Development of a mechanism to facilitate the safety stock planning configuration in ERP

Abstract

Safety stock planning in ERP in general is dependent upon the planner having the experience to simulate planning scenarios. This paper focuses on the development of a mechanism to calculate adequate safety stocks in accordance with required service levels while enabling efficient configuration of the ERP safety stock parameters. The proposed mechanism could be of great benefit to industrial firms as it offers the ability to classify demand patterns, proposes replenishment strategies that are consistent with the demand profile, calculates key parameters and identifies the changes required to the ERP master data. The associated real world application is able to identify potential to save approximately £1.2 M in stock reductions and, more importantly, allows targeted actions to be implemented at material level. These results demonstrated that the proposed mechanism can be considered as a valuable new development for manufacturing industry to gain the competitive advantage.

Keywords

• Safety stock planning
• inventory management
• ERP
• SAP