Tag Archives: Service Level Planning

Target Service Level in SPP

Posted on by

Background

 

With SPP the following are available for configuration in the Location Master. This includes the addition of the ability to add an SPP calendar. This is just like any of the other calendars that can be added such as the PP/DS calendar.

 


Also the ability to enter values related to everything from stocking and de-stocking profiles to warehouse space savings. Of particular is the ability enter a Target Service Level, which of course would be the target service level for the location.


Relevance

Being able to set the service level is at any level in the service hierarchy (also something I refer to as inventory optimization specificity) is a very important asset. You can read more about this at this post at the SCM Focus inventory optimization and multi echelon sub-site.

http://www.scmfocus.com/inventoryoptimizationmultiechelon/2010/01/inventory-optimization-flexibility-and-the-service-level-hierarchy/

It was actually surprising for me to see this field at this location in the location master. However, if you read through the SAP documentation, it states that the service level can be set at the following path.

http://help.sap.com/saphelp_scm70/helpdata/en/47/b144979dbe2fe1e10000000a42189d/content.htm

SAP Easy Access: APO –> Service Parts Planning –> Planning –> Inventory Planning –> EOQ and Safety Stock –> Values of Target SFT and Target Service Level


You can see that a Target Service level can be entered. However, I am not convinced this works. The configuration looks too basic to actually be able to perform service level based planning. I learned that SAP functionality has to actually be tested to see if it works. I recently found this out with shelf life planning in SNP, which has the configuration area, but which does not in fact work. Also given SAP’s very strong partnership with SmartOps, and their declaration that they are not developing this functionality in the future, its difficult to say if or when this functionality will develop.

 

 

 

 

 


Service Level Planning

Posted on by


How Critical?

Service level planning is an increasingly important and prevalent method of managing supply chain planning. More companies are interested in managing their supply chain in a differentiated manner by service level. In its more advanced form this is called creating service level agreements (SLAs)

Up until very recently, SCM did not perform service level planning, at least not explicitly. However, with the 7.0 release thatchanged. Here is where we have located functionality related to service level planning.

SAP SCM

Implicit Methods

  • Capable to Match (CTM) can prioritize requests such that some customers get inventory allocated vs. lower priority customers.
  • In Production Planning and Detailed Scheduling (PP/DS), reservations can be defined on the capacity of resources and they can be made on the basis of profitability and service level agreements.
  • In SNC, a service fill analysis component is now part of the supplier delivery performance rating
  • In Forecast and Replenishment (F&R) the forecast ad estimated safety amounts are based upon both the forecast error and the safety stock.
  • In F&R periods with expected similar patterns can be combined, and separate service levels can be assigned to each ABC classification.
  • In F&R demand influencing factors (DIFs) which are the primary mechanism of forecasting in the module, service level profiles can be setup for the DIFs.
  • Safety stock can be set by service level in the product location master.

Explicit Methods

  • In Service Parts Planning (SPP), target service levels can be set at the location or product location level. As of 7.0, targets can be set depending upon whether the location is an entry, intermediate parent or child location. -Of the major methods in SCM, this is the closest to meeting actual service level planning, however strangely it is not strongly proposed by SAP, even though the functionality brings them closer to being on par with the traditional service parts planning leaders. Secondly, there is a strong trend in companies to move towards service level planning. SPP is one of the few areas that actually does it in an explicit manner.


SNC Supplier Managed Inventory vs. VMI

Posted on by

Why SMI?

We have been investigating SNC and have been surprised to find the term SMI or Supplier Managed Inventory. For the longest time when the supplier managed inventory it was called VMI, but evidently the nomenclature has changed. Interestingly, the book Supply Chain Management and Advanced Planning by Hartmut Stradter and Christian Kilger, which we consider a comprehensive book on supply chain systems, does not have any listing for SMI, but of course does have a listing for VMI. The book as a nice definition of VMI, we will quote it here.

Traditional responsibilities are changing. Large retailers abstain more and more from sending orders to their suppliers. Instead they install consignation stores whose contents are owned by the supplier until the goods are withdrawn by the retailer” “Replenishment decisions are driven by pre-defined service level agreements between the supplier and customer. Inventory collaboration is a service that is usually required by the customer. To control his inventory and the customer’s inventory the supplier has to be able to access the customer’s major inventory levels and forecasts…. – Hartmut Stradter and Christian Kilger

SMI works on the basis of inventory, and the visibility of inventory between two partners in the supply chain. Min and max levels are set for different product location combinations and then when the inventory exceeds or falls below these settings alerts an be sent to both the supplier and customer.

Read more about the benefits and the controversy over the benefits of VMI here:

http://www.scmfocus.com/failedsupplychainconcepts/2009/11/15/what-are-the-real-benefits-of-vmi/

SMI is Inventory Collaboration

Of the different collaboration types, SMI is inventory collaboration. We have written a post on the different inventory types here.

http://www.scmfocus.com/sapplanning/2009/05/16/scm-collaborative-planning/

References

Kyle Harnden, Inventory Planner

http://knowledge.wharton.upenn.edu/article.cfm?articleid=2366

Supplier Collaboration with SAP SNC, Mohammed Hamady and Anita Leitz, SAP Press 2008