Materials Planning with SAP

Ferenc Gulyássy, Marc Hoppe, Martin Isermann, Oliver Köhler

Materials Planning with SAP®

Bonn � Boston

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Contents at a Glance

PART I Basic Principles and Processes of Materials Planning1 Basic Principles of Materials Planning ............................................. 25

2 Strategic versus Operational Materials Planning .............................. 49

3 Item Classification as the Basis for Materials Planning Decisions ..... 55

4 Materials Planning Process in SAP .................................................. 97

Part II Materials Planning Parameters in the SAP System and Their Impact

5 General Materials Planning Master Data ......................................... 127

6 Planning Strategies and Requirements Consumption ...................... 135

7 Determination of Requirements Through Planning and Forecasts .... 173

8 Materials Planning Procedures ........................................................ 203

9 Procurement Quantity Calculation .................................................. 229

10 Safety Stock Planning ..................................................................... 253

11 Determining Sources of Supply ....................................................... 287

12 Scheduling Parameters ................................................................... 323

13 Interactions .................................................................................... 349

Part III Materials Planning Optimization14 Processing Materials Planning Results ............................................. 359

15 Availability Check ........................................................................... 373

16 Collaborative Materials Planning Procedures .................................. 387

17 Materials Planning with Kanban Control ......................................... 405

18 Inventory Controlling ..................................................................... 425

19 Materials Planning Optimization .................................................... 481

20 Outlook ......................................................................................... 521

AppendicesA Literature ....................................................................................... 527

B Materials Planning Parameters and Influencing Factors ................... 529

C Materials Planning Optimization — Four Steps for Implementation with the Support of SAP Consulting ...................... 547

D Add-Ons for SAP ERP ..................................................................... 551

E The Authors ................................................................................... 553

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Contents

Introduction ............................................................................................... 17

PART I Basic Principles and Processes of Materials Planning

1 Basic Principles of Materials Planning ..................................... 25

1.1 Goals and Tasks of Materials Planning ......................................... 251.2 Core Functions of Materials Planning .......................................... 261.3 Requirements Calculation ........................................................... 27

1.3.1 MRP (Deterministic) Determination of Requirements ..... 281.3.2 Consumption-Oriented (Forecast-Based)

Determination of Requirements ..................................... 291.3.3 Order-Based Determination of Requirements ................. 30

1.4 Accumulate Balances .................................................................. 301.5 Purchase Order Calculation ......................................................... 32

1.5.1 Reorder Cycle Method ................................................... 331.5.2 Reorder Point Method ................................................... 361.5.3 Mixed Procedure ............................................................ 381.5.4 Overview of Reorder Policies .......................................... 39

1.6 Impact of Materials Planning on Inventory .................................. 401.6.1 Selecting the Production Type ........................................ 411.6.2 Selecting the MRP Strategy/Determining the

Stocking Level ................................................................ 421.6.3 Selecting Consumption Parameters ................................. 451.6.4 Selecting Lot-Sizing Parameters ...................................... 451.6.5 Selecting the Safety Stock Procedure .............................. 461.6.6 Selecting the Forecast Strategies ..................................... 471.6.7 Item Classification and Product Analysis ......................... 47

1.7 Conclusion .................................................................................. 48

2 Strategic versus Operational Materials Planning .................... 49

2.1 Tasks in Materials Planning ......................................................... 492.2 Organizational Integration of Materials Planning ......................... 512.3 Conclusion .................................................................................. 54

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Contents

3 Item Classification as the Basis for Materials Planning Decisions ................................................... 55

3.1 Options Provided by Item Classification ...................................... 563.1.1 ABC Analysis .................................................................. 563.1.2 XYZ Analysis .................................................................. 61

3.2 ABC Analysis with SAP ................................................................ 633.2.1 Outlining the Analysis Process ........................................ 633.2.2 Determining the Analysis Goal ....................................... 643.2.3 Defining the Area to Analyze .......................................... 643.2.4 Calculating the Data Basis .............................................. 673.2.5 Defining the ABC Strategy .............................................. 693.2.6 Defining Class Limits ...................................................... 713.2.7 Assigning Classes ............................................................ 723.2.8 Evaluating ABC Analysis ................................................. 743.2.9 Performing an ABC Segmentation ................................... 753.2.10 Case Scenario: ABC Analysis for

Warehouse Optimization ................................................ 773.2.11 Case Scenario: ABC Quantity Flow Analysis .................... 79

3.3 XYZ Analysis in the SAP System .................................................. 813.3.1 Running Analyses in SAP ERP ......................................... 81

3.4 Combining ABC and XYZ Analyses .............................................. 833.4.1 Optimization Using the ABC/XYZ Matrix ........................ 833.4.2 Using SAP ERP to Create an ABC/XYZ Matrix ................. 90

3.5 Conclusion .................................................................................. 96

4 Materials Planning Process in SAP ........................................... 97

4.1 Business Overview ...................................................................... 974.1.1 Program Planning ........................................................... 984.1.2 Quantity Planning .......................................................... 1004.1.3 Scheduling and Capacity Requirements Planning ............ 1014.1.4 Order Conversion and Monitoring .................................. 102

4.2 Overview of the Materials Planning Process in the SAP System ... 1024.3 Materials Planning Process in SAP ERP ........................................ 104

4.3.1 Program Planning ........................................................... 1044.3.2 Quantity Planning .......................................................... 1084.3.3 Scheduling and Capacity Requirements Planning ............ 110

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Contents

4.3.4 Order Conversion and Monitoring .................................. 1124.4 Materials Planning Process in SAP APO ....................................... 114

4.4.1 Demand Planning ........................................................... 1154.4.2 Supply Network Planning (SNP) ..................................... 1174.4.3 Production Planning and Detailed Scheduling ................ 119

4.5 Conclusion .................................................................................. 124

Part II Materials Planning Parameters in the SAP System and Their Impact

5 General Materials Planning Master Data ................................. 127

5.1 Differences Between SAP ERP and SAP APO ............................... 1275.2 Mass Maintenance of MRP Master Data ..................................... 131

5.2.1 MRP Group .................................................................... 1315.2.2 MRP Profile .................................................................... 1325.2.3 Transaction MASSD ........................................................ 133

5.3 Special Materials ......................................................................... 1335.4 Conclusion .................................................................................. 134

6 Planning Strategies and Requirements Consumption ............. 135

6.1 System Settings in SAP ERP ......................................................... 1356.1.1 Relationship Between the Strategy and

Requirements Class ........................................................ 1366.1.2 Assigning a Planning Strategy to a Material .................... 1396.1.3 Consumption Parameter ................................................. 141

6.2 Planning Strategies in SAP ERP ................................................... 1426.2.1 Strategies for Make-to-Stock Production ........................ 1436.2.2 Final Assembly by Sales Order ........................................ 1456.2.3 Make-to-Order Production ............................................. 1516.2.4 Planning with a Planning Material .................................. 1526.2.5 Assembly Processing ...................................................... 1556.2.6 Strategies for Configurable Materials .............................. 1566.2.7 Reducing Planned Independent Requirements ............... 1596.2.8 Adjusting and Reorganizing

Planned Independent Requirements ............................... 1606.2.9 Table Summary of Planning Strategies ............................. 161

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Contents

6.3 Planning Strategies in SAP APO .................................................. 1686.3.1 Requirements Class and Check Mode ............................. 1686.3.2 Customizing of Planning Strategies ................................. 1696.3.3 Planning Parameters in the Product Master .................... 1706.3.4 Planning Strategy Names in SAP ERP and SAP APO ........ 170

6.4 Conclusion .................................................................................. 171

7 Determination of Requirements Through Planning and Forecasts ............................................................. 173

7.1 Forecasts in SAP ERP and SAP APO ............................................ 1737.1.1 Forecast Methods .......................................................... 1757.1.2 Forecast Parameters ....................................................... 187

7.2 Forecasting Accuracy .................................................................. 1927.2.1 Error Total (ET) ............................................................... 1927.2.2 Mean Absolute Deviation (MAD) ................................... 1937.2.3 Mean Square Error (MSE) ............................................... 1937.2.4 Root of the Mean Square Error (RMSE) .......................... 1947.2.5 Absolute Percentage Error (APE) .................................... 1947.2.6 Mean Absolute Percentage Error (MAPE) ....................... 1957.2.7 Median of the Absolute Percentage Error (MdAPE) ........ 1967.2.8 Relative Absolute Error (RAE) ......................................... 196

7.3 Forecast Results and Demand Management ................................ 1977.3.1 Adjusting Historical and Forecast Data and

Other Influences ............................................................ 1977.3.2 Guidelines for Materials with a High Forecast Error ........ 1997.3.3 Results Evaluation .......................................................... 200

7.4 Conclusion .................................................................................. 201

8 Materials Planning Procedures ................................................. 203

8.1 Materials Planning Procedures in SAP ERP .................................. 2038.1.1 Consumption-Based Planning ......................................... 2048.1.2 Deterministic MRP ......................................................... 212

8.2 Materials Planning Procedures in SAP APO ................................. 2148.2.1 PP Procedure ................................................................. 2158.2.2 Heuristics ....................................................................... 217

8.3 Conclusion .................................................................................. 227

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Contents

9 Procurement Quantity Calculation ........................................... 229

9.1 Business Background ................................................................... 2299.2 Procurement Quantity Calculation in SAP ERP ............................ 233

9.2.1 Static Lot-Sizing Procedures ............................................ 2349.2.2 Periodic Lot-Sizing Procedures ........................................ 2349.2.3 Optimum Lot-Sizing Procedures ..................................... 2359.2.4 Lot-Size Restrictions ....................................................... 2379.2.5 Additional Lot-Size Options ............................................ 2389.2.6 Scrap Quantity Calculation ............................................. 241

9.3 Procurement Quantity Calculation in SAP APO ........................... 2429.3.1 Static Lot-Sizing Procedures ............................................ 2439.3.2 Periodic Lot-Sizing Procedures ........................................ 2449.3.3 Optimum Lot-Sizing Procedures ..................................... 2459.3.4 Lot-Size Restrictions ....................................................... 2489.3.5 Additional Lot-Size Options ............................................ 2489.3.6 Origin of the Lot-Size Settings ........................................ 2489.3.7 Scrap Quantity Calculation ............................................. 250

9.4 Conclusion .................................................................................. 252

10 Safety Stock Planning ............................................................... 253

10.1 The Purpose of Safety Stock ........................................................ 25310.2 Uncertainties in Materials Planning ............................................. 25410.3 Selecting and Defining the Service Level ..................................... 255

10.3.1 Alpha Service Level ........................................................ 25510.3.2 Beta Service Level .......................................................... 25610.3.3 Defining the Service Level .............................................. 257

10.4 Safety Stocks and Multilevel BOMs ............................................. 25810.5 Safety Stock Planning in SAP ERP ................................................ 259

10.5.1 Manually Maintained Safety Stock .................................. 25910.5.2 Automatically Calculated Safety Stock ............................ 26010.5.3 Safety Time .................................................................... 26310.5.4 Dynamic Safety Stock ..................................................... 265

10.6 Safety Stock Planning in SAP APO ............................................... 26810.6.1 Static Standard Methods ................................................ 26810.6.2 Dynamic Standard Methods and Extended Methods ...... 27110.6.3 Extended Methods ......................................................... 276

10.7 Conclusion .................................................................................. 285

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Contents

11 Determining Sources of Supply ................................................ 287

11.1 Source Determination in SAP ERP ............................................... 28711.1.1 Overview of Procurement Types in SAP ERP ................... 28711.1.2 Types of Special Procurement ......................................... 28911.1.3 Sources of Supply for In-House Production ..................... 29711.1.4 Sources of Supply for External Procurement .................... 299

11.2 Source Determination in SAP APO .............................................. 30711.2.1 Overview of Procurement Types ..................................... 30711.2.2 Sources of Supply for In-House Production ..................... 30811.2.3 Sources of Supply for External Procurement .................... 31111.2.4 Validity of Sources of Supply .......................................... 31311.2.5 The Source Determination Process ................................. 314

11.3 Conclusion .................................................................................. 322

12 Scheduling Parameters ............................................................. 323

12.1 Scheduling in SAP ERP ............................................................... 32412.1.1 Basic Date Scheduling for In-House Production .............. 32412.1.2 Lead-Time Scheduling .................................................... 330

12.2 Scheduling in SAP APO .............................................................. 33912.2.1 SAP APO Scheduling for In-House Production ................ 33912.2.2 SAP APO Scheduling for External Procurement ............... 345

12.3 Conclusion .................................................................................. 348

13 Interactions ............................................................................... 349

13.1 Parameter Dependencies ............................................................ 34913.2 Relationship Model of Parameter Optimization ........................... 35313.3 Conclusion .................................................................................. 356

Part III Materials Planning Optimization

14 Processing Materials Planning Results .................................... 359

14.1 Tasks of the MRP Controller and SAP System Support ................. 35914.1.1 Master Data Maintenance .............................................. 36014.1.2 Qualitative Versus Quantitative Materials Planning ........ 360

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Contents

14.2 Materials Planning Controlling .................................................... 36114.2.1 MRP List and Stock/Requirements List ........................... 36214.2.2 Standard Analyses .......................................................... 363

14.3 Personal Settings ......................................................................... 36714.3.1 Filters ............................................................................. 36714.3.2 Navigation Profiles and Favorites .................................... 368

14.4 Exception Messages and Troubleshooting (Alert Monitoring) ...... 36914.5 Conclusion .................................................................................. 371

15 Availability Check ..................................................................... 373

15.1 Availability Check in SAP ERP ..................................................... 37315.1.1 Availability Check Against ATP Logic .............................. 37315.1.2 Availability Check Against

Planned Independent Requirements ............................... 37915.1.3 Availability Check Against Product Allocations ............... 38015.1.4 Availability Check Against Capacity ................................ 380

15.2 Availability Check in SAP APO .................................................... 38115.2.1 Combination of Basic Methods ....................................... 38115.2.2 Rules-Based ATP Check .................................................. 38215.2.3 Capable to Promise (CTP) ............................................... 38215.2.4 Multilevel ATP Check ..................................................... 384

15.3 Conclusion .................................................................................. 385

16 Collaborative Materials Planning Procedures .......................... 387

16.1 Vendor-Managed Inventory (VMI) .............................................. 38816.1.1 The Traditional VMI Process with SAP ERP ..................... 39116.1.2 The Extended VMI Process with SAP APO ...................... 39216.1.3 The VMI Process with SAP SNC

(Responsive Replenishment) ........................................... 39416.1.4 Evaluation of VMI .......................................................... 397

16.2 Supplier-Managed Inventory (SMI) ............................................. 39916.2.1 SMI with Scheduling Agreement Delivery

Schedule Lines ............................................................... 39916.2.2 SMI with Purchase Order Processing .............................. 40116.2.3 Evaluation of SMI ........................................................... 403

16.3 Conclusion .................................................................................. 404

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Contents

17 Materials Planning with Kanban Control ................................. 405

17.1 The Pull Principle ........................................................................ 40517.2 Elements of Kanban Control ....................................................... 407

17.2.1 Kanban Control Cycle ..................................................... 40817.2.2 Kanban Card .................................................................. 40817.2.3 Kanban Board ................................................................ 40917.2.4 Control Charts ................................................................ 40917.2.5 Determining Priorities in the Working System ................ 409

17.3 A Comparison of Kanban Control and Conventional Production Planning .............................................. 409

17.4 Kanban Procedures ..................................................................... 41017.4.1 Classic Kanban ............................................................... 41017.4.2 Event-Controlled Kanban ............................................... 41117.4.3 One-Card Kanban .......................................................... 41117.4.4 Kanban with Quantity Signal .......................................... 412

17.5 The Kanban Process .................................................................... 41317.6 Automatic Kanban Calculation .................................................... 41617.7 Procedure for Selecting Products Suitable for Kanban ................. 42017.8 Conclusion .................................................................................. 424

18 Inventory Controlling ................................................................ 425

18.1 Why Inventory Monitoring? ........................................................ 42518.2 Introduction to Logistics Controlling ........................................... 426

18.2.1 Statistical Differentiation of Key Figures ......................... 42718.2.2 Business-Related Differentiation of Key Figures .............. 42818.2.3 Logistics Costs and Costs of Materials Planning .............. 431

18.3 Problems with Data Collection .................................................... 43518.4 Important Inventory Key Figures ................................................. 436

18.4.1 “Range of Coverage” Key Figure ..................................... 43618.4.2 “Inventory Turnover” Key Figure .................................... 44118.4.3 “Slow-Moving Items” Key Figure .................................... 44218.4.4 “Stock Value” Key Figure ................................................ 44318.4.5 “Dead Stock” Key Figure ................................................ 44418.4.6 “Average Stock,” “Consumption,” and

“Range of Coverage” Key Figures .................................... 44518.4.7 “Receipt Value of Valuated Stock” Key Figure ................. 447

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Contents

18.4.8 “Safety Stock Buffer” Key Figure ................................... 44718.4.9 “Safety Stock” Key Figure .............................................. 44818.4.10 “Service Level” Key Figure ............................................ 45018.4.11 “Stock at Receipt” Key Figure ....................................... 45618.4.12 “Lot Size” Key Figure .................................................... 456

18.5 Tools for Inventory Analysis ........................................................ 45718.5.1 LMN Analysis ............................................................... 45718.5.2 Flowcharts for Material Flow Analysis ........................... 45818.5.3 Procurement and Consumption Cycles .......................... 460

18.6 Inventory Monitoring in SAP ERP ............................................... 46118.7 Inventory Controlling with SAP APO and SAP NetWeaver BW .... 464

18.7.1 Options for Evaluating Inventory Information ............... 46518.7.2 Overview of SAP NetWeaver BW .................................. 46718.7.3 Using Business Content ................................................. 469

18.8 Conclusion .................................................................................. 479

19 Materials Planning Optimization ............................................. 481

19.1 Classic Problems and Optimization Potential ............................... 48119.1.1 Lack of Knowledge and Insufficient Use of the

Standard SAP System .................................................... 48119.1.2 Stock Problems Caused by Incorrect Order

Progress Messages ........................................................ 48219.1.3 Stock Problems Caused by Backlogs .............................. 48419.1.4 Weaknesses of Parameterization in SAP ERP ................. 485

19.2 Example of the Process Flow of an Optimization Project ............. 48619.2.1 Step 1: Master Data and Process Analysis According

to ABC/XYZ .................................................................. 48619.2.2 Step 2: MRP Training .................................................... 48719.2.3 Step 3: Classifying and Creating the Set of Rules ........... 48719.2.4 Step 4: Migration and Continuous Optimization ........... 489

19.3 Product Classification .................................................................. 49119.3.1 Decision-Making Support for MRP Controllers .............. 49119.3.2 MRP Matrix .................................................................. 50419.3.3 Effects of Classification on Planning .............................. 508

19.4 Optimization Tools from SAP Consulting ..................................... 51019.4.1 MRP Monitor ............................................................... 51019.4.2 Replenishment Lead Time Monitor (RLT Monitor) ......... 514

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Contents

19.4.3 “MRP Optimization” Expert Tool .................................... 51519.4.4 Forecast Monitor ............................................................ 517

19.5 Conclusion .................................................................................. 519

20 Outlook ..................................................................................... 521

Appendices ..................................................................................... 525

A Literature ............................................................................................. 527B Materials Planning Parameters and Influencing Factors ......................... 529

B.1 Planning Strategy ........................................................................ 529B.2 Materials Planning Type .............................................................. 534B.3 Forecast Method ......................................................................... 536B.4 Lot-Size Procedure ...................................................................... 540B.5 Safety Stock ................................................................................ 543

C Materials Planning Optimization — Four Steps for Implementation with the Support of SAP Consulting ..................................................... 547C.1 Introduction ............................................................................... 547C.2 “Materials Planning Optimization” Service Offering ..................... 547C.3 Objectives of the “Materials Planning Optimization” Service

Offering ...................................................................................... 549C.4 Contents During the Implementation .......................................... 549C.5 Procedure When Implementing the Ser vice Offering ................... 550C.6 Results of Service Offering .......................................................... 550

D Add-Ons for SAP ERP ........................................................................... 551D.1 Forecast Monitor ........................................................................ 551D.2 MRP Monitor ............................................................................. 551D.3 Replenishment Lead Time Monitor ............................................. 551D.4 Simulating Safety Stocks ............................................................. 551D.5 Service Level Monitor ................................................................. 551

E The Authors ......................................................................................... 553

Index ......................................................................................................... 555

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MaterialsPlanningProcessinSAP4

Planning (SNP). SNP makes it possible to create a network-wide plan that uses in-plant production, a stock transfer from another production plant or the procurement of components or raw materials to cover the planned independent requirements of demand planning and any sales orders that have already been placed. In this way, it takes account of any capacity restrictions associated with the network. This function isn’t available in SAP ERP.

The second step in materials planning, quantity planning, can be performed in either SAP ERP or SAP APO. In a typical scenario involving integrated production planning, demand-driven materials are planned in SAP APO, and consumption-based materials are planned in SAP ERP. Once again, the planning run and the transparency associated with the procurement situation in the SAP APO system offers some benefits over the SAP ERP system.

Furthermore, scheduling and capacity requirements planning, which is integrated directly into materials requirements planning, can be executed in either the SAP ERP or SAP APO system. However, if the purpose of this step is to achieve a finite produc-tion plan, the enhanced capacity requirements planning options in SAP APO far out-weigh SAP ERP. The SAP APO system provides the functions of the capacity planning table, detailed scheduling heuristics, and the optimizer. SAP ERP, on the other hand, has limited options in terms of finite detailed scheduling.

The step for order conversion and monitoring, that is, subsequent processing of exter-nal procurement and manufacturing orders, takes place in the Procurement and Manu-facturing areas of the SAP ERP system; that is, in Materials Management (MM), Produc-tion Planning (PP), and, if necessary, in an integrated PDC system.

Even though SAP APO is purely a planning tool, any malfunctions and time shifts in production are also considered here.

Materials Planning Process in SAP ERP4.3

In this section, we’ll describe a materials planning process that only involves an SAP ERP system. We’ll show you the SAP ERP functions available for each of four steps described earlier.

Program Planning4.3.1

Entering planned independent requirements as part of demand planning, entering cus-tomer independent requirements based on sales orders in Sales and Distribution (SD), and the interaction of requirement types defined in the planning strategy are also steps within program planning in SAP ERP.

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MaterialsPlanningProcessinSAPERP 4.3

Demand planning

In SAP ERP, Sales and Operations Planning (SAP SOP) is available as an instrument for supporting the process of sales and operations planning. SAP SOP produces require-ment forecasts at the distribution center or production plant level, which can be later transferred to materials planning. Forecast and planning can be based on historical, existing, and estimated future data.

SAP SOP comprises two application components:

Standard sales/operations planning (short form: standard SAP SOPEE )

Flexible planningEE

Standard SAP SOP is, to a large extent, preconfigured when the system is delivered and can be used without much effort. However, its functions are limited to the stan-dard system. In flexible planning, on the other hand, businesses can customize many of the functions provided. As a result, it provides numerous options for adjusting demand planning to customer-specific planning (see Table 4.2), which facilitates plan-ning at every organizational level and determines the content and layout of the plan-ning screens.

Flexible Planning Standard SAP SOP

Numerous options for a customized configuration

Largely preconfigured

Planning hierarchies Product groups

Consistent planning or level-by-level planning

Level-by-level planning

Planning type used to configure the content and layout of the planning table

Standard planning table

Differences Between Flexible Planning and Standard SOPTable 4.2

In demand planning, forecasts are usually based on aggregated historical data, which can, for example, come from SAP ERP-LIS (Logistics Information System). The corre-sponding data structures in LIS are used to structure and prepare the plan figures. They are based on the use of characteristics (e.g., plant and sold-to party) that can be used to break down key figures (e.g., production quantity).

Demand planning can be the starting point for the entire production planning process. For example, production plans can be created within demand planning (e.g., in a pro-duction key figure) and later transferred to operative planning as planned independent requirements. Because of this, the planned independent requirements form the basis for procurement planning and production planning and can, for example, be offset

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against the current sales orders, depending on the chosen planning strategy. This pro-cess is shown again in Figure 4.3.

Operative Planning

LISSales OrganizationSold-to PartyMaterialPlant

Demand Plans

Production Plans

MaterialPlant Planned Indep. Req.

Planned OrdersPurchase RequisitionsBOM ExplosionsCapacity Requirements for Work Centers

Quantity and Dates

Demand Planning

Program Planning

RequirementsPlanning

Demand Planning ProcessFigure 4.3

Planning Strategies in Program Planning

As already described in Section 4.1.1, Program Planning, independent requirements come from planned independent requirements and real sales orders. We’ll now define the interaction of such independent requirements in program planning within the SAP ERP system. How independent requirements behave in requirements planning (i.e., whether they affect requirements and whether they are offset against other require-ments) is determined by their requirement type or planning strategy (see Figure 4.4).

Planned independent requirements are stock requirements that have been derived from a forecast of the future requirements situation. In make-to-stock production, you want to initiate procurement of the relevant materials without having to wait for actual sales orders. Such a procedure can shorten delivery times and, thanks to future-ori-ented planning, evenly spread the burden across the production resources.

SD employees enter customer independent requirements (sales orders). Depending on the requirement type that has been set, customer requirements can flow directly into requirements planning. This is always desired if a business wants to implement customer-specific planning. Sales orders can be used as a sole source of requirements for which procurement is specifically triggered (make-to-order production), or they, together with planned independent requirements, can represent the total requirement. It is also possible to offset sales orders against planned independent requirements.

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Production Program

Planned Indep. Req.Customer

Requirements

Requirements Planning

Meeting Requirements by� In-House Production� External Procurement� Stock Transfers within Internal Network

Offset accordingto Planning

Strategy

Demand Planning Forecasts

Sales Ordersfrom SD

Independent Requirements in the Demand ProgramFigure 4.4

The SAP ERP system provides the following basic strategies for creating the demand program:

Make-to-stock productionEE Production as a result of make-to-stock planning, requirements fulfilled from the warehouse

Subassembly planningEE Planning-based make-to-stock production for assemblies

Order-related productionEE Make-to-order production of finished products and, if necessary, make-to-stock pro-duction of assemblies

If make-to-stock production strategies are used, production usually takes place without sales orders having to already exist for the material in question. After sales orders are received, the goods can be delivered from the warehouse, thus making it possible to implement short delivery times. Make-to-stock production also gives rise to the most even production run, irrespective of the current demand.

Make-to-stock production can also take place for assemblies. In this case, the finished product itself isn’t produced in storage, but only the required assemblies are procured. This generally makes it possible to quickly fulfill a sales order for a finished product because all that remains is final assembly (the assemblies are already available).

For sales-order-related production, there is no planning in the actual sense; instead, procurement doesn’t take place until an actual sales order exists. Often, make-to-order production is used with subassembly planning for components to keep delivery times to a minimum.

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Quantity Planning4.3.2

Quantity planning is used for production planning, external procurement, or stock transfers from other plants using existing in-plant requirements (depending on the pro-curement type). That is, the requirements are covered by creating planned orders (for in-house production planning) as well as purchase requisitions or schedule lines (for external procurement planning). Production planning concludes when planned orders are converted into manufacturing orders (production order or process order) or into purchase orders or schedule lines.

Planning can be consumption-based (e.g., by specifying a reorder point) or demand-driven. For each material, the basic type of materials planning is defined with the MRP type, which is entered on the Materials Planning 1 tab of the material master. The MRP type can also be used to exclude a material from materials planning. Figure 4.5 provides an overview of the MRP procedure in SAP ERP.

MRP Procedures

Plangesteuerte Disposition

Forecast-Based Planning

Verbrauchsgesteuerte Disposition

Time-Phased Planning (t,q or t,S Rule)

Reorder Point Planning (s,q or s,S Rule)

Material Requirements Planning

Consumption-Based Planning

No or Manual Planning

Overview of MRP Procedure in SAP ERPFigure 4.5

MRP is based on current and future sales and takes place across the entire BOM struc-ture (see Figure 4.6).

The planned requirement quantities (in the form of planned independent require-EE

ments or sales orders) trigger requirements calculation.

MRP essentially uses backward scheduling in which the required start dates are EE

determined from a preassigned end date.

The procurement proposals for the finished product are created, and BOM explo-EE

sions are used to determine the dependent requirements for the components. The dependent requirement date is determined from the start date of the source planned order.

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Starting with the dependent requirement date as the availability date, the order EE

dates for the components are determined in backward scheduling using the in-house production time or the planned delivery time.

A

B C

BOM Requirement

Planned Order forFinished Product A

Purchase Order for Raw Material C

Oper. 10 Oper. 20 Oper. 30

Planned Order for Assembly B

Oper. 10 Oper. 20 Oper. 30 Oper. 40

When willproduction take place?

Today

Time

When does procurement have to begin?

DependentRequirements

When will thecomponents be needed?

Planning Process in Multilevel MRPFigure 4.6

In MRP, a net requirements calculation is performed during the planning run to deter-mine whether there is a material shortage. For this purpose, the stock and existing firmed receipts (e.g., purchase orders, fixed purchase requisitions and production orders, and planned orders) are compared against the safety stock and the require-ments. The result of this comparison is known as the quantity available for MRP. If the quantity available for MRP is lower than zero, this is known as a material short-age. Requirements planning responds to material shortages by creating new procure-ment proposals. Here, the procurement type determines whether the system creates purchase order requisitions or planned orders. The proposed procurement quantity is based on the lot-sizing procedure set in the material master (see Figure 4.7).

Consumption-based planning, on the other hand, is based on historical consumption values and uses forecasts or statistical procedures to predict the future requirement. Consumption-based planning is characterized by its simplicity and is principally used for low-value B and C items.

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110


RequirementsSales Orders

Planned Indep. Req.

Dependent Requirements

Reservations

etc.

Safety Stock

Fixed Planned Orders

Fixed Purchase Requisitions

Inventory

Firmed ReceiptsPurchase Orders

Production Orders

etc.

Material Shortage

Lot Size of Procurement Proposal

Within theRescheduling

Period

Net Requirements CalculationFigure 4.7

Manual reorder point planning, shown in Figure 4.8, is a typical procedure in con-sumption-based planning. Materials planning is controlled by a manually specified reorder point (e.g., 50 pieces). During the planning run, the system checks whether or not stock has fallen below this reorder point (i.e., whether there are fewer than 50 pieces in storage). If so, procurement is triggered for the lot-size amount (e.g., a fixed lot size of 500 pieces). This procedure corresponds to the s,q reorder method described in Section 4.1.2, Quantity Planning.

Inve

ntor

y

Reorder Point Time of Delivery

Reorder Point

Safety Stock

Replenishment Lead Time

Time

Lot Size

Consumption-Based PlanningFigure 4.8

Scheduling and Capacity Requirements Planning4.3.3

During quantity planning, the routing can be used to calculate the capacity require-ments resulting from the planned orders. As a prerequisite for this calculation, you

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111


must select Lead Time Scheduling and Capacity Planning as Scheduling parameter 2 for the MRP planning run (see Figure 4.9). Only then is the routing used to schedule the operation dates in addition to the basic dates for planned orders.

Scheduling Parameters for the MRP Planning RunFigure 4.9

In the fi rst step, infi nite requirements planning creates capacity requirements only. These are scheduled by using the times defi ned in the routing and by accepting infi nite capacities. Initially, the system doesn’t check whether the work center is still available for the required dates.

In the second step, it must perform a check to determine whether planning is pos-sible from a capacity perspective. This check takes place during capacity requirements planning, which is usually based on a particular work center. The goal of capacity requirements planning is to schedule all operations for planned orders or manufac-turing orders in such a way that the production plan can be fulfi lled. Scheduling may cause dates to shift.

The functions of capacity evaluation are then used to determine available capacities and capacity requirements and to compare them against each other in lists or charts. Subse-quent capacity leveling can be used to level overloads and underloads in work centers; the best deployment sequence for machines and productions lines can be determined here and suitable resources chosen. The tabular and graphical planning tables can be used to schedule operations so that they can be implemented within capacity planning (see Figure 4.10).

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112


Graphical Planning Table in SAP ERPFigure 4.10

Here, you can also note a particular rule for the scheduling sequence. If work centers have several individual capacities, they can be assigned and split into these individual capacities. However, it’s considerably more helpful to create a fi nite production plan in the SAP APO system because it has an optimizer and scheduling heuristics (for more information, see Section 4.4.3, Production Planning and Detailed Scheduling).

Order Conversion and Monitoring4.3.4

Production control commences as soon as a planned order is converted into a produc-tion order . Planned orders can either be converted manually by the planner or using a release period via collective processing. As you can see in Figure 4.11, a production order in SAP ERP passes through a number of phases.

The activities marked with an asterisk (*) can be automated or processed in the back-ground, which minimizes the manual effort for order management. Work-in-progress (WIP) calculations, deviation recording, and settlement are usually periodic cost object controlling tasks that are processed in the background. The following are important basic production order functions in SAP ERP:

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113


Order Creation

Order Opening

Machine Utilization

Order Release *

Download to PDC System

Order Printout *

Material Staging

Upload from PDC System

Goods Receipt *

DeviationDetermination

Order Settlement

Archive/Delete1

2

3

4

5

6

7

8

910 Material Consumption Posting *

14

15

13

12

11

17

16

Lifecycleof a

Production OrderWork-in-Progress

Determination

Confirmation *

Availability Checks *

Lifecycle of a Production Order in SAP ERPFigure 4.11

Status managementEE

SchedulingEE

Calculation of capacity requirementsEE

CostingEE

Availability check of components, production resources/tools, and capacitiesEE

Printing shop floor papersEE

Material staging via reservationsEE

Confirmation of quantities, services, and time events (variable confirmation EE

procedures)

Goods receiptEE

Period-end closing (process cost allocation, overhead rates, WIP calculations, devia-EE

tion recording, and order settlement)

A production order must be released before production can begin. As soon as this hap-pens, goods movements can be posted for the order, papers printed, confirmations entered, and an automatic availability check performed. The system can perform this availability check for material components, capacities, and production resources/tools.

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114


Confirmations are used to record production progress. They provide the basis for prog-ress tracking and subsequent capacity requirements planning. For this reason, accurate, almost real-time confirmations are important. At the same time, order confirmation is used to record internal services that have been performed for the order. Confirmations are generally made in the SAP ERP system, and they trigger various functions (see Fig-ure 4.12).

Actual Cost

AutomaticGoods Receipt

Backflush

OrderStatusQuantityActual Cost

Reduction ofCapacity

Requirements

Confirmation

Update ofStatistical Data

(LIS, BW)

HCMData Transfer

Confirmation FunctionsFigure 4.12

Each confirmation is recorded with a status (e.g., EE partially confirmed or confirmed).

The confirmed quantity and actual cost are written to the production order.EE

A confirmation can occur with an automatic goods receipt.EE

Material withdrawals can also be posted automatically, using a backflush.EE

The confirmation also reduces the capacity requirements of the production order.EE

If goods receipt and goods issue postings are not coupled with a confirmation, they must be posted manually. These postings are critical for the quality of materials plan-ning because they provide for changes in stock and a reduction in reservations.

Materials Planning Process in SAP APO4.4

This section describes the following SAP APO functions: Demand Planning (DP), Sup-ply Network Planning (SNP), and Production Planning and Detailed Scheduling (PP/DS).

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555

3D classification, 4983D graphic, 743D matrix, 498

A

ABC analysis, 55, 56, 61, 63, 77, 90, 421, 492A Materials, 58B Materials, 59C Materials, 60D Materials, 60Evaluating, 74For warehouse optimization, 77Quantity flow analysis, 79

ABC segmentation, 75ABC strategy parameter, 69ABC/XYZ analysis, 51, 92, 420ABC/XYZ classification, 96, 486, 495, 510ABC/XYZ matrix, 55, 83, 90, 93, 492Ability to deliver, 454Absolute percentage error (APE), 194Accepted delivery time, 500Access fluctuation, 62Accumulate balances, 30Activity, 340Activity relationship, 341Activity scrap, 250Actual delivery time, 454Additional requirement, 31Adherence to desired delivery date, 320Adjustment of historical data, 199Alerting, 175Alert Monitor, 59, 369Alpha factor, 190Analysis goal, 64Analysis of slow-moving items, 366, 443Area to analyze, 64Assemble-to-order, 44Assembly level, 42Assembly processing, 155Assembly scrap, 241, 250Assignment mode, 168

ATP checkMultilevel, 384Rules-based, 382

ATP tree structures, 322Automatic model selection, 2, 180, 181Automatic model selection procedure 1, 181Availability check, 103, 373

Against ATP logic, 373Against capacity, 380Against planned independent requirements, 379Against product allocations, 380Logic, 373

Availability overview, 379Available capacity, 333Available stock, 206, 212Available to promise (ATP) → Availability check, 373Avoid delays, 222Avoid surpluses, 221

B

Backlogs, 484Barcode, 407, 408Base value, 189Basic date, 324, 330, 337, 338Basic date scheduling, 324, 327, 330, 335, 336, 338, 339

Across BOMs, 329Basic finish date, 324, 326, 329, 331, 335Basic start date, 324, 326, 329, 336, 337Bestandsanalyse, 457Beta factor, 190BEx Analyzer, 475B Materials, 59BOM selection, 297Bulk material, 133Bullwhip effect, 387

Index

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556

Index

C

Capable to match (CTM), 118, 224Capable to promise (CTP), 103, 121, 224, 381, 382, 385Capacity evaluation, 111Capacity leveling, 111Capacity requirement, 333, 338Capacity requirements planning, 101, 111Causal forecasting, 184Characteristics planning, 156Checking group, 374Checking rule, 375Check mode, 168CIF → Core Interface, 102Classification, 491

Enhanced, 499Class limit, 70, 71C Materials, 60Collaborative Planning, Forecasting and Replenishment (CPFR), 387Combination of basic methods, 381Component scrap, 241Composite forecasting, 185Configurable materials → Variant configuration, 156Confirmation, 102, 114Confirmation date, 373Consignment, 133, 295, 312, 388Consignment scheduling agreement, 319Consignment stores, 134Constant model with first-order exponential smoothing, 177Consumption, 137Consumption cycle, 460Consumption mode, 141Consumption parameter, 45, 141Consumption period, 141Consumption range of coverage, 437Contract, 300, 311, 314, 319, 345Control cycle, 416Control key, 332, 340Co-product, 243Core Interface, 102Core Interface (CIF), 128, 168Cost function, 319Costs for external services, 434

Costs for load carriers, 434Costs for operating facilities, 433Croston method, 180Customer independent requirements, 99

D

Data basisCalculating, 67

Data collection, 435Data processing costs, 434Data quality, 197Date adjustment, 337Daysí supply, 94Dead stock analysis, 94, 364, 444Decision-making process, 491Decision-making support, 491Decision tree, 502Delivery reliability, 452, 453, 454Delivery service, 454Delivery time, 329Delta factor, 190Demand management, 197Demand Planning (DP), 103, 105, 115, 175Demand program, 28Demand range of coverage, 437Demand source, 406, 410, 411, 414Dependent requirement, 28, 31, 100Destination location, 316, 345Detailed scheduling, 101Detailed Scheduling (DS), 120

MRP-based, 122Determination of requirements, 27, 61, 173

Deterministic, 27, 28, 30Forecast-based, 29Order-based, 30

Direct procurement, 295Direct production, 291Display filter, 363Disposal logistics, 432Distribution key, 329Distribution logistics, 432

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557

Index

E

Early warning system, 67Efficient Consumer Response, 387Engineer-to-order, 43, 44Enterprise-specific factor, 354Enterprise structure, 354Error level → Forecast error, 192Error total (ET), 192Exception, 67Exception message, 369Execution time, 332Explosion date, 320Ex-post forecast, 189External procurement relationship, 311, 319, 345

F

FIFO valuation procedure, 221Fill rate, 453Filter, 367Filter function, 369Final assembly

By sales order, 143Fixed procurement costs, 501Float after production, 330, 335, 339Float before production, 330, 335, 339Flowchart, 458Fluctuating demand, 422Fluctuation coefficient, 62Forecast, 117, 173, 351Forecast controlling, 175Forecast distribution, 201Forecast error, 192Forecasting accuracy, 192, 261Forecast method, 536Forecast monitor, 517Forecast parameters, 187Forecast result, 197Formula parameter, 332, 341Fulfillment rate, 426

G

Gamma factor, 190Geometric mean of the relative absolute error (GMRAE), 196Global parameter, 310Goods receipt processing time, 325, 329, 342, 344, 378Groff reorder procedure, 236, 246Gross requirement, 30, 31, 100Gross Requirements Planning (Strategy 11), 144

H

Handling resource, 342Heuristic, 121

I

Inbound delivery modality, 26Independent requirement, 28, 30, 99Individual/Collective Requirements indicator, 152Individuality, 499Influencing factors, 529, 532Info record, 345Information system, 428InfoSource, 472In-house production time, 324, 326, 329, 330, 335, 337, 339, 378

Lot-size dependent, 324Lot-size independent, 324

Initialization period, 188Interaction, 349Interactions, 491Interactive planning, 319Interoperation time, 324, 333, 341, 343Inventory Aging Analysis, 476Inventory controlling, 63, 75, 425, 461Inventory costs, 433Inventory key figures, 436Inventory Monitoring, 461Inventory strategy, 26Inventory-taking, 61

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558

Index

Inventory turnover, 366Item classification, 47, 51, 56, 88, 424

J

Joint forecasting, 387

K

Kanban, 405Board, 409, 414Card, 405, 408Classic, 410Container, 419Contol, 407Control cycle, 407, 408Event-controlled, 411One-card, 411Procedure, 410, 423Signal, 406, 410, 414Status, 413With quantity signal, 412

Kanban calculationAutomatic, 416, 418

Key figures, 174, 363Average consumption, 445Average range of stock, 445Average stock, 445Business-related, 428Consumption, 445Dead stock, 444Definition, 427Descriptive, 428Inventory turnover, 441Lot size, 456Normative, 428Profitability, 429Range of coverage, 436, 445Receipt value of valuated stock, 447Safety stock, 448Safety stock buffer, 447Service level, 450Slow-moving items, 442Statistical, 427Stock at receipt, 456

Stock factor, 448Stock value, 443

Key for performance efficiency rate, 333

L

Last lotExact, 240

Lead time scheduling, 101, 111, 324, 330, 338, 339, 344

Across BOMs, 336Least unit cost procedure, 236

External procurement, 223Least-unit cost procedure

External procurement, 247Licenses and other rights, 435Linear exponential smoothing, 177Linear regression, 179Liquidity key figure, 428LMN analysis, 457, 497Location group, 334Logistics controlling, 425, 426, 461Logistics costs, 431, 432Logistics Information System (LIS), 59, 105Lorenz curve, 57Lot size, 26

Fixed, 234, 243Lot-for-lot order quantity, 234, 239, 243Maximum, 237, 240, 248

Lot-size calculation, 100, 229Lot size creation

Dynamic, 236Lot-size procedure, 540Lot-size restriction, 237, 248Lot-sizing parameters, 45Lot-sizing procedure, 352

Optimum, 232, 235, 245Periodic, 234, 244Static, 234

Lot-sizing restriction, 233Low-level code, 100Low-level coding, 28

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559

Index

M

Make-to-order, 28, 44Make-to-order production (strategy 20), 30, 143, 151Make-to-stock, 43Make-to-stock production, 41, 143

Customer-independent, 41Make-to-Stock Strategy, 142MASSD, 131Mass maintenance, 131Master data, 481Master Data and Process Analysis, 486Master data concept, 198Master data maintenance, 360Master production scheduling, 214Material BOM, 308Material Flow Analysis, 458Material flow control, 405Material grouping, 64Material master planning, 173Material planning parameters, 529Material posting, 206Material range of coverage, 438Material requirements explosion, 26Material requirements planning (MRP), 28, 406, 409Materials

Configurable, 156Materials Planning → s. Material requirements planning, 28

Advantages and disadvantages of centralized and decentralized, 53Consumption-based planning, 27, 29, 100, 108, 203Forecast-based, 324, 326, 329, 332, 335Forecast-based planning, 28, 208Material requirements planning, 28, 100, 108, 203, 324, 326, 329, 332, 335Mixed procedure, 38MRP, 212Operational, 49, 50Optimization, 388, 399Order-based planning, 28Qualitative, 360Quantitative, 360Strategic, 49, 50, 51

Tasks, 49Time-phased materials planning, 28, 211

Materials planning controlling, 361Materials planning decision, 495Materials planning master data

General, 127Materials planning optimization, 94, 481Materials planning results

Processing, 359Materials planning type, 534Matrix organization, 51, 53, 54Mean absolute deviation (MAD), 189, 193, 261Mean absolute percentage error (MAPE), 195Means of transport, 345Mean square error (MSE), 193Mean value, 81Median of the absolute percentage error (MdAPE), 196Migration, 489Minimum lot size, 237, 248Minimum stock level, 265Mixed procedure, 38Mode, 340Model initialization, 188Models with second-order exponential smoothing, 179Monitor of deliveries, 455Move time, 334, 341, 343Move time matrix, 334, 344Moving average, 176MRP group, 131MRP list, 363MRP matrix, 489, 504, 515MRP monitor, 90, 510MRP parameter, 127

Hierarchy, 351MRP procedure, 27, 108, 203MRP profile, 132MRP strategy, 26, 42, 44, 47, 50MRP training, 487MRP type, 203, 351Multiple linear regression (MLR), 185

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560

Index

N

Navigation profile, 368Negative lead time, 336NetChange, 239NetPL, 239Net requirement, 30, 32, 100Net requirements calculation, 26Normal scheduling agreement, 319

O

One piece flow, 405On-time delivery, 453, 454On-time delivery performance, 315, 320Opening date, 326Opening period for planned order, 326, 329Open order, 454Operating time, 332Operation date, 335Operation scrap, 241Operation segment, 332Operation time, 332Optimization potential, 84, 481

Deriving, 84Optimization project, 486

Process flow, 486Optimization tool, 486, 496, 497, 510Order conversion, 102Order cycle, 61Order float, 330, 335, 339Order monitoring, 102Order opening date, 324Order progress messages, 482Order release, 102Organizational structure

Centralized, 51Corporate group, 53Decentralized, 51Large business, 52Medium-sized business, 51

Outlier correction, 190Outline agreement, 300

P

Parameterization, 485Parameter optimization

Relationship model, 353Parameter settings, 529Part period balancing, 223, 236, 246Part provided, 328PDS BOM, 309Pegging area, 222Period factor, 244Period of adjustment, 160Periods per seasonal cycle, 189Period to analyze, 64Personnel costs, 434Phantom assembly, 146, 289, 309Plan explosion, 310Plan Monitor, 465Planned delivery time, 327, 329, 346, 378Planned independent requirements, 41, 99

Adjust and reorganize, 160Reduce, 159

Planned order conversion, 337Planning, 173, 508

Flexible, 102, 105, 174Without Final Assembly, 149

Planning application, 315, 319, 320Planning at assembly level, 45Planning calendar, 235Planning file, 216Planning for Assemblies Without Final Assembly (Strategy 74), 151Planning for Phantom Assemblies (Strategy 59), 146Planning horizon, 50Planning level, 99, 116Planning material, 152Planning plant, 290Planning profile, 157Planning-relevant event, 215Planning run, 362Planning strategy, 106, 136, 350, 529Planning with a Planning Material and Without Make-to-Order Production (Strategy 63), 152

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561

Index

Planning with a Planning Material (Strategy 60), 155Planning with Final Assembly (Strategy 40), 145Planning Without Final Assembly (Strategy 50 and Strategy 52), 149Plant maintenance, 76Pool, 68Portfolio matrix, 80Positive lead time, 329, 336PP/DS optimizer, 121PP procedure, 214Prediction ability, 62Preproduction and setup costs, 434Primary resource, 340Process control heuristic, 220, 226Procurement costs, 245, 318Procurement cycle, 460Procurement logistics, 431Procurement market research, 60Procurement planning

External, 307Procurement priority, 318Procurement quantity calculation, 229, 242Procurement type, 287, 307, 312, 319Product allocation, 373Product classification, 491Product group, 55Product heuristic, 214, 217, 220, 317Production, 76Production by Lot Size (Strategy 30), 144Production data structure (PDS), 308, 309, 318, 340Production in alternative plant, 289, 310Production in an alternative location, 310Production logistics, 432Production order, 112, 483Production order conversion, 338Production order creation, 326Production planning, 120Production plant, 290Production process model (PPM), 309, 318, 340Production type, 41

Select, 41

Productivity key figure, 429Product lifecycle, 86, 422Product phase-in and phase-out, 422Product type, 499Profitability key figures, 428Program planning, 98, 104Pull principle, 405, 424Pull strategy, 99Purchase Order Calculation → s. Reorder policy, 32Purchase order limit, 33Purchase order period (t), 33Purchase order quantity (q), 33Purchasing, 75Purchasing department processing time, 328, 329, 378Purchasing info record, 311, 314, 319Push principle, 406Push strategy, 99

Q

Quality key figure, 429Quantity flow analysis, 79Quantity planning, 100, 108Quantity signal, 413Queue time, 333, 343Quota, 317Quota-allocated quantity, 317Quota arrangement, 302, 316

Incoming, 316Outgoing, 316

Quota arrangement header, 317Quota base quantity, 317Quota rating, 317

R

Range of coverage, 365Analysis, 365Calculation, 265Profile, 265

Ranking list, 316, 319

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562

Index

Rate of capacity use, 332Readiness to deliver, 452Real estate and occupancy costs, 434Receipt days‘ supply, 437Receipt quantity, 70Reclassification, 87Reduction, 334, 337Reduction in independent requirements, 159Regression analysis, 189Relationship, 341, 343Relationship model of parameter optimization, 353Relative absolute error (RAE), 196Relative indicators, 427Release date, 329Release modality, 26Reorder cycle method, 33Reorder method, 100Reorder point(s), 204; → s. Purchase order limit, 33Reorder point lot-sizing policy, 36Reorder point method, 28, 36Reorder point planning, 204, 327, 329, 344, 352

Automatic, 205Manual, 204

Reorder point system → s. Reorder point method, 36reorder point warehouse level policy, 37Reorder policy, 32, 39Replenishment lead time, 205, 438Replenishment lead time (RLT), 377, 500, 514Replenishment up to maximum stock level, 234, 243Requirements calculation, 27Requirements class, 135Requirements list, 362Requirement splitting, 317Requirement strategy, 169Requirements type, 136Resource, 341Responsive replenishment (RR), 391, 394, 396Reuse mode, 216Root of the mean square error (RMSE), 194Rounding profile, 238, 248Rounding value, 237, 248Route and network costs, 434

Routing, 308Routing selection, 298

S

Safety factor, 262Safety stock, 55, 61, 93, 208, 253, 352, 543

Dynamic, 265Manual, 259Simulation, 449

Safety stock planning profile, 280Safety time, 263, 269, 339Sales and distribution, 75Sales forecast, 42Sales & Operations Planning (SAP SOP), 102, 105Sales-order-related production, 41SAP Consulting solution, 90SAP_MRP_001, 220, 226SAP_MRP_002, 220, 226, 227SAP NetWeaver BW, 464SAP_PP_002, 218, 221, 223, 225, 237, 240, 242, 320SAP_PP_003, 223SAP_PP_004, 223, 248SAP_PP_005, 223, 246SAP_PP_006, 223, 247, 321SAP_PP_007, 224, 225SAP_PP_012, 220SAP_PP_013, 223, 246SAP_PP_017, 242SAP_PP_020, 227SAP_PP_C001, 222SAP_PP_Q001, 223, 317SAP_PP_SL001, 222Scheduling, 323Scheduling agreement, 300, 311, 314, 345Scheduling basis, 332, 340Scheduling formula, 332, 340Scheduling margin key, 326, 330, 335, 339Scheduling parameter, 323SCOR, 426Scrap, 229, 233, 241, 250Seasonal exponential smoothing, 177Seasonal linear regression, 179Seasonal trend exponential smoothing, 178

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563

Index

Selection rule, 363Sequence planning, 101Service heuristic, 220Service level, 255, 262, 451, 500Service Level Monitor, 454Service parts logistics, 432Set of rules, 487Setup time, 324Shortfall, 253Sigma factor, 190Slow-moving item, 366Slow-moving item analysis, 94SMI → Supplier-managed inventory, 388SNP order, 322Source determination, 216, 327

Automatic, 306Source list, 301, 327Source location, 345Source of supply, 307Special material, 133Special process, 198Special procurement key, 289, 310Splitting, 239, 317s.q policy → s. Reorder point lot-sizing policy, 36s,S policy → s. reorder point warehouse level policy, 37Stage numbering algorithm, 227Standard analysis, 363Standard deviation, 81, 262Standard value key, 332Standard values, 332Stock days‘ supply, 438, 478Stocking level, 42, 99, 150Stocking level determination, 42Stock in transit, 293Stock of material provided to vendor, 294Stock transfer, 293, 312, 328, 348Storage costs, 501Storage range, 90Storage volume analysis → LMN analysis, 497Strategy profile, 321Structure key figure, 429Subassembly planning, 45Subassembly Planning (Strategy 70), 145, 146, 151Subcontracting, 293, 312, 328, 348

Supplier-managed inventory (SMI), 388, 399Applications, 404Evaluation, 403With purchase order processing, 401With scheduling agreement delivery schedule lines, 399

Supply Chain Council, 428Supply chain organization, 49Supply Network Planning (SNP), 104, 117

Heuristic, 118Optimizer, 119

Supply source, 406, 410, 415, 422System group, 102

T

Takt time, 240Target stock level, 33, 265Target stock level method, 243, 245Taxes, duties, insurance and other costs, 434Tertiary requirement, 31Total lead time, 460Total replenishment lead time, 378Totals curve, 74Total usage quantity, 67, 68Total usage value, 68t,q policy, 33Tracking signal, 191Transportation lane, 311, 312, 345Transport packaging and conservation costs, 434Trend damping profile, 179Trend value, 189Troubleshooting, 369t,S policy, 34t,s,q policy, 38t,s,S policy, 38

U

Uncertainty, 254Univariate forecast models, 176Update, 338

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564

Index

Abesh Bhattachargee, Dipankar Saha

Implementing and Configuring SAP MII

Implementing and Customizing SAP MII is your guide to the product features of SAP MII, how to implement it, and how to configure and customize it for different manufacturing tasks and issues. The book will help manufacturing teams get processes and systems working together byshowing how to create composite applications that connects them. Oncethe systems are linked and generating comprehensive and accurate data,the book details how to use MII tools to generate accurate reports for analysis and planning.

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V

Valuated stock issue quantity, 67Valuated stock receipt quantity, 67Value analysis, 60Variant configuration, 156Variation coefficient, 81, 92Vendor consignment, 295Vendor-managed inventory (VMI), 388

Applications, 398Direct delivery scenario, 390Evaluation, 397Extended process, 390, 392Shops scenario, 390Traditional process, 388, 390, 391, 395

W

Wait time, 334, 341, 343Warehouse optimization, 77Weighted moving average, 176Weighting group, 176, 189Whiplash effect, 387

Winters seasonal model, 177Withdrawal from alternative plant, 290

X

XYZ analysis, 55, 61, 81, 421, 493N material, 62X material, 61Y material, 61Z material, 61

Y

Yield, 233Y material, 61

Z

Z material, 61

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Materials Planning with SAP

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