Defining Inventory Planning and Optimization

Objective

After completing this lesson, you will be able to determine the most appropriate placement of Inventory Planning and Optimization within the SAP IBP solution to support client requirements effectively.

Inventory Planning and Optimization

In this unit we address Inventory Planning and Optimization as vital components of SAP IBP.

Layered diagram of SAP Integrated Business Planning for Supply Chain. Top Layer: SAP Supply Chain Control Tower. Second Layer: SAP IBP For Sales and Operations. Third Layer: SAP IBP for Demand, Inventory, Demand-Driven Replenishment, Response and Supply. Fourth Layer: SAP IBP Platform. Bottom Layer: SAP HANA.

Inventory Planning and Optimization are crucial parts of any supply chain. They will help put inventory where it is needed, optimize service level, reduce inventory holding costs, avoid stock out situations, and provide valuable input to a supply plan as a whole.

Note

Some functions explained on this chapter might require additional licenses. The following link provides an overview of the available licenses for SAP IBP: SAP Help → SAP Integrated Business Planning for Supply Chain → Applications and Features of SAP Integrated Business Planning for Supply Chain. → SAP IBP for Inventory

Introduction to SAP Integrated Business Planning for Inventory

Data sheet reflecting key figure elements for a specific time period providing transparency, Net Working Capital, and variability data using SAP Integrated Business Planning for Inventory.

SAP Integrated Business Planning for Inventory considers (among others) the following key inputs to generate an optimized inventory plan (e.g. safety stock recommendations):

  • Demand variability, forecast error, and supply uncertainties

  • Relative costs, timing, and inter-relationships across the supply chain

  • Interdependency of inventory across warehouses and other important critical factors in inventory target setting

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