Sap Minimum Safety Stock
Aide Broeckel
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- [Instructor] We will now turn our attention to another short topic, the minimum safety stock. What is a minimum safety stock? The minimum safety stock defines the lowest value of safety stock that you want to keep for a material at any given time. It is the lowest allowed quantity of stock that you always want to have available in your warehouse to cover any unforeseen events. It is mainly used where the system automatically calculates the safety stock during the forecast. Some MRP types are configured to do just that. And if the result of that automatic safety stock calculation is lower than the specified minimum safety stock limit, the safety stock is then set to this minimum value. Herewith it'll be ensured that a system calculated safety stock will never fall below a desire threshold value. The minimum safety stock is maintained on the MRP Two view of the material master record. And if maintained, the system will force you to maintain a safety stock that has to be equal or greater than the minimum safety stock. If you maintain a minimum safety stock on the MRP two few and you try to proceed, the system will issue a warning message telling you that the safety stock must be greater than the minimum safety stock. So it is okay to have a safety stock value that is at least equal to the minimum safety stock. But if I have a value below, it will also give me the same message. So you always want to have a value equal or greater than the minimum safety stock. Let us now look at an example on how this minimum safety stock comes to use. I have a material here that is a forecast based blend with MRP type VV and this MRP type is set up to automatically calculate safety stock during the forecast. Currently, I have a safety stock of 35 maintained on this material and no minimum safety stock yet. So under this settings, if I would run forecast, the forecast right now on this material and I'm executing that now for this one material, then we'll see that the system would calculate me a safety stock of 26 at current. But so what is, what will happen now if I and I haven't saved, I haven't saved the forecast yet but now let me go and change my minimum safety stock to 30 and let's run the forecast now again to see what happens now. Do I run it again? And when the values come back, you will see that the system now calculates 30 because we have a minimum safety stock maintained and the system then will make sure that the automatically calculated safety stock that is calculated during the forecast execution will not be any lower than the minimum safety stock maintained. So if the calculated value would be lower which in my example as we saw before, it was 26, that the system automatically moves this value up to B at the minimum safety stock value. So if I now go back to my screen, you see that the system then has automatically updated now my safety stock to the 30 which is my minimum safety stock. That is there the minimum safety stock mainly comes into play to ensure that any safety stock that will be calculated automatically by the system based on the MRP types that allow to automatically calculate the safety stock, that this safety stock will not fall below the threshold value of 30, which I which I designate in my minimum safety stock.
As such this figure is not stock, it is cut-off figure maintained in master which is used for Planning and once the stock level dips below this value, you can configure system to generate PR, orders automatically. It has its relevance in MRP and CBP.
The lower limit is checked if you use an availability indicator which shows, according to customizing settings, if the safety stock is to be calculated again in a forecast. If the safety stock is lower than this level in forecasting, the safety stock is automatically increased to the value of the lower level.
The Safety Stock is the one that is relevant to Stock Requirement List. The Min Safety Stock is just a threshold/lower limit that the safety stock should not fall below the minimum. This applies to cases where Safety Stock changes through time.
The purpose of the safety stock is to prevent a material shortage from occurring. In order to determine the safety stock level, you must first specify the risk of a material shortage and also the desired service level.
The safety stock depends on the service level that you specified in the MRP 2 view of the material master record and on the accuracy of the forecast. The more accurate the forecast, the smaller your safety stock can be.
You can specify a minimum safety stock. If the result of the safety stock calculation is lower than this limit, the safety stock is then automatically set to this minimum value. You enter the minimum safety stock in the material master record ( MRP 2 screen ).
Maximum level (MAX): The quantity to be ordered to reach the maximum stock level is calculated by multiplying the average sale (VM) by a fixed ratio, usually between 1.5 and 2.5. This formula ensures that stock does not exceed an optimum level, thus avoiding overstocking.
This method takes into account both average sales and delivery times. Thus, as average sales increase, so do minimum and maximum reorder points. Similarly, when delivery times are longer, the minimum level is more important to cope with unforeseen events.
A service rate coefficient ? : Instead of using a fixed ratio, you can replace it with the service rate coefficient (Z) calculated from the normal distribution law. This approach allows you to consider demand variability and adjust stock levels accordingly.
In this formula, Z represents the service rate, which can be calculated according to certain criteria. The standard deviation of demand measures the dispersion of sales in relation to the average.
You must adapt and find the right inventory management method depending on the situation. If your stock levels are low, your lead times are short (less than a few days), your suppliers are close to your warehouses or sales outlets, and your demands are predictable or stable, we recommend the Mini Maxi method.
On the other hand, if your volumes are high, lead times are long, your suppliers are on the other side of the world, and demand is highly volatile, we recommend the safety stock method combined with reorder point and economic quantity.
The core purpose of safety stock is to act as insurance against stockouts. In the ever-unpredictable business world, fluctuations in demand and supply can be triggered by countless factors. Safety stock ensures that even when these fluctuations occur, a business can continue meeting customer demand, upholding its reputation and preventing potential lost sales.
There was a time when businesses revolved centrally around the customer and their needs. Decisions were made based on what is best for the customer first. People did what they said they would, and jobs were completed on time. AMS carries on the tradition of customer service today.
According to E10 help (10.1.400) help for the safety stock definition is that it adds Minimum stock quantity and safety stock quantity together to determine how much is needed.
The question was why not just up the minimum stock quantity??? There seems to be no purpose for the safety stock
I usually instruct users to set the lead time for a part. Minimum qty is usually set as the number of pieces used during the lead time. Safety stock can be equal to minimum, giving you a buffer for peak usage.
MRP suggestions will also tell you if you are below minimum or below safety, indicating the urgency of the suggestion.
The min max recalc dashbaord uses the same logic. A great tool in Epicor.
The example in the MRP Tech Ref states: When the projected On-Hand Quantity for a purchased part falls below the Safety Stock quantity or a 0 quantity, the Urgent Planning parameters are used to determine quantities on the PO suggestions that fall within the lead time window.
It seems to me that for new suggestions you would want to plan with the intent of not dropping below minimum but if demand does happen to exceed supply within the purchase lead time you would be content in consuming minimum and not having to deal with change suggestions.
Hi, Earlier I have set Safety and Minimum Safety Stock. Now I want to make it zero for almost 400 materials. How can I change these values? I tried Mass Maintenance. But in Field Selection, I am getting on Safety Stock Field and no Minimum Safety Stock field is available. How can i do it then? Thanks Shailendra
Hi
use mm17
select marc press f8
enter plant click on material(right side) bubble and paste multiple value
press shift f1 search mi safety stock field and click on check transfer(as you need to remove)
press f8
click on carry out mass change button and save.
Safety stock is an item quantity that's held in inventory to reduce the risk that the item will run out of stock. Safety stock is used when the demand from sales orders is more than planned for final goods, and/or when a supplier can't deliver additional units in the expected time.
The system always tries to prevent the accumulated quantity of an item from falling below its safety stock limit. Whenever the master planning engine detects that the accumulated on-hand inventory for an item will fall below its minimum, it creates a planned order to replenish the item and schedules the order to arrive before the minimum threshold is crossed. Therefore, safety stock is fulfilled on Today's date + Procurement time.
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