The SM Safety Stock Method and the Optimizer in APO

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Executive Summary

Surprisingly, SAP SNP calculates safety stock differently than SAP ERP.
Most companies use the days of supply setting for safety stock.
We cover the SM safety stock method and cost optimizer.

Introduction to Safety Stock in SAP

In this article, we will cover the safety stock method in SAP. The safety stock method controls how the safety stock is derived.

Using SAP SNP Versus SAP ERP for the Safety Stock Calculation?

One of SNP’s selling points over SAP ERP is that it has more ways to derive safety stock from multiple values. For instance, the Safety Stock Method SM has SNP look to either the higher value entered into the Location Product Master or the calculated Days’ Supply. This is based upon the number of days entered into the Safety Stock in the Material Master. This flows to the Location Product Master is a stable value. The Days’ Supply value changes the actual safety stock depending upon the requirements.

This is one of the advantages of safety stock in SAP SNP versus SAP ERP. SAP ERP allows you to combine the “hard-coded” safety stock or the Days’ Supply (which does not make much sense incidentally). However, allowing the system to take the higher of the two values allows the safety stock to flex up during high demand times but not flex too far down. Many companies become comfortable with how this is handled in SAP ERP.

Imagine Their Surprise

They are often perplexed when the functionality concerning safety stock goes down between SAP SNP and SAP ERP. These settings in SAP ERP will flow over to the Location Product Master. The settings are unusual concerning the safety stock because the Safety Stock Method depends on which values are populated in ERP. This is described in this article.

The SM Safety Stock Method and the SNP Optimizer

Unfortunately, and I could not find this problem documented on the internet or SAP’s SDN site, the optimizer does not recognize safety stock if SM is used in SNP.

This is another thing I had to learn from a project, and while I have not established if it is related to SCM 7.0 versus 5.1, it may be a new problem in SCM 7.0.
SAP has no pro-active mechanism for communicating all the things that are broken in the system. They tend to wait for the client to find issues and then tell them that it’s broken and working. Other SAP consultants seem to do their best to hide the broken components from the client. Remember, to most SAP consultants. The “customer” is either SAP or the consulting company they work for — the paying client is on the bottom of the totem pole.

Conclusion and Next Steps?

The SM Safety Stock Method does not work with the optimizer. This means that companies that use the optimizer must understand that they must use either the Safety Stock that is hard-coded into the Material Master or the Safety time/act.cov, but the system will not use either of the two. The way to approach this is to set only the Safety Stock quantity or the Days of Supply. If only the Safety Stock quantity is entered into the Material Master, then the Safety Stock Method will change to SB, while if only the Days of Supply is used, then the Safety Stock Method in APO becomes SZ. This would mean using the mass maintenance transaction to change every Location Product combination in ERP to hold only a Safety Stock Quantity or a Days Supply.

However, there is more to this than simply the master data change. When analyzing this for one project, it was brought up that the current Safety Stock Quantities had been set up on the low side because they were designed really only to protect the lower end of the range. The Safety Stock Quantities were primarily developed to work with the Days of Supply or intended to work with the SM Safety Stock Method.

Once Days of Supply is taken out of the equation for certain Location Products, the Safety Stock Quantity would have to be increased. This, of course, requires that the business go through and increase these Safety Stock Quantities to the appropriate levels if the Days of Supply is never used.