Determination of Target Service Level

One of the aims of inventory planning is to achieve a certain target service level for each location product. The target service level defines that percentage of incoming orders that you must fulfill.

If you determine a target service level for a location product, a criterion for the height of the target service level could, for example, be the price of the location product. Therefore, for a very expensive location product, it would often make more sense to have a low service level that a high one.

Features

So that the system can assign a target service level to each location product, you define rules for assigning target service levels. You do this by specifying a percentage on the SAP Easy Access screen under Start of the navigation path Advanced Planning and Optimization Next navigation step Service Parts Planning (SPP) Planning Inventory Planning EOQ and Safety Stock Values of Target SFT and Target Service Level End of the navigation path . The system performs the following checks to assign the target service level:

The system first checks the rules at location product level that you can define under Location Product Target Safety Stock.

If you define rules at location product level, you can also take into account the level within the bill of distribution (BOD) at which the location from the location product is found. This means that you can define rules based on whether the location is an entry location, a higher-level intermediate location, or a child location.
If no rules are defined under Location Product Target Safety Stock, the system checks the rules at location level that you define under Global/Local Target Safety Stock Rules by specifying a version and a location.
If you define rules at location level, you can also take into account the BOD level of the location.
If no locations are defined on the location level, the system checks the rules on the version level. You define these under Global/Local Target Safety Stock Rules by specifying a version only, and not a location.
If rules are not defined here either, the system chooses the values that you specified under Global Safety Stock Fallback Value to determine the target service level.

You can specify the following data as fallback values, as well as values on the version, location, and location product levels:

You can specify the percentage of incoming orders that the target service level is to cover.
You can define a minimum safety stock that is only valid during the replenishment lead time and that the system must adhere to.
You can specify the number of days that the minimum and maximum days' supply of the safety stock is to be.
You can specify the maximum and minimum level of safety stock.
You can specify the percentage of safety stock of the parent location that the system can give to push child locations. However, this percentage does not refer to the total safety stock at the parent location, but just to the part of the safety stock that the system planned for the parent location because of a push demand.
You can specify the number of days of demand for which the system is to schedule additional safety stock. You can specify this value in the location product master data on the SPP Inventory Planning tab page. If you specify the value here as well as in the location product master data, the system takes into account only the value that you specify here.

Note
If you specify the value here, you can define a different number of days of demand for the same location product, but based on the BOD level at which it is located (entry location, higher-level intermediate location, child location).

End of the note.
If you want to perform the combined planning of EOQ and SFT using Poisson distribution, you can specify a statistical coefficient for the additional safety stock as well as a limit value for the resulting additional safety stock. For more information, see Additional Safety Stock.

You can also define rules on the location and version levels

You can specify the sequence in which the system is to use the rules defined here.
You can specify a minimum demand that a location product cannot fall short of, if it is to follow this rule.
You can specify the maximum procurement costs that a location product cannot fall short of, if it is to follow this rule.
You can specify product group combinations that a location product must belong to, if it is to follow this rule. On the left-hand side of the navigation tree, you can create product group combinations under Product Groups Combination (Target Safety Stock) by assigning them a version, a name, and a description. You can assign product group types and product groups to the defined product group combinations under Product Group Entries (Target Safety Stock).