SAP IBP multi-stage inventory optimizer is an algorithm that calculates and recommends safety stock quantities for all the stocking nodes in the network. The difference with the traditional single-stage approach is that the algorithm considers the optimal allocation of stock among the connected nodes at the different network stages. This reduces the overall stock required in comparison with the isolated single-stage approach.
Run Multi Stage inventory optimization
1. Create a planning view using the Template IO Review Plan
2. Check the values of the Recommended Safety Stock key figure and enter the current values in the table below
Table 1:
Location ID Product ID Current Week Week + 1 Week + 2
1710 IBP-FG1-##
IBP-FG2-##
3710 IBP-FG1-##
IBP-FG2-##
3. Run the Global (multi-stage) inventory optimization in the Base Version 4. Check the optimization run status until it is complete.
5. Refresh the view and review the updated values of Key Figure Recommended Safety Stock by completing the table below.
Table 2:
Location ID
Product ID Current Week Week + 1 Week + 2
1710 IBP-FG1-##
Unit 4 Solution 12
Multi Stage inventory optimization
SAP IBP multi-stage inventory optimizer is an algorithm that calculates and recommends safety stock quantities for all the stocking nodes in the network. The difference with the traditional single-stage approach is that the algorithm considers the optimal allocation of stock among the connected nodes at the different network stages. This reduces the overall stock required in comparison with the isolated single-stage approach.
Run Multi Stage inventory optimization
1. Create a planning view using the Template IO Review Plan
a) From the IBP ribbon in Excel, press New view → From Template b) Choose the template IO Review Plan from the list.
c) On the Filter tab choose Product##.
d) Press OK to view the data.
e) Stay in this view for the next exercise step
2. Check the values of the Recommended Safety Stock key figure and enter the current values in the table below
Table 1:
Location ID Product ID Current Week Week + 1 Week + 2
1710 IBP-FG1-##
IBP-FG2-##
3710 IBP-FG1-##
IBP-FG2-##
3. Run the Global (multi-stage) inventory optimization in the Base Version
a) From the IBP ribbon in Excel, on the Advanced group, selectInventory Optimization
→ Run .
b) Identify your job based on the User field and check the Status.
c) Press the Refresh button to update the status until Completed.
5. Refresh the view and review the updated values of Key Figure Recommended Safety Stock by completing the table below.
Table 2:
Location ID
Product ID Current Week Week + 1 Week + 2
1710 IBP-FG1-##
IBP-FG2-##
3710 IBP-FG1-##
IBP-FG2-##
Lesson: Inventory Optimization Process
Unit 4 Exercise 13 What-if analysis
The inventory optimizer requires a number of input parameters in order to calculate the safety stocks. Such parameters are related to: target service level, forecast error, lead time, period between reviews. In this exercice you will be able to simulate the effect of service level and demand variability on the safety stock level.
Sensitivity to target service level
1. Create a planning view using the template IO Simulate demand .
2. Enter the previously calculated values for recommend safety stock for Product ID: IBP-FG1-## at Location 3710 in the table below
Location ID Product ID Current Week Week + 1
3710 IBP-FG1-##
3. Change the Key Figure Target Service Level from 0.95 to 0.90 for Product ID: IBP-FG1-##
at Location: 3710 in current period.
4. Simulate the Global (multi-stage) inventory optimization
5. Review how values have changed for Recommended Safety Stock Key Figure VS Final Safety Stock Last Cycle (for IO) and enter the values in the table below.
Location ID Product ID Current
Week
Week + 1
3710 IBP-FG1-## Recommended
Safety Stock
3710 IBP-FG1-## Final Safety
Stock Last Cycle (for IO)
6. Refresh to get back to initial plan.
Unit 4 Solution 13 What-if analysis
The inventory optimizer requires a number of input parameters in order to calculate the safety stocks. Such parameters are related to: target service level, forecast error, lead time, period between reviews. In this exercice you will be able to simulate the effect of service level and demand variability on the safety stock level.
Sensitivity to target service level
1. Create a planning view using the template IO Simulate demand .
a) From the IBP ribbon in Excel, press New view→ From Template and choose the template IO Simulate demand
b) On the Filter tab choose filter Product##
c) Press OK to view the planning view.
2. Enter the previously calculated values for recommend safety stock for Product ID: IBP-FG1-## at Location 3710 in the table below
Location ID Product ID Current Week Week + 1
3710 IBP-FG1-##
a) Check the previously calculated values for the Recommended Safety Stock Key Figure for Product ID: IBP-FG1-## at Location: 3710
3. Change the Key Figure Target Service Level from 0.95 to 0.90 for Product ID: IBP-FG1-##
at Location: 3710 in current period.
a) At Location 3710 for Product ID IBP-FG1-## change the value in the first period from 0.95 to 0.90 and press Enter.
4. Simulate the Global (multi-stage) inventory optimization
a) From the IBP ribbon in Excel, on the Data Input group, select Simulate→ Global (multi-stage) inventory optimization
5. Review how values have changed for Recommended Safety Stock Key Figure VS Final
Location ID Product ID Current Week
Week + 1
3710 IBP-FG1-## Final Safety
Stock Last Cycle (for IO)
a) After the optimization run is completed, review how values have changed for Recommended Safety Stock Key Figure VS Final Safety Stock Last Cycle (for IO) for Product ID: IBP-FG1-## at Location: 3710
6. Refresh to get back to initial plan.
a) From the IBP ribbon in Excel, on the Data Input group, select Refresh b) Your data is now reset to its initial situation
Lesson: Inventory Optimization Process