Item safety stock in AX 2012

We came across the safety stock setting again the other day. Safety stock is one of those terms that is bandied about in master planning – I’ve often said in workshops that whole books are written about calculating safety stock – what I’ve never said is: “but I’ve never read any of them”.

Incidentally while I was thinking about writing this I came across this post: Safety Stocks: Beware of Formulas – and it wasn’t just the title that I liked.

So anyway, at first sight it looks like safety stock maps to the Item coverage minimum stock level.

Product information management > Common > Released products > Plan > Coverage > Item coverage:

If you have Product dimensions (Like Configuration, Size Colour and Style) your item coverage is planned for each dimension and has to be setup for each combination. We’re normally planning by warehouse, but that’s optional, and is defined by the Storage dimension group:

So how does master planning react to the Item coverage minimum? Simplest to look at the net requirements from the Release products form:

Safety stock is treated as a demand. This item has no stock on hand in this warehouse so the system proposing a planned purchase order, pegged to the safety stock demand.

Incidentally if you open the Filter in grid option on the transactions overview you’ll see that the form is filtering out the Safety stock demand transaction:

But you can make it visible:

And as soon as you do, you’ll be wondering where the system got that ‘Requirement date’ from.

The answer’s on the General tab of the Item coverage record:

This is an important parameter and it’s a shame that it’s tucked away on the General tab.

Generally I only use the first two options: “Today’s date” and “Today’s date + procurement time”. The default is “Today’s date” which to my mind makes the Minimum stock setting act as a safety stock – as soon as the system predicts that your on-hand stock will fall below the minimum you need to replenish it immediately. However the “Today’s date + procurement time” setting makes the minimum stock setting act like a re-order point; when the stock falls below this setting you’ll place a new order, and your existing stock on hand will cover you for expected demand until that supply arrives. So simplistically I’ve come to think that for purchased items you’re better off with the “Today’s date + procurement time” fulfil minimum setting, and for production items “Today’s date” seems to be a better bet.

There’s another reason for not using a fulfil minimum of “Today’s date” on purchased items. Let’s set our example item up with a four week lead time:

Incidentally I’ve also set an order multiple – IMHO all purchased items should have a Purchase order multiple (the vendor’s pack size). OK, so not all, but all that aren’t purchased as “one-off’s”.

Now the planned purchase order’s got a Futures date message. By definition it’s immediately overdue. You’ve specified the fulfil minimum for today, but you have a purchase lead time. To my mind that’s just generating noise in the system.

With the fulfil minimum equal to “Today’s date + procurement time” you get:

The planned purchase order has got an order date of today – but at least the system’s not telling you that you are already late.

If you’ve got this far through the post you must be interested in setting re-order point and or safety stock, and you’ll no doubt have (or soon will ) come across the Dynamics AX master planning ‘safety stock’ journal. Again, my personal view, but I think the calculations in the safety stock journal are too simplistic and I’d like to play the ‘Beware of formulas’ card.