SNP: Standard Methods of Safety Stock Planning

This note explains the standard safety stock planning methods: SB, SZ, SM, MB, MZ, and MM within Supply Network Planning.

1. Introduction

Safety stock is used to safeguard supply chain inventory against variable influential factors such as customer demand and replenishment lead time. In Supply Network Planning, you can define a safety stock method in the product master for every location product (on the "Lot size" tab page). You can choose standard methods or extended methods. With the standard methods, the planner must directly provide the necessary information for calculating safety stock. However, with the extended methods, the safety stock is calculated automatically on the basis of the service level, the current demand forecast, and past sales data.

The following standard methods are available:
SB - Safety stock from location product master

SZ - Safety days's supply from location product master

SM - Max. of SafeStk and safety days' supply from loc. prod. master

MB - Safety stock (time-dependent maintenance)

MZ - Safety days' supply (time-dependent maintenance)

MM - Max. of SafeStk and safety days' supply (time-depend. maint.)


SB, SZ, and SM are static methods whose parameters are defined in the location product master (on the "Lot size" tab page) but not on a time-dependent basis. MB, MZ, and MM are dynamic methods whose parameters are defined on a time-dependent basis; meaning that they are defined individually for each bucket in the planning buckets profile.


2. Executing the standard methods in interactive planning

All the safety stock planning standard methods are executed by the predefined SNP macro function: SAFETY_CALC. In the standard planning book 9ASNP94, this function is used within the "Safety stk/reorder point/targt stock lvl" macro to fill the SAFETY ("safety stock") auxiliary key figure for the individual buckets of the planning period. Depending on the method, the contents of the key figures DMDTO ("Total demand") and SAFETY ("Safety stock (planned)") will be taken into account, if applicable.


3. Static methods

SB - Safety stock from location product master:

The safety stock is set to the value of the "Safety stock" field from the "Lot size" tab page of the location product master data, and is not dependent on buckets.

SZ - Safety days' supply from location product master:

The safety stock is determined on the basis of the value in the "Safety days' supply" field from the location product master data (the "Lot size" tab page). The unit of this value is always workdays. This value is designated below as TRC.

The safety stock for a specific period is calculated from the total demands for the subsequent period up to the th workday. If the bucket containing the th workday is a daily bucket, demands in this bucket are no longer taken into account. However, if it is a bucket that represents a larger time period, you can choose one of the following:

1. Demands in this bucket are not taken into account.
2. Demands in this bucket are taken into account proportionately, corresponding to the quotient from the number of workdays in the bucket before the th workday and the total number of workdays in the bucket.
3. All the demands in this bucket are taken into account.

To determine which of the above is used, access SAFETY_CALC. If 'BUCKET=E' is specified as an additional parameter, method 1 is used; with 'BUCKET=I' method 3 is used. Otherwise, method 2 is used (default). See also note 374052.

SM - Max. of SafeStk and safety days' supply from loc. prod. master:

The safety stock is assigned with the results of the SB or SZ method, whichever is higher, on a bucket-dependent basis.


4. Dynamic methods

MB - Safety stock (time-dependent maintenance):

The safety stock is calculated identically to the SB method. However, instead of using the "Safety stock" field from the location master data, the bucket-dependent value of a specified key figure is used. The user is then able to maintain the safety stock manually for exact periods.

The key figure to be used is defined by accessing SAFETY_CALC. In planning book 9ASNP94, the default key figure is SAFETY ("Safety stock (planned)").

MZ - Safety days' supply (time-dependent maintenance):

The safety stock is calculated identically to the SZ method. However, the safety days' supply used is not taken from the location product master data, but rather from a specified key figure on a bucket-dependent basis. Thus, the user is able to manually maintain the safety days' supply for exact buckets.

To determine the key figure to be used, access SAFETY_CALC. In the planning book 9ASNP94, this specification is not in the default, which is why the MZ method can only be used within this book after the corresponding macro has been modified.

MM - Max. of SafeStk and safety days' supply (time-depend. maint.):

The safety stock is assigned with the results from the MB or MZ method, whichever is higher, on a bucket-dependent basis.