Safety Stock and its Availability for Planning Purposes
Safety stock, the necessary or unavoidable evil as it is sometimes called, exists as a ‘Quantity Float’ in planning to take care of variabilities both in demand and supply.
Safety stock is an integral part of the Net Requirements Calculation in MRP/Forecast-Based Planning and characteristically it is considered as a stock as well as a requirement plus a receipt and this makes it interesting when it is made available for planning purposes in the form of a prescribed percentage.
Purpose of this document is to discuss about the usage of safety stock for planning purposes and the system behaviour during the usage of the same. Also we will see the recommendations suggested by SAP whilst using this feature, towards the end of the document.
#1: No Safety stock or No MRP group with the appropriate setting maintained in material master for the material.
For the PIRs existing we see the concerned procurement proposals created.
#2: Now maintain the safety stock alone in the material master.
Maintain Safety stock = 100.
Data gets reflected in MD04 screen. Exception Message 96 is set automatically.
#3: Execute MRP for the material
A planned order gets created to cover the safety stock.Today’s date is 22nd Dec’12. We had executed Basic dates scheduling and for the In-house production time of 15 days, system has created a planned order with the date as 9th Jan’2013.
Keep observing the Exception Message 30 and the Rescheduling date pointing to 22nd Dec’12 here and in all subsequent screenshots.
Also note that for all other requirements/PIRs we have the procurement proposals created individually and are intact as in previous step.
#4: Maintain the MRP group parameters specific to the percentage availability of safety stock as in OPPR.
Again this MRP group is maintained in the material master.
#5: Execute MRP again.
Observation is when safety stock availability (100% of 100 which is again 100) is equivalent to the first PIR/requirement then both gets clubbed as a single lot and associated to the first PIR/requirement date.
#6: Now make the share of safety stock available as 50% and execute MRP.
We can see that there is a separate planned order to cover the safety stock requirement first 9on 9th Jan’13) and as it is sufficient to cover the future requirements of 5 and 10 units there are no further planned order proposals that are created.
#7: Now make the share of safety stock available as 20% and execute MRP.
As 20% of safety stock 100 (which is again 20 units) is available and as it is sufficient for the other two requirements it does not create new planned orders.
#8: Now make the share of safety stock available as 19% and execute MRP.
As the available percentage does not cover the future requirements, system creates the proposal for 5 + 15 = 20 units and observe that the date is tied to the last requirement (15 units) here. Important thing to note is that system did not create a planned order for 1 unit rather for the complete shortage in the planning horizon.
Detailed information on the available safety stock value is not seen in the SAP help site but there is a Note that explains the details.
<SAP Note: 120778 – MRP: Available safety stock and rounding value
Two major processing steps occur during requirements planning:
First, the system determines the uncovered net requirement quantities for each individual day in the planned horizon. It does this based on the stocks that have to be taken into account, the requirements and the firmed receipts.
Then, during the lot-size calculation, the system creates procurement proposals for all net requirements and, depending on the lot size parameters, net requirements can be covered exactly, split or combined into one procurement proposal.
The safety stock that is available is a special case because the net requirements calculation interprets it as stock and as requirement and receipt.
First it is taken into account as a stock because it is used to cover the first requirements on the time axis. Only when the available part is consumed does the system calculate the net requirements for the corresponding day. Since this first net requirement should also balance out the available safety stock, the first net requirement is increased by the available part of the safety stock, which means that at this point, the safety stock itself is a requirement that is to be procured.
For example (due to the complexity of the lot size Customizing and the different requirement/stock situations that are possible, we can only describe one scenario as an example):
Safety stock: 10 pieces
Safety stock available for planning: 100 %
|Date||MRP Element||Receipt/Requirement||Available Quantity|
During net requirements calculation, the system determines the following
net requirements while taking the safety stock available for planning into
02.06.2008 13 (10 is safety stock planned as a receipt + 3 for the req on May/01/08)
01.10.2008 12 (3 for July, 3 for Aug, 3 for Sept making it 9 and this is covered by 100% of safety stock and so it takes the next reqt for Oct’08 3 units and makes it 12 and stops there).
Based on these net requirements, the system then carries out the lot size calculation:
a) No rounding: If no rounding is used, the system creates receipt elements with the value of the net requirements for these dates. Material shortages occur only up to the value of the safety stock.
b) Rounding = 5: In this case, the system creates a receipt of 15 for JUN/02/08, that is 2 more pieces than are necessary. These 2 pieces are consumed in the next net requirement so that on OCT/01/08 only 10 are required instead of 12. If 100% of the safety stock is available for planning, no receipt element is required/created. Due to the rounding, the next receipt would be required on NOV/03/08 and not on OCT/01/08 (as was determined in the net requirements calculation). However, this cannot be determined when the lot size planning is carried out. The next receipt is created on the next date that is determined in the net requirements calculation. However, in this example, there is no other net requirement calculated for the original net requirements calculation after OCT/01/08 because only two net requirements (on JUN/02/08 and OCT/01/08) are available without a rounding value. Therefore, the MRP creates only one receipt on JUN/02/08. It does not create any more after that. Only when more requirements are added to the time axis is the next receipt created at a later date.
Problems may occur if, due to roundings, minimum lot size or firmed lot sizes, the lot size calculation carries out procurement beyond the mere filling of the part of the safety stock that is available. In this case, the net requirements quantities and dates that are calculated no longer match the resulting available quantities on the time axis, which causes delayed requirement coverages after the material has been planned.
Note that a useful lot size calculation can only be carried out after the net requirements calculation is completed because otherwise, processes such as the rescheduling check, lot combination and so on do not work correctly. However, if safety stocks are available, the net calculation at the time of the safety stock consumption must assume a procurement of a certain value to ensure that the subsequent net requirements are calculated correctly. Since the amount of this “scheduled receipt” is not known, the system assumes the simplest case (EX – exact balancing of the safety stock at the time of the consumption). Any deviations from this procedure in the lot size calculation can cause incomprehensive procurement and rescheduling proposals.
It is not possible to change the program since material requirements planning is based on the concept of the separation of net requirements and lot size calculation.
Therefore, we recommend that you do not use the safety stocks that are available for planning in connection with firmed lot sizes, minimum lot sizes or roundings.
<End of SAP Note>
Hope the information was useful. Please point out any other points of interest which can be added to this document to make it more meaningful.
Excellent Analysis .Thanks for sharing this document.
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Good Analysis. Thanks for sharing.
Thanks & Regards,
Ramagiri Srinivas Rao,Thank you so much for the feedback.
Good one for PP ℹ
Naresh Patil, Thank you Narresh for the feedback.
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Accurate and clear !
Thanks for this docu!
Very interesting !