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Authors: Peter F. Alderman, Thomas Lüdke
Co-Author: Klaus Reinschmidt
Bibliographical Information of the German National Library
The German National Library lists this publication in the German National Library; detailed biographical data are retrievable on the Internet at http://dnb.d-nb.de.
ISBN 973-3-9524414-7-3
1st edition in 2016
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Table of Contents
This book is written for you: You are a logistics specialist and want to improve your SAP system. We assume that you are tops in your field and now want to implement logistics optimisation. You are very familiar with SAP software and want to ‘coax’ more out of your system.
Many divisions these days are rather short-staffed so that there is not enough time left over for project work. Utilise the supplemental help available to you. You can alleviate the burdens on the pragmatists among the SAP logistics consultants and also help yourself during the implementation of your goals. Thus, we have developed these guidelines from many years of project experience and compiled them for you.
The contents in this book come from practical experience and are intended for practical experience with many checklists, tips, comments as well as numerous graphics which supplement the text.
This book addresses:
Many international companies today use SAP software. In this book, we address the optimisation of logistics processes. In 10 steps, we provide you with guidelines regarding how you can attain logistics optimisation with the aid of SAP software. In this regard, you will receive both tips for the use of standard tools as well as also concrete tips for the customers’ own reports, so-called Z transactions. We will tell you how the daily routine can be organised and how you can exhaust the optimisation potential.
Overview of the Practical Guidelines in 10 Steps:
In this regard, it concerns the mastery of the inventories and logistics processes in SAP systems for production facilities and trading houses. The controlling of the warehouses for maintenance or for replacement parts deliveries is subject to other laws. They are addressed in another set of practical guidelines. In this case, we will analyse primarily the 'basic case' of inventory optimisation–that means that all inventories are located in one SAP system.
The inventories are part of the stock value and are thus considered to be among the current assets. The company incurs costs through:
The inventory costs are often extremely high. Based upon the industry, they can amount to between 16 % and 26% of the inventory value. Across the industries, the inventories are responsible for up to 50 %–60% of the capital commitment. The reduction of the inventories must thus take a central position in the acquisition of the internally-committed liquidity.
In the beginning, the willingness to change must exist because, as a rule, something 'felt' is not in order. The inventories are 'felt' to be too high. We have 'felt' that there were too many missing parts. Thus, we must define something based upon which we can measure our goals.
Almost every plant and every Production Division already has missing parts. The reasons for them can vary:
If a precise analysis is conducted, up to 20 different causes can be compiled per company. As a rule, not just one division is 'guilty' of the missing parts, but rather there are optimisation possibilities along the entire supply chain.
Please do this practical text:
Please now turn on your SAP system and check how many missing parts you have. Ideally, do this evaluation shortly before noon so that some incoming goods have already been booked. Now, list all production orders in which components are missing and compare them with the incoming goods from this morning. Now check whether the incoming goods from this morning have already been supplied to the Production Division. When you have done this, then analyse the trading goods which can be directly classified to the sales orders and then check whether these materials have already been classified to a delivery.
Figure 1: Target Area for Missing Parts
So you needed longer than 10 minutes for this control? Then this would be a clue that optimisation potential exists at your company. Do you know straightaway how many materials were issued last week to the Production Division and how many of them could not be supplied and are thus missing parts? How high is the proportional amount as a %?
Now we want to look at the materials status: Which materials master data have not been maintained or have been only insufficiently maintained? At each company, the Development Division creates new drawings, parts lists and materials, i.e. there are always materials which must still be maintained. How many are there at your company? There are also materials which will be replaced with new materials. Have you standardised this process? If a material is converted from a production material into a replacement material, do you then adjust the settings in the system? Is there a report which shows you that materials have not been correctly maintained because the framework conditions have changed? Example: If a material can be purchased more cheaply, the ABC indicator will change from A to B. Which parameters must you then adjust in the material master?
When did you or your employees last retrieve the transaction MD07 and choose the settings in the system which result in the elimination of missing parts, rescheduling or even cancellations? Do you work with MD07? No? Then you will presumably have missing parts and, at the same time, excessive inventories.
How do you calculate your target inventory? Based upon a gut feeling or have you chosen a threshold figure so that the inventory may only get so high? At 5 million in sales per month, may the inventory only be 8 million high? What is the basis for this calculation? Parameters set by the executive management? The results from the Purchasing Division plus the Production Division minus customer deliveries?
If we want to implement the logistics optimisation with SAP software, then we need concrete parameters for what we must do and control daily.
In principle, these practical guidelines are described for a production company. Each industry has its own requirements and the logistics optimisation must be based upon this.
These days, logistics controlling has become a complex matter. This does not become easier–during the first step–including owing to the introduction and use of the SAP system as your comprehensive management system. As described in the example above, there is initially the risk of frustration … and one needs time. In order to overcome this obstacle, these guidelines will support you.
From the countless optimisation approaches, you must set your primary goals: Where in your logistics is currently causing you the 'most pain'? Discuss and define the goals to be selected. Then write down your goals and then write down a deadline for attaining the goals for which you are striving. Goal-setting which is reasonable and transparent is the first step for optimisation.