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Supply Chain Planning with mySAP SCM

by Dr. Stefan Theis | SAPinsider

October 1, 2002

by Dr. Stefan Theis, SAP AG SAPinsider - 2002 (Volume 3), October (Issue 4)
 

As part of mySAP Supply Chain Management (mySAP SCM), the Supply Chain Planning solution - with its key capabilities for collaborative demand, supply, and distribution planning - offers a complete suite of tools for strategic to operational planning. It is part of the SAP APO (Advanced Planner and Optimizer), and includes collaboration and integration functionality.

The considerable flexibility of the mySAP SCM Supply Chain Planning solution allows you to set up company-specific business processes and planning rules. This enables you to reduce your time to value.

mySAP SCM Supply Chain Planning includes three main scenarios that represent the basic planning needs within the supply chain. These are:

  • Collaborative Demand Planning

  • Collaborative Supply & Distribution Planning

  • Sales & Operations Planning

Collaborative Demand Planning

Using collaborative demand planning, you can leverage all available information to drive forecasting, promotion planning, and demand planning.

Historical data is consolidated in SAP R/3 and can be imported to an SAP Business Information Warehouse (SAP BW) InfoCube. mySAP SCM Demand Planning uses this information to create forecasts and carry out life-cycle planning. For this, a catalog of methods exists, including:

  • Statistical methods, like exponential smoothing or linear regression

  • Causal analysis of influencing factors (like price or climate conditions) using multiple linear regression

  • Composite forecasting to combine different forecasts into one overall forecast

The various methods can be assigned automatically to different data subsets.

Valuable information from any partner can be added via the Internet so you can come to agreement on a shared forecast. Promotion planning is performed to include marketing activities, offering further collaboration possibilities with retailers or distributors.

A demand plan is created using all available information. Freely definable macros enable any kind of calculation on the planning grid. This especially enables any kind of data check and the triggering of alerts for planners.

You refine the demand plan in one of two ways: by collaborative supply and distribution planning within SAP APO, or by using SAP R/3 to execute the approved plans. SAP BW is used for reporting of, for example, forecast accuracy measurements or market trends.

Collaborative Supply & Distribution Planning

With collaborative supply and distribution planning, partners within the supply chain can concurrently plan procurement, manufacturing, and transportation, while integrating all supply chain partners for collaboration.

Based on the demand plan, Safety Stock Planning is carried out first. It enables you to assign optimal safety stock and target stock levels to all inventories throughout the supply network. The system bases safety stock calculations on lead times, forecast and supply variability, and customer service levels.

Supply Planning tries to satisfy the demands and safety stock requirements in an optimal way, makes decisions about sourcing, spreads production among resources, explodes the bills of material (BOMs), organizes the procurement of semi-finished goods or raw materials, and creates allocations for customers and channels. You can choose between three basic approaches:

  • The Supply Planning heuristic calculates requirements for the sources of the products while taking quota arrangements, lead times, calendars, and lot-sizing rules into account. You can execute a capacity check after the infinite requirements planning run is completed. This allows you to quickly determine how planned orders affect your resources and whether or not your plan is feasible. Capacity leveling can eliminate resource overloads.

  • The Supply Planning optimizer generates a feasible supply plan with minimal costs, considering all resources and constraints in the supply network. It uses linear optimization and multi-integer linear programming techniques based on simplex-based algorithms and branch and bound methods.

  • Capable-to-Match matches a large set of prioritized customer demands (forecasts or orders) to a set of categorized supplies, taking into account the current production and transportation capabilities in a multistage production environment. Capable-to-Match is based on constraint-based propagation techniques and goal-oriented programming.

Distribution Planning consists of deployment, which considers the available products and satisfies the real demands based on flexible rules, and the transport load builder, which fills transport vehicles in an optimal way.

Deployment uses push and pull logic to recommend transports when the available-to-deploy quantity can adequately cover the demand. If demand exceeds supply, deployment uses fair-share logic to fulfill the open sales orders, safety stock, and forecast requirements in an optimal way.

The transport load builder uses the results of the deployment run to create transport orders for multiple products. It ensures that your transportation vehicles are filled to their maximum capacity (regarding volume, weight, and number of pallets) and that no transportation vehicle is dispatched unless it is filled to at least its minimum capacity.

Environment

Supply Chain Design allows the definition of the supply chain network and infrastructures. The Supply Chain Cockpit offers a graphical instrument panel for monitoring, navigating, and controlling all the links in the supply chain. The Alert Monitor enables management by exception and informs all planners of every critical situation.

SAP APO can be directly integrated with SAP R/3, SAP BW, and any legacy or external systems, so that all necessary business data will be transferred and available in each system for complete integration. This provides a continuous planning cycle with consistent master data elements, like materials or locations, and transactional data, like on-hand inventory or purchase orders.

Sales & Operations Planning

The point of origin in this scenario is the creation of a sales plan in SAP Strategic Enterprise Management (SAP SEM), part of mySAP Business Intelligence (mySAP BI). The sales plan allows you to create marketing activities in the SAP Customer Relationship Management (SAP CRM) Marketing Planner to support the fulfillment of these plans. The results are transferred to SAP APO and can be taken into consideration during collaborative demand, supply, and distribution planning.

By reviewing alerts and key performance indicators, you can consolidate the sales plan and then re-plan marketing activities accordingly. By using the simulation functions of SAP APO, you can evaluate a variety of scenarios using the available sales and marketing plans.

Conclusions

By using mySAP Supply Chain Management to manage the complex and changing flow of information, and by performing timely collaborative supply chain planning, you can achieve several benefits. Changes in market requirements can be absorbed by leveraging a partner network and adjusting business processes quickly and easily, affording more flexibility to planners. Supply chain partners gain insight into demand, inventory, and capacity information across the extended supply chain network, delivering increased visibility. Optimal plans and operational schedules based on Collaboration can be created. Supply Chain activities can be synchronized internally and externally with plan- and order-driven, real-time execution of supply chain activities.

mySAP SCM Supply Chain Planning provides multiple devices to help you match supply and demand and manage the entire length of your supply chain. mySAP SCM Supply Chain Planning is:

A function-rich solution

mySAP SCM Supply Chain Planning has the tools you need, so you can avoid assembling tools from multiple, specialized software packages. This mySAP solution can improve planning quality, model consumer sales behavior and market dynamics, integrate processes that drive planning, share information, and enable collaborative planning with business partners.

A robust, business-driven solution

Based on the proven expertise in the SAP R/3 client/server technology and real-world business processes, mySAP SCM Supply Chain Planning addresses the specific planning and information requirements of planners in all industries, reliably and effectively.

A successful solution

With mySAP SCM Supply Chain Planning, Carlsberg, for example, achieved a more than 30% reduction in stock and improved the ability to deliver the correct items at the correct times to the correct customers by 20%. This is just one of our many customer success stories.

For other examples of organizations that have benefited from mySAP SCM Supply Chain Planning, registered users can visit the SAP Service Marketplace (http://service.sap.com).

Further information on the robust features and efficiencies of supply chain planning with mySAP Supply Chain Management is available at www.SAP.com/solutions/scm and by logging on to the Service Marketplace at http://service.sap.com.


 

Dr. Stefan Theis is the Product Manager for Supply Chain Planning with SAP's Supply Chain Management GBU. He can be reached at stefan.theis@sap.com.

 

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