Principle of Reorder Point Planning

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Reorder point planning in SAP triggers procurement when available stock (plant stock + fixed receipts) falls below the reorder point. This point is designed to cover material needs during replenishment lead time, plus a safety stock buffer.

Key components:

Reorder Point: Calculated as Safety Stock + (Daily Requirement * Lead Time). It’s the trigger for replenishment.Safety Stock: Buffers against both higher-than-expected consumption during lead time and potential delivery delays.Replenishment Lead Time: The time it takes to replenish stock. A crucial factor in reorder point calculation.

Process:

Monitoring: SAP continuously monitors plant stock.Trigger: When stock falls below the reorder point, a planning file entry is created.Planning Run: The MRP (Materials Requirements Planning) run calculates net requirements.Procurement: If needed, the MRP run generates procurement proposals (e.g., purchase requisitions).Returns: The system also monitors returns and can adjust/cancel planned receipts if they become unnecessary. This requires coordination with Purchasing.

Automatic Reorder Point Planning:

Reorder point and safety stock can be automatically calculated by the integrated forecast program and stored in the material master.

In short, reorder point planning aims to maintain optimal inventory levels, balancing the risk of stockouts with the cost of holding excess inventory.

#SAP #ReorderPointPlanningReorder point planning in SAP triggers procurement when available stock (plant stock + fixed receipts) falls below the reorder point. This point is designed to cover material needs during replenishment lead time, plus a safety stock buffer.Key components:Reorder Point: Calculated as Safety Stock + (Daily Requirement * Lead Time). It’s the trigger for replenishment.Safety Stock: Buffers against both higher-than-expected consumption during lead time and potential delivery delays.Replenishment Lead Time: The time it takes to replenish stock. A crucial factor in reorder point calculation.Process:Monitoring: SAP continuously monitors plant stock.Trigger: When stock falls below the reorder point, a planning file entry is created.Planning Run: The MRP (Materials Requirements Planning) run calculates net requirements.Procurement: If needed, the MRP run generates procurement proposals (e.g., purchase requisitions).Returns: The system also monitors returns and can adjust/cancel planned receipts if they become unnecessary. This requires coordination with Purchasing.Automatic Reorder Point Planning:Reorder point and safety stock can be automatically calculated by the integrated forecast program and stored in the material master.In short, reorder point planning aims to maintain optimal inventory levels, balancing the risk of stockouts with the cost of holding excess inventory. Read More Technology Blogs by Members articles

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