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Generate a mid to long-term time-series based supply plan based on forecasts, inventory
and inventory targets.
Utilize a multi level sourcing determination model for both distribution and Bills of Material
Development of rough cut capacity supply plan, with the ability to create and use
simulation capabilities for scenario planning
Result
Overview
S&OP allows you to generate supply plan using two algorithms types:
Heuristics
Optimization.
The supply is computed based on the assumption that resource capacities are
infinite, i.e. they are unlimited. Resources might be overloaded, i.e. based on
the resulting computed plan some resources might have a utilization of more
than 100%.
Due to the fact that there are lead times, in some situations products or components cannot be
transported or procured on time to fulfill demand
In general Adjusted key figures can be used to overwrite and fix the plan. This can be done for
production, for transports (between locations and from locations to customer) as well as for
external sources of supply. These are material constraints introduced by the user
The S&OP Unconstrained Demand and Supply Planning mode does not
propagate constraints upstream.
Rather it creates a shortage for the location product where a constraint occurs, so
that it becomes visible. This is aligned with the idea of an unconstrained plan,
which fulfills customer demand but shows the bottlenecks (similar to resource
capacities).
Customer 1
CD: 100 200
TD: 100 200
Plant A
D:
120 280
I: 010 000 000
N:
110 280
R:
110 280
S:
120 280
DC 2
Customer 2
CD: 040 080
TD: 040 080
TR:
040 | 080
D:
060 120
I: 000 000 000
N:
060 120
R:
060 120
S:
060 120
N: Net Demand
S: Supply
R: Total Receipts
TR: Transport / Constrained Demand
Plant A / K1
Plant A / P1
D:
120 200
I: 200 080 000
N:
000 120
R:
000 120
S:
120 200
D:
60 50
I: 20 00 00
N:
40 50
R:
40 50
S:
60 50
Plant A / K2
C2 / P1
D:
80 50
I: 00 00 00
N:
80 50
R:
80 50
S:
80 50
CD: 50 30
TD: 50 30
C1 / P2
CD: 20 40
TD: 20 40
Plant A / K3
C2 / P2
CD: 50 10
TD: 50 10
D:
70
I: 95 25
N:
00
R:
00
S:
70
50
00
25
25
50
DPD: 00 | 25
1:1
TR:
00 | 25
D:
00 25
I: 20 20 00
N:
00 05
R:
00 05
S:
00 25
Plant A / P2
CD: Consensus Demand
TD: Total Constrained Demand
D: Dependent Demand
I: Projected Inventory
2013 SAP AG. All rights reserved.
N: Net Demand
S: Supply
R: Total Receipts
TR: Transport / Constrained Demand
Plant A / K1
Plant A / P1
D:
120 200
I: 200 080 000
N:
000 120
R:
000 120
S:
120 200
D:
60 50
I: 20 00 00
N:
40 50
R:
40 50
S:
60 50
CR: 02
Plant A / K2
C2 / P1
CD: 50 30
TD: 50 30
R1 / P1
D:
80 50
I: 00 00 00
N:
80 50
R:
80 50
S:
80 50
R1
C1 / P2
CD: 20 40
TD: 20 40
R1 / P2
CR: 01
C2 / P2
CD: 50 10
TD: 50 10
D:
70
I: 95 25
N:
00
R:
00
S:
70
Plant A / K3
50
00
25
25
50
DLD: 00 | 25
1:1
TR:
00 | 25
D:
00 25
I: 20 20 00
N:
00 05
R:
00 05
S:
00 25
Plant A / P2
CD: Consensus Demand
TD: Total Constrained Demand
D: Dependent Demand
I: Projected Inventory
2013 SAP AG. All rights reserved.
N: Net Demand
S: Supply
R: Total Receipts
TR: Transport / Constrained Demand
CS:
CD:
CU:
CR:
Capa Supply
Capa Demand
Capa Usage
Consumption Rate
8
Optimizer
Two modes: Profit Maximization and Cost Minimization for full Delivery
The following costs are considered:
Non-Delivery Cost Rate of Customer Demand
Production Cost (fixed and per-unit rate)
Transportation Cost (fixed and per-unit rate)
External Procurement Cost (fixed and per-unit rate)
Inventory Holding Cost (per-unit rate)
Safety-Stock Violation Cost (per-unit rate)
Maximum Inventory Violation Cost (per-unit rate)
Optimizer
The objective of the Optimizer is to minimize the total costs of the supply plan.
10
Resources
Resource
Location
Customer
Source
Location
Source
Production
11
Consensus demand
Inventory Target
Stock on hand
12
13
Plant 101
Product1, Product2
101
Product1, Product2
DC102
Plant 102
Supplier
Transport Costs
Plant
102
Inventory Holding Cost Rate
Production Rate
Fixed Procurement Cost
Procurement Unit Rate
DC
Customer
14
Mode
Planning Capabilities
Manual Adjustments from end-user can overwrite and fix the plan. This acts as a constraint
2013 SAP AG. All rights reserved.
17
Mode
Planning Capabilities
18
Mode
Finite Demand and Supply
Planning
Planning Capabilities
Arbitrarily deep network can be modeled
Supports Supply Chain Network with customer-products and location-products as nodes and
sourcing links between these, plus production sources
Computes a complete plan (Demand and Supply Propagation). The generated plan is feasible from
a resource perspective. Supply is propagated downstream so that one sees constraints on customer
demand
Only Production resources can be modeled. Resource constraints are taken into account.
In constrained situation fair-share method is used to distribute available capacity supply
Only feasible dependent demand is propagated to downstream nodes (either components or
locations) to prevent inventory build-up
Target Inventory is modeled
Manual Adjustments from end-user can overwrite and fix the plan. This acts as a constraint
End-user simulation on time-dependent master-data input key figures. For e.g. Consensus Demand,
sourcing ratio or quotas, Component Coefficient, Capacity Supply
19
Modes
Planning Capabilities
Two Modes:
Profit
Maximization
Cost
Minimization for
Full Delivery
Supports Supply Chain Network with Customer-Products and Location-Products as nodes and sourcing links
between these, plus production sources
Arbitrarily deep network can be modeled
Computes a feasible plan
Optimization is performed via a transformation of S&OP-model into a mathematical model (Mixed Integer Linear
Programming (MILP)-model).
Production and Handling Resources can be modeled
Resources can modeled as Finite or Infinite
Mixed Sourcing (Combination of Production and/or Transportation and/or External unspecified). Quotas are not
considered
Lead times for Customer and Location Sourcing
Multi-Level BOM with Components and Co-Products. Number of levels can be arbitrarily deep
Min-Max Lot-Sizes on Transportation lane and Production Sources
Periodic Lot-Sizes with granular sub-periods. Relevant only for Production
Manual Adjustments from end-user can overwrite and fix the plan. This acts as a constraint
End-user Simulation on time-dependent master-data input key figures. For e.g. Costs, Consensus Demand,
Sourcing ratio, Capacity Supply
Optimizer Costs:
Interactive manual adjustments (demand, customer & external receipts, production, transport)
Maximum inventory
Non-Negative Projected Stock
Minimum & maximum lot size
Lead-times
Production & handling resources
20
Multi-level sourcing
Time-dependent sourcing rules
Lead time for customer and location sourcing
Mixed sourcing for various supply sources (Production, Stock Transfers and External Procurement)
In-transit inventory visibility
Min Lot Sizing as a constraint for heuristic and optimizer, available for transportation lanes and production
21
Versions/
Simulation Scenarios
End-user Simulation on time-dependent master-data input key figures. For e.g. Costs, Consensus Demand, Sourcing
ratio, Capacity Supply
Version specific transactional data
User-Defined simulation scenarios on top of versions
Publish simulations to version
Promote transactional data across versions
Version specific master data
Extensibility
22
23
Supply Planning
Environment
Develop the Rough Cut Capacity
Plan based upon various
resources
24
Customer 1
A
On-Hand/Target
Inventory
Required /
Available Supply
Capacity Limit
SUP 301
MFG 201
Customer 2
DC 101
A
A
Multi-level
BOM
SUP 302
DC 102
Customer 3
MFG 202
Product
A
3
Sourcing Ratio
& Lead Times
Sourcing Ratio
& Lead Times
Location
Capacity
Resource
Material
Multi-level
BOM
Sourcing Ratio
& Lead Times
Production
Source
25
AGENDA
Business Scenario
Hands-On Exercises
26
In a Supply Chain Network products are produced, transported and stored. The S&OP
product ID corresponds to a material number in ERP and a product number in APO
Note:
Only the Product ID field is mandatory. Its represented by the attribute PRDID. The
other fields & attributes are an example only.
Components are products that are used as inputs in production process. You can define
a separate master data type for components (with key attribute PRDFR)., which then
comes with its own set of master data entries, or you can reuse the entries already
maintained as products by defining reference master data type. In the training model
we are using it is defined as reference master data
27
Note: Only the Customer ID field is mandatory. Its represented by the attribute CUSTID.
The other fields & attributes are an example only.
28
A location is often a physical place where products are stored, produced, shipped to or
shipped from (via a transport). The locations can be of type Distribution Centers,
Manufacturing Plants.
Note: only the Location ID field is mandatory. Its represented by the attribute LOCID. The
other fields & attributes are an example only.
29
Handling resources apply to all goods receipts at a location in the sense that
each arriving unit of a product consumes a certain capacity unit of the
resource. This resource type is relevant for all receipts of the location product,
which are Transport, Production and External Receipts.
30
Sourcing rules define how a demand for customer or at a certain location has to be
satisfied.
S&OP distinguishes between sourcing rules for Customer demand (Customer Ratio or
C-Rule), for transportation (Transportation Ratio or T-Rule), production (P-Rule) and
unspecified (U-Rule).
Defines from which location (distribution center, plant or supplier) of the supply network a
customer demand has to be satisfied in what percentage.
Customer Sourcing can be maintained as time-dependent or time-independent
To plan supply through stock transfer from another location one has to specify a suitable
transport sourcing rule (T-rule).
Transport Sourcing can be maintained as time-dependent or time-independent
31
Another way to satisfy a demand is to manufacture the required product at the given location.
The meaning of a production sourcing rule is that Product is produced at the location where the
demand for Product exists
Production rule can comprise of BOM and Production resources
U sourcing role is specified when the source of supply to meet the demand is not required to be
modeled explicitly.
If, for instance, the supply network terminates at a location product where components are
purchased and the supply chain of the supplier should not be taken into account one needs
sourcing rules indicating the planning algorithms to stop the network propagation but to make
supply available. This is the task of un-specified sourcing; U stands for unspecified.
U SOURCES DO NOT HAVE A SOURCING QUOTA. There can only be one U rule per product location
32
It is possible to mix multiple source types, one can specify Net Demand to be distributed
according to quotas between different sourcing types.
Its possible to source a Net Demand
Meaning that 30% of the Net Demand should be propagated to a production process, 50% to
another location and 20% of the Net Demand are assumed to be available without limitations
33
MULTI-SOURCING
The sum of quotas has to sum up to 100% (+/- a small epsilon which is needed due to
rounding errors).
34
35
T- and U-rule
Dep. Dem.:
Proj. Stock: 0
Net Demand:
Receipts:
Supply:
Distrib. Center 1 /
Product P
Dep. Dem.:
Proj. Stock: 4
Net Demand:
Ext. Receipts
Receipts:
Supply:
10
0
6
3
5
9
3
0
3
2
2
10
0
10
7
7
20
0
20
10
17
17
36
Lot sizing allows to model production and transportation quantities per period to be set
within limits and / or according to a certain strategy.
37
Examples:
Transportation Lot-Size (SOURCELOCATION)
PRDID
LOCID
LOCFR
TMINLOTSIZE
TMAXLOTSIZE
LEADTIME
TRATIO
P1
L1
L2
500
1000
0.5
P1
L1
L3
100
5000
0.5
LOCID
P2
L1
SOURCETYPE
PRATIO
PERIODSOF
COVERAGE
PMINLOTSIZE
PMAXLOTSIZE
1.0
1000
10000
38
If No values are specified for the minimum and maximum lot-size, lot-for-lot planning
procedure is used
If a minimum and a periodic lot size is specified the system will plan to produce at least
the quantity specified by the minimum lot size.
If periodic lot size is defined in conjunction with a maximum lot size the optimizer will
limit the periodic lot size to the quantity specified by the maximum lot size, which can
have the result that the demand of the N periods might not be covered in one period.
39
Header (SOURCEPRODUCTION)
SOURCEID
PRDID
LOCID
SOURCETYPE
OUTPUTCOEFFICIENT
S1
S2
P
X
L1
L1
P
P
1.0
1.0
Detail: (PRODUCTIONSOURCEITM)
SOURCEID
SOURCEITEMID
PRDID
COMPONENT-COEFFICIENT
S1
S2
10
10
X
Y
1.0
2.0
40
Example:
Header
SOURCEID
PRDID
LOCID
SOURCETYPE
OUTPUTCOEFFICIENT
S1
S1
P1
C1
L1
L1
P
C
10.0
5.0
Detail:
SOURCEID
SOURCEITEMID
PRDID
COMPONENT-COEFFICIENT
S1
S1
1
2
A
B
1.0
2.0
Output co-efficient
can be modeled
as master data or
time-series
41
Subassembly
Component 1
Product 2
Component 1
Component 3
Component 2
Finished Product
2013 SAP AG. All rights reserved.
Component
42
43
This master data type describes resource consumption rate for production source.
44
1.
Execute the plan from Simulate mode Unconstrained Demand and Supply
2.
Review results
45
1.
2.
Review results
3.
4.
Open Capacity View. Reduce the Capacity Supply for Resource 2 to 2000 from (Jan,
Feb and March 15). Run the Optimizer
46
Adjusted key figures are special type of Key Figures that allow adjusting (i.e.
overwriting) the input or the output of an algorithm.
The main use case of Adjusted Key Figures is interactive planning, where a
user changes these key figures manually to influence the output of a planning
algorithm. For that reason, Adjusted Key Figures are also called manual
adjustments.
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