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SAP supply chain Planning in wholesale
/distribution industry
Jalil mousavi
SAP Logistic &MM Consultant
https://ir.linkedi...
© 2011 SAP AG. All rights reserved. 2
Agenda:
Wholesale & dist.
Aggregate planning
SOP
RRP
Sale forecast
Demand management...
© 2011 SAP AG. All rights reserved. 3
Wholesale Distribution are those companies acting as intermediaries between Manufact...
© 2011 SAP AG. All rights reserved. 4
Wholesale/distribution industry types:
Large ASSORTMENT
Distributors sell a Varity (...
© 2011 SAP AG. All rights reserved. 5
SAP(ERP,SCM,…)
High Performance Reporting and analytic
platform
High Performance(Dem...
© 2011 SAP AG. All rights reserved. 6
Sap best practice for FMCG & WH & Dis
Demand planning
MRP
Strategic sourcing
Purchas...
© 2011 SAP AG. All rights reserved. 7
supply SaleDistributionproduction
Long
Range
MediumrangeShortrange
 Strategic plann...
© 2011 SAP AG. All rights reserved. 8
Figure 6.1
Demand
Management
Material
Requirement
Planning(MRP)
Distribution
Require...
© 2011 SAP AG. All rights reserved. 9
sop
Demand
management
Sale
forecasting Capacity
leveling
Master
production
schedule
...
© 2011 SAP AG. All rights reserved. 10
Aggregate Production Plan
Hierarchical planning - process that translates annual bu...
© 2011 SAP AG. All rights reserved. 11
Aggregate Production Plan
Three basic production strategies :
1. Chase Strategy - A...
© 2011 SAP AG. All rights reserved. 12
Sales and Operations Planning
Sales and operations planning (SOP):
Input: sales for...
© 2011 SAP AG. All rights reserved. 13
Sales and Operations Planning
In SAP ERP, sales forecast can be made using:
• Histo...
© 2011 SAP AG. All rights reserved. 14
14-14
Sales and Operations Planning Process
Sales&
operations
planning
Capacity
con...
© 2011 SAP AG. All rights reserved. 15
Resource Requirements Planning (RRP)
Rough-cut planning profiles are used in resour...
© 2011 SAP AG. All rights reserved. 16
Demand Management
The function of Demand Management is to determine requirement qua...
© 2011 SAP AG. All rights reserved. 17
DM & SOP
You can pass on data planned in Flexible Planning or Standard SOP to Deman...
© 2011 SAP AG. All rights reserved. 18
Demand Management & MPS
Links the sales and operations planning process with detail...
© 2011 SAP AG. All rights reserved. 1919
Improvements with SAP FSCM:
 Improve efficiency in credit & collection
processes...
© 2011 SAP AG. All rights reserved. 20
For the optimization of receivables most benefits can be reached by
implementing cr...
© 2011 SAP AG. All rights reserved. 21
Sales Forecasting
With the forecast, you can estimate the future progression of val...
© 2011 SAP AG. All rights reserved. 22
Sales Forecasting (cont’d.)
 SAP’s ERP system takes an integrated approach
 Whene...
© 2011 SAP AG. All rights reserved. 23
Figure 6.1
Demand
Management
SOP
Resource
Requirement
Planning(RRP)
Long Range (Mor...
© 2011 SAP AG. All rights reserved. 24
Evolution of DC-Inventory Management
 Traditional Replenishment Inventory:
 Lot S...
© 2011 SAP AG. All rights reserved. 25
Evolution cont.
MIT Center for Transportation & Logistics - ESD.260 18 © Chris Capl...
© 2011 SAP AG. All rights reserved. 26
DRP?
DRP provides the basis for integrating supply chain inventory information and ...
© 2011 SAP AG. All rights reserved. 27
DRP Role
DRP coordinates material flows through the physical distribution system
Ef...
© 2011 SAP AG. All rights reserved. 28
DRP in the Supply Chain
DRP links firms in the supply chain
Planning records carry ...
© 2011 SAP AG. All rights reserved. 29
Distribution requirements planning and the logistic
system
Vehicle loading
Vehicle ...
© 2011 SAP AG. All rights reserved. 30
A Multi-Echelon Inventory System
MIT Center for Transportation & Logistics - ESD.26...
© 2011 SAP AG. All rights reserved. 31
DRP & Demand Management
Demand management is the connection between mfg. and the ma...
© 2011 SAP AG. All rights reserved. 32
DRP and MPS
DRP greatest payoff is from integrating records and information.
Crossi...
© 2011 SAP AG. All rights reserved. 33
MRP / DRP Integration
Purchase Orders
MRP
MPS
DRP
Product
CDC
RDC
Retail Retail Ret...
© 2011 SAP AG. All rights reserved. 34
34
DRP Benefits
 Helps improve customer service
 Provides a better and faster und...
© 2011 SAP AG. All rights reserved. 35
35
Master Production Scheduling
Controls the timing and quantity of production for ...
© 2011 SAP AG. All rights reserved. 36
36
Master Scheduling Process
Master
Scheduling
Beginning inventory
Forecast
Committ...
© 2011 SAP AG. All rights reserved. 37
37
A Final View of Master Scheduling
SOP
MPS
Marketing Operations
Rough-Cut Capacit...
© 2011 SAP AG. All rights reserved. 38
Rough Cut Capacity Planning (RCCP)
Compares the master production scheduling resour...
© 2011 SAP AG. All rights reserved. 39
Demand
Management
Distribution
Requirement
Planning(DRP)Master
Production
Schedulin...
© 2011 SAP AG. All rights reserved. 40
Material Requirements Planning (MRP)
Uses the master production schedule, open
orde...
© 2011 SAP AG. All rights reserved. 41
MRP inputs and outputs
© 2011 SAP AG. All rights reserved. 42
MRP COMPONENT
Component Description
Bills of material •The components and relations...
© 2011 SAP AG. All rights reserved. 43
Lot Sizing in MRP Systems
• Lot-for-lot (L4L) ordering policy
• Minimum order quant...
© 2011 SAP AG. All rights reserved. 44
Capacity Requirements Planning (CRP)
Compares the material requirements plans to th...
© 2011 SAP AG. All rights reserved. 45
PP: detailed scheduling
Detailed plan of what is to be produced, considering machin...
© 2011 SAP AG. All rights reserved. 46
Production Activity Control
Responsible for executing the:
• Master Production Sche...
© 2011 SAP AG. All rights reserved. 47
PAC Input / Output Control
Input Rate
Control
Output Rate
Control
Queue
(Load, WIP)...
© 2011 SAP AG. All rights reserved. 48
© SAP 2008 / Page 48
Thank you!
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Sap planning

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Hierarchical planning - process that translates annual business & marketing plans & demand forecasts into a production plan for a product family (products that share similar characteristics) in a plant or facility leading to the Aggregate Production Plan (APP)
Planning horizon of APP is at least one year & is usually rolled forward by three months every quarter
Includes costs relevant to the aggregate planning decision include inventory, setup, machine operation, hiring, firing, training, & overtime costs

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Sap planning

  1. 1. SAP supply chain Planning in wholesale /distribution industry Jalil mousavi SAP Logistic &MM Consultant https://ir.linkedin.com/in/jalil-mousavi-b1564756
  2. 2. © 2011 SAP AG. All rights reserved. 2 Agenda: Wholesale & dist. Aggregate planning SOP RRP Sale forecast Demand management DRP MRP for logistics MD MPS RCCP MRP CRP Detailed scheduling PAC SAP Planning and best practice for FMCG
  3. 3. © 2011 SAP AG. All rights reserved. 3 Wholesale Distribution are those companies acting as intermediaries between Manufacturers and consumers. The wholesale distribution industry includes companies that sell products to retailers, merchants, contractors, and /or industrial,institutional,and commercial users ,however ,do not sell in significant amounts to ultimate household consumers. Specific sub industries represented in this segment are divided into durable goods (60%) and nondurable goods (40%) distribution. Wholesale Distribution
  4. 4. © 2011 SAP AG. All rights reserved. 4 Wholesale/distribution industry types: Large ASSORTMENT Distributors sell a Varity (broad-line) of products , allowing customers minimize the number of faces-to-customer , transactions , and deliveries . Small Quantities Distributors sell a small number of units very frequently . Customers want to hold little inventory and purchase only in useable quantities. Short lead times Distributors sell products that need to found and obtained quickly with low customers sourcing costs. The times between ordering and delivering can be measured in hours Value added services Distributors provide special unique services that include , sorting , packaging , labeling , kitting , assembly , installation service , etc
  5. 5. © 2011 SAP AG. All rights reserved. 5 SAP(ERP,SCM,…) High Performance Reporting and analytic platform High Performance(Demand Planning , Distribution Planning , etc) Sale and operation planning Financial Planning Strategic Operational Tactical Execution What? •Supply policies (service levels) •Network design •Strategic sourcing Daily planning Now–2 weeks out Quarterly or yearly planning 1–10 years out Weekly planning Up to 3 months out Monthly or quarterly planning 3 months–1 year out Planning Timeframe Objectives When? Where? •Schedule, monitor, and adjust plan •Order and inventory tracking Execute •Order fulfillment •Material transport Strategic planning Supply chain integrity and strategy levels with sap How?
  6. 6. © 2011 SAP AG. All rights reserved. 6 Sap best practice for FMCG & WH & Dis Demand planning MRP Strategic sourcing Purchase order mgt Investment buying Supplier rebates Cross docking Master data management Invoice verification Commissions Inventory management Profitability analysis Credit management Free goods Mass price maintenance Price protection DRP & Deployment Inbound logistics Outbound logistics internal processing
  7. 7. © 2011 SAP AG. All rights reserved. 7 supply SaleDistributionproduction Long Range MediumrangeShortrange  Strategic planning  Sale forecasting  Material Requirement Planning  Contract management  MPS  CRP  RCCP DRP Demand Planning Available To Promise  Inventory Replenishm ent Transportation management  Safety stock  Production planning  Production activity control Planned order SCOR & SAP planning  Aggregate planning  SOP
  8. 8. © 2011 SAP AG. All rights reserved. 8 Figure 6.1 Demand Management Material Requirement Planning(MRP) Distribution Requirement Planning(DRP)Master Production Scheduling(MPS ) SOP Capacity Requirement Planning(CRP) Rough-Cut Capacity Planning(RCC P) Resource Requirement Planning(RRP) Purchase & planning control BOM Long Range (More than 1 year) Medium range(6 to 18 month) Short range(Days/Week) Production activity control Capacity level Material planPlanning horizon SAP Planning level in FMCG & WH & Dis
  9. 9. © 2011 SAP AG. All rights reserved. 9 sop Demand management Sale forecasting Capacity leveling Master production schedule RCCP Planned Production order Planned PR. Capacity Req. Planning Detailed Scheduling Production activity control Distributio n Req. Planning Capacity req. planning Purchasing MRP WH/SL. SDMRP or MD SAP Planning Updated
  10. 10. © 2011 SAP AG. All rights reserved. 10 Aggregate Production Plan Hierarchical planning - process that translates annual business & marketing plans & demand forecasts into a production plan for a product family (products that share similar characteristics) in a plant or facility leading to the Aggregate Production Plan (APP) Planning horizon of APP is at least one year & is usually rolled forward by three months every quarter Includes costs relevant to the aggregate planning decision include inventory, setup, machine operation, hiring, firing, training, & overtime costs
  11. 11. © 2011 SAP AG. All rights reserved. 11 Aggregate Production Plan Three basic production strategies : 1. Chase Strategy - Adjusts capacity to match demand. Firm hires & lays off workers to match demand. Finished goods inventory remains constant. Works well for make-to-order firms 2. Level Strategy - Relies on a constant output rate while varying inventory & backlog according to fluctuating demand. Firm relies on fluctuating finished goods & backlogs to meet demand. Works well for make-to-stock firms 3. Mixed Production Strategy - Maintains stable core workforce while using other short-term means, such as overtime, subcontracting & part time helpers to manage short-term demand
  12. 12. © 2011 SAP AG. All rights reserved. 12 Sales and Operations Planning Sales and operations planning (SOP): Input: sales forecast provided by Marketing Output: production plan designed to balance market demand with production capacity Production plan is the input to the next step, demand management Disaggregating the sales and operations plan Companies typically develop sales and operations plans for product groups SAP ERP system allows any number of products to be assigned to a product group Sales and operation plan disaggregated Production plan quantities specified for the group are transferred to the individual products that make up the group Sales & Operations Planning (SOP) is a universal planning and forecasting tool that you can use to plan any area of logistics (for example, sales and distribution, production, purchasing)
  13. 13. © 2011 SAP AG. All rights reserved. 13 Sales and Operations Planning In SAP ERP, sales forecast can be made using: • Historical sales data from the Sales and Distribution (SD) module • Input from plans developed in Controlling (CO) module • CO module Profit goals for company can be set Sales levels needed to meet the profit goals can be estimated
  14. 14. © 2011 SAP AG. All rights reserved. 14 14-14 Sales and Operations Planning Process Sales& operations planning Capacity constraints Demand forecasts Company policies Strategic objectives Financial /CO MPS Backlogs , backorder Workforce and inventory level Customer service level Demand management Sales per month by product family Sales Plan Operation plan Monthly update
  15. 15. © 2011 SAP AG. All rights reserved. 15 Resource Requirements Planning (RRP) Rough-cut planning profiles are used in resource leveling. In a rough-cut plannin profile, you plan the requirements of one or more of the following resources: • Work center capacities • Materials (typically, raw materials) • Production resources/tools • Costs Capacity leveling is an important tool for creating realistic plans. It helps you ensure that your targets are within capacity constraints. The following topic describes how to use capacity leveling from the point of view of SOP. SOP supports planning at any level of your organizational hierarchy from high- level planning across national boundaries to the detailed planning of finished products.
  16. 16. © 2011 SAP AG. All rights reserved. 16 Demand Management The function of Demand Management is to determine requirement quantities and delivery dates for finished products assemblies. Customer requirements are created in sales order management. To create a demand program, Demand Management uses planned independent requirements and customer requirements. To create the demand program, you must define the planning strategy for a product. Planning strategies represent the methods of production for planning and manufacturing or procuring a product. Using these strategies, you can decide if production is triggered by sales orders (make-to-order production), or if it is not triggered by sales orders (make-to- stock production).You can have sales orders and stock orders in the demand program.
  17. 17. © 2011 SAP AG. All rights reserved. 17 DM & SOP You can pass on data planned in Flexible Planning or Standard SOP to Demand Management. Demand Management determines the requirement dates and requirement quantities for important assemblies and specifies the strategies for planning and producing/procuring finished products. The result of Demand Management is the demand program. The demand program differentiates planned independent requirements and customer independent requirements.
  18. 18. © 2011 SAP AG. All rights reserved. 18 Demand Management & MPS Links the sales and operations planning process with detailed scheduling and materials requirements planning processes Output: master production schedule (MPS) Production plan for all finished goods
  19. 19. © 2011 SAP AG. All rights reserved. 1919 Improvements with SAP FSCM:  Improve efficiency in credit & collection processes  Ensure consistent company-wide credit policy and process  Manage proactive credit risk management  Forecast cash levels more accurately  Increase transparency in dispute handling and accounting  Gain insights to avoid future credit & collection issues & disputes  Optimize the financial supply chain not only within the company but also with external business partners Credit Management Biller Direct Dispute Management Collections Management Cash & Liquidity Management In-House Cash Bank Communication Management Treasury & Risk Management SAP FINANCIAL SUPPLY CHAIN MANAGEMENT Treasury Mgt. of receivables FSCM
  20. 20. © 2011 SAP AG. All rights reserved. 20 For the optimization of receivables most benefits can be reached by implementing credit, collections and dispute management. 20 Cross department dispute resolution and integration of workflows Automated correspondence activities and internal escalation Support of various communication channels Provision of daily collection work lists Functions to process and view open receivables Broad support of the collections procedure Integration of dispute & credit management Control and monitor customers credit limit and exposure Uniform credit rules and automatic credit limit adjustments Use of external information about credit ratings Source: SAP The functionalities …… and benefits Dispute Management Collections Management Credit Management All related information is within the system Resolve issues before invoice due date 35% efficiency increase in dispute management Identify automatically customers to be called Efficient and comprehensive information provided 40% efficiency increase in collections management Focus sales on “good” customers Comprehensive and up-to-date information for credit checks Apply company-wide credit policy automatically Overview of the credit, collections and dispute management
  21. 21. © 2011 SAP AG. All rights reserved. 21 Sales Forecasting With the forecast, you can estimate the future progression of values in a time series on the basis of past history. You do this either online or in the background. In standard SOP, you can forecast the sales quantities of a product group or material. The system bases the forecast on the historical consumption of materials. It then aggregates these results to the product group level. Consumption data includes every kind of goods issue, even goods that have been written off as scrap.
  22. 22. © 2011 SAP AG. All rights reserved. 22 Sales Forecasting (cont’d.)  SAP’s ERP system takes an integrated approach  Whenever a sale is recorded in Sales and Distribution (SD) module, quantity sold is recorded as a consumption value for that material  Simple forecasting technique  Use a prior period’s sales and then adjust those figures for current conditions
  23. 23. © 2011 SAP AG. All rights reserved. 23 Figure 6.1 Demand Management SOP Resource Requirement Planning(RRP) Long Range (More than 1 year) Capacity level Material planPlanning horizon Level 0_planning
  24. 24. © 2011 SAP AG. All rights reserved. 24 Evolution of DC-Inventory Management  Traditional Replenishment Inventory:  Lot Size/ Order Point Logic  Single item focus  Emphasis on cost optimization  Long run, steady state approach  The MRP / DRP Approach:  Scheduling emphasis  Focus on quantities and times, not cost  Multiple, inter-related items and locations  Simple heuristic rules MIT Center for Transportation & Logistics - ESD.260 17 © Chris Caplice, MIT
  25. 25. © 2011 SAP AG. All rights reserved. 25 Evolution cont. MIT Center for Transportation & Logistics - ESD.260 18 © Chris Caplice, MIT MRP / DRP have limited ability to deal with:  Capacity restrictions in production and distribution “set-up” costs fixed and variable shipping costs alternative sources of supply network transshipment alternatives expediting opportunities Next Steps in MRP/DRP Establish a time-phased MRP/MPS/DRP network Apply optimization tools to the network Consider cost trade-offs across items, locations, and time periods Deal with shortcomings listed above
  26. 26. © 2011 SAP AG. All rights reserved. 26 DRP? DRP provides the basis for integrating supply chain inventory information and physical distribution activities with the Manufacturing Planning and Control system. Managing the flow of materials between firms, warehouses, distribution centers. DRP helps manage these material flows. Just like MRP did in Manufacturing. Links firms in the supply chain by providing planning records that carry demand information from receiving points to supply points and vice versa.
  27. 27. © 2011 SAP AG. All rights reserved. 27 DRP Role DRP coordinates material flows through the physical distribution system Effectively managing the flow of goods and inventories between the firm and the market Planned timings and quantities for replenishing inventories throughout the physical distribution system Provides information to the master scheduler in a format consistent with MRP records
  28. 28. © 2011 SAP AG. All rights reserved. 28 DRP in the Supply Chain DRP links firms in the supply chain Planning records carry demand information from receiving points to supply points and returns supply information to the receiving points DRP integrates key linkages in the supply network DRP can be linked to the MPC systems of the manufacturer, customers, and suppliers Spans the boundary from internal to external MPC
  29. 29. © 2011 SAP AG. All rights reserved. 29 Distribution requirements planning and the logistic system Vehicle loading Vehicle capacity planning Warehouse receipt planning Vehicle dispatching Distribution requirement planning Master Production Scheduling Demand Management
  30. 30. © 2011 SAP AG. All rights reserved. 30 A Multi-Echelon Inventory System MIT Center for Transportation & Logistics - ESD.260 3 © Chris Caplice, MIT plant RDC1 RDC2 LDC3 LDC4LDC1 LDC2 R7 R8R6 R5R4R3R2R1 Higher than expected demand Lower than expected demand SHORTAGES EXCESS
  31. 31. © 2011 SAP AG. All rights reserved. 31 DRP & Demand Management Demand management is the connection between mfg. and the marketplace. Plans derived from the DRP information and shipping requirements are the basis for managing the logistics system. Continually adjusts changes in the demand, sending inventories from central warehouse to distribution centers where they are needed. DRP is connected to the logistics system By helping determine vehicle capacity planning. Helping loading. Developing vehicle dispatching. Determining warehouse capacity. Provides the data to accurately say when availability will be improved and delivery can be expected.
  32. 32. © 2011 SAP AG. All rights reserved. 32 DRP and MPS DRP greatest payoff is from integrating records and information. Crossing the area of inter firm MPC systems means negotiating with supply chain partners for sharing costs and benefits. DRP permits evaluation of current conditions to determine if mfg. priorities need to revised. Provides the master scheduler better info to match mfg. output with shipment needs.
  33. 33. © 2011 SAP AG. All rights reserved. 33 MRP / DRP Integration Purchase Orders MRP MPS DRP Product CDC RDC Retail Retail Retail Retail Sales/Marketing Plan MIT Center for Transportation & Logistics - ESD.260 16 © Chris Caplice, MIT
  34. 34. © 2011 SAP AG. All rights reserved. 34 34 DRP Benefits  Helps improve customer service  Provides a better and faster understanding of the impact of shortages and/or promotions  Helps reduce costs  Inventory  Freight  Production  Provides integration between the stages in the supply chain
  35. 35. © 2011 SAP AG. All rights reserved. 35 35 Master Production Scheduling Controls the timing and quantity of production for products or product families Primary interface point for actual customer orders Coordinates forecasted demand and actual orders with production activity Serves as tool for agreement between marketing and operations (but at a different level than SOP) More detailed than SOP  weekly versus monthly  specific products versus “average”  must satisfy the needs of marketing  must be feasible for operations
  36. 36. © 2011 SAP AG. All rights reserved. 36 36 Master Scheduling Process Master Scheduling Beginning inventory Forecast Committed Customer orders Inputs Outputs Projected inventory Master production schedule ATP: Uncommitted inventory
  37. 37. © 2011 SAP AG. All rights reserved. 37 37 A Final View of Master Scheduling SOP MPS Marketing Operations Rough-Cut Capacity Plan
  38. 38. © 2011 SAP AG. All rights reserved. 38 Rough Cut Capacity Planning (RCCP) Compares the master production scheduling resource requirements to the capacity available in critical work centers. You use RCCP to determine if you should revise the master schedule to create feasible work loads or improve utilization of limited resources. Use output from master production scheduler (quantity and due dates) Use a bill of resources which has times for each part type on each resource Compare with resource time capacity over planning period Quick check on capacity of key resources • Use Bill of Resource (BOR) for each item in MPS • Generates usage of resources by exploding MPS against BOR (offset by lead times) • Infeasibilities addressed by altering MPS or adding capacity (e.g., overtime)
  39. 39. © 2011 SAP AG. All rights reserved. 39 Demand Management Distribution Requirement Planning(DRP)Master Production Scheduling(MPS ) SOP Rough-Cut Capacity Planning(RCC P) Resource Requirement Planning(RRP) Long Range (More than 1 year) Medium range(6 to 18 month) Capacity level Material planPlanning horizon Level 1_planning
  40. 40. © 2011 SAP AG. All rights reserved. 40 Material Requirements Planning (MRP) Uses the master production schedule, open orders, the bill of materials, and inventory records to Calculate time-phased net requirements for every item,and creates a plan for covering material requirements. EnditemComponentRawmaterial R Time Time Time The MRP approach
  41. 41. © 2011 SAP AG. All rights reserved. 41 MRP inputs and outputs
  42. 42. © 2011 SAP AG. All rights reserved. 42 MRP COMPONENT Component Description Bills of material •The components and relationships required to produce a parent item. Use bills of material to: Maintain many configurations for an item without creating additional part numbers •Define quantities of intermediate products in any unit of measure as they progress through the manufacturing process •Enter similar items by copying bills of material, routings, and processes Routings •The operations required to produce the parent item. Use routings to: Define each step of the manufacturing process with allowances for anticipated yield and scrap •Add alternate operations to routings Work centers •The facilities on the shop floor where the routing operations occur. Use work centers to: Define work center number and description •Define the number of operators or machines •Define setup, labor, machine, and overhead rates •Define information for Capacity Planning Engineering change orders (ECOs) •The document that you use to define and implement changes to your products structure. Use engineering change orders to: Control item changes from a single source •Incorporate approved changes to bills of material
  43. 43. © 2011 SAP AG. All rights reserved. 43 Lot Sizing in MRP Systems • Lot-for-lot (L4L) ordering policy • Minimum order quantity (Ex: Min 250) • Multiple order quantity (Ex: X100) • Economic order quantity (Ex: 350; annual demand: 4 200) • Periodic order quantity (Ex: 2 months)
  44. 44. © 2011 SAP AG. All rights reserved. 44 Capacity Requirements Planning (CRP) Compares the material requirements plans to the capacity available in all work centers. You use CRP to determine if you should revise the material requirements plan to create feasible work loads or improve utilization of limited resources • Uses routing data (work centers and times) for all items • Explodes orders against routing information • Generates usage profile of all work centers • Identifies overload conditions • More detailed than RCCP • No provision for fixing problems • Lead times remain fixed despite queuing
  45. 45. © 2011 SAP AG. All rights reserved. 45 PP: detailed scheduling Detailed plan of what is to be produced, considering machine capacity and available labor One key decision in detailed production scheduling How long to make the production runs for each product Production run length requires a balance between setup costs and holding costs to minimize total costs to the company
  46. 46. © 2011 SAP AG. All rights reserved. 46 Production Activity Control Responsible for executing the: • Master Production Schedule (MPS) • Materials Requirements Plan (MRP) At the same time: • Make good use of labour , machines and materials • Minimize work-in-process inventory • Maintain customer service • Manage day-to-day activity and provide support
  47. 47. © 2011 SAP AG. All rights reserved. 47 PAC Input / Output Control Input Rate Control Output Rate Control Queue (Load, WIP) • Control the work going into and out of a work center: Input/output control • Set the priority of orders to run at each work center
  48. 48. © 2011 SAP AG. All rights reserved. 48 © SAP 2008 / Page 48 Thank you!

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