This chapter covers the following topics:
The Oracle E-Business Suite considers inventory levels and prescribes safety stock levels across the service supply chain, including field service technicians. You can specify the maximum inventory and target inventory in terms of days of supply on the Distribution Planning region of the MPS/MRP Planning tab of the Organization Items form.
Service planning supports the following methods of safety stock calculations:
Safety stock based on item attributes
Safety stock recommended by Inventory Optimization
The safety stock calculation method that is based on item attributes has two options:
MRP Planned Percent
Non MRP Planned Percent
MRP Planned Percent. If you choose the MRP planned percent method, then safety stock for the item is dynamically calculated during the planning process. The safety stock quantity is calculated by multiplying the safety stock percentage you define by the average of gross requirements for a period of time defined by the safety stock days.
Safety Stock = Safety Stock Percent * (Gross Requirements / Safety Stock Days)
Non MRP Planned. When this item attribute is used, the safety stock value is defined by Oracle Inventory.
Oracle Inventory provides several methods for calculating safety stock. The safety stock values are collected from the source instance. If no safety stock is defined in Oracle Inventory, then safety stock is zero.
Inventory Optimization Recommended Safety Stock. If you choose to run safety stock based on Inventory planning, then to determine the safety stock service planning uses the Inventory Optimization plan that is fed as a demand schedule.
Inventory Optimization recommends the safety stock both in days of supply and quantity. Based on the plan option in Service Planning, you can specify whether to use Days of Supply or Quantity as the safety stock level calculation method.
Because SPP inline forecasting generates forecasts for the highest revision in a supersession chain (except if the planner defines failure rates for lower revisions), Inventory Optimization also considers setups for the highest revision in the supersession chain, and prescribes the policies at the highest revision in the supersession chain. In case Oracle Demand Planning or Oracle Demantra Demand Management is used for forecasting, the user sets the supersession product introductions appropriately so as to ensure that the forecast is for the highest revision.
Planning logic considers the forecast, sales order, and safety stock demand as part of the supersession substitution calculation.
The system supports the case in which safety stock demand exists on the latest revision item while supply exists on an earlier revision that can be substituted in a bilateral relationship. Planning considers the existing supply prior to generating a new recommendation to create supply either through repair or new buy.
The site level profile option for safety stock calculation MSC: (Service Planning) Item safety stock level value determines the safety stock consideration in SPP. If the value for this profile option is Item, then SPP considers the safety stock level for each item (for which safety stock is prescribed) and does not substitute or use up supply from substitutable parts. If the value for this profile option is set to Prime, then the safety stock for the entire prime is considered as the safety stock level. The existing supply for the various members of the prime is considered while trying to maintain the safety stock level.
When the safety stock level for a group of items is provided by Inventory Optimization, disregard the item attribute safety stock (safety stock based on MRP planned percentage) for the entire supersession chain.
For example, A -> A1 -> A2 -> A3 (where A3 is the current version) and Inventory Optimization recommends a safety stock level for item A3. Then disregard it even if safety stock item attribute exists for A, A1, A2. This assumes the profile MSC: (Service Planning) Item safety stock level value is set to ‘Prime’. This could also include user defined safety stock for a superseded part, in which case Inventory Optimization prescribes the safety stock level for the latest revision item but also includes the safety stock level for the superseded part that the user has prescribed.
When the Inventory Optimization plan does not recommend the safety stock for a supersession chain, aggregate the safety stock level for the items based on the MSC: (Service Planning) item safety stock level value and the safety stock prescribed for each item. This safety stock can be prescribed in inventory or calculated by planning as MRP planned percentage for each SKU.
For example, A3 -> A4 <--> A5 <--> A6 -> A7 <--> A8
Assume that the safety stock level for each of these items is 100 units for a given period.
If the profile option MSC: (Service Planning) item safety stock level value is set to Item then consider the safety stock level for each item to be 100 units, and then use only native supply to maintain this level. Hence no substitution will be recommended by planning. The safety stock violation exceptions are raised for each item.
If the profile option MSC: (Service Planning) item safety stock level value is set to Prime, then planning determines that A3, A6 and A8 are the primes in this supersession chain. Then planning uses the following levels:
For A3 100 units -> and planning will only use supply of A3 to maintain this level
For A6 300 units -> and planning will use supplies of A4, A5 and A6 to maintain this level.
For A8 200 units -> and planning will use supplies of A7 and A8 to maintain this level.
Note: The safety stock level for the supersession items is not pushed to the latest supersession part. The safety stock levels as defined by the users as per the above rules are honored. Oracle recommends that you change (or delete) the item attributes or user defined safety stock levels for superseded parts as part of the change process when including a new supersession part in the chain.
The recommended setup for the MSC: (Service Planning) item safety stock level value is Prime, in which case the Projected Available Balance (PAB) will be accurate when you are viewing the supply chain with the item aggregation level of Prime.
The Maximum and Target levels are also calculated for parts for which the safety stock is considered.
When the safety stock is specified as Days of Supply, planning calculates the safety stock demand across the supply chain by considering the same demand across the primary supply chain path, and then calculating the safety stock numbers at those organizations. This is achieved by generating an unconstrained demand plan through the primary path.
The service planning user interface displays the safety stock quantity, the unconstrained demand used by service planning for safety stock calculations, and the safety stock days of supply number when applicable for the part.
In the case of MRP Planned Safety Stock, Service planning uses a safety stock smoothing technique to eliminate the dramatic variations in safety stock levels within a time period specified by the user. This typically occurs when the forecasting and planning buckets are in days and the safety stock is specified as Days of Supply.
The safety stock smoothing will use the following profile options to calculate the smoothing:
| Profile Name | Description |
|---|---|
| MSC : Safety stock change interval (Days) | This is the time interval used for the smoothing within time interval functionality. If you specify an interval of 20 days, then starting from the system date, planning groups the safety stock calculation in 20 day buckets. Planning then uses the MSC: Smoothing method to calculate the safety stock within change interval to determine the safety stock level for the bucket. |
| MSC: Smoothing method to calculate safety stock within change interval | Specifies the mathematical construct used to calculate safety stock for a time interval using values within the time interval. The values are minimum, maximum, and average. Planning uses the minimum safety stock level, or the maximum safety stock level, or calculates an average within the MSC: Safety stock change interval (Days) to determine the safety stock level for that period. |
| MSC: Maximum Percentage variation in safety stock values | The safety stock is not allowed to deviate by more than this value when going from one time interval to the next. |
| MSC: Minimum Percentage variation in safety stock values | The safety stock is held constant across time intervals if the deviation is within this percentage |
Further, only a single safety stock is provided for the entire horizon for low volume demand (determined based on the selection of Croston’s method of forecasting).
Service levels can be specified:
At the plan level
In item simulation sets
In service level sets
Different service levels apply according to the following rules:
A service level specified in the Plan Options form (and enforced by selecting the Enforce Plan Level defaults check box) overrides any other value. If this rule is not enforced, then this service level serves as the default value for items where service level is not set by any other means.
If the service level is not enforced through Plan Level defaults, and if the service level for an item- and organization combination is specified in the item simulation set, then the value from the item simulation set applies for the plan run.
If the service level is not enforced through Plan Level defaults, and no service level is set in the item simulation set, but service levels are set using the service level set, then the service levels from the service level set are used in the plan run.
A specific hierarchy exists in which service level values default in Oracle Inventory Optimization if entered as part of the service level set. In general, if service level is not provided at a lower level, then the logic checks for service-level default values from higher (more general) levels. For example, service level is not provided at the demand class level. Then logic looks in category, and then item-instance-organization level, and so on.
If service levels are specified at lower levels, then Inventory Optimization logic picks up service level from those lower levels. The only exception to this rule is when you use plan level enforcement. If you specify the service level in plan options (plan level enforcement), Oracle Inventory Optimization logic always uses the service level from plan option, even if service levels are specified at lower levels using a service level set.
The following matrix helps explain the service levels considered by the planning engine as applicable when service levels are enforced (ESL). Note that in plans that enforce capacity constraints (ECC), or enforce budget constraints (EBC), the service level achieved is an output of the plan rather than an input.
| Service level entered at plan option (Plan level defaults) | Enforce plan level default | Service levels specified in item simulation set | Service levels entered using service level set | Expected behavior |
|---|---|---|---|---|
| Yes | Yes | Yes or No | Yes or No | Service level requirement for all the demands is taken from service level that you enter in at plan option. |
| Yes | No | Yes | Yes or No | The service level requirement is picked up from the item simulation set, if specified there, or from collected data. If service level is not available from those sources, then the value set in the service level set is used. If none are available then the value set for plan level defaults are used. |
| Yes | No | No | Yes | The service level that you specify in the service level set will be used. If no service level can be inferred for an item, then plan level defaults are used. |
| No (Null) | No | Yes | Yes or No | the service level requirement is inferred from the item simulation set. If no service level can be inferred from the simulation set, then it is inferred from the service level set. If service levels cannot be inferred from service level set either, then a default service level of 50% is assumed. Note: In EBC plans, the main task is to determine the achievable service levels given a budget. The service level to be achieved is not specified in this case (EBC plans). However, EBC plans require you to provide a target service level that needs to be achieved for all items in a plan; such target service level is entered at plan option. The default value for the target is considered to be 50%. |
| No (Null) | No | No | Yes or No | Service levels specified in the service level Set are used. If none exist, then a default target service level of 50% is assumed. |
| No (Null) | Yes | Yes | Yes or No | The plan will use the service levels specified in the item simulation set or collected data. If nothing is specified in the simulation set, the service levels from the service level set are used. If none exist, then a default service level of 50% is assumed. |
| No (Null) | No | No | Yes | The plan will use the service levels specified in the service level set. |
| No (Null) | No | No | No | The plan will interpret the service level requirement at 50%; that is, no safety stocks are calculated. |
As mentioned previously, a specific hierarchy exists in which service levels are defaulted in Oracle Inventory Optimization if entered as part of a service level set. In general, if service level is not provided at a lower level, logic checks for defaulting service levels from the higher level. For example, if service level is not provided at demand class level, logic looks for category, item-instance-organization level, and so on.
If service levels are specified at lower levels, Inventory Optimization logic picks up service level from lower levels. The only exception to this rule is when you use plan-level enforcement. If you specify the service level in Plan Options (plan level enforcement), Oracle Inventory Optimization logic always picks up service level from the Plan Options, even if service levels are specified at lower levels using service level set.
Field (technicians and locations) may carry a very large inventory. Technician warehouses can be planned, especially if you want to constrain your Inventory plan with inventory budgets. Some of the enhancements and considerations in Inventory Optimization (IO) to support the service parts business include:
Demand fulfillment lead times (DFLT)
Inventory planning for the supersession chain
Support for Poisson’s distribution for intermittent demand (and demand for small quantities)
Safety stock smoothing – Improved heuristic for rounding in case of non-intermittent demand
Budget constraints and the field technician trunk stock
Item simulation set in plan options
See the Oracle Inventory Optimization User Guide.