Global Configuration Parameters
In the Global Configuration app, you set values for the parameters that control various features of the SAP Integrated Business Planning (IBP) for Supply Chain applications.
In SAP IBP 2111, inventory operators were migrated from the model configuration framework to the profile-based framework. That means you can maintain the parameters related to the behavior of inventory operators via inventory profiles app. This concept has the advantage that the settings can be made on the level of the analysis run, which offers more flexibility than the global level.
Be aware that there are still parameters on global level that might have an impact also on planning in IBP for Inventory (e.g. excel-related parameters), but they are not inventory-specific.
Note
Global Configuration Parameters for Inventory Optimization
Several global configuration parameters control various features for inventory optimization. Using global configuration parameters, you can:
Enable dynamic lag.
Enable demand ramp-down and phase out.
Set options for storage capacity constraints.
The following table lists the global configuration parameters used for inventory optimization features:
| Global Configuration Parameter | Topic |
|---|---|
| ENABLE_DYNAMIC_LAG | Dynamic Lag |
| SCAL_HANDLE_DEMAND_RAMP_DOWN | Demand Ramp-Down and Phase-Out |
| STORAGE_CAPACITY_CONSTRAINTS | Maximum Storage Capacity Constraints |
| STORAGE_PENALTY_OPTION | Maximum Storage Capacity Constraints |
The following figures list the global configuration parameters used for inventory optimization features providing use cases and settings:
Dynamic Lag
When enabled, inventory optimization operators use lagged forecast error inputs to calculate inventory target plans, considering the lagged effect of demand variability for upstream nodes in the multistage network.
When set to YES, dynamic lag is considered. When set to NO or any other value, dynamic lag is not considered. The default parameter value is NO.
The following planning operators are affected by dynamic lag (when enabled):
- Global (multistage) inventory optimization
- Decomposed (single-stage) inventory optimization
In addition, you can calculate lag-based forecast error coefficient of variation inputs from the Manage Forecast Error Calculation for inventory optimization app.
The dynamic lag logic in inventory optimization uses each lag-based forecast error coefficient of variation as an input corresponding to the cumulative lead time applicable to a node. For example:
A Lag 2 based forecast error coefficient of variation is applied to a customer facing node that has a sourcing lead time of two (2) weeks.
A Lag 7 based forecast error coefficient of variation is applied to an upstream node when the upstream node sources a downstream node with a 2-week lead time, and that node is sourced from another upstream node with a lead time of 5 weeks.
Multiple sourcing cases: For an upstream node, sourced upstream with a lead time of seven (7) weeks, and sourcing two nodes downstream; one with lead time of two (2) weeks and another with a lead time of zero (0) weeks, the lag-based forecast error coefficient of variation applied to the upstream node is based on demand-weighted lead time between 2 weeks and 0 weeks, plus 7 weeks; if the demand is equal between the two downstream nodes, the lag applied to the upstream node is 7 + (2+0)/2 = 8.
Demand Ramp-Down and Phase-Out
The SCAL_HANDLE_DEMAND_RAMP_DOWN technical global configuration parameter allows the Global (MultiStage) Inventory Optimization operator to better support inventory ramp-downs and phase-outs.
When set to YES, the algorithm automatically detects periods of demand ramp-down or phase out and indicates the states with the following output key figures:
Demand Ramp-Down Indicator (DEMANDRAMPDOWNIND)
Detected for a period when the period’s demand falls below a threshold proportional to the demand moving average. Once detected, the demand ramp-down period is at least as long as the exposure period, that is, lead time plus periods between replenishment.
Demand Phase-Out Indicator (DEMANDPHASEOUTIND)
Detected when all consecutive periods have zero demand, including the end of the planning horizon.
If SCAL_HANDLE_DEMAND_RAMP_DOWN setting is missing or set to any value other than YES or NO, the default value (YES) is used.
Note
Maximum Storage Capacity Constraints
By considering maximum storage capacity constraints at the product location level during inventory optimization, more accurate inventory targets can be recommended.
Planners can consider moving inventory to more expensive but less constrained locations, or if no feasible storage solution is possible, additional storage capacity can be recommended.
Global Configuration settings for Maximum Storage Capacity Constraints:
The maximum storage capacity constraints feature requires setting two global configuration settings, which are explained in the following table:
| Parameter Group | Parameter Name | Default Value | Parameter Description |
|---|---|---|---|
| INVENTORY | STORAGE_CAPACITY_CONSTRAINTS | IGNORE | Set whether to ignore or consider storage capacity constraints. IGNORE is the default value. When set to CONSIDER, IO operators consider storage capacity constraint key figures. If the setting is missing or set to any other value other than IGNORE or CONSIDER, the default value (IGNORE) is used. |
| INVENTORY | STORAGE_PENALTY_OPTION | VARIABLE | Sets how to manage the cost of storage constraint violations. When set to FIXED, the parameter minimizes number of stocking nodes where storage constraint is violated, and assumes a large fix-cost to resolve the storage problem. The VARIABLE option minimizes total cost of storage, and assumes a variable cost for each instance of additional required storage. |
Key Figures for Maximum Storage Capacity Constraint:
Two input key figures are used by the Global (multistage) inventory optimization operator for storage capacity. The following table details those key figures:
| Key Figure ID | Name | Base Planning Level | Definition | More Information |
|---|---|---|---|---|
| MAXINVENTORYVIOLATIONCOSTRATE | Maximum Inventory Violation Cost Rate | WKPRODLOC | Cost rate of violating the maximum inventory, that is, of adding additional storage capacity. | For this key figure to be used by the inventory operator, the STORAGE_CAPACITY_CONSTRAINTS global configuration parameter must be set to CONSIDER. |
| IOMAXINVENTORY | IO Maximum On Hand Inventory | WKPRODLOC | Maximum amount of on hand inventory that can be stored at a location. | For this key figure to be used by the inventory operator, the STORAGE_CAPACITY_CONSTRAINTS global configuration parameter must be set to CONSIDER. |