Supply Chain Management Blogs by SAP
Expand your SAP SCM knowledge and stay informed about supply chain management technology and solutions with blog posts by SAP. Follow and stay connected.
Showing results for 
Search instead for 
Did you mean: 

The year started with some excellent news by delivering on our strategy and introducing IBP for MRO Spare Parts Planning, which seeks to align and integrate the planning functions key to Asset Maintenance including Supply Chain Planning. A solution resulting from SAP´s global co-innovation initiative ‘The Intelligent Supply Chain for Assets’ together with 100+ interested customers.

Today, I would like to share with you the development highlights for the 2208 Release shipped in August and the 2205 Release shipped in May. We focused on three key pillars, introducing MRO Inventory Optimization capabilities, new forecasting algorithms for sporadic demand, and enhancements to the MRO Planning Area.

What is New ?

Introducing Inventory Optimization for MRO planning

Asset-intensive operations are under constant pressure to keep MRO inventory levels under control while maintaining or improving service levels. And achieving success is critical, as up to 50 percent of unscheduled downtime is due to a lack of spare parts or stock-outs.

Consequently, asset-intensive companies often carry extensive spare parts inventories to buffer their maintenance system which leads to higher working capital costs and inventory management costs. It’s a vicious cycle that negatively impacts top-line performance and bottom-line costs!

Inventory Optimization processes are now available in SAP IBP MRO as of the 2208 Release. MRO Inventory Optimization helps to empower users with an accurate, detailed picture of their MRO inventory performance; and powerful capabilities to enable informed decisions that help improve margins, increase service levels and minimize unplanned downtime. It allows calculating the Spare Parts Recommended Safety Stock and Target Inventory Position. This includes Multi-echelon inventory optimization to generate time-phased safety stock at each node within the supply chain and the ability to determine safety stock requirements of components using the uncertainty calculated from planned preventive & corrective maintenance and works programs.

End-End Process flow

The input demand streams in inventory optimization include 1) Historical usage and dependant demand from preventive maintenance 2) Historical usage and independent demand from corrective maintenance. The output key figures include recommended safety stock, targeted inventory position, and reorder point. This offers customers with optimized safety stock levels for the maintenance of spare parts. Setting the segmentation criteria is a pre-requisite, for instance, segmentation profiles eg. ABC for Preventive Maintenance Plans (ex. High priority, High frequency etc).

With the 2208 Release, an end-to-end MRO planning process is now available including Demand Planning, Supply Planning, Inventory Optimization and Maintenance Planning. By bridging the gap between maintenance and supply planning, the solution optimizes the inventory across the whole network to right-size the inventory investment that is needed to achieve a certain service level. SAP IBP MRO customers have managed to lower their MRO spare parts inventory safety stock by up to 20 %

Enhanced Forecasting capabilities

Spare parts and, in general, MRO parts are characterized by intermittent demand. Many MRO parts are made-to-order (MTO) parts with relatively long and inconsistent lead times, especially for aged equipment. As a result, asset-intensive customers usually carry substantial spare and maintenance inventory buffers to protect against downtime due to parts unavailability. This approach usually results in obsolescence! Since traditional forecast measurements are unsuitable for sporadic demand data because of their sparse nature, we introduce a new forecasting method that incorporates the trade-off of economic gains and obsolescence risks incurred.

With the 2205 Release available since May, we included a new forecasting method for Intermittent demand-Croston TSB- into the MRO Sample Planning Area. In MRO, this could be used for corrective maintenance Spares & Resource Usage Forecast. One of the main benefits of the new algorithms is Obsolescence detection, where linear and sudden obsolescence can be detected and that it reacts faster to growing demand intervals and provides better results for intermittency. Additionally, it includes two separate parameters that allow for tuning Demand level and Demand interval forecasting.

The delivered forecast models for the MRO planning area include a best-fit recommendation using both Croston Method and Croston TSB methods as can be seen in the screenshot below.

For parts with stable and high usage patterns, the existing time series forecasting techniques are adequate. Below is a comparison of the two most relevant forecasting algorithms for MRO purposes, Croston forecasting method and Croston TSB forecasting method.

Croston and Croston TSB forecasting methods comparison

Further information about Croston TSB forecasting algorithm and Croston forecasting algorithm

Further integration of Key figures

In February Release of 2202, we offered the Master Data integration with SAP Enterprise Asset Management. In the May Release of 2205, we enhanced the integration further to include Key figures. This integration enables customers to quickly get all relevant data from plant maintenance to SAP IBP and to model MRO processes adhering to the industry processes in the provided planning area.

With the integration of selected asset management master data & key figures for Maintenance, Repair and Operations (MRO) and a dedicated planning area, we’re now offering preconfigured content to address the planning requirements of asset-intensive industries. The preconfigured content allows to plan and optimize preventive and corrective maintenance of spare parts and labor resources. It enables planners to effectively forecast demand for the spare parts and labor resource usage, leading to financial projections. It also helps to see and resolve issues in the supply of spare parts.


What’s Planned for the future: Synchronized Planning for MRO ?

We plan to continue designing functionalities and enhancements in the upcoming releases. For instance, we are currently in the design phase to offer customers safety stock determination with a run-to failure model, a ‘Mean-Time Between Failure‘ (MTBF) calculation. Additionally, we plan to introduce an early concept around Rotables Planning and out of the box integration with Project systems.

In the future, we are working very closely with the Asset & Service Management Product Management teams to get SAP IBP closer to SAP Field Service Management, SAP Resource scheduling, and SAP Intelligent Asset Management solutions. Our ultimate goal is to provide a true Synchronized Planning for MRO, aligning all relevant plans.


Relevant links:

Follow Diaa Abdelaziz on LinkedIn or Twitter
Note: IBP for MRO is not a separate product, it is enhancements on SAP IBP to plan MRO (Maintenance, Repair and Operations/Overhaul) or service/spare parts. There is no separate license material for IBP for MRO.