Safety Stock Planning

Purpose
You can use this business process to plan the quantity of additional stock to procure and hold in case of unexpectedly high fluctuations in demand. Safety Stock Planning allows you to meet a target service level while creating a minimum necessary amount of safety stock throughout your entire supply chain for all intermediate and finished products at their respective locations. Two different groups of safety stock calculation methods are offered: Basic safety stock planning Extended safety stock planning

Basic Safety Stock Planning Method

The easiest way to plan your safety stock is to define a time-dependent or time-independent safety stock level or number of safety days of supply values for given materials required at any stock holding location. The system applies these settings and calculates the resulting safety stock automatically. The safety stock will then be considered during following supply network planning runs and the production run.

Extended Safety Stock Panning Method

The extended safety stock planning method can calculate and consider the variability on the demand and supply side. Simulations of the service level and the forecast error can also be performed. Besides service levels, the system also supports reorder cycle and reorder point strategies. For more information about safety stock planning methods, see the SAP library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Supply Network Planning Safety Stock Planning.

Process Flow

This business process runs in SAP SCM:

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1.

Assign safety stock planning method. After it has been decided where safely stock is to be held in the supply chain, a safety stock planning method must be assigned in the corresponding location product master.

Basic safety stock planning methods: Time-independent safety stock planning methods

SM Maximum of safety stock and safety days of supply Time-dependent safety stock planning methods

SB Safety stock SZ Safety days of supply

MB Time-dependent safety stock MZ Time-dependent safety days of supply

MM Maximum of time-dependent safety stock and time-dependent safety days of supply Extended safety stock planning methods AT Alpha service level using reorder cycle method BT Beta service level using reorder cycle method AS Alpha service level using reorder point method BS Beta service level using reorder point method

For the time-dependent basic and the extended safety stock planning methods, additional master data and other settings are necessary. For more information on standard and extended safety stock planning methods, see the SAP library under mySAP Business Suite SAP Supply Chain Management (SAP SCM) SAP Advanced Planning and Optimization (SAP APO) Supply Network Planning Safety Stock Planning. 2. Run safety stock planning. Based on the settings in the location product master, the system calculates the safety stock quantities for the selected product and locations.

This process step must be performed when you use the extended safety stock planning method; otherwise it is optional. 3. Plan safety stock interactively. The results of the safety stock calculation are displayed in key figure Safety Stock in interactive Supply Network Planning using the standard planning book for SNP (9 ASNP_94, 9ASNP_SSP). Manual changes and adoptions can be performed interactively, if necessary.
This note explains the standard safety stock planning methods: SB, SZ, SM, MB, MZ, and MM within Supply Network Planning. 1. Introduction Safety stock is used to safeguard supply chain inventory against variable influential factors such as customer demand and replenishment lead time. In Supply Network Planning, you can define a safety stock method in the product master for every location product (on the "Lot size" tab page). You can choose standard methods or extended methods. With the standard methods, the planner must directly provide the necessary information for calculating safety stock. However, with the extended methods, the safety stock is calculated automatically on the basis of the service level, the current demand forecast, and past sales data. The following standard methods are available: SB - Safety stock from location product master SZ - Safety days's supply from location product master

SM - Max. of SafeStk and safety days' supply from loc. prod. master MB - Safety stock (time-dependent maintenance) MZ - Safety days' supply (time-dependent maintenance) MM - Max. of SafeStk and safety days' supply (time-depend. maint.)

SB, SZ, and SM are static methods whose parameters are defined in the location product master (on the "Lot size" tab page) but not on a time-dependent basis. MB, MZ, and MM are dynamic methods whose parameters are defined on a time-dependent basis; meaning that they are defined individually for each bucket in the planning buckets profile.

2. Executing the standard methods in interactive planning All the safety stock planning standard methods are executed by the predefined SNP macro function: SAFETY_CALC. In the standard planning book 9ASNP94, this function is used within the "Safety stk/reorder point/targt stock lvl" macro to fill the SAFETY ("safety stock") auxiliary key figure for the individual buckets of the planning period. Depending on the method, the contents of the key figures DMDTO ("Total demand") and SAFETY ("Safety stock (planned)") will be taken into account, if applicable.

3. Static methods SB - Safety stock from location product master: The safety stock is set to the value of the "Safety stock" field from the "Lot size" tab page of the location product master data, and is not dependent on buckets. SZ - Safety days' supply from location product master: The safety stock is determined on the basis of the value in the "Safety days' supply" field from the location product master data (the "Lot size" tab page). The unit of this value is always workdays. This value is designated below as TRC. The safety stock for a specific period is calculated from the total demands for the subsequent period up to the th workday. If the bucket containing the th workday is a daily bucket, demands in this bucket are no longer taken into account. However, if it is a bucket that represents a larger time period, you can choose one of the following: 1. Demands in this bucket are not taken into account. 2. Demands in this bucket are taken into account proportionately, corresponding to the quotient from the number of workdays in the bucket before the th workday and the total number of workdays in the bucket. 3. All the demands in this bucket are taken into account. To determine which of the above is used, access SAFETY_CALC. If 'BUCKET=E' is specified as an additional parameter, method 1 is used; with 'BUCKET=I' method 3 is used. Otherwise, method 2 is used (default). See also note 374052. SM - Max. of SafeStk and safety days' supply from loc. prod. master: The safety stock is assigned with the results of the SB or SZ method, whichever is higher, on a bucket-dependent basis.

4. Dynamic methods MB - Safety stock (time-dependent maintenance): The safety stock is calculated identically to the SB method. However, instead of using the "Safety stock" field from the location master data, the bucket-dependent value of a specified key figure is used. The user is then able to maintain the safety stock manually for exact periods. The key figure to be used is defined by accessing SAFETY_CALC. In planning book 9ASNP94, the default key figure is SAFETY ("Safety stock (planned)"). MZ - Safety days' supply (time-dependent maintenance): The safety stock is calculated identically to the SZ method. However, the safety days' supply used is not taken from the location product master data, but rather from a specified key figure on a bucket-dependent basis. Thus, the user is able to manually maintain the safety days' supply for exact buckets. To determine the key figure to be used, access SAFETY_CALC. In the planning book 9ASNP94, this specification is not in the default, which is why the MZ method can only be used within this book after the corresponding macro has been modified. MM - Max. of SafeStk and safety days' supply (time-depend. maint.): The safety stock is assigned with the results from the MB or MZ method, whichever is higher, on a bucket-dependent basis.