Safety Stock Method

[Former Member]

Dear experts,

I have read the documentation about safety stock methods however I am a bit confused and I can not determine what setting would best suit the following requirement:

I have a distribution center location A which is replenishing many other distribution center locations.

What would be the best method to dynamically calculate a safety stock taking into account the distribution demand and safety stocks for the receiving locations and also the sales orders raised on Location A?

Thanks for your answers

EL

[Former Member · Accepted solution]

Hi EL,

This answer to the question could be very very long...

I will here just try to give you some ideas, and be concise

But to get a better you you will need to describe your need in bigger details

To "dynamically calculate a safety stock" the best in my opinion is tu use safety days (SZ). This way when you demand change the safety stock level change to.

However this does not tell you how many days to maintain (or how to maintain it).

On the theoritical point of view you shoudl calculate your lead time, lead time deviation and demand deviation, then define the expected service level... You can also have a more pratical approach and review the stock position against the saefty stock one and adjust if necessary your number of days... Last you can based it on experience (let the planner decide) which has some pros and cons (pros easier to do, cons this is ofen done without clear "business intelligence)... the later is I think the most commun approach. and can be combined with the second one.

Sorry I might be getting far from original question...so to come back to the different strategies:

SB Safety Stock from Location Product Master

Not dynamic...not good for you

SZ Safety Days' Supply from Location Product Master

As mentioned above probably the best for you

SM Max.of Safety Stock and Safety Days'Sup.from Loc.Prod.Master

if you want to guaranty a minimum safety, that could be a good stragegy, combining both first

AT / AS /BT/ BS : advanced method

This could help you too, but they my be difficult to implement in your case: it works better for final location, based on forecast and sales order... Include the distribution demand might be quite difficult.

MZ Safety Days' Supply (Time-Based Maintenance)

An alertnative to SZ, but quite difficult to maintain for user...

MB Safety Stock (Time-Based Maintenance)

More dynamic than SB because you can change the value for each bucket, but again quite hard to maintain for few benefit

MM Maximum from MB and MZ (Time-Dependent Maintanance)

Combine the 2 above...

Sorry if it is long and confusing... if you have more detailed question I might be able to help you more!

But implementing a safety stock policy is often very crucial for business... often a lot of work required to get it right!

Thanks and Regards

Julien

[Former Member]

Hi El,

Another simpler idea which you can try is to set up STR scenario i.e. let A be the supplying plant to all other distrbution locations (you can configure this in special procurement key). Now due to safety stock requirement in any distribution locations whenever and PReq is generated it will trigger and PReqREL (STR)in the plant A for equal quantity. In this way the PPDS run will cover the requirements for sales oder as well as Safety stock for other locations.

Please let me know if it helpful to you.

Navin

[Former Member]

Hello

Thank you very much your answers, it was very helpful

we finally decided to go for a ss method SZ with safety day's supply for most of the case and by exception with ss method sb and fix safety stock in product master

Thanks again

EL