How does SAP Planned Delivery Time help with procurement?

SAP Planned Delivery Time can help cut inventory carrying costs, writes expert Jawad Akhtar.

Materials procurement planners can tap into SAP Planned Delivery Time (PDT) functionality in SAP ERP to achieve better planning results and cut inventory carrying costs.

SAP PDT first compares the actual number of days it takes for a vendor to deliver a material -- a period known as "lead time" -- with the lead time that was initially entered into the system, based on the procurement planner's prior experience of working with that vendor, or on historical data. Positive lead time means that it takes vendor less time to deliver a material than the dates that the system suggests, whereas negative lead time deviation is just the opposite.

Wherever the system finds positive or negative lead times, PDT proposes to revise or update delivery lead times. Planners can update the information in one or all of the three areas in the system, namely, the Material Master, the Vendor Master and the Purchasing Info Record (Info Record, for short).

The delivery lead time maintained in the Material Master applies to the material procured from all vendors or procurement sources. This may not always be accurate, as actual delivery lead time from various vendors differs and is often subject to change. A vendor from Los Angeles may take longer to deliver a material than a vendor from Boston. Delivery lead times in the vendor master also do not always accurately reflect materials procurement realities, as the same vendor may take varied delivery times to deliver different materials. For example, a vendor supplying a photocopier may take longer to deliver it than to supply its toner cartridges, consumables or spare parts. When a company procures a specific material from a specific vendor, the system uses delivery lead time maintained in the Info Record to suggest the material's delivery date. If the company procures same material from a different vendor, then the system proposes a different delivery date.

When the procurement planner creates a purchase order from the vendor to procure a material, the system first looks for delivery lead time maintained in the Info Record. If it is unable to find requisite information there, it then looks into the Vendor Master for this information. If it is still unable to find this information in the Vendor Master, it finally looks for delivery lead time maintained in the Material Master. The system first looks for delivery time in the Info Record. If lead time is not found there, it looks in the Vendor Master, then in the Material Master. If no delivery lead time is maintained even in the Material Master, then the system proposes the delivery date of a material to be the same day on which the procurement planner creates the purchase order.

The green color in the screenshot below denotes positive lead time deviation. The red color reflects the opposite, which is negative lead time deviation. The next two columns show the date of the purchase order date and the date in which the goods were received. The difference between the two is the lead time.

Planned Delivery Time Evaluations
Figure 1. Planned Delivery Time Evaluations.

About the author:
Jawad Akhtar is the head of SAP delivery in AbacusConsulting, and a frequent writer and trainer on SAP logistics and supply chain management issues and modules. He is also the author of the SAP PRESS book Production Planning and Control with SAP ERP.

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