Sunday, April 15, 2012

The hidden power of the Coverage Profile

The coverage profile which gives you the ability to maintain a dynamic safety stock is one of the most undervalued features of the SAP Planning modules. With it you can define how many days of coverage for future requirements you want the system to hold in safety stock and you can have the system to automatically hold the stock level between a min and a max.

 Of course you need future requirements for the system to figure that out. Unless you have an external forecast or enough dependent requirements into the future, a PD MRP type won't work. Any reorder level pocedure in combination with a coverage profile won't do the trick because it lacks the future requirements for the calculation of the average daily future (and why would we want to maintain a dynamic safety stock level on a reorder procedure anyway). So a VV with a material forecast seems to be perfectly destined to use a coverage profile. Check it out yourself. Use a VV for a material that has consistent consumption, create a forecast that goes beyond the replenishment lead time and use a coverage profile with your choice of how many days you want cover for. Check the result in the graph that you access in MD04 (go to List>Graphic).

 If you want MRP to not exceed a certain stock level you have to maintain a maximum range of cover in config for the Coverage Profile. Should your consumption or sales be less than what you forecasted then your inventory will rise. However, the maximum range of cover will limit this rise. MRP will reuce future order proposals if your lot size is set to EX. If you use a minimum lot size and the receipt exceeds your max, the system will give you exception message 25 'excess stock'. The minimum range of cover triggers the addition of quantities to the order proposal so that after all requirements are covered, the target range of cover remains as safety stock. Therefore don't set it too far below the target. The period view in MD04 has all pertinent information about the result of the calculation of the dynamic safety stock. Why dynamic? Because if the future requirements go down so does the safety stock and if they go up the safety goes up with it. This is because 5 days of coverage are 10 pieces if the future daily requirement is 2 pieces and it is 100 pieces if the average daily requirement is 20 pieces