cancel
Showing results for 
Search instead for 
Did you mean: 

How IO take into account customer transportation lead time?

moggiemx79
Explorer
0 Kudos

Hi experts, I have a conceptual question:

I would like to know how inventory optimization consider the transport lead time to each customer and the respective CV if it works with customer groups?

Thanks,

Héctor

former_member367912
Participant
0 Kudos

Hello Hector,

Its a very interesting question since in IO no where we consider Lead time between the customer facing DC and Customers explicitly while calculating the RSS. Forecast/Sales etc all are at Custgroup levels.

Please let me also know if you get more details on this.

Regards,

AKhilesh

Accepted Solutions (1)

Accepted Solutions (1)

former_member242371
Contributor
0 Kudos

Hello Hector,

IO forecast is placed at customer facing plant and not only at customer level. This should have already considered customer lead time, if any, when demand is placed at the corresponding plant. IO engine considers this demand and its variability along with transportation lead time for the location to generate the recommended safety stock.

Thanks,

Rohit

moggiemx79
Explorer
0 Kudos

Hi Rohit,

Thank you very much.

What do you refer by customer facing plant?

Thanks,

Héctor

former_member242371
Contributor
0 Kudos

Hello Héctor,

Its the location which is connected with customer directly. IO forecast is placed at @location-custgroup level.

Thanks,

Rohit

Answers (1)

Answers (1)

lingaiahvanam
Active Contributor
0 Kudos

Hi,

Purchase and transportation parameters control material movements from one location to another in the supply chain network. Information is used for these parameters through the key figures defined at the week/product/ location/location-from planning level. Hence, the input to the inventory optimization algorithm is for a product at a location that is being supplied by another internal (plant, distribution center, warehouse, etc.) or external (supplier) location.

The purchase and transportation key figures used as input to the inventory optimization algorithm are as follows:

  • Sourcing quota (LOCATIONRATIO): Quota defined for procurement.
  • Transportation lead time (TLEADTIME): Transportation lead time in weeks, which can be an absolute or fraction value.
  • Transportation lead time variability (TLEADTIMEVARIABILITY): CV of transportation lead time in weeks, which can be an absolute or fraction value. – Transportation minimum lot size (TMINLOTSIZE): Defines the minimum quantity for a system-generated transport or purchase requisition.

Best Regards,

Lingaiah

moggiemx79
Explorer
0 Kudos

Thanks Lingaiah,

My question is, shouldn't it consider the lead time and CV between the customer facing location node and the customer as well?

Thanks,

Héctor