apo basics

Supply Chain Planning with SAP APO

Functional Solution Management SCMApri 2010

© SAP 2008 / Supply Chain Planning with SAP APO / 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 faceLost sales due to missing capacity / components orunnecessary production and high inventory

Excessive work-in-capital; high scrap/expiry costs forproducts with shelf life or short life cycle

No systematic consideration of inventory in your supplychain, 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 visibilityin your global supply

chain?

… improve forecastquality?

… systematically consideryour 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 confirmation

and provide reliable salesorder confirmation dates?


Synchronize supply with demand in yourglobal supply chain by balancing push andpull network-planning processes and byhandling replenishment and productionbased on actual demand.

APO DP: Improves the forecast quality andplanning accuracy

APO SNP: Improves visibility across your globalsupply chain and lowers inventory

APO PP/DS: Supports you in creating optimizedproduction plans

APO gATP: Allows state-of-the-art sales orderconfirmation planning processes

APO TP/VS: Optimizes transportation loads andminimizes transportation costs

APO Alert Monitor: Powerful exception messagesystem integrated in all APO planning modules

Global Available-to-Promise

Demand Planning

Supply Network Planning

Production Planning &Detailed Scheduling

Advanced Planning & Optimization

Alert M

onitor

Transportation Planning &Vehicle Scheduling

How SAP APO is structured


Customers and releasesSAP APO by the Numbers

First release: SAP APO 1.1 (1998)

Current release: SAP APO 7.0 (9th APO release) - part of SAP SCM7.0

Outlook: Planned next APO shipment: Q4/2009 -Enhancement package 1 for SAP SCM 7.0 (APO

7.01)

Active customers: 2000+

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


APO DP (Demand Planning)

Comprehensive forecasting tool-setStatistical forecasting with causaland time-series methodsSelection of best-fit modelAutomatic outlier detection availableHighly configurable planning bookswith macro functionalitySupporting aggregation /disaggregation logicLifecycle planningPlan promotions separately from therest of your forecastTrack & monitor forecast accuracySeasonal planningCollaborative demand planning

Improved forecast qualityOne tool for power and business userConsolidated demand plan (differentregions, countries, departments, …)

Key BenefitsFeatures

Calculate and determine future demand to improve demand qualityand accuracy

© SAP 2008 /

ConstantExponential smoothingMoving averageWeighted moving average

TrendExponential smoothingLinear Regression

Season (without trend)Exponential smoothing

Trend - SeasonExponential smoothingManual ForecastingSeasonal linear regression

OthersCroston (sporadic demand)HistoryNo ForecastExternal Forecast

Causal Analysis

Multiple Linear Regression (MLR)Influence Variables

Climate (e.g. Temperature)PriceAdvertisingDistribution...

AUTOMATED

PICK

BEST

Composite Forecast

Own defined model selectionbased on error measureCombine different forecastsWeight each forecast (timeindependent or dynamic)

Statistical Forecasting Methods

© SAP 2008 /

Demand Planning Master Data:Characteristic Value Combinations

Characteristics

Product

Location

Customer

Characteristicvalues

Prod01Prod02Prod03

DC01DC02DC03

Cust01Cust02Cust03

Characteristicvalue combinations

(CVCs)

Prod01, DC01, Cust01Prod01, DC01, Cust02Prod01, DC01, Cust03Prod01, DC02, Cust01Prod01, DC03, Cust02Prod01, DC03, Cust03……. Planning

ObjectStructure


Duet Demand Planning (not part of APO)

Faster and accurate plans aligned to customer demandrequirementsLeverages the full capabilities of Microsoft Excel (formulae,functions, graphics, etc.)Presents an intuitive interface that requires minimum trainingDelivers improved user acceptance and productivity through simpleand timely access to relevant business informationDesigned as a composite application based on Enterprise SOA

Duet Demand Planning enables managers, sales executives,and planners to utilize the full Microsoft Excel capabilities asan intuitive planning front end for SAP SCM


Integrate purchasing, manufacturing,distribution, and transportationConsider constraints and penalties toplan the product flow along thesupply chainAdvanced safety stock methodsconsidering multilevel supply chainnetworks and demand variabilitySupports system wide inventorymodeling and planningEnable planning on different levels ofdetail (aggregated planning)Choice of heuristic-, rule- oroptimization-based algorithm

Increased visibility over the overallsupply chainOptimized sourcing and capacityutilizationReduced inventory levelsImproved 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 additional planning step, Capacity Levelling can beperformed in order to resolve capacity overloads.

Planned StockTransfers

Planned ProductionOrders

Planned PurchaseRequisitions

Demands

Demands

100%100%

Plant

DC

Supplier


Algorithm: Capable-To-Match (CTM)

Local DCCTM planning uses a constraint-based heuristic planningapproach for the cross-supply-chain checks of capacities as wellas material availability.CTM considers predefined supply categories and demandprioritiesCTM supports characteristic-based planning (as of SCM 7.0)

Planned Stock Transfers-> Transportation and Handling Capacities

-> Quota Arrangements and Procurement Priority

Planned Production Orders-> Production Capacities-> Priority of PPM/PDS

Planned Purchase Requisitions-> 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 optimization 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 Production Orders-> Production Capacities

-> Production Costs

Planned Purchase Requisitions-> Procurement Costs

Demands-> Cost for- non deliveries- late deliveries

$$

$

$$

Plant

DC

Supplier


Distribution Planning: Deployment and TransportLoad Builder

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

Deployment confirms or changes the supplynetwork plan 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 alsoconsidering specific rules.

Supply

Supply

Stock

Stock

Stock

Dem

and

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 likevolume, weight or number of pallets tofill transport vehicles optimal.

Plant

DC

© SAP 2007 / PP/DS Overview 15

Operational Planning – Production Planningand Detailed Scheduling (PP/DS)

PurposeCreate procurement proposals

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

Plan critical products and bottleneck resourcesCreate executable production plans

Benefits:Reduce lead times

Increase on-time delivery performanceIncrease 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 & DetailedScheduling)

Capacity-Load OptimizationOptimal Sequencing

Flexible & Graphical Activity SchedulingWhat-if Analysis & Simulation

Configurable Exception Alert Monitor …

Optimal production sequence that is feasibleand can be executed.

Allows simulation of various planningscenarios to determine optimal schedule.Optimization based on actual constraints

ensures reliable delivery due date promises.


Multi-level production planningOrder 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 production sequencefor execution to meet delivery commitments based on actual constraints on

the shop floor.


Powerful Tools : Detailed Scheduling PlanningBoard

Save your ownsimulation

Resource View

Product View


Feature: Multi-level problem solving with orderpegging

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)

Excesscoverage

Shortage

Delay

Sales Order

Planned Order

Planned Order

Pur. Requisition

Dependent Req.

Dependent Req.


Screenshot: Order context (table view)

Demand

Which orders coverthe demand…


Feature: Capacity Reservations

Guarantee most profitable capacityutilizationImport from SNP optimization resultFlexible levels of finite checkRelease capacity prior to production to filltotal capacityConversion from time to production unitExampleCapacity Reservations for namedcustomersUnreserved capacity everyone can use itCollective 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 Engineering

EngineeringChange

Management

QualityAssurance &

Control

ManufacturingExecution

Shipping,Assembly &

Start-Up

ProductionPlanning &

Optimization

ProductionScheduling

Project Planning

Manufacturing

Procurement /Warehouse

Monitor alerts on projects / main assembliesPegging – automatic matching of demand and supply

Visualization of complete order contextAlerts - Early warning system late orders, bottlenecks

Filter on alerts in order context, sort late orders by delayInteractive scheduling to reduce late projects, orders

Detect critical path for order contextReduce buffers on critical path

Reduce duration of project order operationsMulti-level forwards/backwards scheduling

Interactive scheduling to reduce capacity overloadEvaluate resource utilization, filter on overload

Alternative work centers, sequences, production versionsSwitch to external procurement, subcontracting

Work overtime, run additional shiftsAdaptiveness and SimulationWhat-if simulation, compare alternatives


Block Planning (Mill and Mining)

Business RequirementCombine optimal resource utilization and precise customer due datesConsider 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

SolutionDefine time intervals on a resource where products with certain characteristics can beproducedOperations of orders are scheduled into matching blocks

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

Product xyA, 180

Quality SWidth 1000

Product vbA, 200

Quality MWidth 1200


Orders Line network

Model-Mix Planning: Situation

ObjectiveGeneration of a feasible plan

for highly configurableproducts with high volume

Adherence to promiseddelivery date

Position

Equaldistribution

Block

X in Y

Distance

Quantity

Business valueBalanced usage of production

resources

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/scmQ & A

Thank you for yourinterest!

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

contains only intended strategies, developments, and functionalities ofthe SAP® product and is not intended to be binding upon SAP to anyparticular course of business, product strategy, and/or development.

Please note that this document is subject to change and may bechanged by SAP at any time without notice.

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

mailto:[email protected]

mailto:[email protected]

http://www.sap.com/scm

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