In SAP, inventory planning can be done in many ways. One such method is order point planning. In this method, SAP automatically generates an order depending upon how SAP is configured once inventory reaches a certain minimum level. From a pure costing perspective, order point is nothing but summation of safety stock and average demand for materials during the replacement period. In determining the minimum reporting level of inventory, care should be taken that at a minimum, the following parameters are taken into account.

- safety stock
- consumption to date
- future demand
- duration of replacement period

Any increase in consumption, delays in deliveries, supplier history, etc should also be taken into account in SAP order point planning. Once all data is entered in SAP, every dip in inventory to the minimum stock level is highlighted. This enables the stores / production personnel to quickly mae an order for the required material. In SAP, successful inventory planning depends upon how accurate the statistical and actual figures are. The more accurate the input data, the more accurate the order point planning.

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