Finite Heuristic in SAP IBP is not respective Inventory Target

[gaurav_guglani87]

In our scenario,

one FG is being shipped from 2 Node DCs which are in turn supplied from MDC and MDC is supplied from 2 production plants.

I have maintained inventory target at Node DCs and MDC whereas there is no inventory target kept at Production Plants.

After running finite heuristic, Inventory Targets are met at Node DCs wherever Possible. But Inventory Target at MDC is not being met in the weeks where excess stock is kept at one of the Production plants.

There is one 1 period of lead time between shipping DCs and MDCs and also 1 period lead time between MDC and Production Plants.

[keyhani]

Hi,

is there a bottleneck in your network so that inventory target cannot be fulfilled for all location products?
If yes, there is no fair share for inventory target. Fulfilling inventory target for location materials on higher BOM levels are prioritized over lower BOM levels.

Kind regards,
Mohammad Keyhani

[gaurav_guglani87]

Hi Mohammad,

There is no bottleneck in my network. The product in question is a Finished good and has one component which is being procured externally.

Interesting to watch is that heuristic runs full production capacity and tends keeps stock at plant level for future fulfillment to customers ( That is also via MDC only ) but avoids meeting the inventory target at MDC.

I also run TS Optimizer in another version on the same network and Optimizer is meeting the inventory target at the MDC.

If Capacity bottleneck would have been there, that would have made sense but keeping stock at Plant ( having no inventory targets ) and not fulfilling the inventory target at MDC seems weird to me.

Regards

Gaurav

[SatishWaghmare · Accepted solution]

Hi Gaurav,

Most likely this is what is happening in your scenario -

As per my understanding/learning of Finite Heuristic, it fulfills the primary demand first(internally its kind of Phase-1 of algorithm), and then safety stock and SDOS demand is fulfilled (kind of Phase-2 internally). The demands are satisfied one after another, week by week...Current week to future week of course by considering the demand priority. The demand with highest priority is satisfied first. The safety stock is only satisfied when all independent demands/ forecasts etc. are satisfied. During these steps the SoS priorities are considered. The second highest priority SoS is only taken when the first priority SoS is exhausted. However, since the demands are not necessarily satisfied from early to late(Current period to Future), an early demand (which could be safety stock in earlier weeks) may be satisfied with a SOS that has a priority that is lower than the SOS that is used to satisfy a later demand (demand which could be Independent Demand in later weeks). This could be the reason why you see Inventory at Production Plant, but it is not pushed to MDCs. The Inventory at Production Plant could be used for to fulfill demand from future week.

SAP has enhanced finite heuristic in 2105 release to support non storable location products. It is possible to prevent build up of Projected Stock at Production Plants instead it will push any excess quantity to MDCs. The transport receipts are used to push the excess stock from Production Plants to MDCs. The Planned Production receipts will still be planned as late as possible. It can be achieved by using keyfigure named Maximum Inventory(MAXINVENTORY). Example: You can maintain 0 in Maximum Inventory keyfigure for all future weeks for all MAKE Products at both Production Plants. This will make sure projected stock remains at or below the value defined in MAXINVENTORY KF. This will help in pushing Production quantities from MDCs locations immediately after Production(in the same week) and prevent any build-up of projected stock at Production Plants, instead projected stock will be build up at MDCs then. With this you will be able to fulfill demand and Inventory Target requirement from MDCs locations.

Hopefully this will give you some direction.

Thank you

Satish Waghmare

[gaurav_guglani87 · Accepted solution]

Hello Satish,

Thanks a lot for your detailed response. What you explained though is not listed out in any of the sap help documents, still I understand that this may be the login running in the background.

To build on that, I would like to understand how the priorities are assigned to the production locations in the case when Production Costs at 2 locations as well the transportation costs from these 2 Locations to MDC are exactly the same. Which is the setup I have done here.

If you will notice, It is producing fixed receipts ( at maximum capacities ) at both the locations and is building the stock at one of the production locations having no inventory Targets.

Production Cost Rate at 2 plants and Transportation Cost Rate to MDC are the same.

In the second view for MDC, Inventory Target is not being met in the same period.

I have kept all the costs (Non-Delivery/Customer transportation/Transportation/Production) the same and so don't expect the prioritization logic to keep stocks at Plants.

Please note that I am not discounting what you mentioned but just want to further deep-dive on what is exactly happening here.

Regards

Gaurav Guglani