Wednesday, August 29, 2012

Lot Sizing optimization in SAP with an Add-On


Today I saw something great!  It has always been a bit of a problem to me to go to end users, having to tell them that, in order to find the best lot size procedure, you have to do a lot of leg work. And if your portfolio exceeds a few hundred materials it becomes an impossible thing to do..

Well... Marc Hoppe and his team at SAP Consulting have a solution: a lot sizing simulator!

I have written about Hoppe's Add-Ons before. These cover 'white spots' of functionality not available in standard SAP, with solutions written within the SAP namespace. Beautiful stuff. As an example there is the MRP Monitor and it comes, amongst other things, with lot size simulation. The Monitor serves as a basis for many things and lets you store a table containing your portfolio with various data to analyze. You put this record together in that you collect historical data, usually coming from table MVER. However, SAP Consulting provides another option: you can use MVER, the standard consumption history, or you build your own. Building your own gives you the ability, as an example, to exclude certain movement types (like transfer postings). You can also exclude slow movers or new materials which don't have meaningful information yet.

After you built your analysis this way, you can use the various simulation tools and one of these is the lot size optimizer. With it you select a segment of your ABC / XYZ analysis (which the MRP Monitor has put together) and you run the simulation. What this does is exciting. For every material the solution looks at the future demand and tests every lot sizing procedure you choose. It then comes up with a list where for every lot size you can see the cost of replenishment, comparing ordering cost with stock keeping cost!

You can then choose to generate a list which shows for every material and demand situation the optimum lot sizing procedure. In this list you also see a comparison of your cost with the existing lot sizing compared to the lower cost one and the cost saving you get by switching over. With the push of a button all materials are updated with the best procedure and the next MRP run produces best possible order quantities and dates. 

Periodically you run the optimizer again and keep your lot sizes in tune with your changing demand situation... This, by far, beats the impossible labor required by your MRP controller to have the best lot sizing methods maintained. The sheer impossible amount of effort needed is the main reason while only static and periodic lot sizes are in use. This simulator enables the optimizing lot sizes right away.