Chapter 01Materials ManagementArticle 1.1
Excess Prevention Before Purchase
A purchase decision should consider available stock, open supply, reservations and the maximum stock level, not PR quantity alone.
- ProblemA requisition looks like proof that stock must be bought.
- SignalsBalance, reservations, open PR and PO/CON, Min-Max, other locations.
- DecisionUse, transfer, reduce, clarify, or buy what remains.
- ControlA recorded reason that another person can follow.
01Business problem
A purchase requisition arrives with a material, a quantity and a date. It looks like a purchasing instruction. In practice it is a demand signal: evidence that someone expects to need the material, not proof that new stock has to be bought.
The difference matters because the same material can already be covered several times over: on the shelf, on order through an open PO or call-off (CON), reserved for a job that has since been cancelled, or free at another storage location. When each signal is processed on its own, the plant buys material it already has and then pays to carry the excess.
The opposite error is just as real. A genuine requirement for a critical spare that is reduced on the strength of one calculation can turn a short repair into extended downtime. Excess prevention is not about buying less. It is about buying only what existing supply does not already cover.
02Core concept
A demand signal is not a purchase requirement.
A purchase requirement is what remains after the demand has been compared with everything that already covers it:
- stock on hand, minus what is already promised to other work;
- supply already on its way: open PR, PO and call-offs;
- the replenishment band the material is managed to (Min-Max);
- free stock elsewhere that could be transferred under control.
Potential excess is the quantity that would sit above the agreed maximum once current balance, open supply and reservations are counted. It is a projection made before the money is committed, which is the only point at which excess can be prevented rather than managed afterwards.
03Decision rule
Buy only the quantity that existing stock, open supply and controlled transfers cannot cover, and only after criticality and known future demand have been checked.
The usual order of consideration is: use existing stock, transfer, reduce the excess, clarify, and only then purchase. It is an order of questions, not a fixed rule. A critical spare with a long lead time, or a confirmed shutdown scope, can justify keeping a quantity that the arithmetic calls excess, as long as the reason is recorded.
04Signals and inputs
- Warehouse balance
- Unrestricted stock at the requesting location.
- Reservations
- Quantity already committed to other work orders.
- Open PR
- Requisitions raised but not yet ordered.
- Open PO / CON
- Supply already ordered, including call-offs under agreements.
- Min-Max
- The replenishment band the material is managed to.
- Other storage locations
- Free stock that could be transferred instead of bought.
- Transferable excess
- Surplus elsewhere that is genuinely free and not already counted.
- Criticality
- The consequence for the plant if the material is not available.
- Future maintenance demand
- Planned work, shutdown scope or known campaigns.
- Lead time
- How long replacement takes if the quantity is reduced now.
- Consumption history
- Whether the demand pattern matches actual usage.
05Model
- 01Use existing stockFree balance at the requesting location covers the need.
- 02TransferFree stock at another location can be moved under control.
- 03Reduce excessOpen supply would take stock above the maximum: reduce the quantity.
- 04ClarifyQuantity, date, reservation or work order does not hold together.
- 05PurchaseThe remaining need is real, confirmed and not covered.
The bracket is the projected stock: what the location will hold once all open supply arrives and all reservations are issued. Anything above the maximum is the suggested decrease, the quantity the system signal says is not needed.
A result of zero or below means the open supply does not take stock above the maximum. It does not, by itself, prove that a new purchase is needed either.
06Worked example
Illustrative example
Open supply above the maximum
Warehouse balance 4 EA, no open PR, 17 EA on open PO/CON, 7 EA reserved, maximum stock 10 EA. Projected stock is 14 EA, so the system signal is a suggested decrease of 4 EA.
4 EA is a system signal, not a decision to cancel 4 EA. Before the open supply is changed, the review asks: is the item critical, is there planned work that the reservations do not show yet, how long would replacement take, and is the surplus better transferred to another location that needs it?
07Professional judgement
The arithmetic finds the question. It does not answer it.
SAP shows balances, reservations and open documents, but it does not know that a reservation belongs to a cancelled job, that a call-off is already late, or that a low-consumption item protects equipment with no standby. Those facts sit with planners, engineers and the history of the item.
Judgement begins where the signal meets context: criticality, known work scope, lead time, transfer opportunity and the quality of the data itself. A reduction of a critical, long-lead spare should never rest on a single calculation. Neither should a purchase.
08Failure modes
PR quantity treated as unquestionable demand
Stock is bought that the plant already has.
ControlCheck balance, reservations and open supply before approval.
Open supply ignored
Ordered quantity arrives on top of a new purchase.
ControlCount open PO and call-offs as supply.
Other storage locations ignored
One location buys while another holds surplus.
ControlSearch free stock across locations before buying.
Critical material reduced on one signal
The spare is not there when the critical equipment fails.
ControlReview criticality and lead time before any reduction.
Transferable quantity counted twice
The same surplus is promised to two requirements.
ControlReserve or move the transfer quantity before relying on it.
Stale SAP balances
Decisions rest on stock that is not physically there.
ControlConfirm doubtful balances and reservations with the warehouse.
Upcoming maintenance demand ignored
Stock is reduced just before a shutdown needs it.
ControlCheck planned work and shutdown scope with maintenance planning.
09Field note
10Practical checklist
- The work order and need date behind the requirement are confirmed.
- Free balance is checked: stock on hand minus reservations.
- Open PR, PO and call-offs for the same material are counted.
- Projected stock is compared with the maximum.
- Free stock at other locations is checked before buying.
- Criticality, lead time and planned work are reviewed before any reduction.
- The decision and its reason are recorded where the next person will find them.
11Try the decision logic
Decision Lab
Excess prevention
The calculation shows stock above the maximum. What would you check before changing the open supply?
Try the decision logic. There is no score: choose a decision and compare it with a professional review.
01Situation
Illustrative scenario
A maintenance spare is managed to a maximum stock level. Part of the need is already on the shelf, part is reserved for work orders and part is still open on a purchase order and call-off. The calculator starts with the figures from the worked example. Change them, set the context, then choose a decision and compare it with the professional review.
02Signals
Starts with the example from this article. Change any value to see the decision signal.
(4 + 0 + 17 − 7) − 10 = 4 EA
- Projected stock
- 14 EA
- Maximum stock
- 10 EA
- Suggested decrease
- 4 EA
Potential excess of 4 EA above the maximum. Review the open PR and PO/CON before any new purchase.
- CriticalityCritical: no standby, failure stops production · Not critical · Not known
- Future maintenance demandNothing planned beyond current reservations · Planned work or a shutdown will need it · Not checked
- Replacement lead timeShort: weeks · Long: months · Not known
- Need at another locationAnother location has a confirmed need · No other need · Not checked
03Decision
- Keep the full open supply
- Reduce the open supply by the suggested decrease
- Transfer stock between locations instead
- Hold and clarify before changing anything
- Escalate to engineering or management
04Professional review
The interactive review needs JavaScript. Without it, the complete logic is in the rules below.
How the review is reached
The rules are checked from the top; the first one that matches the signals gives the professional position. Values in square brackets are filled in with the calculated numbers.
IfA required number is empty
Professional positionHold and clarify before changing anything
Any other decision: insufficient information
One or more quantities are empty. The suggested decrease cannot be calculated, so no quantity should change yet.
IfSuggested decrease < 0 · Other PM available quantity > 0
Professional positionTransfer stock between locations instead
ConditionalKeep the full open supply
Any other decision: not supported by the signals
Projected stock is below the maximum, so there is no excess to reduce. Free stock at another location should be used before any further purchase.
IfSuggested decrease ≤ 0
Professional positionKeep the full open supply
ConditionalHold and clarify before changing anything
Any other decision: not supported by the signals
Projected stock does not exceed the maximum. The open supply stays within the band the material is managed to, and the signal does not support a reduction.
IfCriticality: Not known
Professional positionHold and clarify before changing anything
ConditionalEscalate to engineering or management
Any other decision: insufficient information
The calculation shows [Suggested decrease] EA above the maximum, but the criticality of the item is not known. Reducing supply for an item that may protect critical equipment cannot rest on arithmetic alone.
IfFuture maintenance demand: Not checked
Professional positionHold and clarify before changing anything
ConditionalEscalate to engineering or management
Any other decision: insufficient information
The calculation shows [Suggested decrease] EA above the maximum, but future maintenance demand has not been checked. Planned work that is not yet reserved could need the quantity the formula treats as excess.
IfFuture maintenance demand: Planned work or a shutdown will need it
Professional positionKeep the full open supply
ConditionalHold and clarify before changing anything
Any other decision: not supported by the signals
Planned work will use the quantity the calculation shows as excess. The signal reflects demand that is not yet reserved in the system, not real excess.
IfNeed at another location: Another location has a confirmed need
Professional positionTransfer stock between locations instead
ConditionalReduce the open supply by the suggested decrease
Any other decision: not supported by the signals
There are [Suggested decrease] EA of potential excess and another location has a confirmed need for the item. Moving the surplus under control uses supply that has already been ordered, instead of reducing it here and buying it there.
IfCriticality: Critical: no standby, failure stops production · Replacement lead time: Not known
Professional positionHold and clarify before changing anything
ConditionalEscalate to engineering or management
Any other decision: insufficient information
The item is critical and the replacement lead time is not known. Without it, the risk of reducing [Suggested decrease] EA cannot be judged.
IfCriticality: Critical: no standby, failure stops production · Replacement lead time: Long: months
Professional positionEscalate to engineering or management
ConditionalKeep the full open supply, Hold and clarify before changing anything
Any other decision: escalation required
The item is critical and replacement takes months. Reducing [Suggested decrease] EA lowers stock value but could leave critical equipment waiting for a long-lead spare. That trade-off needs an engineering or management decision, not a materials adjustment.
IfNeed at another location: Not checked
Professional positionHold and clarify before changing anything
ConditionalReduce the open supply by the suggested decrease
Any other decision: insufficient information
The calculation shows [Suggested decrease] EA above the maximum and the item context allows a reduction, but it has not been checked whether another location needs the item. Reducing the order here while the same item is bought for another location cancels one purchase only to place another.
IfCriticality: Critical: no standby, failure stops production
Professional positionReduce the open supply by the suggested decrease
ConditionalHold and clarify before changing anything, Escalate to engineering or management
Any other decision: not supported by the signals
The item is critical, but replacement is short and no further demand is planned. Reducing [Suggested decrease] EA brings projected stock back to the maximum, and the maximum still protects the equipment.
IfReplacement lead time: Not known
Professional positionReduce the open supply by the suggested decrease
ConditionalHold and clarify before changing anything
Any other decision: not supported by the signals
The item is not critical and no further demand is planned, so an unknown lead time carries limited risk here. The excess of [Suggested decrease] EA can be reduced.
IfAny other combination
Professional positionReduce the open supply by the suggested decrease
ConditionalHold and clarify before changing anything, Escalate to engineering or management
Any other decision: not supported by the signals
The excess of [Suggested decrease] EA is confirmed by the context: the item is not critical, no further work needs it and no other location is waiting for it. Reducing the open supply prevents stock above the maximum before it is paid for.
Illustrative data, not a company record. Changing a purchase order is done by procurement (C&P); this lab is about the materials decision that comes before it.
12Connected intelligence
13Evidence and basis
The formula and the worked example are the ones used in the case Demand Review and Excess Prevention; the figures are illustrative, not a record of a specific company transaction. Basis: requisition and stock review, Min-Max setting and replenishment governance in the CV roles Spare Parts Engineer, Spare Parts Superintendent and Field Materials Superintendent.
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