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Supply Chain Management: SAP Inventory Management
Inventory is a fundamental part of your business. Without proper inventory management, the organization can suffer inefficiencies, profit decline, and sustainability impacts.
What is Inventory Management?
Inventory Management is the practice of controlling inventory flow for maximum organizational efficiency. It is suitable for businesses of any size and focuses on organizing and streamlining product storage and fulfillment. The management of stock can be done on a quantity or value basis. Inventory management in SAP is an important component of the Material Management (MM) module, it deals with stocks and goods movement.
With SAP, many companies have real-time data on inventories, which is vital for capacity management and expansion of complex supply chains. The application provides several management tools to help users create an organized warehousing space while uncovering valuable operational data. A couple of examples include the following.
Supply Chain Management: SAP Inventory Management
Inventory is a fundamental part of your business. Without proper inventory management, the organization can suffer inefficiencies, profit decline, and sustainability impacts.
What is Inventory Management?
Inventory Management is the practice of controlling inventory flow for maximum organizational efficiency. It is suitable for businesses of any size and focuses on organizing and streamlining product storage and fulfillment. The management of stock can be done on a quantity or value basis. Inventory management in SAP is an important component of the Material Management (MM) module, it deals with stocks and goods movement.
With SAP, many companies have real-time data on inventories, which is vital for capacity management and expansion of complex supply chains. The application provides several management tools to help users create an organized warehousing space while uncovering valuable operational data. A couple of examples include the following.
Physical locations or organizational levels:
- Plant: A high-level physical location to which the materials are assigned.
- Storage Location: A specific area within the plant where the material is stored.
Four primary movement of goods are:
- Goods Receipt: Inventory can be approved for immediate use or be checked in.
- Goods Issue: A company may choose to process inventories for production or to sell to customers.
- Return Delivery: When materials are being returned from a customer or vendor.
- Internal Movements: When inventory is transferred internally from one location to another.
Most importantly, proper inventory management allows you to move goods with as little wasted time and money as possible. It can help you to optimize demand fulfillment for e-commerce, which is quickly becoming the norm in business to business today.
Benefits of SAP inventory management are:
- Accuracy and timeliness
- Realistic production schedule
- Quality checking
- Inventory analysis
- Proper reporting.
Technical resource partners for consideration might be –Movilitas, Opsveda, SAP.
Further insights for SAPinsiders around SAP Inventory Management
- Real Time Inventory and Order Visibility: Key for Successful Supply Chain Management. Probodh Chiplunkar from Ithena Technologies, outlines how real-time inventory transparency within a technological landscape affects business operations.
- Pick and Choose: How Kingston General Hospital Manages its Inventory with SAP. Author Davin Wilfrid interviews Derrick Morey at Kingston General Hospital (KGH), about the complex network of systems and people managing all the tubes, bandages, needles, and other medical supplies distributed throughout KGH. As an early adopter of SAP ERP technology, the hospital adopted a centralized inventory management system to track supplies for better accuracy.
- Next-Generation Inventory Management. Tom Chason addresses questions about the SAP Enterprise Inventory and Service-Level Optimization and SmartOps solutions. See how an integrated approach offers a powerful way to meet all these requirements for modern supply chains.
61 results
Enhanced Inventory Performance with RFgen’s Mobile BarcodingJul 7, 2023 — In this technologically advanced landscape, businesses are increasingly channeling their resources toward adopting innovative technological solutions. These solutions are pivotal in furnishing real-time information and granting quick access to data. Especially in supply chain operations, any error in tracking inventory movements can lead to inefficiencies and bottlenecks. Relying on manual or antiquated procedures is not only unscalable, but it also obstructs the visibility necessary for optimal operations. Although the first step in eliminating these inefficiencies is data collection automation with barcoding, mobile barcoding can extend automation within supply chain operations beyond the confines of conventional barcode scanning. RFgen’s mobile inventory barcoding system is an innovative, flexible, and advanced ERP data collection solution that transcends traditional barcode scanning, enabling organizations to automate an array of supply chain operations.
3 minute read
Demand-Driven Planning – Step 4 – Demand Driven MRP (DDMRP)Jun 12, 2023 — Demand-driven Material Requirements Planning (DDMRP) is a modern approach to supply chain management that focuses on meeting customer demand efficiently while minimizing inventory costs. Unlike traditional Material Requirements Planning (MRP) systems, which rely on forecasted demand and fixed lead times, DDMRP uses actual customer demand signals to drive replenishment decisions in real time. By continuously monitoring demand patterns and adjusting inventory levels accordingly, DDMRP enables companies to improve responsiveness, reduce lead times, and optimize inventory levels. It takes into account demand variability and considers factors like demand spikes, seasonality, and promotional activities to ensure that the right amount of inventory is available at the right time. By aligning supply with actual demand, DDMRP helps organizations achieve greater customer satisfaction, reduce stockouts, and enhance overall supply chain performance.
This article focuses on Demand-driven Material Requirements Planning (DDMRP) and how customized MRP type add-on provides the logic to calculate material requirements as part of the demand-driven replenishment approach and adds it as a new MRP type.
4 minute read
Why Continuous Availability is a Must for SAP UsersMay 22, 2023 — Inventory management is crucial for supply chain strategies. Today, organizations need to quickly extract valuable insights from real-time data and promptly adapt to market changes. However, achieving this level of agility requires embracing technology. Unfortunately, most organizations have not prioritized the adoption of agile-enabling technology. According to RFgen's recent Digital Inventory Report, only 16% of participant organizations have mobile systems that adequately meet their current needs. Additionally, it is estimated that more than 80% of warehouses lack automation capabilities. To ensure smooth and efficient operations, it is essential to have access to critical inventory data across various locations, even during offline interruptions.
This article explores why continuous availability is vital for future-ready organizations and how continuous availability solutions simplify complex and manual routines.
5 minute read
Optimising Inventory Management at Hydro TasmaniaMay 19, 2023 — Hydro Tasmania knew there was a problem but was unsure where to start. What we faced was a confluence of out-of-date process documentation, lack of awareness around inventory management and underutilization of SAP to do the heavy lifting. This has been an eye-opening experience to say the least. Come hear our story of both how we set about to Manage Master Data, built and implement business process that are in some cases almost opposite to existing processes and the Training and culture piece that went along with this.
1 minute read
RFgen Revolutionizes Mobile Warehouse Data OperationsMay 16, 2023 — Warehouse and inventory operations present significant challenges for organizations in terms of ensuring data reliability and transparency. Addressing such complexities necessitates a comprehensive approach that integrates technology advancements and process refinement. RFgen, a distinguished provider of barcoding software solutions for mobile data collection, warehouse automation, and inventory management, specializes in resolving inventory issues in several industries, including manufacturing, food and beverage, aerospace and defense, life sciences, and oil and gas.
This Technology Brief will explore RFgen's highly reliable solution capabilities that are widely acknowledged in the industry. RFgen's solutions provide effortless integration with SAP and streamline inventory management, warehouse organization, and supply chain workflows. Customers also get the flexibility to deploy the server on-premise or in a public or private cloud, based on their specific needs, and benefit from cost savings and improved operational efficiency for their businesses
4 minute read
Demand Driven Planning – Dynamic Adjustment – Step 3Apr 17, 2023 — Buffers need to be re-calculated dynamically if material, market or company-related parameters change. This can be done with the consulting solution safety stock and buffer simulation. Buffers must be recalculated if the average daily usage changes and changed daily, weekly, or monthly depending on the analysis period. If the average daily usage is calculated based on the last three months, the key figure should be checked daily or weekly. If the base is more than six months, it is sufficient to recalculate the key figure monthly. With the SAP add-on safety stock and buffer simulation (TCODE: /SAPLOM/SSS), demand influencing factors like the average daily usage can be changed This article focuses on the third step identified by the Demand Driven Institute, called Dynamic Adjustments.
3 minute read
Steps to success for building inventory management and optimization strategiesMar 23, 2023 — SAPinsider’s benchmark report on Inventory Management and Optimization focuses on how organizations are recognizing the significance of supply chain visibility and the need for improved management and optimization to mitigate inventory-related risks and difficulties. The key challenges that organizations face are the lack of: clearly defined inventory strategy and policy, internal skillset for implementation, strategy on transitioning from solutions like APO, and knowledge on the latest tools available.
With organizations still grappling with demand volatility caused by the pandemic, there is a growing need for developing inventory policies. It is no surprise that organizations continue to prioritize inventory management and optimization. SAPinsider’s research has further confirmed this and provided valuable insights into why these capabilities are becoming increasingly important. The article discusses the steps organizations can adopt around inventory management and optimization strategies.
2 minute read
Factors Driving Inventory Management and Optimization in Supply ChainsMar 21, 2023 — Effective inventory management and optimization require a deep understanding of the supply chain and its various components, including demand, supply, lead times, and costs. Companies that can effectively balance these factors can improve customer service levels while minimizing costs and improving overall supply chain performance.
But a multitude of internal and external factors can pose challenges for supply chains. These challenges may stem from economic volatility, evolving customer expectations, and various other risks. As a result, companies must consider a broad range of business factors to navigate these challenges effectively. This article discusses the top drivers for inventory management and optimization identified by SAPinsider's research report.
4 minute read
Maximizing Efficiency and Cost-Effectiveness Through Inventory OptimizationMar 20, 2023 — The COVID-19 pandemic served as one of the significant disruptors to global supply chains, highlighting the vulnerabilities of traditional inventory management practices that made maintaining optimal inventory levels challenging for business leaders. While holding excessive inventory can be expensive and tie up valuable resources such as warehouse space and capital, having too little inventory leads to stock-outs and lost sales, damaging customer relationships and resulting in revenue loss. This article discusses how inventory optimization offers several advantages for businesses. The benefits include increased transparency throughout the entire business (from sales and marketing to raw material suppliers and global partners), real-time collaboration, accurate demand forecasting and predictive analytics, which results in insightful optimization outcomes. Inventory managers can determine which products are the most profitable and which locations and product combinations are most effective by analyzing complex and diverse data sets. Businesses can quickly adapt and optimize operations on a global scale for growth, unexpected events, or unforeseen changes.
3 minute read
Demand Driven Planning – Buffer Management – Step 2Mar 14, 2023 — In SAP ECC 6.0, it is now possible to use demand-driven planning logic with the help of SAP consulting solutions. There are several options for buffer profile and buffer level calculation. The first article on demand driven planning discussed the Demand Driven Planning logic in SAP ECC or SAP S/4HANA using SCM consulting solutions, which are the small add-on tools that can be used in SAP to cover so called “white spots”. The second article focused on first step in Demand Driven Planning, which is Strategic Inventory Positioning, identified by the Demand Driven Institute, to detect which materials should be decoupled and which not. This article focuses on the second step, called Buffer Profiles and Buffer Level Determination.
6 minute read