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The course will cover the following subject areas:
Advanced Supply Chain Planning overview
Demand Planning
Supply Network Planning
Core Interface
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Course Goals
This course will prepare you to:
Gain a basic understanding of SAP functions in the area of
advanced Supply Chain Planning
Describe the Supply Chain Planning options available with the
SAP ECC and SAP SCM (APO) systems
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Course Objectives
After completing this course, you will be able to:
Briefly Describe the role of both the SAP ECC and SAP SCM
components in
Advanced Supply Chain Planning
Specify which master data and transaction data are used in
advanced Supply Chain Planning
Explain the interplay and the integration of SAP ECC and SAP
SCM (Core Interface)
Execute fundamental planning functions of Demand Planning
and Supply Network Planning.
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SCM History
Roots in military logistics, in WW II: the first large, complex
organizations getting the right supplies, the right labor, to the right
place, at the right time
1991: The Gulf War is often called the largest supply chain success of
the 20th century
Supply chain concepts and terminology formalized in the early 1980’s at
a few major Universities
IT began supporting SCM concepts in the late 1980’s
Integrated supply chain systems appeared in 1991, driven by powerful
PC’s, integration, networking
In 1998 ERP vendors entered supply chain market
Now SCM is being driven by internet & e-commerce
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Supply Chain Planning
SupplyDemand
Companies do this by predicting customer demand and fulfilling it by the most efficient allocation of inventory and
production capacity.
• The right product
• At the right time and place
• Delivered to the right customer
• At the lowest total cost
• With the lowest asset investment
Supply Chain Planning is the process of balancing available supply against demand
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SCM Planning and Execution
Supply Chain Management starts with a completed Business Plan:
Strategic Planning
Business Planning
Sales & Operations
Planning
Financial Planning
Distribution
Requirements
Planning
Demand
Planning
Production
Planning &
Scheduling
Material
Requirements
Planning
Execution
Functional Planning
• How are we going to increase the value of the company?
• What businesses are we going to get in/out?
• How are we going to accomplish? (acquisitions, mergers, joint ventures, divestiture, etc.)
• What are the financial implications of the strategic plan?
• What are the financial resource requirements?
• Which financial vehicles should be used in meeting these resource requirements?
• What will it take to make the business more profitable?
• What events / trends are taking place in the markets served which may impact our business?
• How are we going to respond to these events / trends?
• What are the appropriate service and cost targets to gain competitive advantage?
• How does projected demand compare to projected supply?
• What are the projected resource requirements to meet both service and cost targets?
• What actions are required to insure the appropriate levels of resources are available when needed?
Customer
Service
Warehousing Transportation Manufacturing Procurement
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Supply Chain Planning Benefits
Revenue
Costs
Working
Capital
Fixed Capital
Supply Chain Impacts
• Improved customer service
(greater market share, higher
prices)
• Lower raw materials and
finished goods inventory
• Shorter “order-to-cash” cycles
Shareholder
Value
Profitability
Invested
Capital
• Fewer physical assets
(manufacturing plants,
warehouses, material handling
equipment, trucks, etc.)
• Lower cost of goods sold
(including material,
manufacturing, handling,
warehousing, distribution, and
general overhead costs)
10-30%
transport
costs
10-20%
inventory
10-30%
assets
5-10%
conversion
costs
Typical Benefits
2-5% sales
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SAP-APO Planning and Capabilities
Supply Network Planning (SNP)
Demand Planning (DP)
Yearly
Monthly
Daily
What is the expected impact of salesforce
actions?
Will my inventory cover demand next month?
Weekly
Material
Planning
Production
Planning
Inventory
Planning
Demand
Planning
Supplier Customer
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SAP-APO Modules
SAP Advanced Planner & Optimizer
SAP application used to enable real time decision support, advanced constraint based planning and optimization
Covers the planning requirements (optimization, finite capacity, what-if simulation...) not covered by the R/3 system:
APO runs on an independent server from the R/3 one
SAP provides standard software to interface APO and R/3 (stocks, purchase orders, production orders,…)
Demand
Planning
(DP)
Supply
Network
Planning
(SNP)
Sales forecasting
Advanced statistical methods
Graphical views
Alert monitoring
Network needs planning
Delivery, Production and Purchase
Planning
Approximate finite capacity
Optimal solution for the entire
network based on configurable
criteria
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Demand Planning
Statistical Forecasting
Selection of advanced statistical tools (Univariable, Multilinear, Composite, etc.)
Collaborative Forecasting and Consensus Planning
Ability to conduct intra and cross-company Demand Planning collaboration via
Internet
Flexible Multi Level Planning
Ability to plan at various levels of data hierarchy (product, region)
Promotion Planning
Planning, managing and evaluation of the impact of promotions on demand
Product Life Cycle
Ability to use phase-in and phase-out profiles and like modeling to manage new
products and obsolescence
Planning by Exception
Use of Alerts to report exceptions
Simulation
Ability to use what-if scenario simulation
Integration with the Planning and Execution systems
Tight integration with other planning capability (Supply Planning, Production
Planning, etc.) and the Execution system (R/3, etc.)
Capabilities
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Demand Planning Architecture
Planning BooksGUI
APO
OLAP
Processor
Business
Planning
Library
Statistical
Forecasting
Toolbox
Planning & Analysis
Engine
Info
Cubes
Time
Series
Catalog
NotesData Mart
This is a logical view of Demand Planning, Planning Books, User Interface and Data Mart
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Demand Planning Cycle
Create new Master Data
Generate new
CVC’s/Propotional Factors
Info cube/Planning Area
Design/Maintenance
Planning Book
Design/Maintenance
Load new Master Data to
planning area
Evaluate/Update
Planning Area/Planning Books
Forecast Profiles
Design/Maintenance
Creation of Statistical
Forecast
Creation of
Promotions
Manual Adjustments
Reconciliation of
Demand Plans
Release of Demand
Plan
Historical Data
Updates
Monitoring Forecast
Accuracy
Business Process
Data Maintenance
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Supply Network Planning
Supply Chain Model
Ability to model the entire supply network and all of its constraints such as
resource capacities, storage limits, transportation capacities, material
availability, safety and target stock levels, etc.
Concurrent Planning
Produces Distribution/Production/Inventory/Procurement plan concurrently
SNP Heuristic
Performs requirements planning (infinite capacity) for the whole, or a subset
of the supply chain.
Capacity leveling capability is used to balance resource loads.
SNP Optimizer
It is a one step generation of an optimized finite capacity plan in which all
defined costs are minimized.
Capabilities
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Supply Network Planning
Supply Network Planning
• Supply Network Planning (SNP) integrates purchasing, manufacturing, distribution,
and transportation to develop tactical planning and sourcing decisions to be
implemented on the basis of a single, global consistent model.
• SNP uses advanced optimization techniques, based on constraints and penalties, to
plan product flow along the supply chain.
• Starting from a sales plan, SNP determines a permissible short-to-medium term plan
to cover both the quantities that must be transported between two locations and the
quantities to be produced and procured.
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SNP Process Flow
Set up master data, supply
chain model and SNP configuration
Perform SNP
Heuristics, Optimization
or CTM run
Finalize SNP
plan (available to PP/DS)
Release
demand
plan to SNP
Review plan/resolve
problems
Release constrained
SNP plan to DP
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Data Configuration
APO Master Data
Model 000 Model 1
Version 000 Version A Version B
Planning Area
Planning Books
Data Views
• APO Master Data is always assigned to Models. (OLTP Master data comes automatically to model 000)
• Versions are created for each model and these contain version specific master and movement data. Time series
are saved in planning area version.
• In planning book and data views, characteristics, key figures, time bucket profiles, planning horizons, macros are
defined.
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APO Computational Solvers
APO Solvers
Distribution
Planning
Deployment
A wide variety of computational solvers
applied to specific planning functions with
industry-specific variations
Production
Planning &
Scheduling
Demand
Planning
Heuristic Methods
Linear Programming /
Mixed Integer Linear
Programming
Genetic Algorithms,
Constraint-based Programming
Flow Algorithms
Branch & Bound Algorithm
Exponential Smoothing
Holt Winters
Multiple Linear Regression
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SAP R/3 and APO Integration
Master Data Integration
PlantPlant
Work CenterWork Center
Material MasterMaterial Master
VendorVendor
Bill of MaterialBill of Material
RoutingRouting
LocationLocation
Product MasterProduct Master
Production Process ModelProduction Process Model
ResourceResource
Planning (APO)Execution (SAP R/3)
Info RecordInfo Record Transportation LaneTransportation Lane
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APO Core Interface
• Add-on component to R/3 system
• Supply APO with planning and optimization relevant data from R/3
• Return APO planning results to R/3
• Initial and incremental data transfer (automatic switch)
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What Are They?
SAP R/3 is an Enterprise Resource Planning (ERP) system. It is a suite
of modules designed to integrate an organization. Its main purpose is
to integrate data throughout the organization and support the
execution of business processes.
SAP’s Advanced Planner Optimizer (APO) is an Advanced Planning
System (APS). An APS supports any form of planning activities to
manage the supply chain and is a substitute to any planning modules
found in a ERP or legacy system.
32. Advanced Planner and Optimizer
APO is:
o A planning tool
o A decision support tool for managing
throughout, inventory, and order/demand
management
o A modeling technology that enables the supply
chain planning process by:
Modeling “what if” scenarios to solve
problems
Incorporating resource and capacity
constraints
Optimizing plans and schedules around
those constraints
33. Advanced Planner and Optimizer
APO does not:
o Manage entire Bill of Materials
o Replace financial functions
o Maintain inventory movements and position
o Operate as an execution system
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APS Vs ERP
5 key enablers that distinguish the functionality and capabilities of an APS to those of an ERP system:
• Calculation Speed
Memory Resident Architecture.~ 300 times faster than a typical MRPII/DRP system
Creates Capability for continuous process where replanning can be executed every time a change occurs
• Consider Supply Chain constraints concurrently
MRPII is a sequential logic, checking one level in the supply chain at a time
APS can check impact on all constraints in the supply chain simultaneously
• Constraint Based Planning
APS has the ability to consider ‘hard’ and ‘soft’ constraints, MRPII only manages soft constraints
• Upstream and Downstream propagation
Using APS, the impact of a supply side constraint can be reflected in terms of downstream effects in the supply chain
MRPII propagates changes uni-directionally upstream only
• Problem Solving/Optimization features embedded in an Interactive Planning environment
APS presents opportunities for sophisticated planning methods, such as profitability optimization, not available
through MRPII.
