Supply Lead Time Calculation

Objective

After completing this lesson, you will be able to create a supply lead time calculation.

Supply Lead Time Calculation

The lead time is a key input for inventory planning. SAP IBP for inventory not only uses the lead time itself, but also takes into account the uncertainty of the lead time.

With the Supply Lead Time Operator, the inputs for inventory planning can be derived from historical data. These outputs of the Supply Lead Time Operator can then be used as inputs for the other inventory algorithms.

SAP IBP for inventory is able to handle the following lead time types:

  • Production lead time (time it takes to produce products)
  • Supplier lead time (time it takes for a vendor to deliver products (for example, raw materials) after a purchase order has been placed
  • Transportation lead time (time it takes to transport products from one location to another on a transportation lane)

The Supply Lead Time Operator uses historical data from a defined horizon to determine

  • the average length of lead times and
  • the variability of lead times.

Additionally, it determines outliers.

This can be used to refine the following attributes as key figures which are used as inputs for inventory calculations with SAP IBP for inventory:

  • Production Lead Time (PLEADTIME)
  • Production Lead Time Error CV (PLEADTIMEVARIABILITY)
  • Transportation Lead Time (TLEADTIME)
  • Transportation Lead Time Error CV (TLEADTIMEVARIABILITY)

To execute a supply lead time calculation, a Supply Lead Time Profile is needed. This needs to be created in the Supply Lead Time Profiles app.

The following overview shows the inputs and outputs for the Supply Lead Time operator:

Supply Lead Time Operator

Calculate Supply Lead Time

ExerciseStart Exercise

Steps

  1. Create a Supply Lead Time Profile using the entries in the following tables:

    1. Log on to manage the SAP IBP Web UI.

    2. Navigate to the General Planner group and open the Supply Lead Time Profiles app.

    3. Click on Create.

    4. Create the Supply Lead Time Profile by using the settings provided in the tables:

      Create Supply Lead Time Profile

      FieldValue
      NameSUPPLY_LEAD_TIME_##
      DescriptionSUPPLY_LEAD_TIME_##
      Planning AreaZIOUNIFIED
      Calculation LevelCW | Prod | Loc | Src (CALWKPRODLOCSRC)

    5. Click on Continue.

    6. Maintain the following values in the settings area of the Supply Lead Time Profile:

      Create Supply Lead Time Profile Details - Settings

      FieldValue
      Calculation Horizon12
      Minimum Number of Periods4
      Offset for Calculation Horizon0
      Default Lead Time CV0.2
      Confidence Level0.90
      Maximum Lead Time CV2.0
      Maximum Lead Time(= leave empty)
      Outlier Detection MethodNone

    7. Use the following input and output parameters to finalize the Supply Lead Time Profile:

      Input- and Output Parameters Supply Lead Time Profile

      Key Figure NameKey Figure ID Field/Parameter
      Production Lead Time: HistoricalPHISTLEADTIMEInputActual Lead Time
      Production Lead Time: Historical AveragePHISTLEADTIMEAVGOutputLead Time Average
      Production Lead Time: Historical Standard DeviationPHISTLEADTIMESTDDEVOutputLead Time Standard Deviation
      Production Lead Time: Historical CVPHISTLEADTIMECVOutputLead Time CV
      Production Lead Time: Historical Lower LimitPHISTLEADTIMELLOutputLead Time Lower Limit
      Production Lead Time: Historical Upper LimitPHISTLEADTIMEULOutputLead Time Upper Limit

    8. Click on Create to finalize the creation of the Supply Lead Time Profile.

  2. Adjust your planning view by adding the historical lead time key figures to the Production Input tab.

    1. Go to the Excel front-end, log in to planning area ZIOUNIFIED again and open your IO 210 Input Data Review ## planning view that you already have saved as favorite using the connection to ZIOUNIFIED.

    2. Update the Production Input tab of the planning view by adding the following key figures using the Edit View option

    3. Input- and Output Parameters Supply Lead Time Profile

      Key Figure NameKey Figure ID
      Production Lead Time: HistoricalPHISTLEADTIME
      Production Lead Time: Historical AveragePHISTLEADTIMEAVG
      Production Lead Time: Historical Standard DeviationPHISTLEADTIMESTDDEV
      Production Lead Time: Historical CVPHISTLEADTIMECV
      Production Lead Time: Historical Lower LimitPHISTLEADTIMELL
      Production Lead Time: Historical Upper LimitPHISTLEADTIMEUL

  3. Run the Supply Lead Time Operator in the Applications Jobs group, choose Supply Lead Time→Run.

    1. In the excel interface, log off and log in again.

    2. In the Applications Jobs group, choose Supply Lead Time→Run .

    3. If a popup appears, confirm it by clicking on OK.

    1. Select the SUPPLY_LEAD_TIME_## Planning Operator.

    2. Choose Base Version and then Next.

    3. Select run (optionally, you can choose a Reason Code and/or add a comment).

    4. Click on Navigate to Status.

    5. Verify that your planning operator was finalized successfully (Status: Finished).

    6. Click on Close to return to the planning view.

    7. Refresh your planning view and analyze the results of the Supply Lead Time calculation in the newly added key figures.

Learning

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