SAP Consulting Solutions bigbyte Optimization Packages Success Story for The Tennant Company SAP CS MRP Monitor / SAP CS Lot Size Simulation SAP CS Inventory Controlling Cockpit Effective Materials Planning with SAP

The Initial State 

The Tennant Company went through an Inventory Optimization before. Over a very long – and expensive – period of training and material master setup, about 2% of the product portfolio was optimized manually.  Material Planners each have a portfolio of 3,000 to 10,000 materials to manage.  Do not have standardized operating procedures on how to manage material portfolios in the US, Europe and China.  Large demand fluctuation on spare parts makes it difficult to stock optimized quantities in the distribution centers.  To calculate economic lot sizes requires complex simulation models that are hard to execute in standard SAP.  Very high utilization of the Materials Planner. Overwhelmed with the tasks of portfolio management and policy setting.

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Challenges 

Sub optimized inventories on spare parts. Lost sales and overstocking combined with low turns make it hard to plan for high service levels.  A targeted segmentation for the optimal safety stocks and range of cover calculation is not possible.  To calculate economic lot sizes requires complex simulation models that are hard to execute in standard SAP.

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No standardized operating procedures or automation for policy setting No functionality to translate supply chain strategy into SAP policy Low quality of data on a very large part of the material spectrum Reactive approach in exception and error handling. Expediting and data cleaning only when too late

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Painting a picture about the situation of any given material requires time and work intensive assembling of information from many transactions and reports inside and outside of SAP-ERP. Materials Portfolios are not prioritized. Planners must look at every material every day. XYZ – Analysis und Classification is not possible inside of SAP and therefore error prone and inconsistent Lacking analysis for the quality of data. No possibility for a check on the effectiveness of the MRP policies.

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Stocks and RoC

Master Data Quality

Analysis needed

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The Solution: Optimization Package Strategic and Tactical Materials Planning MRP Monitor with Segmentation and Automated Policy Update; Lot Size Simulator; workhops for Tactical Materials Planning; model for Strategic Materials Planning Strategic Materials Planning performs a periodic segmentation of all material portfolios and updates MRP policies for a part of the spectrum automatically. In Tactical Materials Planning prioritized portfolios enable the planner to perform effective exception monitoring, expediting, inventory optimization and lot size simulation for a segmented list of parts and materials. The MRP monitor uses all relevant material movements from the past to determine the ABC-XYZ classification of each material and calculates important key figures such as dead stock, ranges of coverage, and inventory turnover. It also provides integrated support for material master maintenance through classification-based monitoring and parameterization of all materials across their entire life cycle. The MRP monitor helped overcome the challenges with the following functions: 

Execution of fast analyses with low effort

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Calculation of dead stock on the basis of customer-specific inventory calculation

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Determination of key figures such as range of coverage and inventory turnover

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Identification and classification of material ranges with determination of the appropriate NRP policy

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Fully integrated ABC/XYZ analysis with direct updating of the MRP policy in the material master

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Uniform database with key figures and consumption and stock values; list of standardized policies

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Ability to prioritize material portfolios © 2014 SAP AG. All rights reserved.

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The Solution: Optimization Package Inventory Optimization Inventory Controlling Cockpit, Collection of valuable KPIs to support Decision Making and Policy Setting; workshops on Inventory Analysis, Planning and Optimization; period comparison, dashboarding, hitlists and inventory development The Inventory Controlling Cockpit analyses KPIs, classes and historical inventory development. MRP relevant data can be displayed according to freely selectable aggregation levels. Graphical analysis is also possible and hitlists allow for a targeted optimization of inventory and service levels. The Inventory Controlling Cockpit helped overcome the challenges with the following functions:: 

More transparency in inventory developments, turns, dead stock and range of coverage

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Mulit level consumption analysis for the identification and classification of slow moving items

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Complete integration of the ABC – XYZ analysis in KPI analysis and aggregation

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Continuous analysis of the effectiveness of MRP policies and strategies

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Value Drivers And Tangible Benefits Direct Benefits:     

Significant reduction of workload on portfolio management, exception and error handling Significant reduction of stock coverages on X items and increase of availability for critical parts Improved service levels on spare and after-market parts Integrated and standardized inventory controlling on all aggregation levels It is now possible to simulate the most cost effective lot size for every part under consideration of the current demand situation

Process Improvements:  

Inventory optimization is now an ongoing, continuous process It is now possible to perform an automated policy update on classified and segmentized material spectrums  Materials planner move from transactional to analytical behaviour in portfolio management, policy setting and exception monitoring  Prioritized portfolio management to reduce workload in exception monitoring  High, sustainable quality of data supporting and driving high service levels with low inventories - automated - at all times

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Screenshot MRP Monitor

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Screenshot Lot Size Simulation

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Screenshot Inventory Controlling Cockpit

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Thank you! Contact information: Marc Hoppe

Uwe Goehring

Consulting Lead Supply Chain Management SAP Deutschland AG & Co. KG Mobile: +49 160 9082 1606 Phone +49 6227 725664 E-mail [email protected] www.sap.de/inventoryoptimization

Practice Lead Supply Chain Management bigbyte software systems, US Mobile:US +1 (646) 420 9670 Mobile EU +49 151 17279781 E-mail [email protected] www.bigbytesoftware.com http://sap-supply-chainideas.blogspot.com/

SAP - SCM Consulting Solutions bigbyte Optimization Packages                             

SAP ERP Add ons 1333018 – MRP monitor 1341755 – Forecasting monitor 1341712 – Backlog monitor 1341710 – Service level monitor 1341705 - MRP Error monitor 1341571 - RLT-Monitor 1363890 - Simulation of Safety Stocks 1363889 - Simulation of Lot sizes 1363888 - Inventory Controlling Cockpit 1560053 - Discontinuation monitor 1541340 - Inbound monitor 1649107 – Cross Plant Planning in ERP 1653327 - Production controlling cockpit 1653328 - Master data check monitor 1653329 - Kanban monitor 1745268 - Stocking Level Monitor 1783469 – Supplier Preview 1783924 – Multisourcing with Planning calender 1832851 – Purchasing Monitor 1832777 – SD Order Monitor 1907791 – Capacitymonitor 1907823 – Capacity master data monitor 1907927 – MRP Parameter Simulation Additional Consulting Offerings 1315243 - MRP optimization 1292209 - Forecasting optimization 1363923 – Backlog reduction 1492807 - Business Case Calculation for Inventory Optimization

© 2014 SAP AG. All rights reserved.

Optimization Packages      

Strategic and Tactical Materials Planning Service Inventory Optimization Production Scheduling and Capacity Planning S&OP with Forecasting Purchasing Automation

http://www.sap.de/inventoryoptimization http://www.bigbytesofware.com/interactive http://sap-supply-chain-ideas.blogspot.com

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