Safety Stock Planning Part 5: SAP Add-on Simulation of Safety Stock: Time Dependent Safety Stock

SAP offers consulting solutions to enable the first step in demand-driven planning: strategic inventory positioning. For this you can use the consulting solution MRP Monitor to detect which of your materials should be buffered.

SAP Add-on Dynamic Safety Stock Consideration

The SAP Consulting Solution Dynamic Safety Stock Consideration (transaction /SAPLOM/DSS) allows you to manage dynamic safety stocks and reorder points, as well as dynamic minimum and maximum stock levels, and to take these into account in the material planning run.

You can use this SCM Consulting Solution to manage the following key figures periodically:

• Time-Dependent Maximum Stock Level (ToG)
• Time-Dependent Reorder Point (ToY)
• Time-Dependent Safety Stock (ToR)
• Time-Dependent Min. Safety Stock (ToRS)
• ADU Used
• Decoupled RLT Used, Time-Dependent
• RLT Factor Green (%) Time-Dependent
• RLT Factor Red (%) Time-Dependent
• Variability Factor (%) Time-Dependent
• Stock/Prod. Interval

In the next section, we will look at the time-dependent safety stock and its mapping as dynamic safety stock as separate MRP elements (without range of coverage profile).

Purpose of Dynamic Safety Stock

In practice, there are different scenarios in which a time-dependent or also dynamic safety stock is used.

• Seasonal Stock: To preproduce peak demand during a season, seasonal stocks must be built up, which then must be dismantled again at the end of the season.
• Anticipation Position: In the case of extraordinary but planned events, anticipation positions can be set up and reduced. This may be necessary in the case of relocations of production, when joint bottleneck capacities are used, or in the case of a planned breakdown of production machinery in the event of a clean-up or repair. This stock is used for stocking to safeguard risks for certain events.
• Strategic Stock: Strategic inventory is used when supply and demand fluctuate, including fluctuations in revenue. Strategic inventory helps to reduce the difference between organizational capabilities and market expectations regarding the time to market of new products.

The next section shows the scenario of a time-dependent safety stock for mapping seasonal safety stocks.

Pre-Season Safety Stock Shift

To ensure a high service level for your customers, it is important to bring forward the safety stock for products with seasonal demand by bringing forward the higher safety stock of a subsequent period to the current period (Image 1).

Image 1: Shift Safety Stock for Seasonal Demand

You can use the SAP add-on Dynamic Safety Stock Consideration to manually bring forward the safety stocks in the event of seasonal requirement fluctuations.

You can call the dynamic safety stock consideration using transaction /SAPLOM/DSS. Once you have entered and executed the transaction code, the initial screen appears (see Image 2).

Image 2: Dynamic Safety Stock Consideration: Selection Screen

The material-related selection criteria allow you to specify your selection using material numbers, plants, MRP groups, and so on.

In the Usage (Creation) area, you specify whether you want to use the dynamic safety stocks in the following areas:

• Material requirements planning
• Consumption-based planning (including demand-driven planning

The Date selection area is used to define the period and enter a time window for which a selection is made.

The periodicity is set using an entry in the Period Indicator field. Three possible time periods are available:

• Day
• Week
• Month

Example: Periodicity

You have selected the option Week as the periodicity and specified a From and To date for the time bucket for the date. The time window covers a period of 4 weeks. The start date falls on Friday of week 1. The end date is Tuesday of week 4. Now the system extends the selection to the start (Monday) of week 1 and the end (Sunday) of week 4. The selection is then made for 4 full calendar weeks (Monday of week 1 to Sunday of week 4).

The dynamic safety stock consideration enables you to store dynamic safety stock developments in the system. You can maintain and save both a single and several versions for a material-plant-MRP area combination. If you decide to use more than one version for a material-plant MRP area combination, the system takes over the version management. There can be any number of inactive versions for a material-plant-MRP area combination, but there can only ever be a maximum of one active version.

After you have clicked the Create New button, the entry screen appears (see Image 3).

Image 3: Dynamic Safety Stock Consideration: Situation Before Planning

All periods are still empty.

The situation in the current stock/requirements list can be seen in Image 4.

Image 4: Advanced MD04: Situation Before Planning

We now want to use the following safety stock for any material:

• Safety stock for period March: 150
• Safety stock for the April period: 200
• Safety stock for period May: 00

The season takes place in the period of May. The normal safety stock of the material is 69 pieces. To be prepared for the season, you first increase the safety stock to 150 pieces and then to 200 pieces. This means that an increased safety stock and thus a preproduction is built up before the season begins. In the season, you increase it again by 150 pieces to 50 pieces. You can now reduce the safety stock again, first a reduction to 0 pieces but you still want to use the normal status of 69 pieces.

To do this, enter the corresponding quantities in the respective periods (see Image 5).

Image 5: Dynamic Safety Stock Consideration: Situation After Planning

Before we take a closer look at the situation, it is important to understand that a safety stock represents a requirement element in the SAP system. The safety stock is therefore always a “negative” receipt, that is, a negative value.

When you choose the New Create DSS button, the relevant periodic safety stocks are now created.

The current stock/requirements situation is displayed as in Image 6.

Image 6: Advanced MD04: Situation After Planning

We now see additional MRP elements:

• On March 1, 2025, a DSS demand of -150 (delta from SS 0 to SB 150)
• On April 1, 2025, a DSS demand of -20 (delta from SS 150 to SB 200)
• On May 1, 2025, a DSS receipt of -200 (delta from SS 200 to SB 0)

As a result, the planner is very transparent and able to trace the seasonal increase and subsequent reduction of safety stocks.

Advantages of Dynamic Safety Stock

An advantage of the dynamic safety stock is that the safety stocks are adjusted optimally to the different requirement levels. In these methods, the safety stock is no longer stored statically in master data but is based on the current demand. This automatically considers changing demand and procurement situations.

Another advantage is that no more time-consuming configuration or master data maintenance processes are required. This is because the system adopts the optimum setting individually for each individual material master. It is also advantageous to account for current replenishment lead times that are used in extended safety stock planning.

This unit explains how complex the relationship between service levels and stocks is. Calculating the optimum safety stock particularly is a major challenge that is worthwhile because there is enormous potential here to reduce costs. SAP offers a wide range of options for using very different safety stock procedures, which can also be used in different processes. Overall, the variety of solution options is so great that there must be a coordinated overall concept for inventory management that takes sufficient account not only of the process side, but also of the SAP side.

(For more information about the safety stock simulation, contact the author at marc.hoppe@sap.com.)