supply chain planning with sap apo

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Supply Chain Planning with SAP APO

Functional Solution Management SCMApri 2010



©SAP 2008 / Supply Chain Planning with SAP AP O / 2

Pain Points in your Global Supply Chain

Do you have problems with … Forecast quality?

Excess inventory?

Lack of visibility in your supply chain?

Capacity shortages?

Creating an optimized finite production plan?

… and therefore face

Lost sales due to missing capacity / components or

unnecessary production and high inventory

Excessive work-in-capital; high scrap/expiry costs for products with shelf life or short l ife cycle

No systematic consideration of inventory in your supply

chain, which results in lost sales and/or excess inventory

Lack of information for right planning decisions

High set-up costs/times and low resource utilization




Do you therefore need a tool to …

… increase the visibi lityin your global supply

chain?

… improve forecastquality?

… systematically consider your inventory and

calculate safety stockfigures?

… optimize your shortterm distribution and

transportation planning?

… support you increating optimized

production plans in allyour factories?

… improve your salesorder entry confirmationand provide reliable salesorder confirmation dates?




Synchronize supply with demand in your global supply chain by balancing push and

pull network-planning processes and by

handling replenishment and production

based on actual demand.

APO DP: Improves the forecast quality and

planning accuracy

APO SNP: Improves visibility across your global

supply chain and lowers inventory

APO PP/DS: Supports you in creating optimized

production plans

APO gATP: Allows state-of-the-art sales order

confirmation planning processes

APO TP/VS: Optimizes transportation loads and

minimizes transportation costs

APO Alert Monitor: Powerful exception message

system integrated in all APO planning modules

Global Available-to-Promise

Demand Planning

Supply Network Planning

Production Planning &Detailed Scheduling

Advanced Planning & Optimization

A l er t M oni t or

Transportation Planning &Vehicle Scheduling

How SAP APO is structured




Customers and releases

SAP APO by the Numbers

First release: SAP APO 1.1 (1998)

Current release: SAP APO 7.0 (9th APO release) - par t of SAP SCM

7.0

Outlook: Planned next APO shipment: Q4/2009 -

Enhancement package 1 for SAP SCM 7.0 (APO7.01)

Active customers: 2000+

Top Industries Adoption: CP, HighTech, Mill, IM&C, Chemicals,

Automotive, Life Sciences




APO DP (Demand Planning)

Comprehensive forecasting tool-set

Statistical forecasting with causal

and time-series methods Selection of best-fit model

Automatic outl ier detect ion available

Highly configurable planning bookswith macro functionality

Supporting aggregation /disaggregation logic

Lifecycle planning

Plan promot ions separately from therest of your forecast

Track & monitor forecast accuracy

Seasonal planning

Collaborative demand planning

Improved forecast quality

One tool for power and business user

Consolidated demand plan (differentregions, countries, departments, …)

Key BenefitsFeatures

Calculate and determine future demand to improve demand qualityand accuracy



©SAP 2008 /

Constant

Exponential smoothing

Moving average

Weighted moving average

Trend


Linear Regression

Season (without trend)


Trend - Season


Manual Forecasting

Seasonal linear regressionOthers

Croston (sporadic demand)

History

No Forecast

External Forecast

Causal Analysis

Multiple Linear Regression (MLR)

Influence Variables

Climate (e.g. Temperature)

Price

Advertising

Distribution ...

AUTOM

ATED

PICK

BEST

Composite Forecast

Own defined model selection

based on error measure Combine different forecasts

Weight each forecast (timeindependent or dynamic)

Statistical Forecasting Methods



©SAP 2008 /

Demand Planning Master Data:

Characteristic Value Combinations

Characteristics

Product

Location

Customer

Characteristicvalues

Prod01

Prod02 Prod03

DC01 DC02 DC03

Cust01 Cust02 Cust03

Characteristicvalue combinations

(CVCs)

Prod01, DC01, Cust01 Prod01, DC01, Cust02 Prod01, DC01, Cust03 Prod01, DC02, Cust01 Prod01, DC03, Cust02 Prod01, DC03, Cust03 ……. Planning

ObjectStructure




Duet Demand Planning (not part of APO)

Faster and accurate plans aligned to customer demandrequirements

Leverages the full capabilities of Microsoft Excel (formulae,

funct ions, graphics, etc.)

Presents an intuitive interface that requires minimum training

Delivers improved user acceptance and product ivity through simpleand timely access to relevant business information

Designed as a composite application based on Enterprise SOA

Duet Demand Planning enables managers, sales executives,and planners to utilize the full Microsof t Excel capabilities asan intuit ive planning front end for SAP SCM




Integrate purchasing, manufacturing,distribution, and transportation

Consider constraints and penalties toplan the product flow along thesupply chain

Advanced safety stock methodsconsidering multilevel supply chainnetworks and demand variabil ity

Supports system wide inventorymodeling and planning

Enable planning on different levels of detail (aggregated planning)

Choice of heuristic-, rule- or optimization-based algor ithm

Increased visibi lity over the overallsupply chain

Optimized sourcing and capacityutilization

Reduced inventory levels

Improved customer service

APO SNP (Supply Network Planning)


Calculates quantities to be produced and delivered to the locationsto match customer demand and maintain desired service levels.



©SAP 2008 / SNP Overview, Dr. Gerald Heisig, 11

Algorithm: SNP Heuristic

Local DC

30%

70%

40%

60%

SNP Heuristic is a heuristic without considering constraints inthe supply network.

SNP Heuristic does the sourcing based on quota arrangementsand priorities.

As addit ional planning step, Capacity Levell ing can be

performed in order to resolve capacity overloads.

Planned StockTransfers

Planned Production

Orders

Planned Purchase

Requisitions

Demands

Demands

100%100%

Plant

DC

Supplier




Algorithm: Capable-To-Match (CTM)

Local DC CTM planning uses a constraint-based heuristic planningapproach for the cross-supply-chain checks of capacities as wellas material availabili ty.

CTM considers predefined supply categories and demandpriorities

CTM supports characterist ic-based planning (as of SCM 7.0)

Planned Stock Transfers-> Transportation and Handling Capacities

-> Quota Arrangements and Procurement Priority

Planned Product ion Orders

-> Production Capacities

-> Priority o f PPM/PDS

Planned Purchase Requisi tions

-> Procurement Priorities

Demands

-> Priority Classes

Demands

-> Priority Classes

Prio 2

Prio 1Prio 1

Prio 1

Prio 2Prio 1

Plant

DC

Supplier




Algorithm: SNP Optimization

Local DC

$

SNP Optimization is a cost-based opt imization considering allcapacity constraints and material availability in the supplynetwork.

SNP Optimization determines the optimal solution based onpredefined costs for supply alternatives and demands.

Planned Stock Transfers-> Transportation and Handling Capacities

-> Transportation Cost

Planned Producti on Orders

-> Production Capacities

-> Production Costs

Planned Purchase Requisi tions

-> Procurement Costs

Demands

-> Cost f or

- non deliveries

- late deliveries$

$

$

$$

Plant

DC

Supplier




Distribution Planning: Deployment and Transport

Load Builder

Deployment determines the best short -termsolution to allocate available supply to meetdemand and to replenish stocking locations.

Deployment confirms or changes the supplynetwork p lan depending and creates aoptimized plan for stock transfers

The rules-based Deployment Heuristicdistributes the products according toquotations and priorities.

The Deployment Optimizer distributes theproducts according to cost while also

considering specific rules.

Supply

Supply

Stock

Stock

Stock

D em an d

The Transport Load Builder (TLB)groups deployment results for singleproducts (i.e. confirmed stocktransport purchase requisitions) tomulti product stock transport orders.

The TLB considers factors li kevolume, weight or number of pallets tofill transport vehicles optimal.

Plant

DC



©SAP 2007 / PP/DS Overview 15

Operational Planning – Production Planning

and Detailed Scheduling (PP/DS)

Purpose Create procurement proposals

Optimize and plan the resource schedule and theorder dates/times in detail

Plan critical products and bottleneck resources Create executable production plans

Benefits: Reduce lead times

Increase on-time delivery performance Increase the throughput of products

Reduce the stock costs, through better coordinationof resources, production, and procurement

Optimization integrated into PP/DS




APO PP/DS (Production Planning & Detailed

Scheduling)

Capacity-Load Optimization

Optimal Sequencing

Flexible & Graphical Activity Scheduling

What-if Analysis & Simulation

Configurable Exception Alert Monitor …

Optimal production sequence that is feasibleand can be executed.

Al lows simulat ion of various planningscenarios to determine optimal schedule.

Optimization based on actual constraintsensures reliable delivery due date promises.


Multi-level production planning

Order Pegging

Use existing or own developed heuristics

Determines how, when, and where resourcesand materials should be deployed to

accomplish the production goals.

Master planning for materialsand capacity (resource loads).


Production Planning delivers a short term plan that matches overall supplyto demand, given available resources and production methodology.

Detailed Production Scheduling determines optimal product ion sequencefor execution to meet delivery commitments based on actual constraints on

the shop floor.




Powerful Tools : Detailed Scheduling Planning

Board

Save your ownsimulation

Resource View

Product View




Feature: Multi-level problem solving with order

pegging

10

30

30

50

50

80 70

50

50

50

50

50

20 10 40 60

100

100

30 20 50

305020

30

10 20 10 40 50

(+20)

(-10)

Excess

coverage

Shortage

Delay

Sales Order

Planned Order

Planned Order

Pur. Requisition

Dependent Req.

Dependent Req.




Screenshot: Order context (table view)

Demand

Which orders cover the demand…




Feature: Capacity Reservations

Guarantee most profi table capacityutilization

Import from SNP optimization result

Flexible levels of finite check

Release capacity prior to production to fil ltotal capacity

Conversion from t ime to production unit

Example

Capacity Reservations for namedcustomers

Unreserved capacity everyone can use it

Collective reservation not namedcustomers can use it




Industry Solutions

IMC and AD: Scheduling for Project Manufacturing

Mill and Mining: Block Planning

Auto: Model Mix Planning




Production Scheduling

ProjectPlanning

AdvanceProcurement

EngineeringEngineering

ChangeManagement

QualityAssurance &

Control

ManufacturingExecution

Shipping,Assembly &

Start-Up

ProductionPlanning &

Optimization

ProductionScheduling

Project Planning

Manufacturing

Procurement /Warehouse

Monitor alerts on projects / main assemblies

Pegging – automatic matching of demand and supply

Visualization of complete order context

Alerts - Early warning system late orders, bottlenecks

Filter on alerts in order context, sort late orders by delay

Interactive scheduling to reduce late projects, orders

Detect critical path for order context

Reduce buffers on critical path

Reduce duration of project order operations

Multi-level forwards/backwards scheduling

Interactive scheduling to reduce capacity overload

Evaluate resource utilization, filter on overload

Alternative work centers, sequences, production versions

Switch to external procurement, subcontracting

Work overtime, run additional shiftsAdaptiveness and Simulation

What-if simulation, compare alternatives




Block Planning (Mill and Mining)

Business Requirement

Combine optimal resource utilization and precise customer due dates

Consider constraints like minimal and maximal lot sizes, setup time, fixed maintenanceintervals etc.

Plan bottleneck resources in an early planning phase where the final products and productcharacteristics are not known

Solution

Define time intervals on a resource where products with certain characteristics can beproduced

Operations of orders are scheduled into matching blocks

100 to, grade A, grammage 180 120 to, A, 200 75 to, C, 150

Product xy A, 180

Quality S

Width 1000

Product vb A, 200

Quality M

Width 1200




Orders Line network

Model-Mix Planning: Situation

Objective

Generation of a feasible planfor highly configurable

products with high volume

Adherence to promiseddelivery date

Position

Equaldistribution

Block

X in Y

Distance

Quantity

Business value

Balanced usage of productionresources

Early identification of potentialbottlenecks

Reliable delivery date leads toincreased customer

satisfaction

Restrictions




Model-Mix-Planning

day x day x+1 day yday 1

Period Slot

Sequencing

11

22



©SAP 2007 / PP/DS Overview 26©SAP 2008 /

A snapshot of SAP SCM customers

Demand Planning andSupply Planning

Supply Network Collaboration

Order Fulfillment & Transportation Management

Production Planning &Detailed Scheduling




SAP SCM

Ms. Sherry [email protected]

Ms. Fan [email protected]

www.sap.com/scm

Q & AThank you for your

interest!

“ This presentation is a preliminary version and not subject to your license agreement or any other agreement with SAP. This document

contains only int ended strategies, developments, and f unctionalities of the SAP® product and is not intended to be binding upon SAP to any

particular course of business, product strategy, and/or development.Please note that this document is subject to change and may be

changed by SAP at any time without not ice.

SAP assumes no responsibility for errors or omissions in thisdocument.”

mailto:[email protected]


http://www.sap.com/scm

http://www.sap.com/scm





www.orbis.de

ORBIS Consulti ng Shanghai

()

Zao Fong Universe Building, 3D

1800 Zhongshan Xilu

200235 Shanghai

Tel.: +86 21 6440 1276

Fax: +86 21 6440 1279

http://www.orbis-china.com.cn

André Bohe

ORBIS Consulting Shanghai

Forecasting and Allocation in Supply-Chains

http://www.orbis.de/

http://www.orbis-china.com.cn/


http://www.orbis.de/



2 ©ORBIS Consulting Shanghai 20104

Forecast and Planning situation

SupplyChain Structure

Methods / Conflicts

1.a) Definition of Goals and Functionalities in SAP R/3

1.b) Realisation with SAP R/3

2.a) Definition of Goals and Functionalities in SCM-DP

2.b) Realisation with SAP SCM-DP

3.a) Definition of Goals and Functionalities in SCM-SNP

3.b) CurrentProject Status SAP SCM-SNP

3.c) Next Steps

AGENDA




Forecast and Planning Situation




Forecast and Planning Situation – Supply Chain Structure

Central Warehouse Production SitesLogistic Center

Material Supply

Material Supply

Sales OrdersSales Orders

Cross Company Scenario‘s

Cross Client Scenario‘s

Demands

Demands

Situat ion: - Di fferent SAP Systems wi th di fferent Cl ients

- more than 100 SAP Locations

- more than 10 Non-SAP Locations




Forecast and Planning Situation – Methods/Conflicts

Logistic Center

With Stock-Responsibili ty

Unreliable CustomerForecasts

Min/Max-Levels(not flexible)

SaftyStock(not dynamic)

Phase-InPhase-Out

Priority 1:

Demands, coming from

Real sales-orders

Priority 2:


Min/Max-Triggers

Central Warehouse

With Stock-Responsibil ity




Forecast and Planning Situation – Methods/Conflicts

Priority 1:


real sales-orders

Priority 2:


Min/Max-Triggers

Not able todistinguish betweendemands

Priorityof ownCust.Demands

Calculate ownForecastto Prod.

sites

Logistic Center


Central Warehouse





1.a) Definition of Goals and Functionalities SAP-R/3




Definition of Goals and Functionalities

„ Reduce Stocks in Logistic Center by replacing manualReorderpoint Planning with automatic consumption based

forecasting“

Automatic Calculation of consumtion based Forecast-Figures

Forecast-Figures and PIRs on weekly basis

Consumption of Forecast with Sales Orders

Automatic Transfer of Forecast-Figures to MRP

Automatic Creation of Transfer P.O.s after MRP




Realisation with SAP R/3





SOP

Projects an„IndependentForecast“ by weekbased on 52 weeksusage history. Thisforecast istransferred to

Demand Mgt. whereit is converted intoPlanned IdependentRequirements

Run massSales Forecast

16 Weeksforecast forProduct-Group

Demand Mgt

Manages rules forthe impacts on“PIRs” and foradjusting “PIRs”accordingly Consumption bySales Orders

Transfer intoPIRs foruse inMRP-Run

MRP

Keeps track of impacting transactionsand PIR’s.Calculates “NetRequirements” for theCoverage period,based on Demand

Management figures.Produces PurchaseRequisitions

RequirementsListing

RunMRP

Stock,

PIR‘s

Sales Orders,

Transfer P.Os

Purchase

Requisitions

Purchasing

Purchase Requisition willbe automaticallyconverted into PurchaseOrders according toreplenishment horzion

Purchase

Orders





Still open Issues

No global view on s tocks and Planning Situation (Cross System, cross Client

and Non-SAP Systems)

No Alert Functionality for cr itical Stock-Levels / Stock coverage

No possibil ity to track the Requirements (Customer orders / Stock refill)

No automatic mass processing in SOP for new products

“ Isolated” Planning of single Logistic Centers

No Consideration of “ non-working” periods




Definition of Goals and Functionalities in SAP-SCM

A.) “ Get Global view on stocks and planning situation”

Integrate all SAP-Systems/Clients and Non-SAP Systems

Define Alert Functionality for Stock-Levels and Stock coverage

B.) „Replace R/3 SOP-Forecast with SCM-DP Forecast and provide

Key-Figure for SNP-Planning“

Considerplant holiday in Forecastingmechanism

IncludenewProducts automaticallyforForecasting

Use Phase-In / Phase-Out Functionality





A.) “Get Global view on stocks and planning situation”

1. Definition of Data-Flow model

Source-System Level:SAP SystemsNon-SAP Systems

Source-System Level:SAP SystemsNon-SAP Systems

DataSourceLevel:Definition of fieldsandUpload-processDataSourceLevel:Definition of fieldsandUpload-process

Transformation Level: Field-Mapping and Rules Transformation Level: Field-Mapping and Rules

Info-Cube LevelInfo-Cube Level

Info-Cube LevelInfo-Cube Level






2. Definition of Process-Chains and upload cycles






3. Definition of Tableau

Country

Prod. Hierarchy

Product

Location

Nav. Attributes






4. Definition of Alert-Monitor and Alert-Handling

Mail,

triggerd

by Alert

Creation

Alerts, created after

Macro-Calculation

and Result-Check

Alerts, created after

Macro-Calculation

and Result-Check





B.) „Replace R/3 SOP-Forecastwith SCM-DP Forecastand provideKey-Figure for SNP-Planning“

1. Enlargement of existing Settings by Forecast Key-Figures and -models

InfoArea, InfoObjectCatalog, InfoObject

Planning Object Structure Planning Area (expand with Forecast-Figures)

Planning Tableau (expand with Forecast-Figures)

2. Creation of Forecast Profile





Realised Functionalities:

BW-functionality to collect data from Non-SAP systems

Process chain to define update and upload procedures

Global view on Stocks , Stockranges and other Key-Figures (across

Clients, across Systems) with Planning Tableau possible

Extended Planning structrues and levels (clearly arranged Display of Key-

Figures and Graphics)

Automatic Integrat ion of new products to be forecasted via Core Interface





Realised Functionalities:

Individual Calculation of Key-Figures with Macro-Technology

Automatic Alert-Creation Mail to responsible Person (direct link)

More forecasting methods available (e.g. Statist ical Forecast, causal

analysis, Croston, Holt-Winters)

Considering Factory-Calendar in Forecast-Calculation

„ Like-Modelling“ in Case of Phase-in /Phase-out Products

„SCM-DP is easier to handle more flexible and offers muchmorefunctions and possibilities compared to R/3-Functionalities“




3.a) Definition of Goals and Functionalities for SCM-SNP




Definition of Goals and Functionalities in SAP-SCM

“ Planning of entire Supply-Chain based on DP Forecast Key-Figures

with Prioritisation of actual Demands ”

„ Calculate and allocate quantit ies for production plants

„ Reduce Costs in entire Supply Chain”




3.b) Actual Project Status SAP SCM-SNP




Actual Project Status SAP SCM-SNP

Planning methods

Heuristic CTM Optimization

Passes on demand /generates reallocations

BOM explosion / generatessupply

Interactive / local capacityevaluation

Infinite planning / (MRPII- approach)

Rule-based finite planningof individual needs

Integrated finite planning

Prioritization of demand andsupply (rules)

Generates reallocations

BOM explosion / generatesfeasible supply

Constraint-based planning

Prioritization of demand andsupply (costs)

Generates reallocations

BOM explosion / generatesfeasible supply

Linear programming

Decision-Process for CTM or Optimization because Priorit ization of

Demands necessary




Actual Project Status SAP SCM-SNP

Optimization With Optimzier it is only possible run abucket-based planning

Character based Optimization is notprovided (Variant Configuration)

Optimizer does not „know“ Make-to-Order production

CTM Decision pro




3.c) Next Steps




Next Steps

To Do:

1. Create Prioritization rules for different demand categories (sales orders;

PIRs; Transfer P.o.)

2. Create Prioritization rules in between sales orders (material availability

date; delivery priority; recieving location)

3. Definie CTM-Planning Parameter with link of prioritized demands to

prioritized receipts

4. Create PP/DS Alerts (Quantity + Scheduling – Alerts) for open demands

after CTM-Run

5. Check Possibility to change CTM results with BEx-Analyzer and copy back

to SNP-Planningtableau via IP (integrated Planning)



29 ©ORBIS ConsultingShanghai 20104

3rd SIG Automotive Meeting

Thank you for your Attention

André Bohe

ORBIS Consulting Shanghai Co., Ltd. -

ZAO FONG Universe Building, Office: 3D

No. 1800 Zhongshan Xilu (/Yishan Lu) - 1800 3D

200235 Shanghai

Tel: +86 21 6440 12- 76

Fax: +86 21 6440 12- 79

Mobile: +86 131 2215 2136

Email: [email protected]

www.orbis-china.com.cn





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