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.

Procurement & MRP

P2P; PTM

MD04; MM02; MD03

Hello and welcome future supply chain experts. My name is Martin and today we're going to be exploring how we can tap into the untapped potential of your SAP system. Ready to dig deep? Let's get started. In this video, we're going to explore two different flavors of reorder point planning. Now I know we hear often a lot of confusion about reorder point planning versus safety stock and the reluctance to use reorder point planning because the demand disappears. So Sean, I know this is a topic near and dear to your heart. Tell us more about reorder point planning and specifically the perceptions that come along with it. This is such a great question Martin, thank you. And the great news is that we're not boxed in and we do have options. Today I'm going to give you a brief definition of two distinct categories of reorder point planning. And dive into how we define each and then show some examples. I know that I've personally dealt with some hesitancy in using reorder point planning as a standard part of the toolkit, but this is a decoupling technique and decoupling techniques can often help overcome significant volatility and variability when used correctly. So with that said, let's go and take a good look. Welcome to the discussion and demo on reorder point planning. So with reorder point planning in SAP, we set a quantity level or a reorder point below which the system will reorder or create an order for us. And getting to that level requires consideration of things like safety stock, like average consumption, replenishment, lead time, and so on. And SAP then will calculate from the sum of the plant stock and the firm receipts the replenishment that's needed to meet the demand Now there are two types of reorder point planning, the first is manual reorder point planning and here that reorder level and the safety stock level are manually maintained inside of the material master. The second is automatic reorder point planning, and here that reorder level and the safety level are determined by integrated forecasting programs, and we'll deal with it in a future video. Today, we're going to focus around the manual reorder point planning. And so with that said, let's just remind ourselves, how does reorder point planning work? And if we look in this diagram, we can see these consumption lines where we are consuming material and there is a reorder point, which once we breach that and go through it, the system will look to replenish so that we come back above the reorder point. And it will allow us in terms of lead time, normally we allow sufficient time to get down to a certain point and that then the replenishment takes us well above so we can continue the cycle on down. So that's really just high level, you know, some of the theory that goes with this. And what we're going to do today then, is we're going to focus on the manual reorder point planning. And that manual reorder point planning, what we're going to do there, is we are going to look at the VB and a V1. So we'll look at a few materials to get a sense of what happens in the world of reorder point planning and I'm going to go into my stock requirements list which you can see here in front of me, having found those materials and we can start to look at what's going on. If we look at this particular material, we can immediately see what is my stock on hand is 17 , we can see out there that there's certain demand, the forecast is driving, we can see some supply elements, and we notice that this particular item is set up as a PD, it's a P3 in this case here, so it's a plan on demand. And those plan on demand MRP types in the S4 environment, which this is, is PD and then it's of course P1 through P4 and this material is set up as a P3 material. So there we can see what that looks like. Now let's go and change this up and let's look at a reorder point material. Let's take a look at what that looks like. There we go. So in this case, we have a reorder point material and what you can see has happened here is that we have disconnected or decoupled if you want to call it that, this material from the rest of the system. And so there's nothing out here that tells us what's actually going on. The VB shows us that the moment the stock falls below the reorder point, it will set something in place. So the business case is that based on being a predictable material, probably with low cost, and maybe can be somewhat automated, we're able to minimize some of the touch points. So why don't we have a bit of fun with this particular one here. We can see that it's a VB, it's simply got 37 on stock and if I go and have a look inside of the material master, what I'll notice is that my reorder point is 10. So I'm going to have to drop from 37 to below 10 before this triggers anything. So I'm going to change this and I'm going to make this 40 and we'll save that, and once that's saved, I'm going to come back and say, well, here's our current environment, let's run a MRP against this. So we're going to run the MRP, there it is, and now I'm going to refresh this material and boom, there it is. SoI've come below the threshold of 40 with 37 therefore, I now have a replenishment of 5 that it's looking for. And that 5 is built off the rule set that we put in place and you'll notice that the rule set here was a minimum lot size of 5. And because of that what has happened is I've breached the reorder point of 40 and it's given me a minimum lot size of 5 so I'll be back to 42. So that's really what we see happening as far as the ROP now I hear a lot of hesitation sometimes around moving to reorder point planning. And often that hesitancy comes from the perspective of, well, you know what? We just need to see more of the demand drivers. And guess what? The good news is yep, that's possible and we can consider a reorder point MRP type, which is known as a V1. And that includes external requirements. So let's change up on this particular material here, and I'm going to share with you another one. There's my material, and I'm going to refresh that , and so now I see it is a V1 material, which means that it includes external requirements. That's how it's been structured. And as I look down here, I see the forecast demand. In this case, the forecast is within the replenishment lead time. Here's my replenishment lead time. And so that's considered along with the reorder point. And we will then see that the supply elements here have also been created. So there's a planned order, and here's another planned order. These supply elements, the system is putting in place in reaction to the demand that is landing and that is coming down the pipe. And so that's what those planned orders are doing for us. And so we can watch and manage progress in a decoupled environment that meets the same business case requirements that we spoke of with the VB manual reorder point. Now, the slight contrast in favor of V1 is where it is common for order reservations, for argument's sake, to be increased or added and where we might have a little bit more unpredictable usage, then we have a good opportunity to use the V1 and it's going to help us to prevent shortages. So folks, reorder point planning is an exciting option for us as we determine whether and how our materials to be planned. I really enjoyed that demo. So in summary folks. We took a look at two different options of reorder point planning The use case and prerequisites for each. How to tell if reorder point planning is performing and what kinds of changes should trigger a review and recalibration of that reorder point. This is a great technique that should be part of our toolkit. Thanks, Sean. I can see how that could be super valuable for most planners out there. Thank you. Folks, if you want to know more about some other planning techniques, we have a whole catalog on MRP planning, please check that out. And of course, if you have a specific question, feel free to submit it below.

Warehouse Management

WM

LL01; LX04

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 two key features that every warehouse supervisor manager should view each day. So Steven, tell us why these features are so important to start the day. Absolutely, Martin. In this video, I will focus on capacity use per storage bin and the warehouse activity monitor. These two key transactions personally helped me as a warehouse manager, prepare for the day by viewing our potential supply chain disruptions and by analyzing the warehouse capacity health status. This video will demonstrate two key transactions that every warehouse supervisor, lead, or manager should really review every single morning to start the day. So this is something that I did and really paid dividends in the end. So the first is you want to take a look at your health as far as your warehouse capacity. So I would always go into LX04, enter my warehouse number, take a look and just get a high level overview of where I am with capacity usage percentage. How many empty bins I have per storage type. We utilized capacity usages, so the load percentage also meant a lot to me. This would give me a sense of where I could possibly move things. I could judge my inbound volume to see how much more I could put into each of these storage types. So really we were in a state of very, very, very high capacity so managing this, making sure that there was no bottlenecks was a big part of the morning function. Probably the most critical is going to be your Warehouse Activity Monitor. So your Warehouse Activity Monitor is going to be LL01. LL01, you'll enter your warehouse number, you have options here as far as entering movement type, storage types, etc, or you could just go ahead and click right through. This is your late or critical warehouse processes. So, moving into the morning in this will certainly fluctuate throughout the day. The goal is for it to be in green or as low as possible at the end of each day, if there's something that ends up here, it just means that it's exceeded a time parameter. So what you really want at the end of the night, if you're picking, depending on your hours of operation, you're picking all of your warehouse functions, there's a point where this should be the lowest for me walking into the day, you would have a bunch of unconfirmed TOs because we just started receiving, so all those inbound activities were created. So this will fluctuate overnight though, right, when that was kind of our, our dead period, as far as the least amount of interactions or transactions going on. I would expect that to be the lowest point or as close to green as possible, but you still want to open this and take a look at what's kind of pending what's out there and you could see when it was created on and really gives you a sense of what's still due, because all these are potential supply chain disruptions. So, this more of a critical supply chain disruption aspect, you want to go and research and alleviate all these potential issues. And again, the second was going to be LX04, which was taking a look at your health or your overall capacities in your warehouse. In summary, we have covered how capacity per storage bin can be leveraged to analyze warehouse capacity status and how the warehouse activity monitor can be utilized to identify supply chain disruptions that need immediate research and action. Thanks Steven. I can certainly see the benefit of how reviewing this information to start the day could pay dividends for a supervisor. Hey, if you guys want to learn more about this capability and others in your SAP system, please feel free to check out our video catalog and of course if you have any suggestions, please submit it below.

Order Fulfillment & ATP

OTC; P2P; PTM; WM

MM03

Are you interested in creating a more seamless customer experience with less churn and manual intervention? Okay, good, me too. Martin here. And are you equally interested to hear about three fields in the material master that might be helpful? Whenever we have an opportunity to set a rule in place, and that rule matches the behavior that's real, we're in business for improvement. So Kristie, I only have really one question for you today. Actually, three questions. What are the three fields in the Material Master that we need to know so much about? Take it away. That's all I have today. We've got loads of opportunity to leverage master data to make the process flow better. Make it easier and less disjointed when it comes to serving our customers. Today I wanted to just offer up three possible fields. That's three of the many. Today we're going to walk through the value opportunities around sales MOQ, delivery unit, and wait for it, sales unit of measure. And you know what? Since you gave me such a hard time, I'll throw in not one, but two bonus fields. And I'll pick really, really good ones. Let's go in and take a look. I love a good challenge and I love some tips and tricks. So let's get right into it and see if we can't locate a couple of fields that can really help us in making sure that we're getting the behavior we would like out of SAP and maybe simplify some of the things that we are currently doing when we have to go in and manually intervene with our sales documents. So I'm here in the sales org. 1 view, which means I had to specify my material, my sales org, and my distribution channel. And this is MM03, you can see the transaction code here in the lower right hand corner. And a couple of the fields I wanted to point out today that we tend to find very useful in troubleshooting and problem solving. So the first one here is the sales unit. So your base unit of measure, in this case, is pieces. When we sell to the customer, we've decided we would like to sell in palettes, and we are able to specify this based on the material, the sales org, and the distribution channel. So the other thing we can do is we want to make sure that that is consistent, or the same across all sales documents. We can choose the sales unit, not variable. Now, if we wanted the flexibility of having that to be different, then we simply would not choose to tick that tick box. But that can be very helpful if you're trying to make sure that things are the same across all of your sales documents. You may have a compelling business case why that should not be true. And in that case, we would not want to tick that tick box. Now let's come down here a little bit more. We have another field here called the delivering plant. So if we want to default a particular plant onto our sales orders, this is where we can come to do that. Now maybe we have a couple of plants that we could choose from and we want to go in and specify this based on the sales org and distribution channel. We can come in and maintain that field accordingly, and that can help to direct where we are landing that demand. And we can also choose it to help us inherit if we have materials that are available at a couple of different DCs, and we really want to direct those sales orders to a particular delivering plant. There are other places we can also maintain this master data with more specificity. So the lowest level we can maintain it here is at that material sales org and distribution channel. Another one that is really important. See, I'm already up to three. I'm going for bonuses now. Material group and just a comment on this. Material group is a cross functional field. So this is one where we really want to make sure that we are aligned with our friends in finance, and with our friends on the supply side, and particularly our friends in procurement, and how we are categorizing these materials and make sure we have a good understanding of where that is landing. Now, often overlooked, because you do have to scroll down to find it, we have a couple of other quantity stipulations that can really help us. We can specify a minimum order quantity, in this case we chose 12 pieces, a minimum delivery quantity, which could be the same, or it could be less, so let's say you allow for partial deliveries, maybe your minimum order quantity is 12, and your minimum delivery quantity is some multiplier that is less than that, so 8 or 6 or something like that. We can also specify our delivery unit just like we do above for the sales order units. One last thing here if we aren't sure what that conversion is from pieces to pallet or we'd like to see that information in a different way. We can come in here to additional data and simply move to the units of measure. This is where we can see that quantity conversion from pieces to pallet or any other unit of measure that may be helpful to have maintained. So in this case , we have four pieces per pallet, so perhaps on our delivery, we allow for eight, if we allow for partial deliveries, whereas on the sales order itself, we may be requiring a higher quantity. So those are some of the things that we can do to help make that sales order entry a little bit easier and a little bit more consistent to help us to differentiate where the business rules should be different based on the distribution channel and the sales org versus where we want it to be consistent across all of the distribution channels and the sales work. So a couple of different alternatives there. And again, most of this data can also be maintained more finitely or with more specificity as we get into the customer master data. But from materials management perspective, what we can maintain within the material master, this is some governing master data that we can have in place to help ensure consistency and lessen the load of that manual maintenance. Okay, whew, I think I made it with some bonus ones, and I think we hit five fields. So today we had the opportunity to explore some of the key master data fields that live in the material master and support sales order management. Much like our procurement or production related fields, there may be more specific records that take precedence over the material master. A basic principle in SAP is that it loves specificity. And in at least most of the cases. The business rules we looked at today were chosen because they are often options that come up and become useful as a part of problem solving. And that's how we learn how to best put them to use. And remember, as we're exploring and changing and evolving, we must make sure that we have a coordinated approach, especially if what we're working on directly impacts our partners. This is very important. Ah, I can't believe you caved to the pressure, Kristie, and added two more fields. Okay, seriously, five? Okay. We can work on it. But Kristie's right. There are so many more to explore. Taking the time to explore the definitions and the use cases for key master data fields is central to being able to deliver real and lasting value out of SAP. So again, thank you, Kristie. Hey folks, if you're looking more to maximize other features and functions in your SAP system, please check out our video catalogs. And of course, feel free to use the chatbot if you can't find something.

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.

Procurement & MRP

MM; PP

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 the three types of lot size keys available in SAP. This feature in SAP enables MRP to plan replenishment using static, periodic, and cost based lot sizes. So Kristie, tell us a little bit more about how to make the most out of these three lot size keys. You bet, Martin. Lot size keys are one of the key rules for MRP to follow. Getting these right helps us to tackle a wide variety of different planning scenarios and immediately improve the outcomes of our MRP runs. In this demonstration, I am going to focus on the following three things. First, I'll introduce the three different categories of lot size keys. Second, we'll discuss how MRP will respond to some of the most commonly used lot size techniques. And third, we'll give you a couple of tips or tricks on how to incorporate complementary master data for synergy in that planning run. One of the key planning rules for our MRP run relates to our lot size keys and today I want to go through and show you where to find this in the material master and then talk you through a couple of the different options. So I'm starting here from my stock requirements list, of course, because this is where I spend most of my time as a planner or buyer and I'm actually just going to go in and take a look at this material. Now, if I was just going to just I would double click, but I think we're going to do a little bit of changing here. So I'm going to go to environment and say change material and my lot size key lives on this very first MRP view. And there are really three different kinds of lot size keys, or categories of lot size keys, and I want to break them down for you. So the first is a static lot size key. So this is going to be things like a lot for lot order quantity. It's going to be things like replenish to a maximum stock level. These are the kinds of lot size keys that we will be using if we are going through and have a static way we want to replenish. Also things like fixed order quantity, which is what this guy is set up as. So let's say, for example, you always have a truckload of product coming in. You're going to have a fixed lot size with a fixed order quantity and MRP is only going to give you proposals for that full truck, or half truck, or pallet, or tier, or layer, or whatever the case may be but you know that you are only ever going to order in lots of that. So you may get multiple trucks for the same day, but you're going to get a proposal, a replenishment proposal, for exactly that amount. Or you might have something like a lot for lot, and so it's going to look and see what that requirement looks like, and if you need 2,000 units to supply production, then it's going to look at that value, and then you may have something like a rounding value or a minimum order quantity that is also going to go into play. So as soon as you see that you have a need for those 2,000 and you are required to order 2,200 it will follow those rules. So it will say, next proposal, and then what is my MOQ and my rounding value. Another good example would be something like an HB, which is replenish to the maximum stock level. So maybe you're working with a min max, let's say for example you are dealing with constrained storage, so maybe like a tank or a rail car or something and you're going to say okay as soon as I hit X volume in that tank then I want to replenish to the max, I'm going to go ahead and fill it up. This is often used sometimes with giving signals to our VMI suppliers, they are managing that for you but it gives them a good idea of what your forward looking plan might look like. The next kind of lot sizing technique is a periodic lot size. So now we're gathering requirements, so we're going out and we're saying, I want to supply for that entire day. So I might have multiple requirements within that day, I'm going to produce a daily lot size and again, this can work with minimum order quantities, or rounding values, or maximum lot sizes. Okay? So based on what those rules are for your supplier. Or I might be doing a weekly bucket, or a monthly bucket if it's a really, really low volume item and I'm only going to order it every once in a while. So those periodic lot sizes. Now, those generally will work in combination with what your planning cycle is, so how often you're placing those orders with your suppliers and to protect against variability and volatility we ideally want to place orders in the smallest quantity that is economically feasible and as often as possible. So really focusing on the richness of our mix to help mitigate the variability and volatility that we might be seeing in demand. So based on that ABC and XYZ classification or segmentation of your goods, that's going to help you to get the right assignment in place. The last type of lot size, or last category of lot size, would be something like an economic based lot size. So you might be running one of the statistical algorithms to help you to figure out what the most economical order quantity would be. Now that is a more advanced technique so that means your master data is beautifully clean, we've got a high level of trust in MRP, and now we're ready to start allowing SAP to put some of those economic principles in play for us. So really, more of an advanced technique once you've gone through the others. One other one I will highlight for you that is also a periodic lot size, this is PK. So let's say that you need to control your amount of goods coming in on a particular day or you need to divide what days particular suppliers are going to be delivering to you or you have a supplier that only delivers on a particular day. This is where you set up those planning calendars to say this supplier is delivering Monday, Wednesday, Friday, but never Tuesday, Thursday. You're able to go in and set up those kinds of calendars to help manage that influx of goods. This is also very effectively used for trying to balance out how you're receiving inbound goods across the week so you can manage your workforce or your dock doors and that will help play into what's happening with the warehouse. So, oftentimes this is not richly populated in the material master and there is a huge opportunity to be able to use these different lot size keys. You will want to use each of the fields that are available to you to reflect the rules of your supplier. So for example, don't use a monthly lot size because your supplier has a higher MOQ. Think about your replenishment cycle, think about how often you're going to place your orders with your supplier and then use your MOQs and your rounding values to reflect minimum order quantities and the rounding values associated with it. Your rounding values are really your container sizes. It helps to play into your price breaks, which you maintain in your price conditions, but that MOQ is the smallest amount that you would purchase and then you're going to use the amount of gathering. So if you're gathering a day or a week's requirements together in order to place that order with the supplier. So those are three different categories of lot size keys used in conjunction with several other settings in the material master in order to drive your planning. But this is a great way to go through and kind of model your procurement strategy and start to work through these pieces together. It's also incredibly helpful as a planner as you're setting up for manufacturing. You're going to tend more towards those EX lot sizes or very small buckets of periodic lot sizes if any periodic lot sizes at all. So, in summary, we have covered how the three types of lot size keys power MRP. To be able to allow a buyer or planner to control the size of the proposals for replenishment. Model the requirements of your suppliers or the production floor. And lastly, reduce the manual effort and eliminate one of the key areas where unplanned consumption can occur, which throws off the whole plan for our assured supply. Thank you Kristie. Lot size keys offers yet another great opportunity to keep SAP informed of the rules that power the supply chain so MRP can do the heavy lifting and generate a solid plan for replenishment. So if you want to learn more about how to get the most out of your SAP system, please check out our other videos and of course, if you have any burning questions, please submit them below.