Tuesday, April 1, 2014

Inventory Optimization: with or without the SAP Add-On Tools

As we are optimizing SAP supply chains sustainably, all over the globe and also distribute the SAP Add-On Tools (by SAP Germany), bigbyte (www.bigbytesoftware.com) supports a wide portfolio of SAP using manufacturing companies in the US, Europe and Asia.

Some of those companies use the Add-On Tools and some do not - at least not yet.      Man!... what a difference. Not that I want an easy play, but with the Tool-using companies we'll achieve better results in half the time. These tools simply near-perfect the SAP-ERP system (there are tools for APO too) and automate the work.

As an example... when optimizing your replenishment strategies, you have to analyze and classify your material portfolio into materials by consumption value, consumption consistency or predictability, lead times and life cycle (is the material new, obsolete, slow mover or regular) and then set up the master data (the four MRP screens) accordingly. PD for expensive, unpredictable and spotty items, consumption based strategies for predictables, reorder procedures for items you want to keep in stock, lot size procedures that go with the strategy and safety stock strategies.

If you work without the SAP Add-On Tools the process goes like this: Build a list of materials with high optimization potential using transactions MC.9, MC42, MC49, MC48, MC50, MD07, MCBA and much more... then analyze each individual material using historic, outdated graphics, LIS transactions, dual classification, slow mover reports, dead stock reports, MD04 timeline, table MVER and an XYZ analysis in Excel (all of this will take you about 4 hours per material). Then maintain the materials MRP 1 through 4 screens to the best of your knowledge.... repeat for each material... repeat for each material EVERY MONTH !! (things change, right?)

Using the MRP Monitor, you start the analysis for the entire Plant and the monitor classifies and performs a segmentation immediately into six dimensions - ABC for consumption value, XYZ for consumption history with a coefficient of variation, EFG for lead time, UVW for price, LMN for size or volume and Life Cycle. That is your analysis right there. In the Monitor result your portfolio is segmented into these 6 dimensions or classes and you will now select any given class and assign a pre-defined policy (the program reads the policy for the items marked as A,X,E and V and updates all material master with the respective MRP Type, Lot Size procedure, min maxes, safety stock settings, strategy group, consumption strategy and availability checking rule. And it does so every months.

Have a look at the MRP Monitor and the other SAP Add-On Tools... it certainly will be worth your while before you engage in a one-time, six month, loosely defined inventory optimization project.