Exploring SAP Apps for Demand-Driven Buffer Level Management (1Y2)

• Schedule Product Classification (DD) (F2823)
• Mass Maintenance of Products (DD) (F2825)
• Buffer Positioning (F3282)
• Schedule Lead Time Classification of Products (DD) (F2871)
• Schedule Buffer Proposal Calculation (F2837)
• Manage Buffer Levels (F2706)
• Maintain PIRs (F3445)
• Schedule pMRP Simulation Creation (F3968)
• Process pMRP Simulations (F3934)

With this app, you can classify your products by systematically evaluating them based on their goods issue value (ABC classification), usage across BOMs (PQR classification), and variation in actual demand (XYZ classification) across a specified evaluation interval. Classifying your products will help identify whether they are relevant for demand-driven replenishment, and will help define inputs for their buffer settings. Additionally, you can schedule runs to re-classify your products periodically to keep their classifications up to date, so that you get accurate results as you proceed with demand-driven replenishment. This is the first app that you use when you start with demand-driven replenishment.

• Select only the products you need, by means of filters such as Product, Product Group, Plant, and MRP Area.
• Set custom thresholds for product classifications.
• Evaluate your products based on their goods issue value through ABC classification.
• Evaluate your products based on their BOM usage through PQR classification.
• Evaluate your products based on the variation in their actual demand through XYZ classification.

Product classifications can change seasonally or based on increase or decrease in demand over time. We recommend that you periodically re-classify your products to ensure that the right products are considered relevant for demand-driven replenishment.

A product is typically classified as type A, B, or C based on its goods issue value, with products classified as type A having the highest goods issue value and products classified as type C having the lowest goods issue value. The price of a product and the number of goods issues it has are the main factors that decide its goods issue value. For example, a high-priced product with a low number of goods issues may have the same classification as a low-priced product with a high number of goods issues. Using ABC analysis, products are evaluated to compute their goods issue value over a selected evaluation interval, sorted in descending order based on the calculated goods issue value, and then classified based on the thresholds set for value classification. For example, you can set thresholds for value in percentage such as 70, 20, and 10, or 80, 15, and 5 for A, B, and C respectively for value classification. These classifications are stored as a value indicator for the product, and can be displayed and manually changed in the Mass Maintenance of Products (DD) app.

A product is typically classified as type P, Q, or R based on its usage in BOMs, with products classified as type P being used in the highest number of BOMs and products classified as type R being used in the lowest number of BOMs. Using PQR analysis, products are evaluated to understand their presence and impact across BOMs. For example, you can set thresholds for the number of BOMs such as 3, 2, and <2, or 2, 1, and <1 for P, Q, and R respectively for BOM usage classification. These classifications are stored as a BOM usage indicator for the product, and can be displayed and manually changed in the Mass Maintenance of Products (DD) app.

A product is typically classified as type X, Y, or Z based on the variation in its actual demand, with products classified as type X having the lowest variation and products classified as type Z having the highest variation. The actual demand is calculated as the sum of sales orders due on the current date, sales orders that are overdue, and qualified order spikes, if any. Using XYZ analysis, products are systematically evaluated to compute the mean and standard deviation of their actual demand over a selected evaluation interval, through which the coefficient of variation for the actual demand is derived. The products are then classified based on the coefficient of variation using the thresholds set for variability classification. For example, you can set thresholds such as 0.25, 0.5, and >0.5 for X, Y and Z respectively for the coefficient of variation used with the variability classification. These classifications are stored as a variability indicator for the product, and can be displayed and manually changed in the Mass Maintenance of Products (DD) app.

With this app, you can display and change product details (master data records) relevant to demand-driven replenishment. After you have classified or re-classified your products, you can view the results of the classifications in this app and, based on the results, select products that are relevant to demand-driven replenishment. You can use the mass change feature to change the master data records for several products simultaneously. This is the second app that you use when you start with demand-driven replenishment.

• Select products that are relevant to demand-driven replenishment.
• Mark your selected products as DD-relevant by setting an appropriate MRP type.
• Display and change the results of product classifications.
• Select an averaging interval, based on which the average daily usage (ADU) and the decoupled lead time (DLT) will be calculated.
• Select which lot sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced.
• Set a minimum lot size to define a minimum procurement quantity.
• Export your filtered results into a spreadsheet and save it to your computer.

In addition, the app supports the following technical features and options:

• SAP Jam integration
• E-mail integration
• Save as a tile

Note

When you run this app for the first time, you may see that your products don’t have a lead time (EFG) classification. Only DD-relevant products are classified based on their DLT. After you have identified and marked products that are relevant for demand-driven replenishment, you can use the Schedule Lead Time Classification of Products (DD) app to classify your products.

You can select products that are relevant for demand-driven replenishment based on the results of their product classifications. You’ll see these product classifications under the Value Indicator, BOM Usage Indicator, Variability Indicator, and Lead Time Indicator columns of the Mass Maintenance of Products (DD) app. Typically, products with the highest goods issue value (type A), longest lead times (type G), highest BOM usage (type P), and highest variability (type Z) are relevant for demand-driven replenishment. It is, however, a business decision, because the next tier of classifications – B, F, Q, and Y – can also be considered if desired. After selecting the products that are relevant for demand-driven replenishment, you need to mark them as buffered or DD-relevant products. You can do this using the Mass Change feature of the app to assign the products an MRP type with the MRP procedure C, demand-driven replenishment.

The Buffer Positioning app enables you to identify products that need to be buffered by analyzing the upstream and downstream products in your supply chain. Upstream is the longest path, and the path in the BOM with the highest cumulated lead time. Upstream analysis helps you decide where to position buffers to protect the flow of a product on the supply side. For downstream, analyzing the immediate parent of a product in a BOM, the location of the next buffers in the BOM, and the finished products in the BOM help you protect the flow of a product on the demand side.

• View products based on filter criteria, such as MRP area, plant, lead time indicator, and variability indicator
• Buffer or unbuffer products
• Calculate the decoupled lead time (DLT) for one or more products
• Choose a product to view contextual information and all possible actions that can be performed on that product by navigating to related apps
• Navigate to view buffer analysis of a product in Upstream as well as Downstream
• Change MRP Area of products with multiple MRP areas in the BOM and Recalculate DLT to calculate the new Lead Time and DLT in the table
• Switch between table and network graph
  Note

  The table is displayed by default and all the products in the upstream of a buffered product are not displayed by default in either the table or the network graph.
• Visualize the Longest Path, Product Flow, and BOM and BOM Usage with the help of network graphs
• Change the orientation on the network graphs
• Change MRP Area of products with multiple MRP areas in the Product Flow and Recalculate DLT to calculate the new Lead Time and DLT by selecting nodes in the network graph and choosing Show Details
• Choose a product and view the buffer analysis of that product in a new tab
• Switch between buffer analysis tabs to compare products

With this app, you can classify your DD-relevant products by evaluating them based on their DLT (EFG classification) across a specified evaluation interval. Classifying your products based on their DLT helps to define inputs for their buffer settings. Additionally, you can schedule runs to re-classify your products periodically to keep their classifications up to date, so that you get accurate results as you proceed with demand-driven replenishment. This is the third app that you use when you start with demand-driven replenishment.

• Select only the products you need from your DD-relevant products, by means of filters such as Product, Product Group, Plant and MRP Area.
• Select an evaluation interval (in days) based on which your selected products will be classified.
• Set custom thresholds for DLT (EFG) Classification based on procurement types such as Make, Buy and Transfer.
• Evaluate your products based on their DLT through EFG classification.

Product classifications can change seasonally, based on logistics or even based on an increase or decrease in demand over time. We recommend that you periodically re-classify your products to ensure that the right buffer settings are considered for demand-driven replenishment.

A product is typically classified into type E, F, or G based on its decoupled lead time, with products classified as type E having the shortest decoupled lead time and products classified as type G having the longest decoupled lead time. An EFG classification is typically used together with the procurement type for a product or component. The sum of the longest lead times of non-buffered products in a sequence headed by a buffered or DD-relevant product in a BOM, adds up to a cumulative lead time for the DD-relevant product, which is known as the DLT. Using EFG analysis, your products are systematically evaluated to compute the DLT for DD-relevant products, and the DD-relevant products are then classified based on the thresholds set for lead time classification. For example, you can set thresholds for value (in days) such as 2, 5, and >5 for E, F, and G respectively for value classification. These classifications are stored as a lead time indicator for the product, and can be displayed and manually changed in the Mass Maintenance of Products (DD) app.

You can set separate custom thresholds for DLT (EFG) classification based on procurement types such as Make, Buy, and Transfer. For example, you might want to set different DLT thresholds for products produced in-house, products procured from external sources, or products transferred in through STOs based on logistical, contractual, or cost considerations.

With this app, you can generate buffer (stock) level proposals for your DD-relevant products based on their average daily usage, DLT, buffer profiles, and several other factors. Additionally, you can schedule runs to re-calculate the buffer proposals periodically to keep them up to date, so that you maintain appropriate levels of inventory while using demand-driven replenishment. This is the fourth app that you use when you start with demand-driven replenishment.

• Select only the products you need from your DD-relevant products, by means of filters such as Product, Product Group, Plant, and MRP Area.
• Calculate the ADU of your products over a selected averaging interval that you set in the Mass Maintenance of Products (DD) app.
• Calculate the DLT over the same interval in conjunction with the average daily usage.
• Generate buffer level proposals which will act as inputs to the Manage Buffer Levels app for your selected products.
• Adopt the generated buffer proposals automatically based on custom tolerance limits. You can use this feature together with the scheduling facility of this app to automatically adopt the generated buffer proposals after every scheduled run.
• Overwrite product details relevant to demand-driven replenishment such as individual lead time and DLT in master data records based on the updated values calculated by the app.

Buffer proposals can change daily, based on several factors, including an increase or decrease in demand over time. We recommend that you re-calculate the buffer proposals for your products periodically to ensure that the right buffer levels are considered for demand-driven replenishment.

Buffer (stock) level proposals help you manage the safety stock and reorder point and maximum stock for your products through the Manage Buffer Levels app. The following factors are taken into consideration when calculating buffer proposals for your DD-relevant products:

• ADU
• Averaging interval
• DLT
• Minimum order quantity
• Buffer profiles

This is the average usage of a product or component on a daily basis, calculated based on the demand over a selected averaging interval.

The Mass Maintenance of Products (DD) app is used to set an averaging interval; a rolling interval defined in the form [-x days], referring to the current date. This interval is used to calculate the ADU for that date based on the daily usage, and to calculate the DLT.

A sum of the longest lead times of non-buffered products in a sequence headed by a buffered (DD-relevant) product in a BOM, adding up to a cumulative lead time for the buffered product.

Note

If you have never generated a buffer proposal for the products you have selected, an up-to-date DLT is mandatory for generating a new buffer proposal. The DLT is automatically calculated (unless you have specifically chosen not to calculate it, in which case the buffer proposals for those products will not be generated).

The lowest product quantity for which an order can be placed to replenish the stock buffer, decided by logistical, contractual, or cost considerations.

Buffer profiles are a set of buffer control parameters. They are assigned to DD-relevant products based on their classification with respect to lead time and variability, and their procurement type. Every DD-relevant product has a lead time factor and a variability factor assigned to it based on its assigned buffer profile that helps calculate the buffer level proposals for that product.

With this app, you can ensure products are available when needed by managing the safety stock, reorder point, and maximum stock through buffer proposals for optimized demand-driven replenishment. Buffer level proposals are necessary to adjust the buffer levels to the ever-changing reality and thereby ensure that a product is sufficiently stocked to meet average demand, but in low enough quantities to prevent excessive storage costs or losses due to expiry. Buffer level proposals are calculated using the Schedule Buffer Proposal Calculation app.

• View buffer (stock) levels of products based on filter criteria such as proposal status, value indicator, lead time indicator, variability indicator, and so on.
• Adopt or ignore proposed buffer proposals for products.
• Navigate to view the following buffer-related details of a product:
  • Buffer Zones
  • Buffer Levels
  • Average Daily Usage
  • Decoupled Lead Time
  • Classifications
• Adjust the buffer levels for a product by changing the adjustment factor.
• Switch between planning view and performance view of buffer levels:
  • View maximum stock, safety stock, and reorder point in the planning view
  • Review the replenishment operations in the performance view
• For Buffer Levels and Average Daily Usage, switch between chart view and table view.
• Select data points on the charts to view details.

You can use this app to create and monitor planned independent requirements (PIRs) of materials in months or weeks. The information can be used to negotiate rates with your suppliers and, as a result, reduce costs. PIRs are used to procure or produce materials or components prior to receiving sales orders for materials. This information is particularly important if the lead times demanded by your customers are shorter than those to which your suppliers can commit.

This app helps you to detect forecast issues early in the process so that you can produce or purchase sufficient quantities of material to cover future sales demands on time. With the app, you can process PIRs for materials that have a forecast period indicator defined in the material master.

Note

The Maintain PIRs app only shows results for the selected period indicator. The default view is set to monthly periods.

• Sort and filter the list of materials based on various filters such as reach, accuracy, plant, active version or period indicator.
• Determine the reach of your PIRs and find materials with an insufficient reach.
• See how accurate your PIRs are for each period.
• Create additional PIR versions for each material.
• Change a PIR version to active or inactive.
• Mass maintain your PIRs - you can process materials either in months or weeks for up to 12 months or 52 weeks. You can also adjust the period within which you want to process the PIRs.
• Use Microsoft Excel files using the comma-separated value file format (.csv) to maintain PIRs.

In this app, you define the reference data that will be considered for a pMRP simulation, then schedule the creation of the simulation. In order to process simulations, the system creates simplified data based on your operative data for material resource planning. This data is used as reference data in pMRP. A set of defined reference data can be used to create multiple simulations or you can use the same reference data in additional simulations by copying the original. You can also create multiple scheduling jobs to create simulations with different reference data.

• Create pMRP simulations based on work center data
• Create pMRP simulations based on top-level material data
• Create pMRP simulations based on material component data

1. In the Schedule pMRP Simulation app, choose Create to create a new simulation.
2. Follow the steps that guide you through the creation process.

   You can select one of the following available job templates:

   • Creation of pMRP Data via Work Center

     Use this template to generate reference data based on work center data.

   • Creation of pMRP Data via Top-Level Materials

     Use this template to generate reference data based on material data.

   • Creation of pMRP Data via Components

     Use this template to generate reference data based on material component data.

3. Enter all required and additional desired data.
   Note

   In the Start Date of Reference and the End Date of Reference fields, use the dates wisely to have a realistic planning. For example, if your planning horizon is too narrow, the pMRP simulation might not consider data before and after the defined planning horizon of the reference data.
4. Choose Schedule.
   Note

   All relevant demands are distributed over the specified bucket data and displayed in the simulation plan as defined in this app.

The Process pMRP Simulations app enables you to create multiple simulations, check the impact of simulated changes to capacity or demands on the KPIs, and make informed decisions in your production planning. This app facilitates customers reducing inventory costs by making the right adjustments to the pMRP simulation.

• View a simulation list with status
• View and change material demand quantities
• View the capacity situation of a work center
• Display aggregated work center groups
• Change capacity demands
• Shift top-level material demands
• View material components and supplier information
• View the multi-level material simulation
• Start a preproduction of a material component
• Change the source of supply
• View simulation summary and revert changes
• Access the global change history for a simulation and undo or redo changes

After defining the reference plan in the Schedule pMRP Simulation Creation app, the first simulation is available in the Process pMRP Simulation.

• Copy Simulation

  All active simulations that you scheduled are listed in the Process pMRP Simulations app as simulations. In this app, you select a simulation that has the status Created to start processing it, or you can copy the simulation to have two that can be compared at a future point in time.

  Note

  You can copy a simulation multiple times. But you can edit only one simulation at a time.
• Demand Plan Simulation
  • This view provides different views of top-level demands and their quantities displayed as planned independent requirements (PIR) per bucket. To increase or decrease quantities, you choose a cell and begin typing. The red-colored cells indicate a capacity issue. Find more information about the issue by selecting the relevant cell.
  • You can choose between the following views showing the demand quantities as follows:
    • Simulation:

      This view shows only the simulated quantities, that is the quantities that can be edited by you.

    • Reference/Simulation:

      This view helps you to compare quantities based on the reference data with quantities that you can change manually.

    • Delta of Reference and Simulation:

      This view shows the difference between the quantities based on the reference data in comparison with the simulated quantities that you can change.

    • Simulation/Available Delta:

      Available delta is the difference between feasible and required quantities. It can be negative in case the required quantity exceeds the feasible quantity. In this view, you can compare the simulated quantity with the available delta quantity, and you can change the simulated quantity.