What is holding cost percentage in SAP MA-SMOPS - SmartOps?

SAP Term: holding cost percentage

• Component: MA-SMOPS

• Component Name: SmartOps

• Description: The annual cost of storing inventory at a given stocking point as a percent of unit cost. It is comprised of many components including: Cost of Capital, Handling Cost, Storage Cost, Scrap Cost, Obsolescence Cost, Other Costs. Each component is also represented as a percentage of unit cost per annum.

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• Key Concepts: 
  Holding cost percentage is a metric used in SAP's SmartOps module to measure the cost of holding inventory. It is calculated by dividing the total cost of holding inventory by the total value of the inventory. This metric helps to identify areas where inventory costs can be reduced and provides insight into how much money is being spent on inventory. 
  
  How to use it: 
  The holding cost percentage can be used to identify areas where inventory costs can be reduced. It can also be used to compare different suppliers and products to determine which ones are more cost-effective. Additionally, it can be used to track changes in inventory costs over time and identify trends in inventory management. 
  
  Tips & Tricks: 
  When calculating the holding cost percentage, it is important to consider all costs associated with holding inventory, including storage, insurance, taxes, and other overhead costs. Additionally, it is important to ensure that the value of the inventory is up-to-date and accurate. 
  
  Related Information: 
  The holding cost percentage is closely related to other metrics such as inventory turnover rate and days of supply. These metrics can be used together to gain a better understanding of how well an organization is managing its inventory. Additionally, they can be used to compare different suppliers and products to determine which ones are more cost-effective.