The Rounding Value vs the Lot Size in SAP SNP

by Shaun Snapp on November 4, 2011

What This Article Covers

  • What is the rounding value and lot size and how do they work to support supply chain planning?
  • Where are the rounding value and lot size found in SAP SNP?
  • A comparison of the different values set for each.

Background on Rounding Value and Lot Sizes

The way these two fields control the procurement is fairly simple but important to know. The Minimum Lot Size is used to essentially make SAP SNP wait until enough requirements have been gathered before an order is placed. This prevents material being shipped in uneconomic quantities. The Rounding Value essentially does the opposite, it round-up the order quantity. The Minimum Lot Size and Rounding Value can be of course be used in conjunction with one another.

  • The Minimum Lot Size is the minimum quantity which the product can be ordered in.
  • The Rounding Value the quantity multiple which the order is rounded to.

However, if the Rounding Value is higher than the Minimum Lot Size, the Rounding Value can act to increase the order quantity. It can increase it above the requirement. This is why the Rounding Value and Minimum Lot Size can be related under the right circumstances.

Where is Rounding Value and The Lot Size Set in SAP SNP?

Both of these values can be seen in the screen shot below which is Lot Size tab in the Product Location Master.

Comparative Value Analysis

A good exercise is to show different examples of Minimum Lot Sizes (MOS) with Rounding Values (RV) to demonstrate how SNP would respond.

  1. MOS = 0, RV = 15 : In this case as soon as the first requirement for 1 is generated that is not covered by planned Stock on Hand, an order for 15 would be generated. This would be the type of setting useful for high profit items.
  2. MOS = 5, RV = 15: Any MOS which is lower than the RV makes the MOS essentially unused. In order for the MOS to contribute to the ordering in any way, it must be higher than the RV. Therefore, this setting would behave the same as the example above.
  3. MOS = 5, RV = 3: In this case the purchase order minimum becomes 6, which is 2 x the RV of 3. In this scenario the MOS effectively becomes 6, and order quantities are possible in the sequence of 6, 9, 12, etc..
  4. MOS = 10, RV = 1: A RV of 1 would make no sense as the system is already required to order only in integer quantities. Therefore, for the RV to have any effect on ordering, it must always be above 1.
  5. MOS = 10, RV = 10: When the MOS is set equal to the RV, it means that the RV has no effect for the lowest order amount, but then controls the order increment after the MOS.

Where The Rounding Value Can be Set and How it Can be Recognized

There are several places to set the Rounding Value, as the quote below from SAP Help describes.

The following applies for optimization-based planning: If you do not enter a rounding value or enter the value 0, the system uses the rounding logic of the production process model (PPM).

If you specified a rounding profile in the location product master, the system uses this profile instead of the rounding value. The SNP optimizer, deployment and the TLB all ignore the rounding profile.

You have to choose the discrete optimization method in the SNP optimizer profile and enter a discretization horizon in the Integral PPMs field of the Discrete Constraint tab page for the SNP optimizer to be able to take the rounding value into account.

So that the SNP-TLB can use the rounding value, you must set the corresponding indicator in Customizing for SNP under Basic Settings -> Maintain Global SNP Settings. Otherwise the SNP-TLB uses only the rounding value from the transportation lane. - SAP Help

Conclusion

The Rounding Value is a consumption logic parameter. All consumption logic parameters should be set per product location. They can also be set by grouping of product locations by understanding the interaction with the other consumption parameters. This is best accomplished by displaying a spreadsheet or table of product locations and their consumption parameters to those with the business knowledge to intelligently provide feedback on what the parameters should be. After this initial meeting, the consumption parameter results should be analyzed to fully understand what the implications are for what the agreed upon settings are and socializing that analysis among a broad group of decision makers. This continues not to be done in companies. This is why they still have problems with ensuring that their consumption logic parameters are internally and externally consistent.

References

http://help.sap.com/saphelp_40b/helpdata/en/7d/c27259454011d182b40000e829fbfe/content.htm

Shaun Snapp

Shaun Snapp is a long time supply chain planning software consultant, author & as well as the Managing Editor at SCM Focus. He focuses on both SAP APO as well as best of breed applications for demand, supply and production planning.

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