Inventory Optimization with SAP

Introduction ... 19

1. Why Inventory Is Necessary ... 27
... 1.1 Different Inventory Concepts ... 28
... 1.2 Uncertainties in the Supply Chain ... 36
... 1.3 How to Deal With Uncertainties ... 39

2. Factors Influencing Inventory ... 45
... 2.1 Five Instruments ... 45
... 2.2 Controlling by Inventory Monitoring ... 52

3. Inventory Analysis ... 53
... 3.1 Inventory Analysis Options ... 54
... 3.2 ABC Analysis With SAP ... 61
... 3.3 XYZ Analysis With SAP ... 81
... 3.4 Combining ABC and XYZ Analyses ... 87

4. Demand Planning and Forecasting ... 93
... 4.1 The Influence of Demand Planning on Inventories ... 93
... 4.2 The Bullwhip Effect ... 96
... 4.3 Optimization Potentials for the Forecast ... 97
... 4.4 Selecting the Forecast Method ... 132
... 4.5 Details of the Individual Forecast Methods ... 148
... 4.6 Running a Forecast ... 170
... 4.7 Forecast Accuracy and Alert Functions ... 186

5. Material Requirements Planning ... 207
... 5.1 MRP Strategies ... 208
... 5.2 Impact of Material Requirements Planning on Inventory ... 209
... 5.3 Strategies for Make-to-Stock Production in mySAP ERP ... 211
... 5.4 Strategies for Planning Components in mySAP ERP ... 229
... 5.5 Strategies for Make-to-Order Production in mySAP ERP ... 234
... 5.6 Consumption-Based Material Requirements Planning Using mySAP ERP ... 239
... 5.7 Requirements Strategies in SAP APO ... 248
... 5.8 Potential for Optimization in Material Requirements Planning ... 251

6. Service Level and Safety Stocks ... 257
... 6.1 Safety Stock ... 257
... 6.2 Service Level ... 259
... 6.3 Replenishment Lead Time ... 280
... 6.4 Forecast Quality ... 283
... 6.5 Safety Stock ... 286

7. Lot Sizes ... 325
... 7.1 How Do Lot Sizes Affect Stocks ... 325
... 7.2 Stochastic (Static) Lot-Sizing Procedure in mySAP ERP and SAP APO ... 327
... 7.3 Deterministic (Periodic) Lot-Sizing Procedures in mySAP ERP and SAP APO ... 333
... 7.4 Optimal Lot-Sizing Procedures in mySAP ERP and SAP APO ... 347
... 7.5 Restrictions in the Lot-Size Calculation ... 361
... 7.6 Selecting Lot-Sizing Procedures ... 363

8. Production ... 365
... 8.1 How Do Backlogs in Production Affect Stocks? ... 365
... 8.2 Why Do Backlogs Occur in Production Planning? ... 370
... 8.3 Reduction of Backlogs ... 373
... 8.4 Finite Planning and Optimization in SAP APO ... 379

9. Inventory Controlling ... 437
... 9.1 Why Inventory Monitoring? ... 437
... 9.2 An Introduction to Logistics Controlling ... 438
... 9.3 The Information System of the Supply Chain Council ... 440
... 9.4 Problems with Data Collection ... 445
... 9.5 Important Inventory Key Figures ... 446
... 9.6 Tools for Inventory Analysis ... 458
... 9.7 Inventory Monitoring in mySAP ERP ... 462

10. Afterword ... 467

Appendix ... 473
A. Literature ... 473
B. The Author ... 475

Index ... 477