PTI : Plan to Inventory

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    Overview

    Plan to Inventory (PTI), is another term used for inventory planning. In any organization or business, PTI in SAP refers to the entire supply chain-related inventory management process. This includes forecasting and estimating the optimal quantity and timing of inventory to align it with sales, fulfillment, and production capacity, to ensure higher customer satisfaction levels. Inventory planning focuses on optimizing a company’s cash flow and profits while contributing to an efficient supply chain. Thus, the PTI cycle in SAP helps to determine requisite product quantities to carry out future sales. 

    An efficiently functioning plan to inventory process in SAP, needs an understanding of what products should be purchased and in what quantity, to maintain optimal stock levels. In the plan to inventory cycle in SAP, sales or demand forecasts for products are based on historical trends, therefore helping to eliminate inventory overstocking, stockouts, lost sales, and dissatisfied customers.

    How does the Plan to Inventory cycle in SAP work?

    To explain how a PTI process in SAP operates, here are the main components of an inventory management plan:

    1. Demand planning: The first step in the plan to inventory cycle in SAP is to forecast and plan for future demand for products. This is typically implemented using SAP’s Demand Planning (DP) module, where historical sales data, market trends, and other relevant factors are analysed and used to create demand forecasts. These forecasts help determine the expected quantities of products that need to be produced or procured, thereby eliminating understocking, or overstocking of inventory.

    That said, two key factors to consider when estimating demand are product scarcity and competition. For commodities that are hardly available, keeping backup supplies or stocks of the same would help meet demand spikes. Additionally, if product scarcity results in customers switching to competitors, the extra storage cost in retaining stocks is preferable to losing customers.

    2. Materials requirements planning (MRP): Once the current & future demand is determined, the Materials Requirements Planning (MRP) process kicks in. MRP is used to calculate the materials required for the production or replenishment of inventory. It considers key elements like lead times, existing inventory levels, safety stock, and planned production quantity to generate procurement proposals and production orders.

    3. Replenishment planning: A sound replenishment strategy goes hand in hand with materials requirements planning, helping to maintain smooth and steady production supplies. The reorder point (ROP) is a threshold that determines the opportune time to place orders with vendors. ROP is determined by the time needed for vendors to package and deliver products and prevent any potential supply issues. A replenishment strategy should consider regularly and scarcely demanded products. A just-in-time (JIT) inventory system works when the supply chain is consistent and steady.

    4. Purchasing and procurement: In the case of externally procured items, purchase requisitions (PRs) or purchase orders (POs) are created based on the MRP proposals. These documents trigger the procurement mechanism and eventually lead to the receipt of goods in the warehouse.

    5. Production planning: For internally manufactured items, the MRP proposals trigger production orders or planned orders. These orders are used to plan and implement the production of goods based on demand patterns and inventory requirements. SAP Production Planning (PP) modules support the planning and scheduling of production activities, ensuring efficient use of resources and meeting existing demand requirements.

    6. Inventory planning: The warehouse should be able to store extra inventory during critical periods. Inventory planning software is used in conjunction with chosen inventory planning techniques to forecast inventory needs, and avoid stockouts, overstock, and deadstock.  Inventory planning software helps to automate and optimize complex and critical inventory processes, letting businesses know when they need to purchase or transfer inventory to support sales or demand across multiple channels.

    7. Goods receipt (GR) and inventory management: When goods are received from vendors or after production is completed, the inventory is updated in SAP PTI through goods receipt transactions. The inventory levels are then adjusted accordingly, and the system reflects the changes in stock availability. SAP Inventory Management modules efficiently manage the tracking, valuation, and control of inventory levels at all times, ensuring accurate stock quantities and timely replenishment.

    8. Inventory tracking, monitoring, and reporting: PTI in SAP provides various reports and tools to monitor and track inventory levels, stock movements, and other relevant parameters. This information helps organizations make informed decisions on inventory management and its various elements, like reordering, replenishment, or variability in production schedules.

    The efficiency of any inventory management system depends on its robust tracking mechanisms. A point of sale (POS) system categorizes inventory and records changes in real time. The usage of barcode scanners also reduces errors in tracking and increases efficiency.

    8. Adaptable and adjusting stock levels: Any inventory system needs to be monitored and adapted to meet present and future product demand. Agile monitoring systems help to forecast situations when sales are needed to dispose of stagnant inventory, or when it is time to stock up on certain items to meet growing demand.

    9. Warehouse Management: SAP Warehouse Management (WM) modules support efficient warehouse operations and management, optimizing the storage, picking, and shipping of goods.

    10. Logistics Execution & Goods tracking: SAP Logistics Execution (LE) modules integrate various logistics processes like shipping, transportation, and tracking of goods.

    Here is a diagram showing a typical SAP PTI inventory management process framework:

    ITR : Issue to Resolution

    How will BPX help implement the plan to inventory process in SAP?

    BPX can guide you towards a successful SAP plan to inventory process implementation. As such, executing the plan to inventory cycle in SAP consists of several key phases, from understanding the existing “As-Is” process to supporting the PTI in SAP after Go-Live. 

    Below is an explanation of the plan to inventory process in SAP, along with the primary activities contained within each stage:

    1)As-Is Process:

    • Inventory Planning: Evaluate the existing methods and processes followed for demand forecasting, material planning, and stock replenishment. This includes analyzing how demand is captured, the forecasting methods used, and the current planning metrics and criteria.
    • Procurement and Production: Review the current procurement procedures for externally sourced items and the production processes for internally produced goods. Understand how purchase requisitions, purchase orders, and production orders are generated and managed.
    • Inventory Management: Assess and analyze how inventory is currently monitored, valued, and adjusted within the PTI process in SAP. Evaluate the process framework for goods receipts, goods issues, and stock transfers.
    • Asset Management: If relevant to the PTI cycle, assess how asset acquisition and depreciation (which are part of the ‘acquire to retire’ process) are managed within the SAP system.

    2)Business Blueprint:

    • Fit-Gap Analysis: Identify the gaps between the current “As-Is” processes and the desired “To-Be” processes for PTI in SAP. This involves understanding the business needs and specifications and aligning them to SAP components.
    • To-Be Process Design: Define the future state PTI process in SAP in line with the best practices, industry standards, and the specific needs and configuration of the organization.
    • Data Requirements: Determine the data needed for the new PTI cycle in SAP and plan for data migration or configuration of the item master data in SAP.

    3)Master Data Migration / Item Master Configuration:

    • Data Cleansing and Preparation: Cleanse and prepare master data for migration to SAP, including materials, vendors, customers, and any other relevant data.
    • Data Migration: Load the cleansed data into the SAP system, ensuring data accuracy and consistency.

    4) System Configuration / Realization:

    • PTI Configuration: Configure the PTI cycle in SAP based on the defined “To-Be” processes. This includes setting up demand planning, MRP (Materials Requirements Planning), procurement, production, inventory management modules, and any other relevant SAP components.
    • Customization: If required, develop, and implement custom solutions to address specific business requirements not covered by standard SAP functionalities.

    5)User Acceptance Testing (UAT):

    • Test Script Preparation: Create test scripts based on the defined SAP PTI processes and requirements.
    • UAT Execution: Perform UAT with end-users who conduct tests based on the prepared scripts to identify any issues, discrepancies, or potential roadblocks.
    • Issue Resolution: Address and resolve any defects, issues, or gaps identified during UAT, ensuring the system meets the specific business requirements.

    6)Go-Live Preparation:

    • Data Validation: Validate the data migrated into the SAP plan to the inventory system and ensure its accuracy.
    • End-User Training: Provide complete training to end-users on the new PTI in SAP processes and the knowledge to use and manage the PTI process in SAP.
    • Cutover Activities: Plan and execute the activities required to transition from the legacy system to the SAP plan to inventory process.

    7)Go-Live:

    • System Go-Live: Implement the SAP system for live operations and begin using it to manage the PTI cycle in SAP.
    • Post Go-Live Support: Address any issues, concerns, or challenges that may arise immediately and later on, after go-live.

    8) After Go-Live Support:

    • Ongoing Support: Provide continuous and ongoing support to end-users in real time, addressing any post-implementation issues, concerns, or questions.
    • System Optimization: Continuously monitor and optimize the SAP system and the PTI process in SAP for efficiency and effectiveness.

    For a successful transition to the plan to inventory process in SAP, it is imperative to collaborate and be constantly aligned with the SAP process consultants like BPX, SMEs, subject matter experts, the SAP IT team, and other key stakeholders. PTI in SAP has to be implemented through proper communication and documentation, as also adherence to the best practices, in keeping with the organization’s unique requirements and demands, size, industry, existing processes, and the modules to be deployed.

    BPX at a glance

    Headquartered in Pune India, Business Process Experts (BPX) is one of the leading players in the process management landscape, a specialist in offering unique, customized SAP plan to inventory solutions. With offices in UAE and other prominent Indian cities, the company was established more than a decade back in 2012. Since then, it has not looked back, growing steadily to become a market leader in the SAP plan to inventory solutions space. 

    Led by a professional team of engineers, management and finance experts, and SAP process consultants, BPX and its renowned sister concern like YRC have become key strategic, transformational partners for leading clientele across the world. BPX clients belong to key industry sectors like engineering, automobiles, banks, chemicals, garments and apparel, retail & hospitality, manufacturing, pharmaceuticals, mining, and ITeS.

    As your ever-reliable SAP PTI process consulting partner, BPX will comprehensively analyze your organization’s PTI cycle in SAP and tailor your entire process roadmap, mapping it to your unique business needs. Our SAP business process experts will handhold you end-to-end across your entire implementation journey, ensuring tangible cost benefits and efficient resource utilization.

    So, if you are a business owner or entrepreneur looking to transform your organization’s SAP plan to inventory process, please connect with BPX now. Our expert team will promptly get in touch with you to craft your game-changing SAP PTI journey, helping your business scale up, and grow exponentially, to stay well ahead of the curve!

    FAQs

    The term ‘plan to inventory’ (PTI) generally refers to the entire supply chain-related inventory management process, comprising demand planning and forecasting, materials requirements planning, procurement, production, and inventory management. PTI in SAP offers various modules and functionalities that support these processes, and organizations tend to use different SAP components to efficiently manage their end-to-end supply chain operations.

    The steps in the plan to inventory cycle in SAP can be outlined below:

    1. Demand Planning & Forecasting
    2. Materials Requirement Planning (MRP)
    3. Replenishment Planning
    4. Purchasing & Procurement
    5. Production Planning
    6. Inventory Planning
    7. Goods Receipt (GR) & Inventory Management
    8. Inventory Tracking & Reporting
    9. Adaptable Stock Levels
    10. Warehouse Management
    11. Logistics Execution and Goods Tracking

    Retailers and businesses worldwide regularly lose huge amounts of revenue due to overstocking, shortages, and product returns. The following are the key benefits or advantages of inventory planning, or implementing a plan to inventory (PTI) process framework in SAP:

    1. Inventory visibility and transparency: through warehouse visibility, staff accountability, and proper tracking of inventory locations and movement. This minimizes inventory shrinkage and ensures the maintenance of optimum inventory levels.
    2. Smoother cash flow: on account of a properly functioning data-driven inventory management system.
    3. Enhanced demand forecasting: for future inventory needs, through historical sales data usage.
    4. Cost savings: by minimizing overstocking, product shortages, and product returns. Carrying costs associated with excess inventory are also eliminated.
    5. Proper inventory control framework: to determine restocking systems, including re-order points and re-order quantities.
    6. Increased profits and enhanced customer satisfaction: through effective inventory planning. SAP’s integrated PTI system enables faster and more accurate order processing, leading to improved customer satisfaction and retention, and faster order fulfillment.
    7. Establishment of proper quality control checks: and quality benchmarks through proper inventory governance and control.
    8. Streamlined Procurement: allowing integration with procurement modules, facilitating streamlined purchase requisitions, purchase order processing, and vendor management. This helps in optimizing the procurement process and maintaining adequate inventory levels.
    9. Efficient Warehouse Management: The SAP WMS module helps to optimize warehouse processes, such as picking, packing, and shipping, leading to reduced lead times and improved order fulfillment.
    10. Centralized Data: Inventory data is stored and tracked in a centralized form, making it easier to access and analyze critical information, which facilitates better decision-making across the organization.
    11. Compliance and Traceability: The PTI system allows businesses to track the movement of goods throughout the supply chain, ensuring regulatory compliance and effective product traceability.
    12. Demand-Driven Replenishment: SAP’s advanced inventory planning tools enable demand-driven replenishment strategies, ensuring that inventory is replenished based on actual demand indicators and requirements rather than fixed or rigid schedules.

    Integration with Financials: The integration of inventory management with SAP financial modules ensures accurate cost accounting, financial reporting, and proper visibility into the financial impact of inventory management decisions.

    A good Plan to Inventory (PTI) system in SAP is based on key best practices that align together to ensure effective inventory management and planning. They can be touched upon as follows:

    1. Accurate demand forecasting and planning
    2. Material requirements planning (MRP)
    3. Safety stock planning
    4. Lead time estimation for goods procurement and production
    5. Inventory optimization techniques to determine optimum inventory levels
    6. Seamless integration with procurement and production
    7. Realtime inventory visibility and tracking
    8. Data accuracy and integration with other SAP modules, through real-time updates
    9. Continuous improvement & optimization of inventory metrics based on actual performance data

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