What is The Target Stocking Level?


What is a Target Stocking Level?

The first time we heard of Target Stocking Level was on an MCA project. This is the actual output of the Strategy module of MCA SPO. We have listed a short definition from MCA’s SPO Glossary.

“TSL is the quantity available to meet demand within the lead time and thus becomes the basis for computing the customer service levels. The TSL for each Location part is determined on the impact of what the TSL will have on the service level.” – MCA Glossary

TSL in Common Usage

A search through the web shows that this term is not very common. However, it is not hard to find it listed in books through Google Book Search.


We found a formula for it in the book Best Practices in Inventory Management by Tony Wild which we have listed below.

TSL2
TSL in SAP

We had never run into the concept of TSLs in SAP until we did a search for it in SAP Help. We found it in the following area:

  • SAP ERP SOP
  • SAP ERP – The concept exists as a “range” within purchasing
  • SAP SCM Forecasting and Replenishment
  • SAP SCM SNP

TSL in Dead Modules or Functionality

Interestingly, of the four areas we found it, two of the areas – S&OP and SAP Forecasting and Replenishment are “dead” areas within SAP, in that they are only extremely rarely implemented in companies (see our next post for more details). The range concept of TSL in purchasing is infrequently implemented and instead the vast majority of clients we would guess use the requirements plus lot size to drive replenishment.

TSL in SNC

The one area where TSL is both used and used in a module that is actually alive is in Supply Network Collaboration or SNC. Interestingly, it is not called a TSL but instead is called minimum and maximum stock levels. We quote from the book Supplier Collaboration with SAP SNC..

“The projected stock and actual stock on hand are compared with the minimum and maximum stock levels agreed upon by customer and supplier for a location product. If the threshold values are not reached, or are exceeded, alerts are generated.”Mohamed Hamedy and Antia Leitz

SNC3
SNC is not a planning engine like SAP SNP or MCA SPO. Instead it is a collaborative software add-on to SAP SCM that communicates, in this case, inventory information between SAP SNC (in most cases) and suppliers or customers. Most likely SNP (Supply Network Planning) is producing the TSL range, while SNC is gathering actual inventory levels, and then comparing the two to send our requests for bringing in more inventory on specific dates.

Conclusion

Target stocking level is not yet a common term in industry, but does have a number books which both cover it and work with the concept. The concept is a powerful one in that is manifests all of the complex inputs of stock determination into a single number, or a number range. This number(s) can be then compared to actual stock values, in order to develop stock transfers, unserviceable item repairs (for service parts) or can be communicated to suppliers or customers using a collaboration tool like SAP SNC.

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5 thoughts on “What is The Target Stocking Level?

  1. Pingback: Target Stocking Level « SPPLAN – Service Parts Planning — ERPSCOUT

  2. Pingback: Supply Network Inventory in SNC « SAP SCM Planning

  3. Pingback: Supply Network Inventory in SNC « SAP SCM Planning

  4. Pingback: Target Stocking Level « SPPLAN – Service Parts Planning

  5. Pingback: Why Safety Stock Is Not The Focus of Inventory Optimization

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