Demand & Supply Planning

Demand & Supply Planning

P2P; PTM

MD04

Hey there, my name is Martin, and in this video, we'll be discussing what to do when you have more than one realignment or rebalancing exception message. When MRP controllers are first getting started in daily exception monitoring, it can be frustrating and often confusing when you see more than one exception message. That's alerting you to the need for rescheduling in, rescheduling out, or even cancelling. All in the same material. So I'd love to hear more about this and how we can do this quickly and really understand when to resolve and how to resolve these planning situations. Patrick, I couldn't think of anybody better. Why don't you tell us more about this? Definitely, Martin. I knew that this was a challenge for me when I was first getting started with exception monitoring. Come on SAP, what are you telling me here? Move this one in, move that one out um, and cancel this one over here. The good news is that there's actually deep opportunities in these exception messages. And once you're comfortable with reviewing the full planning situation for a material, rather than just responding to a particular exception message, it can become really powerful, even if there are several that seem to be in conflict on the same material. Let's go in, take a look, and figure out what to do with these. Before we get overwhelmed by the exception messages that we see on the MD04 screen, let's try to figure out what's really happening in our supply chain. In my personal experience, I find it helpful to take a look at the whole picture before jumping into any conclusions. The MD04 stock requirements list reminds me of a checkbook. First, I want to look at my stock balance. In this case, we have zero pieces on hand. It's like I have no money in my checking account. As we look at the next MRP element on the list, which is here, a forecasted requirement of 500 pieces we can see that that's April 11th, which is today. When MRP did the math and looked at the fact that I had 500 pieces that were supposed to be consumed today and saw that I had no inventory on hand, it showed us that our inventory balance would come down to negative 500 pieces. So if I go back to the checkbook example, if I had no money in my checking account and I tried to cash a check for $500, my account balance was going to go negative by $500. So if I don't find a way to put $500 in my bank account, we're going to have a problem. So before we panic, let's continue reviewing the information on the screen. The next row of data shows that we have an open purchase order for 1,000 pieces scheduled to arrive on April 18th. MRP did the math for us again, and it realized that if you were negative 500 and you brought in 1,000 pieces, you would actually end with 500 pieces on hand. However, we needed that inventory on April 11th. It's giving us one of the most common exception messages, which is 10, to bring the process forward. If we bring those 1,000 pieces in, sure, we can satisfy that 500 piece demand, and we'll end up with 500 pieces on the shelf, but we're not going to be able to meet the demand on the day that we need it, which was April 11th, we should be looking to pull this forward. Obviously this can happen for a whole lot of reasons. Maybe our recent sales were higher than expected. Maybe our forecast in the current period is higher than expected because we're expecting the business to take off. Maybe we had some inventory and then we had an inventory write off during a physical inventory. A whole bunch of reasons that we might get exception messages. But in this case, at least we know that the supply chain is out of balance. And this exception message number 10 is letting us know that we're going to have to expedite something. So let's make a mental note about that and continue on and look at the rest of the picture. So when we look at the next MRP element, it's another purchase order. This one is due on April 30th. And this one's for 500 pieces all the way over here. So that's great. When we bring in 500 pieces on April 30th, we're going to have a 1,000 in inventory. But the thing is, we don't need a 1,000 in inventory. We don't have demand telling us to bring in a 1,000, so we've got an exception message again. In this case, it's a different kind of message. It's an exception message 15. And that message is to postpone the process. So in this case it's telling us, take this purchase order and instead of bringing it in on April 30th, let's bring it in on June 1st. The first one we're supposed to pull that one in, the next one we're supposed to push that out. Things are looking a little bit out of control, but for now, let's not overreact. Let's just make another mental note for ourselves and continue going on down through the list because it's always important to look at the whole picture. So with that in mind, the next thing that we're going to see is a 500 piece demand over here on May 1st. And thankfully there's no exception message on this one, finally an MRP element without an exception message. So good news, the inventory will be decremented by 500 and we'll have 500 left. So fantastic, but we can't stop here. So let's carry on. The next thing we see is another purchase order. This purchase order for June 1st, but we have another exception message. This exception message number 20 is actually a cancel message. And I'm sure as you look at the screen here, you could probably tell why it's asking us to cancel it. We have 500 pieces in inventory. When we bring in 500 on this purchase order, we'll have a 1,000 in inventory. And then the only demand left in the system is on June 1st for 500 pieces. So if we bring in that purchase order, we're going to be left with 500 pieces on the shelf. And unfortunately, we don't want to end with 500 on the shelf, because we don't have demand for that. So I think we need to figure this whole thing out. We've got the whole picture in front of us. So, we don't need this purchase order. In this purchase order, we need to pull in. In this purchase order, we need to push out. We actually don't need to overreact. We're getting close to the end here. Even think about this on this purchase order with the reschedule, you have a reschedule pull in, you have a push out, and you have a cancel message. Maybe if we execute to that cancel message, it will provide our vendor some capacity relief. It can let them prioritize other materials that we actually need. So maybe it's a good story that we have all these different messages. Again, bottom line, SAP is keeping us in line. So now that we've looked at the whole picture, we've got the whole scenario, we've made some mental notes. I think I know exactly what we need to do. We have an opportunity to reach out to our supplier and to communicate that whole picture. Basically, we have to ask them to do everything we see on the screen, but all in all, it's a pretty good news story. We're going to ask them. If we can pull in this purchase order number ending in 157563, from April 18th to April 11th. And then we're also going to ask them if we can push out this PO, which ends in 726, from April 30th to June 1st. And then finally, when we've done that, we will ask them if we can cancel this purchase order that ends in 887. And once we've done that, we've had our full communication. And honestly, now that I'm thinking about it, hopefully you agree that wasn't too bad. So that's all I have. I got to go and just wish me some luck with that phone call to the supplier. So in summary, what we've covered today are three messages that often co exist on the same material to show our scheduled supply is either running ahead, behind, or no longer needed. We briefly discussed some of the common causes, the opportunities that these messages can create to prioritize, or provide capacity relief. And some suggestions for how we might resolve them. Thank you for allowing me to give you the tour. Thanks, Patrick. For MRP controllers, these messages provide daily insights to support decision making. And understanding that we should review and resolve these entire planning situations rather than a single exception message. Once again, thank you. So folks, if you want to know more about this exception message and all the other exception messages that exist, please check out our video catalog. If you're not sure what video to check out, ask the chatbot.

Demand & Supply Planning

P2P; PTM

MD07; MM03

Greetings supply chain enthusiasts, Martin here. And today we're on a mission to uncover the hidden value in your SAP system. So buckle up and let's get started. In this video, we're going to deep dive into 3 key things that an MRP controller should always know or be aware of. So Dave, tell us about these three things MRP controllers should know or be aware of. Hi Martin. Do you know how often I've experienced MRP controllers finding themselves a little lost in the weeds? There is so much going on in the day to day that it's easy to lose the plot. In this video, I'm going to highlight 3 key things that every MRP controller should know. First, we need to know who is responsible for the different MRP elements that show up in our planning. Who can we go to when we need help? Second, we need to know where we are behind on our work and work to bring that current. And third, we need to know what's new, what's changing from a business perspective, what's new since last night, what is the news of the day? We've got great tools at our disposal, so let's go in and take a look. Some of the most common inventory control questions a business leader is going to ask revolve around, who do I go to get a supply answer? Especially about materials that are in short supply or overstocked or holding up my production. Why do I have so much inventory of material? How long does it take to make or procure this item? Who's our most reliable supplier? Why are we making so much of this material? Or conversely, why are we making so little and constantly can't supply customers on time? All of these questions revolve around an MRP controller, he's a key person in the supply chain. In terms of planning and procuring, the MRP controller is one of those key personnel we need to have complete expert knowledge of a product we can rely on to help in key decisions. Now, how do we get to these MRP controllers and what do we do with them? Grouping and prioritizing. Typically, an MRP controller is either a planner or a buyer in some cases, a planner would handle internally procured materials and a buyer will handle externally procured materials. In some organizations, you could find one person doing both the internally and externally procured materials, but rare. The assignment of a material in a plant to a MRP controller is used to clearly define who is responsible and accountable for that product in terms of demand and supply issues impacting the implied supply chain, which ultimately impacts your overall profitability. SAP allows us to assign unique MRP control IDs for each material plant combination. We do the assignment in the material master field, MRP 1 designated for MRP controller. Let's have a look at what that looks like and where we do it. I'm looking at the material master, MM02, I'm looking at a material. Go to MRP 1 for my plant, and I have an MRP controller field designated. So in our instance, we have 001 Adam Kane. I can modify these on a weekly, monthly basis, typically, you want to assign that person responsible for these materials. So what does an MRP controller do? MRP controllers are either planning, scheduling, or buying materials, and because of these functions, they need to know the demand and supply related issues to the products they manage. These issues we trap in exception reports, these exceptions are generated by an MRP run. So how do they perform these important functions? MRP controllers have an arsenal of reports, which can be run at an MRP controller level for both a planner or a buyer, and they include stock requirement lists in different reports. MD04, MD06, MD07, or production COIS and CO24 for missing parts. The objective of using these tools is to help the MRP controller balance the supply chain, the supply and demand in his area of expertise by finding and managing exceptions that have been unearthed in the MRP process. Exception groups collect exception messages planners and buyers need. These exception groups are created at the time of an MRP execution. MRP is actually capturing these exception messages, advising of planning terminations, planned or production orders with due dates in the past, or exceptions during rescheduling, exceptions during availability checking. Let's have a look at some of what an MRP list would look like. I'm going to use the MD06 transaction. I'm going to put in my controller and I want to look at exception groups, in this example, I can choose what I want to look at. I look at new opening dates in the past, new start date in the past, new finish dates in the past, which are all messages or I can look at terminations. Execute the task for my plant and I now get a list of materials that have been assigned to my MRP controller, I have my exception groups and I have the count of exception messages in that exception group. I can now at this point drill down further into those messages to find out what they are. We're going to tackle that in further discussions. Using MD06, I as a planner can input my controller ID, I can input the plant that I'm working in, I can input what exception groups I want to see, I can input material data, and I can execute this task and look at the messages that are generated. I'm going to take one material that I, have issues on FG126-AB. I can double click on the material, I can see that I have overdue planned orders, I have a independent requirement that is well overdue, that's been satisfied by this planned order. So that's my only demand I have. I have planned orders out into the future and I can see that in this instance this planned order is being created 03/20 for this demand element. I have a stock transport requirement, this Ord.DS, which is generating the planned order. So this is my immediate feedback. I can see that these orders are overdue, I have to do something soon. Either I decide on, am I going to supply this STO, or I'm going to advise the buyer who initiated this and cancel the planned order. This exception message is giving me a great look at what's happening in my area of control. So in summary, if we focus on making sure we know these three key things, then this helps us to. Continually improve the quality of our planning and our supply chain outcomes. We have to acknowledge that sometimes the truth hurts or really bites. Our supply chains can get disrupted. Things may not go according to plan or our customers might surprise us with good or bad news. Last but not least, and I know this goes against many of our natures, but we need to focus on progress over perfection, or we'll never get to the wins. Motion builds momentum. Thanks Dave, much appreciate that. Especially that last point, it's so true. 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 need to know more about this particular topic, there's plenty more to go. And if you have a suggestion, please post it below.

Demand & Supply Planning

MM

MB52; MMBE; MD04; MC48; MB5B

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 be trying to discuss five ways to review inventory in SAP. Clearly keeping your finger on the pulse of what's happening with our investment in inventory is critical to the success and to our business. SAP has so many reports that allow us to see what's happening. I'm actually interested to see which ones we're going to choose today. So Kristie, why don't you show us a couple of these specific reports, and do we really have five different types? Why yes I am, Martin. Five is really just the start. There are so many great ways to look at inventory in SAP, and it really just depends on what question you're trying to answer in that particular moment, I think we all have our favorites. Today, I'm going to cover. Five of the most common transactions we look at for inventory. What information in each one is best for. And for a feature or three that folks might not yet know about or have in their daily repertoire of analytical goodness. Let's dive in and take a look. All right, five different ways to look at inventory. Let's see what we can find here. So first of all, we are in MD52 and if you're following along, the transaction code is going to be in the lower right hand corner of the screen. And we're going to go through these five transactions and get a good idea of what it is. So this is your perpetual inventory. You would run this for either a selection of materials or across an entire plant or looking at a storage location. You can see here you've got quite a lot in terms of selection criteria. You can also bring in your special stock. So in this case, I've chosen to bring in Vendor provided stock, so things that I've got out at the subcontractor, I want to include those. Making a choice not to show any type of zero stock lines, so don't show me those and then down at the bottom I have the option to set up my display and either a hierarchical representation or a non hierarchical representation. These are good to play with and understand the difference and then you can also assign a default layout here as well. So perpetual inventory is great for looking to see what your status is as of right now. It allows you to look across a lot of different materials and it will run and bring back for you a wide variety of information. So you can see you've got material number, plant storage location. This is that special stock indicator. Coming across here, if you've got the supplier attached to that in the case of choosing a vendor provided stock, your unit of measure, and then all of the different types of stock that is available to you and you're going to see this both in units as well as in dollars. So again, this layout is highly adaptable, you can see here that you're able to go in and adjust it just like you would in any other transaction. But you're also going to be able to see things like what's in transit or in transfer, what you have in block stock and quality inspection stock. This is great for where are we today? Going into a physical inventory and freezing the books, knowing where you are ending and you're cleaning up going into a physical, so making sure that you've got good line of sight on what's going on with all your in transit and in transfer items. You know what it is that you're going to do there, so you don't accidentally miss that when you go to do your account postings, you've accounted for everything, you've cleaned as much of that up as possible. Same thing with block stock and quality inspection stock. So really useful transaction that is really regarded as the number one way to view your perpetual inventory. Okay, so loads and loads and loads of different options here in terms of the layout and what you can go through and include. And remember as well that you can adjust the position by just adjusting these numbers here if you don't want to have to drag and drop, as well as the length of your fields. This is a really nice way to be able to work with your layout and then you're able also to do subtotalings and totals in which case you're going to get this line two and line three depending on the front screen if you've chosen hierarchical or versus non hierarchical display. So I'd encourage you to play with both, because they're both there for different reasons. So that is MB52. Now let's go back to our stock requirements list. Here we are. And I want to show you a couple of different things that we can see from here. So first of all, this is an inventory report unto itself, right? It's telling us what our current stock is. It is also telling us what our projected stock is. And we can even get to a graphic that is going to show us a green line of where we're expecting our stock to go. And I'm going to go ahead and just choose our available quantity and that's going to bring up a chart for us so that we can see what our anticipated inventory level looks like across time. There you are. And you can scroll out and look way out into the future to see what is going on with your planning. Another option here is if you see these golden cubes appear, this means that there is additional stock out there. So if you click on this, this is alerting you that you've got stock in some place that you're not seeing as part of this available quantity. So in this case, it's block stock. So in addition to the 1, 700 pieces, we have an unrestricted use stock that's available for planning. There's also an additional 5, 500 that is hanging out there in block stock and we want to make sure that we're aware of that and that we're asking questions around whether that is going to be returned to use or what the plan is for disposition. And block stock should be the things that we should not be counting on, so it's excluded from our planning. We also might have some other categories here as you can see, there's a bunch of other options and so those golden cubes appear when there is other stock out there, we want to make sure that when we see that it's really an exception, we want to go in and take a look at that and see what's going on. Another place that we can go from here is our current stock status. So here, let's click on just the stock line itself, and I can see down here at the bottom, that's another way to get to the same place as the golden cubes. I can go to stock overview. What this is going to do is actually pass me through to MMBE and this allows us to see for that particular material, we can see where it's sitting, all the batch information, if it was across several different MRP areas or storage locations, you'd be able to see that. In fact, let's go back and pick one where we have some of that going on. I'm just going to pick a different item from the list and go to the same place. I'm able to quickly do this so I'm going to go ahead and choose this guy here and again, I'm going to double click on stock and go to stock overview. The other way I could do this is up at the top in the drop down menu. I can use go to to get me there. And you'll see here, this is focused on units rather than dollars. So if you think about the perpetual inventory, that was our giving us our on book value. This is giving us our units, so this is much more focused from a planning point of view, or a sales operations or warehousing point of view if you're not using warehouse management. If you're using warehouse management, obviously there's much better transactions to be able to see where your inventory is sitting. But really nice to be able to go in and take a look at this. It will have your batch information and it's going to have any splits across MRP areas. It's going to break this down a little bit further for you and you can again modify the order of these columns to make that process easier. All right, let's go to another one. From here, I'm going to go ahead and actually switch a navigation profile on, and if you haven't seen that video yet, go take a look. And I'm going to go to environment and navigation profile, and I'm going to say assign, and I'm going to pick, that's going to bring up a bunch of stuff for me, and I could go to MC.9 and I actually think today, that would take me through, so if I click on that, it's going to default in all the information for me, so I can go into MC.9 and look at my inventory. But I think I'm going to keep this even simpler for today, and I'm going to go to MC48. So, let's do that. Slash N, M, MC48. Alright, and it's brought my material number over, and I'm going to choose this plant. And this is going to give me my current inventory. MC49 will give me my average inventory. And so here is my current stock value. So if I needed this rather than in units, but in dollars, I could do that and then I can get to units from here. I'm just going to click on this guy, and I'm going to go to double line, which is going to bring up more statistics for me and it will tell me that this is this dollar value is made up by these 665 pieces. I can then even go into detailed display, select my item, detailed display, and I can choose stock level, that is going to give us our famous red line graph and it would bring up that visual for us. Okay, so really good stuff there. One last one I want to show to you. This one's very helpful, stock as of a particular posting date. So I'm going to go to slash n and I am going to MB5B and in this one, now, and this is a very common question, you can actually go back and look at your stock value based on a particular selection date. So you can put in the dates that you want to look at, or the date range. So let's say you're looking for a particular end of period value. You're able to put that in, and what it's going to show you if you put a range, is it's going to show you how many issued, how many receipts, and then what your value was on those particular periods. So really nice to be able to go in and say, hey, what was my stock value the same date or the end of month, the same period last year? And you're able to quickly go in and there is a ton of selection opportunities here. So storage locations, so if you want to see things in units, your evaluated stock, special stock, and then evaluated stock if you're in a consignment environment that's particularly helpful, and then you've got all kinds of scope of lists and settings here for what it is that you can see and then you can assign layouts. So, this one we could spend a couple videos on just going through the different selection criteria, but I just want you to be aware that it's here, MB5B, and this is what allows you to see your stock as of a particular period. So let's quickly recap. MB52, perpetual inventory, that's the first one we looked at and probably one that you're very familiar with. This is where we can see our value and our units based on a plant or other organizational object. Really, really helpful for getting snapshots of inventory when we're going into the end of period, or if we're going through a process where we're expecting to see some changes and you need to get it before and after screenshot. MMBE is where we're able to go in and see the details of a particular material, break all that down to batch level. We can do that in MB52 as well, but MMBE displays that in a little nicer way when we're looking at a particular material and we're really deep diving into the details. MC48 allows us to run our current stock value. We can run this across an entire plant or for material across multiple plants. This is going to allow us to see dollars and units. We have to go to the double line display to see the units. It's also where we can get our red line graph. MD04, we can get a green line graph representing our future forecasted inventory position. We can look at the gold box to see if we have stock that is in a non planable location or in other places other than unrestricted. And then lastly, MB5B, the transaction we're on right now, and this is the one where we can see, based on a particular date, what our stocking position was, or look at a range and see the puts and takes from point A to point B. Lots of different selection criteria here. Welcome back! I really enjoyed putting together this overview. There is so much untapped potential in SAP when it comes to reviewing our inventory investments. Today we focused on. Some of the basics as a jumping off point. And tried to offer a better context on where these staple report's best feature in our quest to efficiently balance supply to demand. And lastly, we pointed out a few tips that have made life easier when we've used these particular transactions in our own supply chain lives. I can't wait to hit some more. This has really been the tip of the iceberg. Yeah, I agree, Kristie. So much to explore here. But we have to start somewhere and understand where these common use reports fit into our ability to review our inventory investment. The accuracy and the placement is vitally important. Good stuff. So if you want to know more about this particular topic or any other topic related to SAP and inventory, there are so many videos in our catalog please check them out and if you have a burning question, please submit it below.

Demand & Supply Planning

DM; IBP; P2P; PTM

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, this is Martin, and in this video we will focus on supply chain balance using SAP's red, yellow, and green traffic lights, in the exception monitors. A very powerful tool, and when used correctly, this traffic light system provides organizations with real time visibility into the status of inventory coverage, enabling them to identify and resolve issues quickly and efficiently. So, Kristie, how about you tell us a bit about these traffic lights? Sure Martin, red, yellow, and green traffic lights offer us a powerful feature when used correctly, and in this demonstration, I'm going to focus on three key things. Where can we find red, yellow, and green traffic lights? What do the different traffic lights mean? And how do we set the settings for the traffic lights to be in a good starting point for tracking the health of our inventory coverage? Spoiler alert, we want to start with SAP standard. Alright, let's talk about how the exception monitor can help us to know whether we are in balance or not. So probably always wondered what these red, yellow, and green lights mean. Have a vague impression, right? Because we know what it means when we see red, yellow, and green in other areas, traffic lights, maybe inbounds on the floor. What they mean here, the red light, means that we do not have enough inventory on hand as of today in order to be able to service our current demand. So current or past due, actually. So what I'm going to do is give you a little better idea by clicking into this material, and what you'll see here is that we have 196 pieces on hand. So it doesn't mean that we don't have any inventory, it means that we don't have sufficient inventory to cover current or past due demand. So today happens to be Valentine's Day, it's the 14th of February, and so if I look at my requirements in the past, you'll see I've got a bunch of dependent requirements that are out there that are waiting to be served. So I'm currently at risk of not servicing the manufacturing floor. In fact, I'm not in a position right now to service the manufacturing floor for everything that they needed, prior to today. You can also see we've got a past due purchase order and the system thinks that's coming in any moment now, and so we need to get that updated to reflect the reality of when it's coming in. So really important to keep track of those exception messages and monitoring. But the red traffic lights will help us to know either we don't have enough on order or there's something going on where we're behind, but as of this moment that 196 pieces is not going to cut it in terms of being able to service our current demand. So we come back out here, what I'm going to do next, I'm going to go through and find my yellows, so I could scroll through my list, but I know that this is a pretty big one. So I'm going to go ahead and have the system just go ahead and find it for me in my list, find in materials, and here's all in my yellows. So yellow is actually the ideal state. That means our plan is in balance, and if we continue to action according to our plan, we can continue to stay in balance, and that's as of today. Now what we would want to do is continue to review the planning situation for these materials, make sure that we are taking care of any exception messages, because you can see that there's some exception messages even though these are yellow and that we're watching for any, situations where our next order would put us into a really positive, inventory position. We want to make sure that we are still keeping the supply and demand in balance as we go through and do those material reviews. But good news right now is of this moment, we are currently in balance and we want to continue to plan these materials according to the plan. The next piece is our green ones, so green means good, right? Well, sometimes what it means in this case is it means that we have enough inventory on hand to service our needs as of today, but you can see that sometimes that's just a little bit, so we've got enough to cover today. We've got 0.2 days, 0.5 days, 1 day on hand. Okay, so just because it's green doesn't mean that it doesn't require any love or activity. We still need to make sure that we are processing those replenishments and making sure nothing goes past due. On the flip side, not only does it mean we have a positive stock balance, but it can sometimes mean that we have more than what we need, or that there is no future demand or supply for this item. So you can see here we have 320 pieces on hand. We don't have any future demand for this particular item. We're maxed out at 999.99. So there's no future use, so that stock is also likely showing up for us on some of our other inventory analysis reports, so these are good opportunities where we can go in and refine those inventory levels or figure out how we can make best use of that inventory. What you really want to keep an eye out is for situations where maybe you have a target days of supply based on your ABC code or based on that particular materials usage, and maybe you're expecting to see something in the, 20 to 40 day range and you're carrying 16 to 90 days. Those are your opportunities to use these green lights to help really bring those stocking levels back to where they need to be, and the way we would do that is by going in and actually evaluating what's going on with that particular material, both historically and future looking, and then refining our master data parameters so that MRP is giving us a proper result for the inventory carrying that we would be looking for. So really helpful to have these red, yellow, and green lights. If you're not sure what your settings are, the best way to check is to go in here to define traffic light, and we always recommend when you're getting started to go with the basic setting. So you can click on this button here and then click save. That will change your exception monitors so that you're using the standard settings. If you have something different than this, it's good to understand, what those settings are, but if you're not currently making it all the way through your exception messages or you're not sure how to get started, starting with that basic setting is a really good place to begin. And then I'll let you see whether you tend to be, really short on inventory, how many red lights you have versus how many green lights you have, and then striving, to get to a place where you start to see some of those yellow lights pop up. Okay, great tool. Great to have those red, yellow, and green traffic lights, and hopefully this gives you a little insight into what you might do with them. So in summary, we have covered. How red, yellow, and green traffic lights allow us to quickly hone in on a few of our materials and how they are positioned. Where to find these red, yellow and green traffic lights so that we can make working with them a part of our daily habits. And lastly, how to set your traffic lights in a good place to get started, the basic settings that SAP provides. Thanks Kristie. Taking advantage of this visibility really helps control and monitor end-to-end supply chain and operational processes and resolves issues quickly and efficiently. So if you want to learn more about how to get the most out of your SAP system, please check all the other videos we have in our catalog and if you don't have an answer to a burning question you have, please submit a suggestion.

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.

Demand & Supply Planning

PP; MM

MD04; MD05

Hi, Martin here and welcome to the video service that unlocks and reveals the hidden value in your SAP system. So in this video, we're going to talk about an unsung hero called the pegging report. This is a hidden gem in SAP. Now this happens to be one of my personal favorites. When we say awesomeness, we don't take that title lightly. This is a time saver when something does not go to plan and you quickly need to make some decisions on impact and prioritization. It does come with a couple caveats though. As with most things there is some critical thinking involved to turn data into intelligence and into decisions. So as we know the best way to learn is by doing so Kristie why don't you take us away and show us more about this pegging report? I've got this one, Martin. I'm on it. I can remember way back in the beginning of my supply chain career, every week we had a voice of the customer meeting, and it was my job to analyze the shortage impacts, and in addition, provide a Pareto of all the root causes. I would go through this multi hour review in SAP, and then in Excel, and then in Crystal Reports. What? No, it was a long time ago and then there were unexpected questions or a new piece of information in the session and oh man, let the confusion and frustration ensue. The pegging report doesn't get rid of all that business by itself but what it does do is let you get a quick beat on what the supply element is currently destined to serve. So today we're going to jump into SAP and go find the pegging report. We're going to look at the information available. And we're going to then go in and look at the ripple effect. It's awesome. Let's go take a look. All right, I want to talk a little bit about something called the pegging report. And again, this is such a good find for when you are in that situation where you're being asked if this is late, what is it going to impact or whom is it going to impact? So let's say that you're a buyer, you're responsible for providing material to the manufacturing floor. So even down at the individual component level, you're able to take this and trace it all the way back up to sales orders, deliveries, forecasts, and identify which customers are potentially impacted as well as specifically which production orders are in jeopardy. And this is so important for those conversations. Now granted, this is all based on the priorities that SAP is currently aware of. So for example, in this case, you can see there's a really past due order reservation out there for this particular product. But getting your housekeeping in order helps you to identify these types of situations as well. So this is another tool in the toolkit to help ensure that everything is accurate. So I'm going to just take this particular item here. So this is a planned order, let's go ahead and double click on it, and I can see here I now have the option to see the pegged requirements, so it's going to look upwards as this is soft pegging, so what is this destined to supply? This might help us also with prioritizing or shifting around when we have limited supply available. I could also have got to it by selecting the line item and then just clicking on this button down here. But let's go in and just take a look and what this is going to do is it's going to say this particular element, so you can see the material number, the receipt date, the PO quantity, and it's going to tell you what all this is destined to supply. So the date, so how much coverage, so you can see this is pent up demand. So I'm actually covering, oh, roughly call it six weeks worth of demand is what this is pegging across. And it'll give you the material, material description. So let's say this particular raw material went into many different sub assemblies or finished goods, it's going to track it all the way back up to the top, tell you exactly what orders are going to be impacted. So in this case, this component only goes into one material, but it could be many and you would see all that listed here. And then you would see your material description and then if there was a material memo in place that you needed to be aware of, you could see some text here, your MRP area and then most interestingly is the element. So if we click here, you can see the drop down and this is where you can tell how much trouble or not you might be in. And so if I scroll down here, I can see I've got some PPs in place and the PP are forecasts, okay? So important, I want to respect the forecast, but maybe not as critical, but down here I have things like orders. So we can see we're impacting some specific orders and it's telling us the order, the item number, and then even the schedule line number that this is going to be supplying. It also is going to tell us if it is pegging against, for example, a delivery, right? So that is really important. So it tells you exactly the type of document that you're pegging against and what you're destined to supply. This starts to get you some much better information really quickly to go, okay, so this is actually going to impact sales orders that are out there. We really shouldn't see it impact deliveries very often, unless you are really in a place where you're counting on incoming components to supply your deliveries and your ATP check. That's a separate conversation for another day, but important to know. And we can very quickly get in here and start to understand what's going on and we can actually go in and look at these individual elements. The other thing that we can get that is super cool is a visualization. For those of you who are on S4, you do not get the same visualization as part of the graphics harmonization. This is for our friends on ECC and S4 we get some additional tools that help us to go through and do the same type of evaluation. So I'm just going to bring the graphic up, bring this over, and here you can see, and this again is a really simple example for the purposes of today's conversation, but you could have really complex order flows here, where you would see, your component going into many different subassemblies, going into many different manufacturing orders, supplying different orders and forecasts. And the deeper you get into the bill of material, if you have common components the greater the magnitude is. But being able to see if I have to spend money on expediting this, if I'm making my case for freight approval for air freight or something like that, this can be really helpful in being able to quickly go through and do that analysis. So here's the component that's being supplied, these are all the different orders. You can see here my scroll bar. And then these are what it is that we're impacting. So sales order, independent requirements, a couple of other sales orders. You're getting that specific information and how it's tying back to the actual manufacturing order as well. And you can also see then the status whether these are actually production orders that are out there, if you're still dealing with planned orders that are out in the future. If it's planned orders, then there may be something else going on with manufacturing, so before you decide to expedite this component, you may want to talk with your planners and schedulers and find out if this is even going to be able to make it out onto the manufacturing floor. There could be something going on that's beyond the availability of your component that's causing them to be backed up, they could have a capacity constraint. And so understanding when they actually plan to execute these orders helps you to make a on what it is that you want to do in terms of expediting this with the supplier. We know that we only have so many cookies in the cookie jar, so we want to be really smart about those decisions. And then knowing where it's destined for, what it's meant to supply, definitely helps with that conversation as well, and also leads you into conversations around making sure that everything is up to date and neat and tidy and clean so that you have the clearest picture possible to make these decisions on what you want to spend your time and energy on expediting. Nothing's worse than air freighting a component in and then having it go to the manufacturing floor and create clutter because they aren't in a place where they have the capacity available to do it or they are missing a tool or whatever the case may be. Definitely having those conversations is important and in another video, we're going to show you how to do the reverse of this, which is to take a planned or production order and look at the order report to see how many components you're missing so you can make decisions on where to spend your capacity. So all these things work together as one toolkit in order to be able to make the best decisions possible when you are in a limited availability situation. Welcome back from the tour. The Pegging Report is an awesome insight into the plan as of this moment in time. It helps us to understand the impacts and empower conversations and prioritization and constraint management all in one meeting. This is vitally important when plans change and they often do. And it really helps us to be positioned for success as a jumping off point for the moment the conversations happen and we think about what we could or should do. You can think of it as a foundation for what if scenarios. How did we do Martin? Hey, that's awesome Kristie. And of course, this is one of those things that if you're a cross functional team, just becomes super powerful. It's part of the planners home base, the stock requirements list embedded right there for us to use. Soft pegging is not the end and be all of being able to see where the supply is intended to go and what the impacts are is powerful. So again, if you have any more questions about this particular topic please submit it below and of course we have a series of videos that you can check out on our catalog.

Demand & Supply Planning

DM

MD04; MM03

Hi there, Martin here, and welcome to the only video series where we unlock the secrets and reveal the magic behind your SAP system. In this video, we're going to highlight a feature that nearly every client is looking to solve for, SAP consumption based forecasting. This is such a hot topic. I actually can't wait to hear more. Ed, please introduce us to this consumption based forecasting. I think for most people, the question really is, can SAP do that? It's such a great question. Yes. I'm very pleased to share that SAP actually can do that, and there's no additional software required to get started with a basic statistical forecast, driven by consumption. In today's walkthrough, I'm going to focus on a few key things. First of all, I'll show you that yes, SAP can actually do this. Second, I'll explain the basic building blocks that help to get a statistical forecast off the ground. And lastly, we'll explore options for where the right place to start might be across your product portfolio. This is one of the best kept secrets in SAP. So let's get in and take a look. Alright. Here we are in our favorite place for planning the stock requirements list. Let's talk a little bit about the makeup of a demand program. Our demand program can be made up of several different demand inputs. We might see sales orders, stock transfer orders, and requests for transfer or requirements for use in manufacturing. In addition to these elements, we may also see a forecast, and that forecast can find its way into SAP in a variety of ways. But what if you are just getting started and you'd like SAP to produce a forecast for you? Yes, SAP can actually do that, and the limitation is the limit of predictability and statistics, but that's really about it. We've got some really good bones to work with here. Now notice the requirements type on this material. It may be different from what you might be used to seeing. We can tell by the MRP type that this is a consumption based forecast. See here, the MRP type is vv. This is also the requirement type that lets us generate a statistically driven safety stock. And that's an exciting feature for another day. Now let's look at the periodic totals and let's see the monthly view. We can see that this forecast is still considered a planned, independent requirement, and we can see the quantity we have open remaining to sell or what has not yet been consumed. This is also compatible with the total requirements display for help in exception monitoring and quality checking. So how is this happening? In your material master, let's get there by double clicking on the material. Let's go to the tab where all the magic is happening. Okay. Really it's where the math is happening. One of the nice things about this flavor of forecasting is that it's not a big scary black box. This is the forecasting view. Here we see the history, and you can see that there's options for adjusting or correcting outliers. This is what the stat engine will use to create the forecast. So we want to start here if something looks out of place. We can also see we have options for forecast type and selections, time horizons, and more. There is plenty of functionality that we can go to and use to get started. I'm going to make a quick correction here so we can see how MRP will respond. Okay, here are results. See the change in the forecast and the response of the plan. We can produce forecasts that follow a constant, trend or seasonable model. But where to start? Look for items that have reasonable history. We're looking for a detectable signal here to base a forecast on. If that's not happening for you at an item level, is there a product group that makes sense to forecast together? Should we be forecasting at a different level of the bill of material where there is a common subassembly or component? This does require some data maintenance, thinking through your planning hierarchy, focusing on horizons that make sense, and then tuning results. But folks, this is a great place to get started and let SAP do some of that heavy lifting for us. There's so much to talk to here in terms of how SAP gets this done, and this is one of the many videos. So please make sure you check the other ones out as well. Thanks for taking the tour with me. We love talking to folks about the feature, especially if they're just getting off the ground with getting demand into the system. Or are struggling with variability or volatility driven by finished goods forecast to components with stable consumption. Today we reviewed. Where to go to set up your consumption based forecast. The different types of forecasts available. And discussed some of the care and feeding required to get started on this journey. Consumption based forecasting on items that have stable history is a very powerful tool to have in the planning arsenal. I hope this information will help you become curious and explore what SAP offers in this arena. Thanks, Ed. Consumption based forecasting on items that have stable history is a very powerful tool to have in the planning arsenal. I really appreciate that you've shared with us today. It was a great food for thought, so thank you. Okay, folks, if you want to learn more about this topic and specific topics related to forecasting, please check out our catalog. And of course, don't forget our chatbot. You can ask any question you want.

Demand & Supply Planning

DM

MD04; MM03; MEQ1

Hey there supply chain friends, Martin here. In today's video, we're not just scratching the surface, we're going to go deep to unlock some of the full power of your SAP system. So ready for this journey? Let's get going. In this video, we're going to provide some insights into a very common question for those with more complex supply chain networks. And that is, where to place the forecast. Ed, I know that this is a real problem for many people. How do you expect us to attack this particular challenge? Well, Martin, the good news is that the question of where to place the forecast is not terribly difficult to answer. Where organizations typically struggle is in how to make sure the demand signal is making it to the right place. In today's tour, we're going to highlight a few key things. First of all, how we can use the forecast to make our supply chains more demand driven. Second, how we use the choice of placement to pull to the place where the demand is consumed. And third, how we drive the visibility of the connection. Let's go in and take a look. Let's take a walk through where to place the forecast. As you can see, this is MD07 and we have one material in multiple plants. The first thing we want to focus on when we're thinking about placing our forecast is where we should ship from. We want to place the forecast as close to that demand signal as possible so that we're able to pull to the place where the customer order is fulfilled. Then, we need to think about how the plants and DCs are connected to one another. A good first check is the procurement type. A second is who is supplying whom. We want to link the supply chain together with no gaps in the chain. This helps to ensure the consumption of the forecast happens properly, as well as making sure that we're able to efficiently transfer the demand to the supplying partner. Let's go a little further and jump into the stock requirements list and flow through the connections. This plant functions as a DC. We can see it here that it receives material from multiple manufacturing plants on an ongoing basis. See the supplying plant? There are a few ways to set up these transfers. Special Procurement Key, if there is one primary source, and any other sources are an exception. Quota Arrangements, if you are intentionally splitting volumes across multiple plants or sources. Or Scheduling Agreements that support stock transfers. We can see here that if we flip now to the supplying plant, that the demand is flowing through nicely. This gives us the visibility we're looking for and allows the forecast to be consumed as firm requirements come in. Sometimes we see organizations placing large or blanket transfer orders. If we do that, it erodes MRP's ability to keep the balance in place and moves planning much further from the pulse of the customer demand signal. I would like to emphasize the importance of keeping the signal as clean and clear as possible. The forecast needs attention and regular maintenance. Check the quality of the signal, the bias in the forecast, regularly review consumption profiles, and get going on a regular cadence of deciding whether to keep or roll forward the process. The supplying plant is the customer of this information, so we must support them in supporting the customer and positioning inventory in a productive way. We need to actively pursue excellence in housekeeping. Our transactions need to post in a timely manner, orders need to be cleaned up and kept current, and the demand picture needs to be trustworthy. And last but not least, we need to make sure our master data rules are aligned between our shipping plants, or DCs, and the sources that supply them, so that we're moving our inventory with nice flow and cadence through the process. This includes how we buffer in time and quantity, and where we place the buffer to protect the demand. Not only is that the location, but also the level of the bill of material. We want to be flexible and efficient. If we pursue these things, then we are building supply chain visibility that creates the responsiveness the market is looking for. So that's today's tour. To recap. The first step to getting this right is to visualize the connections between supply and demand. Second of all, as with all things, it's very important to keep the signals clean, clear, and under control. And lastly, the point of consumption drives the placement of the forecasts, in most cases. Focusing on that will get you started and special cases can be worked from there. Great stuff. Thank you, Ed. Appreciate it. That gives everyone a great place to start in placing their demand close to the customer and connecting the supply chain to drive the right activities. Super cool. Thank you. Folks, if you want to know more about this, please check out our chatbot, ask your question, and of course we have a video catalog and library that you can check out as well.

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.

Demand & Supply Planning

DM; P2P

MD04; MM03

Greetings from the SAP supply chain universe. My name is Martin, and I'm going to be your guide in unlocking and revealing the hidden value in your SAP system. Okay, so if you're curious, let's just dive right in. In this video, we're going to be talking about how to use the decoupling technique called material forecasting. Today's discussion is specifically focused on driving a forecast for raw materials or semi finished goods that have stable demand and are used in many different end items where the demand is far less stable. In these cases, the bill of material explosion may not drive the best signal to position us for success and may either significantly over or under drive stocking levels. Hey, Peyton, this is a big topic. Why don't you share with us a little bit about how do we position ourselves for success? Sure Martin, my world is procurement and making sure that all of our partners have what they need to produce or distribute to the customer is what we get up in the morning to do. In this brief tour today. I'm going to highlight what characteristics make a good candidate for a material forecast. How to monitor performance, we got to look at the results right. And I'm going to talk about some of the risks and where you might need to go in and revisit this choice. Let's go in and take a look. So let's talk about what types of materials may be great candidates for consumption based forecasting. Generally, we will look for materials that have a high, predictable volume, a low cost, and a long lead time. And for my purposes for this demo, I'm going to use material 1400-710, which is blue paint for tires. So here we can see the MD04 view. We don't have any demand in there right now, but what I want to look at here is the consumption, because if I come in here and I look at the consumption, I can start to see is there a pattern, is there opportunity to use consumption based forecasting. And from this view, while it fluctuates a little bit, I can see as I go through 2024 and into 2023, that there's a bit of a pattern that things drop off in January and February and a little bit in December, and then they come back for the rest of the year. So that might come in as a seasonal forecast or a trend based forecast, but we'll take a look at that in a minute. From there, I want to look at the cost of the material, since we do consider that when we're looking for which materials may be good candidates, and I'm going to go to the info record for that. I'm going to put in my vendor as 2008 and I'm going to hit enter. Let me go back so we can see the rest of those settings. I've got my purchase organ as 1,000, plant 1,000 in my material. So once we hit enter to display the info record, we're able to see all the information that's already been input. I'm going to go to Purchase Org Data 1, and I'm going to look down here, my net price right now is $5.65 per liter, which makes it a relatively inexpensive item, but we sure do use a whole lot of it, so it may be a good candidate for using consumption based forecasting planning technique. So to do that, it means we have to decouple. I'm going to go to MM02 here. It means we have to decouple the raw material or semi finished part if it's purchased, from the finished good. When we're decoupling a material, what that means is we're taking a component part that's purchased and decoupling it from the finished good it's used in. And so we'll go into the material master here to take a look at what that means master data wise. I'm going to go to the MRP1 view for this material, put in my plant as 1,000, and here I can see the MRP type for this is PD, and that's the MRP type that's used standard when you have a material that's in a BOM, and we want that material to come up as demand for the parent part, the finished good, comes into the system. If I change this to VV, which is the MRP type to use a consumption based forecast, and I put in consumption based forecast parameters, it's going to decouple that component from the finished good and what that means is that when we go into MD04 next time, if there had been demand that we saw from the PD setting, we're not going to see that anymore. We're not going to see all that production related data because we've taken that PD out and now we're using the consumption based forecast. So that is, one of the things that changes if you go to this model. Now once we've changed it to VV, we would then go to the Forecasting tab and we've got to tell it how we want it to forecast. If we look here at the forecast model, SAP can choose the forecast for you by using J Automatic model selection, and what it will do if you use J, and you execute the forecast is it will look at the historical data that you enter there and it will decide, do I see a trend, do I see seasonality, or is it a constant thing, and we're going to do a constant model. I'm going to select J for this purpose. to see what the system gives me back. I've put in my historical periods as 24, telling it to look back at 24 months of consumption, but I want it to forecast 12 months, and if I have seasonality, the number of periods in a season will be 12. The tracking limit tells the system how much you want it to consider recent history in that forecast, and here the default is 4, that's what will automatically come in. We'll put an X for initialization, since it had already been initialized, it didn't give me an X, but we'll put an X in there so that when I hit execute forecast, so it's taken out the gamma factor, I don't need it for the forecast that it's chosen for me, we'll hit execute, we tell it to do for April, automatic model selection, it brings in these figures. We want it to look for trend and season, and this is what it gives me back based on the pattern of consumption values that are already in the system. And I can tell from that that it's chosen a constant model, which is why it's changed it to the letter D. So the system has decided that it would be best for me to order on a constant model, where maybe I'm ordering more material in a particular month than I need, but the next month that will roll into the demand for that and it'll all balance out. From there, I'll save that. I will run MRP really quickly so that we can see what this looks like in MD04. We'll go there, 1400-710, and here you can see these forecast requirements that it's put in for me based on the forecast that it calculated and we can see the purchase requisition that it's given me to satisfy those forecast values and because this has a long lead time, and I just entered the forecast, it's giving me some purchase requisitions that are behind and need to be rescheduled because of that. We also need to check up on the forecast and make sure it's looking how we expect and so if I came in here and I saw that for whatever reason one of these values was way too high or way too low based on what I knew about the product, I might go in to MM02, go to the forecasting tab, and run another model. You can go into the material master and you can try another model and execute the forecast once again to see what figures it gives you back and you can compare that to the history and see if it matches more what you were expecting. Alternatively, if for some reason we find that this doesn't work for us and we are not really into the VV model, we can always go back in, change that VV back to a PD or a V1 if you're using reorder point planning, save it, run MRP, and the forecast is going to go away, and we'll have a demand picture based on what we've told the system to give back to us. And that is a brief look at finding materials that are candidates for consumption based forecasting and executing that forecast. That was fun. Okay, so in summary today. We discussed some of the key benefits of deploying a decoupling technique, like moving to a material forecast. Highlighted some of the challenges that come with any decoupling technique. And spoke about the empowerment that comes with staying squarely in the driver's seat with your planning. Techniques like these, a decision to separate the information flow from the end items, should never be made in isolation. So use the power of teamwork to be curious, think critically and drive good decisions. Hey, thank you, Peyton, that was really fun. I love the highlights on what to look out for and how to pick the best candidates, as well as how to close the loop on performance and adjust if necessary. So once again, thanks Peyton. Okay, folks, if you want to learn more about this topic and others, please check out our video catalog. And if you have a burning question, feel free to try the chatbot.

Demand & Supply Planning

DM; IBP; OTC; P2P; PTM

MD04; MD07; MD73

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 will focus on housekeeping for demand. When used correctly, a demand plan provides an effective line of sight for future requirements. When the forecast sales order deliveries are overdue, it creates imbalance and mistrust in the actual demand. So Kristie, why is this a problem for us? Sure Martin, let's talk a little about it. Demand plan housekeeping is a powerful feature when you use correctly and in this demonstration I'm going to explain it by focusing on three key things. Where and how do we find materials that have one or more overdue elements? What is the best practice for cleanup and what does that typically look like? And then how can we communicate across functions to ensure that we're effective in identifying and responding to the demand? All right, we spend a lot of time talking about how to do housekeeping on the supply side of the house and how to do exception monitoring and if you're curious about that, there's lots and lots of videos out there that will walk you through the different exception message types and housekeeping for supply side. But now what we need to talk about is the other side of the house, which is our demand plan. So what I'm going to do is I'm going to go ahead and navigate, I'm going to go to MD07 today, that's going to be the collective display or my stock requirements list. And I'm going to go ahead and just run this wide open for my plant and while I'm letting this run, I'll explain why it is that we're going in and taking a look at this. So just like our supply elements can get out of date, our demand plan can as well, and the demand is what's driving supply so it's very important that we're keeping that up to date and up to date means that the sales orders and the deliveries that are in there are real demand, the forecast that is in there is expected demand, and we're keeping the dates within a reasonable timeframe. So typically, we're looking to keep everything except for forecasts within a 7 day horizon. And forecast, we're trying to keep up to date within 30 days just so it's sending the right signal. Now, your consumption parameters may cause you to have some variance to this depending on whether you're having rest in terms of quantity of your time. We work in demand planning, or lucky enough that we can have either or come into play and our customer orders and deliveries may be impacted by customers being able, if they're doing customer pickup, getting in and making those things happen in a timely manner. But we really need to keep them as up to date as possible and make sure that every element in there is in fact relevant for supply to be planning to, otherwise we're not planning the right inventory and we'll end up not being flexible where we need to be because we're going to be over capacity or overuse of material, or we're going to be investing space time or materials in a way that isn't conducive to being able to supply the actual relevant demand. So first of all, sad news for those of us on the supply side of the house, exceptions only happen on supply side elements. There are no exceptions on demand side elements except for safety stock, which is both a demand and stock and the reason for that is because at its core safety stock is stock that's available, which is a supply side element. Other than that, you're never going to see an exception message on a forecast, a delivery, a sales order, or the demand side of a stock transfer order. However, we can still do the housekeeping and so when it's time to do that, I'm going to pick on independent requirements today, but you would pick any of your demand side elements and then you would go ahead and locate those by putting in a, from and to date. So if I want to get anything that is really past due, I might throttle my independent requirements just even to the beginning of this year and slowly work my way into current. I've got some stuff that's dated all the way back to 2017. This is a messy system and for most of us getting started, we're going to encounter some things like this where in some categories we may have some very, very aged materials and you can see I've got the full gamut here in terms of dates. So I'm going to go ahead and just run this out to the beginning of this month and I'll actually run it just to the end of the last month that way I don't get anything that has been cleaned up already for the month of April, and I'm going to go ahead and click find MRP elements, this is going to bring up some forecasts for me, and then I'm just going to go ahead and say, okay, so I have 27 materials that have forecasts that are older than March 31st of 2023, and for those of you who are wondering it is, April 13th of 2023. So should expect that those have been dropped at the beginning of the month or rolled forward if appropriate. I'm going to go ahead and click on that and it will take me in so I can see what kind of housekeeping it is that we're dealing with. Okay, and one of the things that I can do is I can actually navigate in here and take a look at my total requirements planned. But before I do that, let me just point out the sales order here. So here's a sales order with 10 pieces open from 2019. That is a great example of something that we could look at cleaning up. Okay, and so I could come in here, take a look at that order, see what's going on with it, and validate that indeed, we still do have a need for it. Okay, and it looks like this particular order's on hold, but this will be another good indication something's wrong. I should be able to see my customer name right here as well to see what is needed for that particular customer. Okay, I also have these forecasts that are past due, and you can see that I'm actively driving replenishment with exception messages associated with it. So there's a symbiotic relationship between cleaning up your outed demand and cleaning up your supply. So once you are cleaning up the demand, MRP is going to run and realign the plan, bring that demand and supply into good match with one another and then when that happens, then we don't have to go in and do all that manual work to realign the plan and we're not chasing exception messages that are not real. Now could be valid demand, we could be past due and we need to deal with those situations as well, but I can see on my forecast it's performing. So a couple of things here, I can go in here to periodic totals and I can see here, if I want to bring this into months, I can see anything I have past due. So it's 2,350 pieces still open to sell from January, so I probably want to clean that up and then also 650 from February and then actually we've exhausted all of March, and you can see we're starting to peg some requirements against April and May already. So I want to go in and clean that up so I can go in here also to environment and I can go into total requirements displayed and what that's going to do is it's actually going to take me in so that I can see how I am matching to my customer order. So where things are pegging and then the remaining balances where I don't have anything that is pegged against that yet. So I have the opportunity to go in and start to clean these up. One of the ways I may be doing that is, first of all, if I am on the supply side of the house, if it's a sales order or a delivery or stock transfer order that's originating from another facility, then I could actually go in and reach out to my friends and colleagues and ask them to help me get those items cleaned up. I can also work with my global planning or my sales and operations folks and see if they can help us on the forecast side to make sure that they're doing that reorganization of the forecast on a regular basis so it's getting cleaned up. And then the last thing I might want to take a look at, and this will be a conversation again with my demand planners and for any demand planners listening to this, is really focusing in on what that consumption profile looks like. So on the MRP 3 tab, making sure that that consumption mode is set appropriately. So both forward and backward looking if appropriate, making sure that we've got the correct consumption periods assigned so the horizon of confidence. So we think we are correct in terms of quantity, but might have some issues with timing that spans say two periods, then I can set my consumption periods up appropriately so that is pegging the orders in the best way so that I'm making the best use out of that forecast. But certainly we want to go through and clean those things up and where we can, starting to break that forecast down into weekly buckets will also help with that process. Being able to see our rate of consumption as we're going through the month and seeing our remaining balance that's open to sell. But yes, certainly sales orders, deliveries, requirements to shift to a different facility, transfer requirements out to subcontractors, and then of course our forecast, those are all demand elements that we want to make sure that we're going through and still tending to and cleaning up. We may not be able to do that as the MRP controller or the person who's responsible for the material, but we do want to communicate with the folks who are, and make sure that we are keeping our plans in good alignment. Basic housekeeping goes a long way towards reducing those exception messages and ensuring that we are prioritizing our supply appropriately in order to facilitate the real customer needs. So in summary, we have covered how demand plan housekeeping allows you to. Send the right signals to SAP MRP and our supply side counterparts so that they are focusing on the things that matter. Quickly identify materials that require clean up. And start an effective dialogue across functional areas so that you can manage our plans in harmony. Thank you. Keeping our forecast sales orders and deliveries clean will improve the accuracy of our plans and exception messages, allow for better decision making and most importantly, better customer satisfaction. So if you want to learn more about how to get the most out of the SAP system please check out our other videos and of course if there is an unanswered question please submit a suggestion below.

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.

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.

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.

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.

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, Martin here, and in this video we're going to focus on one of SAP's biggest and major rules, planning strategies. We've talked about the different categories of planning strategies in other videos, but today we want to talk about the differences between gross and net requirements planning. This adds a whole new dimension to the planner's arsenal. So Kristie, tell us a little bit more about this whole gross versus net requirements planning in SAP. Absolutely, I've been looking forward to this one. We know about the different planning strategy categories around make to stock, make to order, and assemble to order, and we've spoken about the fact that there are many options for how we can plan in each of those categories. One concept that we're going to explain today is around another key decision. Do we want a plan that considers the inventory we have on hand, which is classic and common in how we might plan? Or do we have a specific need to plan for specific volumes regardless of our current inventory levels? When used correctly, the introduction of these concepts to our planning can be a real advantage. So, to the system we go, and I will be walking through three key things. First, the difference between gross and net requirements planning. Second, the use case for both. And third, how MRP will react to these rules. Okay, gross versus net requirements planning. Super important and used for two distinctly different purposes. So the first example I'm going to show you is right here on the screen. You'll see I'm in MD04, this is my stock requirements list where all planners and buyers spend the majority of their lives. Okay, at least their days when they're planning and buying and you'll see here for this particular material, I have VSFs, or independent requirements. Now, your requirement type, where it says VSF, could be a variety of different requirement types. In this case, this is classic net requirements planning, this is your typical make to stock or procure to stock strategy and what I'm doing here is I have a forecast, and I've got sales orders coming in and they're consuming that forecast and ultimately what's happening is I'm checking against any existing inventory before determining how much it is that I need to make or buy. This is checking against inventory, it's checking against what is coming inbound to us, what I have out there for planned production, all of those good things in order to be able to come up with my plan. Now, that's net requirements planning, it's netting out the available inventory. The other thing that's happening here is that you can see my overall plan that I have in place, I've got my forecast and I have my orders and I can come in here and I can actually see how my forecast is performing versus orders. I'm going to go to environment and total requirements display and you'll see here in the 25th week of the month I have a forecast of 15 and then I have these sales orders of 8. So that 15 is allowing those sales orders to peg against it, and so there are 7 pieces remaining to be sold and then I have 5 for each of the remaining weeks. We had a big event this first one, and so that's why the demand is a little bit higher. If I go back here, you will see there's that 7 pieces, okay? Now, I'm going to make a change here, and when I do, what I'm going to do is I'm just going to change our requirements type so that you can get an idea of how the system is going to react and respond to that. So in this case, if I had inventory, it would be playing against that inventory and then figuring out how much additional inventory needed to be made or procured. The next one, I'm just going to give you an example here, what would end up happening is that it's going to actually say, okay, that forecast is going to be what we're going to make. So let's say you had a constraint, the maximum that you could produce for that particular item was 20 per week. Then you would use the forecast to control that, it's not going to see how much inventory you have on hand, if you're sending a signal for 20 units per week, that is indeed what it is going to produce, and so you control this with a combination of the planning strategy and the way that the sales orders are receiving that information onto the sales order. So anytime you change your planning strategy, like I just did here, you have to go in and actually adjust your sales orders to be able to pick up that new master data, if you would like to invoke that rule as of that particular sales order. But what the system is going to do in gross requirements planning is it's going to go, okay, you told me how much I need to produce regardless of what my inventory position is, I am actually going to go and produce or procure that, and so it's a very different way to look at your planning, and you really would want to use this in situations where you have a very specific constraint and where that constraint is much lower than what your market demand or your usage is going to be either demonstrated or planned for the future. Okay, so this is much less commonly used, but it allows you to set a master production schedule in place and use that to be the kind of the heartbeat of your supply plan and so you're constraining saying no matter what my inventory position is, which means if my forecast is wrong and customer pulls are different from what I was expecting, so that consumption is different, I am going to produce this amount regardless. And so there's a lot more risk inherent in a gross requirements planning strategy than there is in the net, which is allowing you to constantly react and respond and plan to that demand. But it is a good way to handle constraints, and so as you're thinking through all of your different planning strategy options, just bear in mind you have a bunch of different ways that you can react to the demand plan and service it through either manufacturing or procurement. So make sure that as you're thinking through your planning strategies, particularly for manufacturing, you're considering the use of both of these different options. A lot of times we only think about it in terms of make to stock, make to order, assemble to order, but within each of those categories there are a variety of additional options and this is a good example of the difference if you think about gross versus net requirements planning. So in summary we have covered how applying a planning strategy that reflects gross versus net requirements planning. Will allow you to manage through a maximum replenishment in specific use cases. Further refine your plan for every part. Or support the way in which we want to plan manufacturing to respond to our demand and position us for success in our go to market strategy. Thanks Kristie, that was interesting. It's so important that we think through our product portfolio and apply the best rule to suit the strategy for each part. It's amazing how many options SAP offers to enable our vision if we just know where to look. So folks if you want to learn more about what you can do to get the most out of your SAP system please check out our other video library and also, of course, if you have a question please submit it below.

Demand & Supply Planning

OTC; DM; P2P; PTM

MD04; MM02

Hey, supply chain friends, Martin here. And in today's video, we're not just scratching the surface we're going to dive deep and unlock the power of your SAP system. So let's get going. In this video, hold on. In this video, we're going to be discussing getting ready for the disco. What are we talking about, Sam? Well, I'm very curious about this. Somehow, I don't think my wardrobe is a match for today's topic. Sam, what do you think? Okay, guys, disco. I'm going to leave it to Sam to tell us what that is. I'd love to go to the disco. That would be so much fun. And while today's topic is fun, it's not that kind of fun. Today we're talking about discoing items. You know, discontinuing . It's one of the things we all do and most of us don't do very well. So today, we're going to try to fix that. I'm going to tell you how to get ready for the disco in three easy steps. Tidying up before putting the material away. Setting the material status to restrict activities, and promote visibility. And last but not least, setting the MRP type. No more exception message group 8's. Let's dive in and see how this works. So, how do you know if you're really ready to disco? Well, this is a great time for some OCD and perfectionism. We do not want to put a material in a fully discontinued status if it's not been cleaned up. It's like dirty dishes just hanging out and cluttering up the sink. That's no fun, and the gunk can really start to build up. This is an activity that a lot of organizations struggle with, and it's not because it's hard. It's really just that it doesn't seem particularly important in the moment. So, we see a lot of systems that have tons of exception message group 8's as a result. Not cleaning this up makes for murky waters in exception monitoring, in reporting, and in congestion in the system. We want a nice, tidy system to work with. There's no time to be chasing down inaccurate signals, only to find out this item should have been shut down a long time ago. The other reason this is critically important is that the process should be very specific in what activities are allowed and when. It helps keep us safe and reduce the risk to the business. No one wants a purchase order to go out the door on an item that has been discontinued. So, are you ready? Here are your three simple steps to get ready for the disco. Number one, we need to deal with any demand that is in excess of inventory. This item is discontinued. We're not going to replenish anymore. Be sure to check the entire supply network and make sure you're all set to sunset at the same time if that's part of the plan. This includes forecast, dependent requirements from production, and don't forget about follow on materials as an option to transition. Stock transfers and even sales orders that may need to close short or be redirected. Oh, and don't forget to remove the safety stock, safety time, and coverage profiles. Number two. Now we want to put MRP to work for us. Once the demand is cleaned up, we can now run MRP to deal with any additional proposals for replenishment that are out there. Who knows why we dealt with the demand first? Because zombies, for real. If you don't deal with demand first, those purchase requisitions or planned orders will just come back from the dead as MRP provides you with a proposed plan to satisfy the demand. If you don't clean up, they're just coming right back. Make sure you deal with closing out any firm proposals as well and clear them out. This is also important so that our reports have the correct information and can support inventory projections, projected buys, and other insights to the supply chain. Number three, last but not least, if our planning is now cleaned up, we need to reclass the material. First, make sure that the status is correct, either at the plant specific or cross plant level, as well as the sales status. Then, let's consider removing or updating the ABC indicator. And last but not least, make sure you update the MRP type to ND and the MRP controller number to move it to the right storage now that it's all clean and ready to be put away. See? It's not so hard to get ready for the disco. We just have to make it a regular habit and recognize that it matters and makes life easier for everyone. Thanks for taking a spin around the floor with me. Discontinuing materials is often challenging because in order to make it hassle free, a certain sequence of activity needs to occur. What we want is to put these materials away clearly and set the status so it's clear what's happening with them. If we do all the things we need to, this also gets these discoed items out of the way so that we can drive focus back to the active materials that need our time and attention. Hey Sam, that trip to the disco was pretty fun and informative. I think those are some great steps that we can all easily follow. Hey folks, if you want to know more about discontinued items, there are plenty of videos about it. And of course, if you have a burning question, feel free to submit it below or use the chatbot.

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.

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.

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.

Demand & Supply Planning

MM; PP

MD04; MM03; MC42; MC43; MC.9

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're going to focus on using SAP to determine if a material is living its best life. What a big question. We all want to know if a material is being planned efficiently and if we are investing wisely. And as we know, the best way to learn is by doing, so Kristie how about you take us away on this little topic? Of course Martin, I would love to. As a material planner this is a question that is always top of mind. We're constantly striving to improve the quality of our planning. In this demo. We're going to highlight some of the key reporting mechanisms that can help us to quantify whether this material is living its best life. I'll also go through a few of the visualizations that can help us. And lastly, I'll embed a few tips for what to do with the information as you find it. Alright, so one of the common questions that we get asked is how to tell if a material is living its best life and what I mean by that is how do you tell if your material planning is healthy, if you've got the right balance of in stock, inventory levels, if you have planning parameters that make sense, and if you're managing the overall cycle of that product's planning well. And you can see here I have a material pulled up in my MD04 screen, which means that this is live as of the moment that I've come in here and we're just going to take a little look through this material, and I'm going to give you a couple of different places where you can go to see what is happening. So this is a material that has about 1,000 units in stock, and it has about 1,000 units required for safety stock, so it's over at safety stock level and you can see that we are just starting to eat into that safety stock value as we're going into the end of this month, and that the end of the replenishment lead time, so where we would replenish without needing to expedite, is out at the 25th of July. And there is a purchase requisition sitting out here and it has a 30 on it, and a 30, if I double click, as some of you may recall, is that we need to actually get this process in motion. It's what I call the Alice in Wonderland, it is the Mad Hatter's message to us that we are late, right? The rabbit is telling us we are late, we need to get this going as quickly as possible. And so that gives us a sign that in this current moment in time, we are a little bit behind, our demand is exceeding our supply plan and we actually need to move quickly in order to get this in. So ideally, if we were to fully recover our safety stock by the time that we go negative, we need to have some more inventory come in the, June 23rd. And SAP's doing that math for us. It's told us how much we need and by when we need it. So that's our first little review is just to see how many exceptions there are. And then what you could do is actually take another look a little further down and make sure that your situation is balancing out, once you get past that near term horizon and so you can then see you've got another purchase requisition that is due in the 22nd, so about a month later. And then another one that is coming in mid October. So, if I were to take a look and see what's happening with this particular material, something else I might do is go in and take a look and just see what's going on with that lot sizing, make sure that that's lining up well, I don't have a lot size that's too massive for this material in terms of that lot size key in particular, if I'm pulling monthly versus weekly buckets and how that compares to the demand. Something that's really handy to do is to actually go in also and sum this up. So maybe come in here and just take a look at your plan in monthly buckets and see how you're looking. So you can look at that pattern of receipts versus requirements and there you're going to see the same thing. So we've got 1,363 units coming in July, we actually need that in June, we've got another 1,363 coming in in August, and then there's nothing in September, and then in October. And if we continue and just look as we go out, it looks like we are actually replenishing this every month to every two months is when it looks like this is coming in. So there's a pretty regular plan in place as we get a little bit further out into the time horizon. So some of the things that are really good to take a look at are your average daily consumption. So this would be one of your document evaluation reports or average daily requirements, so looking backwards or forwards. But the place we're going to go today is MC.9, so this is one of your LIS reports, and well go ahead and run this. We're going to run this looking out for the last 12 months, so taking a look back at our history and I'm going to go ahead and execute this, and I'll go ahead and switch this just so that you can see the material here. Go ahead and flip this over. Maybe you have brought in multiple materials here, I can see. And you'll see there's a bunch of different key figures going across out on the right hand side, and we can see the number of issues, and what our average inventory stock has been. So 750 kilograms in stock and all of those good key figures. But something else that is really great to do, and is often not known about, is if you come up here to extras, under detailed info, there's a wealth of information that is available to you that drives really good decision making. So the first thing I might want to take a look at is just my receipts and issues diagram. So this is going to tell me how my stock position has been over time and I'm just going to go ahead and bring this over for you, and you can see here, I'll turn on the legend, but your green and blue lines are telling you how much has been issued, so that's out, and how much has been received. And anytime that we start to see a gap, let me see if I can move this out of your way. Anytime we start to see a gap, you'll see there's a reaction down here in our stock level. So the red line is our stock balance. So that's how many units we've had in stock, and so we can definitely see a pattern here as we look at the goods receipts versus goods issues, and what we're really looking to do is create a repeatable pattern for this material, because if we can, it becomes much easier for us to manage, right? Reducing the volatility, we're making sure that our stock is staying in a positive position, but that we don't have a lot of dead stock or unused stock that's out there. Another thing that we can do, if it's a little hard to read these graphs, sometimes it's easier to just look at some of the information. So you can come to extras, and again, detailed information, and come down to key figures and then again total stock. I'm going to come in here and this gives me some really great information. There's all kinds of key figures, like if I went in and I pulled in all key figures, we'd have a massive list to scroll through. But these are very, very helpful. So this is going to tell me what the opening stock was as of the beginning of the period I've got my average, I can see my minimum, so you can see at one point we did go a little bit negative, and then I have my maximum, and then what my closing stock value is. If there's a big delta between the two of these, that also gives me some information I can go chase down. But probably even more important is it tells us the last consumption date and then what our average range of coverage is. So that's how long the inventory is expected to last. So over the last year, and I can even break this down and take a look at the last 3 or 6 months and see how it moves or changes. I can see that I've been able to cover about 31 days on average, and then I can also see information around my inventory turns, and then also very interesting, how many days that I actually was sitting in a zero stock position. Sometimes this is intentional, depends on what your stocking strategy is, so whether this is good, bad, or indifferent, that's important to know. Whenever we stock out our dead stock goes to zero because it's the lowest stocking value over the period of evaluation. So we're looking across an entire year here. So what we would want to then do is go back and maybe run this for a shorter period of time, 3 and 6 months and see how that compares. And then we can also go in and get some more stats just around where we were sitting from an inventory perspective before our goods receipt. So the last time that we've actually received those goods in. And this is really helpful information in being able to diagnose if this material is living its best life. So I'd really encourage you to go out and take a look at these key figures. And particularly pay attention to how those trends or pieces of information change as you look at 12 months, 6 months, 3 months. And then that's going to give you an idea of how that material is working, and then also use the graphs and charts to support your evaluation and see where there's opportunities to further refine your planning strategies and your planning parameters in order to get that material to behave just the way that you would like it to. And continue to revise and run MRP and review your results until you are satisfied. So in summary, we have covered how to use SAP to determine if a material is living its best life. Using SAP to evaluate a material's performance allows you to work towards stability and predictability. Optimize your planning. And improve your inventory levels. And it's really important that we go in and look at our materials in this fashion on a regular basis. This is one of the key things we can do to fine tune our planning engine and manage through business challenges. We know the only thing that is always true is change and doing this will help us to keep all of our materials in line with the new business challenges as they come forward. Thanks Kristie, this is especially important. We need to take a step back to determine the best path forward. SAP provides quality information that is often just not known. Love seeing some of these opportunities highlighted here. So, if you'd like to learn more about how to get the most out of your SAP system please check out our videos but if you also have a question please submit it below.

Demand & Supply Planning

DM; P2P; PTM

MD04; MM02

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. Hi, Martin here, and in this video we'll be taking a deeper dive into safety stock. Now in today's video, when we say safety stock, we are referring to static safety stock maintained in the material master. This is the flavor of safety stock most commonly used and therefore most familiar to most MRP controllers. It's one of the key decisions that needs to be regularly reviewed, and those discussions and approvals tend to be a cross functional in nature. Kristie, how about you tell us more about safety stock and specifically the static safety stock that we just called out. Kristie: Well, Martin, it seems that this is a high area of interest for folks. So what we're going to do today is take a deeper dive. Now, there are two major areas of discussion around safety stock. The first is what flavor is it, static or dynamic or safety type? Which one is best for [00:01:00] which planning situations and how do you determine a good value? And then the second is what the safety stock is actually going to do and how it should be thought about in the planning results. In this video, we are going to be focused on the latter. You've determined a value and now you're going to see how the system is going to respond. SAP has some options for us here and I'm going to get in and show you. What, where and how those options may play out. We will also touch on what a static safety stock might be a good fit for and some situations where it may not be a good fit. And lastly, what a good cadence of review might look like depending on what season of planning the business you're in. Let's get into it. All right, let's go in and take a look at the planning situation for this material with some safety stock on it, and what you'll see here is that we have an exception message 96, and if I double click on it it's going to give me the definition down here. So it says stock fallen below safety stock level, and we can [00:02:00] clearly see that. So our available quantity on hand right now is 87 pieces, and we have a safety stock of 100 pieces. That leaves our available stock balance at negative 13 pieces. Safety stock comes off the top, so it's the very first thing that MRP is going to plan for, it's the very first demand that it's going to see. ~Okay? And so,~ From here, it's going to go out and plan the rest of the month for us and start to get our replenishment in order. So the static safety stock needs to be looked at regularly, that's the very first thing that we want to make sure that we're mindful of. We don't want to change it too often, but we do want to make sure that we're going through and we're reviewing our safety stocks on at least a quarterly basis and dealing with any outliers. ~okay? And that is becomes very, very important. ~And then if there's a major forecast change, or if an item switches to a different point in the product life cycle, then we also would want to be able to go in and look at that and review it at that point as well. ~Okay,~ So some things that we want to consider as we're thinking [00:03:00] through our safety stock value, and I'm just going to go ahead and navigate here and remind you of where this lives, so it lives on the MRP2 view, and you'll see it right down here, ~okay,~ and we have the option of defining the safety stock level ourself or using an MRP type in conjunction with a service level that we're trying to achieve and having SAP go in and calculate that value for us. ~Okay,~ And that's a very interesting way to go about things, but most organizations are calculating this in some way either ~um,~ outside the system using another tool, and in some rare cases also using that feature in SAP that most people don't know about. So we'll have another video to explain that, but when we're thinking about safety stock and reviewing it, any changes, significant changes, in our lead time, in our minimum order quantity, in our lot sizing procedure, variability, new customers or structural changes to our forecast or in our product life cycle would cause us to want to go in and [00:04:00] review this, and you can see we've got this set right now just so it's really easy for us to see what's happening with the planning, which is the planned delivery time of 0 and in house production of 0 as well. So let me go back over here and we can see that this is also lot for lot with a minimum lot size of 3 and we do have a planning time fence out there of 7 just to park that demand out at the end of it. The other option that you have when it comes to your safety stock is you can make a decision on how much of this safety stock is considered available to planning. Now, as a general rule, you want to keep this as simple and as straightforward as possible and so most cases, your safety stock value that you see here is not going to be available to MRP, meaning that we want to honor the full 100 pieces. But you do have the ability to dampen the noise a little bit and let's say your safety stock is a 100 pieces, [00:05:00] you actually could change that so that it is considering a different value and i'm going to show that to you just so you can see what it looks like. I'll go to environment and change material and what we're doing here is we're actually controlling this by our MRP group. So let me go in and choose a different one here, I believe this one will do it and save And then right here from my navigation profile, let's actually switch that over. I'm going to switch to navigation profile, that's going to let me quickly go in and do the things that I need to do, which is going to include running MRP. So I'll go ahead and do that and save. Thank you very much for saving that, and now I've got my hotkey to go directly to MD02. It's going to let me run MRP. Go ahead and run that. And so the other thing that we can do is we can look at our periodic totals, which will help us to see how long that safety stock is actually going to last. So let me go ahead and [00:06:00] refresh. Okay. And what this actually is doing now, you'll see the values have changed over here. So it's letting me use some of that safety stock. I'll change it back here in just a moment so that you can see that again. So you'll see here we're swinging negative, we've got negative 69 pieces and when we come back here to our next replenishment, you'll see that we're able to actually go in and consume some of the safety stock, and what we've set it to is allow it to use 50 percent of that safety stock in planning. So that's an extreme level just so that you're able to see it today, but in general, ~first of all, I'll~ start first and foremost with being able to, ~um,~ have that safety stock stay clean and not use it in MRP, meaning you're not allowed to dip into that 100 pieces, you want to get that warning message immediately, get the exception message, and get the replenishment plans. But if for whatever reason you are in a position where you need to actually dampen that noise, you've gotten really good at keeping your safety [00:07:00] stock up to date, you're feeling confident with it, then you can actually choose to adjust the percentage ~of, um,~ of what it is that can actually be considered in planning, so, it's an ~alternate, um,~ alternate option there for you. What I wanted to show you also is this periodic total. So, we can actually come in here and see, let's look at our months, so we can see what our demand is over the next couple of months and that is going to help us to know how much we're covering with that safety stock. So, maybe that 100 pieces is way too high based on what it is that we are currently using. And you'll see here ~that~ that 100 pieces actually lasts us quite a long time, so this would be a good candidate for review, and bringing that back down, think about the class of the product and the variability. So your ~A, B, C, ~A, B, C and X, Y, Z, ~um,~ so your importance of that product and then the variability and how volatile it is to help you figure out how much coverage you're going to want. So a couple of different options for you there in terms of being able [00:08:00] to use that safety stock and set it up appropriately with a good cadence of review. Again, make sure that you don't change it too frequently, like if you're changing it every month, that is too often unless you are in ~you know,~ a very fast turning industry. And try to take a look at it based on ~you know,~ your own seasonality and review. And then make sure that you are triggering it with events like product life cycle management, reviewing to see what your usage looks like, and keeping an eye on those lead times and lot sizes to make sure ~that ~that safety stock still makes sense. Okay, so in summary, today we've taken a deeper dive into static safety stock and what the rules around it mean to our planning results? We still definitely have our floaties on on this topic and we could spend days actually workshopping it. However, we hope that this gives you a little more insight into the reaction of the system and the options for how safety stock can be used in the planning and availability checking. Remember that because it is static, it does not automatically change with the seasons, the [00:09:00] life cycles, or the changes in business dynamics. We are in control and we need a good cadence of review and adjustment that is exception based and at a frequency that makes sense. Back over to you, Martin, to bring us home. Martin: Once again, thank you Kristie. Brilliant. This is a hot topic and I don't see that changing anytime soon, frankly. Safety stock can be such an asset if planned well. I like the options and reminders we talked through today and hopefully that will support everyone with good reminders as they go into their next cycle of review. Choosing where you want to invest working capital, time, space and materials is a key decision in the planning process in any business that's a supply chain oriented. So folks, if you want to know more about this video and others, please check out our other catalogs and of course, if you have a particular question submit it below.

Demand & Supply Planning

DM; P2P; PTM

MD04; MM02

Welcome folks, Martin here, and welcome to the service that unlocks and reveals the hidden value in your SAP system. In this video, we'll be discussing one of the least well understood buffering techniques. It's called safety time. Now, so far, we've been talking about quantity buffers, but in this video, we're going to be focusing on time buffering. Let me make one point clear, though. Safety time is still an impact on working capital. You're holding the inventory in stock for longer than necessary to protect against volatility and variability and while both static and dynamic stock is primarily focused on protecting against changes in demand and we're often ongoing, safety time is focused on protecting against variability in supply and should be a temporary measure while the root cause of that constraint of performance issue is worked on. I know there's a lot there and a lot said so we want to get into the details of this, Kristie, tell us how to use [00:01:00] safety time effectively. Kristie: Sure thing Martin. Of the safety options, this is the one that causes the most confusion. Your point on working capital? I have a vivid memory of sitting across from my team when I was new to the organization. They were absolutely insistent that safety time was no big deal. They had it on every item because it's not safety stock and therefore it was low risk and less impactful. So, let's test that hypothesis. Let's go into SAP and try out some different safety time settings and let's look at some of the different results. What are the actual impacts for working capital? What do we actually risk? And why are we saying this should typically be a temporary measure while the root cause is addressed? I think the only way to effectively address this is to jump in and learn together by doing. Let's do it. Safety time. I think that this is one of the most interesting safety features available to us ~um,~ on the ERP side for [00:02:00] SAP and I'm excited to talk to you a little bit more about that and actually show you in the system today. So you'll see here, I've removed all other safety stock that's going on and now we're going to actually try to introduce some safety time and as a reminder, we want to use safety time really in specific situations, they should be ~um,~ event driven, short term, maybe we're working with a supplier and ~um, you know,~ we're going through an improvement activity with them. So we want them to actually see that it's due earlier, but still maintain the lead time and then be protected on the back end because we actually have buffered. So ~let's,~ let's look at this and see what it actually is doing. So the first thing I'm going to do is go to environment and I'm going to go in and I'm going to change this material and if we look here, not a whole lot going on, I'm just going to keep this really simple and easy to see. So I've wiped out most of the other planning~ um, different planning ~parameters so that we can focus purely on the safety time. So I'm going to come down here and [00:03:00] there's a couple of different settings. The first is the safety time indicator and you have a choice, so if it's blank, no matter what else you have populated, it is ignoring your safety time. So this has to be set in order for it to be MRP relevant and then one is if we want to just use safety time for our independent requirements. So things like our planned independent requirements, our customer orders, those kinds of things, deliveries. Or if we want to use it for our all of our requirements, meaning also considering dependent requirements that are coming through. So in this case, we're going to go ahead and say, yep, use it for everything, that's just fine. So now that we've turned it on, okay, think about that as turning it on, now we need to decide how much coverage we need. ~Okay,~ So let's take the example of you're working with a supplier, they're having some trouble, you've gone through and you've run your lead time reports, you've done some ~um,~ looking at what it is that they're actually delivering to you [00:04:00] based on your purchase order date versus your goods receipt date, and you're finding that their lead time is maybe ~it's~ 19 days and they're actually delivering in ~like~ 25 days. So let's go ahead and say ~Okay, ~that's 6 days, let's give them 7 just ~to,~ to help. And so you've got a specific improvement initiative, you're working hard with that supplier, you want to maintain your lead time while still keeping you safe. So this is going to tell the supplier you need it 7 days earlier, but you're still going to give them their stated 19 day lead time, but you're actually going to be allowing for it to take up to 19 plus 7 days in this case. Now we have zero lead time on here right now, so I'm going to go ahead and hit save. And what we're going to see is we're going to see all of our requirements actually change by about 7 days. Okay, so we just saw here, we've got some start and [00:05:00] release dates that are coming in and what I'm going to do is I'm going to click this little button that says switch on safety time, and what I want you to keep an eye on is this requirement for 325. Okay, see this guy here 325, 6 pieces. I'm going to hit safety time and this one for 4/1 here is for 55 pieces. ~ All right, ~So, now what we'll see is that thing for 325, that independent requirement has gone actually to 314. And we had another requirement out there for 5 pieces and it actually went to 321. Okay, now let me turn it back off, there you go. See your 6 pieces moved out and if I scroll down just a little bit, there's your 5 pieces. So it's doing that offset and it's basing that on the factory calendar. So let's go back in here. I'm going to show you something else that's really cool. And if you're not sure how it's doing that math, then just [00:06:00] come down here ~and you can always do, here you go, and it will, ~you can always do F1, and you'll see here safety time is in work days. Okay, so based on your factory calendar. So 7 days could be 7 calendar days, if your work calendar is for 7 days a week, in this case, it's 5 days because my work calendar is actually 5 days. ~ ~And then the other thing that is here that is really helpful is this is called a safety time period profile. So let's think about when you have a particular situation that only lasts for a couple of weeks, and I'm thinking here that the big example is Chinese New Year. So perhaps you are working with your suppliers in China and you want to actually offset just for the period around Chinese New Year and actually have your requirements pulled forward. You could set up a safety time period profile that only lasts for that particular period of time. And we'll do [00:07:00] something like bring all your requirements in two weeks early to help you navigate that. I can't tell you how many times I've gone through and had to manually manipulate that to get it to be two weeks early. So this is a great way to explore that as well. Now this is a little piece of configuration, you go in and you set up the profile and then you'll have profiles to select from when you click on this little drop down here. Okay, so you see here, there's one here called dynamic safety time, and this is set up for just one little period of time, and it will do the offsetting. So that is another great option if you're looking for a way to accommodate some sort of periodic adjustment. Maybe you have physical inventory every ~you know,~ December, July, or June, and you can actually schedule to have your deliveries coming in just a little bit early just for that particular period of time. Then you don't risk carrying a lot of additional inventory because ~you, um,~ you've got this ~just kind of~ turned on and you forget to turn it off. So, make sure ~that, um,~ you consider that as an [00:08:00] option. As well, be mindful of your work calendar and then consider whether you're using safety time just for your independent requirements or for everything. ~Sometimes when it is, I'll give you~ Another great example, candy season in Chicago, it's really hard to get trucks, so you need a little bit of extra lead time there. Sometimes there's congestion at the ports. ~So, um,~ You want to make sure that you're using this very ~Uh,~ specifically, ~so, ~and it's not something that becomes ~a,~ a time offset ~uh,~ that is ~always,~ always happening for you. You really want to be ~um,~ driven ~by,~ by purpose when you choose this. And then when you're using safety stock or coverage profiles, again, make sure that we don't stack ~on,~ on top of one another with quantity and time buffers, or we can find ourselves going It's carrying way too much inventory very quickly, so be very judicious with this and make sure that you're reviewing it on a regular basis. But there's some really great tools here for you in terms of being able to buffer that kind of time versus having to deal with quantity. And it also allows you to quickly see what's going on and which items are set up with safety time and you should have a good reason, a specific reason why you're using [00:09:00] that. So nice features there in terms of being able to go through and do that balance and bear in mind, you do not get an exception match since 96 with safety time you're only going to get that with your static safety stock. All righty, let's review what we explored together today. We went into the material master and tried a couple of different options for safety time. We ran MRP and we reviewed the results. And then we took a look into how to incorporate safety time into our review or not. We discussed the benefits and the challenges and we talked about how to think about safety time versus safety stock. And Martin, if I can make one more point. We've also seen organizations try to use all three techniques on the same part. Doing that is like saying Beetlejuice three times. I will appear in your office. And while it's awesome to use all three flavors of safety buffering across your organization, please choose and build a plan for that part and make sure it's a good, clean plan where everyone can [00:10:00] understand the results. Martin: That's an excellent point, Kristie. Thank you so much. So safety buffering is a commitment to resources and working capital right. We need to be very deliberate and transparent in which technique we're using and why in order to get the best value out of your inventory investment. So these conversations should typically take place cross functionally in a mature MRP environment and should be at the forefront of sharing information on what they are seeing and which part is the best choice for which particular product. So folks, if you want to know more about what particular parts and rules to use for your materials, please go ahead and check out our other videos and if you have a particular question in mind please submit it below.

Demand & Supply Planning

DM; IBP; OTC; P2P; PTM

MD04; 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, my name is Martin, and in this video we will focus on how to take advantage of SAP's make to order capability. When planning strategy make to order is used properly it enables organizations to produce goods based on formal demand, ensuring that customs receive the products based on mutually agreed to lead times. Kristie, tell us a little bit more about make to order. Let me tell you a little more about make to order. Make to order is one of our categories of planning strategies. Planning strategies are a key rule in how the system or MRP will evaluate and respond to demand and to signal manufacturing. It is a powerful feature when used correctly and in this demonstration I'm going to focus on three key things. First of all, what make to order truly means. Second where we set the rule for SAP or MRP to follow. And thirdly, how it looks in our planning. All right let's talk about one of our other strategy choices. So if we say the easiest strategy choice to understand and the one that we probably are most commonly used to seeing is make to stock, the next most common is going to be make to order. So make to stock simply means that we are going to stock in advance of that demand or be in a position where we have supply available in advance of that customer demand or stock transfer order. In make to order now we are not even starting the replenishment process until we have that customer order on hand. This is very important. A lot of times we will say we are make to order when we are not, we are actually finished or assembled to order. Make to order means we do not have any of the components, the sub-assembly or the finished good in advance of that customer demand, we are going to respond and react only to firm demand in the system. The forecast does not come into play as we are getting ready to make that product. We are working only with firm demand. We're not stocking in advance, so no safety stock, no additional inventory is planned to be on that shelf. Our go ahead for manufacturing is the actual receipt of an actual firmed order. So if we look at this in SAP, let me just go ahead and back out of here and let's go over to our stock requirements list. And we're going to go ahead and pull up a material, this guy right here, and let's take a look and see what is happening. So you can see here, this is what is often the case and we should never, ever see, is inventory that is hanging out here that is not tied to a customer order. What we should be seeing is a pair between the customer order and the production that we are planning or the production that we have confirmed to produce. And then when we actually go through and we produce that inventory, it is going to tie directly back to that customer segment and this is one of the planning strategies for make to order. This is a planning strategy 20, which is going to tie these two things specifically together. So we can ee that our demand is discreet for that particular customer order, and that is why you see the 20 pieces here are not being used because they are not coming directly from a customer order that needs to be placed, so we would have to actually move that inventory into that customer segment in order for it to get drawn. We mentioned this just because this is very typical. People will say, organizations will say that they are make to order, but they are actually stocking in advance of the demand and the problem with that is that we don't draw the inventory through as we should. We need to make sure that if we assign a make to order strategy or we say we are make to order, that our clearance to go into manufacturing or into procurement is based on that customer order, that we are flowing that inventory back into that customer stock so that it can be pulled and assigned and shipped out the door in order to meet that customer's needs, and is allocated properly all the way through. So nothing is produced or procured in advance of that customer signal. So where you'll see this happen is going to be on the MRP 3 view and your material master. So if you come in here, you'll be able to see your different strategy groups get assigned. Okay? And so this is make to order production, and you can see make to order, no assembly order. So everything is going to be related directly to that customer order that we have received and we're doing everything based on that customer order. So common strategy, we want to make sure that we are honoring the intention of it and if we say that we are make to order, we are not replenishing or starting that process until the customer order is actually in hand. We're going to talk in another video about assemble to order and some of the benefits of that. So if you're going, eh, we say we're make to order, but we're still forecasting and driving components or sub assemblies. Watch the assemble to order and that will walk you through how that process is intended to work, but make to order strictly means we are waiting for that customer demand to come in and then we're reacting responsibly to it and that is our strategy group 20. So in summary we have covered how make to order allows you to. Pull your process through according to your actual customer demand. Control replenishment based purely on the customer's commitment. And develop lead times based on the total lead time of that product from soup to nuts. Thanks Kristie. Often used for low volume, high mix, or highly custom products, using this feature can really help us be more responsive to our customer demands and ultimately increase our bottom line. Once again, so if you are looking for more information on this particular topic or other topics in your SAP system please feel free to check out our other videos and of course if you have a question please submit it.

Demand & Supply Planning

DM; IBP; OTC; P2P; PTM

MD04; 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, my name is Martin, and in this video we will focus on how to take advantage of SAP's make to stock capability. When using the planning strategy make you stock effectively, it enables organizations to produce goods ahead of the formal demand and therefore shorten sales delivery lead times. So, Kristie, the flip side is also true, when we use make to stock ineffectively we will produce goods we don't need or sell. Tell us a little bit more about how we use this feature properly. I'd love to Martin. Planning strategies represent one of the most vital governing rules for MRP. Choosing make to stock is a powerful feature when it is used correctly and in this demonstration I'm going to focus on three key things. Number one, what it really means to be make to stock. Number two, where we set the planning strategy. And number three, how MRP is going to expect us to respond to a make to stock strategy. All right, let's talk a little bit about planning strategies. Specifically, let's talk about make to stock. So these are the planning strategies that many of us are probably most familiar with. And most particularly, planning strategy number 40, by far the most common out of all the planning strategies in a make to stock environment. Now, you also may see a planning strategy 52 or 63 out there, and we're actually going to talk a little bit more about those in some upcoming videos. But this is all about being in a position to service that customer demand as needed, and your demand program may be made up of a variety of things. So it could be your customer orders, it could be independent requirements in the form of forecast, it could be stock transfers that are pulling through to another location servicing a sister plant, it could be the dependent requirements that are flowing through from a BOM, so on your semi-finished or your raw materials. So this just means that you are stocking in anticipation of that demand. You're in a position where you're able to store inventory on the shelf. And let's look at an example of that in SAP, so let me pop over here and we'll take a look at one of our items. So you can see here, this is a pump, and for this particular item we are planning on stocking in advance of the demand signal. So that's how this is set up today, this is forecasted, the forecast type is a VSF, this is our ongoing anticipated pull for the customer, and we are planning on supplying that. The other thing, you'll notice that there is safety stock, we're planning on keeping some stock on the shelf as well. And so as we're gearing up for our production runs, you're going to see that they are set up to cover that safety stock and our forecast, even though we do not actually have an order from the customer yet. Okay, so we're positioning that stock in anticipation of those customer orders to come in and pull it forward. This is one of the most simple versions of how you might see a planning situation as it relates to a make to stock item and you can see we're going to continue to plan for that across time. So we're replenishing our safety stock and then we are covering our planned independent requirements, and if I pull this into a periodic view for you so that you're able to see what it looks like in time buckets, we look at this by month. You can see here you've got your planned independent requirements, your remaining balance to sell for those periods, and then you have your receipts to continue to replenish. And because we're in a hole right now for March, you can see that's where the majority of the receipts are coming back in, in order to get us back up to a positive, available to promise quantity. So we're anticipating that demand, we are planning for it, and our trigger to manufacturing in this case is allowed to be a forecast, and based on that forecast we'll make those commitments for manufacturing or for procurement. And we are able to control the horizon with which we're doing that, so we can use things like periods of adjustments to drop that forecast, and then of course our consumption profile so that we're seeing a clear demand signal, but we are going to make to stock in anticipation of that demand. So where are these settings? On the material master, if you go into display, you're going to navigate over to your MRP 3 view, and this is where you're going to see that strategy group show up as well as the consumption profiles for that particular forecast, and if I click in here you'll see all of the different options. I can click into strategy group and it will not only tell me the kind, but it's going to give you lots and lots of different options for what you can set up. So many of us use one or two in our operations today. You are not a make to stock or make to assemble or to order organization, a lot of cases you have materials that fall into each of those buckets, and so you want to apply the appropriate planning strategy for how you want that particular material to behave. So your raw materials don't require planning strategy, just your items where you are putting in a forecast or they are available to sell to a customer or to transfer to another facility are the ones where you would set that strategy in place. So in summary, we have covered how planning strategies or make to stock specifically will allow you to. A, stock in advance of the formal demand and be positioned for when that demand occurs. B, shorten lead times for our customers. And C, protect against volatility and variability that exceeds our ability to respond within the customer's tolerance time. And your point is well noted. This is the most commonly used planning strategy and we do run into trouble where we set all of our materials to make to stock. It's a good thing to have a plan for every part and determining the correct planning strategy is a great starting point. Thanks Kristie. A very effective planning strategy and can really help differentiate you from your competitors. However, has to be clear and be carefully used with clear intent. So if you would like to learn more about how to get the most of your SAP system please check out our other videos and of course if you can find a video to answer as burning question please submit a suggestion.

Demand & Supply Planning

PTM; P2P

MD04

[00:00:00] Welcome back, folks. Martin here. And today's the day we're taking a closer look at one of SAP's features that is so underutilized that it must be hidden. Well, we're here to walk you through value that's been hidden in plain sight. We're always looking for tools that highlight integration, good conversation and enable further data backed decision making. So many times the answer to a question that could be a great conversation is a side note, and I'll look into that. We believe that getting more of these conversations happening in the moment and in the room promotes integrated thinking and is more effective in problem solving. Monique, you are probably the queen of the brief, the promoter of the aha moment, and a huge believer in the importance of context. What is this tool? Tell us more about it. What are some of the things you can inspire us regarding this particular tool? Way to tee it up, Martin. [00:01:00] That was like a legit Paul Bettany in a Knight's Tale moment. And I love a good moment. So, okay, I'm going to rise to the occasion. So the question is, can we do it? This sometimes can give us a good idea of whether we are in a position to say yes or no, and why. It can help us to understand the impacts of changes and the ripple effect of our decisions. What it doesn't necessarily have is the insight for what cards we might be holding that will open up the door to the yes. Being able to use a tool like this to drive conversations. Gets us engaged in the room and thinking about solutions as a team and over time, this lets us recognize patterns and get to the outcomes more efficiently. So let's get into SAP and have a quick briefing on the anatomy of the order report and the good stuff we can get from it. So here we are again, friends, picking up from our home base, the stock requirements list. Imagine for a moment that we needed to reschedule an order to meet a pressing customer [00:02:00] need. If that's not currently our plan, there are a series of checks that we need to go through to evaluate the availability of capacity, labor, and materials. The job of a planner or scheduler is not an easy one. It's our job to balance service levels with inventory performance and efficiency. That can be a delicate puzzle that requires sometimes difficult conversations. But by the time the shop floor has a scheduled order that will be released and executed, we want to make sure all of our ducks are in a row. So how do we get started? We have a bunch of options. The order report is special because it's a quick validation in the room that can open up the conversation to problem solve and find solutions. Now, while we're talking, I'm doing a few things. First, I found an order that needs to be expedited. I've selected that order by clicking on it, and then I've clicked on the icon for the order report. This [00:03:00] has opened up a new section on my screen here, and I have options for how I might want to see this information. I like it at the top of the screen so I have more real estate to display the columns. And still have a good portion of the stock requirements list visible below to interact with. I can also control how much real estate on the screen this information is allowed to take up by setting a percentage in my user settings. Now this information is interactive. I can navigate to any of the materials we see here by double clicking. And their planning situation is going to display for me in the stock requirements list below. It's easy to jump between materials and take actions interactively. Refresh and see the impact in the order report. Now I want to highlight a couple of important features for you here. Consider them to be a few of my favorite things. First of all, we can see each of the levels of the BOM and what's needed to produce each. Then we can see the requirements date [00:04:00] compared with the current plan availability date. We'll also see the associated exception message and the date it needs to be rescheduled to in order to support this run. We can also see, and this is my favorite part, what kind of MRP element we are counting on here. Do we have an order in motion we can expedite, or is it just a planned MRP element like a planned order or purchase requisition? Do we have stock and may need to redeploy? This helps us to ask questions and seek out opportunities. Two other points to be made before we head back into the studio. First, this does not replace the full production plan and cycle of material availability checking, capacity evaluation, and finite scheduling, or calling a supplier to see what can be done, or working with the customer experience team to discuss priorities. But it helps to get the conversation started in the room and actions agreed upon. [00:05:00] This speeds up the conversation. Second, another great use for this tool is if you are working on your use of the exception messages in SAP, is to see the impact of realigning activities through the BOM. It can really help the team see how we can resolve several exception messages all at once. Now let's get back to the studio and wrap this baby up. I hope I was able to deliver some helpful context and a few aha moments in this walkthrough. I believe that was my end of the bargain after that great introduction today from Martin. So a couple of quick things before you go. This tool is a great jumping off point to explore not only can we do something, but should we? Many times when we're entering this conversation, it's because something hasn't gone to plan and we're looking to see if we can meet a need. Having the conversation cross functionally in the room promotes integrated thinking that can lead to a good decision on next action. Which may involve redeploying of [00:06:00] capacity, labor, or materials to meet an urgent need. And this helps to build a context for that question. Ah, all right, Monique. That was pretty good. And if this conversation sparked your interest, especially the points about evaluating options and impacts, you may want to check out another video that's coming soon about the companion of the audit report, and it's called the pegging report. Integrated system, integrated supply chains, that's what we're striving for. We need some collaboration to support that integration for sure. So once again, Monique, thanks a lot. So folks, if you want to learn more about this topic and the pegging report to come, you will see this in our video catalog. And of course, if you have some specific questions on these topics, feel free to submit it below.

Demand & Supply Planning

DM; IBP; P2P; PTM

MC.9; MD04

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 provide an overview of the value of moving our organization from a push to a pull company. Now, what that really means is from a material point of view, are we pulling our materials through the supply chain or are we pushing them through the supply chain? I'm going to let Kristie explain that in a little more detail. Thanks, Martin. Moving from push to pull is a powerful strategy when used correctly. And in this demonstration, I'm going to focus on three key things. First of all, what are some of the reasons and techniques for why and how we would move from push to pull with an emphasis on decoupling techniques. Also, how would we analyze materials behavior to determine the truth of whether we are pushing or pulling? And lastly, what does that transition from push to pull look like? Stabilization, inventory optimization and responding to the signal. Moving from push to pull is such an important conversation. So, whether you are starting to receive information from your customer, so they're getting more integrated into the process, so you're getting a clear pull signal from them that's more reliable, you're starting to integrate that into your demand planning process through CPFR, or maybe even receiving scheduling agreements from that customer with firm free and tradeoff zones, or whether you're thinking about decoupling strategies. So how you're able to service many customers by going to an assembled to order model and just being in a good place to be able to supply depending on what it is that they're asking for in their final variation or you're thinking about decoupling because your signal at the end item is just not good and so you want to be able to position for pull and you're starting to pull through your supply network or your up and running on S/4, maybe you're exploring a DDMRP strategy, which is kind of the ultimate in pull. As you're thinking through these things and locating where your inventory in the appropriate places throughout the supply network, it's really good to be able to evaluate how you can shift from push to pull. But one of the things that's fundamental to doing that and one of the starting places is to just be able to go in and analyze the behavior of your materials. So I picked a material kind of at random here, and this is MC.9, and I'm just going to look and see what's been going on with this over the last year. So I've got a material and a plant in here, and I've got a period of evaluation that I'm going to look at, I'm going to look at it for the last year. Now, if I'm going from push to pull, I'm probably looking at smaller more finite pieces in order to be able to take cuts on what's going on. And immediately when I come in here it's going to give me some statistics so I'm getting some evaluated stock values, my current stock value, how many units I have on hand, my average, and then I can compare where I am for evaluated stock versus average. Wow, almost twice as much as what is normal for me, so it's going to be some good information for me to consider how many times I've issued the product, and then what, I'm looking at for patterns over the last year. But what I'm really interested in is if I come up here and I go to extras, there's this detailed info button, I can get a lot of, first of all statistics on what's going on, but I can also get some pictures. So the two things I'm most interested here right now are the key figures. Coming down here, I'm going to go ahead and pull based on total stock. And what it's going to do is pop up a bunch of information for me so I can see, what has been happening, my opening, my mean value, and my closing so I can see I'm actually growing an inventory on this particular item. I can see the last time it was consumed. What my average days of coverage is. So this is definitely, I'm pushing, I've got 394 days of coverage. I can see my current inventory turns, how many times I've stocked out. Very, very important as we're going from push to pull. We may make an intention to stock out if we're moving to make to order, but in general, we want to make sure we're working that slowly down, I can see my dead stock percentage and then I get just a little bit more information on what is going on. Now for those of us who like to look more at time series information I can also do that from here as well, so I can go to extras and then I'm going to go to detailed information and what I actually want, I could look at just more red line graph through stock level and look at total stock, but I want a little more information. I want to see how I've actually been planning this item, so I'm going to do my receipts versus issues diagram and I'm going to click on total stock. This is going to give me a little bit more information on what's been happening. So, you can see here, let me make this nice and big for you, so over time, over my period of evaluation, I can see the red line here and I can show on my legend. My red line is my stock balance so I can see my stock has started to go up a little bit and then my blue is my cumulative receipt quantity so I can see my supply pattern, how that's playing out and my green line is my cumulative issues quantity and what we can see here is that the patterns are very similar, but as we're looking at that accumulation, my issues is really lagging behind my receipts. And the bigger that gap gets, we can see it has a direct relation to what is going on with my stocking level, right? So as we see more blank space between the receipt and the issues, that's a time delay and I can see that my red line is graph is going up. So if I'm thinking about how I can get this back into control as I'm thinking about how I'm working through the behavior of this item, I want to start to get things just to be as stable and predictable from a supply perspective as I possibly can. And what that's going to allow me to do is as that becomes more predictable and stable, now I can start to reduce down how much inventory I am holding with less risk of stock out. So you can see at a very normalized pattern, we just recently started using it and then as that has happened now we're really starting to see this tick up in a big way. So I want to reduce that process deviation, it's going to help me get closer to, being in a position to pull rather than push and really start to bring that inventory safely down to a level that allows us to serve the customer within that customer's tolerance time. And that's a couple of the different ways that we can evaluate and look at information that will help us to go from push to pull. So in summary. We have covered how moving from push to pull allows you to position yourself for your customer's demand. Reduce inventory that is stagnant and stabilized supply. And decouple where necessary to protect and buffer against volatility and variability in demand. Oh, once again, thanks Kristie. Making this philosophical decision and allowing SAP to pull the materials through the supply chain can make such a difference to the business. If you want to learn more about this specific topic and others about your SAP system, please check out our video catalog, and if you have a specific question feel free to submit it below.

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. Hi Martin here, and in this video we are going to focus on how to find needles in the proverbial SAP haystack. Given the breadth and depth of SAP, sometimes it can be difficult to know where to start. If we just focus on the vital few things we can quickly uncover where the biggest differences can be made. Kristie, how about you help us figure out where these needles/problems potentially exist? Absolutely Martin. Let me give you the tour. Needles in haystacks via the exception monitors provide a powerful capability when used correctly and in this demonstration I'm going to focus on three ways to identify these needles in the haystack. First of all, we can use red lights to help us. Second days of forward coverage. And lastly, using the exception messages to help us identify these needles in the haystack. Let's take a look. Do you ever feel like you come into your exception monitor and you're looking for a needle in a haystack? Usually feels that way when you're first getting started, and sometimes when we have a lot of volatility or variability and the situation gets away from us a little bit, it can feel like it then too. So you're definitely not alone, I certainly have felt that way. So how do we find these supply situations that are the most urgent? I'm going to give you a couple of different ways to do that. So the first one is the one that we're likely really familiar with, and that's our red lights here. So when we have a red light, it means we're at risk of service level degradation. It means that we do not have enough inventory as of this moment in time to cover our current or past due demand. And you can see here we actually get a calculation that says how far in the hole we are. So that's one of the ways we can know which items need the most support in order to be able to recover. And then we can also see if we have a recovery plan currently in place based on what's going on in this first receipt days of supply and your second receipt days of supply. There's another video that walks through examples of how those calculations are made, but that will help you also to know where you want to focus your time and attention. So particularly on the ones that don't have a recovery plan in place. So we're not seeing any improvement in the days of supply after the first receipt days of supply. Alright, so then the other way that you can do it is you can come into the binoculars and we can look for some exception messages. Always update your statistics, you can see I've got a lot of different materials that I've pulled in here and I'm going to go ahead and update those statistics because as we go through the day things are changing. So I want to make sure that I have the most up to date information and I can work my exception monitor throughout the day. And as I'm moving forward in my day, I'm probably transitioning if I'm in ECC or I'm not yet running MRP live from MD06 to MD07, so I've got the current stock situation and I can come over here and I want to go to find exception messages. I'll come in here and I'm going to look to see which exception messages have me the most concerned. So, highlight here we've got one where we've got some items that have the stock fallen below safety stock level. So that message 96, I've got 4 occurrences of that. I also have a lot of reschedule ins, so those are items where my supply is due to come in later than what is needed. So beyond that mad date for the customer or beyond the forecasted demand for orders that have not yet filled in or beyond when it's needed for use in production or for stock transfer. Even more important or more critical than that are these, these 7 30's These are the ones where I know that I need to get this process in motion, I'm actually already behind. Unless I had a time machine, I would not be able to get the material here according to the current lead time. So my goal with these is to get my orders placed and then start to work through the process of moving them in within lead time if possible, and in order to do that, I might need to work some of my reschedule out or my cancel messages to free up time, space, materials capacity, room on containers, all of those good things that will allow me to create a hole to bring in these critical items. So I can use this to help me find those really critical supply situations and then start to work through them. There's also reporting an SAP that will help us with this. So some of our inventory analysis reports would let us go in and take a look to see where we've got that negative days of supply. So really helpful would be MC42 or MC43 to be able to go in and filter on negative days of supply and even work that near selection criteria in. As you're going into your exception monitor, you also have some of those filters. Let me go ahead and leave this overview, yep, that's fine, and I'm going to go ahead and scroll down to the bottom. You'll see here I'm using the extended selection criteria for MD07. This is also there for you on one of your tabs if you are just using regular old MD07, but this extended criteria is nice. I wish when I was a planner that I had known that this existed many, many years ago at the beginning in my career, I didn't find out until I'd been working with SAP for quite a while, and boy was this a game changer for me because I could look at multiple plants or specific material numbers altogether. It gave me lots of different ways to group and prioritize. So this is really helpful. But you can see down here in this range of coverage, you can actually pull in based on certain stock days of supplies, so you can work through your threshold. So for example, eliminating some of those positive 999 messages, really throttling to your inventory that you're currently managing through and then looking at your 999's as a seperate use case might be helpful, focusing on some of the recovery for your first receipt days of supply. So those are, in most cases, it's going to be the things that are scheduled to come in, so purchase orders, ship notifications, production orders, process orders, those kinds of things, firm stock transfers. So you can see how your pipeline is filling back up and what you're looking at in terms of recovery, that will also help you to prioritize. So really nice to have not only the exception messages, the red lights with those days of supply calculations sitting right next to them, but also some of the filtering on the front as you're entering into MD07 to be able to set some of these thresholds so you can focus on them as well as the inventory analysis reports. So things like MC42 or MC43, where you could go in and actually filter based on specific days of supply and that allows you to look at it not only from forward looking, so what you're predicting to use, but also backwards looking in terms of usage. So nice to have those different options in your back pocket. That'll help you to find those needles in the haystack so that you can move through and work through those exception messages and get those orders placed so you're in a good position for supply going forward. So in summary we have covered how using the exception monitor to find needles and haystacks allows you to. Focus on the materials in the most critical planning situations. Evaluate and resolve the supply and demand imbalances. And lastly, find materials with very specific planning situations. When we are first getting started with exception monitoring, it can feel completely overwhelming. In fact, you may feel like the data or exceptions are not real, rest assured life can be different. Too true Kristie. Thank you. Understanding how to get key insights from SAP allows you to narrow your focus and get the biggest impact from a few key actions. So if you want to learn more about doing that and other things around your SAP system please feel free to check out our video catalog. If you have a specific question that needs to be answered feel free to log it below.

Demand & Supply Planning

MM; PP; SD; DM

MD04; MD05

Hey folks, welcome to the video service that unlocks and reveals the hidden value in your SAP system. So we know the best way to learn by doing, so let's get cracking on this video. We're going to be discussing an effective feature available in MRP list and stock requirements list, and it's called the periodic totals. Yes, ladies and gentlemen, clicking on that green sigma button will take you to a place that's very useful. Kristie, tell us more about periodic totals. Well Martin, sometimes it's nice to take a peek at the forest and not just the trees. It can be a super useful way to look at what's happening at the day, week, or even month level. There's some great intel we can glean from these rolls up. But you don't have to take my word for it, we're going to go in and take a tour. We'll go see where to access the periodic totals. Review the information that lives there. And then provide some solid examples of where this functionality can be really helpful. Let's plant some seeds to get your minds churning. All right, let's get in and take a look around at periodic totals. You can see here I'm in the stock requirements list. Now you can get to this similarly in the MRP list as well for those of you who are still running classic MRP. But bear in mind your MRP list is static as of the last time the MRP run occurred versus your stock requirements list or MD04 is dynamic as of the moment that you entered it or when you last hit your refresh button. And this is the way that most of us are used to looking at our planning situation, right, so it's date by date, requirement by requirement, element by element. But sometimes it's really helpful, especially if you are having a conversation around a recovery situation or when you're expecting to be caught up in back and balance. If you just need to get a really quick rough cut look, it can be very helpful to roll this up to periodic totals. And the way that we do that is actually by clicking on this little guy right here. So see this little green sigma button? When I click on that, it's going to give me some different options for how I might want to look at this. Now I can go ahead and click on this, and here you'll see we've got these different options, so we can look at it day by day, so it's going to accumulate our forecast, planned independent requirements, our requirements, so our actual sales orders, deliveries, etc. And then our receipts, so what we plan to have in terms of replenishment and then it will calculate for us our available quantity, so what is it that we expect to have available in order to be able to serve the customer. And then over here, you're going to see the actual coverage which is what we intend to have in terms of the number of days of supply, so it's calculating that out for us. And we can look at this on a day by day, a week by week or a month by month basis. So I'm going to go ahead and switch over to the week accumulations that we can see that now it's getting a little easier to see right what those actual balances are and then I can even come up to month and what I love about week and month is that as we look at the planned independent requirements, we can start to think about that as our remaining available to sell so what do we expect to still have coming in, in terms of sales orders or deliveries or other customer requirements, stock transfer orders? What else is out there that is going to come in and consume that forecast that we need to adjust for? Or, if we're planning to that forecast, irrespective of our requirements, what is it that we still anticipate needing to serve? So, open balance remaining to sell, requirements that we have in hand. How much we are expecting to receive. So, you can see here, let's do the math, we are expecting to receive, we have 0 available right now, we have 6 pieces that we are expecting to receive, we have 2 pieces of requirements already on hand, so our balance at the end of the week is 4 pieces. Okay, and then if we come down here, same thing, no additional requirements for this week, we have 11 additional pieces planned to come in, so we have 15 pieces available. Coming down a little bit more, we have 17 pieces planned to go out the door, we have no more coming in, so 17 deducted from 15 gives us a negative 2, which gives us an actual coverage of a negative 14 here. And if you come down even a little bit further, now we have our expected available to sell for these weeks, so we're still expecting to get some additional demand in and again, we don't get caught up really until a few weeks from now. So assuming that today was week 43, really our first full recovery is not until week 51, and so this would be a planning situation that we can then go in and start to work. Now if you have dynamic safety stock or coverage profile in place, your view here will look different. You'll have some additional columns because you're trying to react and respond to that safety stock. In our case here, we do have a safety stock in place and I'll show you that in just a moment, I'll just flip over real quick here to seeing that accumulation by month, so you can see what your end of period balances should look like as you go through and out across the different months. And if you're ever not sure about what something means, you can come in here and you can hit your F1 key and it will bring up the definitions for you so that you can see very specifically what is going on here. So your actual range of coverage in this case is in days versus the other pieces of information that we are looking at are in units, and then you can read a little bit more to understand exactly how the system is calculating that for you. So again, that is going to be the F1 key on your keyboard. So the difference here is ATP quantity versus your days of coverage. Now to go back to what we're normally looking at here, all I have to do is click on the puzzle pieces, I'm going to switch to our individual lines and here again is that safety stock, so the 24 pieces that's netting out our current inventory on hand. So we are reliant on this additional production order for us to be able to supply and you'll see we also have some exception messages here that we need to take care of. But sometimes it's very helpful, especially if you have a very active product, to be able to quickly go in and do that roll up and look at it either accumulated at the day, week, or month level, and really depending on how your forecast split is happening that weekly or monthly can be very, very helpful in terms of seeing what your remaining balance available to sell is. It's also a good way if you're working with some of your counterparts, maybe in customer service or sales support, to be able to give them an idea of what that recovery period looks like and that also is accounting for your lead times. Okay everyone, now we're up to speed on this little piece of functionality that can be so helpful at getting a quick look at how supply is serving demand. We're all on the same page with where to find the periodic totals. What the options are for totaling the requirements, and receipts by period, and the expected available to promise for that period. We also chatted through some context around this information and when it can be the most useful. The hope is that this gives you enough information to start thinking through how we might use this piece of functionality in your day to day life. Back over to you Martin. Awesome, Kristie. I can see how periodic totals can be of help. An actual matter of fact, we probably have to take a step back every now and then and just kind of rise above the chaos of the day and kind of assess our problem to see if it's a persistent one. This in combination with forward looking green graphs can be actually very powerful. So once again, thank you and good stuff. So folks, if you want to know more about this and maybe even about the green graph I just mentioned, please check out our other videos and of course if you have a particular question please submit it below.

Demand & Supply Planning

DM; IBP

MD04; 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, my name is Martin, and in this video we're going to focus on something really important, and that is SAP's planning strategies capability. When used correctly, planning strategies can help organization optimize their production planning processes resulting in improved planning, accuracy, and reduced lead times. Kristie, a big topic for sure. How about you take it away? Guess what Martin? Planning strategies represent a powerful feature that will dictate how we will recognize and respond to demand and when used correctly truly help organizations properly balance the investment and capacity, resources, and materials to the demand, and in this demonstration I'm going to focus on three key things. First of all, what are our options for planning strategies and how does that selection look. Where can we find the planning strategy in SAP? And lastly, just a few tips for selecting the planning strategy that meets the needs of your business and the customer. So now what we want to do is go in and actually take a look at the list of planning strategies that are available to us. So where we're going to find this is in the material master. So you can see that I am in here, I'm under MM03 because I just intend to display and I've made my way over to the MRP 3 tab and then you can see that I'm going to come down here to this particular field. This tab is where most of the information around how we are going to respond to demand is going to live and one of the places where we're going to do that is through our planning strategy or our strategy group. So we need to go through for all of our materials and make a determination on whether we are make to stock, meaning we are stocking inventory in advance of receiving a sales order, whether we are make to order, which we're making our inventory and direct response to that particular sales order, or if we are an assemble or finished order means we're stocking at some level of the BOM but we are able to convert within the customer tolerance time. So you can see here that there is quite an extensive list of different planning strategies. In fact, it's difficult to believe that there would be a manufacturing scenario out there where we didn't have a planning strategy that could help us to get us to where we need to be. But as you're thinking about your demand program and how you're flowing information into the system, this is your point of control, so how am I going to react and respond to that demand? How do I remove risk from the demand signal that I'm experiencing and where can I count on that demand and produce even to something like our forecast or to an overall plan. So let's say for example, you were wanting to be in a position to only make to customer order. You might choose something like one of the planning strategies that say make to order production, so something like a 20. Perhaps you are more of a traditional make to stock environment, you might be using something like a strategy 40. If you were an assembled or finished to order, you might be working with a planning strategy 52, where you're stocking at one level of the BOM and then using your forecast in order to be in a position to quickly convert from those raw or semi-finished goods into the finished good all within customer lead time. Maybe you have a particular planning material and you're able to provide a forecast for that particular group but not for the individual and finished goods, you could tie them all together using a planning strategy 63 and even control which planning plan or production plan you're going to be using to divide that demand signal out. These strategy groups are so important, it's one of the two key master data fields that help us to get our plans in place for the material so that we know how we're going to react and respond. It's one of the key points of control and one of our best opportunities to ensure that our manufacturing strategy is in alignment with our customer needs. So as we think also about moving from a push to a pole model this is another area or lever we could focus in and try to make those improvements. But very long list here, you've got 79 options in this case. I'm sure a few less than that, just coming straight out of the box but there is a strategy group for just about any manufacturing scenario for how we want to react and respond to that demand. Definitely an area to explore and a lot of opportunities to work through these and know that it's not a selection just for your overall organization, but this is something that can be evaluated by product, family, or by other levels of the hierarchy and it's tied directly in to your go-to-market strategy. So typically underappreciated, usually folks are using only one or two. So really a lot of opportunity here to diversify your strategy and make sure that you're planning in the right way to meet your customer needs. So in summary we have covered how planning strategies will allow you to be able to. Strategically react and respond to demand. Control your response time to the customer. And empower MRP with the correct information on whether that material should be planned or replenished as make to stock, make to order or assemble or finish to order. Thanks Kristie, that's a big topic for sure. Using this feature allows for an improved picture of and response to demand forecasts, better production planning, and of course increased customer satisfaction. So if you want to learn more about planning strategies and other features in SAP please check our video catalog and if you can find what you're looking for feel free to submit a suggestion below.

Demand & Supply Planning

DM; PTM

MD04; 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 Martin here, and in this video we will focus on how to take advantage of SAP's planning with a planning material capability. When used correctly planning with a planning material can help organizations evaluate the quality of signal and plan at a right level to drive results. Kristie, I know that means a lot, how about you tell us a little bit more? Let me break it down for you Martin. Planning with a planning material is a powerful strategy when used correctly. What it allows us to do is group materials that share a demand stream together and allow the demand for that material to consume the forecasted requirements for the family. In this demonstration I am going to focus on three key things. First of all, where we maintain the master data that supports planning strategy 63 or planning with a planning material. Second, what a material that utilizes planning strategy 63 would look like. And lastly, how the materials that are set up to reference a planning material might be related to one another, or essentially the use case for planning strategy 60. Okay, before I show you this one in the system, I think it's important that I give you a little visual in the definition. So, planning with a planning material and without make to order planning strategy 63, you have to think about this one as a one to many relationship. So it allows you to be in a position to produce many different finished goods. Think about it, if you had a whole family of products that were related to one another, and you needed to tie it back to a single material where you were able to get enough signal to forecast. You may be forecasting that planning material to be in a position to produce a variety of different end items. So if you saw our previous video where we talked a little bit about assemble order, and we were walking through the different levels of BOM's that you could stock at, this is using those same principles, but in addition to that, you have one material where you're placing that signal and many different end items that you may be producing as a result that has some variance in the way that it's finally built out to the customer. Okay, and you get to choose the level of the bill of material, so it's got a common BOM. That level of bill of material that you want to stock at, so you're sending that demand signal through appropriately. This is very, very helpful when you have a lot of variants in terms of the end items, but you have some consistency in terms of the non-variable components that can be in there and consumed by those different end items. So let's do this now, let's go ahead and actually look in SAP and I'll show you where this is maintained. So this is our example here, and again, this is a planning material so customer orders will never come in against this item. It's just getting us set up to drive requirements to the materials that are associated with it. So this is 2087 aptly named planning material, and this is where we're controlling that flow. So we're entering our forecast here and it is generating a planned order, which is going to get transitioned over to the related materials. We're going to go to 2088, which is one of the end items that is related to this planning material, so you can see the dependent requirement, it's handing that demand over here. But nothing is going to happen until we actually have a customer order come in and then that is going to be what will actually drive this. So let me display for you, unless we are choosing to stock at the finished good level, but we can control the level at which we want to stock, let me display for you where these settings are made. And this is going to be on your MRP three view of the material master. And you'll see here we've got the planning strategy is set to 63. Our planning material is 2087 and our planning plant is 3000. So you can even use this across network if you need to, to be able to consolidate, but it's much easier to see the demand and supply generally in the same plant, so easier to plan with when you're first getting started, but as you go, you could start to make this very sophisticated. But then as we think through the bill of material that's related for the non-variable components, we're going to be driving from that in order to be able to convert this into the appropriate end item within that customer's tolerance time. So everything that is related to the replenishment with all the non-variable components is driven by that forecast on the planning material and we control the level of the BOM that we want to stock at and then this finished good as the customer orders are coming in, we'll start to see this tick away and we'll get those planned orders converted into production orders, and then everything made and produced and ready for that customer requirement. Okay, so very, very useful technique to help us to be able to get the demand signal at the right level and maintain flexibility as well as assurance of supply as we're passing those requirements down. So in summary, we have covered how planning with the planning material will allow you to. Think about how your materials are related and if we get a stronger signal when grouped together using a planning material. Maintain a forecast at the planning material level to support several different end items. And support cross location planning, referencing a planning plant. This planning strategy is very specific and may be a little hard to understand, but hopefully this helps to generate some interest and conversation around this helpful planning strategy. Thanks Kristie. This sounds like an excellent way to improve demand forecasting accuracy, signal better production plans and increase our customer satisfaction. So if you want to learn more about planning strategies and your SAP system please feel free to check out our other videos and of course if you have a burning question feel free to submit it below.

Demand & Supply Planning

P2P; PTM; DM

MD04; MM03

Hey everyone, Martin here. And 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 how we can use the plant specific material status field in the Material Master to align the activities and materials eligible for to through its stages of the product lifecycle. This helps with everything from compliance to making sure that we have the opportunity to run the inventory down at the end. So Sean, I'd love for you to dive into this and tell us more about it. What are some of the key things we should know about the plant specific material status? This is a great topic, Martin, thank you very much. Now folks, the plant specific material status is highly configurable to your organizations needs. It's meant to associate what activities a material is eligible for and where it is in the product life cycle. And it creates for us a high level of visibility if you take time to think through the descriptions. This is how we can know if a material is cleared for takeoff. Or on restriction for planning, for replenishment, or for procurement. And most importantly, know that SAP follows rules and alerts, and if you're trying to perform that activity that a material is not eligible for, it's going to let you know. So let's go in and take a look. Today we're talking about plant specific material status. Now this will be a high level demo, but in doing so, a reminder that material statuses are configurable to the needs of the organization. And what they do is they tell us whether a material is subject to restrictions and what those restrictions are. So let's say there's a material under development or one that's about to be discontinued, we will more than likely need a way to restrict that material, which could be blocked for use in certain business activities by assigning statuses that direct how that's going to happen. So we're going to look inside of SAP as to how this takes place and we will take a look specifically at the material master MRP options . So let's get started and let's take a look at what it looks like in SAP. So here I have a material, what I'm going to do is I'm going to go to the material master and take a look, and you'll notice in this view, this is the MRP1 view, that there's a field here called material status. And so if I open that up, what I see are the restrictions that which have been applied from a material status point of view, and in this case, there are six of them. We see design, we see design and plan, use, phase out, obsolete, and then there's one to block our BOM header items as well. So those are the restrictions that are currently in place. Now, looking inside of that, just to get a view for setting the rules as we go, what we do is get a view behind the scenes as to what's happening inside of the configuration. So here's our material master, and I'm going to again take a look at what that looks like. And now I get the same six areas in terms of these descriptions that I see on the right hand side. This was the drop down, remember, from the material status piece that we saw in MRP 1. And if I wanted to look at what happens here, I can look under design. What are the details behind that? And this is an interesting piece because we spoke about blocking certain things or not allowing certain things to happen. So from a purchasing management point of view, what's the messaging we're going to get if we want to buy something or purchase something while it's in the design phase? And you'll notice there's a B, and if I just bring those dropdowns for you, there were three options. If it was blank, there'd be no message at all. It'd be go ahead, do as you need to. If it was an A, it would give me a message, a warning that would say, look this is still in the design phase, so here's a warning, you may not want to do this. Or as is currently the case, it's a B and that B says it's going to give me an error and it will not allow me to do any purchasing based on something that's still in the design phase. The same can be said for manufacturing. So if I come down to this piece of the puzzle under production, I'll notice here that I also have a B. So it's also going to block me, it's not going to allow me to do anything from a production point of view, it's going to hold back as far as that's concerned. And so these are really interesting and important pieces that this is where we set the rules that is going to help us guide. If I went into the use phase, if I look in the use, what I'm going to see is that it's all open. Once this material is in use, it's free, we can purchase, we can put out RFPs, we can do production, etc. So that's how the rule set works. By contrast, if we got down to an obsolete place and we look at what does the obsolete look like, I'm now going to just see that I've got this B everywhere. So whether it's purchasing, whether it's bills and materials, whether it's routings, whether it is the material requirements, whether it's production, the B is indicating to me, as I showed you earlier on, that it is going to give us an error message. In other words, it's going to block us from actually going down and continuing with that. So this is where the power of the material status comes into play in terms of creating restrictions and not allowing us to continue in that space because we've set up the rules, and we can see as we track back here through the configuration process, we're setting up the rules to say, please make sure that we actually block things at this stage of the puzzle, and we don't want to make it go forward as far as these are concerned. So that's the first area where we're able to put those restrictions in place. It's in terms of the material master inside of MRP. Okay folks, let's review the so what of this powerful field found in the MRP 1 tab of the material master. First of all, well constructed statuses show a clear progression that matches how a material might move through its lifecycle with some accommodation for things that could come up and that would require temporary restriction. The fields we're discussing today is at plant level, which can be helpful if status change and may need to be done differently by either plant or by country. Now most importantly, while this field is great to support reporting, it is an operational field that's meant to have teeth and assist the MRP controller in their planning and replenishment processes. And then the warehouse team in moving the inventory through the process. Thank you, Sean. This of course sounds super valuable and an opportunity that one of many organizations should spend time thinking through and getting right. So folks, as always, please check out our video catalog and if you have a specific comment, please submit it below.

Demand & Supply Planning

P2P; PTM; DM

MC.9

Welcome to the ultimate guide to maximizing your SAP system. I'm Martin and today's video, we're going to help you unlock some of the functionalities you didn't even know existed. So shall we? Okay. In this video, we're going to take a look at some of the red line graphs and see what they can tell us about a material's history. I'm very pleased to say that we have a special treat today, none other than Sean Elliffe. He is a man that knows how to tell a story, so I cannot wait to hear him articulate some of the examples for us. Sean, take it away. Well Martin, we have action, we have adventure, we have surprises at every twist and turn and we are going to go in and see if these materials are predictable or if they're unpredictable. You know what the biggest surprise is? When we feel like an item is completely out of control and then we take a real look and find the consumption is actually pretty steady. So let's get in and take a look, see what the story is. I'll also highlight what we can and cannot determine from the visual that we're looking at. It's fun to imagine what the story may be, but we do not want to assume facts that are not actually evident. So let's go in and take a look. Welcome to the demo on predictability and unpredictability. Now, I ran my inventory report and found a few materials worth considering. I chose raw material and two finished goods and I based that on an analysis of key figures, such as the number of times that we've been issuing these materials over the period, against the average inventory value over the same period. Let's take a look graphically at these materials. So the first is then the raw material, let's start there and we're going to go and take a look at what does this look like graphically. And surprise! Look at that, wow! It really is a nice looking graph. You know what I'm going to do? I'm just going to change up the size of those lines a little bit so it is even clearer and we can what a wonderful looking graph, but what does this tell us? First, it looks like the activity is contained in a pretty consistent band. From the top to the bottom. If we look at all of these top to bottom, pretty consistent band, and we call that process deviation, and that consistency is the first good sign of predictability. The next thing we look at is what we call the consumption lines. Now, if you take these lines, the downward lines, all of these downward lines are consumption, where we are using material, consuming it, and looking at those, they actually look to be fairly parallel, pretty much parallel to one another, that's what they look like. And that parallel line between them gives us a second indication that we have a predictable material. Now there's some other indications in here, let's call them facts without evidence. We could call on what is our average inventory and it looks to be somewhere running through there close enough to about 30,000 kilograms. And what is the lowest point? So the lowest point over the period is this here, and that is known as our dead stock. And our dead stock here running around about. 13,000 kilos. Now, these are important pointers for inventory analysis and they're going to be covered in other videos. But let's look then at what is the final sign of predictability, and so for that let me come out of here and what I'm going to do now is I'm going to go to what's known as my receipts and issues diagram. Oh voila! Look at that. And what this is telling me is if I take a look at the receipts against the issues, and we'll open up the legend so we can see what that looks like. The green line are the accumulated issues and the blue line there are the accumulated receipts over time. And we're seeing two things here. One, they're tracking pretty close to one another. And that's a good sign where receipts and issues are very close and almost equal to one another. The second sign we see is that the line that they are tapering upwards is around about 45 degrees, and those two key pointers indicate predictability. So as a result, I would argue that this particular material has a high level of predictability and is really one that could go into an automation process quite easily, but a high level of predictability from that. Okay, let's take a look then at our second material, which is a finished good, and once again, we're going to go and take a look at the stock level and say, Oh, this looks a little different. And we'll do that same little trick that we looked at early on and change the width of those lines. All right, that gives us a much better picture. And so as we look at this and change that scale, the result is that we can see from the analysis, there's a large range and if I just give it to you off the top in terms of dollars this time instead of kilos, this high point here down to this low point here is a range of about $300,000 here to about $10,000 here at the low end and that is a significant process deviation from top to bottom and so at first glance that might look as being an unpredictable material because of this huge process deviation that we have. But it also raises some questions that require further evidence. Are we producing to plan? Are we changing constantly as we go ? Let's look at our lowest inventory point of the analysis, which is this one down here. It in fact, gives us a false sense of the read on deadstock, which as we go forward is actually climbing because as our averages go up and this space below, it's starting to show that deadstock is rising as we go. So we get these other nuances that we can start to look at. But looking at those instances, we also see lot sizes that are produced and if we look in this space here, we can see these lot sizes were pretty much consistent. There was another space there. Here's another space. And here's a third place where we're looking like they were running pretty consistently. And those consumption lines by the same token from our earlier conversation are showing some form of consistencies and there are some parallel dynamics against it. So once again, we want to go and say, okay I'm still not a hundred percent sure Let's go and do our final check then as to what that might look like and we're going to look again at our receipts and our issues diagram and what does that look like? Oh, well, look at that. So now if we put our legend in again, we start to see the green line is accumulated issues and the blue line is accumulated receipts. Now, we do start to see semblances of that 45 degree angle of the lines, which talks about predictability. But what we are seeing here is that once we look a bit further into it, we see that the gap between the two is getting wider. And that gap suggests that we are, in this case, bringing in way more than we are actually using. So our receipts are outstripping our issues. In and around that, we still have a good argument that there is predictability here that we can work with. And if we can take that predictability and optimize this material, I think we'd be in a good position. But I would argue in this case here that there is still a good semblance of predictability that we can see on this particular material. Okay, so with that said, let's go back and let's take a look at the final example that we have. And we'll follow the same process. Let's go down and take a look at what we have. Oh, this looks a bit higgledy piggledy, it looks like it's all over the show, right? So let's again, adjust that width so that we can see those lines a little bit more clearer. And what we also noticed is that we did have a stock out at a point here, but it's pretty difficult to start to see whether the downward lines are parallel with one another. And we start to get a sense that this is probably less predictable than we would otherwise think. We're also seeing that the process deviation from top to bottom is fairly wide, it's quite large, and so that noise suggests again that maybe not so good. Maybe it's not quite as predictable as we would imagine. And just looking at this particular graph, I would err on the side of saying, there's less predictability here than would otherwise be the case. So if we follow what we've done thus far, and we go back and we take a look at our receipts and our issues, once again, we get that issue. from a consumption point of view on the issues, that's the green line. There is a little bit of consistency. We can see some predictability with this material. The receipts seem to be all over the show and creating gaps between the two and therefore we're bringing in way more than we need but from a consumption point of view, it looks like that consumption is a lot more consistent. And so for us, the challenge is inconsistency on the supply side, which is the receipts but that needs to be tightened up for us to get to an optimized space at the end of the day. And so folks getting to grips with visibility on what is predictable and what is not will position us to better optimize our inventory and help our organizations as they go on the quest to free up working capital. What a fun demo. There's no doubt that a picture is worth a thousand words and being able to rally around a visual is immensely helpful to critical thinking and to problem solving. These graphs offer us an opportunity to be curious and investigate further to truly understand the story. And then when we're well armed, and particularly if we've had a surprise twist, and the material does have predictable consumption, We can focus on taking control and smoothing out the supply. Knowledge is power after all. So let's take the time to explore and understand. Thanks, Sean. Whenever someone says story, I always hope you're one of them to tell it. Thank you for helping us understand the opportunity in this feature and function. All right, folks, if you want to know more about this and hear more stories from Sean, please come back and check out our video catalog and of course, if you have a specific question feel free to submit it below.

Demand & Supply Planning

DM; PTM; P2P

MD04; MD62; MD74; MD73

Hi there folks, Martin here and welcome to the only video series where you get to unlock the secrets and reveal the hidden magic behind your SAP system. Intrigued? Okay, let's stick around. Let's get into this. We're going to talk about a very important maintenance step that is part of the care and feeding that supports a healthy demand management program in SAP. The step is called reorganizing the forecast and this activity helps to keep the demand signal clean, clear, and under control. Steven, reorganizing a forecast is a really tough subject. Take it away and tell us more about it. I certainly can. We can all appreciate how challenging it can be to produce a reliable forecast. Particularly, to be the humans who manage that process. The forecast can be off in two ways, time and or quantity. There are a variety of tools in the toolkit to help manage this. One of them is by reorganizing the forecast on a regular cadence. It helps to address when we want to drop, keep, or roll forward the remaining forecast to sell into a future period. Reorganizing the forecast addresses the former, and today we'll look at some options. It's important to synchronize the watches, make sure this cleanup activity aligns well with your S&OP calendar. Let's venture in and take a look. To keep or not to keep? This is the question. Let's dive right in and take a look at this material in our stock requirements list. We can see here that we have an ongoing forecast that goes out in weekly buckets for the next three periods, and we can observe that the forecast goes back to the beginning of the month of April. We're midway through the month and then in monthly buckets for, let's scroll, 15 months after that. This allows for a total visibility horizon of 18 months. Now some of you may see your planned independent requirements. The MRP element that represents the consensus demand plan or the forecast that's been released for execution. Those PIRs might be neither weekly or monthly buckets and stay at that level for the full horizon. SAP is happy to take daily, weekly, or monthly buckets and is fine with mixing horizons. So you can differentiate where it matters most. Let's say, for example, you were managing a specific promotion, event, or planogram. You might enter a forecast for a very specific period of time and also give it its own requirement plan number. You'd watch that very carefully, and then as the orders came in, check to make sure the orders match the expected quantity. When the orders are all in, you might then go in and remove any unused balance because you know that temporary specific need demand was now fully received. How do you maintain that? Well, you may have an advanced planning solution where the reconciliation will happen and the reduced values will be loaded into SAP as a change. Or, you might maintain it manually, like we're showing here. Double clicking on the forecast line to be cleaned up. Then going into MD62 to lower the quantity to what has been received. But what happens if you have a lot to work through? Well, you might want to put SAP to work and reorganize that forecast. Let's head there now. We can see here that we have some nice, healthy selection criteria. We can choose a plant or multiple plants, material or multiple materials, and then get far more specific. In this case, we're going to specify the requirement plan number, and I'll go ahead and specify the key date. Please note the text here on the screen around for plants without a reorganization period. Because this is key for regular maintenance. And we'll revisit that option here in a moment. Now one of the things I really enjoy about this activity is we can run it in test mode. Let's do that so we can see the results. We can see here that we have some allocated quantities. These are the quantities that are soft pegged to the forecast as pending consumption. We will have SAP net to those quantities and not below so we can keep the demand pegged to the period it was planned for. When we take off test mode, it's going to go ahead and clean these up. So back to our original question, to keep or not to keep? As a part of our monthly S&OP cycle, we need to evaluate what we want to keep, leave open, or roll over, and in this consideration, we also need to think about our consumption modes and the number of days for both forward or backwards. We also don't want to have outdated forecasts hanging out getting old and moldy. Here are a few things to consider. First, set your conversation around drop or roll forward to occur as you go into the third week of the month. If we're rolling forward, the volume gets added to the next period or the period we expect it to come in if we have new information. Second, consider breaking your forecast down into weekly buckets and running the reorganization as a regularly scheduled batch job, dropping a week at a time instead of an entire month. And again, work this in conjunction with your consumption mode and period. Third, think about the communication and collaboration opportunities when transitioning from S&OP to S&OE to keep everyone aligned and moving in the right direction. We have the tools to make this easier. Fantastic! Now let's review some highlights. Reorganizing your forecast on a set cadence can help relieve that feeling of a monthly reset. It's that sentiment of a big change at the beginning of each month when the forecast drops. When this activity is synced well with the S&OP cycle, the changes become more predictable and can even be taken in bite sized adjustments throughout the month. Lastly, we like to keep the planning clean in SAP, and this particular tool helps to maintain a clean sweep so we know exactly where we are and what we're aiming for. Thanks Steven. Maintenance is very important to a healthy system. No one wants to waste precious time and resources working on an incomplete, overstated and outdated plan where we can help it. Great tips today. Thanks again. Team, if you want to know more about forecasting and other related topics, please check out our catalog. And of course, as always, submit your questions below.

Demand & Supply Planning

DM; P2P; PTM

MD07

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'll be responding to a very important question about the exception monitor. Here's what it is. So, green means good, right? So, we've heard that so many times. Green means go. It's an interesting one, but I'd have to say that the answer is maybe sometimes. It may be good, but it also may not be good necessarily. And I know Kristie is going to take us away and tell us more about it. Kristie, tell us why we think green may or may not be a good thing. Krisite: You bet you Martin. The traffic lights in the exception monitor offer great insight into the stage of supply of our materials and the best part is how it's visual and we can catch it at a glance. Today we're going to go in and take a look at some examples of. Green lights and, we'll, let you in the audience be the judge of [00:01:00] whether a green light means good. We'll take a look at some healthy and some not so healthy green lights. We'll also review how to see if you have more red, yellow, or green lights, and how to know which green light needs some love. Away we go! So we've been taught our whole lives that red means stop, or sometimes bad, yellow means caution, and green means good. And in many cases, that is true, however in the exception monitor it is only sometimes true. So, here I am in MD07, I could be here either through MD06 or MD07. But I wanted the latest, greatest point of view on what is going on with our stock. And in this case ~um,~ what I want to talk about today are the green lights. But as a quick reminder, our red lights are the items that are at risk of service level degradation, where we don't have enough stock as of today to be able to cover our demand. The yellows are the ones that are in balance, but we need to continue to action them accordingly. And then the green ones are simply the [00:02:00] items that have a positive days of supply, and if you're ever not sure, you can always come to this Define Traffic Light button and click on it, and it's going to tell you ~what~ what will flag as a red, yellow, and green? And don't forget, not only do you have your current days on hand, but then you also have something called first receipt and second receipt. And what this does is it runs very similarly to an ATP check, you choose what portion of the pipeline is included in each of these. So whether it's incoming purchase orders or planned receipts, all of that good stuff. So there's a whole separate video on this you can go check out, but just know that that's out there too in terms of being able to see whether those red, yellow, and green lines make sense. Okay, and this is the SAP default, and if you click on basic setting, it will always restore it for you if you see something different here. But where this becomes really important is if we're looking at our green lights, anytime we see it drift into this 999.9, what that means is that there is more stock on hand than any of the demand that SAP has visibility to. [00:03:00] So if you don't have your demand loaded into the system, you may be seeing this a lot. Or, if you do have your demand loaded into the system, you have discontinued the item, ~um,~ but not wiped out all of the stock, then all of the stock has been relieved from your supply chain, then you may see it here. And, you could also see this ~um,~ if you are just replenishing way, way above what you're expecting to see. ~Um,~ And here, you've got your days on hand. So, this is 10 in this case, so we can see this item is plan to use the 600,000 pieces in the next 10 days. That's about how long it's going to last and down below, that 558 is going to last us about 30 days. Okay, so that may be very, very good. That might be very healthy for your supply chain, and those might be great numbers. But you do want to take a look at your green lights in conjunction with at least the stock days of supply. And then you can start to look further out once you understand how these are configured for your particular business. But definitely paying attention to this is very helpful. The other thing is you might consider is this an A, B, or [00:04:00] C class item? And based on that, if you have some rough inventory targets, you could use that to double check and make sure that it makes sense. And you could even do things like use the document evaluation reports for looking at range of coverage based on historical usage or future projected usage and get a good idea of how long that stock is meant to last. You can even run it for anything over ~um,~ X number of days and ABC classifications so that you can go in and see whether you're meeting those targets. And if you're not, then what you would want to do is you would want to come in and start to look at things like your minimum order quantity. You would want to take a look and see what's going on from a safety stock or a coverage profile. You can see that information here, maybe what's going on with your reorder point, okay? And that information is going to really help you to understand what is going on and how you can correct that situation. If you do find that you're overstocking, either based on your stock position now or after you start to receive your next round of goods in from your suppliers. So, super helpful to make sure that that [00:05:00] working capital is staying at the right level and just making sure that we go in and we take a look at this, and again, looking at your lights in conjunction with your current days on hand, how long that is meant to last you based on the visibility to the current demand. And if you don't trust that number then go over to document evaluation and take a look at your range of coverage, and again, you can break that down based on your ABC classification and start to get a good idea of whether that coverage actually makes sense for you, and then that is going to tell you whether green means good. And the conclusion is, green lights are not always good, but they are generally less urgent to act on than red lights, where we know that we're at risk of service level degradation as of today. Today we saw some good examples of. Good, not so good, and really not so good around healthy green lights. We talked through some options for identification and also some options for how we might resolve them. It's important that the supply chain has tension in it in order to make sure that we're in balance and taking a [00:06:00] deeper look into green light status definitely helps us to maintain that control. Thanks Martin. Martin: Thank you Kristie, love that. We love to think that green is always a go. So many things can factor into an unhealthy green light material status. Where are we in the product's life cycle? Our rules, our behaviors matching or not matching, our inventory policies and our cadence for review. We need to keep our pulse on this and make sure that we're maximizing the quality of our inventory investment. This is really a good one and we really appreciate the question. So thank you. So if you have more questions, please submit them below and we'll try and answer that and of course there are other videos that may be giving you more details around this.

Demand & Supply Planning

PTM; P2P

MD04; CM05

Hey there folks, Martin here. One of your guides to making the most out of your SAP system. Whether you're a beginner or a seasoned pro, today's video is designed to reveal functionalities that might just be a game changer for you. Let's dive right into it. In this video, Jake is going to introduce us to some tips and tricks for decision making when we find ourselves spoiled for choice and have to decide whether we will be making, buying, or transferring. Jake, this is an interesting topic, something you're very familiar with. Take it away. Definitely, Martin. The decision point on whether to make or buy is a classic. Today, we're also suggesting that it could be make, buy, or transfer. So when you're planning a material, the primary responsibility is in deciding how to supply the demand in the most effective way possible. So in today's introduction, I'm going to focus on a few key things. First, is the procurement key. This is the master data element that indicates that there is a choice to be made. Next, we'll talk about the different options that might be available. And then lastly, we'll highlight a few ideas on how to define the rules that guide that decision making. So let's go in and take a look. So here we are in everyone's favorite transaction to support critical planning decisions. MD04 or the stock requirement list. As a planner, we have a ton of different responsibilities when it comes to making sure that our materials are living out their best and most productive lives. And one of the most critical is determining how we're going to supply the demands. MRP gives us proposals for replenishment and exceptions for when we're out of balance. Most of the time these proposals have a clear source and MRP knows this based on the rules or the master data in the system. However, sometimes we have flexibility and while we do have a preferred source, we also have options. This helps to reduce risk in the process and provides for some flexibility. If we have an item that can be either made or procured, we'll have a special procurement type in place, look, we can see that right here. E is for internally produced and F is for externally sourced. We also have an option for X, which lets us know that this item can be either internally procured or externally sourced. A choice may be baked into the MRP run via a quota arrangement if we have some splits that we want to facilitate. That's great when that can happen as we see here. However, sometimes we have to make the decision. Let's imagine, for example, that demand suddenly goes up and the next plan's replenishment is from the supplier. They're not going to be able to expedite, so now we would want to look and see if we can transfer from another plant that has a less immediate need, or produce if we have the capacity and the components on hand. Now the opposite could also be true. Maybe we find ourselves overcapacity and we need to find some relief. That may be a great opportunity to do some cross plant rebalancing or get some capacity relief by deploying some of the replenishment requests out to the supplier. This is a great proactive activity that should be part of the midterm planning and the supply review or as a lead time intervention as part of the S&OE cycle. So a few tips. Make sure your picture in SAP is up to date and clear as possible. Look at your capacity overloads via CM05 and look for those opportunities to backfill for production. Understand the response time from the suppliers, or even the subcontractors, and review placement across the supply network to help each other out when the times get tough. It's really great to have choices, and I hope this opens up the conversation for future exploration. It's a real privilege to be in the driver's seat for planning, but it's not easy. And choices are awesome, but can also add complexity to the planning process. So it's really important that we can have the information we need, on tap in order to make smart and efficient choices. I love the flexibility that comes with a multi source environment and knowing that we can provide relief to whichever source is struggling is an awesome advantage. Thanks, Jake. That was amazing. Breaking it down like that. That was perfect. Thank you. So folks, if you want to know more about that topic, please check out our video catalog. And of course, if you have a specific question, our chatbot will be able to help.

Demand & Supply Planning

DM; P2P; PTM

MD04; MM03; MD02

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 discuss the plan that follows the demand. Hmm, I'm not sure what to make of that. Don't all plans follow the demand, Steven? Clearly not. Take it away. Tell us more. You bet, Martin. SAP offers two broad categories of planning. Consumption based planning, so things like reorder point planning, consumption based forecasting, etc. And another category called deterministic planning. In deterministic planning, we're following the demand program and responding to that demand program following the rules of our planning strategy. This may include sales orders, stock transfers, forecasts, requirements that support our subcontractors or our own manufacturing. This is the type of planning that most of us are most familiar with. So today we're going to go in and take a look at how MRP follows the demand to determine what we need, how many we need, where we need it, and when. We'll also explore a couple of different MRP types, look at the results, and lastly we'll show how a top level change on the sellable goods affects the plan for a component. Now let's dive in and take a look. Now let's go look at this plan that follows the demand. This is the world that most of us live in. We have a demand program that can be made up of several different requirements, and we're having MRP respond to that demand to plan our replenishment. In essence, this is the point of MRP, to supply the demand. So here we are in our stock requirements list. We can see that this material has a forecast or planned independent requirement, and that it also has a plan for replenishment. Every time the stock level dips down too far, there's a response to try and supply. This is the plan that follows the demand. Now there are many master data rules that fuel the MRP engine, but two of the big heroes are the MRP type and the planning strategy or strategy group. Let's go look at the material master and find these fields. The first is MRP type. The MRP types fall into really two categories with many options in each. The first are what we refer to as deterministic planning, aka, the ones that tell MRP it's okay to follow that demand. The second fall into the category of consumption based planning. You have the option to plan based on history or consumption or future requirements. Let's stop by the MRP 3 tab now. This is where we'll see the strategy group that contains the planning strategy. This controls how we respond to or supply the demand. We could be make to stock, make to order, or assemble to order. There are lots of colors in this coloring box as well. Plenty of options to choose from, and we could get really deep into that pool. But the point for today is simply that they work together to produce the results. Now that we have some orientation, I want us to experiment a little bit. Let's do this. Let's go back to the plan and let's change it. We're going to go in and manually adjust the forecast for the purpose of this experiment. Just one period, nothing too crazy, but let's put in a big enough number that we can see the cascade of the results. All right, cool. Now let's run MRP. Yes, yes, we're sure. It's okay to follow that demand. Now let's look at the results. We can see here that a whole bunch of things happened. We have multiple requirement changes because the demand transferred throughout the BOM and then the supply plan was adjusted in response. Let's go look. So here's our top level finished good that we just adjusted and this is one of the materials that goes into making that top level item. This happens to be a phone case and the component is the plastic resin. When the plan follows the demand, and if the component also has an MRP type that supports following the demand, you have a fully linked and very responsive plan. Sometimes that's great, and sometimes it poses some real challenges. If you'd like to hear more about how to address some of those challenges, we have a series of videos coming that start with the word decoupling. Well, welcome back. I want to leave you with a few highlights about the plan that follows the demand. First, it's highly responsive to the latest information. Second, the supporting master data for planning is paramount. And lastly, as we all know, a squeaky clean system is foundational to allowing MRP and ATP to perform well. Let's get it right so we can plan with integrity and make promises we can keep. Thanks, Steven. Leaning into exploring the different options for how we plan exploring how data integrity and proper data rules actually matter and work together to produce the results we're looking for is definitely worth the undertaking. Hey folks, if you want to learn more about this topic and other forecast based topics, please check out our video catalog. And if you have any specific questions, submit it below.

Demand & Supply Planning

P2P; PTM

MD04; MM02; MD03

Hello supply chain aficionados, Martin here. And in this time, we're going to explore how SAP can help us when we have so much space for a material, and we want to take full advantage of that allocated space by replenishing to the max stock level. Let's say, for example, that we have a tank, a silo, a shelf of dangerous goods or storage area, available for storage, and we want and need to control the amount on hand. There are a couple of ways to limit the replenishment to a maximum, but today we're going to specifically explore how to take full advantage of the space available by combining the max with an instruction to MRP to replenish to the max as well. Sean Elliffe is the king of inventory optimization and I'm going to ask him to help us talk through what this looks like and how to use the replenishment levels of maximum stock to be able to get what we need. So Sean, take it away. Thank you, Martin. Encountering a physical or regulatory space constraint is a definite challenge. Did you know that SAP can actually help you to pre plan to have the right level of inventory? Think about it as filling up to the max fill line. But planning to stay at or just beneath, depending on the other lot size rules that you may encounter. Now, you may choose to work this in conjunction with a reorder point, which gets you closer to physical reality due to a delayed trigger, or you may choose to plan in advance to the demand and then continue to refine as you get closer to replenishment time. You might then combine this with a schedule agreement and distinguish between a just in time release and a forecasted schedule. We can get quite sophisticated with this, that's for sure. So to get started today, let's keep it simple. Let's jump into SAP and we'll look at replenishing to max stock level using appropriate lot size key, a minimum lot size, a rounding value, and a max stock level so we do not exceed it. After all, the best way of learning is by doing. We are so spoilt for choices on the ways in which we can set up our planning. There are options to fulfill almost any business scenario and today we're going to produce a simple planning situation that will allow us to readily see the impact of three key master data fields and their settings. The large size key, the maximum stock level and a minimum order quantity. So let's jump into our stock requirements list and what we've done is we've set this up for material PLA black in plant 1000 and this material is our black plastic and supports production of our seasonal phone holder. Now we are storage constrained on Gaylord boxes at this particular facility and so we want to make sure that we have 1, 300 pounds of plastic resin in this facility at any given time. Now, we could use reorder points or deterministic planning to achieve this, depending on our requirements. And to keep the focus on lot size, let's keep the PD MRP type in place. From our stock requirements list, what we can do is we can easily go and make the changes and update the material master. A good way to try out this new technique is to just change one thing at a time, not everything at the same time, just one at a time and to check the results. So that's what we're going to do today. We'll build on our planning results as we go. So first, let's simply change the lot size key, which is over here, from two weeks to HB that's replenished to max, and then of course we have to put in place a maximum stock level, which is 1,300 pounds, which we spoke about. And what are we going to do is we're going to save that so that the master data is now correct. And then we're going to run MRP and just see what's happened and how things have changed. So good. Let's go and take a look at that and see what's happening. So here's our MRP, we're running it , off she goes, yes, we have. And this is what we looked like before we made the changes. Now I'm going to just simply refresh and then let's see as an outcome, what has changed. And there you have it. So we can see now based on the rate of demand that we're getting and the proposals that we need, it's taken us to the 1,300 max that we want. And that's really cool, isn't it? But maybe, maybe I'm not quite happy with this. I think we'll add a minimum order quantity, maybe, and a rounding value. So how do we do that? The same way we did early on, we go back to our material master. So I go to environment, change the material, I can see there's my max stock, which I changed my HB, which I changed as well. And this time, what I'm wanting to do is I'm going to add a minimum lot size. So my minimum lot size here is going to be 300. So that's the MOQ minimum order quantities. And at the same time, I'm going to put in a rounding value and the rounding value is going to be 100. So it's going to say, rounded off in hundreds. Now before we go back and run MRP, think about this use case. Maybe you have a Kanban in place, but you aren't yet fully taking advantage of SAP's Kanban board. To get started, you could set a maximum stock level that reflects the total value of your cards and a rounding value of a single card value. Pretty cool, right? Okay. So I've got one more for you. You have a silo that you want to replenish when it hits its footer. So you change your MRP type to a reorder point, we let it replenish to the maximum stock level to fill it up. You may still need some physical control. But this will get the orders in place for a just in time call off and provide a forecast for your suppliers So, so many good options. So let's do the following. Let's save what we've done now. Once again, let's go and run MRP, there's our MRP run, made the changes in the background and now let's see what's happened. If we go back to the stock requirements here is our snapshot of what it was before we made the changes, and if we hit the refresh button, you're going to see the changes that got made. You'll notice those changes that got made down the bottom because we brought in rounding values and minimum orders, these dependent requirements in terms of new supply have adjusted themselves. And you can see that they won't plan to replenish over the max with the introduction of the minimum order quantity and the rounding value, we've further throttled it back until we have planned to have enough room. And so my friends, that is how to build up a planning situation. Get curious, explore, and make it happen. Welcome back from our demo. Before we release you into the wild to go about your day, I want to give a couple of key points. First, as with all planning related settings, the settings controlling your replenishment to max stock level require regular review. And if you find that you need to be more precise and the supplier is nearby, well, consider moving to a reorder point MRP type with an HB lot size key. Second, this feature has many alternative uses and there are also alternatives to achieving a similar result. If you're trying to achieve a pseudo Kanban, that's very possible with container sized rounding values and a max stock level that represents the number of cards. Or using the actual Kanban functionality in SAP might provide a more accurate status for the stock for your use. Last but not least, this process requires management, space is critical constraint, and someone is going to be struggling if the goods are not flowing as you would expect them. Stay in close contact with the floor and be prepared to refine as necessary. Good stuff, Sean. Thank you. Those are some great insights and wonderful ways to engage and be curious. Thank you for the walkthrough and of course helping us brainstorm through this. Hey folks, if you want to know more about this particular topic, feel free to check out our video catalog. And if you're struggling to find a video, use the chatbot that will help you actually recommend a video for you to watch.

Demand & Supply Planning

DM; P2P; PTM; OTC

MD04; MD13

Hey, hey, welcome back supply chain superstars, Martin here. We've got a good one today. Did you know that there is a tool in SAP that will allow you to visualize the connection between a supply element for a component at the lowest level of the bill of material and the final demand element that is planned to serve? Now, we'll acknowledge that it's not the prettiest graphic that you'll ever see, but for the purpose of impact and analysis and connection, it's a very powerful tool. We have two videos on this topic. One on the visualization end product, and the other goes into detail around the pegging report. What we're talking about today is the end result known as the ripple effect. To take us through this excellent feature in SAP, Sean's going to be sharing with the team about how this specific report can actually help us. Sean, take us away. Well, well, well, Martin. How the tables have turned, my friend. Usually, it's Martin who talks about the ripple effect. Today, I get to put my own spin on it. This is exciting. In our walkthrough today, I'm going to focus on three key things. First, I'll carry on the definition Martin started to frame up on what we mean by the ripple effect. Second, I'll show you how to navigate to it and zoom in and out once you're there. And lastly, I'll give you some insight as to why this is so useful. As they say, a picture paints a thousand words. So let's get in and take a good look. Right folks, so here we are and what we're going to do is we're going to go into a transaction called MD04, which is your stock requirements list. And in this stock requirements list, I've chosen a material PLA-BLK, so this is 3D black printing and it is for plant 1000 and it's going to open up the stock requirements list for me and we can see the details that are currently in there in terms of the requirements and so on. And what I want to do is I want to select one of those supply elements. So here is a planned order at the top and we'll look at that planned order and go to what's known as the pegging report. If you notice down the bottom here is a button called pegging requirements. It has the upward arrow. So I click on that and what it does, is it opens up the pegging requirements for me that's related to that particular planned order. And what I then want to do is I want to say, well, show me this geographically , how does this look from a graphical point of view that portrays what's happening in the pegging report. And on the top button here, there's a graphic. So if I click on that, there it opens it up. And what it's doing, and just simply put what the ripple effect is about, is having a visible view that sees the connection and the links from the supply element component, which is here, all the way through to the intended purpose to which it is supplying and supporting. In this case, it's a forecast. So the intended outcome here, or the support that it's for, is for this forecast, but it could just as well be for a sales order or for a delivery. And in between it, we notice all the layers and levels of production in between where that requirement is coming from and what the supply is trying to supply to. Now, one of the neat things inside of this report is that when you get a much more complicated view than the one that I've got here, which is pretty straightforward, it's pretty simple, it's a great example to show graphically what this looks like. You have this functionality of zoom in and zoom out. And so let's just assume if this was a very complicated and dense, you can hardly read it. If I was to hit the zoom in button, see what happens? It increases the size to the point that I will get to, to say, I can see now what these other elements are in terms of the links between the elements from the supply all the way through to where that demand is coming from. So in this case, as I said, it is a forecast. Now we get to stages very often that it's far more complex than this graphic and that's why we need the zoom in capability. So let me show you a quick example of that ripple effect, now take a look at this one. How detailed is this? Oh my goodness, it really does have multiple layers. There are multiple drivers of demand in between the supply element and the demand element. There's all these different production pieces that are part and parcel of the process. And so what this is showing us that where it is way more complicated, it's very useful for us to be able to use that zoom in functionality so that we can understand the ripple effect. We want to understand inside of this, what is it that these are all touching? What is that ripple effect so that we can get to the point of having debate and really looking to improve things. So if I go back to my example, in this case, now I was going to zoom out. There I have, in this case, fortunately, the entire example. And I can then look at what are all of these pieces of the puzzle that make it up. Now, here's a really cool thing that one can look at as well. The real value of doing this analysis and seeing this graphically is when it comes to the quality of the conversations that are going to direct us towards what that outcome looks like. That's really what the whole notion is about. What is the quality of the conversations that we can use these graphics for? And it's going to help us to uncover issues relating to, say, good or bad forecasts. It may be overdue sales orders. Maybe there's missing materials, incomplete production orders, deliveries, and so on. But it really helps us unpack that. And just by way of a quick example, if I look at one of these planned orders in between. If I was to double click on that planned order, look what happens. It opens up the details that are behind it. And so when I get into that conversation as a team, when I get into that conversation as a production team or as a purchasing team, whatever it might be, I can start to look at really what's going on. I can understand the links that are inside of that and it makes things so much more easy for me to understand. And I can see now from the links, from the supplier all the way through to that demand picture. So it really is a phenomenal opportunity for us to have those conversations. And I want to encourage you, that as you get out there, take a look at the ripple effect that you're seeing on your business and use this graphical functionality to enable you to get to a point where you can have good conversations. And with that, we're back in the studio. I hope you found that walkthrough helpful. Today, we wanted to give you a little bit of how you can be curious and explore in your own system. A few key things to keep in mind. One is the visualization of the ripple effect helps us to get a picture of the magnitude of the impact when we're dealing with a wrinkle in the supply or we're working on changing priorities. Two, this is a visual infographic that can be quickly brought up in meetings to answer questions and demonstrate concerns based on that magnitude of impact we just mentioned. And three, this is the visual representation of the pegging report. We have a lovely video on that for you to check out and it walks through the full anatomy of that report. So there's more to come. Thank you, Sean. And thank you for taking one of my favorite topics on the ripple effect. This is just one of those areas that actually just help us with cross functional understanding and just really understand the impact of up and downstream supply chain challenges. So folks, if you want to learn more about how to apply some of these tools, please use our chatbot that will actually help recommend some videos based on your specific questions. Otherwise, if you have a question for us, feel free to submit it below.

Demand & Supply Planning

DM; OTC; 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. Hi, my name is Martin and in this video we are going to focus on where to find SAP exception messages. When used correctly. Exception messages can alert organizations to potential issues with the MRP results or other processes within the SAP. But where are they? Kristie, help us discover where they are. I think I can show you where Martin. Let's talk about where to find this powerful feature. As a buyer or planner, this is the feature that should be helping us most with our day-to-day work. Yet, for many of us, we struggle on how to get started, and in this demonstration, we're going to focus on three key things. First of all, what transactions will lead us to find these exception messages? Second, where the exception messages will actually appear. And third, how we should think about getting started when evaluating and resolving materials with exception messages. Let's learn about exception messages together. So this is a great question. Where do we find exception messages for demand? Have you ever noticed that when you look at where your exception messages are placed that they are not placed against your demand elements, they are only placed against your supply elements. The only one that's a little confusing is safety stock, because safety stock is a demand element, but it's letting you know that the stock is fallen below safety stock level, so it's related to your ability to supply it. So if you think about the purpose of MRP and our purpose as planners is to supply the demand and as buyers to supply the demand. It's our whole, our whole goal is to make sure that we have the right material in the right place, at the right time, the right cost, and the right quality, but our exceptions, because it's communicating to us as folks who are on the supply side of the house, only fall on our supply elements. You can see right here I have this scheduling agreement for this customer. It's actually in the past. Today is the 14th of February. We don't have enough inventory for it. There's no exception message. Where's the exception message? It's on the purchase order that is intended to provide the supply to supply that demand. Interesting, right? There is a lot of exception monitoring available though, for demand side elements. So the first is what I'm going to show you today, which is how we monitor our forecast to see how we're doing there. The second is, a good example would be VA06 for those of you who are on ECC or some of the Fiori apps, for those of you who have migrated to S/4, that let us know what is happening with our sales orders and gives us a lot of exception monitoring and insight into those arenas. Another good example for how we would find some exceptions would be around housekeeping. So we can always look for overdue MRP elements, in our exception monitor related to demand side items. But let's look at one of the exception monitors for managing our forecast, and I'm going to come in here first, and I just want to sum this up. So sometimes it's nice to be able to look at things summed up by periods, so days, weeks, or months, and in this case we happen to be forecasting in monthly buckets, so I want to come in here and take a look, this column here for planned independent requirements. So this is what we have, we can think of it as our open remaining to sell. So if we had planned for the month, this is the balance that we do not currently have a sales order or scheduling agreement pegged against. Our requirements are what we have sold for the month, and then the balance of that is the plans receipts. You can see we're planning perfectly in balance for these items. We're planning to replenish to the total demand, and we're not planning to keep any additional stock. Okay, so then the question becomes if we are starting to see exception messages like request to expedite what caused us to be outside of plan, did we place our purchase orders on time is definitely something we could look at. The other thing we can look at is we can see how we are balancing against our current forecast, and so to do that I'm going to come up to environment and I'm going to go look at this thing called total requirements display. So in the interest of full disclosure, I have a background in demand planning, so this is not blaming the forecast for all of our supply chain woes. I wish that that was the case or blaming the customer, if only the customer would place that order with the lead time that they were promised, if only, you know, the forecasting team would get it together on the demand plan. No, we, we work in supply chain our purpose in life is dealing with the variability and the volatility and the mixed issues that occur. So this is our world and what we're good at working through, but we can get some exception monitoring on how we're performing to the forecast. You can see here all the pieces that are out here, so what we have consumed and where we are able to balance against that forecast and it's easier to do this if we actually go in and we look at the customer view. You'll actually get a red, yellow, and green light here. So these items that are in red at the top, this is demand that does not currently have any forecast that it's able to consume against, and that's why we don't have any information over here to the right. Further down from that we have items that do have forecasts they're able to consume against, so a hundred and this is what's been assigned to it, and we can work our way through until we get out into the future, where we've got greens where there's plenty for us to peg against. So this is our planned quantity, what we're currently pegging against and then based on our consumption rules, how much of that forecast we're able to consume, and so in this case we can see that these sales orders don't have anything, they don't have a forecast that's within their consumption window and so this demand is actually in addition to our forecast. Now this happens in the current period so there's other considerations in terms of how we might be dropping or reorganizing that forecast for the current month, but this is very helpful in determining whether we're ahead or behind. The other piece of this around just rolling it up to these totals is if you can think about the planned independent requirements as you're remaining open to sell. When you exhaust those and the requirements, quantity starts to climb. If you are within your firm zone, your lead time for your suppliers, your firm zone for manufacturing, this is where we'll start to see those exception messages pop up because we aren't in position to be able to supply, so we are overselling plan. The opposite can also happen and we'd be able to see that here if we are underselling the plan. There's lots of plan that is open and we don't have anything currently pegged against it. You know, you can get a look out across the horizons. You can see here for October, we've already consumed the totality of our forecast, we have requirements of 210 pieces, in fact that may be larger than what the original forecast quantity was, and so we can use that customer view for help to determine that and then to be able to have good conversations with our counterparts in the sales and operations planning process, the IPP process, or just in demand planning to work through and resolve any of those exceptions as they occur. So really nice to be able to go through and see how the customer orders are stacking up against that demand and then be able to adjust accordingly and that's how we might be able to detect some of the exceptions that are occurring in our planning process. That and housekeeping are our two main ways to be able to do that because we housekeep both for supply and demand, and we have to push back on the demand in order to resolve the supply. So if we go through and we cancel something, or we delete something, which we should never do, we should close out. If we're doing those types of activities and there's still open demand, then all that will happen is the next time MRP runs, it's just going to regenerate for us, so getting a line of sight on some of these daily views and being able to have those housekeeping conversations with our counterparts definitely helps us to get this cleaned up. So that's where we find our exceptions for demand. So in summary we have covered how exception messages. Show up in key transactions. Highlight areas where our supply is misaligned to our demand. And become a critical daily habit for managing the overall supply chain. Super exciting! Thank you Kristie. We know that exceptions are the lifeblood of buyers and planners daily activities but finding exception messages is important because they highlight potential issues and this allows planners and buyers to proactively work to resolve them before they become larger and time consuming and more impactful into the business. If you'd like to know more about exceptions, finding exceptions and exception management in general, of course plus any other features and function SAP please check out our video catalog and of course if you've got some suggestions we are happy to listen please submit them below.

Demand & Supply Planning

DM

MM02; MD04

Hey folks, Martin here. Are you ready to tackle uncertainty and challenge? Are you comfortable with confronting the level of risk and uncertainty in your forecast head on? Well, today's the day. Today we're talking about forecast error and bias, and how to put the consumption horizon to work for you in managing your way through the risk that is inherent in your forecast. If this is a challenge for your business, you're in good company. Predicting customer behavior is a challenge for most organizations, and it's a topic that we're going to continue to build upon over time on this channel. In fact, if you search, you'll find other videos on monitoring forecast performance, working with consumption modes, and choosing a planning strategy that addresses different kinds of variability, volatility, and risk tolerance. Check them out. But specifically for this topic, we're going to be talking about forecast bias. To help us today on this topic of forecast bias, we have Kristie. Kristie, I know this is something that you love tremendously. This is something you deal with all the time. You may get even excited about this. So take us away. Yes, it's true. I do love a good demand planning puzzle. And while we may hit temporary plateaus in improving the quality of our forecast on some of our individual materials or products and in some of our segments. What we can do is get really great at managing the risk. And that is what I want to chat with you about today. I remember exactly when the shift in perspective hit me. I was in an IBP meeting that was well on its way to becoming a post mortem on forecast quality, and I remember hurting for my team as they tried to explain all the things that they were doing to try to get the forecast "right". And all the blame that was coming their way for our failures as an organization to deliver to the customer. Our cost to serve is ridiculous and our suppliers are tired of it. Forecast. The shipment was late and the customer is upset again. Forecast. Precious time, materials, and capacity gone because. Forecast. Now I'm a manufacturing gal at heart that also happens to love demand planning. So you know what? I know that SAP and supply chains salute all too well. It looks like this. And it's not helpful. So let's stop doing that. Baby steps are a good place to start. So let's focus the conversation. Supply chains are made up of quantity and time. So today, we're going to focus on time as an ally in dealing with the volatility in quantities. We'll also address our bias. Are we dealing with a bull or a bear? And then we're going to talk about the importance of differentiating where it matters and setting the appropriate rules in place as we consider our plan for every part. One of the tools that we have that can really help us is to understand the bias in our forecast and that is if we are consistently under or over predicting. What the demand will be for a particular item, and this is for those of us who are working on the supply side. We look at this at the material, the plant and potentially even the MRP area level. So it's very granular in terms of how we are observing that forecast. There are a ton of videos to help us to understand and unpack the different tools. I want to bring a couple of them together, though, today in the context of bias. And I'm going to talk specifically about consumption and the way that we can manage our consumption parameters to help protect us against some of the risks that's inherent in our forecast process. Here are a couple of other tools, though, before we go there. The first is we can take our average daily consumption. So that is what we have been using over the last X number of periods and compare it to our projections, our average daily requirement where those are wildly different, that gives us a great way to have a conversation with our counterparts. In demand planning and they can help us to understand the reasons for why that may be different. We want to make sure that we do respect the demand plan, just like when we say that we can't get production done by a particular date or we can't get supply in by a particular date the demand planning team the customer experience team has to trust that we are doing everything in our power to get it there when we see the demand plan and we have the conversation we ask the question at some point we have to say we've done everything in our power to get the best prediction that we can on this particular item. And it's good to ask the questions and certainly if you see something to say something. But at some point I do want to emphasize it is important that we start to work the process and commit. What we're talking about today can help us to manage through the inherent variability and volatility that we're going to experience with demand over time. One of the other things that we can get a quick line of sight on is how our forecast that is in the now is performing. So here's a good example. This is our remaining balance open to sell. It is December right now. We have nothing left and we have requirements for 45 units. Looks like that is a pretty typical demand. You can see November has 48 pieces remaining open. Looks like we might have had a timing issue there. The demand came in in a different time bucket than what we were expecting and we have 36 pieces projected for January. Looking like that's a little less than what we are seeing in the months that follow. So this is where we start to say, okay, what's going on? Are we over under forecasting? Is there some predictability to that? And if so, how can we set our consumption rules in place to help set us up for success? So, let's go in there and take a look. I'm going to go into the material master. This all lives on the MRP3 tab. Now my colleague and friend Patrick has put out a couple of great videos around consumption mode and forward consumption period and backward consumption periods. He's gone through and he's demoed as you change those settings what happens. So I will let him speak with you about that. What I want to address is the consumption based on bias. So how do you think about that depending on if you tend to over or under forecast? Now it's important to note that your consumption mode and the way you're consuming your forecast and what's eligible for consuming your forecast does tie back to your planning strategy. So there is a tight connection there and that is a big topic to explore. But when we're talking about consumption mode, think about it like this. So your sales orders, for example, are coming in and they're eating away at the forecast that is out there, the demand plan that's in the system. I think about them like Pac Man. It makes me less angry when things are wrong. So I think about it like Pac Man. We are coming in, that sales order is eating away at the demand plan. Now sometimes, that Pac Man gets too full and it just stops eating and then we end up with extra forecasts out there that's just hanging out like that November forecast we just saw. Sometimes, in a particular period, it may overeat. So, for example, the December time period that we saw that was completely consumed and now we're moving into January. When we know that we are maybe not right in terms of timing, but we are roughly right in terms of quantity, that is where the consumption mode can really help us. And really that's what it's saying. This is how much or how far out I am allowed to consume that forecast. So at some point, if I tend to under forecast, my demand plan is not high enough. I may want to allow those additional sales orders to sit on top of the forecast that we've put in. So it's going to stop eating away, it is additional incremental demand on top of the forecast. If I tend to under forecast, backward consumption and then controlling or not allowing, or controlling the horizon of forward consumption becomes my friend. So I don't continue to add to the problem. I'm not in a position where I allow it to continue to consume forward to January or February when I know I'm already over my forecast in December. I don't allow that problem to continue because I restrict how far forward I'm allowed to consume that forecast. If I am, over forecasting, so I am in a position where I am planning too much, this is where I really want to lean into that backwards and then that forwards consumption and I might allow myself to go a little bit further back and a little bit further forward in order to smooth that out because that might mean that I am a little bit off in terms of when that forecast is hitting. But if I'm roughly right and I'm confident that I'm going to consume it within the next couple of periods, then I might allow those days to go further out. Your consumption periods are in work days, they are subject to your factory calendar. So make sure that you're aware of that. A lot of times people come in, they put 30 days, they assume it's a month. Depending on your factory calendar, that may not be the case. So that's something really important to be aware of as you're going in and you're adjusting those dates, so you really want to think about whether you tend to under or over predict that demand and then use that to help you to choose the correct consumption mode and the period that you need for being able to smooth out that forecast. So look at your risk buckets and figure out what those bands look like and then adjust the timing so that you're getting the smoothest demand signal to your supply partners. Very, very helpful to be able to come in and fine tune this and make sure that we have the right rules in place so that we don't compile or add on or complicate the situation by allowing that forecast consumption to go too far out and allowing those sales orders to overeat into future periods when we really want to restrict that in if we do tend to under forecast. So whether you're overly optimistic or if you're pessimistic with your forecast, there is help for you here and it really surrounds the consumption mode and the consumption periods and how far out you allow that Pac Man or those sales orders to eat that forecast. You know what all good demand planners have in common? Radical candor, excellent storytelling, and intense curiosity. They live in a world where the good jobs are rare and the criticism is high. So to get better at all this, the first step is to know thyself as a person. As a collective that builds a consensus plan and as products, product families, customer and customer groups, whatever is the right level for you to get to a roughly right picture of demand. We have to be champions of risk and attack it heads on. If we can acknowledge and address where we're most likely to be wrong and historically how wrong without outliers and in which direction we tend to be wrong in, we can evaluate what we need to borrow from and how much time we need. Most importantly, the bias doesn't go away if we ignore it. So we need to work with it, rather than against it, and have SAP help us make it work. We are supply chain stewards, and good ones make it work with the cards that we have, while we are working on getting to a better hand. Much more to come on this particular topic. Okay, wow, Kristie. I mean, you were off to the races on that one. I can't imagine where this is going to go next. Hey folks, I'm sure there'll be plenty more videos to come if you're looking for those other videos we mentioned earlier use the chatbot, it will recommend them for you. If you have a specific question for us, please submit it below.