APO Overview

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© SAP AG AP010 Preface-1

SAP AG 2001

Copyright 2001 SAP AG. All rights reserved.

No part of this publication may be reproducedor transmitted inany form or for any purpose without the express permission ofSAP AG. The information contained herein may be changedwithout prior notice.

All rights reserved.

Copyright

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SAP Advanced Planner and Optimizer (APO)

Level 2SAP R/3

Level 3SAP APO

Level 2SAP APO

SAP APO Overview

AP010 2 days

PP - Planning andExecution for Discreteand RepetitiveManufacturing

LO050 5 days

PP-PIProcess Manufacturing

LO060 5 days

liveCacheAdministration

BC555 2 days

Integration MasterData

AP205 2 days

Global ATP

AP230 2 days

Production Planning/Detailed Scheduling

AP220 3 days

SupplyNetwork Planning

AP215 3 days

Demand Planning

AP210 5 days

The level 2 course AP010, the first in the series of SAP Advanced Planner and Optimizer courses,provides an overview of the individual SAP APO components and is a prerequisite for allof the level 3 SAP APO courses.

The level 3 courses build on the knowledge gained during AP010 and broaden your working knowledgeof the individual SAP APO components. The five level 3 courses give detailed information on thefollowing areas: Demand Planning, Integration, Supply Network Planning, Production Planning andDetailed Scheduling, and Global Availability Check.System administrators can also attend course BC555 liveCache Administration, which is listed in theBasis Administation Training curriculum.



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Course Prerequisites

Prerequisites

Recommended

l General understanding of supply chain concepts

l None



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Target group

??

Target group

Duration

l Project team members involved in theimplementation of APO (Advanced Planner andOptimizer) in their company.

l 2 days

Notes to the user

The training materials are not intended as self-study programs. They complement the courseinstructor's explanations. There is space for you to write down additional information on each page.

There may not be enough time in the course to do all of the exercises. The exercises are additionalexamples that are done during the course. Participants can also use these examples to refresh or extendtheir knowledge after the course.



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Company Profile: Precision Pump Company

??

Precision Pump Company

Customers

Products

l The Precision Pump Company was launched in 1971 and is themarket leader, selling a large variety of high-tech standard pumps.It has been listed in the New York stock index Nasdaq 100 since1999.

l In the product catalog are turbomolecular, centrifugal,rotation and membrane pumps (for the manufacture ofultrahigh vacuums, for example).

l From the electronics industry, semiconductor industries,chemical technology, pharmaceutical technology, andprocess technology up to and including vehiclemanufacturers, and universities.

The Precision Pump Company was launched in 1971 and is the market leader, selling a large variety ofhigh-tech standard pumps. In the product catalog are turbomolecular, centrifugal, rotation and membranepumps. Its customers come from the electronics industry, semiconductor industries, chemicaltechnology, pharmaceutical technology and process technology up to and including vehiclemanufacturers, and universities. The company recently became ISO certified and has been listed in theNew York share index Nasdaq 100 since 1999.

ü In the rapidly growing business area of turbomolecular pumps in particular, the company has shown aclear rise in revenue over the past business year: in the semiconductor industries countless steps, fromwafer manufacture, to the final chip, can only be made under high vacuum conditions. In this area,there has to be ultimate pressure of < 10-10 mbar (i.e. ultrahigh vacuum).

ü During the current fiscal year, the company is planning to enter the booming DVD growth market.DVDs are a form of rewritable optical memory media. They are distinguished from the CD by theirlarge memory capacity. Coating equipment needed to create these rewritable DVDs also uses vacuumtechnology.

ü Via intensive "co-engineering" with manufacturers, Precision Pump Company has optimized a largenumber of products to match these special requirements.



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Plants and Distribution Centers

2400 DC Milan2400 DC Milan

2500 DC Rotterdam2500 DC Rotterdam

1000 Hamburg (main plant and companyheadquarters)1000 Hamburg (main plant and companyheadquarters)

2300 Barcelona2300 Barcelona3800 Denver3800 Denver

3000 New York3000 New York

PlantPlant DCDC



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BOM P-102

1 1 1 1Item 0010 0020 0030 0040 0050 00601 1

Pump Precision 102P-102(FERT, T-F2##)(1000, 0, _ )

1Casing

100-100(HALB, T-B1##)

(1000, 10, 2 )

1Fly wheel102-200

(HALB, T-B?##)(1000, 10, 2 )

1Shaft

100-300(HALB, T-B3##)

(1000, 0, _ )

1Pressure cover

100-400(HALB, T-B4##)

(1000, 10, 2 )

1DocumentP-100(T-F1##)

DRW, 000, 00

Screw100-130

(ROH, 100-130)(1000, 10007, 2 )

1 81Slug

100-110(ROH, T-T1##)(1000, 1000, 2 )

Flat gasket100-120

(ROH, T-T2##)(1000, 1000, 2 )

Screw100-130

(ROH, T-T3##)(1000, 1000, 2 )

Slug100-210

(ROH, T-T0##)(1000, 1000, 2 )

Item 0010 0020 0030 0010 1

1

Slug100-310

(ROH, T-T4##)(1000, 1000, 2 )

0010 1Slug

100-410(ROH, T-T5##)(1000, 1000, 2 )

0010 1

1003 Gusswerke(5300000866)

1003 Gusswerke(5300000867)

1006 Blacks(5300000720)

1011 Kugelmeier

(5300001081)

1002 M(5300000790)

1022 MaxWholesale

(5300000721)

1003 Gusswerke(?)

1011 Kugelmeier(5300001106)

1003 Gusswerke(?)

1011 Kugelmeier(5300001107)

1003 Gusswerke(?)

1011 Kugelmeier(5300001083)

SNP relevant Only R/3

This slide shows the R/3 BOM for the product P-102 (T-F2##). This BOM was transferred via CIF as aPP/DS BOM with the screw 100-130 only being planned in R/3. An SNP BOM was then generated fromthe PP/DS BOM. During automatic conversion it was defined that only the products P-102, 100-100,100-110, 100-300 and 100-310 are SNP relevant.

ü Legend: (Demo material number for SD, consulting)(training material type, training material number (xx = 00 - 20))

(plant, stock, single/collective requirements indicator)



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Contents:

APO Overview

l Introduction to Supply Chain

l Overview of APO Planning Applications



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Course Goals

This course will prepare you to:

l List the fundamental planning scenarios of theAdvanced Planner and Optimizer (APO)

l Explain the functions and interplay of theindividual APO components

l Describe the integration with the execution systemand information systems



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Unit Objectives

At the conclusion of this course, you will be able to

l Explain the concepts of Supply Chain Management

l List the advantages of APO

l Summarize the functions of the planningapplications in APO

l Explain the interplay of the individual planningapplications



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Preface

Course Content

Unit 1 Course Overview

Unit 2 Integration andTechnology

Unit 3 Modelling andEvaluation in APO

Unit 4 Demand Planning

Unit 5 Supply NetworkPlanning

Unit 6 Production Planning /Detailed Scheduling

Unit 7 Transportation Planning /Vehicle Scheduling

Unit 8 GlobalAvailable-to-Promise

Unit 9 APO SCM Implementation

Unit 10 Conclusion



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Course Overview Diagram

444

333Integration and Technology222

11 Course Overview

555

666

11

777

888

999

Modelling and Evaluation in APO

Demand Planning

Supply NetworkPlanningProduction Planning/DetailedScheduling

TransportationPlanning/Vehicle Scheduling

Global Available-to-Promise

Conclusion



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Business Scenario

l Precision Pump company would like to improvemanagement of its supply chain, in order torecognize bottlenecks earlier, improve usage ofresources and to reduce costs.

l Reduced lead times and the guarantee of materialand resource availability improve PumpPrecision's customer service.



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Increase customer responsiveness at least cost

Manufacturer DistributionSupplier

Information flow

Retail Outlet Consumer

Supply Chain Optimization

CASH FLOW

Transfer Transfer Transfer Transfer

The Supply Chain: From Supplier to Consumer

Supply Chain Management includes the management of materials, information, and financial flows in anetwork consisting of suppliers, manufacturers, distributors, and customers. The co-ordination andintegration of these flows within and across companies are critical in effective Supply ChainManagement.

Why manage the supply chain?

ü Lower sourcing costs of finished goods and raw materials

ü Improve customer service

ü Dramatically lower inventory levels

ü Leverage all resources to bring substantial benefits to a company



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Changing Consumer Buying Patterns• More products• Alternative ways to shop

CollaborativePlanning

• Sales• Purchasing

More Effective Planning• More accurate forecasting• Feasible plans• Lower inventory levels

Shortened CycleTimes

• Improvedcustomer service

• Flexible reactionto servicerequests

Increased Demand forValue-Added Programs

• Custom packs/displays

Why Have Supply Chain Management?

Innovation ? Companies today are being forced to adapt tochanges in the marketplace in order to stay profitable.



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Key Supply Chain Problems

Supply ChainLe

adtim

eD

eliv

ery

time

Suppliers

Plants

Customers

DCs

Pus

hP

ull

l Postponement

l Bullwhip Effect

The key supply chain problem is that the delivery time of products to the customer must be considerablyshorter than the production or the lead time. In order to realize this and to guarantee a high deliveryservice, inventory and safety stock must be built up at component or finished product level in plants ordistribution centers (DC).

You use postponement strategies to define how far the sales order links with the supply chain; in otherwords, where the decoupling of make-to-stock production (push strategies) (MTS), and make-to-orderproduction (pull strategies) (MTO), takes place.

The bullwhip effect refers to an increase in variability of a (constant) demand pattern - due to largefluctuations at the manufacturer or the supplier - as we move along the supply chain, triggered by lot sizecreation.

Implementing an APS system (Advanced Planning System) does not in itself solve supply chainproblems. It is also important that company bosses are prepared to consider making organizationalchanges to their companies, or at least looking into the possible benefits.



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Comparison of MRP II with APS Systems

AggregationLevel

PlanningHorizon

Demand Planning foranonymous demands

Master ProductionScheduling (MPS)

Material Requirements Planning forDependent Requirements (MRP)

Lot Sizing

Capacity RequirementsPlanning

MR

PII

APO

Scheduling Result:Feasible plans

APS (Advanced Planning Systems) is the description of the new generation of planning systems withsimultaneous quantities and capacity requirements planning.

The acceptances for the MRPII concept proved to be too restrictive:

ü Material planning has highest priority

ü Capacity requirements planning and scheduling are functions that are separate and subsequent tomaterial planning and are executed successively

ü Individual planning of separate products. The BOM demands are planned successively and are notlinked to each other (no pegging)

ü Evaluation and rescheduling of exception situations is feasible

ü Cross-plant planning and distribution resource planning do not have to be reflected in the system

Disadvantages of the MRPII concept:

ü The sequential planning process lasts too long; exceptions cannot be replanned quickly

ü Constraints and capacities are planned infinitely and require the plan to be postprocessed

ü Individual planning of separate products is not given for lot sizes and manufacture of co-products

ü Static safety and buffer times lead to long lead times and unrealistic capacity loads



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Strategic Application Level

Core Business Application Level

•Finance

•MaterialsManagement

•ProductionPlanning

•Sales

•HR

Open Systems

ScalabilityClient-Server

Flexibility

•••

SupplyChain

Solutions(APO)

liveCacheIntegration

CustomerRelationshipManagement

(CRM)

•Logistics

Core level

•Databasestructure

•Interfaces•Developmenttools

•Communication

Non-R/3Systems

ElectronicCommerce

B2B

BusinessInformationWarehouse

(BW)

SAP's Total Supply Chain Solution

StrategicEnterprise

Management(SEM)

R/3



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Advantages of APO

ª High performance using liveCache technology

ª Global server: integrates multiple OLTP systems

ª Collaborative planning via the internet

ª Simultaneous material and finite capacity requirementsplanning

ª Cross-plant optimization of the resource load

ª Sequence and setup time optimization of orders

ª Transportation optimization with route planning

ª Evaluation and analysis of orders

ª Seamless integration between APO and R/3



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Levels of Supply Chain Management

Decision of direction for the company

Supply Chain DesignNetwork Design (ND)

Operational aggregated planning (tacticalplanning)

Aggregated sales anddemand planning Demand

Planning (DP)Supply Network Planning

(SNP)

Ext. proc. planning Productionplanning

Delivery planning

Partner

Par

tner

External procurement Production Outbounddelivery

Externalprocurement at

customer

Operational detailed planning (operationalplanning)

Execution

Planning

Supplier

Cus

tom

er

SupplyChainCollaborationmarketplace

integration

SupplyChainCollaborationmarketplace

integration

Strategy planning

Tactical planning: strategy realization and infrastructure planning (plan infrastructure)

SNP PP/DS SNP ATP, TP/VSPP/DS

for example,LES, MM

for example,PP

for example, LES,MM, SD

In Supply Chain Management, there is a planning level and an execution level. Within the planninglevel APS systems are used (APS = Advanced Planning Systems), and at the execution level, ERPsystems (ERP = Enterprise Resource Planning) are used. The planning level is divided into differentplanning levels depending on the meaning of the decisions made: strategic, tactical and operational. Thecriterion for deciding what belongs to which planning level is not primarily the planning horizon butrather the scope of the planning. Each hierarchically superior level determines the ranges of the planninglevels below it.

Strategic level (strategy planning): Here, comparatively unstructured and simple planning tools suchas portfolio techniques (product life cycle analysis, Boston Consulting Group portfolios, McKinseyportfolios, for example) are used to make decisions about the direction of the company (such as productdiversification strategies, quality strategies, cost leadership).

Tactical level (strategy realization and infrastructure planning): decisions about direction arerealized at this level when the company is restructured based on the strategies. Tactical planning isdecisive for operational planning and execution because they form the planning environment in thecompany (planning personnel, IT systems for planning, their selection, implementation and settingparameters, planning processes) as well as the part of the company that physically executes (such asfactory planning, personnel planning, transportation planning, logistically-relevant IT system forexecution). This links the operational planning level and the execution level.

...



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Operational level (operational aggregated and detailed planning): Structured, recurring planningbased on tactical realization decisions such as strategies for settling sales orders and pre-planning, whichare not questioned again in operational planning. Operational planning can also be long-term to bridgebottlenecks that will occur in the future, such as early planning for seasonal requirements or planningruns to determine components with longer replenishment times. Planning for further planning in thefuture is usually done aggregated objectively or based on time since planning data is uncertain.Aggregated planning also serves to redirect tactical planning if necessary, for example, additional shifts,additional capacity, outline agreements with suppliers. Detailed planning attempts to optimally use thelogistic system within the limits set by tactical and aggregated planning and based on the most currentdata.

Execution level: Along with the development of the product (production, stock transfer, sorting, receipt,delivery), administrative activities are also performed at the execution level. These activities aresupported by execution systems, for example, when papers for production (production orders) areprinted.



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APO Planning Components

APO Product MapMonitor

Tactical

Detailed Planning

Scheduling

Supply Chain Cockpit

Supply NetworkPlanning

ProductionPlanning

&Detailed

Scheduling

Sales

Planning

BUY

Purchasing

DistributionPlanning

&

Deployment

TransportationPlanning

&Vehicle

Scheduling

Network Design

MAKE STORE MOVE SELL


Agg. Planning

Supply Chain Cockpit: A graphical tool for evaluating and controlling the supply chain.

Network Design: Strategic planning for analyzing, optimizing and reorganizing the supply chain. Long-term sourcing, production and distribution decisions are supported here.

Demand Planning (DP): aggregated and detailed demand planning with a variety of forecastingtechniques based on aggregated sales figures.

Supply Network Planning (SNP): Finite, cross-location, mid- to long-term production and procurementplanning with simultaneous material planning and capacity scheduling. Deployment is used to planshort-term replenishment.

Production Planning/Detailed Scheduling (PP/DS): Finite, detailed production planning. PP/DS usessimultaneous material planning and capacity scheduling, and optimization techniques to generatefeasible plans that are in the optimum sequence with the optimum setup-times.

Transportation Planning/Vehicle Scheduling (TP/VS): Optimizes use of transportation vehicles andselection of carriers. Generates deliveries and shipments.

Global Available-to-Promise (ATP): Rules-based availability check that is integrated with productionplanning and product allocation.



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Network Design

Strategic Supply Chain Planning

Network Design is a component used specifically for strategic planning. You can use this tool to makeassignment decisions (relationships between individual locations and assignment of products tolocations), as well as to make additional decisions regarding locations (location determination andlocation selection), taking account of demand and cost structures. Network Design can also beimplemented for regular evaluation of the existing supply chain in order to discover any weaknesses andtake any necessary measures.

There are four methods available in Network Design for planning the supply chain network. Thesemethods optimize either geographical distances or costs, in each case taking the demand structures intoaccount.



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Purchasing(MM)

Production Planning (PP)

APO Planning Sequence with R/3 Integration

Demand Planning (DP)

Conversion

Flexible Planning

R/3 or non-SAP system APO

Supply Network Planning (SNP)Prod. Plng & Det. Schedlng (PP/DS)

Planned ind.reqmts

Sales orderConsumption

Sales orderSales &Distribution (SD)

Demandmanagement

Planned ind.reqmts

Transp. Plng & Veh. Schedlng (TP/VS)

Deploy-ment

Logistics Execution System(LES)

Release,Confirmations

Planned orderProduction order

Purchase requisitionPurchase orderStock transport requisitionStock transport order


Purchase requisitionPurchase orderStock transportrequisition

Planned deliveryDeliveryDelivery

Transfer order Planned shipment / ShipmentExecution

In APO Demand Planning (DP) you base forecasts on aggregated historical data from the R/3 orBusiness Information Warehouse (BW) system (such as sales quantities from past sales orders). You usethe "Administrator Workbench" in APO to upload aggregated historical data from the R/3 or BWsystem. In APO Demand Planning you generate planned independent requirements (release forecastto APO Demand Planning) that are used for make-to-stock planning.If you are not yet using APO Demand Planning, it is also possible to generate planned independentrequirements in the R/3 system (either manually in R/3 Demand Management, or automatically in R/3Demand Management using data from R/3 Flexible Planning, Sales and Operation Planning (R/3 SOP),or Sales and Profit Planning (R/3 CO/PA). If you do this, the planned independent requirements aretransferred to APO through the R/3 APO interface (CIF).

Sales orders and planned independent requirements form the starting point for both Supply NetworkPlanning (SNP) and Production Planning / Detailed Scheduling (PP/DS) in APO. Existing storagelocation stock is also included in the planning. Here, sales orders are entered in the R/3 system (salesmodule) but the availability check (or ATP check - Available to Promise) is done in APO. Sales ordersthen consume the planned independent requirements in APO depending on the APO "requirementsstrategy".

In Supply Network Planning (SNP) you plan for the short- or mid-term horizon for the entire supplychain: you generate stock transport requisitions (for planning and stock transfer) between distributioncenters and plants, and can also generate planned orders (for in-house production planning) and purchaserequisitions (for external procurement planning) directly in the production plant for the longer termhorizon. In Production Planning and Detailed Scheduling however, you usually generate plannedorders and purchase requisitions directly in the production plant for the short term horizon.



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Transaction data generated in APO (such as planned orders) is transferred to the R/3 system throughthe R/3 APO interface (CIF: Core Interface). The APO demand plan is only transferred from APO to theR/3 system as planned independent requirements through mass processing from within APO DemandPlanning (however, you only need to do this if Production Planning is being done in the R/3 systemrather than in APO). It is however possible to automatically transfer planned independent requirementsthat have been maintained in R/3, to APO through the CIF.

As soon as planned orders and purchase requisitions get closer to the today-line, the stock planner orbuyer can collectively convert planned orders into production orders and purchase requisitions intopurchase orders. You use the APO Deployment /TLB (Transport Load Builder) to convert stocktransport requisitions into stock transport orders.

APO is a planning tool: execution functions such as release, confirmation, material staging, or goodsmovement for production orders or purchase orders are performed in the R/3 system. Confirmation andother data is then transferred back to APO from the R/3 system.

You create planned deliveries in Transportation Planning and Vehicle Scheduling (TP/VS). In APOTP/VS different deliveries can also be grouped together into one shipment. It is then possible to convertplanned deliveries and planned shipments into real deliveries and shipments and transfer them to the R/3.The R/3 system then actions the above (such as printing documents and managing status).



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Demand Planning


ProductionPlanning

The Demand Planning Lever Effect

Small changes made during Demand Planning cause large changes to be made during ProductionPlanning. The aim of Demand Planning therefore is to create sales quantity forecasts that are as accurateas possible.



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Retail outlet

DistributioncentersProduction

units

Suppliers

Functions of Demand Planning

l Cross-company DemandPlanning (internet)

l Consistent, detailed andconsolidated plans

l Statistical and causalforecasting techniques

l Lifecycle planning

l Promotion planning

Demand Planning is a complex, powerful, and flexible tool that supports your company's demandplanning process. User-specific planning layouts and interactive planning books not only allow you toinclude different departments, you can also use them to include other companies in the forecast creationprocess. With APO Demand Planning you can use statistical forecasting methods and advanced macrotechniques to do the following: - Create forecasts from sales history, based on many different causalfactors; - Test predefined, and user-defined forecast models, and forecast results; - And use a consensus-based approach to consolidate the demand plans of different departments. You can use forecast overridesand promotions to add marketing intelligence and management adjustments. The seamless integrationwith APO Supply Network Planning supports an efficient Sales and Operations Planning (S&OP)process.



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Demand Planning Concept

Aggregated actual data Future demandforecast

R/3ExcelNon-SAP system

l Incoming ordervalue

Quantities Values

l Invoice Quantities Values

l …

l Statistical forecastingl Collaborative forecastingl Promotions

Sold-to party

Product hierarchy

Location

Region

Sales organization

BW

The APO DP library of statistical forecasting and advanced macro techniques allows you to createforecasts based on sales history as well as any number of causal factors, and use a consensus-basedapproach to consolidate the results.

Marketing intelligence and management adjustments can be added by using forecast overrides andpromotions.

Aggregated actual data can be extracted from the R/3 system in exactly the same way as it can beimported from BW, Excel, and legacy systems.



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ManufacturerSupplier Customer

Collaborationwith Suppliers

Collaborationwith Customers

l Demand plansl Promotionsl Stock levelsl Delivery dates

l Product requirementsl Production datesl Procurementl Delivery dates

High efficiency, precise information and short leadtimes to improve delivery of service

Supply Chain Optimization

Collaborative Planning in APO



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Supply Network Planning (SNP)

Graph

Design

CapacityLeveling

APO - Product Total

APO - Product Total

Selection Profile

Screen Title

Grid Title

Key Figure 1

Key Figure 3

Key Figure 2

Key Figure 4

Key Figure 5

Object 1

Object 2

Object 3

Object 4

User

Selection ID

W 24 W 25 W 26 W 28W 27

Planning Book

Grid 2 Title

Key Figure 1

Key Figure 3

Key Figure 2

Key Figure 4

Key Figure 5

W 24 W 25 W 26 W 28W 27

ID Object Text

Text 1

Text 2

Text 3

Text 4

SNP Planning plans the mid- to long-term horizon. It creates a rough quantity-based, cross-locationproduction and distribution plan with individual rough bills of material (BOM) and routings.

The SNP BOM contains critical products that are produced on bottleneck resources and products with along replenishment lead time.

SNP ensures that the right quantity is available on the right day without critical resources beingoverloaded. The smallest unit used for scheduling is days.



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Supply Network Planning Scenario

l SNP plans the material flow along the supply chain

l Mid- to long-term, finite, cross-plant planning

l Prioritization of demands; supply optimization

l Result: Feasible plans

Demand Plan

Supplier Plant DC Customer

The role of Supply Network Planning involves:

ü Planning supply to meet demand

ü Integrating purchasing, production, and distribution in one consistent model in the entire supplynetwork

ü Synchronizing activities and planning material flow along the supply chain



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Comparison of Mid- and Short-Term Planning

Productionhorizon

ForecastsSales ordersForecastsSales orders

Supply Network PlanningProduction Planning/Detailed Scheduling

l SNP planned ordersl Purchase requisitionsl Stock transfers

l PP/DS planned ordersl Purchase requisitionsl Stock transfers

l SNP BOM and routingl Cross-plant finite planningl Distribution and procurementl Quantity and bucket-orientedl No pegging

l PP/DS BOM and routingl Finite, detailed planning per locationl Sequences and setup timesl Continuous and order-relatedl Pegging

Time

SNP integrates purchasing, manufacturing, distribution, and transportation so that comprehensivetactical planning and sourcing decisions can be simulated and implemented on the basis of a single,global consistent model.

SNP uses advanced optimization techniques, based on constraints and penalties, to plan product flowalong the supply chain. The result is optimal purchasing, production, and distribution decisions, reducedorder fulfillment times and inventory levels, and improved customer service.

Pegging is the link between receipts and issues along the supply chain. When an order is shifted, alldependent orders can be adjusted automatically.



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Production Planning / Detailed Scheduling (PP/DS)

Where Supply Network Planning (SNP) is usually used for rough mid- to long-term planning over theentire supply chain (in particular when there are several plants and distribution centers), ProductionPlanning and Detailed Scheduling (PP/DS) is usually used for to-the-minute short-term planning in aproduction plant.

ü In Supply Network Planning (SNP) demands are aggregated for a specified bucket ("day" forexample). It is irrelevant here whether a requirement falls within an early or a late shift, asrequirements are only planned roughly here - it does not include break times either. The sequence oforders is not an SNP time consideration. Cross-plant planning, and mid- to long-term planning in theproduction plant however do all play an important role in Supply Network Planning.

ü Production Planning and Detailed Scheduling however, does schedule orders to-the-minute(meaning that shifts and breaks are included here), and does include order sequences (sequencing andoptimization of sequences). In the short-term horizon, these functions are highly important for theproduction plant.

As soon as a requirement (such as a sales order or planned independent requirement) falls within aspecific horizon, it is no longer planned in the SNP planning run, but instead in the production planningrun of PP/DS.



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Customer

Functions of Production Planning / DetailedScheduling (PP/DS)

l Plans production, externalprocurement, and stock transferwithin the production plant to-the-minute

l Plans simultaneous materialrequirements and schedules finitecapacity at operation level for theshort-term horizon

l Takes order sequences intoaccount

l Optimizes machine schedules(sequences, lead times)

l Transfers the planning results toan execution system (such as theR/3 Shop Floor Control)

Time

Resource 3

Resource 2

Resource 1

30

20

10

Resource 1Resource 2

Resource 3

Production Planning and Detailed Scheduling (PP/DS) is used mainly for short-term to-the-minuteplanning (both for in-house production and external procurement) in the production plant. PP/DSschedules and plans all operations of an order that are relevant for planning at the different resources.PP/DS has the following functions:

ü It generates planned orders (to plan in-house production), and purchase requisitions or schedulingagreement schedule lines (to plan external procurement) in the event of product shortage. It usessimultaneous material and capacity requirements planning to do this: You can define resources as“finite” resources (planning-critical resources) in the resource master. Order operations are onlycreated at these resources if there is sufficient capacity for the order quantity on the correspondingdate. When there is no available capacity, the system searches for a date on which the order operationcan be carried out, taking account of the capacity situation.

ü Takes order sequences into account: when new in-house production orders are created, the setuptimes in the new order can be determined automatically from the setup status of the resources(depending on the preceding order).

ü It is possible to display the orders in graphic format (in the detailed scheduling planning board), andto sequence from there. Alternatively you can use the optimizer to execute a sequencing.

ü Machine scheduling optimization: during planning, it is possible for orders to be generated that donot have an optimum order sequence. Therefore, you can change the sequence and resourceassignments of existing orders using the optimization run.

PP/DS is a planning tool. Execution functions such as confirmations and goods receipts are performed inthe execution system (for example, R/3). Therefore, the planning results are transferred to the executionsystem.



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Deployment adjusts the stock transfers for short-term changeson both the supply and demand side (distribution detailed planning).

Deployment

Chicago

WinnipegCalgary

Customer DC2

DC1

Plant

l Fair Share

Proportional distribution

Proportional targetfulfillment

Quota arrangements

l Push deployment

Push horizon

The deployment function in SNP determines how and when inventory and planned supplies should bedeployed to distribution centers, customers, and vendor-managed inventory (VMI) accounts. It generatesoptimized replenishment plans that take into account short-term changes on the supply or demand side,as well as constraints, such as transportation and storage capabilities.

A variety of deployment strategies are used depending on the current situation (e.g., fair share, pushdeployment, pull-push deployment).



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TP/VS, LES, and BW provide an integrated solution fortransportation management within the Supply Chain

Transportation Management

LESBW

APO TP/VS (Planning)

(Execution)(Monitoring)

l Is integrated with the APOcomponents DP, SNP,PP/DS, and ATP

l Evaluates the planning inBW

l Plans for both short, andlong term horizons

The TP/VS component has the following functions:

ü Transportation planning and transportation consolidation

ü Vehicle Scheduling and route determination in a dynamic environment

ü Transportation mode and carrier selection

ü Multi-pick up and multi-drop functions

ü Management by exception

The APO system includes the tactical and operational planning area from the SAP TransportManagement solution, which is complemented for transportation execution by the SAP component fromLogistics Execution Systems (LES).



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Rules

Global Available-to-Promise (Global ATP)

l Event-driven

l Internet capabilities

l Rules-based ATP:

Location substitution

Product substitution

l Integration with PP/DS

l Product allocations

l High performance (time series)

Is it possible to deliver the productin the required quantity, and on the

required date?

You use Global ATP (Available To Promise) to check product availability and capacities, to providecustomers with reliable confirmation dates for their sales orders.ATP checks are triggered from the OLTP system (R/3 system, or non-SAP system) as an event (event-driven). In the interface with APO you can specify that the ATP check is to be done in APO and notR/3. If you create a sales order in R/3, for example, the system first checks if there is enough of therequested product in stock. The system can also check if receipts (for example, production orders andplanned orders) have already been planned by the requested date.

Global ATP has the following functions:

ü Rules-based ATP: When there is no availability, it is possible in APO to set it so that the system doesan ATP check for the product at another location or else substitutes that product for an alternative one(location and product substitution).

ü Integration with PP/DS: It is also possible to set it so that when a product is not available, the salesorder directly triggers production. If it triggers an order for in-house production, APO creates aplanned order for the required quantity in PP/DS.

ü Product allocations: Product allocation allows you to manage the supply of scarce products tocustomers, so that each customer only receives an allocated amount.

ü Time series: Planned orders and production orders are aggregated and represented in a time series,which can be used to evaluate the incoming requests from the sales orders. This improves performanceof the ATP check.



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APO optimization solutions

Optimization Solutions

A complete range of optimization solutionsadjusted to the planning tasks

Linear programming /mixed / whole numberprogramming

Genetic algorithmconstraint-based

programming

Tab. search

SupplyNetworkDesign +Planning


Transportationplanning

In APO, the following optimizers are available: optimizer for CTM, optimizer for PP/DS, optimizer forNetwork Design, optimizer for Sequence Planning, optimizer for Supply Network Planning, optimizerfor Transportation Planning.

In Supply Network Planning, optimization problems are usually of the nature that they can be solvedwith an "exact mathematical solution procedure" (which can be solved using linear equations). For thisreason, linear programming is used for optimization in Supply Network Planning. Linear programmingis able to calculate an "exact solution".

In Production Planning and Detailed Scheduling (PP/DS) however, there are usually more complexoptimization problems for which no "exact solutions" can be found. Therefore, linear programming isless suited for PP/DS. Instead, solutions are more able to approximate an "optimum or exact solution".Approximate optimization procedures are therefore more suited to be used in PP/DS (geneticalgorithm/constraint-based programming). This allows the optimization system to find a suitablesolution faster.

The different optimizers can be installed on the same server on which the APO application, theliveCache, and the database are all installed (but you can also install them on different servers). TheAPO application server and the optimizer are linked via a TCP/IP connection. Here you specify whetherthe optimizer is to be called on the APO application server or on a different server (transaction sm59).



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You are now able to

APO Overview: Unit Summary

l Explain the concepts of Supply ChainManagement

l List the advantages of APO

l Summarize the functions of the planningapplications in APO

l Explain the interplay of the individual planningapplications



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Contents:

APO Integration and Technology

l liveCache Technology

l Integration of the Online Transaction Processing (OLTP)System and APO

l Pegging



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Unit Objectives

At the conclusion of this unit, you will be able to

l Describe the advantages of liveCache Technology

l Outline the data exchange between R/3 (or otherOLTP systems) and APO

l Explain the pegging tasks.



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Overview Diagram (1)

444

333Integration and Technology

11122

Course Overview

555

666

22

777

888

999


Demand Planning

Supply Network Planning

Production Planning/DetailedScheduling



Conclusion



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Business Scenario

l With high performance and pegging procedures,the liveCache technology allows quick,simultaneous material and finite capacityplanning.

l Pump Precision uses the R/3 as an executionsystem and APO for planning. The Core Interface(CIF) provides a close integration of the systems,where order data is exchanged in real-time.



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APOAPOOLTP (R/3)OLTP (R/3)

GlobalATP

InformationWarehouse(SAP BW)

InformationWarehouse(SAP BW)

Demand Planning

Customerorders

ProductionScheduling

Inventorymanagement

SupplyNetworkPlanning


Deployment

PP / DS

APO Application Architecture

Transportation PlanningTransportationprocessing

LIS, CO-PAHR, FI

KeyPerformanceKey figures(KPIs)

Planned Indep.Requirements

Historicaldata

Aggregated actual data can be transferred to APO from OLTP, BW (Business Information Warehouse),Excel, and Legacy systems, and saved in InfoCubes. This data is the basis for forecasting. The demandplan is created as a result of the forecast.

You release the demand plan to Production Planning, which creates planned independent requirementsfor Supply Network Planning (SNP), and PP/DS. You can also transfer the demand plan to the operatingsystem (OLTP) as planned independent requirements.

The seamless integration with Supply Network Planning (SNP), and PP/DS supports an efficient S&OPprocess.



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> 1 ms

Application

Data Storage

< 10

liveliveCacheCache

ApplicationApplication

Data StorageData Storage

What is liveCache ?

l Main objective = higher performance:

Performance-critical routines (in C++) are running in addressspace of the liveCache management system

=> no heavy data transfer between application and data storage

Access to data in the liveCache is approximately 100 times faster than it is in a database (10 microseconds asopposed to one millisecond).

Display of complex data structures (nets, trees). The typical liveCache data structure is NOT a relational data table.

Easy node access (grid access points, navigation).

Simultaneous access is possible (read & write).

Fast data recovery.

Little navigation needed within the networks.

Applications run where the data is stored

Further advantages for the user:

ü "Shared data" for application and the application server (independent of the R/3 OLTP database).

ü Higher performance (performance-critical routines run the stored operations and problem-specific data modelingis therefore supported in the same address space as it is in data management. This is more efficient thanrelational data modeling).

ü Scalability via a number of processors.

ü Scalability of the liveCache, because of an interlaced architecture.

Higher data security in a simple C program that saves all data. In case of a program termination (downtime), datawill not be lost.



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Application Server

ABAP-Application Programexec sql.Execute procedure "Schedule_order"

(OUT : var1,IN : table1,IN : var2)

endexec.

Optimized method codingSchedule_order

Optimized data structures

liveCache Technology

l Avoid disk I/O through shared, buffereddata

Hold all application data in memory

Save large datasets

l Optimized data structures

Support application-specific datastructures (e.g. store BOM as atree rather than a relational table)

l Built-in business functionality

Run application logic where thedata is stored

Aggregate OLTP databaseinformation in main memory

liveCacheliveCache

A liveCache management system is in a non-ABAP environment.

During the first liveCache upload (bring up), mass data (master data and transaction data) from theconnected R/3 and legacy system(s) is either sent to the APO System, reduced (filter) or transformedinto an APO presentation. Some of the data is then also sent to the liveCache.

Changes from an OLTP are transmitted into APO in real-time and therefore into liveCache, if the OLTPsystem is an R/3 System. In case of non-R/3 Systems there is only one periodic upload of the changes.

The APO server presents changes to be sent back from APO or liveCache into an OLTP system, in aspecial data structure (black board). From here, the OLTP system collects the relevant changes inregular intervals.



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R/3 Plug-In Technology

R/3R/3

Plug-in

Information on R/3 Plug-in: SAPNet/R/3 Plug-in

CRM BW SEM

(from Release 3.1I)

BBP

CIF APO

An R/3 interface is marked with an R/3 Plug-in to make it possible to integrate a mySAP.comcomponent (for example, APO or BW) with one or several R/3 Systems. With R/3 Plug-ins, severalmySAP.com components can be inserted at the same time. Most Plug-ins concern add-ons (R/3 standardsoftware enhancements with additional functions).

The data transfer between R/3 and APO Systems is defined and controlled using the APO CoreInterface (CIF). The CIF is the central interface for connecting APO to the existing R/3 Systemenvironment.

Plug-ins supply the components with transaction and master data. In this way, APO CIF does not onlyprovide the SAP APO System with initial data records (initial supply), it also guarantees a step-by-stepsupply with all the relevant data changes. Only the object data relevant for the individual planning andoptimization process in APO is transferred from the complex data records into R/3. The integrationbetween R/3 and APO is possible as of R/3 release 3.1I (for the PM/SM area and production processmodels, integration is possible as of 4.5B).



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APO

PlantPlant22

PlantPlant33CompanyCompany

CC

PlantPlant11

CompanyCompanyBB

CompanyCompanyAA

liveCacheliveCache

APO

Global APO Server

A multi-system environment is possible

Different layouts of enterprises and plants are possible



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APO Integration (2)

SAP APOSAP APO

SDSD LOLO

HRHR

SAP R/3SAP R/3

Non-R/3 System

Non-Non-R/3 SystemR/3 System

BAPI

BAPI

BAPI

CIF(Core Interface) BAPIs

The APO Core Interface (CIF) is responsible for the data exchange between APO and R/3 Systems. TheAPO Core Interface is a real-time interface, linking APO with one or several R/3 Systems.

Only the data objects needed in the data structures in APO for the different planning and optimizationprocesses are transferred from the complex dataset of the R/3 into APO.

The APO Core Interface guarantees both the initial data transfer (initial transfer) and also the transfer ofdata changes within APO.

The outbound delivery from APO CIF takes place as an R/3 Plug-in.

Technical integration of SAP APO with:

ü an R/3 environment where Core Interfaces are used

ü a non-R/3 environment where the official standard of Business Application Programming Interfaces(BAPIs) is used.



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APO Integration (3)

R/3 APOOrder• Production• Procurement• Replenishment

liveCache

liveCache

LocationProductResourceProduction

process model

Plant, Customer,...Material masterCapacityRouting and

bill of material

Sales orderPlanned orderProduction orderOrder...

CIF

CIFReal-time

The planning in APO is based on its own master data that is usually transferred automatically from a R/3System, but can also be created manually.

The transfer of master data from the R/3 is displayed in the corresponding master data in APO. Only themaster data relevant for planning in APO is transferred (firstly in the form of an initial transfer, and thenlater as transfers of data changes).

The R/3 remains the execution system for the master data. Only the settings which cannot be transferredfrom the R/3 are maintained directly in APO.

The transaction data relevant for planning, such as warehouse stock and sales or production orders isalso transferred from the R/3 into APO via the CIF interface. And vice versa, the results of the planningin APO are returned to the R/3 via CIF and executed there. This integration of transaction data takesplace in real-time.



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Master Data Objects of the CIF

R/3 APO

Location

Product

Resource

Productionprocess model

R/3 master data APO master data

Plant

Customer

Vendor

Material master

Capacity

Routing and

bill of material

Initial transfer

Incremental datatransfer

The APO Core Interface concerns a real-time interface. Only the data objects needed in the datastructures reconciled in the planning in APO for the particular planning and optimization processes aretransferred from the complex dataset in R/3 into APO.

Both the initial data transfer (initial transfer) and the transfer of data changes within APO take place viathe APO Core Interface.

The master data objects in APO are not identical with those in R/3. For the master data transfer it is infact the relevant R/3 master data that is mapped onto the corresponding planning master data in APO.

The R/3 System remains the dominant system for the master data. Only specific APO master data thatdoes not exist in R/3 is maintained directly in APO.



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Initial datatransfer

Transaction Data Objects of the CIF

R/3 APO

Order with categoryBF (PchOrd)AG (PurRqs)BM (SalesOrder)AI (PlOrd.)FA (FC req.)AM (PrdRes)CC (Stock)...

R/3 transaction data APO transaction dataOrders

Purchase requisitions

Sales orders

Planned orders

Planned ind. reqmts

Reservations

Supplies...

Real-time

Changetransfer

The initial data transfer of transaction data takes place first, via the APO Core Interface. The changetransfer between R/3 and APO usually automatically follows for transaction data objects that belong toan active integration model. New transaction data or changes to existing transaction data is automaticallytransferred. (For transaction data of the APO component SNP, you can define in Customizing whether areal-time or periodic publication is to be performed.)

The transaction data objects in APO are not identical to those in R/3. All transaction data in R/3 istransferred to APO as orders that can be distinguished by ATP category.

In the standard system, planned independent requirements can only be transferred from the R/3 intoAPO. The retransfer of the planned independent requirements that you may require if you only performDemand Planning in APO, must be triggered from Demand Planning in APO with a specific transaction.

For planned orders and purchase requisitions, you can specify in APO that they are only transferred fromAPO to the R/3 System if the conversion indicator has been set.



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Transfer of Data to APO

1. Generate integration model NameTarget system

Sales ordersProduction ordersStorage location stock...

Determine name and APOtarget system

Select master and transactiondata

2. Activate integration model

Integration model is active

Data is transferred for the first time, a continuousreal-time incremental transfer of transaction datafollows

Start

You define the integration model that controls the transfer of master and transaction data in the R/3System. You can find the menu option Core Interface Advanced Planner and Optimizer (the CIFmenu) under Logistics -> Central Functions -> Supply Chain Planning Interface.

The integration model distinguishes between master data and transaction data. We recommend selectingthese two types of data in separate integration models and then also transferring them separately.

In the integration model, you select the master and transaction data you want to transfer. You specify thefollowing in the integration model:

ü The APO target system for the data transfer

ü The data objects you want to transfer

You can delete integration models that you no longer need. Note that you must first deactivate theseintegration models.

For any transaction data that is contained in an active integration model, a continuous real-timeincremental data transfer is performed between the R/3 System and APO.



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SD MM PP

Sales order


Purchase requisitionStock transfer

Storage location stockIntransit receipts

Purchase requisitionOrder

ForecastliveCacheliveCache

liveCache Integration with R/3

R/3

APO

Planned indep.requirement

CIF

DPDPBWextractors

The historical data from Demand Planning (DP) is transferred into APO with the help of the extractorsfrom the Business Information Warehouse (BW).

You can release the Demand Planning forecast to the liveCache and therefore create plannedindependent requirements. Alternatively, you can transfer planned independent requirements from theexecution system.

The orders, supplies and planned independent requirements of the execution systems are transferred viathe CIF interface into APO.

The planning results of APO, the purchase requisitions, stock transport requisitions, stock transportorders and planned independent requirements, are also distributed via the CIF interface into theexecution systems. Planned orders can also create direct production orders in the OLTP system.



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Detailed Scheduling (DS)

Deployment

Transport Load Builder (TLB)

APO - OLTP Integration

APO OLTP

Planned independentrequirementsPlanned ordersPurchase requisitionsStock transportrequisitions

Planned ordersProduction ordersPurchase requisitionsStock transportrequisitions

Adjustment ofstock transportrequisitions

Grouping ofstock transport orders

This slide shows the exchange of movement data between APO and the connected OLTP systems.

You can transfer the results of Demand Planning as planned independent requirements to the OLTPsystems, similar to the transfer from Flexible Planning or Sales and Operations Planning (R/3) todemand management.

You can transfer the SNP planning results as planned orders, purchase requisitions and stock transportrequisitions to the OLTP system.

You can also transfer the PP/DS planning results as planned orders, purchase requisitions and stocktransport requisitions to the OLTP system. If you convert SNP planned orders into PP/DS plannedorders, the planned orders are adjusted in the OLTP system. You can only transfer planned orders asproduction orders to the OLTP system from PP/DS.

Deployment and the TLB confirm the OLTP stock transport requisitions and can convert them into stocktransport orders or VMI sales orders.

Via Customizing -> APO -> Supply Chain Planning -> Supply Network Planning (SNP) -> BasicSettings -> Configure Transfer to OLTP Systems you can configure how transfer should take place.



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50 50

80 20Pegging

Input nodeOutput node

Demand

Order

50 2030

Pegging

l The pegging network

assigns receipts torequirements

propagates therequirements throughthe BOM

is cross-location

finds unassigned orderquantities

l APO offers fixed anddynamic pegging

Pegging describes the assignment of quotation and requirement. It links each input node fromrequirements or receipts with output nodes from receipts. The material flow between requirements, stocktransfers, purchase requisitions, planned orders and storage location stock is therefore defined in thesystem. Pegging allows the bi-directional planning of components to the end product and of the endproduct to the components.

There are two types of pegging:

ü Dynamic Pegging: The pegging relationship is re-calculated each time, with regard to quantity anddate changes, when a product receipt or issue takes place.

ü Static Pegging: All relationships are fixed. Only the user or an external program can change theserelationships.



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Sales order

Transfer order

Production order

Order

10

30

30

50

50

80 80

50

50

50

50

50

20 10 40 60

100

100

30 20 50

305020

30

10 20 10 40 50

(+20)

(+10)

(-10)

Surplus

Shortage

Supply Chain Pegging



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You are now able to

Conclusion

l Describe the advantages of liveCache Technology

l Outline the data exchange between R/3 (or otherOLTP systems) and APO

l Explain the pegging tasks.



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Contents:


l Models and version in APO

l Supply Chain Cockpit

l Supply Chain Engineer

l Alert Monitor

l Evaluations using the BW explorer



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Unit Objectives


l Explain the functions of models and versions inAPO

l Describe the modelling of the Supply Chainnetwork

l Analyze master and transactional data in theSupply Chain Cockpit

l Call alerts from the Supply Chain Cockpit

l Evaluate aggregated historical data



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444

222 Integration and Technology111

33

Course Overview

555

666

33

777

888

999

Modelling and Evaluationin APO

Demand Planning





Conclusion



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Business Scenario

l Precision Pump company uses the Supply ChainCockpit for multi-site analysis and documentationof planning results.

l In the Alert Monitor, every planner can find hiscurrent planning problems and exceptionmessages.

l Key Performance Indicators (KPIs)provide benchmarks for defining the goals of thecompany. After each planning cycle, PrecisionPump company uses KPIs to analyze theperformance of its supply chain.

SAP AG



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Planning Version 1version dependent masterdata and movement data

Planning Version nversion dependent masterdata and movement data

Active Version 000version dependent masterdata and movement data

Legacy R/3

APO Master Data (model independent)

Model 1

OLTP Master Data

Active Model

PPMsTransportation

lanes

Locations

ProductsSimulation

Models

Models and Planning Versions

The network model represents the supply chain and consists of individual nodes and relationships. InAPO it is possible to create and maintain different versions of a model for simulation purposes. There isonly one active model (000) with an active version. The active planning version is 000.

All APO planning functions are based on the supply chain model. The model covers the entire supplychain network. It is modeled in the Supply Chain Engineer and contains details like locations, resources,products, transportation lanes and production process models (PPMs).

You also have the option of creating several models, each with different versions for simulationpurposes.

Master data like locations, products, resources and plans that are transferred from OLTP systems areautomatically assigned to model 000. You must assign master data that you create in APO explicitly tothe model.



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Alert MonitorAlert MonitorEngineerEngineer

Information

Warning

Error

Ignore

APO Maintenance and Analysis Tools

CockpitCockpit

Modeling theNetwork

Analysis of thePlanning Situation

Evaluation of theException Messages

The Supply Chain Engineer enables you to maintain the model of your supply chain. You can use thiscomponent to create or change supply chain network models. The network model represents a supplychain and consists of individual node points and links. A model can have different planning versions.You also have the option of creating several models, each with different versions for simulationpurposes.

The Supply Chain Engineer is a fully integrated APO component used for creating models. The model isthe basis for all APO planning functions. It covers all areas of the network chain, from the supplier'ssupplier to the customer's customer. The relevant data objects are imported here from the source systemto APO.

The Supply Chain Cockpit allows planners to make an integrated analysis of transactional data in thesupply chain. It also allows data to be broken down into planner-specific subsets, such as by indvidualregion or product line.

The Alert Monitor gathers messages regarding problems within your plan.



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Work Areas

Access to frequently used objects

l Used for queries

l Serve as filters

l Configured for users

The complete supply chain view can be unclear. You can limit the view to the objects on which youwant to concentrate when you are defining work areas. The work area is used exclusively as a filter fordisplaying objects in the Cockpit and Engineer.

The pre-defined work area is the basis for the queries which you can use to gain information about allaspects of your supply chain from the APO system. The transportation lanes in your work area aredefined using the model in which you are working.

In the work area of the supply chain you can select:

ü Locations (plant, DC, supplier, customer)

ü Resources, production, storage, processing, transportation

ü Products

ü PPMs (production process models)



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l Locations

l Transportation lanes

Objects in the Supply Chain Network

CarrierCarrierMRPMRPareaarea

Stock transferStock transferpointpoint

Transport.Transport.zonezone

SupplierSupplier PlantPlant DCDC CustomerCustomer

In APO, a location can represent a distribution center, manufacturing plant, supplier location, acustomer, a carrier, transportation zones, MRP areas, for example.

The material flow between locations is modeled via transportation lanes. You map your supply chain vialocations and transportation lanes.

A transportation zone can be used to group together customers, for example, in the form of a locationhierarchy. The transportation zone is used in the TLB and in transportation planning. Carriers and stocktransfer points are only used in transportation planning. An MRP area is planned in SNP like aproduction plant.

Product master records, resources and PPMs (production process models) are assigned to the locations.

ü You can map production, storage, transportation and handling capacities via resources.

ü DP, SNP and PP/DS PPMs (production process models) are available to allow you to define BOMsand routings.



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Cockpit controlsCockpit controls

Network mapNetwork map

Control panelControl panel

Overview mapOverview map

PlanningobjectsPlanningobjects

Application toolbarApplication toolbarAlertmonitoring

Alertmonitoring

WorkareasWorkareas

Supply Chain Cockpit Navigation

Use this navigational component of the Supply Chain Cockpit to:

ü Retain a complete overview of your supply chain model

ü Retrieve information from the APO system through queries

ü Measure performance with KPIs (Key Performance Indicators)

ü Display location, product, resource, PPM and lane data

ü Keep track of alert situations

The three main business tools available from the Supply Chain Cockpit include:

ü Queries that facilitate the planning function

ü Key Performance Indicators that provide feedback on actual performance

ü The Alert Monitor that provides notification of exception messages



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Fixed Network Information- Transportation network- Production network

APO Master Data• Products• Resources• Locations• Transportation lanes• Production process model

Business InformationWarehouse• Key PerformanceIndicators

- Service level- Supply chain costs

APO Applications- Supply Network Planning- Production Planning- ATP- Demand Planning

Planning Results- Production- Demand- Stock- Transportation- Capacity load

Alert Monitor

Information Retrieval

Queries facilitate the planning function.

Key Performance Indicators provide feedback on actual performance.



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What was the total profitmade from Gel 250delivered to customer Xfrom DC Milan?

Purpose of Key Performance Indicators

The APO key performance indicators (KPIs) express abstract supply chain objectives in financial orphysical units for comparative purposes. Data pertaining to the various planning and execution processessuch as demand planning or product planning is collected, measured, and transformed into physical orfinancial information that can be used to compare results and thus measure performance.

For example, a KPI could tell you what percentage of your products were damaged during production.Based on that information, you could set a goal to reduce the percentage of damaged goods by 5%. Afterimplementing the steps necessary to reach the goal, you would again launch a KPI query to check yourprogress.



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l Planning

l Order quantities/values

l Days' supply

l Stock levels

l Material consumption

l Resource load

l Purchasing

l Purchase order quantities

l Delivery time

l Service level

l Vendor evaluation

l Days' supply

l Production

l Lead times

l Date variances

l Scrap

l Delays

l Service

l Credit memos

l Deliveries

l Billing documents

l Returns

Standard KPIs (Selection)

The slide shows some of the standard KPIs provided by SAP. In addition, you have the option to definespecific KPIs - tailor-made to your company - in the Business Information Warehouse and to assignthem to the Supply Chain Cockpit.



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0. Identify key performance indicators (KPIs)Measure performance using KPIs

1. APO: Plan &Optimize

2. Execute

3. Measureperformanceusing KPIs

4. Compareresults of KPIs

5. Identify gapsand improve

Key Performance Indicators

The graphic above depicts the three steps to improving supply chain performance using APO KPIs:

ü Plan and optimize in APO

ü Execute decisions in an execution system (R/3)

ü Benchmark in BW

The KPI function allows you to track and measure your supply chain performance by retrievinginformation stored in the Business Information Warehouse (BW) pertaining to your business.

Performance measurement is a way to determine if your business has improved or not.

The use of metrics to measure performance is a complex business process that requires careful planning,analysis and a thorough knowledge of the supply chain. For more information on measuring supplychain performance, refer to the SCC1_E.doc, Appendix 1: The SCOR Model.



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Exception Windowfor Details

Alert Notification

Alert

Alert Monitor Definition

l Exceptions are calculated using macros and displayed inthe Alert Monitor

l There are standard macros and the option to define yourown alerts

The role of the Alert Monitor is to inform you of exception cases that occur in your plan. Every situationthat has to be adjusted in planning is an exception.

In Supply Network Planning you have the option to display either database or dynamic alerts. Thedatabase alerts show the planning situation as it was at the time of the planning run, while the dynamicalerts reflect the current planning situation.

The Alert Monitor in Supply Network Planning enables you to display and remove alerts for resourcesand location products. Typical alerts are: When the resource is too overloaded (over 100% utilization ofcapacity), when the resource is not sufficiently loaded (less than 50% utilization), backlog, shortfall insafety stock, target days' supply excess/shortfall, customer-specific alerts.

You retain constant control over your supply chain network because of the alerts you defined andbecause you have the option to send these by mail. As planner or manager you will be prepared for anyproblems that occur. You will be informed in time so that you can take the necessary precautions.



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Cockpit

Alert Monitor

Example:

ProductionPlanning /Detailed

Scheduling


Problem resolution

APOAlert

Repository

DPDPDP

PP/DSPP/DSPP/DS

ATP

SNP

Alert Monitor Integration

The Alert Monitor in Supply Network Planning enables you to display and remove alerts for resourcesand location products. Typical alerts are: When the resource is too overloaded (over 100% utilization ofcapacity), when the resource is not sufficiently loaded (less than 50% utilization), backlog, shortfall insafety stock, target days' supply excess/shortfall, customer-specific alerts.

You retain constant control over your supply chain network because of the alerts you defined andbecause you have the option to send these by mail. As planner or manager you will be prepared for anyproblems that occur. You will be informed in time so that you can take the necessary precautions.

You can call the Alert Monitor from the Supply Chain Cockpit, from the menu or directly frominteractive planning. Right-click on the alert to go directly to the problem resolution screen.



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ATP: Requirementsnot covered

Resource load (SNP)

DemandPlanning


ProductionPlanning/Detailed

Scheduling

ATP

BusinessInformationWarehouse

DP macro status alerts

Violation ofdue dates

Resource load (PP/DS)

Alert Types

APO's monitoring component comes equipped with a selection of 20 alert types ranging from productshortage to various capacity overloads. The alert types must be prioritized and assigned to the variousAPO applications. For example, some alerts apply only to SNP, but others can be assigned to DP andPP/DS as well.

The Alert Monitor differentiates between alerts in a specific planning version and alerts in general. Forexample, capacity overload pertains to a specific planning version while Demand Planning alerts aregeneral. Both types of alerts, however, are displayed in the Monitor.

If you want to show an alert in the SCC, you can assign the alert type to the application. This ensuresthat the traffic lights in the monitoring slot in the control panel go on. Lights indicate that at least onealert of that priority type exists.

Since some alert types cannot always be clearly assigned, it can happen that the same alerts may appearunder more than one priority light.

Each alert type can be assigned to any number of applications.



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liveCacheliveCache

l Using the BW Business Explorer you can evaluate:

Order data from the liveCache

Aggregated data in InfoCubes

Planningarea

Extractionstructure

RemoteCube

DP InfoCubeBusiness Explorer

Evaluations in APO

You can also evaluate data from APO using the BW frontend.

It is not only the aggregated actual data from the InfoCubes that are evaluated, but also all of the orderand time series objects from the liveCache.

The prerequisites for 'liveReporting' orders and time series are as follows: a planning area in APO; anextraction structure for the planning area; an infosource, and an SAP RemoteCube that reflects theliveCache data.



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You are now able to

Conclusion

l Explain the functions of models and versions inAPO

l Describe the modelling of the Supply Chainnetwork

l Analyze master and transactional data in theSupply Chain Cockpit

l Call alerts from the Supply Chain Cockpit

l Evaluate aggregated historical data



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Exercises

Unit: Supply Chain CockpitTopic: Display and Query


• Maintain the user settings for the Supply Chain Cockpit

• Execute queries in the Supply Chain Cockpit and with the BusinessInformation Explorer

Precision Pump company’s supply chain planner can procure allnecessary information about the products, locations and resources forwhich he/she is responsible via the Cockpit.

The group number ## that you need for the following exercises is on your monitor.

1-1 Open the Supply Chain Cockpit with the following entries:

Planning version 000

For model 000

Work area PUMP

Change to the logical view PUMP and analyze the supply chain. Which distributioncenters supply the plants 1000 and 2300?

1-2 Display the global master data for the product T-F225 and the master data for theproduct T-F225 in the distribution center 2400 in the Supply Chain Cockpit.

1-3 Query the stock/requirements list for product T-F225 at location 2400.



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1-4 Query the transportation lanes permitted for the product T-F225.

1-5 Open your user settings profile directly from the Cockpit. Enter the SDP alert profilePUMP. Save the profile, go back to the Cockpit and refresh the alert situation. Arealerts displayed? How can you process the alerts?

1-6 Evaluate the aggregated historical data for the product T-F2##. Log on to the APOsystem using the Business Information Warehouse (BW) Analyzer and open the querySALES DATA for the SALES InfoCube.Find out the extent that Product T-F2##, with Sold-to party 1000, and in SalesOrganization 1000, contributed to sales in the past few months.



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Solutions

Unit: Supply Chain CockpitTopic: Display and Query


• Maintain the user settings for the Supply Chain Cockpit

• Execute queries in the Supply Chain Cockpit and with the BusinessInformation Explorer

Precision Pump company’s supply chain planner can procure allnecessary information about the products, locations and resources forwhich he/she is responsible via the Cockpit.

The group number ## that you need for the following exercises is on your monitor.

1-1 Open the Supply Chain Cockpit with the following entries:


For model 000

Work area PUMP

Change to the logical view PUMP and analyze the supply chain. Which distributioncenters supply the plants 1000 and 2300?

Supply Chain Monitoring à Supply Chain CockpitEnter the input data and select “Use”.Select the “Fit to objects” button on the left above the graphic to adjust the objects.Enter the logical view PUMP and select “Logical view”.If you want to restrict the area further, you can define the zoom area using the leftmouse button.The transportation lanes show you that the plants 1000 and 2300 supply thedistribution centers 2400 and 2500.



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1-2 Display the global master data for the product T-F225 and the master data for theproduct T-F225 in the distribution center 2400 in the Supply Chain Cockpit.

Choose the Products tabRight-click on product T-F225 and display the master data for this product: Displayà ProductSelect the location 2400 in the graphic and the product T-F225 in the Products taband display the location product by right-clicking on the product: Display à Productat location

1-3 Query the stock/requirements list for product T-F225 at location 2400.

Select the location 2400 on the mapSelect product T-F225 in the Products tab and right-click to call up the contextmenu: Call up planning applications à PP/DS Stock/Requirements ListCheck that Product and Plant have green lights in the selection options screen andcheck which product is selected by clicking on the Display buttonExecute the query by clicking on the Execute button

1-4 Query the transportation lanes permitted for the product T-F225.

Choose T-F225 in the Products tabRight-click to call up the context menu: Query: Master data à Transport net - map

1-5 Open your user settings profile directly from the Cockpit. Enter the SDP alert profilePUMP. Save the profile, go back to the Cockpit and refresh the alert situation. Arealerts displayed? How can you process the alerts?

Settings à User profileEnter the SDP alert profile PUMP in the Alert Monitor tab.Save the profile and use the green arrow to go back to the Cockpit.Press the “Refresh alerts” button and the exception messages are shown in red.Double-click here to go directly to the Alert Monitor and right-click to process thealerts.



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1-6 Evaluate the aggregated historical data for the product T-F2##. Log on to the APOsystem using the Business Information Warehouse (BW) Analyzer and open the querySALES DATA for the SALES InfoCube.Find out the extent that Product T-F2##, with Sold-to party 1000, and in SalesOrganization 1000, contributed to sales in the past few months.

Call up the BW Analyzer, activate the macros, and press the “Open” icon in theBusiness Explorer. Log on to your APO system.Expand the SALES PLANNING info area and the SALES infocube. Select theSALES DATA query and press OK.You are given an aggregated view of the invoiced sales quantity and invoiced salesvalue of the three sales organizations. Right-click on the field next to APO product torestrict the evaluation for your product T-F2## via “Select filter value”.By right-clicking on sales organization you can drilldown the evaluation accordingto sold-to parties by choosing “Add Drilldown According to” sold-to parties.By right-clicking on the SALES key figure, you can drilldown the evaluationaccording to months by choosing “Filter and drilldown according to”cal.year/month.



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SAP AG 2001

Contents:


l Demand Planning Tasks and Functions

l Integration with the Business Information Warehouse (BW)

l Forecast Toolbox

l Lifecycle Planning

l Promotions



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Unit Objectives

At the conclusion of this unit, you will be able to:

l Explain how the Business Information Warehouseis integrated with Demand Planning,

l Describe the tasks of Demand Planning,

l Define various forecasting strategies,

l Create a simple sales forecast, and release theresults to Production Planning.



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222333

Integration and Technology111

44

Course Overview

555

666

44

777

888

999


Demand Planning




Conclusion



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Business Scenario

l The Precision Pump company will implement APODemand Planning and use it to execute theirmonthly finished product forecasting.

l Consistent planning allows you to enter theforecast data on different planning levels andautomatically consolidate the data in the masterforecast.

SAP AG

Demand Planning is a complex, powerful, and flexible tool that supports your company's demandplanning process. User-specific planning layouts and interactive planning books not only allow you toinclude different departments, you can also use them to include other companies in the forecast creationprocess. With APO Demand Planning you can use statistical forecasting methods and advanced macrotechniques to do the following: - Create forecasts from sales history, based on many different causalfactors; - Test predefined, and user-defined forecast models, and forecast results; - And use a consensus-based approach to consolidate the demand plans of different departments. You can use forecast overridesand promotions to add marketing intelligence and management adjustments. The seamless integrationwith APO Supply Network Planning supports an efficient Sales and Operations Planning (S&OP)process.

Demand Planning is the application component in the Advanced Planner and Optimizer (APO) thatallows you to forecast market demand for your company's products. The result of APO DemandPlanning is the demand plan.



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Advantages of Demand Planning in APO

ª Global server with a BW infrastructure

ª Integrated exception handling, creation of user defined alerts

ª Integration with Production Planning (S&OP scenario)

ª Main memory based planning

ª Flexible navigation in the planning table, variable drill down

ª Extensive forecasting technique

ª Promotion planning and evaluation, 'like' modeling

ª Collaborative planning via the internet

ª Sales Bills of Material (BOMs)

The Business Information Warehouse (BW) infrastructure includes easy to use features for extracting allthe data from execution systems and analyzing it in the SAP BW Business Explorer.

Macros can be used to perform complex calculations, and to define conditions and exception messages(alerts). Mails can be sent automatically, and status automatically queried.

In the S&OP scenario, the feasible production plan from SNP or PP/DS is compared with the originaldemand plan. Deviations are identified automatically and reported to the planner.

The following statistical procedures are all available for forecasting; Constant model, Trend model,Seasonal model, Trend and Seasonal model, Croston method with exponential smoothing, Linearregression, and Causal models with multilinear regression. External forecasting procedures can also belinked to this.

"Like modeling" refers to the forecasting of new products using historical data from old products. Lifecycle definition is also covered in like modeling.

You can make each planning book accessible to customers or suppliers over the internet in order to beable to exchange data as soon as possible.



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CentralStore

RegionalD/C

CentralStore

RegionalD/C

StorePromotionPromotion

Sales ForceSales Force

PricePrice

AdvertisementAdvertisement

PromotionPromotion SeasonSeason

WeatherWeather

PricePrice

Company 1 Company 2 Customer

Influencing Factors in Demand Planning

l Understanding demand in a dynamic business environment

l Multiple sources of demand plan data such as: internally created forecastsbased on history, forecasts from customers, or point of sale (POS) datadirect from retailers

l Managing all significant factors that influence demand

l Tracking and management of product lifecycles

The complexity and competitive nature of today's business environment requires organizations toconsider many variables when developing a sales and operations plan.

ü Multiple sources of demand plan data (e.g. manufacturer forecast is based on a distributor’s saleshistory, and/or point of sales direct from retailer.)

ü Factors influencing demand (sales force size, R&D expenditures, advertising expenditures, price,promotions, seasonality.)

ü Demand data can be exchanged with sales organizations, customers, and suppliers over the Internet(Collaborative Demand Planning).



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Demand Planning

Sales history,Price, Costs, ...

Forecast

BusinessInformation

Warehouse

ForecastForecast ReportingReporting

APOData Mart

APO Integration - Business Warehouse

Demand Planning specific data

l Forecast & planning scenarios

l Causal factors

l Lifecycle patterns

l Seasonal patterns

l Promotional patterns

Central Data Pool

l Summarized data

l POS, order, and shipmentdata

l Syndicated POS data

l Cost information

l ...

SAP's Business Information Warehouse (SAP BW) is contained in the APO scope of supply and iscompletely integrated with it.

If you are going to execute extensive reporting, it is a good idea to set up an independent BW server, andonly transfer the data that is relevant for planning to the APO system.

As data structures in BW and APO are identical, you can also evaluate APO data with the BW frontend.



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Demand Planning Concept



l Incoming ordervalue

Quantities Values

l Invoice Quantities Values

l …


Sold-to party

Product hierarchy

Location

Region

Sales organization

BW






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time sequence

Aug. Sept.

W32 W33 W 34 W35 W36 W37 W38 W39 W40 W41

124

203

Material

Cu

sto

mer

Period

Product Groups

Regions

Planning & Reporting

l Consistent planning (top down,middle out,bottom up)

l Slice & dice

l Drill downs & ups

l Multiple demand plansto be simulated

l Standard forecast accuracyanalysis

Planning supports online simulation in multiple planning scenarios, consistent planning throughout yourenterprise (top down, middle out, or bottom up), drilling up and down, aggregation and disaggregation,and slice-and-dice techniques.

Consistent planning means that planning data on all planning levels can be consistently held (automaticaggregation and disaggregation).



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The Planning Table

Title viewKey figure 1

Key figure 3Key figure 2

Key figure 4Key figure 5

Object 1Object 2Object 3Object 4

GraphDesign Capacity Leveling

APO - Product Total APO - Location Total

W 24 W 25 W 26 W 28W 27ID Object Text

Text 1Text 2Text 3Text 4

Selection profile

UserSelection ID

Planning bookData views

Macros

Selection

Selected objects

Standard selections

Header information

Right mouse button:additional settings

The APO modules Demand Planning and Supply Network Planning have a standard user interface. Itconsists of two significant components: the selection range and the work area.

The selection range (Shuffler) is the window, where you choose the InfoObjects to be planned.

In the Shuffler, you can save commonly used selections, and load existing selections. To open theShuffler, choose the symbol selection window.

The selection profile displays all the selection IDs which have been assigned for the planner. Theplanner can access commonly used selections quickly using the selection IDs.

In the data view area, you choose your planning books, and views. You can define a filter for availableplanning books and views.



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Calculations in Demand Planning

l Calculate deviations

l Make automatic corrections

l Calculate sales budgets

l Define your own exceptional situations

l Launch status queries

l Send mails

You can use macros to:

Macros perform complex calculations quickly and accurately. The extreme flexibility of the macrosallows the planner to model a planning environment based on individual business tasks.



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Statistical Toolbox

l Univariate Forecasting

Moving average

Models (constant, seasonaltrend, seasonal)

Exponential smoothing

Seasonal linear regression

Holt-Winters

Croston's method (for sporadicdemand)

l Causal Analysis

Multiple linear regression

l Composite forecasting

Weighted average of multiplemodels

The product portfolio of a company covers a variety of products in different stages of their lifecycle andwith different demand types.

APO Demand Planning offers a "toolbox" of proven forecasting methods. The system allows you tochoose the best method for a specific demand type.

Composite forecasting extends the idea of pick-the-best; with this technique you combine two or moremethods.

Croston's method allows you to model "lumpy" (sporadic) demand.

The statistical forecasting toolbox provides all the features you require to efficiently create accurateforecasts, including everything from data analysis via time series models through multiple linearregression.



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Lifecycle Management & Like Modeling

Actual data of the old product

Forecasting of the new product

Lifecycle

Time

Sales

Like

You use lifecycle planning and "Like" modeling to forecast the launch (phase-in) and discontinuation(phase-out) of a product.

A product's lifecycle consists of different phases: launch (phase-in), growth, maturity, anddiscontinuation (phase-out). This process models launch, growth and discontinuation phases.

For all characteristic value combinations, you can use either a "like" profile, a phase-in profile, or aphase-out profile, or any combination of these.

If the phase-out profile period is within the history horizon of the master forecast profile, the systemadjusts history input values, displays the adjusted values in the original history and corrected history keyfigures, and writes the adjusted values in the corrected history.

If the phase-in profile period is within the future horizon of the specified master forecast profile, thesystem adjusts baseline (original) forecasts, and writes the adjusted values in the corrected forecast keyfigure.



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Forecast simulation

Sales

Profit

Total sales:

Total profit:

Promotion 1

Price

Quantity

-10%

Promotion patterns

? 5

? 7

? 6

? 8PlannerPlanner

Promotion Planning

Promotions can have a major impact on consumer behavior.

In APO Demand Planning, you can plan promotions or other special events independently of the rest ofyour forecast.

Use Promotion Planning to record either one-time events, such as the millennium, or repeated eventssuch as quarterly advertising campaigns. Other examples of promotions are trade fairs, coupons, free-standing inserts, competitors' activities, market intelligence. Examples of events that also have an impacton consumer behavior are upward/downward economic trends, and acts of nature, such as hurricanes,and tornadoes.

Promotional uplifts can be defined in units or percentages by common promotion patterns. The effect ofa promotion pattern that occurred in the past can be automatically detected using sales history orestimated by the planner. A promotion pattern can be archived in a promotion catalog; it can therefore bereused if a promotion of the same type is repeated. A copy function in the promotion catalog alsosupports "like" modeling of "like products," "like regions", and so on. There are several techniquesavailable to determine the impact of a historical promotion. One such technique is multiple linearregression with or without a trend or seasonality.



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Release of Sales Quantities as PlannedIndependent Requirements

Demand Planning Production Planning

Key figure: sales quantityPlanned independentrequirements

SNPPP/DS

Production quantitiesKey figure: feasiblesales quantity

MacrosAlerts

Once the various stakeholders in the forecast have reached a one-number, consensus plan, you releasethe demand plan as a planned independent requirement.

You release the demand plan from Demand Planning (DP) via either the demand planner or the SNPplanner.

This release causes planned independent requirements to be created in the order liveCache. Theseanonymous demands form the basis of SNP, or PP/DS, where BOM explosion, capacity planning, andsourcing are carried out for the complete supply network.

After feasibility of the planned sales quantities in SNP or PP/DS has been checked, the results can betransferred back to Demand Planning. Macros are used to analyze the differences between the demandplan and feasible quantities and alerts are generated if large differences occur.



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You are now able to:

Demand Planning: Unit Summary

l Explain how the Business Information Warehouseis integrated with Demand Planning

l Describe the tasks of Demand Planning

l Define various forecasting strategies

l Create a simple sales forecast, and release theresults to Production Planning.



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Exercises

Unit: Demand PlanningTopic: Interactive Planning

At the conclusion of this exercise, you will be able to:

• Evaluate historical data

• Create a sales forecast including corrections

• Release the demand plan to Production Planning

The Precision Pump company is creating a demand plan to provideplanned independent requirements for Supply Network Planning. Thisplan uses a statistical forecast based on historical data, and includes inputfrom regional sales managers.

1-1 Go to Demand Planning.Open the selection window and, under “Show”, select “APO PRODUCT”. Version000 is already displayed automatically. In the next row, enter APO - Product onceagain, and on the right-hand side enter your product T-F2##. Load the data for theproduct into the planning table.

1-2 Perform a univariate forecast and analyze the graphic results. The seasonal pattern thatoccurred in the past has been extrapolated into the future. Go back to the planningtable.

1-3 For three months from now enter a manual correction of 100 pumps. Check that thecorrection is automatically added to the demand plan. Save your plan.



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1-4 Release your demand plan to Production Planning. Use the “RELEASE” variant, andenter your product T-F2## and the horizon. Which locations have had plannedindependent requirements created for them?

Field Name Input Data

Planning area SALES


Key figure FINFOR


Category FA

Horizon The next 3 months

Daily buckets profile 90 days

Product T-F2##

1-5 Make sure that planned independent requirements have been created in the LiveCache.Go to PP/DS product view for version 000, product T-F2##, and location 2400.



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Solutions

Unit: Demand PlanningTopic: Interactive Planning

1-1 Go to Demand Planning.Open the selection window and, under “Show”, select “APO PRODUCT”. Version000 is already displayed automatically. In the next row, enter APO - Product onceagain, and on the right-hand side enter your product T-F2##. Load the data for theproduct into the planning table.

Demand Planning → Planning → Interactive Demand PlanningThe selection window is the second icon in the top left. Open the selection windowand, under “Show”, select “APO PRODUCT”. Version 000 is already displayedautomatically. In the next row, enter APO - Product once again, and on the right-hand side enter your product T-F2##. Select “Adopt”, and your selection will beadopted by the selection window.Double click on your product T-F2##. Entries can now be made for this selectionin the planning table rows.

1-2 Perform a univariate forecast and analyze the graphic results. The seasonal pattern thatoccurred in the past has been extrapolated into the future. Go back to the planningtable.

Click on the “STAT” symbol and the forecast is calculated automatically. Selectthe “Switch table/graphic” button, and the forecast results plus historical data willbe displayed graphically.To get back to the original table, click on the green “back” arrow.

1-3 For three months from now enter a manual correction of 100 pumps. Check that thecorrection is automatically added to the demand plan. Save your plan.

In the “Correction” key figure, type in 100.The total from the “Forecast” plus “Correction” key figures is displayed in the“Demand Plan” key figure. Save your plan and exit the table.



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1-4 Release your demand plan to Production Planning. Use the “RELEASE” variant, andenter your product T-F2## and the horizon. Which locations have had plannedindependent requirements created for them?

Demand Planningà Planning à Release to Supply Network PlanningSelect the “Get variant...” button and choose the RELEASE variant. Enter yourproduct T-F2##, and choose Execute.


Planning area SALES


Key figure FINFOR


Category FA

Horizon The next 3 months

Daily buckets profile 90 days

Product T-F2##

Planned independent requirements are created for Distribution Centers 2400, andPlant 1000.

1-5 Make sure that planned independent requirements have been created in the LiveCache.Go to PP/DS product view for version 000, product T-F2##, and location 2400.

Production Planning à Interactive Production Planning à Product ViewEnter version 000, product T-F2##, and location 2400. Continue. Your monthlyplanned sales quantities have been transferred here and distributed over days.



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SAP AG 2001

Contents:


l Distribution Network and Process Flow

l Master Data Requirements

l Planning Methods

SNP Heuristic

SNP Optimizer

Capable-to-Match

l Deployment (distribution detailed planning)



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Unit Objectives


l Describe the Supply NetworkPlanning distribution network

l Explain the Supply NetworkPlanning process flow

l Identify master data that is requiredto run Supply Network Planning

l Describe and compare SupplyNetwork Planning planning methods

l Explain the function of deployment



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444


111

55

Course Overview

222

666

55

777

888

999


Demand Planning




Conclusion



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SAP AG 2001

Business Scenario

l The Precision Pump Company is implementingSupply Network Planning (SNP) to plan, in the mid-to long-term, the material flow of critical materialsthrough the entire supply chain.

l Production and storage resources should beconsidered finitely and simultaneously.

l This planning is used to guarantee the procurementof parts with long delivery time and the effective useof resources, in order to improve customer serviceand to minimize inventory and lead times.

l Precision Pump company uses deployment to matchstock transports to supply and demand when thereare short-term changes.

SAP AG



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SAP AG 2001

ª Multi-site mid-term rough-cut planning

ª Simultaneous material planning and finite capacity planning ofproduction, storage and transportation resources

ª Simultaneous production planning and distribution resourceplanning

ª Planning of critical components on bottleneck resources

ª Cross-plant optimization of the resource loadª Prioritization of demand and supply

ª Collaborative procurement planning via the internet

ª Distribution detailed planning (deployment)

ª Collective conversion of stock transport requisitions

Benefits of Supply Network Planning in APO



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Planning HorizonDemand Planning (DP)




Deployment

Transportation Planning (TP/VS) / TLB

APO Planning Sequence

The tasks of the individual APO modules can be summarized as follows:

ü DP is used for long-term unconstrained planning of the future demand plan

ü SNP is used for mid-term planning of feasible cross-plant procurement and production

ü PP/DS optimizes production in the plant in the next few weeks according to sequences and setup times

ü Deployment and the TLB (Transport Load Builder) are functions of the SNP module for short-termreplenishment planning.Deployment and the TLB adjust stock transfers according to short-term changes on the demand orsupply side.

ü In Transportation Planning, routes and vehicle utilization are optimized.



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Aims of SNP Planning

l SNP Planning plans the mid- to long-term horizon. It creates arough quantity-based, cross-location production anddistribution plan with individual rough bills of material (BOM)and routings.

l The SNP BOM contains critical products that are produced onbottleneck resources and products with a long replenishmentlead time.

l SNP ensures that the right quantity is available on the right daywithout critical resources being overloaded. The smallest unitused for scheduling is days.



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Supplier WH

ManufacturerDC

Customer DC

Production process model

Production plant

Supplier plant

Beyond Traditional Planning


The stock and previously-planned receipts for finished products and components of all connected OLTPsystems are known by SNP.

Various planning methods can be used to create cross-location, feasible plans for the material flow alongthe supply chain, taking account of constraints and penalties. The result is optimal purchasing,production, and distribution decisions, reduced inventory levels, and improved customer service.

Possible constraints are, for example, material availability and unrestricted availability of work center,storage, transportation and handling capacities.



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Supplier CustomerDCPlant

Locations in the Supply Network

CarrierMRParea

Stock transferpoint

Transportationzone

l Locations are only differentiatedby the location type that controlsthe symbol on the map(exception VMI)

l Products can be stored at everylocation

l Demands can be fulfilled fromeach location

l You can maintain storage,handling, transportation andproduction capacities for eachlocation

l Storage cost per unit for eachproduct

l Purchasing cost per unit foreach product

Production, shipping and storage calendars can be defined for each location.

A handling and a storage resource can be associated with a location to represent aggregate handling andstorage capacity.

The geographical data is used to position the location on the geographical map of the Supply ChainEngineer. Predefining it as a part of the location data forces the location to be positioned at a specificpoint on the map. If you leave these fields blank, they are filled automatically when you place thelocation on the map.

The VMI customer tab only applies to the location type '1010 customer'. The carrier tab is only activatedwhen you select the location type '1020 carrier'.

Input fields that are not available to other location types are activated for location type '1007 MRP area'.

For each location you can define costs for storage, handling, procurement and production as well aspenalties for non-delivery. Procurement costs are used to select suppliers and production costs forselecting PPMs. An integrated examination of the costs is carried out during the SNP optimization run.



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Transportation lanes control the material flow alongthe supply chain

Transportation Lanes

l Procurement

l Transportation method

l Products that can be carriedby a transportation method

l Transportation capacity byvolume, weight, pallets

l Transportation costs per unit,product and transportationmethod

A transportation lane in APO represents a business relationship between the locations that you can use totransport goods. The relationships and the locations represent the supply chain network. The direction ofthe transportation lane from source to target location defines the material flow. These transportationlanes enable you to:

ü Define the product procurement parameters like lot sizes, cost functions, unit costs and lane priorities

ü Define the transportation methods (truck, ship, airplane, etc) for each lane and the related parameterslike transportation costs, distances and times

ü Assign product-specific transportation methods

ü Assign carriers to the lanes

You can query the lane relevant data via the Supply Chain Engineer menu or on the map. For example,you can display a list of all products that are assigned to a specific lane.



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TransportationProduction

Storage Handling

Resource Categories

You can model additional bottlenecks in your supply chain using bucket resources.

For period-oriented short- and mid-term planning in Supply Network Planning you use bucket resourcesthat you plan in detail based on days.

You can define the capacity of a bucket resource as

ü Quantity (without time base) - this defines the transportation capacity of a truck or the storage capacityof a warehouse, for example.

ü Rate (quantity with time base) - this defines the consumption or production capacity of a resource, forexample; in other words, the quantity that is consumed or produced on a working day at the resource.

You can use transport bucket resources to model the capacity of transport fleets in order to avoidoverloading them.

You can use storage bucket resources to model the capacity of storage locations in order to avoidoverloading them.

You can use handling bucket resources to model the capacity of forklifts, conveyor belts or pipelines inorder to avoid overloading them.



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Structure of Plan and PPM

Operations:l Material staging

l Pre-assembly

l Final assembly

l Inspection

Activities:l Produce

l Tear down

l Queue time

l Product

l Relationship

l Resources

In / Out

Resource consumption

PPM: Product, location,lot size area

$

Sequence

Plan (location independent)

Control costs

The detailed information required for producing a product is specified in the plan. Each plan includesone or more operations. Each operation includes one or more activities, the components consumed bythe activity, the resources used and their sequence within the operation.

The plans used for Supply Network Planning (SNP) are usually rougher than those used for ProductionPlanning/Detailed Scheduling (PP/DS). They contain:

The variable costs contain all production costs.

Activity type: P (system always considers operations as production)

Consumption mode: S (system always considers consumption at start of activity)

Resources:

ü Unit of measure must be the same unit as in the resource itself

ü Fixed duration for scheduling: 1 day means that the activity lasts one day, for example.

ü Variable resource consumption: Time to produce one base quantity of material.

PPMs that determine the location, lot size, and time interval for which the plan is valid are assigned tothe plan.

A consistency check can be performed manually but is always executed when saving the PPM. If thereare inconsistencies, the PPM cannot be activated.



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Perform SNP Heuristic,Optimization, or CTM run

Finalize SNP plan(available to PP / DS)

Check plan/solve problems

Deploymentrun

Release constraint-based SNP plan

to DP

TLB run

Build loads fornon-assigned

transport orders

Set up master data andsupply chain model

Release demandplan

SNP Planning Sequence

Planned independent requirements are generated for SNP or PP/DS when the demand plan is releasedfrom Demand Planning. This step can either be carried out using the demand planner or the SNPplanner.

Performing the SNP run using the SNP Heuristic, SNP optimization, or Capable-to-Match (CTM) resultsin a mid-term production and distribution plan.

After the SNP run, check the exception messages (alerts) and resolve any problems that occur.

The final SNP plan consists of purchase requisitions, stock transport requisitions and SNP plannedorders. You can automatically convert the SNP planned orders into PP/DS planned orders in theproduction horizon. Production Planning and Detailed Scheduling (PP/DS) then starts with these PP/DSplanned orders to remove detailed constraints and bottlenecks and to create a feasible production plan.

The final SNP plan can be released back to DP for comparison of the unconstrained demand plan withthe feasible SNP plan. If the differences between these two plans are too great, you can use a macro totrigger alerts so that the demand planner plans his forecasts again.

After production planning has been completed, the deployment run confirms the stock transportrequisitions based on current supplies and demands.

The TLB run groups the stock transport requisitions resulting from the deployment run into stocktransport orders.

You can build stock transport orders manually for stock transport requisitions that could not be takeninto account during the TLB run due to specified threshold values.



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SNP Planning Functionality

l Mid- to Long-Term Planning Methods

Heuristic

Capable-to-Match (CTM)

Optimization

Propagation

l Deployment (short-term Replenishment Planning)

Heuristic

Optimization

l Transport Load Builder

Grouping of Stock Transfers

The following planning scenarios are supported by Supply Network Planning:

ü Supply Network Planning creates feasible mid-term procurement, production and distribution plans.

ü Deployment distributes stock and available receipts to distribution centers and vendor-managedinventory (VMI) customers.

ü Transport Load Builder converts the stock transport requisitions used by deployment into stocktransport orders, taking account of transportation capabilities.



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Heuristic Scenario

1. Demandno stock

2. Demandno stock

l Quantity-based, rapid, multi-site planning

l MRP II concept (planning against infinite capacity)

l Time-based aggregation to weekly splits, for example

3. Explosion of planCreation and scheduling of

receipts

4. Valid transportationlanes, quota

arrangements,priorities

The role of the Heuristic involves:


ü Integrating purchasing, production, and distribution in one consistent model

ü Modeling the entire delivery network

ü Synchronizing activities and planning material flow throughout the supply chain

The slide shows an example of the Heuristic:

There is a demand in the customer location. The net requirements calculation does not find anystock. The product is procured externally. The system analyzes the possible transportation lanes.

There is also no stock in the distribution center so the Heuristic checks the possible transportationlanes in the plant.

There is no stock in the plant, so the SNP plan is exploded and a planned order is created for thefinished product and dependent demands for the components.

Procurement for the components then occurs via the possible transportation lanes and quotaarrangements or priorities.



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1. Day 2. Day 3. Day 4. Day 5. Day

Capacity load

100 %

BACKWARD FORWARD

Time-Based Capacity Leveling

Capacity Leveling

The planner can use the following methods to adjust the plan:

ü Backward shift of capacity load to satisfy demand with high priorities without due date violations.However, rescheduling does not create any orders in the production horizon. Forward shift of capacityload related to demand with lower priorities and minimization of due date violations based on demandpriorities.

ü A combination of backward and forward shift of capacity load.

If you choose a time-based capacity leveling option, you can select various priority rules:

ü If you do not select a priority rule, the priority is determined by the system and is completely random.

ü If you choose Time-Based Capacity Leveling by decreasing order quantity, the system first adjusts thelargest order, then the second largest, and so on. If you choose Time-Based Capacity Leveling byincreasing order quantity, the system adjusts the smallest order first, then the second smallest, and soon.

ü If you choose Time-Based Capacity Leveling by decreasing stock range of coverage, the system firstadjusts the order with the largest stock range of coverage, then the one with the second largest range,and so on. If you choose Time-Based Capacity Leveling by increasing stock range of coverage, thesystem adjusts the order with the smallest range of coverage first, then the one with the secondsmallest range, and so on.

ü If you choose Time-Based Capacity Leveling by decreasing product priority, the system first adjuststhe order with the highest priority, then the one with the second highest priority, and so on. If youchoose Time-Based Capacity Leveling by increasing product priority, the system adjusts the order



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with the lowest priority first, then the one with the second lowest, and so on. The product priority ismaintained in the product location master record on the SNP2 tab.



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CTM Scenario

1. Demand withhighest priority,no stock

3. Strategy: Search for surplus stockResult: No stockATP rule: Substitution productResult: No stockProduction: Search for availablecapacityResult: No resource available

4. Strategy: Search forsurplus stockResult: Stock

5. Stock transfercreated

2. Transp. lanehighest priority

This slide shows the determination of feasible receipts for the demand with highest priority. CTMgradually checks the feasible receipts, whereby you can define the sequence of checks via rules. CTMtakes the first feasible solution.

CTM considers:

ü Prioritized single requirements

ü Production capacity and not handling, storage or transport capacities

ü Splitting production between resources

ü Component availability

CTM is order-based planning that uses pegging methods to trace orders back to the individualrequirement. In Supply Network Planning no order-based planning takes place; rather, quantity planningtakes place. After the optimization run (or after the heuristic run), no information relating to connectionsbetween particular planned production orders and original sales orders can be determined.



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PrioritizedDemands Demands

1.2.3.4.5.6.7.8.9.

10.11.

Demand Prioritization

Priority Order Date Customer Product

1

2

3

KAUF

KAUF

forecast

1.3. 2001

1.4. 2001

Baker

Baker

P-102

P-102

P-1021.2. 2001 DC1

l The sort can be carried outaccording to:

Customer (location) priority

Product priority

Order type

Due date

l Demand selection

CTM work area

CTM prioritizes current demands based on order category (for example, sales order (KAUF) anddemand planning forecasts), due date and the defined priorities.

The sequence of the priority criteria is of great importance for processing demands in the CTM run.Note: If no priorities are set, prioritization occurs on a first come, first-served basis by due date.

You can simulate demand prioritization and check the results.

Below is a list of possible prioritization criteria: Maximum number of partial deliveries allowed per item,stock / receipt / demand / forecast categories, confirmed quantity, ATP, BOP: confirmation share, CTMquantity, order / MRP element number, order / MRP element item, date on which the record was added,delivery group (items are delivered together), location, ATP, BOP: delivery date, delivery priority,location, location product number priority, product priority, material staging date, item type salesdocument, ATP, BOP: user exit priority, sales document type, requested quantity.

The sort within a prioritization criterion can be descending, ascending or user-defined.

Define your demand selection in the CTM profile. (Multilevel Supply & Demand Matching > Planning> Planning CTM > Demands tab) or (Multilevel Supply & Demand Matching > Environment > CurrentSettings > Demand Prioritization > Sort Profile)



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1.2.3.

4.

5.6.

7.8.

9.10.11.

CategorizedSupplies

PrioritizedDemandsCapable-to-Match

Multi-site capacity andtransportation capability check

CTM Results

The CTM planning run is powered by the CTM engine, which matches the prioritized demands to theavailable stock and receipts. Then it matches receipts and demands, taking account of productioncapacities and transportation capabilities.

Performing the CTM planning run in the SNP environment generates a mid-term production anddistribution plan.

CTM complements SNP's multi-site supply chain planning strategies. Its purpose is to perform a quickcheck of production capacities and transportation capabilities based on a preprocessed set of categorizedsupplies and prioritized demands.



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The Principle of the Optimizer

Product requirementspriorities, resources,

horizons

Simultaneous productand resource

planning

Feasible receipts: planned orders, stock transfers andpurchase requisitions

Optimizer

Result:

l Constraints:

l Customer priority

l Product priority

l Production capacity

l Storage capacity

l Transportation capacity

l Lot sizes

l Safety stock

The Optimizer uses linear programming to consider all relevant factors simultaneously as one problem.The Optimizer compares alternative solutions for the incurred costs and proposes the best feasiblesolution based on constraints defined in the system. You use the control costs to also configure yourpriorities such as minimizing delays or minimizing on-hand stock. The Optimizer considers allconstraints in the supply chain model that were activated in the optimizer profile. As more constraintsare activated, the optimization problem becomes more complex and the time required to solve thisproblem increases.



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Aims of Optimization

What should be optimized

Costs - optimal

Prerequisite: "real" variablecosts or adequateestimate

Non-delivery costs :=Sales price + surcharge forcustomer loss/dissatisfaction

Service level - optimal

Prerequisite: "simplified"costs accepted(Control costs)

Non-delivery costs (NC) := highStorage costs := > 0, << NCOther costs := << NC

Service level - optimal on this slide shows the simpler configuration made by the Optimizer. Youmaintain high non-delivery costs (NC) and storage costs for the finished products via mass maintenance.The high non-delivery costs force the Optimizer to exhaust all possible procurement and productioncapacities to satisfy the demands. The storage costs make sure that procurement and production arecarried out as late as possible.

Costs - optimal on this slide shows the more complex configuration made by the Optimizer. Youmaintain realistic costs for procurement, production, transportation and storage. You model lost salesand customer dissatisfaction via delay and non-delivery costs. In this scenario the Optimizer uses thecosts to determine the most cost-effective integrated solution.

The result of the optimization run is an optimal solution (minimum costs or maximum profit) takingaccount of planning-relevant transportation, production, storage and handling constraints. In that sense,the solution is feasible. However, the result might be that due date constraints are violated or safetystocks are not filled. Due dates and safety stocks are considered to be soft constraints. There are costsassociated with such violations, so the Optimizer only proposes this solution if, according to the costsspecified in the system, it is the least costly solution.



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30

Costs Penalty costs forlate delivery

Optimizer Decisions

l Where will procurementtake place?

l Where will production takeplace?

l When will production takeplace?

l What will be produced?

l Where will transportationtake place?

l When will transportationtake place?

l Where will the product bestored?

l How long will the productbe stored?

The essence of optimization is finding the best feasible solution. For example, is it less costly to delivertwo days late or to produce three weeks early? The challenge with optimization is to properly define therelevant costs (for example, cost of late delivery). You can fine-tune the relative importance of differentcost types via the cost profile.



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Demand at a locationDependent demand at loc.Processing flow

Heuristic: Optimizer:

CTM:

SNP Strategies: Comparison (1)

The Heuristic is a rapid infinite planning method that generates alerts when there is a material shortfallor resource overload.

CTM is a rules-based method with extensive prioritization capabilities and finite, global planning ofproduction resources. CTM is order-based planning that uses pegging methods to trace orders back to theindividual requirement.

The Optimizer considers material and resource availability simultaneously. It uses linear programmingto consider all relevant factors simultaneously as one problem. In other words, there is no sequentialprocessing in the determination of a solution. The Optimizer considers transportation, production,storage, and handling costs to propose a minimum cost solution that meets the respective constraints.

The lack of pegging of orders back to the individual requirement has the following repercussions: InSupply Network Planning no order-based planning takes place. After the optimization run (or after theHeuristic run), no information relating to connections between particular planned production orders andoriginal sales orders can be determined (CTM can, however, provide such information via order tracing).



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Speed

Quality

Prod. resources

Other resources

Multi-level

Costs

Priority

Quota arrangements

Heuristic Optimizer CTM

+

-

2. Step, local

2. Step, local

+

-

-

+

-

+

global +

global +

+

+

Product/location

creates

¡

¡

global +

-

+

-

Location / prod.+

+

SNP Strategies: Comparison (2)

The performance of the three planning methods can be divided up roughly as follows: The Heuristic isthe fastest method, CTM is in the middle and the Optimizer is the most complex and the slowest method.This is just a rule of thumb. If you plan a lot of orders per period and location product, the performanceof CTM and the Optimizer can be compared since planning in CTM is order-based.

The quality of the heuristic planning result is poorest (infinite!), next comes CTM (rules), and youshould expect the best result from the Optimizer that weighs up all possibilities of this algorithm.

Production resources are considered globally and finitely by the Optimizer and CTM, while the infiniteplanning result of the Heuristic must be postprocessed interactively.

Transportation, storage and handling resources can be considered globally and finitely by the Optimizer,while the infinite planning result of CTM and the Heuristic can be postprocessed interactively.

All methods can plan all BOM levels automatically.

Costs are only relevant to the Optimizer.

Priorities control CTM. There are product, location, order and due date, procurement and stock transportpriorities. You set priorities for the Optimizer via the penalty costs for late delivery and non-delivery ofthe location products.

Quota arrangements are used by the Heuristic and CTM. They can be optimized using the Optimizer.



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Planning Process

Planning Horizon


Demand Planning

Production Planning /Detailed Scheduling

Transport LoadBuilder

Recommendedstock transportrequisitions

Forecast

Deployment

Stock transportorder

Planned orders

Firmedstock transportrequisitions

Deployment determines which demands can be fulfilled by the existing supplies. If the produced andprocured quantities as well as the demands match SNP planning, the result of deployment is aconfirmation of the SNP plan. If the available quantities are not sufficient to meet the demand, thesystem makes the necessary adjustments according to whether you are executing the deploymentheuristic or deployment optimization.

The Transport Load Builder (TLB) then groups these confirmed quantities together into stock transportorders.

Deployment and the TLB confirm the OLTP stock transport requisitions and can convert them into stocktransport orders or VMI sales orders. Via Customizing -> APO -> Supply Chain Planning -> SupplyNetwork Planning (SNP) -> Basic Settings -> Configure Transfer to OLTP Systems you can configure iftransfer should take place using deployment or the TLB.

Deployment and TLB are simply used to confirm stock transfers. Everything beyond this, such as routeplanning, selection of carriers and generation of deliveries and transportations in the OLTP system, isplanned in TP/VS (Transportation Planning and Vehicle Scheduling).



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Heuristic

Optimization

Deployment: Heuristic versus Optimization

l Heuristic

Started for one plant

Product by product

l Optimization

Focus on network

Product by product

Coverage maximization

Cost-based optimization

The deployment function in SNP determines how and when inventory should be deployed to distributioncenters, customers, and vendor-managed inventory (VMI) accounts. It produces optimized distributionplans based on constraints (such as transportation capacities) and business rules (such as minimum costapproach, or replenishment strategies).

A variety of deployment strategies are used depending on the current situation (e.g., fair share, pushdeployment, pull-push deployment, and minimum cost flow optimization).

The Heuristic has a hierarchical view of the supply chain network: Deployment is always carried outfrom one delivery location to the receiving locations (DCs or customers).

The deployment heuristic calculates a replenishment plan for a product in a delivery location. If theavailable quantities are not sufficient to fulfill the demand, the system determines the distribution planbased on fair share rules. If on the other hand supply exceeds demand, the system uses push rules todetermine the distribution plan. Fair share and push rules are defined in the deployment profile.

Deployment optimization has the integrated view of the receipt situation of all delivery locations and thedemand situation of the receiving locations.

The deployment optimization run calculates a replenishment plan for a product in all locations within thenetwork. If the available quantities are not sufficient to fulfill the demand or supply exceeds demand, thesystem uses minimum cost flow optimization to determine an optimum distribution plan for the wholenetwork at once.

Deployment optimization works like SNP optimization except that the production and procurementquantities are not changed.



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DC2

DC1

Plant

Deployment adjusts the stock transfers for short-term changeson both the supply and demand side (distribution detailed planning).

Deployment

l Fair Share

Proportional allocationaccording to demands

Proportional allocationaccording to target stocklevel

Quota arrangements

l Push deployment

Based on future demands

Quota arrangements

There are several deployment and allocation strategies: fair share, push deployment, pull-pushdeployment, and minimum cost flow optimization.

If demand exceeds supply, use a fair share allocation.

If demand is less than supply or excess inventory exists, use a push strategy to be able to transfer stockas early as possible.

When excess inventory exists, surplus stock can be distributed according to push logic.

For pull/push deployment rules, the demand horizon restricts the future demands that can be deliveredearly.

Set the pull horizon on the demand profile; set the push horizon on the supply profile.



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Deployment Results

Plant to DC1Plant to DC 2Plant to DC 1Plant to DC 2

Date: ATD Quantity: Requirements:

Detailed requirements per DC:

Today

Sup

ply

Dem

and

Deployment Result: Fair Share Rule A

05.01.200106.01.200107.01.2001

1000900400

100 (DC1)500 (DC2)800 (DC1+2)

DC1DC2

200600

100500100300

05.01.200106.01.200107.01.200107.01.2001

The slide shows the result of a deployment heuristic using the fair share rule A that is issued afterplanning in the background: Today, 1000 units are available in the plant for distribution. The stocktransfer for the current demand from DC1 can be confirmed. The stock transfer for tomorrow can also beconfirmed. The day after tomorrow, the demand exceeds the remaining quantity in the plant, so the 400units are distributed using the defined fair share rule A.

You use the ATD (Available to deploy) quantity to describe the quantity that is determined in thedelivering plant for distribution and according to ATP rules. You configure the category groups inCustomizing and assign them to the locations. Receipts (ATR) are, for instance, stock, productionorders, purchase orders, etc. Issues (ATI) are reservations, etc.



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Objective: Collective conversion of stock transport requisitionsinto stock transport orders in R/3

Transport Load Builder

l Grouped according to

Products (transportation planner)

Time (pull-in horizon)

Transportation zones

l Ensures that minimum requirementsare met for:

Volume

Weight

Number of pallets

The primary purpose of the Transport Load Builder (TLB) is to use the results of the deployment run(single product transport recommendations) to create multi-product transport orders in a time period fora transportation zone. It should be ensured that:

ü The transportation methods are filled to maximum capacity

ü No transportation method is dispatched that is not filled to minimum capacity

ü For stock transport orders that could not be satisfied during the TLB run due to specified constraints,you can build transport orders manually

You can create transportation zones for the TLB or transfer them from R/3. You can thereby consolidateyour transportation capabilities (for example, use one truck to deliver orders to several locations). Youcan group several locations together using transportation zones (and thereby create a zone). TLB ordersfor several locations are regarded as one order for a large location, although individual purchase ordersdo actually exist for separate locations.

If you want to use transportation zones, you create a location as a transportation zone in the locationmaster. (From the APO Easy Access menu choose Master Data -> Location. Use the input help (F4) inthe Loc.type field of the location master and choose 1005 - transportation zone). You then assign therelevant locations in the hierarchy master to this transportation zone (choose Master Data -> Hierarchy).You can display these location hierarchies in the TLB interactive planning shuffler.



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1

Building Consolidated Loads

Days2 3

Half-fulltruck

Full truck(best price) Minimum capacity

In the Interactive Planning table for the TLB, you can view transport orders generated automatically byTLB for a specific day. If the load does not meet the minimum capacity requirements specified for a fulltransport load within the specified pull-in horizon, you can manually create transport orders that areplanned for later shipment and ship them early in order to build a full truck load.



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You are now able to

Supply Network Planning: Unit Summary

l Describe the Supply NetworkPlanning distribution network

l Explain the Supply NetworkPlanning process flow

l Identify master data that is requiredto run Supply Network Planning

l Describe and compare SupplyNetwork Planning planning methods

l Explain the function of deployment



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Exercises

Unit: Supply Network PlanningTopic: Interactive Planning


• Open interactive planning in SNP, run the heuristic and view thecapacity situation for a resource

Once a forecast has been generated at Precision Pump Company, theLogistics Planner uses the SNP heuristic to create a rough distributionplan and checks for capacity overloads at the production plants.

1-1 Open interactive planning of Supply Network Planning.Open the selection window and, under “Show”, select “APO Location product”.Version 000 is already displayed automatically. In the next row, enter APO - Productonce again, and on the right-hand side enter your product T-F2##. Load the data for theproduct at location 2400 into the planning table.

1-2 Look at the future periods and check if the planned independent requirements youreleased for the distribution centers 2400 and 2500 and the plant 1000 are displayed.Analyze in which key figure the planned independent requirements are shown.Make sure that no distributed demands and production orders exist for the productionplants 1000 and 2300.

1-3 Run the network heuristic and check the situation for your product T-F2## for thedistribution center 2400.

Verify that there are now values in the Total receipts row.

Which plants are supplying the receipts?_______________



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1-4 Check the capacity situation for resources WT-L##_1000_001 and WT-L##_2300_001in the Capacity View. Switch data views by dragging the grey bar upwards on the leftand double-clicking on data view SNP94(2) “CAPACITY CHECK”.

Open the selection window and, under “Show”, select “APO Resource”. Version 000 isalready displayed automatically. In the next row, enter “APO Resource” once again,and on the right-hand side enter your resources WT-L##*. Load the data for a resourceinto the planning table sequentially. If there are any capacity overloads, run “CapacityLeveling”.

Is there any capacity overload for these resources?_________

If so, when do the violations occur?____________________

1-5 Run optimization for your product T-F2## at all locations. Load all location productswith product T-F2## into the planning table. Start the Optimizer with the optimizerprofile DISCRETE and the cost profile MASTER. Check the capacity situation again.

1-6 Check if the receipts have been transferred to the connected R/3 System. Log on to theR/3 System and call the stock/requirements list for your product T_F2## in plant 1000.



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Unit: Supply Network PlanningTopic: Deployment

At the conclusion of this optional exercise, you will be able to:

• Describe deployment’s functionality and how it is used in APO

Precision Pump’s products are distributed to their distribution centers andcustomers on a daily basis.

Deployment checks the quantity that is available in the next few days fordistribution and confirms stock transports that can be made.

1-1* Run deployment for the location 1000 for the next 100 days using mass processing.Reduce SNP transport orders. Write down the result of the deployment run:

_______________________________________________________________

_______________________________________________________________


Version 000

Planning book 9ASNP94

Data view SNP94(1)

Location 1000

Product T-F2##

Deployment horizon indays

100

If you select Orders: Do not change the system will not change theSNP transport orders.

The horizons in the training system are not realistic. In practice,deployment is used to confirm stock transports for the next few days.But in the course we cannot wait until the orders reach the short-termhorizon.



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Solutions

Unit: Supply Network PlanningTopic: Interactive Planning

1-1 Open interactive planning of Supply Network Planning.Open the selection window and, under “Show”, select “APO Location product”.Version 000 is already displayed automatically. In the next row, enter APO - Productonce again, and on the right-hand side enter your product T-F2##. Load the data for theproduct at location 2400 into the planning table.

Supply Network Planning → Planning → Interactive Supply Network PlanningThe selection window is the second icon in the top left. Open the selection windowand, under “Show”, select “APO Location product”. Version 000 is alreadydisplayed automatically. In the next row, enter APO -Product once again, and onthe right-hand side enter your product T-F2##. Select “Adopt”, and your selectionwill be adopted by the selection window.Double-click on your product T-F2## for the distribution center 2400. The data forthis selection is now displayed in the planning table.

1-2 Look at the future periods and check if the planned independent requirements youreleased for the distribution centers 2400 and 2500 and the plant 1000 are displayed.Analyze in which key figure the planned independent requirements are shown.Make sure that no distributed demands and production orders exist for the productionplants 1000 and 2300.

Display the weeks in the next month and you will see the quantities in the key figure“Total demand”. Only forecasts outside of the forecast horizon contribute to the totaldemand.Double-click on the “Total demand” row. The released data is displayed in the keyfigure "Forecast". All six key figures (forecast, sales order, dependent demand,distributed demands) contribute to the total demand.Double-click on your product T-F2## for the distribution center 2500. Ensure thatdemand is displayed.Double-click on your product T-F2## for the plant 1000. Forecasts are displayed butno production quantities and distributed demand.



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1-3 Run the network heuristic and check the situation for your product T-F2## for thedistribution center 2400.

Verify that there are now values in the Total receipts row.

Which plants are supplying the receipts?_______________

Click on the Heuristic (network) button to run the heuristic.Double-click on your product T-F2## for the distribution center 2400.Double-click on the “Total receipts” row.The stock transports created by the heuristic are displayed in the key figure“DistrReceipt (Planned)”. Right-click on this key figure and select “Display details”to display the receipts from the plants in the lower window.The production plants 1000 and 2300 supply the distribution center 2400 accordingto the quota arrangement for the product T-F2##.

1-4 Check the capacity situation for resources WT-L##_1000_001 and WT-L##_2300_001in the Capacity View. Switch data views by dragging the grey bar upwards on the leftand double-clicking on data view SNP94(2) “CAPACITY CHECK”.

Open the selection window and, under “Show”, select “APO Resource”. Version 000is already displayed automatically. In the next row, enter “APO – Resource” onceagain, and on the right-hand side enter your resources WT-L##*. Load the data for aresource into the planning table sequentially. If there are any capacity overloads, run“Capacity Leveling”.

Is there any capacity overload for these resources?_________

If so, when do the violations occur?____________________

Double-click on the data view SNP94(2) “CAPACITY CHECK”.Double-click on your resource in the selection window to load data for the resourceinto the planning table.The aggregated available resource is calculated from the available capacity perworkday.If capacity overloads occur, select “Capacity leveling”; “Capacity leveling bybackward scheduling”; “Time-based capacity leveling w/o priority rule”; “Maximumload as a % :100%”, “Ignore firmed quantity”. Save the result and select again.



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1-5 Run optimization for your product T-F2## at all locations. Load all location productswith product T-F2## into the planning table. Start the Optimizer with the optimizerprofile DISCRETE and the cost profile MASTER. Check the capacity situation again.

Double-click on the data view SNP94(1) “SNP PLAN”. Open the selection windowand, under “Show”, select “APO Location product”. Version 000 is alreadydisplayed automatically. In the next row, enter APO -Product once again, and onthe right-hand side enter your product T-F2##. Select “Adopt”, and your selectionwill be adopted by the selection window.Press the “Select all” symbol above the selection window and load the data bypressing the “Load data” symbol.Start the optimization run by pressing the “Optimizer” symbol.Enter DISCRETE for the optimizer profile and MASTER for the cost profile andpress “Execute”. When the Optimizer has finished the calculation, the resulting costsare displayed. When you have analyzed the costs, select the green arrow BACK toreturn to the planning table. Now you can check the resource loads again.

1-6 Check if the receipts have been transferred to the connected R/3 System. Log on to theR/3 System and call the stock/requirements list for your product T_F2## in plant 1000.

SAP standard menu → Logistics → Production → MRP → Evaluations →Stock/Reqmts ListEnter your product T-F2## and the plant 1000, for example, and confirm.The SNP planned orders and releases for the stock transport requisitions are in R/3.The planned independent requirements are not transferred back via CIF but viamass processing in Demand Planning.



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Unit: Supply Network PlanningTopic: Deployment

1-1* Run deployment for the location 1000 for the next 100 days using mass processing.Reduce SNP transport orders. Write down the result of the deployment run:

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

Supply Network Planningà Planning à SNP in the Background à Deployment


Version 000

Planning book 9ASNP94

Data view SNP94(1)

Location 1000

Product T-F2##

Deployment horizon indays

100

Select “Orders: Reduce”, and “Log”.

If you select Orders: Do not change the system will not change theSNP transport orders.

The horizons in the training system are not realistic. In practice,deployment is used to confirm stock transports for the next few days.But in the course we cannot wait until the orders reach the short-termhorizon.



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SAP AG 2001

Contents:

Production Planning / Detailed Scheduling (PP/DS)

l Consumption of planning by sales orders for forecast-controlled products in make-to-stock and make-to-orderproduction

l Simultaneous material and capacity requirements planning atoperation level in the production plant

l Tools for production planning and production scheduling

l Schedule optimization in PP/DS

l Transfer of planning results to the execution system



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Course Objectives

At the conclusion of this course, you will be able to

l Describe how sales orders consume planning inmake-to-stock and make-to-order production

l Use simultaneous material and capacityrequirements planning at operation level

l Use the production planning and productionscheduling tools

l Describe schedule optimization in PP/DS

l Transfer the planning results to the executionsystem



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444


66

Course Overview

555

333

66777

888

999


Demand Planning



Transportation Planning


Conclusion



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Business Scenario

l In Demand Planning, a demand planning forecastwas generated and transferred to the distributioncenter as planned independent requirements.

l After SNP has transferred the requirements via thestock transfer to the production plant, theproduction quantities and capacities must beplanned in the production plant.



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Production Planning & Detailed Scheduling inAPO: Advantages

ª Simultaneous material and capacity requirements planning for in-houseproduction, external procurement, and stock transfers in a production plant atoperation level: Fast generation of feasible plans

ª Immediate and automatic planning (for example, to trigger production from theplant) - close integration with plant

ª Planning with exact times, even for dependent requirements (for example, aprerequisite for material staging by shift)

ª Dynamic exception messages in real-time and based on order linking (pegging)across the whole supply chain

ª Multi-level capacity requirements planning possible: automatic, multi-level, bi-directional propagation of order changes

ª Planning of alternative resources

ª Available capacity: time, volumn, length ...

ª Consideration of restrictions in planning (for example, supplier capacity)

ª Schedule optimization (order sequencing, lead time, etc.)

Simultaneous material and capacity requirements planning: You can define resources as finiteresources in the resource master (resources critical for planning). At these resources, operations oforders are only created if there is enough capacity available for the order quantity on the order date. Ifthere is not enough capacity available, the system searches for a new date, taking the capacity situationinto account.

Automatic planning immediately: If you set this indicator for a product (PP/DS tab in the productmaster), the system starts a single-level planning run for this product for each change made that isrelevant to planning (for example, a new sales order). At the same time (immediately) a multi-level ATPcheck is performed for the product and for the assembly/components for which automatic planningimmediately is defined.

Planning with exact times: Dependent requirements and orders are created with a time.

Bi-directional propagation of order changes: If you make time-related changes to orders at, forexample, finished-product level, you can specify that the system is to automatically move the assemblyorders. If, however, there is not enough capacity at that time for the assembly orders, an exceptionmessage can be generated or the order is not moved at finished product level. In the other direction,moving assembly orders can have an effect on finished product orders.

Planning alternative resources: If not enough capacity is available at a resource, the operation can berescheduled at alternative resources (maintained in the PPM).

Schedule optimization: During planning, it may be that orders were generated whose order sequence isnot optimum. Therefore, you can change the sequence and resource assignment of existing orders in theoptimization run.



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Interaction Between SNP and PP/DS

Create,change

Create,change

PP/DS

Today

Create,change

Create,change

SNP

Order4713

Order4714

Order4715

Order4716

Order4717

Production horizon(per product)

Time

Receipts

Reqmts in plantMo Tu We Th

50

Order4712

100 40 210 160 35

l Capacities and material are plannedbased on exact times (to the second)

l Consideration of order sequences

l Optimizer: Can optimize the sequenceof existing orders and operations

l Capacities are planned in time bucketprofiles in an aggregated manner

l Order sequences not considered

l Optimizer: Optimizes lot sizes,determines source of supply

If you decide to plan using both Supply Network Planning (SNP) and Production Planning and DetailedScheduling (PP/DS), the production horizon is used to separate the areas of responsibility for these twoplanning functions:

ü Supply Network Planning is used for medium-term to long-term planning across the whole logisticschain (especially if several plants and distribution centers are available). Requirements for a definedbucket (for example, day) are aggregated. In this case, it is irrelevant whether a requirement is in anearly shift or late shift since the requirements are only roughly planned, and even the time positions ofbreaks are not taken into account. Furthermore, you are not only able to perform time aggregatedplanning in SNP, but also period aggregated planning (if desired). You can define bucket resources tobe used for SNP which can represent, for example, the available capacity of a whole warehouse. Sinceyou create separate PPMs for SNP (which are usually copied from PP/DS-PPMs), you can describeproduction at these bucket resources. Order sequences play no role in the time area of SNP planning.

ü PP/DS is used for short-term planning in which orders must be scheduled to the minute and ordersequences must be taken into account (sequence planning and optimization).

As soon as a requirement is within the production horizon, it is no longer planned in the SNP planningrun, but rather in the production planning run in PP/DS. Orders can be manually created or changed inPP/DS across the complete time axis, irrespective of the production horizon. During automatic planning(the production planning run) in PP/DS, only orders within the production horizon are created. In SNP,however, orders cannot be created or changed in the production horizon. Orders that are in theproduction horizon and thus planned by PP/DS are still displayed in SNP as aggregated requirements forthe defined bucket.



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100Today

Production horizon

SNPCreate

100Today

Production horizon

DeletePP/DS

100Today

Production horizon

Create againPP/DS

Scheduling accordingto the PPM for SNP

Scheduling accordingto the PPM for PP/DS

Interaction Between SNP and PP/DS (2)

In this graphic, an order is created in Supply Network Planning using the production process modeldefined in SNP. Production process models are created (the SNP-PPM can be copied from PP/DS-PPM,which is generated via the R/3-APO interface from the R/3 routing/BOM). Bucket resources (used onlyin SNP) or mixed resources (which can be used both in PP/DS and SNP-PPM) are planned in SupplyNetwork Planning. Orders are aggregated for each defined bucket.

As soon as the start date of the order enters the production horizon, the SNP order is no longer plannedby SNP. The SNP order must be converted into a PP/DS order so it can be planned by PP/DS. To do this,background conversion is available in the PP/DS menu, which can be used to schedule periodically. Theconversion creates the order again in PP/DS using the production process model defined there. Beforethe conversion, the aggregated requirements are displayed in SNP as planned production. After theconversion in PP/DS, the orders are still displayed as aggregated requirements in SNP.

The production horizon is defined as a number of days from the current day into the future in whichPP/DS is to be used to plan. The production horizon can be defined in Customizing for Supply ChainPlanning, in the IMG activity, Display Global Parameters and Default Values. You may also define aproduction horizon for each product per location in the product master. This definition takes priorityover the Customizing definition.



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Requirementsstrategies

Quantity 100Date 05/10

Quantity ?Date ?

Requirements Strategies

Salesorder

SDSDPlannedindep.reqmts

CustomerProduction /Purchasing

l How does SAP process independentrequirements?

A requirement is the quantity of a material required at a certain time in a plant.

Independent requirements do not refer to the requirements of other materials. Planned independentrequirements and sales orders are independent requirements.

A requirements strategy specifies a possible procedure for material planning.

Some requirements strategies support make-to-stock production. You could, for example, planproduction or purchasing based on a forecast and then cover the sales orders from the stock.

Some requirements strategies support make-to-order production. In this case, you may not startproduction or purchasing, for example, until a sales order has been received.

Some requirements strategies support a combination of make-to-stock and make-to-order production.You could produce the subordinate assembly, for example, based on a forecast. You would not start thefinal assembly until a sales order is received.



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Requirements Strategies

l Make-to-stock production of the finished product by planning atthe finished product level

l Sales order-related final assembly:

Make-to-stock production of assemblies by planning atassembly level, final assembly in make-to-stock or make-to-order production when sales orders are received.

Make-to-stock production of assemblies by planning atfinished product level, but final assembly is not triggered untilthe sales order is received. Final assembly in make-to-stockor make-to-order production.

l Make-to-order production only, without planning

Requirements strategies represent the business procedure for planning production quantities and dates. Awide variety of requirements strategies are available offering a number of different possibilities forplanning, ranging from make-to-order production to make-to-stock production. Depending on thestrategy you select, you have the following options:

• Make-to-stock production based on sales orders and/or planned independent requirements at finishedproduct level

• Planning specifically for the assembly, if you can plan more easily at component level. Final assemblytakes place in make-to-stock or make-to-order production.

• Stocking up of assemblies by planning at finished product level, but final assembly is not triggereduntil the sales order is received. Final assembly takes place in make-to-stock or make-to-orderproduction.

• Make-to-order production only, without planning the finished product or the components

Furthermore, you can combine requirements strategies. This allows you to plan a finished product with arequirements strategy for make-to-stock production as well as plan an important assembly that is alsosold as a spare part.

The planning strategies available for a material can be found in APO Customizing for Master Data (instep Determine Requirements Strategies). You can assign a requirements strategy to a material in theRequirements strategy field. Each requirements strategy contains important control parameters for theconsumption of sales orders (or dependent requirements) and planning.



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SAP AG 2001

Overview of the Complete Production PlanningRun Process

Dependentrequirements

Order

Sched. agree.del. schedule

Sales orders,Planned ind. reqmts

Purchaserequisition

Convert

External procurementIn-house

production

ProductProductplanning runplanning run

Sched. agree.del. schedule

Convert

Planned order

Productionorder

Processorder

Plnd order forrepetitive man.

Planning

Execution

Material requirements planning deals with current and future requirements. The planned requirementsquantities trigger planning (in consumption-based planning, for example, planning is triggered when thereorder point is not reached). Requirements elements for material requirements planning are, forexample, sales orders, planned independent requirements, dependent requirements.

If the production planning run discovers shortage quantities, procurement proposals are generated:purchase requisitions and planned orders are internal planning elements which can be changed,rescheduled or deleted at any time.

ü In the case of in-house production the system creates planned order for planning productionquantities. When planning is complete, planned orders are converted to production orders. Dependentrequirements for the planned order are converted to reservations for the production order.

ü In external procurement, the system generates a purchase requisition for planning externalprocurement quantities. When planning is complete, the purchase requisition is converted to an order.If a material exists for a scheduling agreement, scheduling agreement delivery schedules can also begenerated directly during the production planning run.

When planning is complete, in-house production or external procurement must be triggered. For this,

ü Planned orders are converted to production orders if you are working with discrete manufacturing(order-based production)

ü Planned orders are converted to process orders if you are working with process manufacturing

ü Planned orders are used as a basis for production if you are working with repetitive manufacturing(period-based instead of order-based)

ü Purchase requisitions are converted to purchase orders



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Time Elements in Scheduling

Finishedproduct

Assembly ofa different

plant

Stock transferto a differentplant

Time

Availability date

Start date

Reqmts date

10 3020

End date

GR processing time10

10 20

GI processing time GR processing time

10

GR processing time

GR processing time

Operations

When the lot size of the planned order has been determined and the PPM has been exploded, theproduction planning run calculates the dates of the planned orders.The dependent requirement dates of the planned orders are moved to the dates of the assigned operations(PPM). A material order appropriate for the operation is then possible.

The system assumes material staging according to component assignments in the PPM to the operationsin the PPM. The dependent requirement dates of the BOM components are moved to the production startdates of the operations to which they are assigned.



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Production Planning Run Overview: SimultaneousMaterial and Capacity Requirements Planning

Time

Resource 3 (finite)

Resource 2 (infinite)

Resource 1 (finite)

Sales order with desireddate and quantity

30

20

10

30

20

Confirmedqty/date

Available

Occupied

1st Loading attempt

Final loading

Today

Resource availability

Raw material Delivery time Delivery time

Possible ALERTS:Resource OverloadSupplier-supplier time violatedSupplier-resource overload

10

Uninterruptible operation, according to PPM

If a product is not available, the requirement (the sales order or dependent requirement, for example)triggers production directly: If it triggers an order for in-house production, APO creates a planned orderfor the desired quantity in PP/DS. All of the operations of the PPM are scheduled at the resources of thePPM, and the system takes the capacity restrictions into account (available capacity and orders that mayhave already been scheduled).If the capacities are already exhausted on the desired date, the system uses simultaneous material andcapacity requirements planning to find a date on which the planned order can be created. You use thestrategy profile to define how the system is to schedule (search for a slot, infinite planning ...).

Prerequisite:

ü Maintain resources critical to planning as finite resources in the resource master. At these resources,operations of orders are only created if there is enough capacity available for the order quantity on theorder date.

ü Maintain the strategy profile with which you want to trigger the scheduling of planned orders inplanning under Global Settings in Customizing for PP/DS, in the Strategy profile field. The defaultstrategy profile in the delivery system is SAP002 (search for a slot backward).



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Detailed Scheduling Planning Board

Diagram areaTable area

Graphical object(operation, order)Message bar

Res. Res.type

Shortdescrip-

tion

Res03

Res02

Res01 P

P

P

Loc 01

Loc 01

Loc 02

Resource chart03/15/1999 03/16/1999

00 02 04 06 08 10 12 14 16 18 20 22 00 02 04 06 0822

OrderNo Products

000001357

000001335

000001294 P

P

P

Order Chart03/15/1999 03/16/1999

00 02 04 06 08 10 12 14 16 18 20 22 00 02 04 06 0822

Product

Product 01

Product histogram03/15/1999 03/16/1999

00 02 04 06 08 10 12 14 16 18 20 22 00 02 04 06 0822

300200100

Order No: 000001294

Differentcharts

Lines

Chart objects

Columnheading

Schedules are displayed graphically in the planning board.

The planning board is used for interactive planning, for example, for interactive processing and dealingwith Alerts.

You can call the planning board directly from the Production Planning/Detailed Scheduling menu orfrom order processing.

You can define the layout of the planning board, for example:

ü The different charts (such as a resource chart and an order chart):

ü The field selection and sorting for the columns in the table section of a chart

ü The format of the rows in the table section

ü The objects displayed in the diagram section of a chart, for example:

Operations or orders (graphical objects)

Histograms (product stock curves or resource load curves)

Network views of operations and orders that display the time and pegging relationships betweenoperations and orders

ü The layout of operations and orders in the diagram section.



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Optimization Concept in PP/DS

Objective function

W1* Total lead time

+ W2* Sum of setup times

+ W3* Sum of setup costs

+ W4* Maximum delay costs

+ W5* Sum of delay costs

+ W6* Sum of mode costs

= MINIMUM

l Optimization: Change of production dates/sequences and resourceassignments of existing operations/activities with regard to the following criteria(no creation or deletion of orders):

Use: Optimization allows you to optimize the production dates/sequences and the resourceassignment of existing operations/activities which were generated by the production planning run ormanual planning. The optimizer does not create or delete orders.The purpose of optimization is to generate feasible production plans and increase the efficiency ofproduction. Several optimization parameters (such as setup times, due date violations) can be weightedin such a way that the optimized schedule comes as close to the desired results (for example, minimumsetup times) as possible. The following parameters can be taken into account in optimization:

• Total lead time (from the start of the first operation to the end of the last operation in a schedule withinthe optimization horizon). The total lead time makes a statement about the compactness of the orderswithin the optimization horizon.

• Sum of setup times

• Sum of setup costs

• Maximum delay costs (maximum delay of an order compared to its requirements or due date).

• Sum of delay costs (delay compared to requirements or due dates)

• Sum of mode costs



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Non-working timesFixed operationsOperations, that may be rescheduledRelationshipsOptimization range Transferred resources: B, C, D

Start End Resource A

Resource B

Resource C

Resource D

Resource E

Optimization Window: Time and Resources

Earliest start for optimized schedule

When you call up optimization you set the optimization horizon (start and end) and the start date forthe optimized schedule. The optimization function reschedules orders and operations that are:

ü Completely within the optimization horizon (defined by a start and an end date)

ü Not fixed

ü At resources which were transferred to optimization

If you have selected resources in the planning board, only these selected resources are transferred tothe optimizer. If you have not selected any resources in the planning board, the system transfers theresources that you specified in the work area for the planning board and the optimizer.In particular, the system can only reschedule an activity to alternative resources during optimizationwhen these resources are included in the resource selection for optimization.

The relationships of the fixed orders and operations to the non-fixed orders and operations determine ifand by how much these orders and operations can be shifted during optimization. The optimizedschedule is, therefore, adjusted to accommodate the fixed orders and operations.

The system does not change planning outside of the optimization window during planning. Activitiesoutside of the optimization window are fixed during optimization. However, the fixed activitiesdetermine by their relationships to the non-fixed activities in the optimization range, whether and howfar these activities can be rescheduled during optimization. The optimized schedule is, therefore,adjusted to accommodate the fixed activities.

Earliest start date for the optimized schedule: Before the optimization, you specify the earliest date onwhich the optimization function can schedule the activities. You cannot enter an earliest start date thatlies in the past.



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Optimization: Sum of Setup Times/Setup Costs

Setup times at paint shop

Prod. A B CA 0 10 20B 30 0 15C 30 25 0

AC Setuptime

Setuptime

Operations of products A to C at paint shop according to schedule (starting situation for optimization): plannedorders for A were created first, then for B and C

Requirements timeC B AA

Optimization result (with light weighting of delays)

Setup times in minutes

A

Product A: white colorProduct B: yellow colorProduct C: blue color

Time

BAC SetuptimeASetup

time

A CSetuptimeA Setup

time

Optimization result (without weighting of delays)Optimum setup time

B

Setuptime B

Use: You can optimize the schedule for single resources based on the sum of the setup times and sum ofthe setup costs. The system determines sequence dependent setup times and setup costs from the setupmatrix (which can only be maintained for single resources).

Prerequisites:

• You have modeled the single resources and the operations that are processed at these resources exactlyas with the setup time adjustment (see the unit Simultaneous Material and Capacity RequirementsPlanning).

• You strongly weighted the setup times or the setup costs in the objective function.

Scope of function: In the objective function, the system interprets the values for the setup times andsetup costs from the setup matrix as follows:

• You enter the setup time in a unit of your choice (for example, hours or minutes) in the setup matrix.The system uses the setup duration in seconds in the objective function. If you enter, for example, asetup duration of 10 minutes in the setup matrix, the system uses the value of 600 (seconds) in theobjective function.

• You enter the setup costs without unit of measurement in the setup matrix. In the objective function,the system directly uses the value entered in the setup matrix. If you enter, for example, the value 10for the setup costs in the setup matrix, the system uses the value of 10 to calculate in the objectivefunction.

Important: In the objective function, the setup costs with a value of 10 correspond to a setup duration of10 seconds. You must consider this relationship between setup times and setup costs when defining theobjective function, that is, when specifying the weighting for the setup times and the setup costs.



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Conversion to Fixed Procurement Elements

Productionorder

Plannedorder

Plannedorders

Productionorders

Individual conversionIndividual conversion

Collective conversionCollective conversion

OrderPurchaserequisition

Purchaserequisitions Orders

You can trigger the conversion of planned orders and purchase requisitions to production orders ororders directly in APO. You set the conversion indicator in APO for the orders you want to convert. Theorders are transferred to the OLTP system and converted automatically. The converted orders are sentback to the APO System with a different ATP category (purchase requisition to purchase order). If aplanned order is converted to a production order, the dependent requirements of the components areconverted to reservations.

You can convert planned orders and purchase requistions in one of the following two ways:

ü Individually in interactive planning: In the product view and the product planning table, you canselect orders to be converted and then choose Set conversion indicator. When you save the planningresults, the orders to be converted are transferred to the R/3 System, where the conversion will beautomatically triggered. The converted orders are sent back to the APO System with a new ATPcategory.

ü Using mass conversion and selection criteria (Choose Production Planning -> ManufacturingExecution -> Conversion of Orders/Purchase Requisitions): You can set the conversion indicators fora large number of orders or for several products. You can restrict the selection of orders to beconverted by entering the product, location, production planner and the offset for the opening period.The opening period, which is defined in the product master on the PP/DS tab, controls which ordersare to be converted. The opening period is a number of workdays starting from the current date. TheAPO System only sets the conversion indicators for orders whose order start dates are within thisperiod. The opening period is used both for in-house production orders and external procurementorders.

Prerequisites: On the PP/DS tab in the product master, you have maintained an opening period for eachproduct at the location level.



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Mass Conversion - Time-Based

Order headerOrder header

Operations

Material components

Prod uction resource/tool

Costs PlanKPlndActual

2050

100

Orders

Production orders/process orders

Today x days later

Offset time

Time

Planned orders andpurchase requisitions

PlanningPlanned order

Purchase requisition

Openingperiod

Productionfinish

Productionstart

Creationdate

In-houseproduction

External procurement

APO orders contain three dates: production start, production finish, creation date. The creation date isthe date on which a planned order is to be converted to a production order or a purchase requisition to anorder. This date is based on the opening period defined in the R3 material master (SchedMargin keyfield). The opening period from the SchedMargin key of the R/3 material master is transferred to theAPO product master in the R/3 APO interface (Opening field in the Horizons group box).

As soon as the creation date of a planned order is passed on to a time horizon selected in massconversion, it can be converted in mass conversion. The time interval (offset time) entered in massconversion is always valid as of today's date. Planned orders whose creation dates are in the past areautomatically selected too.

Planned orders are usually converted to production orders (in-house production), purchase requisitions topurchase orders (external procurement).

In in-house production, the order type in R/3 determines whether it is a production order or a processorder. The order type is taken (in the sequence of highest priority) from the production schedulingprofile in the R/3 material master, the MRP group in the R/3 material master, and the plant parameters inR/3-Customizing. The R/3 System decides whether a production order or a process order is to begenerated for the product.

When the planned order is converted to a production order or process order, the planned order is deleted.The related dependent requirements (material components) and any capacity requirements are redirectedto the newly created production order. The dependent requirements become reservations.



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SAP AG 2001

Production Planning / Detailed Scheduling (PP/DS):Unit Summary

You are now able to

l Describe how sales orders consume planning in make-to-stock and make-to-order production

l Use simultaneous material and capacity requirementsplanning at operation level

l Use the tools for production planning and productionscheduling

l Describe schedule optimization in PP/DS

l Transfer the planning results to the execution system



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Exercises

Unit: Production Planning and Detailed Scheduling

At the conclusion of these exercises, you will be able to:

• Explain the production planning run method in PP/DS(simultaneous material requirements planning and capacityplanning)

In Demand Planning, a demand planning forecast was generated andtransferred to the distribution centers in Milan and Rotterdam asplanned independent requirements. After SNP has transferred therequirements via the stock transfer to the production plant, theproduction quantities and capacities must be planned in theproduction plant.In addition, customers in Germany in your company are not suppliedvia the distribution centers. Rather, they receive supplies directly viathe plant 1000 in Hamburg. Therefore, planned independentrequirements have also been generated in Demand Planning directlyfor the plant 1000 (without a detour via the distribution centers).These planned independent requirements preplan the demandexpected for the customers in Germany.

Your task is to plan material availability in plant 1000 in Hamburg.Start a production planning run to plan material and capacitysimultaneously in the plant.

1-1 In the Product View in APO, look at the planned independent requirements for pumpT-F2## at location 1000 (production plant Hamburg) .

1-1-1 Why have no planned orders been created, in the near future, for the plannedindependent requirements?

_____________________________________________________

To return to the display of the stock/requirements situation, select the Elementstab.



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1-2 Execute a production planning run to schedule the production of the pumps. In thisexample, planning should not be triggered from the product view; rather, theproduction planning run should be used.

1-2-1 Exit the product view and follow the menu path for the production planningrun. In the production planning run, in plant 1000, you plan all products forwhich you have planned the production planner.

In the production planning menu, select the following variant: SAP_MRP_001.

After making this selection, choose Selection criteria.Now select the following values:

Field Values

Product

Location 1000

Production planner 0##

Planning file entry created X

Choose Execute.

1-3 In the Product View in APO, look at the planning result for the APO product T-F2## atlocation 1000 (production plant Hamburg).

1-3-1 Look at the situations of the planned order for product T-F2## and check therequirements/receipt situation for all components.Were all requirements planned in planning?

_____________________________________________________

1-3-2 Now check the planned order details:

Look at the component list of the latest planned order within the productionhorizon: Double-click on the latest planned order within the production horizonto go to the planned order.After double-clicking, you can see the detailed data (header data) of the plannedorder on the right, and the complete structure of the planned order on the left.On the left you can recognize the receipts, components (requirements) andoperations of the planned order.

When are the start and end dates of the planned order for the final assembly ofpump T-F2##?

_____________________________________________________



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How many operations have been scheduled in the planned order on the variousresources?

_____________________________________________________

Which assemblies (and also dependent requirements) are contained in theplanned order for the pump T-F2##?

_____________________________________________________

Have the components T-B1## (casing), T-B22## (fly wheel), T-B3## (hollowshaft) and T-B4## (electronic turbo-drive) also been planned?To find this out, double-click on the corresponding product number in thecomponent list of the planned order and look at the requirements/stock situationfor the corresponding assembly on the right of the screen.Are there any alerts for the components of the planned order?

_____________________________________________________



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Optional exercise (not part of the standard course –can be used by the course participants after the course)

Unit: Production Planning and DetailedScheduling(Machine Scheduler’s Tools)


• Visualize and process orders in the detailed schedulingplanning board

After you have executed the planning run for your plant 1000 inHamburg, you must then reschedule the sequence of the existingorders.

1-4 Until now, we have only created requirements and orders for pump T-F2## (white pump).Now, create some more planned independent requirements for pump T-F4## in plant 1000.

To demonstrate that planned independent requirements can be created not only using APODemand Planning, but also using R/3 Program Planning, create the planned independentrequirements manually in R/3.

Note: Creation of planned independent requirements in R/3 is useful if you are performingdemand planning in R/3, or are not performing demand planning and wish to maintain theplanned independent requirements manually.

1-4-1 Enter the independent requirements for material T-F4## in plant 1000 in the R/3program planning. In the initial screen of the transaction, enter T (day format) inthe planning period field, to select day schedule lines as the period schedule line.In the planning table, select the first row of the table and choose the deliveryschedule tab.Enter the following independent requirements for pump T-F4## in plant 1000:

Friday in aweek

Friday intwo weeks

Friday inthree weeks

Friday infour weeks

5 5 5 5

Save your entries.



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1-5 Check the sequence of the planned orders for both product pump T-F2## (white pump)and T-F4## (blue pump). To do this, use the detailed scheduling planning board.

1-5-1 Call up the variable view of the Detailed Scheduling Planning Board. Choose the“Pump ##” overall profile and confirm using Enter.

You see that the work area “Pump ##” was selected automatically when youselected the overall profile “Pump ##”. This includes all resources for the finalassembly of the pumps.

Enter the detailed scheduling planning board using the selection criteria specifiedabove and then navigate in the planning board.

1-5-2 Look for the first orders for products T-F2## (white pump), and T-F4## (bluepump) by selecting the respective product numbers one after the other in theProduct chart and then right-click to select "begin with first graphical object".

Look in the Resources chart to see which resources the pumps occupy. To find outwhich capacity loads belong to which order in the resources chart, select the firstplanned order for the product T-F2## and then right-click to select “Mark objectsfor the same order”.All capacity requirements belonging to the order are then shown in color.

1-5-3 In the Detailed Scheduling Planning Board, you can now manually rescheduleorders/operations using Drag & Drop, or you can start the Optimizer for automaticsequence planning.

However, only observe the planning result here, and then exit the DetailedScheduling Planning Board without saving.



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Solutions

Unit: Production Planning and Detailed Scheduling

1-1 APO menu path: Production Planning → Interactive Production Planning →Product View

1-1-1 Why have no planned orders been created, in the near future, for the plannedindependent requirements?For product T-F2##, a production horizon of a certain number of days hasbeen maintained in the product master, on the SNP2 tab. Requirements outsidethis production horizon are covered by the SNP planning run. Requirementswithin the production horizon are covered by the PP/DS planning run. As onlyan SNP planning run was executed in the last exercise, but not a PP/DSplanning run, no planned orders are available for any requirements within theproduction horizon.

1-2 APO menu path: Production Planning → Automated Production Planning andOptimization → Production Planning Run

1-3 APO menu path: Production Planning → Interactive Production Planning →Product View

1-3-1 Look at the situations of the planned order for product T-F2## and check therequirements/receipt situation for all components.Were all requirements planned in planning?After the production planning run, all the planned independent requirementswere planned.

1-3-2 When are the start and end dates of the planned order for the final assembly ofpump T-F2##?Take the dates from the planning order header.

How many operations have been scheduled in the planned order on the variousresources?In total, the six different PPM operations have been scheduled in the plannedorder.

Which assemblies (and also dependent requirements) are contained in theplanned order for the pump T-F2##?The components T-B1##, T-B22##, T-B3## and T-B4## are contained in theplanned order for the pump.



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Are the components T-B1## (casing), T-B22## (fly wheel), T-B3## (hollowshaft) and T-B4## (electronic turbo-drive) also planned automatically andimmediately? Are there any alerts for the components of the planned order?Only the dependent requirements of the hollow shaft are planned immediately;the other dependent requirements were not planned. However, these arepartially covered by storage location stock.Solutions



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Optional exercise (not part of the standard course –can be used by the course participants after the course)

Unit: Production Planning and DetailedScheduling (Machine Scheduler’s Tools)

1-4

1-4-1 R/3 menu path: Logistics → Production Planning → Program Planning →Planned Independent Requirement → Create

1-5

1-5-1 APO menu path: Production Planning → Interactive Production Planning →Detailed Scheduling Planning Board

1-5-2

1-5-3

SAP AG 2001

Contents:

Transportation Planning & Vehicle Scheduling(TP/VS)

l Route optimization

l Transportation consolidation

l Carrier selection

l Shipment tendering



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SAP AG 2001

Unit Objectives


l Describe the tasks of Transportation Planning &Vehicle Scheduling, and how it is applied in APO

l State the differences between the Transport LoadBuilder, and Transportation Planning & VehicleScheduling.



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SAP AG 2001


444


111

77

Course Overview

555

66677

222

888

999


Demand Planning




Conclusion



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SAP AG 2001

Business Scenario

l The Precision Pump Company is usingTransportation Planning & Vehicle Scheduling tomake optimum usage of available capacities intrucks, trains, ships, and aircraft . Their aim is toplan more efficiently and reduce costs.

l During optimization, both optimum routes, andoptimum vehicles will be identified (using R/3freight costs, for example).

The Precision Pump Company is using Transportation Planning to make optimum usage of availablecapacities in trucks, trains, ships, and aircraft . Their aim is to perform planning more efficiently andreduce costs.

They are using Vehicle Scheduling to analyze and modify the plan that was generated duringTransportation Planning. For example using carrier selection manually to fix planning results, andtransfer them to the OLTP system for transportation execution (LES).



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SAP AG 2001

TP/VS, LES, and BW provide an integrated solution fortransportation management within the Supply Chain

Transportation Management

LESBW

APO TP/VS (Planning)

(Execution)(Monitoring)

l Is integrated with the APOcomponents DP, SNP,PP/DS, and ATP

l Evaluates the planning inBW

l Plans for both short, andlong term horizons

The TP/VS component has the following functions:

ü Transportation planning and transportation consolidation

ü Vehicle Scheduling and route determination in a dynamic environment

ü Transportation mode and carrier selection

ü Multi-pick up and multi-drop functions

ü Management by exception

The APO system includes the tactical and operational planning area from the SAP TransportManagement solution, which is complemented for transportation execution by the SAP component fromLogistics Execution Systems (LES).



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SAP AG 2001

Transport LoadTransport LoadBuilderBuilder

Supply NetworkSupply NetworkPlanningPlanning

Demand PlanningDemand Planning

PP/DSPP/DS

TP/VSTP/VS

Stock transfers

ForecastForecast

Deployment

Plannedorders

Planneddeliveries

Plannedshipments

Unconstrained

Aggregated planning

ConstrainedMid-term planning

ConstrainedDetailed planning

Constrained

Route planning andtransportation consolidation

APO Planning Process

Supply Network Planning is used for long-term and mid-term planning. A big advantage of thiscomponent is the sourcing which determines where and how a product will be procured. Sourcing isoptimized by functions such as the Transport Load Builder (TLB). Bucket capacities are used in SupplyNetwork Planning to plan products. These bucket capacities show the most detailed level of dailyplanning.

Vehicle Scheduling (VS) is a short-term planning component. You can define planning horizons for boththe Supply Network Planning component and the VS component here. These horizons are allindependent of one another and have to be planned as such.

In Vehicle Scheduling, resources and transportation processes are maintained in detail, so that planningwill be performed as precisely as possible. When orders from Supply Network Planning become VSorders, the following happens:

ü the orders are received in a specific sequence

ü the exact transportation time is specified

ü information and processes that were still outstanding are added (data and processes that are notnecessary for Supply Network Planning, but are for Vehicle Scheduling such as loading and deliveryactivities)



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SAP AG 2001

Created transportation lane

Generated transportation lane

Inbound

Outbound

ReplenishmentTransportation

zones

TP/VS Supply Chain Modeling

Customers or suppliers can be grouped into transportation zones to reduce the complexity of TP/VSproblems.

The unbroken line is modeled and the broken lines are generated by the optimizer.

If a transportation zone is loaded with customers from the R/3, an associated hierarchy is generatedautomatically.



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SAP AG 2001

Transportation planning & Vehicle Scheduling(TP/VS)

Sales orders,stock transfers,

forecasts

Simultaneous routeplanning and transportationconsolidation

Selection oftransportation provider

Vehicleresources

TLB ordersExpress orders

Objective:

Deliveries andtransportation orders in R/3

Optimizer

Optimization in TP/VS is for optimizing transportation schedules with the assignment of vehicleresources to orders. It takes into account the following:

ü Travel from and back to the depot

ü Loading and unloading time

ü Order consolidation

ü Reduce transportation time costs

ü Reduce distance costs

ü Costs for being too early/delayed

ü Costs for non-delivery

ü Transportation fixed costs

Optimization can be simulated or used in the active planning version 000.

You can use transportation allocation to

ü define the maximum transportation capacity of a carrier per day and per transportation lane

ü fix a specific minimum service acceptance to define the minimum of shipments that must be made.Transportation allocations are maintained as time-dependent

ü The capacity utilization (in percentage terms) of a carrier, plays an important role, and should becomputable (also refer to the Business Share Strategy used in carrier assignment).



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It is a particularly good idea to use carrier transportation capacities if you are working with priorities forvarious carriers.



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SAP AG 2001

The Vehicle Scheduling Procedure

Select carrier

Shipment tenderingPublication of

deliveries

Create/transferdeliveries

Configuration

Backorder processing

Master data Modeling

Optimization(Route planning and

transportation consolidation)

Create/transfershipments

You use interactive planning in Vehicle Scheduling to:

ü perform transportation planning manually or automatically

ü display, change, confirm, or reject optimization results

ü execute carrier selection manually

ü fix planning results and transfer them to the OLTP system for transportation execution



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SAP AG 2001

Createdeliveries

Publish

Release forexecution

Accept / Refuse

Business scenario:Internet tendering




TP/VS Tendering

XML

EDI

HTML Service agentService agentTransportation plannerTransportation planner



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SAP AG 2001


Unit Summary

l Describe the tasks of Transportation Planning &Vehicle Scheduling, and how it is applied in APO

l State the differences between the Transport LoadBuilder, and Transportation Planning & VehicleScheduling



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SAP AG 2001

Contents:

Global Available-to-Promise (Global ATP)

l Global ATP and Integration with OLTP

l Integration with PP/DS

l Rules-based ATP

l Product Allocations



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SAP AG 2001

Unit Objectives


l Describe how Global Available-to-Promise(ATP) integrates with OLTP andAPO applications

l Define the features and functionalityof Global Available-to-Promise

l Identify benefits of using GlobalAvailable-to-Promise



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SAP AG 2001


444


88

Course Overview

555

666

88777

999

333 Modelling and Evaluation in APO

Demand Planning





Conclusion



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SAP AG 2001

Business Scenario

l Precision Pump company intends to use rules-based ATP to be able to carry out a multi-plantsearch for products requested by its customers. Ifthe pumps are not available, the feasible deliverydate can be determined, taking account ofresource availability.

SAP AG



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SAP AG 2001

GlobalATP

HistoricaldataHistoricaldata

Demand Planning

Salesorders

Shop floorcontrol

Inventorymanagement



Deployment

ProductionPlanning and

DetailedScheduling

AP0 Application Architecture and Global Available-to-Promise (ATP)

Transportation PlanningTransportation

processing

LIS, CO/PAHR, FI

Keyperformanceindicators(KPIs)

R/3 APO BW

In the R/3 APO interface you can define that the ATP check of products (ATP check, ATP = Available-to-Promise) should not be carried out in R/3 but in APO, as soon as a sales order is created.

Sales orders created in the OLTP system (for example, R/3 System) automatically trigger the availabilitycheck in APO in this case. Depending on the system settings, a check can be carried out againstinventory, production plans and distribution plans.

Planned orders that are created via ATP integration with PP/DS can be sent back directly to the OLTPsystems.



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SAP AG 2001

Global Availability Check in APO: Benefits

ª Rules-based availability check (multi-step availability check):check of multiple locations and products

ª Better integration between sales and distribution andproduction: triggering of production when there is noavailability (integration PP/DS)

ª Multilevel component and capacity check (real-time operation)

ª Check against aggregated, memory-resident data

Rules-based ATP (multi-step availability check): When there is no availability, you can configure inAPO that the system should carry out the availability check for the product in another location or else foran alternative product.

Integration between sales and distribution and production: You can also define that the sales ordertriggers production directly if a product is not available. If it triggers an order for in-house production,APO creates a planned order for the desired quantity in PP/DS (Production Planning & DetailedScheduling).

In addition, component availability can be checked (multi-level components and capacity check).

Check against aggregated data: Planned orders and production orders are aggregrated and representedin a time series, which can be used to evaluate the incoming requests from the sales orders. This meansthat better system performance is then available.



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SAP AG 2001

Salesorders

R/3

l Global ATP: multi-site, real-time

l Rules-based, multi-level ATP

Alternative locations

Alternative products

Alternative PPMs

l Integrated with Production Planning

Checks against actual production plan

Consideration of capacity constraints

l Integration of legacy systems

Articlestructure

ATP request

40 pieces

Confirmation

Global ATP

Customer

APO

Global ATP is embedded in Supply Chain Management (SCM) processes for any kind of orderprocessing.

Availability checks are triggered as events in the OLTP system - either R/3 or legacy systems - and anATP request for product availability is sent over to APO.

An Available-To-Promise (ATP) check is an online search to verify the company's ability to provide therequested product, in the requested quantity, and on the date requested by the customer.

In many OLTP systems, ATP functionality is limited or not possible at all. In older versions of R/3, anATP check searched local inventories only for available products and assumed infinite capacity when aproduct had to be produced. For this reason, ATP checks are carried out in APO on the basis of timeseries, either in real-time or in simulation mode.

When it comes to production, ATP makes use of PP/DS (Production Planning and Detailed Scheduling)functionality to check against the actual order network including all constraints.

Applying rules-based ATP is the basis for checks of alternative products in alternative locations as wellas for production.



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SAP AG 2001

Receipts

Issues

Time

PlannedPlannedorderorderStockStock PurchasePurchase

requisitionrequisitionProductionProduction

orderorder

Further sales-Further sales-relatedrelated

requirementsrequirementsReservationReservation

Issues & Receipts

In accordance with ATP settings in APO, you can take into account various stock, requirements andreceipts in the availability check. You can define which requirements and receipts to use as a basis for asales order confirmation that you want to give the customer.

The scope of check is configured in APO Customizing.



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SAP AG 2001

Aggregation of Time Series

l Aggregate each receipt (issue) per:

Category

Time unit

l High performance because

Cumulative quantities are checked,not individual goods movements

The data sent from the OLTP system is aggregated and represented in a time series consisting of thecorresponding ATP objects that are then used to evaluate the incoming ATP requests.

The time series display (see picture above) shows the receipt elements above the line. The issue elementsare below the line.

If the stock is zero or negative, a new order can only be confirmed for a later date.

To differentiate between the various levels of probability with which a specific product will be in stockin the future, there is a time series for each type of ATP category.

Examples of ATP categories: firm planned order, consignment stock, released production order.

To improve your system performance, ATP gives you the option to aggregate orders by reorganizingtime series'. All receipts and issues within one period are cumulated. The ATP check checks againstthese aggregated quantities.

ATP performance is reduced if you process incoming orders in individual checks.



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SAP AG 2001

Alternative location(s)Alte

rnative

produc

t(s)

End item ofsales order

PPM

expl

osio

n

Problem:Insufficient number of pieces in stock

Possible solution:Step 1: Alternative productStep 2: Procurement from another locationStep 3: Production (PPM explosion)

Rules-based ATP: Example

Rules-based availability checking is an iterative process. The rules stored in the system determine thenext checking step in each case.

Possible next steps are as follows:

ü Substitution (alternative product)

ü Sourcing (alternative location)

ü Capable-To-Promise (triggering production = creating an order)

All of these span the three-dimensional space shown in the picture.

The search stops when an acceptable result is provided by the check (if any number of substitution stepsis permitted).

In the rule strategy settings, however, only one substitution can be selected. In this case the systemcompletes the rule evaluation. Without customer-specific coding (= customer exit) the system choosesthe first result that covers the requirement completely. By activating the customer exit you can decidewhich selection is appropriate and if a dialog should be displayed. Only one result is permitted.

The rule strategy forms the actual rule-base for a specific check. In the simplest case, this search strategydefines the sequence in which the system reads the individual rules.

Each access of this sequence is performed using a combination of characteristics. When an order is to bechecked, the characteristics of the order are passed over to APO from the OLTP system.

You can thereby define, for example, that sales orders for different sales organizations, sold-to parties,and so on, are checked using different ATP rules. Depending on these values, the corresponding rule isevaluated.



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SAP AG 2001

Sales order

Sales orderSales order

R/3 APOSales (SD)Sales (SD) ATP checkATP checkATP request

Production Planning/Detailed SchedulingProduction Planning/Detailed Scheduling

For non-availability Produce

Planned order

MRP

Confirmation

Update time series

Save sales order

Planned orderPlanned order

Availability Check (ATP Check) in Sales Orders

In the R/3-APO interface, you can specify in the integration model that the availability check (ATPcheck) in the sales order is not to be performed in R/3, but rather in APO (Availability check indicator).If you create a sales order in the R/3 System, the system first checks whether there is enough stockavailable for this product. It can also check whether receipts (such as production orders or plannedorders) are scheduled before the desired date.

For non-availability, you can specify in APO that the system is to perform an availability check for theproduct in a different location or for an alternative product. Furthermore, if a product is not available,you can define that the sales order can trigger production directly. In this case, it triggers an order for in-house production and APO creates a planned order for the desired quantity in PP/DS. All of theoperations of the PPM are scheduled at the resources of the PPM, and the system takes the capacityrestrictions into account (available capacity and orders that may have already been scheduled). Inaddition, the availability of the components can be checked (Automatic planning indicator in the productmaster of the components). If the capacities are already exhausted on the desired date, the system usessimultaneous material and capacity requirements planning to find a date on which the planned order canbe created.

The availability date of the newly created planned order (finish date) is passed back to the R/3 salesorder and copied as the internal confirmation date. Delivery scheduling is used to determine the date inthe sales order on which the customer can receive the product. The sales employee can find this deliverydate in the R/3 sales order. When you confirm this proposed date in the sales order and save it, the APOplanned order, which was only simulated, is transferred back to R/3 and is visible there.



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SAP AG 2001

Time

Resource 3 (finite)Resource 3 (finite)



Sales order

Desired dateand quantity

30

20

1010

30

20

Confirmedqty/date

Available

Occupied

1st Loading attempt

Final loading

Today

Integration of Availability Check and Sales Order -Production

Resource availability

If a product is not available, the sales order can trigger production directly: If it triggers an order for in-house production, APO creates a planned order for the desired quantity in PP/DS. All of the operationsof the PPM are scheduled at the resources of the PPM, and the system takes the capacity restrictions intoaccount (available capacity and orders that may have already been scheduled).If the capacities are already exhausted on the desired date, the system uses simultaneous material andcapacity requirements planning to find a date on which the planned order can be created. You use thestrategy profile to define how the system is to schedule (search for a slot, infinite planning ...).

Prerequisite:

ü In the "rules-based availability check", define that production is to be triggered directly for non-availability (this function can be used in connection with all requirements strategies in planning).

ü Maintain the strategy profile with which you want to trigger the scheduling of planned orders from theATP integration and maintain them under Global Settings in Customizing for PP/DS, in the Strategyprofile for ATP integration field. The default strategy profile in the delivery system is SAP001 (searchfor a slot backward).

ü You define in APO how the availability of a sales order is checked in APO (for example, checkingagainst stock, checking against forecasting, checking against allocation, or checking using rules-basedATP (also checking against alternative products/locations or triggering production from the salesorder). Here, depending on the R/3 requirements class and the business event (for example, A = salesorder, AE = make-to-order sales order, B = delivery), you can define which check if any should beperformed (check against stock, against forecasting, against allocation or rules-based ATP). If you userules-based ATP, the corresponding rules are selected according to material, sales organization, sold-to party, plant, etc (condition technique).



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SAP AG 2001

ReceiptReceiptDemandDemandJan Feb Mar Apr

è Managing demand against constrained supply

Product Allocation

Product allocation functionality allows you to manage the supply of scarce products to customers, so thateach customer receives an allocated amount.

Product allocations are applied to a product allocation object. The product allocation object is the reasonfor allocating quantities. It could be any one of the following:

ü A product (personal computer) or a product group

ü A component (processor)

ü A season (summer, winter)

ü A production line

The reason for product allocations may vary in different phases of the product life cycle.



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SAP AG 2001

June July Aug. Sept.

Checking horizon/Replenishment lead time = 2 periods

Time

June TimeJuly Aug. Sept.Stock

Planned orderSales order

Sales order confirmations -Before

Sales order confirmations - bypriority

Backorder Processing

Backorder processing is one of the new availability check tools that enables you to analyze and editbackorders and to overwrite confirmed quantities as the result of the previous ATP check. You canredistribute the confirmed quantities of one or more products via selected customer requirements.

Backorder processing can be executed

ü In interactive mode

ü In batch mode (including simulation)

ü As a combination of both

The orders to be processed are determined via a filter that is to be defined. This filter definition can beconfigured by the user or you can use the standard filters provided by SAP, which filter according tolocations in which the planning situation has changed (netchange filter). They must be taken into accountagain within backorder processing.

After the orders have been selected once via the filter, they can be sorted via specific configurablecriteria.

The orders whose delivery date now lies in the past can be scheduled in the future, if desired.



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SAP AG 2001

You are now able to

Global Available-to-Promise: Unit Summary

l Describe how Global Available-to-Promise (ATP)integrates with OLTP and APO applications

l Define the features and functionalityof Global Available-to-Promise

l Perform a simulation of rules-basedusing Global Available-to-Promise

l Identify benefits of using GlobalAvailable-to-Promise



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Exercises

Unit: Global Available-to-Promise (Global ATP)


• Create a sales order in R/3

• Run the ATP check

• Understand why you got this specific ATP check result

The Precision Pump Company receives a customer inquiry for theproduct T-F2##. The customer Jashanmal Trading, Dubai wants aconfirmation regarding when Precision Pump Company is able to deliverthe product.

1-1 Create a sales order in R/3 and perform the ATP check.


Order type OR

Sales organization

Distribution channel

Division

2400

10

00

In the sales order screen you enter the following data:


Sold-to party 2402

Purch. order no. Group ##

Material T-F2##

Order quantity 5

You get a dialog box with the ATP check result.



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How many units of the products can be delivered?

___________________________________________

___________________________________________

Save the order. The order is transferred directly to APO after saving in R/3.

In the APO system, check the planning situation for the product T-F2## (pump) in thelocations 2400 (Milan), 2500 (Rotterdam) and 2300 (Barcelona).



Product T-F2##

Location 2400

Then check the planning situation in locations 2500 and 2300.



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Solutions

Unit: Global Available-to-Promise (Global ATP)

1-1 Create a sales order in R/3 and perform the ATP check.

Logistics à Sales and Distribution à Salesà Order à Create


Order type OR

Sales organization

Distribution channel

Division

2400

10

00

Press Enter

In the sales order screen you enter the following data:


Sold-to party 2402

Purch. order no. Group ##

Material T-F2##

Order quantity 5

You get a dialog box with the ATP check result.

How many units of the products can be delivered?___________________________________________

___________________________________________

Save the order. The order is transferred directly to APO after saving in R/3.



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In the APO system, check the planning situation for the product T-F2## (pump) in thelocations 2400 (Milan), 2500 (Rotterdam) and 2300 (Barcelona).

Production Planning → Interactive Production Planning → Product View



Product T-F2##

Location 2400

Then check the planning situation in the locations 2500 and 2300.

SAP AG 2001

APO SCM Implementation

l ASAP SCM Implementation Philosophy

l ASAP SCM Methodology

Objectives

Deliverables

Tools

l ASAP for APO

Contents:



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SAP AG 2001

Unit Objectives


l Explain the philosophy behind the ASAP SCMimplementation methodology,

l List the various phases of the ASAP SCMmethodology,

l Describe the objectives, deliverables, and the useof tools of each phase of the ASAP SCMmethodology.



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SAP AG 2001


444


99

Course Overview

555

666

99

777

888

101010


Demand Planning





333

Conclusion

APO SCM Implementation



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SAP AG 2001

The SAP Supply Chain Implementation Philosophy:

A supply-chain diagnosticsapproach that will enable SAP toevaluate a customer's supplychain, identify significant issues,estimate benefits that APO coulddeliver, and develop a tailoredimplementation plan that enablescustomers to realize these benefitsin a short period of time



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SAP AG 2001

The Supply Chain Implementation Tool Kit

Projectplans

APOprocess flows

Supply Chaincase studies

APO activitymatrix

Analyticaltools

R/3 ValueanalysisQuestionnaires

& surveys

l Built-in tools, templates &techniques

Models

Templates

Questionnaires

”

Case studiesI D Task Nam e1 Sample Schedule

2 Project Preparation

3 Business Blueprint

4 Simulation

5 Validation

6 Final Preparation

7 Go Live & Support

8

9

10

Nov Dec Jan Feb M ar Apr M ay JunNovem ber Decem ber Januar y Febr uar y M ar ch Apr i l M ay June

ID T a sk Name1 Samp leSche dule2 ProjectPreparation3 BusinessBl ue print4 Si mulation5 Vali dat ion6 F inalPre parati on7 GoLive&Support

89

10

Nov Dec Ja n F eb Ma r Apr Ma y J unNo vemb e rDecem be r Ja n uar y F eb rua ry M arch Ap ri l M ay Ju ne



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SAP AG 2001

Businessblueprint

Projectpreparation

Finalpreparation

Realization Go live andsupport

D 3

D 2

AC METai wan

Semi conduct orD ist ri buto r

S 1

P 2

P1

P4P3

M4 D1

C ustom ersACME

ACM ELaptop

Pr oduct ion( SanJose)

A CMELapt op

Pr oduct ion( SanJ ose)

ACM EL aptop

Dist r ibut ion( SanJose)

P4

Semi conduct orManuf act ur er

S1D2

Cust omer

Lapt opDi st r ibut or

LaptopR etail er

S1

P2

D 1S1 D 1

P1

P2

Cust ome rsS uppl ier

P 1

Non-R/3 R/3

SAP B usinessInformationWarehouse

SAP AdvancedPlanner &Optimizer

R/3R/3 Non R/3

Peo p leL earning

O ppo rtuni ties

Pro cessesInn ovation

Strategy

Produ ctsIndu stry Practice s

Impleme ntation s

ASAP SCM Methodology Phases



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SAP AG 2001

Phase 1: Project Preparation - Objectives

l Organize the ASAP SCM Implementation Project

l Set customer and SAP team expectations

l Establish a technical infrastructure



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SAP AG 2001

Phase 2: Business Blueprint - Objectives

l Identify specific ways of improving the supply chainmanagement and strategies of the customer

l Benchmark the Supply Chain

l Align SAP and 3rd party solutions to realize theseopportunities

l Develop business solution design and implementationplans

l APO process blueprint



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SAP AG 2001

Phase 2: Business Blueprint - Tools

l APO for ASAP

Strategic blueprint

Case studies

Question & Answer database (QAdb)

Process description

Questionnaires

Roadmap / project plan



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SAP AG 2001

Phase 3: Realization - Objectives

l Develop plans for model specification

l Configure and validate baseline and final models

l Perform and resolve functional gap analysis

l Conduct configuration workshops

l Develop conversion and interface programs

l Develop reports and enhancements

l Final integration testing

l Prepare end user documentation and training material



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SAP AG 2001

Phase 4: Final Preparation - Objectives

l Prepare for "live" solution implementation

l Anticipate and plan for contingencies



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SAP AG 2001

Phase 5: Go Live and Support - Objectives

l Identify and resolve post go-live issues

l Validate "live" SCM solution results

l Perform a project review



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SAP AG 2001


APO Implementation: Unit Summary (2)

l Explain the philosophy behindthe ASAP SCM implementation methodology

l List the various phases of theASAP SCM methodology

l Describe the objectives, deliverables, and use oftools of each phase of the ASAP SCM methodology



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SAP AG 2001

Conclusion

444333

Integration and Technology222

1010

Course Overview

555

666

1010

777

888

999


Demand Planning


Production Planning /Detailed Scheduling

Deployment



111

Conclusion



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SAP AG 2001

Course Goals

At the conclusion of this course you will able to

l List the fundamental planning scenarios of theAdvanced Planner and Optimizer (APO)

l Explain the functions and interplay of theindividual APO components

l Describe the integration with the execution systemand information systems

SAP AG



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SAP AG 2001

Planning HorizonDemand Planning (DP)




Deployment

Transportation Planning &Vehicle Scheduling (TP/VS)

APO Planning Sequence

APO is used to make strategic, tactical, and operational decisions:

ü DP is used for long-term demand planning

ü In SNP there is mid-term production, distribution and procurement planning

ü PP/DS is used for short-term production planning

ü Deployment plans short-term replenishment planning

ü In Transportation Planning, routes are optimized and transportation methods are loaded as near tocapacity as possible



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SAP AG 2001

The Demand Planning Concept



l Incoming ordersl Quantitiesl Values

l Billing documentl Quantitiesl Values

l …


Sold-to party

Product hierarchy

Location

Region

Sales organization

BW






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SAP AG 2001

Supply Network Planning Scenario

l SNP plans the material flow along the supply chain

l Mid- to long-term, finite, cross-plant planning

l Prioritization of demands; supply optimization

l Result: Feasible plans

Demand Plan

Supplier Plant DC Customer

The role of Supply Network Planning involves:


ü Integrating purchasing, production, and distribution in one consistent model in the entire supplynetwork

ü Synchronizing activities and planning material flow along the supply chain



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SAP AG 2001

Comparison of Mid- and Short-Term Planning

Productionhorizon

ForecastsSales ordersForecastsSales orders

Supply Network PlanningProduction Planning /Detailed Scheduling

l SNP planned ordersl Purchase requisitionsl Stock transfers

l PP/DS planned ordersl Purchase requisitionsl Stock transfers

l SNP BOM and routingl Cross-plant finite planningl Distribution and procurementl Quantity and bucket-orientedl No pegging

l PP/DS BOM and routingl Finite, detailed planning per locationl Sequences and setup timesl Continuous and order-relatedl Pegging

Time


SNP uses advanced optimization techniques, based on constraints and penalties, to plan product flowalong the supply chain. The result is optimal purchasing, production, and distribution decisions, reducedorder fulfillment times and inventory levels, and improved customer service.

Pegging is the link between receipts and issues along the supply chain. When an order is shifted, alldependent orders can be adjusted automatically.



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SAP AG 2001

Customer

Functions of Production Planning / DetailedScheduling (PP/DS)

l Plans production, externalprocurement, and stock transferwithin the production plant to-the-minute

l Plans simultaneous materialrequirements and schedules finitecapacity at operation level for theshort-term horizon

l Takes order sequences intoaccount

l Optimizes machine schedules(sequences, lead times)

l Transfers the planning results toan execution system (such as theR/3 Shop Floor Control)

Time

Resource 3

Resource 2

Resource 1

30

20

10

Resource 1Resource 2

Resource 3

Production Planning and Detailed Scheduling (PP/DS) is used mainly for short-term to-the-minuteplanning (both for in-house production and external procurement) in the production plant. PP/DSschedules and plans all operations of an order that are relevant for planning at the different resources.PP/DS has the following functions:

ü It generates planned orders (to plan in-house production), and purchase requisitions or schedulingagreement schedule lines (to plan external procurement) in the event of product shortage. It usessimultaneous material and capacity requirements planning to do this: You can define resources as“finite” resources (planning-critical resources) in the resource master. Order operations are onlycreated at these resources if there is sufficient capacity for the order quantity on the correspondingdate. When there is no available capacity, the system searches for a date on which the order operationcan be carried out, taking account of the capacity situation.

ü Takes order sequences into account: when new in-house production orders are created, the setuptimes in the new order can be determined automatically from the setup status of the resources(depending on the preceding order).

ü It is possible to display the orders in graphic format (in the detailed scheduling planning board), andto sequence from there. Alternatively you can use the optimizer to execute a sequencing.

ü Machine scheduling optimization: during planning, it is possible for orders to be generated that donot have an optimum order sequence. Therefore, you can change the sequence and resourceassignments of existing orders using the optimization run.

PP/DS is a planning tool. Execution functions such as confirmations and goods receipts are performed inthe execution system (for example, R/3). Therefore, the planning results are transferred to the executionsystem.



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SAP AG 2001

Transportation Planning & Vehicle Scheduling(TP/VS)

Sales orders,stock transfers,

forecasts

Simultaneous routeand load/weightplanning

Selection oftransportation provider

Vehicleresources

TLB ordersExpress orders

Goal:

Deliveries andtransportation orders in R/3

Optimizer



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SAP AG 2001

Sales order

Planned orders

R/3 APOSD ATPATP request


No ATP MakePlannedorders

MRP

Confirmation

Update time series

ATP Integration with PP/DS and R/3

Event-driven: In the R/3 APO interface you can define that the ATP check in the sales order should notbe carried out in R/3 but in APO, as soon as a sales order is created. If you create a sales order in R/3,the system first checks if there is enough stock available for the requested product. The system can alsocheck if receipts (for example, production orders and planned orders) have already been planned by therequested date.

Time series: Planned orders and production orders are aggregrated and represented in a time series,which can be used to evaluate the incoming requests from the sales orders.

Rules-based ATP: When there is no availability, you can configure in APO that the system should carryout the availability check for the product in another location or else for an alternative product.

Integration with PP/DS: You can also define that the sales order should trigger production directly if aproduct is not available. If it triggers an order for in-house production, APO creates a planned order forthe desired quantity in PP/DS. All of the operations are scheduled on the resources, and the system takesthe capacity restrictions into account (available capacity and orders that may have already beenscheduled). In addition, component availability can be checked. If the capacities are already exhaustedon the desired date, the system uses simultaneous material and capacity requirements planning to find adate on which the planned order can be created.The availability date of the newly-created planned order (end date) is returned to the R/3 sales order andadopted as an internal confirmation date. Using shipment scheduling, the date on which the productreaches the customer is determined in the sales order. In the R/3 sales order the sales employeerecognizes these proposed delivery dates.



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In dieser Dokumentation verwendete Abkürzungen

APO Advanced Planner and Optimizer

APS Advanced Planning System

ATP Verfügbarkeitsprüfung (Available-to-Promise)

BBP Business to Business Procurement (B2B)

BAPI Business Application Programming InterfaceBW SAP Business Information Warehouse

CIF Core Interface (Schnittstelle für Stamm- und Bewegungsdaten R/3-APO)

CPFR Collaborative Planning, Forecasting and Replenishment

CRM Customer Relationship Management

CTM Capable-to-Match (Multi-Level Supply and Demand Matching (SDM))

DC Distributionszentrum (DZ)

DP Absatzplanung (Demand Planning)

DS Feinplanung (Detailed Scheduling)

iPPE integriertes Produkt- und Prozeß- Engineering

LES Logistics Execution System (=LE, Warehouse Management (WM))KPI Key Performance Indicator

MLR Multiple lineare Regression

MRP Material Requirements Planning

MRPII Manufacturing Resource Planning

OLTP Online Transaction Processing System

OLAP Online Analytical Processing System

PP Produktionsplanung

PPM Produktionsprozeßmodell (APO Stückliste und Arbeitsplan zugeordnet)

SCC Supply Chain Cockpit

SCE Supply Chain Engineer; Supply-Chain-ExecutionSCM Supply-Chain-Management

SEM Strategic Enterprise Management

SNP Supply Network Planning

SOP Sales and Operations Planning (Absatz- und Produktionsgrobplanung)

TDL Transportdienstleister

TLB Transport Load Builder

TP/VS Transportation Planning / Vehicle Scheduling

VMI Vendor-Managed-Inventory



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APO Overview

Documents

Transcript of APO Overview