Exploring Safety Stock and Planning: A Step-by-Step Guide

Safety stock is a "quantity float" used to address demand and supply variabilities in MRP/Forecast-Based Planning. It is a stock that serves as both a requirement and a receipt. When used for planning purposes, safety stock is available in the form of a prescribed percentage. SAP recommends the use of safety stock for planning purposes and provides recommendations for its usage.

Safety stock, also known as buffer stock, is a crucial component of Material Requirements Planning (MRP) and Forecast-Based Planning systems. It acts as a "quantity float" to address fluctuations in demand and supply, serving both as a requirement and a receipt [1]. This article explores the significance of safety stock in MRP/Forecast-Based Planning, its availability for planning purposes, and SAP's recommendations for its usage.

When safety stock is available in the system, it is treated as a prescribed percentage of the total requirements. For instance, if the safety stock percentage is set to 100%, the system considers the safety stock as equivalent to the first Purchase Information Record (PIR) or requirement [1]. In such cases, both the safety stock and the PIR are clubbed together as a single lot and associated with the PIR date [1].

To illustrate this, let's consider a scenario where a company maintains a safety stock of 100 units for a particular material. When the system executes MRP, it creates a planned order to cover the safety stock requirement first, as it is considered the most immediate need [1]. If the safety stock is sufficient to cover the future requirements, no further planned order proposals are created [1].

However, if the safety stock percentage is reduced, say to 50%, the system treats the safety stock as a separate requirement and creates a separate planned order to cover it [1]. In this case, the planned order for the safety stock is created before the planned orders for other requirements, ensuring that the immediate safety stock requirement is addressed first.

SAP recommends maintaining safety stock for planning purposes and provides guidelines on its usage [1]. For instance, if no safety stock or no MRP group with the appropriate setting is maintained in the material master, the system creates procurement proposals for the PIRs [1]. However, if safety stock is maintained in the material master, the system creates a planned order to cover the safety stock requirement first [1].

In summary, safety stock plays a vital role in MRP/Forecast-Based Planning by addressing demand and supply variabilities. It is treated as a prescribed percentage of the total requirements and is available in the form of a planned order to cover the immediate need. SAP recommends maintaining safety stock for planning purposes and provides guidelines on its usage to ensure efficient inventory management.

References:
[1] SAP Community. (2012, December 22). Safety stock and its availability for planning purposes. Retrieved from https://community.sap.com/t5/enterprise-resource-planning-blogs-by-members/safety-stock-and-its-availability-for-planning-purposes/ba-p/13243815