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Question: What is the purpose of the Minimum Range of Coverage in the Coverage Profile for Safety Stock derivation in the MRP run for Safety Stock generation?
Answer: The fields Safety Stock and Minimum Stock can be found in MRP 2 data view,
The Safety Stock can be set via:
• Manual entry directly in the MRP2 data view
• Dynamic Safety Stock
• Calculated via Range of Coverage Profile (also assigned in the MRP 2 data view)• Calculated via DDRP (only if the Material is set as DDMRP Material)
The Minimum Safety Stock can be set via:
• Manual entry directly in the MRP2 data view
• Dynamic Minimum Safety Stock• Calculated via Range of Coverage Profile (also assigned in the MRP 2 data view)
Range of Coverage Profile was introduced in R/3 and still available for use in S/4HANA.
Range of Coverage Profile based Dynamic Safety Stock uses demand-driven (dynamic) safety stock, rather than a fixed quantity, allowing for flexible inventory levels based on fluctuating demand. AND this is similar in principle to the new concepts of DDMRP (Demand Driven MRP) in S/4HANA.
Minimum vs. Target vs. Maximum Safety Stock:Assuming ADR = 50pcs
• Minimum (Min) Safety Stock: Triggers procurement when stock is too low.
= Average Daily requirement x Minimum Days Supply= 50 x 2 Days (Minimum Days Supply)= 100
• Target (Tgt) Safety Stock: The desired stock level for reordering.= Average Daily requirement x Target Days Supply= 50 x 5 Days (Minimum Days Supply)= 250• Maximum (Max) Safety Stock: Defines when excess stock exists.= Average Daily requirement x Target Days Supply= 50 x 7 Days (Minimum Days Supply)= 350
ADR (Average Daily requirement) is determine by
• Planned Independent Requirement (PIR)(In this case, Finished Product, Sub-Assembly, and Components can use the Range of Coverage)
• Sales Order
• Dependent Requirement
Example Calculation:
ADR (Average Daily Requirement) = 50pcs
Minimum Days Supply = 2 Days, hence the Minimum Safety Stock is 2 x 50pcs = 100pcsTarget Days Supply = 5 Days, hence the Target Safety Stock is 5 x 50pc = 250pcsMaximum Days Supply = 7 Days, hence the Maximum Safety Stock is 7 x 50c = 350pc
Calculation logic as below:
Case 1: If the Stock is now 50pcs (below the 2 days minimum of 100pcs), the system will replenish up to 250pcs, hence the procurement proposal will be 200pcs up to the Target Safety Stock level.Case 2: If there is a Lot Size adjustment due to Lot Sizing Rule or Rounding Rule/Profile and the replenishment qty should be adjusted higher than the Target Safety Stock level, then the Maximum allowed in this case will be 300pcs (as current stock 50 + 300pc = 350 = Maximum Safety Stock).
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Question: Dealing with "Static" parameters for Planning.
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Answer: As we know that "Garbage in is Garbage out", MRP calculation is always based on the accuracy of the INPUT data. Therefore whether data in and not limited to the following:
the BOMthe Routing Cycle TimeThe MRP1,2,3,4 data view in the Material MasterOther parameters of Planning HorizonsPO delivery datePO confirmation requirementPIR etc etc
are expected to up-to-date. The questions asked is:
• Do we evaluate these parameters in certain regulated intervals to ensure its accuracy• Are there any tools or transaction code that assist in recommending the right parameters and offer option to update the various master data
Thoughts:
• Unfortunately SAP do not provide all the tools (transactions) for evaluating the actuals and use it to update the Master data.• For example one of good example of a tool is, transaction code WPDTC for Planned Delivery Time Calculation; see below.• Even if SAP do not provide such tools, then it is up to "us" to device methodologies the evaluate actual performance and update the "actuals" to the various master data to ensure the accuracy of INPUT to the MRP Calculation.
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Question: Notes on WPDTC transaction code for Planned Delivery Time Calculation.
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Answer: Transaction code WPDTC is used to calculate the actual planned delivery time by analyzing historical data, comparing order dates, and goods receipts. This function, is used to update vendor-specific master data (ie: Purchasing Info Record) based on actual, rather than assumed, delivery performance.
Points to be considered:
- Calculation of Average Lead Time: It calculates the average time between the PO date and the Goods Receipt (GR) date to determine a more accurate, data-driven planned delivery time.
- Mass Update Master Data: Users can select calculated results and directly update the planned delivery time in the Purchasing Info Record, Material Master, or Vendor master data.
- Performance Evaluation: It provides a report to analyze the deviation between the current planned delivery time and actual delivery performance.
- Flexibility in Calculation: The report can handle specific criteria, such as selecting by plant, vendor, or material, and allows for weighting partial deliveries.
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Question: Industrial Engineering Cycle Time vs the Actual Time.
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Answer: Industrial engineering (IE) standard times in production routings often differ from actual production times because standards represent the theoretical time for an "average" operator under ideal conditions, whereas actual production is subject to real-world variability, human factors, and systemic inefficiencies.
Case 1: Usually the IE times are often "TOO OPTIMISTIC" compared to ACTUAL run times resulting always in, the reason behind such "TOO OPTIMISTIC" deficiencies are:
• Unaccounted Downtime: Routing times often ignore unplanned equipment failures, breakdowns, or tool changes that occur on the shop floor.• Variability in Operator Performance: Standards are set for an "average" operator. In reality, skill levels vary, and an inexperienced operator or operator fatigue can significantly increase the actual time.• Over-Idealized Conditions: Time studies often assume the ideal, optimized environment, while actual production involves imperfect conditions, such as poor ergonomics or inefficient workstations.• Outdated Standards: If the process has been improved or if tools/machinery have evolved, old standard times become inaccurate. So, it goes back to how often IE re-evaluate the appropriate cycle times and update to the Routing.• Batching and Queue Time: Actual production involves waiting for batches to complete at previous stations. These "wait-for-batch" times can account for 90% or more of total manufacturing cycle time.
Case 2: Another scenario is when "TOO MUCH BUFFER" is included in the IE calculated time to the Routing BUT there seemed to be always more than enough Capacity. Since SAP uses the Routing from IE time, planner may then resort to EXCEL to adjust the cycle time for Planning Production!!!!
• IE and Planning : When Industrial Engineering (IE) works in a silo and fails to communicate with Production Planning, it creates a fundamental disconnect between engineered capability (how things should run) and production execution (how things are running).
Thoughts:
• To get Actual Production time isn't an easy task as it requires correct Actual Production Start Time and then Actual Production Finish Time for each operation; It is not an easy task (or "impossible") to dictate a requirement for Production to provide this result as the entry of confirmation times can be partial plus many other factors like wait for qc, etc etc making collection of actuals production times to be compared with the IE cycle times not an easy task from the standpoint of SAP data entry.
• Nevertheless, in order that IE deriving a balanced Cycle Time without being "TOO OPTIMISTIC" and "TOO MUCH BUFFER", IE should not work in isolation (in Silo), it must work both Production department and the Planning department OR communicate for a balanced Cycle Time input to SAP.
• To ensure "REALISTIC" Cycle-Times, some Organizations will place the IE as part of the Production department but reorganization is only part of the solution; it fundamentally only require people to work together.
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Question: Spreadsheet or No-Spreadsheet but SAP does not provide row and column view of Planning data and SAP system not flexible to make quick changes to master data for a one-off or case to enable more "effective planning", then what.
Answer: The perception of spreadsheets as "king" stems from their familiarity, low cost, and flexibility, but they are increasingly viewed as a "shadow system" that introduces risk and inefficiency as businesses grow.
• As the spreadsheet is "so FLEXIBLE" that it does not provide as a single source of truth to planning.
• Denying the use of spreadsheet many ways isn't always possible because ERP system do not provide the spreadsheet like presentation and "flexibility" making it cumbersome to work efficiently and coupled with data in the ERP system cannot be adjusted easily for planning purpose.
In the advent of FIORI App and continued collaboration between SAP and Microsoft, Excel is increasingly becoming the additional tool for data entry and data review. One such tool released for S/4HANA is the "pMRP" FIORI App depicted by an example screenshot above of the Capacity view of multiple work center on the period layout.
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Demand-Driven Material Requirements Planning (DDMRP) can be effective, but it is not a "magic wand" that works immediately without proper implementation. It is specifically designed to combat the high variability and complexity (VUCA world) that causes traditional MRP systems (Push system) to break down. _0406&07_aATP&BOP_Blogged.jpg)
Answer: One of the functionality introduce as part of the aATP (Advanced Availability to Promise) development in S/4HANA is the Advanced BOP (or Advanced Back-Order Processing), Advanced Backorder Processing (BOP) in SAP S/4HANA (aATP) enables organizations to efficiently manage and reprioritize pending customer orders during supply shortages, ensuring critical, high-priority, or "winner" orders are fulfilled first. It utilizes batch processing to automatically reevaluate, filter, and reallocate stock across complex supply chains based on preconfigured strategies like Win, Gain, Redistribute, Fill, and Lose.
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Question: What is DDMRP?
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Answer: Demand Driven Material Requirements Planning (DDMRP) was developed by Carol Ptak and Chad Smith. Both are prominent proponents of the MRP system and have work with/in APICS (American Production and Inventory Control Society) for many years. They then become the co-founders of the Demand Driven Institute (DDI), an organization established in 2011 to promote and develop these Dmand-Driven Strategies.
The Demand Driven Institute (DDI) is now the global authority and governing body for Demand Driven Material Requirements Planning (DDMRP) education, training, certification, and compliance. organization. The Institute sets the standards for DDMRP, promoting methodologies that replace traditional, forecast-driven planning with demand-driven approaches to improve supply chain flow, reduce inventory, and increase responsiveness.
The Core Concept of DDMRP is "Position, Protect, and Pull" - Instead of pushing inventory based on long-term forecasts (which causes the "bullwhip effect"), DDMRP manages inventory through a visual, pull-based system that only replenishes what has actually been consumed.
DDMRP vs. Traditional MRP:
- Driver: Traditional MRP is push-based (forecast-driven), while DDMRP is pull-based (demand-driven).
- Inventory: Traditional MRP often leads to overstocks and shortages, whereas DDMRP reduces total inventory (30-45% reduction) and improves service levels (97-100% on-time).
- Response: DDMRP reduces lead times by up to 80% and reduces the need for "firefighting" or expedited shipping.
SAP officially released Demand-Driven MRP (DDMRP) capabilities in September 2017 with the SAP S/4HANA 1709 release. It was introduced to help manufacturers manage complex supply chains by using buffer-level stocking, rather than relying solely on forecasts.
See the following Blog Post
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Question: Advanced Back-Order Processing.
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Answer: One of the functionality introduce as part of the aATP (Advanced Availability to Promise) development in S/4HANA is the Advanced BOP (or Advanced Back-Order Processing), Advanced Backorder Processing (BOP) in SAP S/4HANA (aATP) enables organizations to efficiently manage and reprioritize pending customer orders during supply shortages, ensuring critical, high-priority, or "winner" orders are fulfilled first. It utilizes batch processing to automatically reevaluate, filter, and reallocate stock across complex supply chains based on preconfigured strategies like Win, Gain, Redistribute, Fill, and Lose.
Do note that Advanced BOP is only one of the features of aATP, other aATP feature like "RefDy (Release for Delivery)" FIORI App etc are desirable tools to many Availability check for mid term to short term Sales Order delivery confirmation.
See the following Blog Post:
See the following link to the Fiori Apps for Advanced BOP in the Fiori Library
Configure BOP Variant (App ID F2160)Configure BP Segment (App ID F2158)Schedule BOP Run (App ID F2665)Monitor BOP Run (App ID F2159)
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Question: Alignment and reacting to changes via FIORI tools.
Answer: MM, SD, QM, PM, PS provide several "Overview" FIORI App tools that combine multiple transaction data into one APP. For example, in MM, the "Procurement Overview" Fiori App ID F1990 comes with the ability to set "Area of Responsibility" so that the responsible person for groups of vendor (and other criterias) and SAVE as different FIORI App variants to allow immediate analysis of Problems, for example:
• Contracts that are Expiring which require review• PRs without vendor• PR with vendor but waiting to be converted to PO• PO with delivery date already outstanding• etc
See the following link to the FIORI App in the Fiori Library:
From the operation point of view, to be align and responsive to the "current situations" is an important day to day operational requirement in any department in any organizations. Traditionally, SAP does not a variety of transaction codes each dealing with different motivations. We appreciate that SAP S/4HANA is beginning to offer tools in FIORI Apps that provide "Insights" to these operational issues in such FIORI apps likes the "Procurement Overview" in MM that publishes such operational insights on-line real time to the App to allow more efficient response to these daily tasks.
Another example is the "Order Fulfillment" Fiori App for SD Issue identification and Resolution. Check the FIORI (App ID (F0029A/F0029):
Click link below:
Do note that SAP may update the Apps like it is now F0029A (the above is link the F0029).
Suggestion: SAP Fiori applications generally offer better, more efficient tools for addressing operational issues compared to the traditional SAP GUI. Fiori provides a modern, role-based user experience (UX) that simplifies complex tasks, enables real-time analytics, and provides better mobile access for field operations.
Click here to go to Fiori Library:
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