apo and r3
DESCRIPTION
APO and R3TRANSCRIPT
Bob FerrariSAP
SAP R/3 vs. SAP APO Evaluating Planning Capabilities
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 2
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
What We’ll Cover …
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 3
Shades of Planning: SAP R/3, SAP APO, & SAP SCM
Execution(SAP R/3)
Planning(SAP R/3)
Advanced planning
(SAP APO)
Adaptive planning
(SAP SCM)(Non-SAP)
i.e. MRPMaterial
requirements needed for production
i.e. MRPMaterial
requirements needed for production
i.e. Supply PlanningRe-balance
production plans across the supply
network
i.e. Supply PlanningRe-balance
production plans across the supply
network
Event ManagementSense a delay in the delivery of a critical
material
Event ManagementSense a delay in the delivery of a critical
materiali.e. WarehuseManagement
Issue a pick order to fill a customer
shipment
i.e. WarehuseManagement
Issue a pick order to fill a customer
shipment
Execute a transaction
Unconstrained planning
Constrained planning• Optimization• Simulation• Supply network
planning
Sense and respond
Information integrationBusiness
intelligenceMaster data
managementSupplier
Scoreboard update
Information integrationBusiness
intelligenceMaster data
managementSupplier
Scoreboard update
Shipping, delivery, and billing
Shipping, delivery, and billing
PurchasingPurchasing
Inventory managementInventory
managementGoods receiptGoods receipt
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 4
Supply Chain Execution in SAP R/3
SAP R/3 supports SAP SCM execution processes and supporting transactions
! Logistics execution and transactions... (TMS, WMS)
! Example: Warehouse Management" WMS can execute:
# Direct an employee in putting away a product# Direct an employee to pick a product for shipment# Transact a movement of inventory from one location to
another location" WMS, however, cannot plan:
# Look ahead five months to assess warehouse capacity# Optimize the storage strategy for 10 regional warehouses
Warehouse Management
(WMS)
Warehouse Management
(WMS)
Execution(SAP R/3)
Transportation Management
(TMS)
Transportation Management
(TMS)
Logistics Execution System (LES)
Materials Management
(MM)
Materials Management
(MM)
Sales & Distribution
(SD)
Sales & Distribution
(SD)
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 5
Warehouse Management
(WMS)
Warehouse Management
(WMS)
Execution(SAP R/3)
Transportation Management
(TMS)
Transportation Management
(TMS)
Logistics Execution System (LES)
Materials Management
(MM)
Materials Management
(MM)
Sales & Distribution
(SD)
Sales & Distribution
(SD)
Examples: SAP R/3 SCM Execution
I need to get that last batch put away in the
warehouse.
Can I tender that customer shipment to
my carrier?
What parts are in transit between my
plant and my regional DC?
How many parts do I have at each of my
regional warehouses?
Sure.
No problem.
I can do that.
I’ll tell you.
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 6
Planning in SAP R/3
Planning(SAP R/3)
Materials Requirements
Planning (MRP)
Materials Requirements
Planning (MRP)
SAP R/3 supports unconstrainedplanning.
! Ability to plan regardless of time, money, or other scarce materials/resources
! Example: Materials Requirements Planning (MRP)" MRP knows that:
# If each cookie needs 5 chips# And each box has 30 cookies# And I need to make 100 boxes# Then I need (5 x 30 x 100 =) 15,000 chips
" MRP is not concerned if you:# Only have 10,000 chips# Only have capacity to make 80 boxes
Distribution Requirements
Planning (DRP)
Distribution Requirements
Planning (DRP)
Sales forecasting (flexible planning)
Sales forecasting (flexible planning)
Production Planning
(PP)
Production Planning
(PP)
Sales & Operations Planning (S&OP)
! Unconstrained sources
! Large amounts of data
! Non-critical materials
! Feeds from legacy systems
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 7
Planning in SAP R/3 (cont.)
LISLogistics Information
System
Repetitive manufacturing
CO-PALong-term revenue,
costs, and sales planning at an aggregate level
S&OPAggregate sales planning
at different levels: medium to long term, aggregate production planning
MPS/MRPPlanning of independent
and dependentrequirements at finished
product level
SFCSelf-regulating control cycles
(KANBAN)
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 8
Planning(SAP R/3)
Materials Requirements
Planning (MRP)
Materials Requirements
Planning (MRP)
Distribution Requirements
Planning (DRP)
Distribution Requirements
Planning (DRP)
Sales forecasting (flexible planning)
Sales forecasting (flexible planning)
Production Planning
(PP)
Production Planning
(PP)
Sales & Operations Planning (S&OP)
Examples: SAP R/3 Planning
I would like to forecast demand by item by plant
for the next two years
I need to net inventory from demand at a single
plant.
In what sequence should I run my products on a
production line?
If I need 10,000 widgets, how many components
do I need to buy?
Sure.
No problem.
I can do that.
I’ll tell you.
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 9
Common Misconceptions about SAP APO
! SAP APO supports only very sophisticated planning needs, mostly driven by constraint-based optimization
! SAP APO does not integrate well with R/3 or other SAP applications
! SAP APO is not flexible to support my industry is unique planning needs
! SAP APO is too complex for us to ever implement, and for our planners to understand and effectively use
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 10
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 11
Advanced Planning with SAP APO
Execution(SAP R/3)
Planning(SAP R/3)
Advanced Planning
(SAP APO)
Execute a Transaction
Unconstrained Planning
Why advanced planning?
Most businesses have excess capacity, shortfalls, or both.
! Shortfalls in product availability lead to lost sales, which reduces profits.
! Assets cost money, so excess capacity means reduced profits.
! To maximize profits most businesses need to consider or factor key constraints
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Supply Planning (SNP)
Production Plng & Detailed Scheduling
(PP/DS)
Production Plng & Detailed Scheduling
(PP/DS)
Transportation Plng/ Vehicle Scheduling
(TP/VS)
Transportation Plng/ Vehicle Scheduling
(TP/VS)
Global Available to Promise
(GATP)
Global Available to Promise
(GATP)
Advanced planning!Heuristics (sequential business rules)
" Create unconstrained replenishment plan" Constrain the plan based on capacity
!Optimization " Simultaneously optimize supply and
demand across the network leveraging genetic algorithms and linear programming
!Capable-to-Match" Match prioritized supply and demand
needs across the entire supply network
! Simulation
! Optimization
! Collaboration
! Advanced algorithms
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 12
Advanced Planning
(SAP APO)
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Supply Planning (SNP)
Production Planning & Detailed Scheduling (PP/DS)
Production Planning & Detailed Scheduling (PP/DS)
Transportation Planning/Vehicle
Scheduling (TP/VS)
Transportation Planning/Vehicle
Scheduling (TP/VS)
Global Available to Promise
(GATP)
Global Available to Promise
(GATP)
Examples: SAP APO Planning
I need to collaboratively plan for customer demand across
my entire supply network
I would like to simulate the impact of a 30% “lift” in sales
in June and then pre-build inventory to support it.
Can I optimize my sequence and schedule for every line
simultaneously?
Sure.
No problem.
I can do that.
How do I select carriers and optimize my route?I’ll tell you.
Do I have inventory or capacity in my supply network to promise delivery of this
customer order?
I know.
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 13
Adaptive Planning with SAP SCM
Execution(SAP R/3)
Planning(SAP R/3)
Execute a Transaction
Unconstrained Planning
When does planning start to become adaptive?
Adaptive planning senses events beyond the four walls of the organization and responds with updated planning and execution.
! When a production plan is changed because a supplier will be late delivering a critical component/material
! When a procurement plan is changed due to the increasing of the demand forecast in reaction to a customer accepting a promotion
! When Adaptive Agents monitor patterns of events, and respond with suggested changes to plans
Adaptive Planning
(SAP SCM)
SAP Event Management
(SAP EM)
SAP Event Management
(SAP EM)
SAP Inventory Collaboration Hub
(SAP ICH)
SAP Inventory Collaboration Hub
(SAP ICH)
SAP Advanced Planning &
Optimization(SAP APO)
SAP Advanced Planning &
Optimization(SAP APO)
SENSE
RESPOND
EXECUTE
PLAN
LEARN
SAP has begun to pursue adaptive planning by bundling event management, advanced planning, and inventory collaboration together into the SAP SCM 4.0 solution.
SAP NetWeaver
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 14
Adaptive Planning
(SAP SCM)
SAP Event Management
(SAP EM)
SAP Event Management
(SAP EM)
SAP Inventory Collaboration Hub
(SAP ICH)
SAP Inventory Collaboration Hub
(SAP ICH)
SAP Advanced Planning &
Optimization(SAP APO)
SAP Advanced Planning &
Optimization(SAP APO)
Examples: What SAP SCM 4.0 Can Do
I need to know when critical supplier
deliveries will be delayed.
Can I enable my suppliers to perform
Web-based VMI in real-time?
I would like to simulate a delayed delivery of a critical
component.
I’ll tell you.
I can do that.
No problem.
SAP and Non-SAP Systems
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 15
SAP R/3 and SAP SCM Working Together
Execution(SAP R/3)
Planning(SAP R/3)
Advanced planning
(SAP APO)
Adaptive planning
(SAP SCM)
Materials requirements are
calculated for new production plan.
Materials requirements are
calculated for new production plan.
A new trade promotion is planned in SAP CRM.
A new trade promotion is planned in SAP CRM.
Customers update collaborative forecasts
based on the promotion.
Customers update collaborative forecasts
based on the promotion.
Purchase orders are issued to vendors.
Purchase orders are issued to vendors. Production and
replenishment are re-balanced based on
material and resource capacity
Production and replenishment are re-
balanced based on material and resource
capacity
A critical purchase order is noted to be
delayed at the vendor.
A critical purchase order is noted to be
delayed at the vendor.
Production of a less critical product is delayed to free up required material.
Production of a less critical product is delayed to free up required material.
The updated production plan is
scheduled.
The updated production plan is
scheduled.New production is received into inventory
New production is received into inventory
Customer order is picked/ packed/shipped/invoiced.
Customer order is picked/ packed/shipped/invoiced.
Network product demand is statistically forecasted in Demand
Planning
Network product demand is statistically forecasted in Demand
Planning
Information integration
Supplier Scoreboard update
Information integration
Supplier Scoreboard update
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 16
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 17
SAP APO Demand Planning
(DP)
Statistical forecastingStatistical
forecasting
Promotions planning
Promotions planning
Collaborative forecasting
Collaborative forecasting
Consensus forecasting
Consensus forecasting
Alert monitoring and reporting
Alert monitoring and reporting
What SAP APO Demand Planning Can Do
I’d like to forecast based on past orders, past shipments, and leading indicators like
price, retail outlets, etc.
I would like to adjust for the impact of multiple re-useable
promotions across many products/regions/etc.
Can I work with my key customers over the Internet on
a collaborative forecast?
Sure.
No problem.
I can do that.
How do I merge input from customers, sales, marketing,
and production?I’ll tell you.
Where are my forecasts out of tolerance? What is my
projected sales by brand? region? account?
I know.
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 18
Planning(SAP R/3)
Materials Requirements
Planning (MRP)
Distribution Requirements
Planning (DRP)
Sales forecasting (flexible planning)
Sales forecasting (flexible planning)
Production Planning
(PP)
Sales & Operations Planning (S&OP)
SAP R/3 and SAP APO: Forecasting
Advanced Planning
(SAP APO)
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Production Planning and
Detailed Scheduling (PP/DS)
Transportation Planning/Vehicle
Scheduling (TP/VS)
Global Available to Promise
(GATP)
Data storage•LIS based•Transparent table•Single hierarchy
•BW-LiveCache Based•Multi-Dimensional•Multiple Hierarchies
Forecasting techniques•Univariate algorithms •More univariate
algorithms•Outlier correction•Multiple linear regression
•Composite forecasting
•Drag and drop
Macros•Simple arithmetic•Row operations
•Complex arithmetic•Complex functions•Row, column, area operations
SAP APOSAP R/3
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 19
SAP R/3: Single Hierarchy
Planning hierarchy
1000
4711 4712
M-0001 M-0002 M-0001 M-0002
33.3%66.6% 25%75%
40%60%
Sales organization
Customer
Material
SAP
R/3
is li
mite
d to
nin
e ch
arac
teris
tics
SAP R/3 is practically limited to 150,000 characteristic combinations,i.e., Material M-0001/Customer 4711/Sales Org 1000 is one combination
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 20
SAP R/3: Univariate Forecasting
• Use of recognized, stable forecasting methods
" Exponential smoothing" Moving average
• Automatic model selection is possible
• Graphical checks as well as adjustment of historical data and forecast results
UsageUsage Actual dataActual data
ForecastForecast
PredictionPrediction
Used as planning dataUsed as planning dataUsed as planning data
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 21
SAP APO: Flexible Hierarchy
MaterialMaterial Distribution Center
Distribution Center
AccountAccountBrandBrand
Package sizePackage sizeAccount rep.Account rep.
RegionRegionChannelChannel
Classification (A-B-C)
Classification (A-B-C)
CountryCountry
etc.etc.
DENUSAJeff D.C-Store6345AMER1Beta32415
BERGERADirk R.Retail7668EMEA1Alpha87960
PARFRAAJean G.Mass2323EMEA2Alpha98765
NYCUSABob A.Retail5555AMER1Alpha12345
etc.etc.DCcountryA-B-Crep.channelaccountregionpkgsizebrandmaterial
Brand = AlphaBrand = Alpha
Channel = RetailChannel = Retail
TotalReconcile by:
• Fixed proportion• Forecast value• Dynamic value
• Historical sales• Store count• etc.
etc.etc.There is no fixed limit on the number of characteristicsThere is no fixed limit on the number of characteristics
Some SAP APO customers run over 1,000,000 combinationsSome SAP APO customers run over 1,000,000 combinations
12345 87960
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 22
SAP APO Advanced Planning: Univariate Forecasting
# Analysis of historical data! Outlier detection! Outlier correction
# Application of promotions to history
# Automatic model selection
# Automatic correction of forecast for:! Promotions! Lifecycle planning! Supersession (APO 4.0)
# Graphical monitoring and manipulation of both historical data and forecast
Correct historical data
Correct historical data
ForecastForecast
Correct forecastCorrect forecast
Used as planning figuresUsed as planning figures
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 23
Advanced Planning Statistical Algorithms
26 forecast algorithms with auto select feature
Custom algorithms can be used
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 24
Advanced Planning: Composite Forecasting
Forecast1
n
...Combine
and reconcile
Combine and
reconcile
Time series
MLR
Time seriesResultMLR
• Weighted average of multiple forecast methods• Simple average• Time phased composition
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 25
Advanced Planning: Causal FactorsU
nit s
ales
Feb. Mar. April May June July Aug. Sept.
$ 20
00
$ 10
00Advertising budget:
# Model fit analysis! R2 ! R2 adjusted ! Durbin-Watson! Durbin - h ! t - Test
# Model fit analysis! R2 ! R2 adjusted ! Durbin-Watson! Durbin - h ! t - Test
# Modeling options! Linear and nonlinear trends! Seasonal patterns! Dummy variables and time lags
# Modeling options! Linear and nonlinear trends! Seasonal patterns! Dummy variables and time lags
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 26
SAP R/3: Macros
Sales EventCorrected salesDifference in %
01/03 02/03 03/03
Region: USARegion: USA
KGKGKG%
Database Database Display onlyDisplay only
Additional key Additional key figurefigure
300 320 29070
39022
Special view on planning data
Dependency between key figures can be defined using macros
Macro Sales+ Event= Corrected sales
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 27
SAP APO Advanced Planning Macros
Operations on single fields, rows, columns, and areas
Conditional statements: (if, then, else)
Operators:(+,-,*,/,sqrt,trunc, sin, etc.)
Functions:(sum, avg, max, mad, var)
Alerts and emails
Drag and drop psuedocode
$Row%
$C
olum
n%
Cell AreaMacro triggers:•Always on•Button•Action
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 28
Summarized Features - SAP APO DP
! Helps you forecast and plan for future or anticipated product demand, either based on historical sales, or actual demand data
! Ability to forecast and plan on any level, and in any dimension
! Data is stored at the lowest level, allowing top-down, bottom-up, or middle-out forecasting and planning
! Built-in, sophisticated statistical forecasting with 26 forecast algorithms
! Information stored and viewed in highly configurable planning books, including out-of-the box, preconfigured planning books
! Integration to Microsoft Excel
! Front-end tool for collaborative replenishment processes such as VMI or CPFR
! Supports ability to collaborate with other internal groups, or external customers and suppliers with collaborative demand planning
! Currently available for license as standalone solution
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 29
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 30
SAP APO Supply Network Planning
(SNP)
HeuristicsHeuristics
OptimizationOptimization
Capable-to-MatchCapable-to-Match
Truck load buildingTruck load building
Alert monitoring and reporting
Alert monitoring and reporting
What SAP APO Supply Network Planning Can Do
I’d like to set up rules and quotas to decide where/
when/how to produce and distribute product.
Can I find a feasible global plan that minimizes the types
of costs that I want?
I need to balance different supply and demand priorities for a complex supply chain.
Sure.
No problem.
I can do that.
How do I best aggregate my shipments into trucks,
containers, etc.?I’ll tell you.
Where do I have too much/little inventory? Where will I be
exceeding capacity?I know.
Can I do all of this for VMI and CPFR customers too?Yes.Collaborative
supply planningCollaborative
supply planning
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 31
SAPAPO
SAPR/3Planning
(SAP R/3)
Materials Requirements
Planning (MRP)
Distribution Requirements
Planning (DRP)
Sales forecasting (flexible planning)
Sales forecasting (flexible planning)
Production Planning
(PP)
Sales & Operations Planning (S&OP)
SAP R/3 and SAP APO: Supply Planning
Advanced Planning
(SAP APO)
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Production Planning and
Detailed Scheduling (PP/DS)
Transportation Planning/Vehicle
Scheduling (TP/VS)
Global Available to Promise
(GATP)
Solution techniques• Rules based• (MRP and DRP)• No simulation• Bills of material• Sequential solve• Static sourcing map
•Rules-based and optimization
•Multiple simulations•BOMs and routings•Simultaneous solve•Dynamic sourcing
Ease of Use•No macros•Table-based views•Master data from SAP R/3
•Real time inventory and order updates
•Sophisticated macros•Graphics and table•Master data from SAP R/3
•Real time inventory and order updates
Planning with constraints•Infinite capacity•Infinite materials
•Constrained capacity•Constrained materials•Bottleneck resources
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 32
SAP R/3: Supply Planning
Static quotas determine how demand is aggregated
Simple netting logic is used to determine production requirements.! Lead time from source to destination is a single static amount.! Demand is assigned regardless of exceeding capacities.
Plant 1
RDC1 RDC2
DC1 DC2 DC3 DC4
Plant 240%
60%
Demand = 300Inventory = 200Net Demand = 100
Demand = 500Inventory = 300Net Demand = 200
Demand = 300Inventory = 100Net Demand = 200
Net Demand = 200 + (40% x 500) = 450
Demand = 500Inventory = 100Net Demand = 400
Demand = 400Inventory = 200Net Demand = 200
Demand = 600Inventory = 100Net Demand = 500
Net Demand = (60% x 500) = 300
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 33
SAP APO SNP Heuristic
Demands
Storage locations
Plants
Stock transfer orders Production orders
Suppliers
"Calculates supply requirements taking quota arrangements, lead times, calendars, and lot-sizing rules into account
"Execute a capacity check, or enable capacity leveling
"Calculates supply requirements taking quota arrangements, lead times, calendars, and lot-sizing rules into account
"Execute a capacity check, or enable capacity leveling
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 34
Minimierung der KostenMaximierung des Profits
SAP APO SNP Optimization
Forecastssales ordersForecasts
sales orders
Sourcing Product mix
Production andprocurement plan
Inventory strategies
Sourcing Product mix
Production andprocurement plan
Inventory strategies
APO
Liste
Flexible constraint definition# Capacities# Material availability# Market constraints# Costs of opportunity
Optimization
Supply chain modelSupply chain model
Linear and mixed integer programmingLinear and mixed integer programming
Cost minimizationProfit maximization
Constraint-based feasible solutionConstraint-based feasible solution
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 35
Capable-to-Match: Matching of Demand/Supplies
Categorizedsupplies
Prioritizeddemands
1.
2.3.
4.
5.6.
7.
8.
9.10.
11.
Multi-site capacity check and check of transportation capabilities
Capable-to-MatchCapable-to-Match
"Matches a set of prioritized customer demands (forecast and orders) to a set of categorized supplies
"Supports multi-stage production networks
"Matches a set of prioritized customer demands (forecast and orders) to a set of categorized supplies
"Supports multi-stage production networks
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 36
Summarized Features - SAP APO SNP
! Allows you to efficiently plan available supply, contrasted to projected demand, across your entire supply chain network
! Ability to create feasible plans for procurement, manufacturing,inventory, and transportation needs
! Three different alternatives to efficiently plan supply:" Heuristics and capacity leveling" Optimization" Capable-to-match (CTM)
! Fully supported distribution and safety stock planning, as well as dynamically rebalance and optimize your distribution network
! Ability to plan based on different production strategy needs:" Make-to-stock" Assemble-to-order (with or without final assembly)" Configure-to-order
! You can include other internal or external groups in planning with built-in collaborative supply planning
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 37
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 38
Planning(SAP R/3)
Materials Requirements
Planning (MRP)
Distribution Requirements
Planning (DRP)
Sales forecasting (flexible planning)
Sales forecasting (flexible planning)
Production Planning
(PP)
Sales & Operations Planning (S&OP)
SAP R/3 & SAP APO: Production Planning & Scheduling
Advanced Planning
(SAP APO)
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Production Plng & Detailed Scheduling
(PP/DS)
Transportation Plng/ Vehicle Scheduling
(TP/VS)
Global Available to Promise
(GATP)
Planning with constraints•Infinite capacity•Infinite materials
• Constrained capacity• Constrained materials• Bottleneck resources
Solution techniques• Single plant• Due date driven• Backwards
scheduling• Manual leveling• Simulation only for
long term
• Multi-plant• Priority and cost driven• Forward and backward
scheduling• Auto and manual level• Real-time simulation• Industry specific
solvers
Visualization• Product planning
table• Graphical planning
table• Map-based cockpit• BI-based reporting• Alert monitoring
SAPAPO
SAPR/3
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 39
Linear vs Integrated Planning Process
SAP APO PP/DS! Plans for both material and capacity
constraints In one planning process
! Constraint driven optimization of planning
! Sequencing and changeover
! Date determination based on actual capacity load- increased planning accuracy
! Automatic solve constraint resources alternate resource, capacity variant
! Detailed capacity planning
! Visibility on material flow (pegging)
! Simulation capabilities
! Alert capabilities
! Improved analytics and reporting tools
SAP R/3 PP! Linear process – traditional backward
scheduling MRP Logic
! Run MPS and MRP- no consideration of capacities in planning run
! Explode BOM, create planned purchases, production orders, calculate net requirements and lot size
! Run rough-cut capacity planning
! No flexible and user-defined heuristics
! Optional material and capacity check
! Changes are only taken into account for the next MRP run
! Capacity leveling over and under
! Limited interactive planning
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 40
online
Online Integration into Execution
Execution with SAP R/3 Planning with SAP APO
Change of work center
Re-scheduling manual/automatic
Visualization
Optimization
Product order
Purchase order
Customer requirementCustomer order
Forecast requirement Creation
Creation
Planned order
Purchase request
Change of work center
Status change
Confirmation
Goods receipt
planned order Production planning
Order conversion
Consumption
Product order
Purchase order
...
Planned order
Purchase request
...
online
online
online
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 41
# Planner works interactively # Visualization of resources, order
network, and material flows
# Planner works interactively # Visualization of resources, order
network, and material flowsManual
reschedulingManual
rescheduling
Automatic planning
Automatic planning
OptimizationOptimization
SAP APO PP/DS Planning
# ‘State of the art’ optimization algorithms
# Optimization with several criteria# All constraints on all levels
# ‘State of the art’ optimization algorithms
# Optimization with several criteria# All constraints on all levels
ALERTS
ALERTS
# Multi-level material and capacity planning
# Creation of order network # Quick identification of constraint
violations
# Multi-level material and capacity planning
# Creation of order network # Quick identification of constraint
violations
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 42
Constraints in SAP APO PP/DS
! Due dates/deadlines
! Material availability
! Planned delivery times, transport capacity
! Routing/recipe
! Standard times, sequences, relationships between production activities
! Alternative resources (alternative technologies)
! Limited machine and personnel capacities
! Setup times/costs (dynamic)
! ...
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 43
Setup Optimization in SAP APO PP/DS
B ACSetup Setup
Customer orders C BA A
A
Setup times inpaint shopProd. A B C
A 0 10 20B 30 0 10C 40 30 0
Setup time inminutes
Product A: white colorProduct B: yellow colorProduct C: blue color
time20 30 30
Optimal plan for setup
Set-up BA CA Set-
up
10 10
Set-up B ACA SetupSet-
up
10 10 40Optimal plan for setup and due dates
Setup
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 44
Order networkOrder network
Component viewsComponent views
StrategiesStrategiesOptimizationOptimization
Alert monitorAlert monitor
Graphical Planning Table
Stock viewsStock views
Capacity viewsCapacity views
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 45
Summarized Features - SAP APO PP/DS
! With PP/DS, companies can generate optimized schedules, and execute production plans:! Perform forward and backward scheduling on multiple levels! Perform detailed capacity and material planning! Synchronize schedules and scheduling changes at multiple levels! Support sequencing and scheduling needs! Perform interactive scheduling using a graphical planning board ! Use the optimizer to determine most feasible plans, based on
defined constraints! Exchange master data with SAP R/3 in real-time
! The PP/DS capabilities support both discrete and process manufacturing needs
! Supports customer order promising and fulfillment needs in capable-to-match (CTP), in conjunction with APO GATP
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 46
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 47
SAP R/3 and SAP APO: Transportation Planning
Advanced Planning
(SAP APO)
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Production Planning and
Detailed Scheduling (PP/DS)
Transportation Planning/Vehicle
Scheduling (TP/VS)
Global Available to Promise
(GATP)
Load building• Rules-based order
consolidation• Predefined routes
• Optimization• Item combinations• Delivery date/time • Equipment
• Capacity• Availability• Compatibility
• Costs (late, early)• Dock hours
Tendering• Transactional
• EDI• Internet• Fax
• Collaborative• EDI• Internet• Fax• Capacity Info
Carrier selection• Manual • Optimization
• Cost• Priority• Business shareWarehouse
Management (WMS)
Warehouse Management
(WMS)
Execution(SAP R/3)
Transportation Management
(TMS)
Transportation Management
(TMS)
Logistics Execution System (LES)
Materials Management
(MM)
Materials Management
(MM)
Sales & Distribution
(SD)
Sales & Distribution
(SD)
SAPAPO
SAPR/3
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 48
SAP APO TP-VS vs. SAP R/3 LES Transportation
& Constraint-based#Optimized vs. Predefined routes#Optimized vs. Rules based or manual order consolidation#Uses real orders instead of deliveries#Considers costs and penalties#More precise planning time frame – minute:sec vs. day
& Creates and supports many types of shipments#Multiple modes such as truckload, airfreight, intermodal...#Mode combinations – (i.e. rail to sea)#Multiple stop, pickup, and delivery
& Factor hard and soft constraints#Open/closed dock hours#Equipment capacity, availability, and compatibility#Product combination restrictions#Requested delivery date and time#Transportation, late, and early delivery costs
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 49
Summarized Features - SAP APO TP/VS
! Allows you to plan for the best use of available capacity for freight vehicles, trucks, railcars, ships, and airplanes
! Anticipated load capacities can be consolidated and planned, allowing more efficient use of available transportation resources
! Out-of-box integration to SAP R/3 transportation execution and freight costing enables automatic release of orders, and more consistent information pass-through
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 50
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 51
SAP R/3 and SAP APO: Available to Promise
Advanced Planning
(SAP APO)
Demand Planning (DP)
Demand Planning (DP)
Supply Planning (SNP)
Production Planning and
Detailed Scheduling (PP/DS)
Transportation Planning/Vehicle
Scheduling (TP/VS)
Global Available to Promise
(GATP)
Warehouse Management
(WMS)
Warehouse Management
(WMS)
Execution(SAP R/3)
Transportation Management
(TMS)
Transportation Management
(TMS)
Logistics Execution System (LES)
Materials Management
(MM)
Materials Management
(MM)
Sales & Distribution
(SD)
Sales & Distribution
(SD)
Promise Against• Inventory (one
location)• Scheduled production
(one location)
• Global inventory• Finite scheduling• Global
constrained capacity
• Available components
Solutions• Available to promise• Backorder processing• Product allocation
• Available to promise• Backorder
processing• Product allocation• Capable to promise
Technology• Real time check at
order entry• Real time check at
order entry• Rules-based• Multi-level check
SAPAPO
SAPR/3
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 52
SAP APO Global Available-to-Promise
Rules-based, multi-level ATP! Alternative locations! Alternative products
Integrated with Production Planning
! Checks against actual production plan
! Considering capacity constraints
Integration with demand planning/forecasting
! Product allocation
ATP request
Confirmation
Sales
It is better/faster/more functional than the ATP check in R/3
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 53
Rules-based ATP
Alternative location(s)Alte
rnative
product(s)
Customer Order end item
PPM
exp
losi
onProblem:Not enough items in stock
Solution policy:Step 1: Alternative productStep 2: Procure from different locationStep 3: Finally produce (PPM explosion)
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 54
Multi-level ATP/CTP Comparison
YesNoBlock planning
Fixed/min./max.Lot-for-lot order quantityLot size
Detailed schedulingSimple lead time schedulingScheduling of components
Finite scheduling on resources
Daily production rate (represented by product allocation)
Capacity restrictions
‘Worse’‘Better’Performance
Separate planning logIntegrated in ATP result overviewDisplay of the check results
PP/DS planned ordersATP tree structuresResult
Based on secondsCumulated in daysScheduling of finished product
YesNoCDP
Check using the pegging functionality
Product availability check/check against forecastScope of check, shortage checks, and checking horizons are taken into accountRules-based ATP is supported
Availability check on component level
CTPMATP
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 55
Planning in SAP R/3 vs. SAP APO – Outline of Topics
Overview - planning and execution in SAP
Advanced planning
Demand Planning (DP) and forecasting
Inventory, supply, and production planning
Production Planning and Detailed Scheduling (PP/DS)
Transportation planning (TP)
Available to promise (ATP)
7 Key Points to Take Home
Q & A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 56
Summary - SAP R/3 Planning
! Planning process support for:! MRP, DRP, PP (single instance LIS based)! Non-constrained, sequential based planning! Simple netting logic
! Linear planning process - traditional MPS/MRP logic
! Sequential batch programs make for a longer planning cycle
! Single hierarchy
! Limited forecasting tools - univariate algorithms
! Limited what-if simulations
! Limited interactive planning
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 57
Summary - SAP APO Planning
! Planning process support for:! Complex or global demand and supply network planning! All planning processes (strategic, tactical, operational)
! Constraint-based, producing most feasible plan given reality of multiple material, capacity, production, and transportation needs
! Extensive and deep planning and forecasting tools
! More flexibility - deeper planning tools to support simultaneous advanced planning and execution
! Integrated master data with SAP R/3 connector
! Real-time
! Broader, more flexible specific business process support (VMI, CPFR, S&OP, DRP )
! Enhanced for specific industry planning needs (discrete, process, distribution )
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 58
Good Strategies for Getting Started with APO
! Prepare … prepare! First, ensure that all master data is clean and accurate, for all
network participants! Ensure that your planning processes and planning models are
clearly documented and understood by your planners and the business
! Get solid APO training for all participants! Change management is a significant consideration for any advanced
planning process implementation
! Start your APO journey in manageable implementation steps! Start small … chew fast ! If you desire to engage an implementation partner, ensure that it has
demonstrated experience! Research best practices and successful implementation models! Take advantage of new SCM Safeguarding Services offered by SAP
Services
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 59
Resources
! APO 4.0 detailed information:" http://help.sap.com/ > SAP Cross-Industry Solutions > SAP Supply
Chain Management > SAP Advanced Planning and Optimization
! Supply Chain Planning Business Process Support Maps:" http://www.sap.com/solutions/businessmaps/ > Solution Maps
Cross-Industry Business Maps > Supply Chain Management > Supply Chain Planning
! SCM 4.0 integration and technology:" http://service.sap.com/scm > mySAP SCM Technology > SCM 4.0
Integration and Technology
! Best practices for mySAP SCM Solution Management:" http://service.sap.com/scm > Best Practices for Solution Management
mySAP SCM
! SAP Planning: Best Practices in Implementation by George W. Andersen, Pearson Education, April 2003
" Highest rated SAP-related book on BarnesandNoble.com
SAP R/3 vs. SAP APOEvaluating Planning Capabilities
Your Turn for Questions !
How to contact me: robert.ferrari @sap.com, Telephone: 781-522-5209
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 61
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Copyright 2004 SAP AG. All Rights Reserved
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! No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.
! Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.
! Microsoft®, WINDOWS®, NT®, EXCEL®, Word®, PowerPoint® and SQL Server® are registered trademarks of Microsoft Corporation.
! IBM®, DB2®, DB2 Universal Database, OS/2®, Parallel Sysplex®, MVS/ESA, AIX®, S/390®, AS/400®, OS/390®, OS/400®, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere®, Netfinity®, Tivoli®, Informix and Informix® Dynamic ServerTM are trademarks of IBM Corporation in USA and/or other countries.
! ORACLE® is a registered trademark of ORACLE Corporation.
! UNIX®, X/Open®, OSF/1®, and Motif® are registered trademarks of the Open Group.
! Citrix®, the Citrix logo, ICA®, Program Neighborhood®, MetaFrame®, WinFrame®, VideoFrame®, MultiWin® and other Citrix product names referenced herein are trademarks of Citrix Systems, Inc.
! HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C®, World Wide Web Consortium, Massachusetts Institute of Technology.
! JAVA® is a registered trademark of Sun Microsystems, Inc.
! JAVASCRIPT® is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape.
! MarketSet and Enterprise Buyer are jointly owned trademarks of SAP AG and Commerce One.
! SAP, SAP Logo, R/2, R/3, mySAP, mySAP.com and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are trademarks of their respective companies.
Copyright 2003 SAP AG. All Rights Reserved