Supply Chain Planning with SAP APO Functional Solution Management SCM Apri 2010
Supply Chain Planning with SAP APO
Functional Solution Management SCMApri 2010
© SAP 2008 / Supply Chain Planning with SAP APO / 2
Pain Points in your Global Supply Chain
Do you have problems with …Forecast quality?
Excess inventory?
Lack of visibility in your supply chain?
Capacity shortages?
Creating an optimized finite production plan?
… and therefore faceLost sales due to missing capacity / components orunnecessary production and high inventory
Excessive work-in-capital; high scrap/expiry costs forproducts with shelf life or short life cycle
No systematic consideration of inventory in your supplychain, which results in lost sales and/or excess inventory
Lack of information for right planning decisions
High set-up costs/times and low resource utilization
© SAP 2008 / Supply Chain Planning with SAP APO / 3
Do you therefore need a tool to …
… increase the visibilityin your global supply
chain?
… improve forecastquality?
… systematically consideryour inventory and
calculate safety stockfigures?
… optimize your shortterm distribution and
transportation planning?
… support you increating optimized
production plans in allyour factories?
… improve your salesorder entry confirmation
and provide reliable salesorder confirmation dates?
© SAP 2008 / Supply Chain Planning with SAP APO / 4
Synchronize supply with demand in yourglobal supply chain by balancing push andpull network-planning processes and byhandling replenishment and productionbased on actual demand.
APO DP: Improves the forecast quality andplanning accuracy
APO SNP: Improves visibility across your globalsupply chain and lowers inventory
APO PP/DS: Supports you in creating optimizedproduction plans
APO gATP: Allows state-of-the-art sales orderconfirmation planning processes
APO TP/VS: Optimizes transportation loads andminimizes transportation costs
APO Alert Monitor: Powerful exception messagesystem integrated in all APO planning modules
Global Available-to-Promise
Demand Planning
Supply Network Planning
Production Planning &Detailed Scheduling
Advanced Planning & Optimization
Alert M
onitor
Transportation Planning &Vehicle Scheduling
How SAP APO is structured
© SAP 2008 / Supply Chain Planning with SAP APO / 5
Customers and releasesSAP APO by the Numbers
First release: SAP APO 1.1 (1998)
Current release: SAP APO 7.0 (9th APO release) - part of SAP SCM7.0
Outlook: Planned next APO shipment: Q4/2009 -Enhancement package 1 for SAP SCM 7.0 (APO
7.01)
Active customers: 2000+
Top Industries Adoption: CP, HighTech, Mill, IM&C, Chemicals,Automotive, Life Sciences
© SAP 2008 / Supply Chain Planning with SAP APO / 6
APO DP (Demand Planning)
Comprehensive forecasting tool-setStatistical forecasting with causaland time-series methodsSelection of best-fit modelAutomatic outlier detection availableHighly configurable planning bookswith macro functionalitySupporting aggregation /disaggregation logicLifecycle planningPlan promotions separately from therest of your forecastTrack & monitor forecast accuracySeasonal planningCollaborative demand planning
Improved forecast qualityOne tool for power and business userConsolidated demand plan (differentregions, countries, departments, …)
Key BenefitsFeatures
Calculate and determine future demand to improve demand qualityand accuracy
© SAP 2008 / Page 7
ConstantExponential smoothingMoving averageWeighted moving average
TrendExponential smoothingLinear Regression
Season (without trend)Exponential smoothing
Trend - SeasonExponential smoothingManual ForecastingSeasonal linear regression
OthersCroston (sporadic demand)HistoryNo ForecastExternal Forecast
Causal Analysis
Multiple Linear Regression (MLR)Influence Variables
Climate (e.g. Temperature)PriceAdvertisingDistribution...
AUTOMATED
PICK
BEST
Composite Forecast
Own defined model selectionbased on error measureCombine different forecastsWeight each forecast (timeindependent or dynamic)
Statistical Forecasting Methods
© SAP 2008 / Page 8
Demand Planning Master Data:Characteristic Value Combinations
Characteristics
Product
Location
Customer
Characteristicvalues
Prod01Prod02Prod03
DC01DC02DC03
Cust01Cust02Cust03
Characteristicvalue combinations
(CVCs)
Prod01, DC01, Cust01Prod01, DC01, Cust02Prod01, DC01, Cust03Prod01, DC02, Cust01Prod01, DC03, Cust02Prod01, DC03, Cust03……. Planning
ObjectStructure
© SAP 2008 / Supply Chain Planning with SAP APO / 9
Duet Demand Planning (not part of APO)
Faster and accurate plans aligned to customer demandrequirementsLeverages the full capabilities of Microsoft Excel (formulae,functions, graphics, etc.)Presents an intuitive interface that requires minimum trainingDelivers improved user acceptance and productivity through simpleand timely access to relevant business informationDesigned as a composite application based on Enterprise SOA
Duet Demand Planning enables managers, sales executives,and planners to utilize the full Microsoft Excel capabilities asan intuitive planning front end for SAP SCM
© SAP 2008 / Supply Chain Planning with SAP APO / 10
Integrate purchasing, manufacturing,distribution, and transportationConsider constraints and penalties toplan the product flow along thesupply chainAdvanced safety stock methodsconsidering multilevel supply chainnetworks and demand variabilitySupports system wide inventorymodeling and planningEnable planning on different levels ofdetail (aggregated planning)Choice of heuristic-, rule- oroptimization-based algorithm
Increased visibility over the overallsupply chainOptimized sourcing and capacityutilizationReduced inventory levelsImproved customer service
APO SNP (Supply Network Planning)
Key BenefitsFeatures
Calculates quantities to be produced and delivered to the locationsto match customer demand and maintain desired service levels.
© SAP 2008 / SNP Overview, Dr. Gerald Heisig, 11
Algorithm: SNP Heuristic
Local DC
30%
70%
40%60%
SNP Heuristic is a heuristic without considering constraints inthe supply network.SNP Heuristic does the sourcing based on quota arrangementsand priorities.As additional planning step, Capacity Levelling can beperformed in order to resolve capacity overloads.
Planned StockTransfers
Planned ProductionOrders
Planned PurchaseRequisitions
Demands
Demands
100%100%
Plant
DC
Supplier
© SAP 2008 / SNP Overview, Dr. Gerald Heisig, 12
Algorithm: Capable-To-Match (CTM)
Local DCCTM planning uses a constraint-based heuristic planningapproach for the cross-supply-chain checks of capacities as wellas material availability.CTM considers predefined supply categories and demandprioritiesCTM supports characteristic-based planning (as of SCM 7.0)
Planned Stock Transfers-> Transportation and Handling Capacities
-> Quota Arrangements and Procurement Priority
Planned Production Orders-> Production Capacities-> Priority of PPM/PDS
Planned Purchase Requisitions-> Procurement Priorities
Demands-> Priority Classes
Demands-> Priority Classes
Prio 2
Prio 1Prio 1
Prio 1
Prio 2Prio 1
Plant
DC
Supplier
© SAP 2008 / SNP Overview, Dr. Gerald Heisig, 13
Algorithm: SNP Optimization
Local DC
$
SNP Optimization is a cost-based optimization considering allcapacity constraints and material availability in the supplynetwork.SNP Optimization determines the optimal solution based onpredefined costs for supply alternatives and demands.
Planned Stock Transfers-> Transportation and Handling Capacities
-> Transportation Cost
Planned Production Orders-> Production Capacities
-> Production Costs
Planned Purchase Requisitions-> Procurement Costs
Demands-> Cost for- non deliveries- late deliveries
$$
$
$$
Plant
DC
Supplier
© SAP 2008 / SNP Overview, Dr. Gerald Heisig, 14
Distribution Planning: Deployment and TransportLoad Builder
Deployment determines the best short-termsolution to allocate available supply to meetdemand and to replenish stocking locations.
Deployment confirms or changes the supplynetwork plan depending and creates aoptimized plan for stock transfers
The rules-based Deployment Heuristicdistributes the products according toquotations and priorities.
The Deployment Optimizer distributes theproducts according to cost while alsoconsidering specific rules.
Supply
Supply
Stock
Stock
Stock
Dem
and
The Transport Load Builder (TLB)groups deployment results for singleproducts (i.e. confirmed stocktransport purchase requisitions) tomulti product stock transport orders.
The TLB considers factors likevolume, weight or number of pallets tofill transport vehicles optimal.
Plant
DC
© SAP 2007 / PP/DS Overview 15
Operational Planning – Production Planningand Detailed Scheduling (PP/DS)
PurposeCreate procurement proposals
Optimize and plan the resource schedule and theorder dates/times in detail
Plan critical products and bottleneck resourcesCreate executable production plans
Benefits:Reduce lead times
Increase on-time delivery performanceIncrease the throughput of products
Reduce the stock costs, through better coordinationof resources, production, and procurement
Optimization integrated into PP/DS
© SAP 2007 / PP/DS Overview 16
APO PP/DS (Production Planning & DetailedScheduling)
Capacity-Load OptimizationOptimal Sequencing
Flexible & Graphical Activity SchedulingWhat-if Analysis & Simulation
Configurable Exception Alert Monitor …
Optimal production sequence that is feasibleand can be executed.
Allows simulation of various planningscenarios to determine optimal schedule.Optimization based on actual constraints
ensures reliable delivery due date promises.
Key BenefitsFeatures
Multi-level production planningOrder Pegging
Use existing or own developed heuristics
Determines how, when, and where resourcesand materials should be deployed to
accomplish the production goals.Master planning for materialsand capacity (resource loads).
Key BenefitsFeatures
Production Planning delivers a short term plan that matches overall supplyto demand, given available resources and production methodology.
Detailed Production Scheduling determines optimal production sequencefor execution to meet delivery commitments based on actual constraints on
the shop floor.
© SAP 2007 / PP/DS Overview 17
Powerful Tools : Detailed Scheduling PlanningBoard
Save your ownsimulation
Resource View
Product View
© SAP 2007 / PP/DS Overview 18
Feature: Multi-level problem solving with orderpegging
10
30
30
50
50
80 70
50
50
50
50
50
20 10 40 60
100
100
30 20 50
305020
30
10 20 10 40 50
(+20)
(-10)
Excesscoverage
Shortage
Delay
Sales Order
Planned Order
Planned Order
Pur. Requisition
Dependent Req.
Dependent Req.
© SAP 2007 / PP/DS Overview 19
Screenshot: Order context (table view)
Demand
Which orders coverthe demand…
© SAP 2007 / PP/DS Overview 20
Feature: Capacity Reservations
Guarantee most profitable capacityutilizationImport from SNP optimization resultFlexible levels of finite checkRelease capacity prior to production to filltotal capacityConversion from time to production unitExampleCapacity Reservations for namedcustomersUnreserved capacity everyone can use itCollective reservation not namedcustomers can use it
© SAP 2007 / PP/DS Overview 21
Industry Solutions
IMC and AD: Scheduling for Project Manufacturing
Mill and Mining: Block Planning
Auto: Model Mix Planning
© SAP 2007 / PP/DS Overview 22
Production Scheduling
ProjectPlanning
AdvanceProcurement Engineering
EngineeringChange
Management
QualityAssurance &
Control
ManufacturingExecution
Shipping,Assembly &
Start-Up
ProductionPlanning &
Optimization
ProductionScheduling
Project Planning
Manufacturing
Procurement /Warehouse
Monitor alerts on projects / main assembliesPegging – automatic matching of demand and supply
Visualization of complete order contextAlerts - Early warning system late orders, bottlenecks
Filter on alerts in order context, sort late orders by delayInteractive scheduling to reduce late projects, orders
Detect critical path for order contextReduce buffers on critical path
Reduce duration of project order operationsMulti-level forwards/backwards scheduling
Interactive scheduling to reduce capacity overloadEvaluate resource utilization, filter on overload
Alternative work centers, sequences, production versionsSwitch to external procurement, subcontracting
Work overtime, run additional shiftsAdaptiveness and SimulationWhat-if simulation, compare alternatives
© SAP 2007 / PP/DS Overview 23
Block Planning (Mill and Mining)
Business RequirementCombine optimal resource utilization and precise customer due datesConsider constraints like minimal and maximal lot sizes, setup time, fixed maintenanceintervals etc.Plan bottleneck resources in an early planning phase where the final products and productcharacteristics are not known
SolutionDefine time intervals on a resource where products with certain characteristics can beproducedOperations of orders are scheduled into matching blocks
100 to, grade A, grammage 180 120 to, A, 200 75 to, C, 150
Product xyA, 180
Quality SWidth 1000
Product vbA, 200
Quality MWidth 1200
© SAP 2007 / PP/DS Overview 24
Orders Line network
Model-Mix Planning: Situation
ObjectiveGeneration of a feasible plan
for highly configurableproducts with high volume
Adherence to promiseddelivery date
Position
Equaldistribution
Block
X in Y
Distance
Quantity
Business valueBalanced usage of production
resources
Early identification of potentialbottlenecks
Reliable delivery date leads toincreased customer
satisfaction
Restrictions
© SAP 2007 / PP/DS Overview 25
Model-Mix-Planning
day x day x+1 day yday 1
Period Slot
Sequencing
11
22
© SAP 2007 / PP/DS Overview 26© SAP 2008 / Page 26
A snapshot of SAP SCM customers
Demand Planning andSupply Planning
Supply Network Collaboration
Order Fulfillment & Transportation Management
Production Planning &Detailed Scheduling
© SAP 2007 / PP/DS Overview 27
SAP SCM
Ms. Sherry [email protected]
Ms. Fan [email protected]
www.sap.com/scmQ & A
Thank you for yourinterest!
“This presentation is a preliminary version and not subject to yourlicense agreement or any other agreement with SAP. This document
contains only intended strategies, developments, and functionalities ofthe SAP® product and is not intended to be binding upon SAP to anyparticular course of business, product strategy, and/or development.
Please note that this document is subject to change and may bechanged by SAP at any time without notice.
SAP assumes no responsibility for errors or omissions in thisdocument.”