Need help - Inventory Management best practice for distribution business

[sourabh_jain66]

Hi Experts,

In my current assignment i need to prepare a framework for inventory management and forecasting business processes for a distribution company.

I need your help on best practices followed across industry for Inventory Management and Forecasting (if possible for companies into distribution business).

Request you to please share, if you have any information on these lines.

I would really appreciate any help on this.

Rgds

Sourabh

[Former Member · Accepted solution]

Sourabh,

My experience with Distributors is that they follow a buy-resale business model.  There are many possible solutions; it is puzzling to me how one would be able to present a solution without first knowing the details of the actual client's business requirements. 

When I want to see how everyone else solves generic business problems, I refer to SAPs Best Practices.  I would suspect that the SAP Baseline BP would contain enough material to give you some ideas.

http://help.sap.com/saap/sap_bp/BP_BL_ERP607_USV2/HTML/preconfigured_scenarios_EN_US.htm

Maybe start with the 'trade' section within generic.

Or, there may be something of interest within the Wholesale industry BP.

http://help.sap.com/saap/sap_bp/CP_WSD_ERP606_US/html/preconfigured_scenarios_EN_US.htm

If you wish to focus on APO solutions, there are some predefined solution ideas to be found in SAPs Rapid Deployment Solutions.  Try http://service.sap.com/rds-sup-chain

Best Regards & good luck,

DB49

[sourabh_jain66 · Accepted solution]

Hi DB,

Thanks a lot for your answer, as a requirement from my client i am looking forward for Inventory optimization best practices, which will comprise of sub areas like;

- Stocking/Destocking

- Lead Time Forecasting Framework

- Safety Stock Calculation Approach

- Framework to select parts for Inter Plant Movement

- Stock rotation selection Framework

- Re-Order point framework

If you can put some light on best practices followed in these sub areas in particular that will be a great help.

I tried searching google for this with no luck, any help here is highly appreciated.

Rgds

Sourabh

[sourabh_jain66 · Accepted solution]

Hi Everyone,

Can anybody from SCM Moderators (Rico Frenzel, Tibor Nagy, Mahesh Babu MG, Michel Bohn, Wilian Segatto, Somnath Manna) or experienced members please put some light on this.

As a requirement from my client i am looking forward for Inventory optimization best practices, which will comprise of sub areas like;

- Stocking/Destocking
- Lead Time Forecasting Framework 
- Safety Stock Calculation Approach 
- Framework to select parts for Inter Plant Movement 
- Stock rotation selection Framework
- Re-Order point framework


If you can put some light on best practices followed in these sub areas in particular that will be a great help.

I tried searching google for this with no luck, any help here is highly appreciated.

I would really appreciate any directional help here, please guys help me.

Rgds

Sourabh

[Former Member · Accepted solution]

Sourabh,    

I am not sure exactly what you mean by 'framework'.

What you seem to be asking for is a bit vague.  These concepts are generic planning concepts, and not unique to SAP software.  I am not aware of any single SAP "Best Practices" solution for 'inventory optimization'.  This is a huge topic; some people spend careers studying this subject.

It is possible that I have misunderstood your question.  Maybe you can provide a bit more detail of exactly what you are looking for.

Best Regards,

DB49

[somnath_manna · Accepted solution]

Hi Sourabh,

Your question is quite heavy

Traditionally APO does not have a framework for the points you mentioned.

APO/SCM is a tool for execution of functionalities provided the data points like Safety days Supply, Safety Stock Qty, Target Days, Re-Order point parameters are available in system.

As for Safety Stock / Service Level analysis / optimisation there were 3rd party players with SmartOps one of the niche players for such sw solution. It was SAP Solution Partner in that space for quire some time till earlier this year when SAP finally bought it out.

Take a look at http://www.sap.com/solution/lob/scm/software/inventory-management/index.html

http://www.sap.com/solution/lob/scm/software/smartops-supply-chain/index.html

and also read this blog by David Kahn http://scn.sap.com/community/scm/blog/2013/12/05/stuff-sap-inventory-optimization-customers-say who is a Solution Manager from SmartOps.

I don't know if Stock / Destocking decision making is supported by SmartOps or any tool as such but it is more of a strategic decision-making by business.

Same goes for Lead Time Forecasting.

Inter-plant Movement is an outcome of Stock / Destocking decision making as that will govern the Supply Chain Network - from Manufacturing Plants to Regional DC / Hubs to Local DCs.

Long time back (in the days of APO 3.0/3.1 or maybe 4.0) there was a module in APO called ND - Network Design. Check transaction id /SAPAPO/ND to explore further in your APO system.

I am not clear what you mean by Stock Rotation.

As for Re Order Point framework - APO has the feature but does it really work? I mean for C Class items ReOrder Point Planning is done and it can be handled entirely in ECC side. The Re Order point determination can be based on EOQ policy which is a standard Logistics formula based on Annual Demand, Ordering Cost vs Inventory Carrying Cost.

Hope this helps.

Somnath

[sourabh_jain66 · Accepted solution]

Hi Somnath,

Thanks for your help here.

Rgds

Sourabh

[sourabh_jain66 · Accepted solution]

Hi DB,

Thanks for your help here.

Rgds

Sourabh

[sourabh_jain66]

Hi Everybody,

Request you all to please help me.

Rgds

Sourabh