Use strategic decoupling points and inventory buffers to control the flow of material through the supply chain.
Position your inventory buffers strategically
To enable the uninterrupted flow of material through the supply chain, the recommended decoupling point operator in SAP Integrated Business Planning sets decoupling points (inventory buffers) within your product structure and supply chain. Influencing factors for your inventory locations are internal and external variability, customer tolerance time, and inventory flexibility, among others. Scenario capabilities provide visibility into the quantity and value impact of changing the decoupling point.
Calculate and refine replenishment buffer levels
In the “Protect” stage of the process, the software suggests how much material must be placed for each decoupling point, per part and location. Each buffer quantity is divided into three zones that are identified by the colors green, yellow, and red. The green zone controls the frequency and minimum order size of each replenishment order, the yellow zone indicates the heart of demand coverage, and the red zone is safety stock. You can evaluate and dynamically fine-tune the suggested buffer values by incorporating information the system might not have, such as promotions or resource closures.
Generate replenishment orders and execute them
In the final “Pull” stage of the process, order quantities are calculated to bring the available stock position to the target level of the buffer zone. Minimum order quantities can be considered as input for planning. For order execution, you can evaluate color-coding and buffer status alerts that indicate which orders need to be prioritized. Finally, replenishment proposals are converted into demand and supply order elements in ERP.
Explore all capabilities of integrated business planning
Sales and operations planning
Unify financial and operational stakeholders in one S&OP process to foster collaboration –aligning inventory, service levels, and profitability.
Forecasting and demand management
Automate the statistical forecasting process and apply machine learning algorithms to predict demand.
Inventory planning and optimization
Establish optimal inventory targets that enable you to maximize profits, while ensuring customer service levels.
Response and supply planning
Generate feasible supply plans to meet demand with accurate inventory targets and efficient capacity utilization.
Supply chain visibility
Gain end-to-end visibility of your supply chain and detect potential disruptions with SAP Supply Chain Control Tower.