The Tip Doctor, Insider Learning Network
This SAP SCM tip comes courtesy of by Wolfgang Eddigehausen of Fujitsu Australia, who originally wrote this for an issue of SCM Expert, the premier independent online knowledgebase designed for SAP professionals who manage and support SAP logistics and supply chain management activities for their organizations.
As an SAP SCM consultant, Eddigehausen says he is sent many questions regarding implementations. However, he finds that the same three questions come up time and again:
- What is the time frame required to implement SAP SCM 5, particularly Demand Planning (DP) and Supply Network Planning (SNP)?
- What is the team size to implement these capabilities?
- Do we need to have an SAP Advanced Planning & Optimization (SAP APO) optimization server as a separate system or does it run on the SAP APO box?
To answer these questions, Eddigehausen makes two assumptions. First he needs to assume that the company uses SAP R/3 or SAP ERP Central Component (ECC) with the modules Sales and Distribution (SD), Materials M
anagement (MM), and Production Planning (PP) already, and that they do not use any SAP industry solutions. His next assumption is that there won’t be any major process changes as part of the project and thus this would be a technical implementation only.
Two more important assumptions need to be made with regards to the organization’s size. For DP, the estimate assumes one central Demand Plan is created for the entire supply chain. This might encompass having one or multiple distribution sites, but demand planning is central. For SNP I assume an average supply network with no more than about ten production or distribution sites.
A team of three to four SAP APO specialists complemented by the in-house IT team (to take over Basis-related work) can implement DP and SNP in about six months under these conditions. You then also need two or three subject matter experts (SMEs) part time (about 30% of time) to conduct process- and solution-related workshops and feedback sessions. These SMEs are the vital link to the business, ensuring the solution covers user requirements and is accepted by the business.
You only need an SAP optimization server if you use the SNP Optimizer. Optimization servers in an SAP APO landscape are dedicated servers that are not used for the main APO instance. Note that you can use the same optimization server for the SNP Optimizer and, for example, the Production Planning/Detailed Scheduling (PP/DS) Sequence Optimizer.
You use the SNP Optimizer to plan the supply network planning demands based on supply cost and non- or late delivery penalties (constrained model). It is thus not complementing the SNP Heuristic, but replacing it. The SNP Heuristic is an unconstrained planning algorithm similar to the traditional Materials Requirements Planning (MRP) or Distribution Resource Planning (DRP) and runs in R/3. Whether to use the SNP Optimizer or not is a business
decision and affects the time line described above.
The main impact on implementing the SNP Optimizer is the definition of a cost/penalty model that lines up with business requirements. This is typically a trial-and-error, time-consuming process. Most companies use the SNP Optimizer as a phase-2 implementation only, as the cost model implementation requires a good understanding of optimization planning algorithms and overwhelms users new to SAP APO.