Demand-driven Procurement

SAP Best Practices for Retail (India)

SAP Best Practices

Scenario Overview – 1

Purpose This scenario begins with the required planning steps. The forecasting processes and

different consumption-based MRP procedures. The supply source determination schema in SAP R/3 is then outlined in brief and the various options explained. The Purchase Order process shows you how to work with the Planning Workbench. Order optimizing comprises quantity optimizing, investment buying, load building and goods receipt capacity check. The last section shows you how vendor evaluations can be used to optimize goods procurement.

Benefits Alongside article-specific inventory management, the SAP R/3 System provides an accurate

data basis for using the comprehensive range of requirements planning methods. The main task in requirements planning is to monitor stocks and, in particular, generate automatic order proposals for purchasing.

With the planning workbench, extensive functionalities for order optimization and vendor evaluation you can handle the whole process for demand-driven procurement.

Key process flows covered Requirement Planning Planning Run Supply Source Determination Contract Processing Planning Workbench Order Optimizing Purchase Order Monitoring Vendor Evaluation

Purpose and Benefits:

Scenario Overview – 2

Required SAP EHP3 for SAP ERP 6.0

Company roles involved in process flows Retail Non-Seasonal Purchaser Retail Non-Seasonal Purchaser – Power User Retail Non-Seasonal Purchase – Manager Retail Replenishment Planner Retail Replenishment Planner – Power User Retail Master data Manager Retail Warehouse Clerk Retail Store Manager

SAP Applications Required:

Process Flow Diagram

Requirement Planning

MRP ProcedureAutomatic

reorder point planning

Carry out the individual

Forecast from the article

master

Optional: Evaluating the

Planning Results

Enter goods receipt for

purchase order

Optional: Planning File

Optional:Reprocess the

Forecast results

Ev

en

t

Unload Materials

from Truck

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R.

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P

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Convert the Purch.

Requisition to a Purchase Order

MRP ProcedureTime-phased

planning

MRP ProcedureForecast-based

planning

MRP ProcedureTime-phased planning with reorder point

planning

Alternative: Carry out the

individual Forecast from

the menu Carry out Single-Item, Single-Level

Planning

Process Flow Diagram

Supply Source Determination

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Supply Source: Source List

Maintain Source List

Automatic Conversion of the Purchase

Requisition to a Purchase Order

Create Purchase Order with reference

to P. Requisition

Supply Source: Purchase Info

Record

Create Purchase

Requisition

Re

tail

No

n-

Se

as

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P

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U.

Goods receipt in DC

Ev

-e

nt Unload

Materials from Truck

Re

tail

R

ep

len

. P

lan

ne

r P

ow

er

Us

er

Create Contract

Create Purchase

Requisition (Assign Supply

Source)

Release Order for the Contract

Process Flow Diagram

Purchase Order Process and Vendor Evaluation

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Create Purchase Order

via eCATT

Plan Workbench:

Online Requirements

Planning

Re

tail

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as

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P

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Goods receipt in DC

RN

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M

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Return on Investment

Order Cancellation

Order Release

Order Optimizing: Investment Buying Run

Alternative: Simulate

Investment Buying Run

Investment Buying

Analysis

Order Optimizing:

Load Building: Carry out

Single-Level, Single Item

Planning

Convert Purchase

Requisition to Purchase Order

Automatic Load Building

Manual Load Building

Maintaining the Vendor

Evaluation Manually

Vendor Evaluation Automatic

Reevaluation

Comparison of Evaluations Ranking List

Executing an Evaluation of

the Art./Merch. Cat.

eCATT for Vendor

Evaluation

Create Purchase Order

Order Optimizing:

Goods receipt capacitiy check

Requirements Planning

Objectives

Automation of the procurement process on site level

Inventory monitoring of a site

Central + distributed application

Requirements Planning: Forecasting Model

Basic value

Basic valueTrend value

Basic valueSeason indices

Constant modelTrend modelsSeasonal modelsSeasonal trend models

Manual

Models Parameters

Automatic

Model selection

Automatic

T: Test for trend

S: Test for season

A: Test for trend and season

Manual model selection with additionalautomatic test

Selection

Requirements Planning: Overview

RP type

Requirements

Planning

Consumption values

10/2000 98711/2000 100012/2000 1251

PurchaseRequisition

Item 10

Item 20

Purchase Order

Item 10

Item 20

Forecastindicator ?

ArticlesArticles

Forecast

Forecast Applications

Forecast Application

Calculation of the reorder

point and the safety

stock by the forecast.

Calculation of the reorder

point and the safety

stock by the forecast.

The forecast values are

copied as requirements

and replace the reorder

point. Calculation of the reorder

point and the safety

stock by the forecast.

The forecast values are

copied as requirements

and replace the reorder

point. Calculation of the reorder

point and the safety

stock by the forecast.

Reorder Point Planning

The forecast values are

copied as requirements. The planning run is only

carried out on predefined

dates. Time-Phased planning can

be applied in combination

with Reorder Point

planning.

The forecast values are

copied as requirements. The planning run is only

carried out on predefined

dates. Time-Phased planning can

be applied in combination

with Reorder Point

planning.

Forecast-Based Planning

Time-Phased Planning

Reorder PointPlanning

Source Determination

Purchase Order: Supply Source Determination

Quota arrangementQuota arrangement

??60%60% 40%40%

2

Source listSource list

Outline agreementsPurch . info records

Regular vendor

Purch. requisitionWITHOUT supply source

Article PCS-04-MRP201for VZ01 50 pc

?3

MIT

Supply source ind.

1

Stock transfer deliv-ery schedules

Supplying sites

• Find external source ofsupply only

• Find internal source ofsupply only

• Find internal supply sourcefirst, then external

• Find external supply sourcefirst, then internal

Purch. orderVendor PCS-V201

Art. 3214 20 pc

Art. 5110 15 pc

PReqVendor ??

Art. 321420 pcArt. 511015 pc

ArticleArticle

5

4 Supply region ?

Vendor R3001Vendor PCS-V201

Order Processing

Planning Workbench

Manual planning

Select worklist - Site - Vendor

Material selection - Stock planner - Merchandise category

Default data - Item category - Account assignmentcategory

Control data - Sort algorithms

Application settings - Display

Worklist settings - Sequence

Internet services

WWW

e-mail

General settings

- Hide processed worklist

- Expand levels with one element

- Display symbols

Start variant

Planning Workbench: Manual Planning

Planning workbench with integrated manual planning

Worklist personalization

Simple display navigation in tree format

Display of additional information, for example, site or vendormaster data

Direct access to the Internet or mail system

Worklist view personalization

Manual planning

Display of consumption and/or forecast data

Use of restriction profiles

Automatically generated purchase requisitions

Order Optimizing

Quantity Optimizing: Rounding Profiles

0 No rounding1 Round up to a multiple of the order

units/sales units2 Round up to order/sales/logistical units of

measure3 Round up to order/sales/logistical units of

measure, or log. unit of measure, zero qty for order units only

Check the permitted units of measure used by vendors or recipients

• Rounding method

• Rounding rule

• Unit of measure group

Dynamic profileDynamic profile

AUn % Up % Down CAR 70.0 10.0 LAY 80.0 10.0 PAL 90.0 10.0

Dynamic Rounding Profiles

Investment Buying: Purpose

Investment buying is a method of determing procurement proposals that take account of future price increases, and are to be covered by external procurement

The aim of Investment buying is to purchase articles

in suitable quantities

in good time

as cheaply as possible

taking account of various influencing factors

Investment Buying: Overview

Open PO quantities

Stock on-hand

ROI Parameters

Forecast

InvestmentBuyingAnalysis

Protokoll Log of items found relevant to Purchasing

Purchase requisitions

-

Worklist

Purchase orders

Purchase price conditions

Purchase price higher than future price

Actual ROIis lower thanrequired ROI

Can

cella

tion

Can

cella

tion

Calculate order quantity

Select condition changes

Select relevant articles (Info Record)

Simulate purchase price

Calculate ROI

Load Building

Load building is a process used to group together purchase orders and other requirements, while taking account of procurement restrictions, and thereby reduce procurement costs.

Definition

Load Building Overview

Purchase requisitions

otherorder

processes

Manual load buildingEDI to vendor

Automaticload building process

Req. Planning Investment buying process

Promotionorders

Simulation list process

Purch. Req.. ...Purch. req. ...Purch. Req.. ...

Purch. order...Lieferant 326

Purch. Order...Vendor 326

Without existingrequirementelements

Purchase orders

Goods receipt capacity check

Up to now, there was no check for sufficient capacity for the delivery date of a planned delivery in the goods receipt area of a warehouse. If the goods are delivered to a warehouse door that does not have any free capacity, there can be a bottleneck in the goods receipt area of a warehouse. At the same time, another warehouse door might have enough capacity.

Advantages for the retailer and vendor:

Taking the goods receipt capacity into account prevents potential bottlenecks.

The vendor's delivery date planning utilizes the capacity of the retailer's goods

receipt areas.

The vendor can schedule the deliveries better since the planned time window for

inbound deliveries is binding.

Vendor Evaluation

Functions in Vendor Evaluation

Delivery datesPrices

Quantities

GR checks

Quality audits

Complaints

Vendor C

Regular vendorfor

Article 1 ?

Vendor A Vendor B Vendor C

Vendor Evaluation

Automatic Subcriteria: Overview

Main Criteria

Price

Quality

Delivery

Service

Subcriteria

Price levelPrice developmentGR inspectionComplaintsAuditOn-time deliveryQuantity reliabilityShipping instructionsConfirmation

Analyses for Vendor Evaluation

Evaluation for Article 1General Vendor Evaluation

84 75 92 88 81Vendor A

General Vendor EvaluationTotal PreisPrice QualQual .. LiefDlvy.. ServiceService

90

84

81

92

75

90

90

92

76

93

88

74

85

81

84

Analysis for Article/ Merchandise category

Vendor Evaluation EvaluationTotal PreisPrice QualQual .. LiefDlvy. ServiceService

88

81

81

90

93

76

92

74

86

84

Vendor A

Vendor C

Evaluation Comparison

Total PreisPrice QualQual .. LiefDlvy. ServiceService

Vendor B

Vendor A

Vendor C

Total PreisPrice QualQual .. Dlvy. ServiceService

88 81 93 92 86

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