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I have on-hand inventory – let me use it!

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Hi. We are using Dynamics AX 2012.

We've been confonted with the problem described in the article by Jacob Roder: https://community.dynamics.com/ax/b/axmrpjakeroder/archive/2015/12/01/i-have-on-hand-inventory-let-me-use-it and I've seen some posts from Timsaxblog on this subject as well, but didn't find the solution yet.

The safety stock is blocking use of an item which is on-hand, causing all the planned orders to fall after the fulfillment of the safety stock.

If I change the fulfillment setting to "Today's date + procurement time", this doesn't solve the problem completely, I guess because the procurement time (7 days) is set up shorter than the real delivery lead time (about 3 months) as confirmed by an order. However, there is no need to speed up the order, as we still have a large stock available.

The problem is that all planned orders which need to use this item are now planned after 3 months, causing us to see unrealistically long lead times.

Setting the fulfillment parameter to "Coverage time fence" solves that problem, but now the planned order for replenishment of the safety stock is pushed all the way to the end of the coverage time fence, which is 365 days away.

What do you suggest?

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  • Suggested answer
    guk1964 Profile Picture
    guk1964 10,877 on at
    RE: I have on-hand inventory – let me use it!

    . As mentioned in my last comment, mrp does not stop you using safety stock and the last two notes are a useful explanation of that. ultimately mrp is only a big calculator that does a simuialtion that calculates  based on the demands and supplies  using the policies and data  you have defined, and its planned order outputs a is the best suggestion it can give to meet those possibly conflicting factors. However until you master schedule, i.e. firm, then its just a calculation.

    That is why you can run dynamic and static plans with different coverage settings, they are just calculations based on those particular rules. You can firm an order against any plan -once its firmed then its reality and subsequent plans will take it into account and assume a firmed order  can't be changed, and then plan around it.

    Otherwise mrp will throw out any unfirmed, planned orders and just recalculate again with whatever coverage policies you use for that run. If planned orders in some way blocked the inventory, then replanning  would either not be possible or would cause confusion..

    The problem  you faced  is mainly because  your coverage days and your replenishment days don't really have a logical relationship for the number of days in each.

    On another, related  note:  Be clear whether you plan on calendar says, or working days, for your purchase lead time. To add to the confusion, you can set this lead time value  in 3 different places: default order settings, Site specific order settings. and the item coverage record. And yes there is one more place the Price Agreement (Trade agreement).

    It gets better - when you do not have a Primary vendor on the Purchase fast tab on your item master then Ax will search for a vendor in the purchase price trade agreements and that might give you zero lead times - so  best to set the ‘Disregard lead time’ flag on the Purchase price trade agreement on when you are not using the lead time field.

    Set the default order setting’s purchase lead time to the lead time of the primary vendor (plus safety time?).

    If I remember correctly it was Tim who suggested those points and also to  calculate safety stocks based on your supply plan (e.g.  you get a delivery every month but your overall lead time is e.g. 7 days  or vice versa.

    His advice, which sounds good to me,  is to put your supply schedule lead time on the item coverage, and your purchase lead time on the trade agreement.

     

  • Suggested answer
    Danny Bilodeau Profile Picture
    Danny Bilodeau 4,056 Super User on at
    RE: I have on-hand inventory – let me use it!

    Hi Adriaan, Check the On-Hand inventory for that item and look at the Available for Reservation which is what matters because what is available for Reservation is available for new Production orders. You can confirm that the Safety Stock of 750 does not reserve any stock.

    In your case, the "Period" Coverage did what it is meant to do. You should consider reducing the Coverage Period; (eg. If you want one PO every week, reduce the period to 7 days); If you do so, every week, MRP will suggest an order to cover the week's demand so that you finish the Period at the Minimum stock.

    But may a MinMax coverage is more the type of trigger that you want. With MinMax, on reaching the level identified as minimum stock on this Item's coverage, MRP will suggest a planned purchase to bring your stock to the value identified as maximum stock. As long as your planning horizon (Coverage Time Fence) is higher than this item's 5 days lead time, MRP will consider all demand that horizon and recommend a purchase when it anticipates that stock going below that Min. MRP will try to maintain that MinMax balance.  

  • Adriaan Van Nuffel Profile Picture
    Adriaan Van Nuffel 391 on at
    RE: I have on-hand inventory – let me use it!

    Hi Danny, thanks for your reply, much appreciated.

    I like the Critical Components tab because it shows in one view if all the items required for our production order are on hand. We want to check this before releasing the order, to avoid that the order is released towards the shop floor with insufficient on-hand inventory. This results in people that want to start on a job which is impossible to finish.

    Would there be a better way to check this?

  • Suggested answer
    Danny Bilodeau Profile Picture
    Danny Bilodeau 4,056 Super User on at
    RE: I have on-hand inventory – let me use it!

    Hi Adriaan, Looking at your question again. It is worth highlighting that MRP is Zen: it likes balance. MRP is trying to balance demand against supply. In your set up for that item, using the Period coverage code you told the system that for this item. balance is Min=750. So AX is planning supply so that at the end of the current 365 days period, you have at least 750 unit is stock; it will not be exact because you have minimum order quantities that forces to buy in chunks of 250 units. That screen is not meant to tell you how the stock is being utilised or reserved; it only explains the results of MRP; how your demand and supply are balanced.  

  • Suggested answer
    Danny Bilodeau Profile Picture
    Danny Bilodeau 4,056 Super User on at
    RE: I have on-hand inventory – let me use it!

    Hi Adriaan,

    Your coverage Group being "Period" and this period coverage is set at 365 days, the system is looking at the demand over the next 365 days and generating a single Planned Purchase Order for that entire period.  I would suggest to either 1) reduce that Period coverage to represent the frequency at which you want to issue your re-orders; may be on a monthly basis given that purchase Lead time is 5 days; or 2) since you obviously expect that order demand is not representative of real or historical demand, enter a forecast demand for the Finished Good that is representative of your expected sales to consume some of that components supply and configure your .Master Plan to consider that forecast.

  • Adriaan Van Nuffel Profile Picture
    Adriaan Van Nuffel 391 on at
    RE: I have on-hand inventory – let me use it!

    Hi, thanks for the reply!

    I've changed the setting to "first issue" but it doesn't really change the situation.

    Here's an example of what I see; when I look at the explosion of a certain production order which uses the part K7E17: this part is indicated as "order settled" - although there is certainly enough on-hand inventory of this part available. This is what it looks like with the Fulfill setting at first issue.

    Net-requirements-Coverage.PNG

    However, when I look at the Net Requirements of this part K7E17, it shows a large accumulated stock.

    As far as I understand, the Safety Stock claims the on-hand inventory, making it look like I'll only be able to use K7E17 until the purchase order is delivered. This is what it looks like with the Fulfill setting at first issue.

    Net-requirements-First-issue.PNG

    The real problem here is that I've seen MRP planning the orders unacceptably far away to the future, because the inventory was claimed by the safety stock and the orders have to wait for a purchase order with a (by coincidence) long lead time.

    When I change the Fulfill parameter to Coverage time fence, it now shows the K7E17 as "on hand settled" in my production order - which is correct (from my point of view).

    Explosion-production-order-coverage-end.PNG

    However, in the Net Requirements of the K7E17 I now see a problem: the safety stock requirement is now only asked at the end of the coverage time (which is next year) - and the purchase order is only planned at that time as well - which means my safety stock is not really guaranteed and I could be in peril of running out of my beloved K7E17.

    Net-requirements-Coverage.PNG

    So what I really want is the safety stock to be the trigger to launch a purchase order and ring a small alarm bell, but not to block any on-hand inventory in the eyes of MRP (*) and in the Critical Components tab (**).

    If I'd have a simple way to check the safety stock levels on a daily basis, I could put the Fulfill parameter on Coverage time fence, and still feel safe.

    Thanks for any tips you may have!

    (*): We use MRP to generate planned production orders, and for CTP calculations on order confirmations.

    (**): We use the Critical Components tab to check if production orders are ready for releasing, prior to releasing them.

  • Suggested answer
    guk1964 Profile Picture
    guk1964 10,877 on at
    RE: I have on-hand inventory – let me use it!

    Safety stock is there to be used.

    If its breached then mrp correctly will plan to replace it.

    It does not stop you using the stock it is not hard reserved and Ax will always give priority to a real demand over safety stock.

    When master scheduling is run, the calculation considers the minimum level as a demand ( safety stock in pegging) that drives supply, i.e. a purchase order, production order, or transfer order,. In most erp systems safety stock is  treated like a sales order required immediately. Ax offers more control over the timing of the demand/supply logic. When the planned ‘supply’ order, pegged to a safety stock demand is generated, a parameter on the item’s coverage group determines when MRP calculates the net requirement and when a planned order is generate, It sounds like you might be better to use the parameter. First issue

     MRP calculates the minimum quantity only when there is an issue transaction needed for the item. If there is no ‘demand’ for the item consuming inventory, then a planned order will not be generated. This will help in reducing carrying costs of an item where there is no issue / demand scheduled.  You might also then consider two other options:

    set the minimum to zero but add a safety margin to the lead time

    use of positive days to not raise POs to early

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