Planning Operators

Once the inputs have been validated, the inventory optimization algorithms should be activated. Depending on the data volume and the corresponding run times, this either can happen as a batch-based process that runs overnight or can be triggered by the planner.

As you’ve learned so far, with the configuration and the details about optimization algorithms, running inventory optimization requires a sequence of steps—or planning operators—to be executed. The following figure shows the standard way inventory planning operators should be structured to get all elements calculated accurately.

The following steps are typically part of a complete inventory optimization run:

1. Calculate the forecast error CV, which we mentioned in the first step as a validation element. Typically you would include this step in the end-to-end run.
2. Run the Multi-Stage Network operator to visualize multi-stage networks that are considered in optimization (optionally).
3. Run the Supply Lead Time Operator to calculate inputs for inventory planning related to production, transportation, and/or supplier lead time (optionally).
4. Run the global (multistage) inventory optimization, which optimizes the stock globally and simultaneously over all products and locations, considering all drivers for safety stock, as described in previous chapters. The global run also makes sure that all the propagated demands are calculated, which might be required by subsequent operators.
5. Calculate target inventory components such as cycle stock, pipeline stock, merchandising stock, and the average inventory position.
6. Run the Service Level Prediction operator to determine how adjustments will impact service levels (optionally).

Optionally, you can store the previous cycle values of inventory optimization in a set of key figures with previous cycle in the name—for example, Previous Cycle Target Inventory. This allows the planner to compare the newly calculated results to the previous ones. This operator, of course, should only be executed once, at the start of the cycle.

Beside the planning operators, that are specifically designed for the usage in the environment of inventory optimization, it is also possible to utilize planning operators provided in the area of MRO (Maintenance, Repair, and Operations) as they are available for inventory users of IBP as well.

As mentioned in the beginning of this section, upon completion of the first step of validation of inputs, this job can be triggered automatically. Alternatively, planners can trigger it manually from the SAP IBP, add-in for Microsoft Excel, by pressing Run in the Advanced section, and selecting Inventory Optimization.