kind of hard work pays dividends, not just for their desk, but for their colleagues as well. There's a ripple effect of goodness that comes from this hard work. Before I let you go, please don't make this a sprint and erode effort. Focus on the cultural shift and the move to well cadenced daily habits. That's the way to get real about data. Martin: Hey Steven. Thank you. This is kind of like the right to play stuff that we're talking about. If we don't build the foundation, then we limit our ability to grow, but with investment in the quality of data and the focus of empowering decision making, we can really make a difference and a change in our conversation. This is the path towards achieving business objectives. So folks, if you want to know more about this topic or even just some other leadership digest topics, there's a whole catalog of videos about this, please check them out and if you're not sure which ones to look for, use the chatbot.

Optimizing planning cycles, costs, and inventory investment

Welcome to the video service that unlocks and reveals the hidden value in your SAP system. Hi, Martin here and in this video we're going to focus on key master data rules, lot size keys. Lot size keys define where the MRP will accumulate quantities and the timing of proposals for replenishment. And as we know, the best way to learn is by doing so Kristie tell us more about lot size keys. Oh, Martin, lot size keys are often misunderstood and commonly underutilized. This key master data field sets the stage for replenishment and there are great use cases for the different types of lot size keys. Today we will touch on. The different lot size keys. Review where to find this key information in SAP. And provide some tips on how to get more value out of this underutilized key rule to empower MRP. One of the key planning rules for our MRP run relates to our lot size keys and today I want to go through and show you where to find this in the material master and then talk you through a couple of the different options. So I'm starting here from my stock requirements list, of course, because this is where I spend most of my time as a planner or buyer and I'm actually just going to go in and take a look at this material. Now if I was just going to display, I would double click, but I think we're going to do a little bit of changing here, so I'm going to go to environment and say change material. and my lot size key lives on this very first MRP view. And there are really three different kinds of lot size keys, or categories of lot size keys, and I want to break them down for you. So the first is a static lot size key. So this is going to be things like a lot for lot order quantity. It's going to be things like replenish to a maximum stock level. These are the kinds of lot size keys that we will be using if we are going through and have a static way we want to replenish. Also things like fixed order quantity which is what this guy is set up as. So let's say, for example, you always have a truckload of product coming in. You're going to have a fixed lot size with a fixed order quantity and MRP is only going to give you proposals for that full truck, or half truck, or pallet, or tier, or layer, or whatever the case may be, but you know that you are only ever going to order and lots of that. So you may get multiple trucks for the same day but you're going to get a proposal, a replenishment proposal, for exactly that amount. Or you might have something like a lot for lot, and so it's going to look and see what that requirement looks like and if you need 2,000 units to supply production then it's going to look at that value and then you may have something like a rounding value or a minimum order quantity that is also going to go into play. So as soon as you see that you have a need for those 2,000 and you are required to order 2,200 it will follow those rules. So it will say, next proposal and then what is my MOQ and my rounding value. Another good example would be something like an HB, which is replenished to the maximum stock level. So maybe you're working with a min max, let's say for example, you are dealing with constrained storage, so maybe like a tank or a rail car or something, and you're going to say, okay, as soon as I hit X volume in that tank then I want to replenish to the max, I'm going to go ahead and fill it up. This is often used sometimes with giving signals to our VMI suppliers, they are managing that for you but it gives them a good idea of what your forward looking plan might look like. The next kind of lot sizing technique is a periodic lot size. So now we're gathering requirements. So we're going out and we're saying, I want to supply for that entire day. So I might have multiple requirements within that day, I'm going to produce a daily lot size, and again this can work with minimum order quantities, or rounding values, or maximum lot sizes, okay? So based on what those rules are for your supplier. Or I might be doing a weekly bucket, or a monthly bucket if it's a really, really low volume item and I'm only going to order it every once in a while, so those periodic lot sizes. Now, those generally will work in combination with what your planning cycle is, so how often you're placing those orders with your suppliers. And to protect against variability and volatility, we ideally want to place orders in the smallest quantity that is economically feasible and as often as possible. So really focusing on the richness of our mix to help mitigate the variability and volatility that we might be seeing in demand. So based on that ABC and XYZ classification or segmentation of your goods, that's going to help you to get the right assignment in place. The last type of lot size or last category of lot size would be something like an economic based lot size. So you might be running one of the statistical algorithms to help you to figure out what the most economical order quantity would be. Now that is a more advanced technique, so that means your master data is beautifully clean, we've got a high level of trust in MRP, and now we're ready to start allowing SAP to put some of those economic principles in play for us. So really more of an advanced technique once you've gone through the others. One other one I will highlight for you that is also a periodic lot size, this is PK. So let's say that you need to control your amount of goods coming in on a particular day or you need to divide what days particular suppliers are going to be delivering to you or you have a supplier that only delivers on a particular day. This is where you set up those planning calendars to say this supplier is delivering Monday, Wednesday, Friday, but never Tuesday, Thursday. You're able to go in and set up those kinds of calendars to help manage that influx of goods. This is also very effectively used for trying to balance out how you're receiving inbound goods across the week so you can manage your workforce or your dock doors and that will help play into what's happening with the warehouse. So oftentimes this is not richly populated in the material master and there is a huge opportunity to be able to use these different lot size keys. You will want to use each of the fields that are available to you to reflect the rules of your supplier. So for example, don't use a monthly lot size because your supplier has a higher MOQ. Think about your replenishment cycle, think about how often you're going to place your orders with your supplier, and then use your MOQs and your rounding values to reflect minimum order quantities and the rounding values associated with it. Your rounding values are really your container sizes, it helps to play into your price breaks you maintain in your price conditions, but that MOQ is the smallest amount that you would purchase and then you're going to use the amount of gathering, so if you're gathering a day or a week's requirements together in order to place that order with the supplier. So those are three different categories of lot size keys used in conjunction with several other settings in the material master in order to drive your planning, but this is a great way to go through and model your procurement strategy and start to work through these pieces together. It's also incredibly helpful as a planner, as you're setting up for manufacturing, you're going to tend more towards those EX lot sizes, or very small buckets of periodic lot sizes, if any periodic lot sizes at all. So, in summary we have covered. How applying a quality lot size key allows you to drive better plans for replenishment. Meet a variety of different business needs. And be set up for success with your suppliers, sister facilities, and the manufacturing floor. There is so much goodness in this topic that we will most certainly be back for further exploration in another video or three. Thank you Kristie. Driving synergy across the different rules for planning is the fun part. We can definitely put MRP to work for us and start to drive better results as we explore the options here. This is a key one for managing working capital and reducing manual interventions. So folks if you want to know more about how to use lot size keys or any other feature in SAP please feel free to check out our other video services, of course if you have a question please submit it below.

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