SAP ERP and the production planning and detailed scheduling (PP/DS) and supply network planning (SNP) components of SAP Advanced Planning and Optimization (SAP APO) offer functionality that can be utilized in a variety of design options to optimize production plans and provide greater visibility into your inventory management, but when do you use which? Especially with the introduction of SAP S/4HANA and the plan to include PP/DS functionality in S/4, which complicates the decision further.
Logistics and SCM, Manufacturing, Procurement, and PLM 2016 speaker Matthew Campbell answered reader questions about how — and when — to use SAP ERP and the PP/DS and SNP components of SAP APO to satisfy your organization’s demand-driven supply chain scheduling requirements, the similarities and differences in the functionality delivered with each, and more, such as:
- What functionality is available in PP/DS that is not available in SAP ERP?
- Will Integrated Business Planning (IBP) Response and Supply replace production planning functionality available in APO?
- What business requirements would drive you to utilize APO SNP for supply and capacity planning instead of using SAP ERP planning?
- How will SAP's plan to move PP/DS functionality into SAP S/4HANA effect my implementation roadmap?
- What are some tips and tricks to be successful with APO and IBP implementations?
Meet the panelist:
Matthew Campbell , Principal, SCMO2
Matt is a co-founding principal of SCMO2 where he is responsible for client engagement management delivering SAP supply chain planning solutions. Matt possesses 18 years of design and management experience in SAP SCM. He specializes in helping clients develop solutions and making process improvement in demand planning, supply planning, inventory optimization, S&OP, production planning, VMI, and collaboration processes utilizing APO, SNC, EIS and IBP.
Natalie Miller, SAPinsider: Hello and welcome to today’s live Q&A on meeting demand-driven scheduling requirements with SAP ERP and SAP APO. I’m Natalie Miller, features editor of SAPinsider and insiderPROFILES, and I’m pleased to introduce today’s panelist, Logistics and SCM, Manufacturing, Procurement, and PLM 2016 speaker Matthew Campbell.
Matt is a co-founding principal of SCMO2, where he is responsible for client engagement management delivering SAP supply chain planning solutions, and he has 18 years of design and management experience in SAP SCM.
Hi, Matt, thank you so much for being here today!
Matthew Campbell, SCMO2: Hey, great to be available for the next hour. I look forward to answering any questions you have.
Natalie Miller: There are already a bunch of questions from readers waiting for you, but to kick things off, can you share some of the biggest misconceptions you hear from customers about PPDS functionality and why it’s needed?
Matthew Campbell: Many customers think they only need PPDS if they have complex scheduling scenarios. We often find that even for manual scheduling, the tools in APO PPDS can provide value for schedulers over the basic functionality available in ECC.
Natalie Miller: Thanks for that answer, Matt. I will let you get started on readers’ questions now.
Comment from Pawel J.: I heard contrary statements about the on-premise version of IBP (the latest of these is that it is not being worked on). Considering that this is the current approach from SAP, what do you suggest for customers that cannot move to a cloud solution (due to any security / law restrictions) while keeping in mind the ERP Roadmap of 2025 (which suggests that APO won’t be supported then)?
Matthew Campbell: I expect that SAP will support on premise versions of IBP as the product matures. There is also a possibility that APO and ECC will be supported beyond 2025, and you can be sure that SAP will have a solution that supports all of its customers. If you cannot move to the cloud, you should continue to make improvements to you current solutions and look to move to IBP in later versions.
Comment from Oscar Cases: I've read that simple logistics in S4/HANA has the functionality to optimize production planning. What are the main differences between S4/HANA and the PPDS optimizer? Will it be possible to optimize several alternative production lines at same time in S4/HANA while using a generic algorithm and taking into account, for example, shift time costs or customer delays?
Matthew Campbell: S/4HANA will include PPDS functionality in the version that is planned to be released at the end of 2016. When this is available, you will have all of the functionality that is available in PPDS today. This includes alternative production lines and optimization. The S/4HANA version of PPDS functionality is also expected to have many user interface improvements and a simpler Core interface design.
Comment from Harsh: Will IBP have the functionality of GATP, too, and completely replace SAP APO?
Matthew Campbell: There is some GATP functionality that has been moved into IBP Response & Supply on HANA, but this is really only for a few order confirmation scenarios. Most of the GATP functionality is going to move into S/4HANA, similar to what is being done with PPDS. The timing for when GATP functionality will be available in S4 has not been released, but this is the plan for the next several years.
Comment from Satyam Valluru: How the does the new IBP and S/4HANA-based demand driven production scheduling supplement or replace the existing APO SNP & PPDS functionality? What is the recommended migration path for customers who are already using APO SNP & PPDS?
Matthew Campbell: Much of the current SNP functionality will move into IBP Response and Supply. The current release of IBP already has some of the same features and planning engines included, but there will be a few more releases before you really have all the same functionality. For instance, the current version of IBP does not have deployment and TLB functionality, but this will eventually be included. There are many things in IBP that make it more appealing than APO, including the embedded analytics, the user interfaces, and the unified data model.
For PPDS, this functionality will not end up in IBP, but rather in S/4HANA. As a result, the migration path from APO to IBP and S4 is a bigger decision that will need to include other process areas in terms of when it makes sense to move to S4. We are seeing that the migration can be gradual, and you may move one module of APO at a time or do it all together, depending on your business requirements and risk tolerance.
Comment from Pawel J.: Regarding the new PPDS on S4 - as the future approaches, we have been told that CIF will remain (but would be somehow improved). As of today, it's a main killer of master data consistency between the systems. Do we consider this approach written in stone already? Do you have any details about how CIF will be improved in comparison to ERP and APO?
Matthew Campbell: There is no doubt that SAP is planning for a simplified core interface design in the S/4HANA PPDS functionality that will be released. Since the PPDS design will be embedded in S4, it is expected that more of the data will be integrated into the S4 master data design, thus requiring less CIF reliance. We will not know what it looks like until the product is released, but SAP has stated that this is one of the 3 main improvements over APO PPDS. The others are the embedded analytics and the user interface improvements.
Comment from Pawel J.: Regarding planning horizons, we plan on having a future landscape of S4 and PPDS in S4 (two sets of master data) and IBP for supply and response. How should the splitting of duties - between mid/long term planning (IBP for supply and response?), short term planning (PPDS on S4?) and execution (S4 itself?) - be handled? How can we ensure that one system will not get in the way of another for an already developed plan? (Would this require 3 master data sets to be consistent with each other)?
Matthew Campbell: Yes, the biggest way to segregate the processes and system control will be with planning horizons. If you end up with a planning environment that has both IBP for response and supply, and S4 for production scheduling, you will need to have a hand-off where detailed scheduling owns the plan inside some time horizon. This will be similar to how SNP and PPDS work together today.
In terms of master data, you could have 2 sets of master data, but IBP master data will more than likely pull from the same master data objects that are being used for S4 PPDS processes. So if you design your data model in IBP with this in mind, you can have the same data driving both planning solutions.
Comment from Pawel J.: For the companies with multi-instanced ERPs and single-instanced APO PPDS, considering that PPDS is moving to ERP, what kind of approach would you recommend? (Please take into account fact that making single ERP is major effort and might not be an option).
Matthew Campbell: There are a few options for your roadmap. You can stay on PPDS integrating to ERP at least until 2025, so you have some time to live in your current environment until you are ready to move to a single ERP or S/4HANA environment.
You also have the option already to put ECC on HANA, which allows you to also move your PPDS functionality into ECC on HANA, and you can turn off APO. This option just was released at the beginning of 2016 and is an alternative if you know that a move to S4 will take a long while.
The other option is to move to S/4HANA and migrate both your ERP instances and your APO PPDS functionality to the same S4 solution.
Comment from Harsh: What is the compulsive factor when choosing between implementing APO vis-a-vis IBP?
Matthew Campbell: This really depends on the functional area you are discussing.
For demand planning, the functionality in IBP for Demand is already getting close to comparing to what is in APO DP. There is also new functionality in IBP Demand for demand sensing that will never be available in APO. Over the next several releases of IBP, additional functionality will be added that will make moving to IBP more compelling for most customers. There are some scenarios that are not currently on the roadmap for IBP Demand, including characteristic-based forecasting. So for some of these special cases, you may have to wait longer on IBP.
For Inventory planning, there is really no comparison, as APO SNP’s advanced safety stock planning functionality does not offer anywhere near the same capabilities that are available in IBP for Inventory. The multi-echelon planning concept in IBP for Inventory Planning is not available in SNP, and the user interface and analytics available in SNP also do not compare.
For Sales and Operation Planning processes, there is also no comparison, as APO cannot deliver the functionality that is available in IBP for S&OP. This is specifically the case for scenario planning and for integration to financial planning and profit optimization.
Comment from Philippe: We have APO PPDS installed at 1 plant for now. The plan is to roll out ECC and PPDS in other plants, too. Some plants will be supplying other plants. Some plants are supplying other plants but also supplying customers. How should we run PPDS in all these plants? Should we run it separately per plant from bottom up to top? Or is it possible to use PPDS optimizer across all plants at 1 time? Or should we consider looking into SNP to manage overall planning? Would there be an advantage to looking into HANA and IBP?
You can use PPDS across a network of plants, but you just need to run it in a sequence that matches the goals of planning your network. This is often done top down, but we have set up PPDS optimization from the bottom up as well, since the most important constraint for that client was at the bulk manufacturing level. PPDS functionality will move to S/4HANA in coming releases and not be on IBP, so that would be the other consideration.
Comment from Tijus: Has SAP released any documents yet about PPDS functionality in S4?
You can find some information about the planned strategy for PPDS in S4 on SAP.com, but there is not a lot of detail available yet.
Comment From Tijus: Also, what does that mean to the PPDS consultant?
PPDS consultants will be able to utilize all their current PPDS expertise as they quickly come up to speed with the new options for implementing PPDS in either ECC on HANA or S/4HANA.
Comment from Dinesh Goyal: Is there any plan for IBP as an add-on to S/4HANA?
Not that I know of.
Comment from Hector Chacon: What are the prerequisites for moving to S/4HANA for clients currently running PPDS?
There are no prerequisites for this scenario other than waiting for the new version of S4 that is due out near the end of this year that will include PPDS functionality. You can integrate your current version of PPDS with the current version of S4 via CIF, similarly to how you probably have it set up with ECC.
Comment from PR: Hi, Matthew. For a company (FMCG) requiring a more enhanced solution for shortage management, and therefore requiring functionality like product allocation, fair share allocations, interactive backorder processing, and enhanced backorder processing, I would expect that the choice would then be SAP APO GATP for now and S4 in future. Would you agree?
Yes. Since most of that functionality will migrate to S4 and not IBP, you probably want to keep APO GATP until the solutions for allocation are available in S4. Some of the GATP functionality for BOP is already available in IBP Response and Supply (version 6.1), so that is also a consideration.
Comment from Dinesh Goyal: How can IBP can add value for an APO on Hana customer belonging to the non-consumer product industry in use cases other than S&OP?
Some of the IBP Response and Supply functionality is a great fit for high-tech companies to help optimize order fulfillment and complex multi-location production scenarios.
Comment from PR: Hi, Matthew. For a company requiring demand-driven MRP, and hence also requiring fast response in initiating supply, would you envisage the combination of SAP APO SNP for supply and SAP IBP for demand/consensus demand, hence not using SAP IBP to also manage enhanced supply?
In the short-term, I would expect you to utilize SNP for supply planning if you have a complex supply network planning scenario. Eventually, the IBP Response and Supply functionality will be able to support the same planning complexities, but it is still a few releases away from having all of the same functionality that APO SNP has. That being said, IBP Response and Supply is already full of features that APO SNP will never have.
Comment from Binil: How will PPDS be integrated with IBP? What is the architecture?
PPDS functionality will be made available in S/4HANA, not IBP. IBP will support supply planning in IBP Response and Supply.
Comment from Oscar: Why will a CIF be needed if PPDS is supposed to be on S4? Will PPDS work in another sever?
I don’t know all the details, but I believe PPDS on S4 will still have some processes that run on a separate server. But it will be a much more simplified architecture than the current CIF for APO.
Comment from JLF: What functionality is available in PPDS that is not available in SAP ERP? Will Integrated Business Planning (IBP) Response and Supply replace the production planning functionality available in APO?
PPDS has many features and planning engines that allow you to generate a constrained, feasible plan. This can be done via planning runs or interactively using the graphical planning board and other transactions that are packed with functionality that is far more advanced than anything available in ECC. There are also options in PPDS to run over 60 heuristics or optimizations to develop a feasible schedule that minimizes downtimes.
IBP Response and Supply will eventually replace most of the production planning functionality available in APO today, just not all the detailed scheduling functionality that is available in PP/DS.
Comment from andrea fuschetto: Since we are just upgrading to ECC on HANA and not S4, should we wait to do PPDS until we go to S4, which could be 5 years from now? Or should we implement PPDS on APO? (We use DP and SNP today.)
You should consider the option of having PPDS in your ECC on HANA solution. There are some ECC EHP requirements, but this is a brand new option that will allow you to get PPDS functionality directly in ECC. Then you can migrate the solution to S/4HANA whenever you are ready.
Comment from Tijus: So what happens to APO PPDS after S/4hana is released?
APO PPDS will be available and supported by SAP at least until 2025 if not longer.
Comment from Dinesh Goyal: Hello, Matt. I am happy you think SAP will extend support of APO and ECC beyond 2025. For a smaller organization, would you still recommend IBP and S/4hana? What type of customer should continue on ECC and APO?
We recommend IBP and S4 to many of our customers already today, but it really depends on the business requirements of the customer and the flexibility a client has to transition to the new tools. Some customers that do not already have a complex SAP environment that includes APO may find it easier to start with IBP or S4.
Comment from Tijus: So if we were to highlight 4-5 points , when can we use ECC scheduling and when should we use APO ppds?
Use ECC for manual planning or when you do not have complex constraints to model.
Use PPDS to automate scheduling.
Use PPDS to model capable to promise scenarios when you want to give customers an order commit date that considers production capacity.
Use PPDS to model block scheduling or production cycles.
Use PPDS to provide schedulers with tools to more easily re-plan using drag and drop planning board functionality, alerts, and heuristics to automate the process.
Comment from hI: Is it possible to use PPDS as part of ECC, i.e. without purchasing the full APO license?
Not that I am aware of.
Comment from Eddie: We are currently using APO for forecasting, product view, automatic replenishment in min/max, etc. Currently, only a handful of users (maybe 5) use this actively. Could we just use basic MRP to handle our situation, or do we really need APO to do basic replenishment? We are not manufacturers; we are just buying goods for internal use.
This would require a deeper analysis to say for sure, but MRP may be sufficient based on what you described.
Comment from Oscar Cases: Hi, Matthew. I recently read that many APO PPDS functionalities are now in the Simple Logistics CRP. I even read the word 'optimization' in the article. Is it true that SAP has a roadmap to include all the APO PPDS functionalities in ECC?
Yes, in ECC on HANA or in the S/4HANA release due around the end of 2016.
Comment from Niels M: I would like to hear your opinion on released versions: Will s/4Hana Logistics version 1511 be the version to aim for, or will it be smarter to wait for a more mature version of s/4Hana Logistics? Thanks.
This really depends on what your current situation is. If you don’t already have SAP, then the current version will be worth implementing. But if you already have a stable SAP ECC environment, then waiting a while to transition to S4 may benefit you.
Natalie Miller: Thanks to everyone here for joining us today and for all your questions. And a special thanks to Matt for being here today and for all these insightful answers!
Matthew Campbell: Thanks everyone for attending. If you need additional support in the future feel free to reach out to me via email at: email@example.com
Natalie Miller: For more information on this topic, check out Matt’s sessions at the upcoming Logistics and SCM, Manufacturing, Procurement, and PLM 2016 Vienna event on June 22-24:
• SAP ERP versus SAP APO: Which production planning functionality do I use, and how can I be successful?
• Next-generation inventory management: An inside look at how to successfully integrate SAP APO with EIS and increase user adoption
Click here for more information about the Logistics and SCM, Manufacturing, Procurement, and PLM 2016 event, including a full list of speakers and details about how to join us in Vienna!