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8 steps for setting up Advanced Safety Stock Planning to reduce inventory

by The Tip Doctor

November 16, 2011

Tip Doctor, Insider Learning Network.

This tip is taken from “How to Really Reduce Inventory with SAP APO Safety Stock Planning Methods” by Matthew Campbell, K2 Professional Services, presented at last year’s Logistics & Supply Chain Management 2011 conference.

SAP APO includes methods for safety stock planning. But what are the key steps and best practices for setting up and managing approvals? Which fields do you set up in the product master, and how does this process change whether you’re using PP/DS or liveCache? Review these steps as you set up and execute safety stock planning.

Advanced Safety Stock Planning — Process Overview

1.    Set up product master:

  • Method
  • Target days
  • Service level
  • Replenishment Lead Time (RLT)
  • RLT error %
  • Demand error %
  • Min/max

2.    Prepare safety stock profile (if required)

3.    Review forecast history and actual history in Demand Planning

4.    Execute (advanced) safety stock planning for location/products

5.    Review safety stock planning book results

6.    Can have an approval step to send safety stock values to the official key figure

7.    If using PP/DS, execute PP/DS order conversion to send the time series into PP/DS as orders or run heuristic to publish safety stock to liveCache

8.    Review below-safety-stock alerts in the Alert Monitor

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