Calculate Target Inventory Components

Objective

After completing this lesson, you will be able to understand the usage of the target inventory components calculation.

Defining a Target Inventory Components Calculation

You use the Calculate Target Inventory Components operator to calculate the types of inventory that comprise the total inventory for a given item to support a more granular inventory optimization calculation.

Note

You must run the Global (multi-stage) inventory optimization operator before running the Calculate Target Inventory Components operator.

The operator performs the following:

Runs a calculation with respect to optimal inventory targets.
Estimates target, average quantities, and currency values of inventory position, on-hand stock, cycle stock, pipeline stock, and merchandising stock.
Supports minimum stock requirements and cost per unit as inputs.
Calculates the reorder point and the days of supply for recommended safety stock and for on-hand stock (target, average and end of period).
Calculates values for the whole network.
Supports sub-network (PLUNITID) filters in Batch Mode.
Supports unit of measure conversion for input and output key figures.
Supports production and transportation lot size periods of coverage for PBR.

The following figure shows the Calculate Target Inventory Components operator and what inputs are used:

The figure describes the Calculate Target Inventory Components: Inputs.

The following table lists the demand input to the Calculate Target Inventory Components operator:

Inputs	Type
IOFORECAST	Key figure

The following table lists the inventory constraint inputs to the Calculate Target Inventory Components operator:

Inputs	Type
RECOMMENDEDSAFETYSTOCK	Key figure
IOMINSTOCKREQUIREMENT	Key figure

The following table lists the policy parameter inputs to the Calculate Target Inventory Components operator:

Inputs	Type
PBR	Attribute as key figure
PLUNITID	Master data type attribute
STOCKINGNODETYPE	Master data type attribute
SOURCETYPE	Master data type attribute
TSHIPMENTFREQUENCY	Master data type attribute
PSHIPMENTFREQUENCY	Master data type attribute
COSTPERUNIT	Master data type attribute
EXCHANGERATE	Attribute as key figure
UOMCONVERSIONFACTOR	Attribute as key figure
PLOTSIZECOVERAGE	Attribute as key figure
TLOTSIZECOVERAGE	Attribute as key figure

The following table lists the lot size and lead time inputs to the Calculate Target Inventory Components operator:

Inputs	Type
TLEADTIME	Attribute as key figure
TMINLOTSIZE	Attribute as key figure
TINCLOTSIZE or TROUNDING	Attribute as key figure or Master data type attribute
PLEADTIME	Attribute as key figure
PMINLOTSIZE	Attribute as key figure
PINCLOTSIZE or PROUNDING	Attribute as key figure or Master data type attribute
TLEADTIMEVARIABILITY	Attribute as key figure
PLEADTIMEVARIABILITY	Attribute as key figure
NONSTOCKALLOCATIONHORIZON	Master data type attribute

The following table lists the sourcing quotas and BOM inputs to the Calculate Target Inventory Components operator:

Inputs	Type
RATIOTS	Master data type attribute
PRATIOTS	Master data type attribute
OUTPUTCOEFFICIENTTTS	Master data type attribute
COMPONENTCOEFFICIENTTS	Master data type attribute
LOCATIONRATIO or TRATIO	Key figure or Master data type attribute
PRODUCTIONRATIO or PRATIO	Key figure or Master data type attribute
OUTPUTCOEFFICIENT	Key figure
COMPONENTCOEFFICIENT	Key figure

The following figure shows the Calculate Target Inventory Components operator and the outputs that result:

The figure describes the Calculate Target Inventory Components: Outputs.

The following table lists the key figure outputs for the Calculate Target Inventory Components operator:

Outputs	Base Planning Level
PROPAGATEDDEMANDMEAN	WKPRODLOC
IOTARGETCYCLESTOCK	WKPRODLOC
IOAVGCYCLESTOCK	WKPRODLOC
IOTARGETONHANDSTOCK	WKPRODLOC
IOAVGONHANDSTOCK	WKPRODLOC
IOENDONHANDSTOCK	WKPRODLOC
IOTARGETPIPELINESTOCK	WKPRODLOC
IOAVGPIPELINESTOCK	WKPRODLOC
IOTARGETINPROCESSSTOCK	WKPRODLOC
IOAVGINPROCESSSTOCK	WKPRODLOC
IOTARGETVENDORTRANSITSTOCK	WKPRODLOC
IOAVGVENDORTRANSITSTOCK	WKPRODLOC
ROP	WKPRODLOC
IOAVGINVENTORYPOSITION	WKPRODLOC
TARGETINVENTORYPOSITION	WKPRODLOC
IOSAFETYSTOCKDAYSOFSUPPLY	WKPRODLOC
IOTGTONHANDDAYSOFSUPPLY	WKPRODLOC
IOAVGONHANDDAYSOFSUPPLY	WKPRODLOC
IOENDONHANDDAYSOFSUPPLY	WKPRODLOC
RECOMMENDEDSAFETYSTOCKVAL	WKPRODLOCCURR
IOMINSTOCKREQUIREMENTVAL	WKPRODLOCCURR
IOMERCHANDISINGSTOCKVAL	WKPRODLOCCURR
IOTARGETCYCLESTOCKVAL	WKPRODLOCCURR
IOAVGCYCLESTOCKVAL	WKPRODLOCCURR
IOTARGETONHANDSTOCKVAL	WKPRODLOCCURR
IOAVGONHANDSTOCKVAL	WKPRODLOCCURR
IOTARGETPIPELINESTOCKVAL	WKPRODLOCCURR
IOAVGPIPELINESTOCKVAL	WKPRODLOCCURR
IOTARGETINPROCESSSTOCKVAL	WKPRODLOCCURR
IOAVGINPROCESSSTOCKVAL	WKPRODLOCCURR
IOTARGETVENDORTRANSITSTOCKVAL	WKPRODLOCCURR
IOAVGVENDORTRANSITSTOCKVAL	WKPRODLOCCURR
IOTARGETWORKINGCAPITAL	WKPRODLOCCURR
IOAVGWORKINGCAPITAL	WKPRODLOCCURR

Calculate the Target Inventory Components (CIC)

ExerciseStart Exercise

Business Example

As inventory planner you would like to calculate the inventory components. To do that we will work during this exercise with the connection ZIOUNIFIED within the Planning Area ZIOUNIFIED.

Prerequisites

Planning View used for this exercise: IO 240 InvComp Review ##
All previous exercises are prerequisites for this exercise.
For this exercise we will work with FG1## e.g. Trainee number 20 - Product: FG120.
Use the filters within the planning view based on Macros to activate the Graphs.

Note

Manual inputs are only feasible in the current and in the future period. Calculations will not affect the past in the planning horizon.

Steps

Verify in the first tab InvComp(Avg) that results of the Global Inventory Optimization exist for some combinations. With this step we are verifying as well that Recommended Safety Stock contain input values while Cycle Stock (Average), Merchandising Stock, Pipeline Stock (Average), On Hand Stock (Average), In Processs Stock (Average), Vendor in Transit Stock (Average) and Average Inventory Position were not calculated yet.
1. Log on to the SAP IBP, add-in for Microsoft Excel.
2. Open your favorite IO 240 InvComp Review ##.
3. Edit the planning view IO 240 Planning Result ## by using the option Edit View in the upper part of the Excel window and maintain a workbook filter for FG1## only.
4. Click on OK.
5. Verify that Recommended Safety Stock contain input values at least for some of the combinations.
6. Verify that Cycle Stock (Average), Merchandising Stock, Pipeline Stock (Average), On Hand Stock (Average), In Processs Stock (Average), Vendor in Transit Stock (Average) and Average Inventory Position do not contain input values yet.
Go to the InvComp(Target) tab to verify that there are no values within the inventory components in this sheet.
1. In the second tab InvComp(target), filter by your group number ## to display your products.
2. Verify that Cycle Stock (Target), Pipeline Stock (Target), On Hand Stock (Target), In Process Stock (Target), Vendor in Transit Stock (Target) and Target Inventory Position do not contain input values.
  Note
  Because the GIO Operator was already activated, we can see results within Recommended Safety Stock in the current and in the future periods.
Go to the Application Jobs group to run the CIC algorithm.
1. Under Application Jobs, open the drop down of Inventory Planning (Advanced), click on Run.
2. Select Calculate Target Inventory Components as Function under Inventory Planning Profile_SAP.
3. Select all planning units which correspond to your group number ## e.g. Planning Units: Brasil##, Europe##, India##, US## and Venezuela##.
4. Select Scenarios: Baseline, Versions: Base Version.
5. A filter is not needed. Click on Next.
6. Select as Reason Code: Inventory and add a comment Running the algorithm to calculate inventory components.
7. Click on Run and click on OK to confirm that you have scheduled a job.
8. Watch the progress in the dialog box. When the run is finished, choose Navigate to Status to view the list of logs. Close to return to planning view.
9. When the status is Finished close the window Inventory Optimization - Status and refresh the planning view.
10. Click onInvComp(Avg), filtering by your group number ## to display your planning objects.
11. Refresh the Excel sheet to verify that the algorithm has calculated the inventory components.
12. Verify that Cycle Stock (Average), On Hand Stock (Average), In Process Stock (Average) and Average Inventory Position do contain results.
13. Click onInvComp (Target), filtering by your group number ## to display your planning objects.
14. Refresh the Excel sheet to verify that the algorithm has calculated the inventory components.
15. Verify that Cycle Stock (Target), Pipeline Stock (Target), On Hand Stock (Target), In Process Stock (Target), Vendor in Transit Stock (Target) and Target Inventory Position do contain results.
16. Compare the results between locations.
17. Go to tab Plnd On Hand vs. Proj. Stock. Refresh the page to analyze results. Note that the projected stock was not calculated yet. This calculation is not part of the scope of this training. SAP IBP for response and supply calculates the projected inventory using the Sales and Operations Operator.
  Note
  Because the GIO Operator was already activated, we can see results under Recommended Safety Stock in the current and in the future periods as well.
  The heuristic and the optimizer solver within SAP IBP for response and supply will calculate the projected stock based on the Recommended Safety Stock and the Target Inventory. That is, SAP IBP for inventory delivers inputs to SAP IBP for response and supply, and this last module delivers inputs back.

Result

Results

Now you have seen how you can activate the calculation of inventory components after having activated a global inventory optimization.

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