How APS Replenishes Safety Stock

This topic describes how APS plans safety stock replenishment. See MRP Overview for a description of how MRP plans safety stock.

APS will plan to keep inventory at or above safety stock. When safety stock is set up correctly, the system will generate ONE safety stock replenishment order for any item that drops below safety stock with the following attributes:

• Order Quantity - The order quantity, adjusted for the item’s order minimum and multiple values, will ensure the inventory level remains at or above safety stock over the whole planning horizon.
• Projected Date - The projected date of the safety stock order is calculated as APS normally does for purchased (using all the lead times applied to the PCAL) and manufactured items (using the item’s BOM).
• Due Date - The due date of the safety stock is calculated several ways. See the Due Date section below for more details.

Due Date Calculation

For purchased Items:

Due date = Date & Time of APS plan + Lead time (using the PCAL shop calendar)

Lead time = Fixed + Dock-to-stock + Paperwork lead times

For manufactured items:

Due date = Date & Time of APS plan + Lead time, using the PCAL shop calendar

Lead time = Fixed + Dock-to-stock + Paperwork + (Variable * Safety Stock level).

Note: The safety stock level in the lead time formula for manufactured items is the total level you are attempting to maintain (as shown in the Safety Stock field on the Items form), and not the shortfall amount when on-hand dips below safety stock.

Safety Stock for Manufactured Items

When you run APS Planning, the system plans safety stock replenishment for manufactured items according to one of two processes: Post Process or Dynamic. The system automatically selects which process to use for an item based on either the relationship between Order Minimum and Safety Stock Level, or the relationship between Order Multiple and Safety Stock Level.

Dynamic Safety Stock Behavior

During the APS planning run, as each demand is planned, the item's safety stock level is evaluated. If a demand causes safety stock to dip below the safety stock level:

• A safety stock order is planned for that item.
• Part of the order minimum/order multiple is reserved for safety stock. The remainder is available to other demands during the planning run.
• Depending on the current inventory level, dynamic safety stock behavior can sometimes be planned immediately. Unlike Post Process behavior, you can have safety stock plans inside the item's time fence.

Once safety stock is planned for an item using dynamic behavior, the Time Fence is turned off. Time Fence is no longer needed since the Safety Stock Order protects the safety stock quantity.

Post Process Safety Stock Behavior

After all demands, or orders, are planned, the system plans safety stock for each item in order by Low Level Code, from low to high. For each item, if the inventory falls below the safety stock level, outside of the time fence, the system creates a Safety Stock plan at the point in time with a quantity equal to the difference between safety stock level and the lowest projected inventory level outside of the Time Fence.

Avoiding Too-large, Too-early Replenishment Quantities

For manufactured items, it is possible that in some situations (when you have demands due far into the future that use up your near-term supplies), the system may generate a safety stock planned order that is due much earlier than the demands need it, leaving you with a large quantity of unnecessary supplies.

To avoid this problem, we recommend you set the Time Fence Rule to Accumulated Lead Time for the item on the Items form. By setting this Time Fence Rule, the later demands will not use the near-term supplies and the system will create planned orders due closer to when the demands are actually due.

Safety Stock for Purchased Items

After the system finishes planning all the demands normally, according to order priority, it performs a second, time-phased planning run. At the current date and at every date where there is a demand for the item, the system compares the on-hand quantity with the safety stock value:

1. If on-hand is not below safety stock, the system continues planning normally according to the Purchased Supply Switching/Generate Purchase Order Exceptions functionality.
2. If on-hand is below safety stock, the system searches for existing planned supplies to satisfy the demand.
3. If sufficient planned supplies are available to satisfy the entire demand quantity, the system allocates the supplies to the demand instead of allocating on-hand inventory. Safety stock is preserved without requiring a safety stock planned order.
4. If sufficient supplies are NOT available, the system generates a new planned order at the earliest possible date to cover the safety stock shortage and the demand quantity. The system also generates the "On Hand Below Safety Stock" exception message. The due date of the planned order is set to the current date + standard lead time. The planned order quantity is set to the difference between safety stock and the projected on-hand at the current date + lead time.

Once the level is at or above safety stock, demands due later than the current date + standard lead time cannot reduce the level back below safety stock.

NOTE: The system generates only a single safety stock planned order for a given item (it does not generate a planned order for each instance where the on-hand level drops below safety stock).

Safety Stock for Transferred Items

The system plans safety stock for transferred items the same way it plans safety stock for purchased items.

Parameters Related to Safety Stock Replenishment

The following parameters appear on either the Planning Parameters form (and affect ALL items) or on the Items form. They either affect the way the system generates planned orders to replenish safety stock or the system uses them along with the safety stock value to calculate a value used for another feature.

About Reorder Point Items and Safety Stock

Reorder Point items are usually inexpensive, high-volume items (such as nails, bolts, etc.) that you want to track and replenish differently than normal items. The system does not generate safety stock replenishment planned orders for Reorder Point items. However, the "On Hand below Safety Stock" exception is generated when the system creates a reorder-point planned order. See the Reorder Point topic for more information.

Related Topics

APS Overview

Setting Up Safety Stock