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.