SAP SPP – Service Parts Planning – Simplified

SAP SPP –  Service Parts Planning – Simplified
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What is service parts planning?

SAP Service Parts planning is a module in SAP SCM where it provides functions specific to spare parts and transparency throughout the supply chain, right from the moment demand occurs through to the delivery of the product.

Service Parts requires special forecasting methods for sporadic demand. Demand Forecasting for service parts is very difficult to predict on. SPP provides various forecast models.

Planning for service parts takes place in distribution structures (abbreviation: BOD – bill of distribution), which contain all of our locations in as network. Locations can be, for example, distribution centers, contract packagers, or our customers and dealers. Alongside the current BOD, we can also work with future BODs. This means that we can define a specific time in the future when current BOD will be replaced by new BOD. The system takes this future BOD into account for planning.

SPP considers the characteristics of each product during planning. It takes into account, for example, the locations at which you most need a certain product, whether a product is fast-moving or slow-moving, and the sales behavior of a product. Depending on these properties, we can decide for each product whether we want to perform period-based service parts planning based on the forecast or whether we would rather plan your service parts based on a reorder point. If we use period-based planning, SPP generates the forecast for a product either on the basis of past sales history or on the basis of leading indicators. SAP distinguishes between products with constant demand, trends, seasonal demand, and products with sporadic demand. SPP links the stocks within BOD optimally with the actual demands. If we cannot meet the demand within our BOD, SPP plans the covering of these demands either through external procurement or repair. SPP automates most of the release and approval processes. In this way, SPP enables to reduce our ordering and stock-holding costs, improve service levels, and shorten your delivery times.

We can use all of these planning functions not only for our own locations, but also for our customers and dealers.

In addition to our actual planning, we can also carry out a simulation of the planning. This means we can simulate a particular planning process and thus optimize parameters and settings.

Capturing demand and having demand history forms the basis for forecasting and planning services. Historical Demand Data is usually captured from SAP CRM or SAP ERP systems. BOD has a significant role during demand capture to determine right Facing and Stockholding location of the demand load.

Planning in SPP is carried out in form of services through planning service manager.

Listed below are important services that take place in SPP planning.

  1. Forecasting

The forecasting service covers the whole life cycle of a product from phase-in planning for new products via various types of product interchangeability through to phase-out planning for products in discontinuation. We can determine the forecast on the basis of leading indicators such as our installations or the operating time of equipment, or on the basis of past requirements or a combination of the two forecast methods. If we determine the forecast on the basis of past requirements, the forecast service can use different forecast models for individually planning future requirements for products with different sales behavior. In leading-indicator-based forecasting it can be taken into account and use our knowledge about your installations. In both cases, the system approves a large proportion of the forecast results in an automated approval process and makes them available to the follow-on services. The forecast service presents only those forecast results that deviate heavily from the previous forecast results to check and approve manually.

  1. Inventory Planning

The Inventory Planning Service determines the locations at which it would be sensible to increase or decrease stock. This is based on past demand. To keep our stockholding costs as low as possible, reduce purchase costs, and still maintain a high level of service for your customers, the inventory planning service plans the optimum stock and optimum order quantity for location products. According to the sales behavior of a product, the service uses either normal or Poisson distribution. The inventory planning service also groups products into ABC classes depending on their sales behavior and thereby identifies fast-moving and slow-moving items.

  1. Distribution Requirement Planning

Distribution requirements planning (DRP) organizes replenishment planning within a BOD. Based on predicted requirements, the stocks of the locations, and delivery schedules, DRP generates stock transport requisitions, scheduling agreement schedule lines, and purchase requisitions if we are procuring service parts, planned orders, and subcontracting purchase requisitions, if we are repairing service parts internally or at a subcontractor. If we use kits, DRP plans both the procurement or manufacture of the kits and the procurement of the dependent demands you require to manufacture the kits. During planning, DRP takes into account supplier shutdowns as well as product substitutions, substitutions of obsolete products, and discontinuation of products. In addition to these planning functions, DRP allows for efficient checking of the planning results and a multilevel approval process as required.

  1. Deployment

Deployment controls the distribution of incoming goods within the BOD on the basis of current demand. It uses priority tiers, sequence rules, and fair share distribution to distribute the goods optimally.

  1. Inventory Balancing

The inventory balancing service balances excess and shortage at the individual locations and thereby ensures that stock within a BOD is evenly distributed.

  1. Surplus & Obsolescence Planning

Surplus and obsolescence planning uses certain criteria to evaluate current stocks according to whether they count as surplus or obsolete stock, and can therefore be disposed of.

  1. Inbound Delivery Monitor

We can use the inbound delivery monitor to automatically monitor the processing times for the individual sub-steps of the delivery. The inbound delivery monitor takes into account both deliveries from your supplier to a location and stock transfers from one location within the BOD to another. The automatic monitoring functions of the inbound delivery monitor are part of SAP APO and the resulting reports are provided in SAP NetWeaver Business Intelligence.

  1. Shortage Analysis

Shortage analysis provides us and our suppliers with a quick overview of critical situations such as shortages. The SPP Alert Monitor displays alerts that show unplanned situations. Our supplier and we can view the relevant alerts and influence the planning if necessary. Shortage analysis is integrated in the Web user interface of SAP SNC.

  1. Supplier Delivery Performance Rating

Supplier delivery performance rating (SDPR) evaluates the performance of our suppliers on the basis of various criteria such as time and quantity accuracy. We can provide our suppliers with direct access to these results. SDPR is integrated in both SAP SNC and SAP NetWeaver Business Intelligence.

  1. Service fill Monitor

We can use the service fill monitor to analyze our goods issue activities. It displays the service level we were able to offer our customers, and, as part of the service loss analysis, analyzes why sales orders could not be met on time or in full. The analysis functions of the service fill monitor are part of both SAP APO and SAP NetWeaver usage type Business Intelligence.

Who Is It Designed for & What Pain Points does SPP Address?

Now a days after-sales market is a growing business and managing service parts to make sure customers high service level is fulfilled in right time by planning and optimal inventory maintenance across all the distribution centers within network is of high priority.

To cater high service fill requirements of service parts especially in automobile industry where we are going to see very high number of SKU’s (Stock Keeping Units), SAP came up with SPP (Service Parts Planning). Planning in service parts planning takes place in BOD (Bill of Distribution) which contains all of the locations from where the part can be served.

The other major requirements in service parts business is very high sales order lines from dealers, scattered requirements across various locations of distribution networks, High number of replacement parts (Supersession), Sporadic demand and right decision on where to stock and where to un-stock part.

How is SAP SPP different from SAP DP ?

  1. BOD – Bill of distribution is a new and specific to SPP which help in carryout planning for entire network.
  2. In DP we have only one strategy(croston method) which helps us run a forecast with sporadic demand in past whereas in SPP we have more models. few are for example dynamic moving average model, declining demand forecast etc
  3. SPP has EOQ and safety stock planning together. This helps us saving cost in terms of not overstocking by ordering more or not giving out more in terms of frequent orderings.
  4. Obsolete and surplus planning. helps us identifying the not so good moving parts and taking them off the business.
  5. Inventory balancing- helps us maintaining the right stock level at particular locations by moving extra from or bringing into stocks
  6. SPP is fully integrated with SNC/EWM/CRM to avail the full-fledged planning.

How do I get started ?

Call us now on (309)269-2551 or email us at contactus@geniusbsi.com to know whether SAP SPP is the right solution for you  or to discuss how we can get started with SAP SPP implementations.

Genius Business Solutions is an ERP Consulting firm headquarted at Moline -Quad Cities, Illinois with clients based throughout the United States and India. Call us now to achieve the most ROI out of your SAP ERP investments. With over 12 years of industry experience and certified industry experts with software and business knowledge we can help run your business efficiently by optimizing your ERP system and re engineering your business processes to achieve unprecedented business results.

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