Apo10 PDF

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Copyright 2001 SAP AG. All rights reserved.

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SAP AG. The information contained herein may be changed
without prior notice.
All rights reserved.
? SAP AG 2001
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© SAP AG AP010 Preface-1

SAP Advanced Planner and Optimizer (APO)
Level 2 Level 2 Level 3

SAP R/3 SAP APO SAP APO
AP210 5 days
LO050 5 days
Demand Planning
PP - Planning and
Execution for Discrete
and Repetitive AP215 3 days
Manufacturing AP010 2 days
Supply
SAP APO Overview Network Planning
AP205 2 days AP220 3 days

Integration Master Production Planning/
Data Detailed Scheduling
AP230 2 days
LO060 5 days
Global ATP
PP-PI BC555 2 days
Process Manufacturing
liveCache
Administration
? SAP AG 2001
??The level 2 course AP010, the first in the series of SAP Advanced Planner and Optimizer courses,
provides an overview of the individual SAP APO components and is a prerequisite for all
of the level 3 SAP APO courses.
??The level 3 courses build on the knowledge gained during AP010 and broaden your working
knowledge of the individual SAP APO components. The five level 3 courses give detailed
information on the following areas: Demand Planning, Integration, Supply Network Planning,
Production Planning and Detailed Scheduling, and Global Availability Check.
System administrators can also attend course BC555 liveCache Administration, which is listed in the
Basis Administation Training curriculum.

Course Prerequisites
Prerequisites
? None
Recommended
? General understanding of supply chain concepts
? SAP AG 2001

Target group
?
Target group
? Project team members involved in the

implementation of APO (Advanced Planner and
Optimizer) in their company.
Duration
? 2 days
?
? SAP AG 2001
Notes to the user

??The training materials are not intended as self-study programs. They complement the course
instructor's explanations. There is space for you to write down additional information on each page.
??There may not be enough time in the course to do all of the exercises. The exercises are additional
examples that are done during the course. Participants can also use these examples to refresh or
extend their knowledge after the course.

Company Profile: Precision Pump Company
?
Precision Pump Company
? The Precision Pump Company was launched in 1971 and is the
market leader, selling a large variety of high-tech standard pumps.
It has been listed in the New York stock index Nasdaq 100 since
1999.
Products
? In the product catalog are turbomolecular, centrifugal,
?
rotation and membrane pumps (for the manufacture of
ultrahigh vacuums, for example).
Customers
? From the electronics industry, semiconductor industries,
chemical technology, pharmaceutical technology, and
process technology up to and including vehicle
manufacturers, and universities.
? SAP AG 2001
??The Precision Pump Company was launched in 1971 and is the market leader, selling a large variety
of high-tech standard pumps. In the product catalog are turbomolecular, centrifugal, rotation and
membrane pumps. Its customers come from the electronics industry, semiconductor industries,
chemical technology, pharmaceutical technology and process technology up to and including vehicle
manufacturers, and universities. The company recently became ISO certified and has been listed in
the New York share index Nasdaq 100 since 1999.
??In the rapidly growing business area of turbomolecular pumps in particular, the company has
shown a clear rise in revenue over the past business year: in the semiconductor industries countless
steps, from wafer manufacture, to the final chip, can only be made under high vacuum conditions.
In this area, there has to be ultimate pressure of < 10-10 mbar (i.e. ultrahigh vacuum).
??During the current fiscal year, the company is planning to enter the booming DVD growth market.
DVDs are a form of rewritable optical memory media. They are distinguished from the CD by
their large memory capacity. Coating equipment needed to create these rewritable DVDs also uses
vacuum technology.
??Via intensive "co-engineering" with manufacturers, Precision Pump Company has optimized a
large number of products to match these special requirements.

Plants and Distribution Centers
2500 DC Rotterdam
3000 New York 1000 Hamburg
Hamburg (main plant
plant and
and company
company
headquarters)
2400 DC Milan
2300 Barcelona
3800 Denver
Denver
Plant DC
? SAP AG 2001

BOM P-102
Pump Precision 102

P-102
(FERT, T-F2##)
(1000, 0, _ )
Item 0010 1 0020 1 0030 1 0040 1 0050 1 0060 1

Casing Fly wheel Shaft Pressure cover Document Screw
100-100 102-200 100- 300 100-400 P-100 100-130
(HALB, T-B1##) (HALB, T-B?##) (HALB, T-B3##) (HALB, T-B4##) (T-F1##) (ROH, 100-130)
(1000, 10, 2 ) (1000, 10, 2 ) (1000, 0, _ ) (1000, 10, 2 ) DRW, 000, 00 (1000, 10007, 2 )
Item 0010 1 0020 1 0030 8 0010 1 0010 1 0010 1

Slug Flat gasket Screw Slug Slug Slug
100-110 100-120 100-130 100-210 100-310 100-410
(ROH, T-T1##) (ROH, T-T2##) (ROH, T-T3##) (ROH, T-T0##) (ROH, T-T4##) (ROH, T-T5##)
(1000, 1000, 2 ) (1000, 1000, 2 ) (1000, 1000, 2 ) (1000, 1000, 2 ) (1000, 1000, 2 ) (1000, 1000, 2 )
1003 Gusswerke 1003 Gusswerke 1002 M üller 1003 Gusswerke 1003 Gusswerke 1003 Gusswerke
(5300000866) (5300000867) (5300000790) (?) (?) (?)
1006 Blacks 1022 Max 1011 Kugelmeier 1011 Kugelmeier 1011 Kugelmeier
(5300000720) Wholesale (5300001106) (5300001107) (5300001083)
1011 Kugelmeier (5300000721)
(5300001081)
SNP relevant Only R/3

? SAP AG 2001
??This slide shows the R/3 BOM for the product P-102 (T-F2##). This BOM was transferred via CIF
as a PP/DS BOM with the screw 100-130 only being planned in R/3. An SNP BOM was then
generated from the PP/DS BOM. During automatic conversion it was defined that only the products
P-102, 100-100, 100-110, 100-300 and 100-310 are SNP relevant.
??Legend: (Demo material number for SD, consulting)
(training material type, training material number (xx = 00 - 20))
(plant, stock, single/collective requirements indicator)

APO Overview
Contents:
? Introduction to Supply Chain
? Overview of APO Planning Applications
? SAP AG 2001
© SAP AG AP010 1-1

Course Goals
This course will prepare you to:
? List the fundamental planning scenarios of the

Advanced Planner and Optimizer (APO)
? Explain the functions and interplay of the
individual APO components
? Describe the integration with the execution system
and information systems
? SAP AG 2001
© SAP AG AP010 1-2

Unit Objectives
At the conclusion of this course, you will be able to
? Explain the concepts of Supply Chain Management

? List the advantages of APO
? Summarize the functions of the planning
applications in APO
? Explain the interplay of the individual planning
applications
? SAP AG 2001
© SAP AG AP010 1-3

Course Content
Preface
Unit 1 Course Overview Unit 6 Production Planning /

Detailed Scheduling
Unit 2 Integration and
Technology Unit 7 Transportation Planning /
Vehicle Scheduling
Unit 3 Modelling and
Evaluation in APO Unit 8 Global
Available-to-Promise
Unit 4 Demand Planning
Unit 9 APO SCM Implementation
Unit 5 Supply Network
Planning Unit 10 Conclusion
? SAP AG 2001
© SAP AG AP010 1-4

Course Overview Diagram
11 Course Overview
1
22 Integration and Technology
3 Modelling and Evaluation in APO
4 Demand Planning
Supply Network
55 Planning
Production Planning/Detailed
6 Scheduling
Transportation
7 Planning/Vehicle Scheduling
88 Global Available-to-Promise
99 Conclusion
? SAP AG 2001
© SAP AG AP010 1-5

Business Scenario
? Precision Pump company would like to improve

management of its supply chain, in order to
recognize bottlenecks earlier, improve usage of
resources and to reduce costs.
? Reduced lead times and the guarantee of material
and resource availability improve Pump
Precision's customer service.
? SAP AG 2001
© SAP AG AP010 1-6

The Supply Chain: From Supplier to Consumer
Information flow
Transfer Transfer Transfer Transfer
Supplier Manufacturer Distribution Retail Outlet Consumer
CASH FLOW
Supply Chain Optimization
Increase customer responsiveness at least cost
? SAP AG 2001
??Supply Chain Management includes the management of materials, information, and financial flows
in a network consisting of suppliers, manufacturers, distributors, and customers. The co-ordination
and integration of these flows within and across companies are critical in effective Supply Chain
Management.
??Why manage the supply chain?
??Lower sourcing costs of finished goods and raw materials
??Improve customer service
??Dramatically lower inventory levels
??Leverage all resources to bring substantial benefits to a company
© SAP AG AP010 1-7

Why Have Supply Chain Management?
Innovation … Companies today are being forced to adapt to

changes in the marketplace in order to stay profitable.
Changing Consumer Buying Patterns

• More products
• Alternative ways to shop
Shortened Cycle
Collaborative Times
Planning • Improved
• Sales customer service
• Purchasing • Flexible reaction
to service
requests
More Effective Planning

• More accurate forecasting Increased Demand for
• Feasible plans Value-Added Programs
• Lower inventory levels • Custom packs/displays
? SAP AG 2001
© SAP AG AP010 1-8

Key Supply Chain Problems
? Postponement
? Bullwhip Effect
Delivery time
Customers
Pull
DCs
Plants
Lead time
Push
Suppliers
Supply Chain
? SAP AG 2001
??The key supply chain problem is that the delivery time of products to the customer must be
considerably shorter than the production or the lead time. In order to realize this and to guarantee a
high delivery service, inventory and safety stock must be built up at component or finished product
level in plants or distribution centers (DC).
??You use postponement strategies to define how far the sales order links with the supply chain; in
other words, where the decoupling of make-to-stock production (push strategies) (MTS), and make-
to-order production (pull strategies) (MTO), takes place.
??The bullwhip effect refers to an increase in variability of a (constant) demand pattern - due to large
fluctuations at the manufacturer or the supplier - as we move along the supply chain, triggered by lot
size creation.
??Implementing an APS system (Advanced Planning System) does not in itself solve supply chain
problems. It is also important that company bosses are prepared to consider making organizational
changes to their companies, or at least looking into the possible benefits.
© SAP AG AP010 1-9

Comparison of MRP II with APS Systems
Aggregation
Level
Demand Planning for
anonymous demands
Master Production
Scheduling (MPS)
Material Requirements Planning for
MRP II
Dependent Requirements (MRP)
APO
Lot Sizing
Capacity Requirements
Planning
Scheduling
Result:
Planning Feasible plans
Horizon
? SAP AG 2001
??APS (Advanced Planning Systems) is the description of the new generation of planning systems with
simultaneous quantities and capacity requirements planning.
??The acceptances for the MRPII concept proved to be too restrictive:
??Material planning has highest priority
??Capacity requirements planning and scheduling are functions that are separate and subsequent to
material planning and are executed successively
??Individual planning of separate products. The BOM demands are planned successively and are not
linked to each other (no pegging)
??Evaluation and rescheduling of exception situations is feasible
??Cross-plant planning and distribution resource planning do not have to be reflected in the system
??Disadvantages of the MRPII concept:
??The sequential planning process lasts too long; exceptions cannot be replanned quickly
??Constraints and capacities are planned infinitely and require the plan to be postprocessed
??Individual planning of separate products is not given for lot sizes and manufacture of co-products
??Static safety and buffer times lead to long lead times and unrealistic capacity loads
© SAP AG AP010 1-1 0

SAP's Total Supply Chain Solution
Strategic Application Level
Customer Supply
Relationship R/3 Chain
Management Solutions
(CRM) Core Business Application Level
(APO)
Integration •Finance •HR liveCache

Core level
Strategic •Database
structure Electronic
Enterprise
•Interfaces Commerce
Management •Logistics •Sales
•Development B2B
(SEM)
tools
•Communication
•Materials •Production
Scalability
Client-Server
Management Planning
Business
Information
Warehouse
?? ? (BW)
Flexibility Non-R/3
Open Systems
Systems
? SAP AG 2001
© SAP AG AP010 1-1 1

Advantages of APO
? High performance using liveCache technology

? Global server: integrates multiple OLTP systems
? Collaborative planning via the internet
? Simultaneous material and finite capacity requirements
planning
? Cross-plant optimization of the resource load
? Sequence and setup time optimization of orders
? Transportation optimization with route planning
? Evaluation and analysis of orders
? Seamless integration between APO and R/3
? SAP AG 2001
© SAP AG AP010 1-1 2

Levels of Supply Chain Management
Planning
Strategy planning
Supply Chain Collaboration marketplace Decision of direction for the company
Supply Chain Collaboration marketplace

Tactical planning: strategy realization and infrastructure planning (plan infrastructure)
Operational aggregated planning (tactical
Supplier
Customer
Supply Chain Design planning)
Network Design (ND) Aggregated sales and
demand planning Demand
integration
integration
Planning (DP)
Supply Network Planning
(SNP)
Operational detailed planning (operational
planning)
Partner
Partner
Ext. proc. planning Production Delivery planning
planning
PP/DS SNP PP/DS SNP ATP, TP/VS
Outbound
Production External
External procurement delivery
for example, for example, for example, LES, procurement at
LES, MM PP MM, SD customer
Execution
? SAP AG 2001
?? In Supply Chain Management, there is a planning level and an execution level. Within the
planning level APS systems are used (APS = Advanced Planning Systems), and at the execution
level, ERP systems (ERP = Enterprise Resource Planning) are used. The planning level is divided
into different planning levels depending on the meaning of the decisions made: strategic, tactical and
operational. The criterion for deciding what belongs to which planning level is not primarily the
planning horizon but rather the scope of the planning. Each hierarchically superior level determines
the ranges of the planning levels below it.
?? Strategic level (strategy planning): Here, comparatively unstructured and simple planning tools
such as portfolio techniques (product life cycle analysis, Boston Consulting Group portfolios,
McKinsey portfolios, for example) are used to make decisions about the direction of the company
(such as product diversification strategies, quality strategies, cost leadership).
?? Tactical level (strategy realization and infrastructure planning): decisions about direction are
realized at this level when the company is restructured based on the strategies. Tactical planning is
decisive for operational planning and execution because they form the planning environment in the
company (plann ing personnel, IT systems for planning, their selection, implementation and setting
parameters, planning processes) as well as the part of the company that physically executes (such as
factory planning, personnel planning, transportation planning, logistically-relevant IT system for
execution). This links the operational planning level and the execution level.
...
© SAP AG AP010 1-1 3

...
?? Operational level (operational aggregated and detailed planning): Structured, recurring planning
based on tactical realization decisions such as strategies for settling sales orders and pre-planning,
which are not questioned again in operational planning. Operational planning can also be long-term
to bridge bottlenecks that will occur in the future, such as early planning for seasonal requirements or
planning runs to determine components with longer replenishment times. Planning for further
planning in the future is usually done aggregated objectively or based on time since planning data is
uncertain. Aggregated planning also serves to redirect tactical planning if necessary, for example,
additional shifts, additional capacity, outline agreements with suppliers. Detailed planning attempts
to optimally use the logistic system within the limits set by tactical and aggregated planning and
based on the most current data.
?? Execution level: Along with the development of the product (production, stock transfer, sorting,
receipt, delivery), administrative activities are also performed at the execution level. These activities
are supported by execution systems, for example, when papers for production (production orders) are
printed.
© SAP AG AP010 1-1 4

APO Planning Components
Monitor APO Product Map Supply Chain Cockpit
Tactical
Network Design
Agg. Planning Supply Network

Planning
Sales
Production Distribution Transportation Planning

Detailed Planning Planning Planning Planning
Purchasing & & &
Detailed Vehicle
Deployment
Scheduling Scheduling
Scheduling
Global Available-to-Promise
BUY MAKE STORE MOVE SELL
? SAP AG 2001
??Supply Chain Cockpit: A graphical tool for evaluating and controlling the supply chain.
??Network Design: Strategic planning for analyzing, optimizing and reorganizing the supply chain.
Long-term sourcing, production and distribution decisions are supported here.
??Demand Planning (DP): aggregated and detailed demand planning with a variety of forecasting
techniques based on aggregated sales figures.
??Supply Network Planning (SNP): Finite, cross-location, mid - to long-term production and
procurement planning with simultaneous material planning and capacity scheduling. Deployment is
used to plan short-term replenishment.
??Production Planning/Detailed Scheduling (PP/DS): Finite, detailed production planning. PP/DS
uses simultaneous material planning and capacity scheduling, and optimization techniques to
generate feasible plans that are in the optimum sequence with the optimum setup-times.
??Transportation Planning/Vehicle Scheduling (TP/VS): Optimizes use of transportation vehicles
and selection of carriers. Generates deliveries and shipments.
??Global Available-to-Promise (ATP): Rules-based availability check that is integrated with
production planning and product allocation.
© SAP AG AP010 1-1 5

Network Design
Strategic Supply Chain Planning
? SAP AG 2001
??Network Design is a component used specifically for strategic planning. You can use this tool to
make assignment decisions (relationships between individual locations and assignment of products to
locations), as well as to make additional decisions regarding locations (location determination and
location selection), taking account of demand and cost structures. Network Design can also be
implemented for regular evaluation of the existing supply chain in order to discover any weaknesses
and take any necessary measures.
??There are four methods available in Network Design for planning the supply chain network. These
methods optimize either geographical distances or costs, in each case taking the demand structures
into account.
© SAP AG AP010 1-1 6

APO Planning Sequence with R/3 Integration
R/3 or non-SAP system APO
Flexible Planning Demand Planning (DP)
Demand Planned ind.reqmts Planned ind.reqmts

management Consumption
Sales & Sales order
Sales order
Distribution (SD)
Production Planning (PP) Supply Network Planning (SNP)
Prod. Plng & Det. Schedlng (PP/DS)
Planned order Planned order
Release,
Confirmations Production order Production order Conversion
Purchasing Purchase requisition Purchase requisition

(MM) Purchase order Purchase order
Stock transport Stock transport requisition
Deploy
requisition Stock transport order -ment
Logistics Execution System Transp. Plng & Veh. Schedlng (TP/VS)

(LES) Planned delivery
Delivery Delivery
Execution
Transfer order Planned shipment / Shipment
? SAP AG 2001
??In APO Demand Planning (DP) you base forecasts on aggregated historical data from the R/3 or
Business Information Warehouse (BW) system (such as sales quantities from past sales orders). You
use the "Administrator Workbench" in APO to upload aggregated historical data from the R/3 or BW
system. In APO Demand Planning you generate planned independent requirements (release
forecast to APO Demand Planning) that are used for make-to-stock planning.
If you are not yet using APO Demand Planning, it is also possible to generate planned independent
requirements in the R/3 system (either manually in R/3 Demand Management, or automatically in
R/3 Demand Management using data from R/3 Flexible Planning, Sales and Operation Planning (R/3
SOP), or Sales and Profit Planning (R/3 CO/PA). If you do this, the planned independent
requirements are transferred to APO through the R/3 APO interface (CIF).
??Sales orders and planned independent requirements form the starting point for both Supply Network
Planning (SNP) and Production Planning / Detailed Scheduling (PP/DS) in APO. Existing storage
location stock is also included in the planning. Here, sales orders are entered in the R/3 system (sales
module) but the availability check (or ATP check - Available to Promise) is done in APO. Sales
orders then consume the planned independent requirements in APO depending on the APO
"requirements strategy".
??In Supply Network Planning (SNP) you plan for the short- or mid-term horizon for the entire
supply chain: you generate stock transport requisitions (for planning and stock transfer) between
distribution centers and plants, and can also generate planned orders (for in-house production
planning) and purchase requisitions (for external procurement planning) directly in the production
plant for the longer term horizon. In Production Planning and Detailed Scheduling however, you
usually generate planned orders and purchase requisitions directly in the production plant for the
short term horizon.
...
© SAP AG AP010 1-1 7
© SAP AG AP010 1-1 8
...
??Transaction data generated in APO (such as planned orders) is transferred to the R/3 system
through the R/3 APO interface (CIF: Core Interface). The APO demand plan is only transferred from
APO to the R/3 system as planned independent requirements through mass processing from within
APO Demand Planning (however, you only need to do this if Production Planning is being done in
the R/3 system rather than in APO). It is however possible to automatically transfer planned
independent requirements that have been maintained in R/3, to APO through the CIF.
??As soon as planned orders and purchase requisitions get closer to the today-line, the stock planner or
buyer can collectively convert planned orders into production orders and purchase requisitions into
purchase orders. You use the APO Deployment /TLB (Transport Load Builder) to convert stock
transport requ isitions into stock transport orders.
??APO is a planning tool: execution functions such as release, confirmation, material staging, or
goods movement for production orders or purchase orders are performed in the R/3 system.
Confirmation and other data is then transferred back to APO from the R/3 system.
??You create planned deliveries in Transportation Planning and Vehicle Scheduling (TP/VS). In
APO TP/VS different deliveries can also be grouped together into one shipment. It is then possible to
convert plann ed deliveries and planned shipments into real deliveries and shipments and transfer
them to the R/3. The R/3 system then actions the above (such as printing documents and managing
status).
© SAP AG AP010 1-1 9

The Demand Planning Lever Effect
Demand Planning
Supply Network
Planning
Production
Planning
? SAP AG 2001
??Small changes made during Demand Planning cause large changes to be made during Production
Planning. The aim of Demand Planning therefore is to create sales quantity forecasts that are as
accurate as possible.
© SAP AG AP010 1-2 0

Functions of Demand Planning
? Cross-company Demand
Planning (internet)
? Consistent, detailed and
consolidated plans
? Statistical and causal
forecasting techniques
Retail outlet ? Lifecycle planning
Suppliers ? Promotion planning
Distribution
Production centers
units
? SAP AG 2001
??Demand Planning is a complex, powerful, and flexible tool that supports your company's demand
planning process. User-specific planning layouts and interactive planning books not only allow you
to include different departments, you can also use them to include other companies in the forecast
creation process. With APO Demand Planning you can use statistical forecasting methods and
advanced macro techniques to do the following: - Create forecasts from sales history, based on many
different causal factors; - Test predefined, and user-defined forecast models, and forecast results; -
And use a consensus-based approach to consolidate the demand plans of different departments. You
can use forecast overrides and promotions to add marketing intelligence and management
adjustments. The seamless integration with APO Supply Network Planning supports an efficient
Sales and Operations Planning (S&OP) process.
© SAP AG AP010 1-2 1

Demand Planning Concept
Location
Aggregated actual data Future demand
Product hierarchy forecast
Sold-to party
Sales organization
Region
? Incoming order
value
? Statistical forecasting
? Quantities BW
? Collaborative forecasting
? Values
R/3 ? Promotions
? Invoice Excel
? Quantities Non-SAP system
? Values
?…
? SAP AG 2001
??The APO DP library of statistical forecasting and advanced macro techniques allows you to create
forecasts based on sales history as well as any number of causal factors, and use a consensus -based
approach to consolidate the results.
??Marketing intelligence and management adjustments can be added by using forecast overrides and
promotions.
??Aggregated actual data can be extracted from the R/3 system in exactly the same way as it can be
imported from BW, Excel, and legacy systems.
© SAP AG AP010 1-2 2

Collaborative Planning in APO
Collaboration Collaboration
with Suppliers with Customers
Supplier Manufacturer Customer
? Product requirements ? Demand plans

? Production dates ? Promotions
? Procurement ? Stock levels
? Delivery dates ? Delivery dates
Supply Chain Optimization
High efficiency, precise information and short lead

times to improve delivery of service
? SAP AG 2001
© SAP AG AP010 1-2 3

Supply Network Planning (SNP)
Screen Title
APO - Product Tota APO - Product Tota

l l
ID Object Text
Des Gra Capacity
ign ph Leveling
Object 1 Text 1 Grid Title W 24 W 25 W 26 W 27 W 28
Supply Network Object 2
Object 3
Object 4
Text 2
Text 3
Text 4
Key Figure 1
Key Figure 2
Key Figure 3
Key Figure 4
Planning Selection Profile
User
Key Figure 5
Selection ID Grid 2 Title W 24 W 25 W 26 W 27 W 28
Key Figure 1
Key Figure 2
Key Figure 3
Key Figure 4
Key Figure 5
Planning Book
? SAP AG 2001
??SNP Planning plans the mid- to long-term horizon. It creates a rough quantity-based, cross-location
production and distribution plan with individual rough bills of material (BOM) and routings.
??The SNP BOM contains critical products that are produced on bottleneck resources and products
with a long replenishment lead time.
??SNP ensures that the right quantity is available on the right day without critical resources being
overloaded. The smallest unit used for scheduling is days.
© SAP AG AP010 1-2 4

Supply Network Planning Scenario
Demand Plan
Supplier Plant DC
Customer
? SNP plans the material flow along the supply chain

? Mid- to long-term, finite, cross-plant planning
? Prioritization of demands; supply optimization
? Result: Feasible plans
? SAP AG 2001
??The role of Supply Network Planning involves:

??Planning supply to meet demand
??Integrating purchasing, production, and distribution in one consistent model in the entire supply
network
??Synchronizing activities and planning material flow along the supply chain
© SAP AG AP010 1-2 5

Comparison of Mid- and Short-Term Planning
Sales orders Forecasts Sales orders Forecasts
Production Planning/Detailed Scheduling Supply Network Planning
? PP/DS planned orders ? SNP planned orders

? Purchase requisitions ? Purchase requisitions
? Stock transfers ? Stock transfers
? PP/DS BOM and routing ? SNP BOM and routing

? Finite, detailed planning per location ? Cross-plant finite planning
? Sequences and setup times ? Distribution and procurement
? Continuous and order-related ? Quantity and bucket-oriented
? Pegging ? No pegging
Production Time
horizon
? SAP AG 2001
??SNP integrates purchasing, manufacturing, distribution, and transportation so that comprehensive

tactical planning and sourcing decisions can be simulated and implemented on the basis of a single,
global consistent model.
??SNP uses advanced optimization techniques, based on constraints and penalties, to plan product flow
along the supply chain. The result is optimal purchasing, production, and distribution decisions,
reduced order fulfillment times and inventory levels, and improved customer service.
??Peggingis the link between receipts and issues along the supply chain. When an order is shifted, all
dependent orders can be adjusted automatically.
© SAP AG AP010 1-2 6

Production Planning / Detailed Scheduling (PP/DS)
Production Planning/
Detailed Scheduling
? SAP AG 2001
??Where Supply Network Planning (SNP) is usually used for rough mid- to long-term planning over
the entire supply chain (in particular when there are several plants and distribution centers),
Production Planning and Detailed Scheduling (PP/DS) is usually used for to-the-minute short-
term planning in a production plant.
??In Supply Network Planning (SNP) demands ar e aggregated for a specified bucket ("day" for
example). It is irrelevant here whether a requirement falls within an early or a late shift, as
requirements are only planned roughly here - it does not include break times either. The sequence
of orders is not an SNP time consideration. Cross-plant planning, and mid - to long-term planning
in the production plant however do all play an important role in Supply Network Planning.
??Production Planning and Detailed Scheduling however, does schedule orders to-the-minute
(meaning that shifts and breaks are included here), and does include order sequences (sequencing
and optimization of sequences). In the short-term horizon, these functions are highly important for
the production plant.
??As soon as a requirement (such as a sales order or planned independent requirement) falls within a
specific horizon, it is no longer planned in the SNP planning run, but instead in the production
planning run of PP/DS.
© SAP AG AP010 1-2 7

Functions of Production Planning / Detailed
Scheduling (PP/DS)
? Plans production, external

Customer
procurement, and stock transfer
within the production plant to-the-
minute
? Plans simultaneous material
requirements and schedules finite
capacity at operation level for the
short-term horizon
Resource 2 ? Takes order sequences into
Resource 1 Resource 3 account
? Optimizes machine schedules
30 (sequences, lead times)
Resource 3
? Transfers the planning results to
20 an execution system (such as the
Resource 2
R/3 Shop Floor Control)
Resource 1 10
Time
? SAP AG 2001
??Production Planning and Detailed Scheduling (PP/DS) is used mainly for short-term to-the-
minute planning (both for in-house production and external procurement) in the production plant.
PP/DS schedules and plans all operations of an order that are relevant for planning at the different
resources. PP/DS has the following functions:
??It generates planned orders (to plan in-house production), and purchase requisitions or scheduling
agreement schedule lines (to plan external procurement) in the event of product shortage. It uses
simultaneous material and capacity requirements planning to do this: You can define
resources as “finite” resources (planning-critical resources) in the resource master. Order
operations are only created at these resources if there is sufficient capacity for the order quantity
on the corresponding date. When there is no available capacity, the system searches for a date on
which the order operation can be carried out, taking account of the capacity situation.
??Takes order sequences into account: when new in-house production orders are created, the setup
times in the new order can be determined automatically from the setup status of the resources
(depending on the preceding order).
??It is possible to display the orders in graphic format (in the detailed scheduling planning board),
and to sequence from there. Alternatively you can use the optimizer to execute a sequencing.
??Machine scheduling optimization: during planning, it is possible for orders to be generated that
do not have an optimum order sequence. Therefore, you can change the sequence and resource
assignments of existing orders using the optimization run.
??PP/DS is a planning tool. Execution functions such as confirmations and goods receipts are
performed in the execution system (for example, R/3). Therefore, the planning results are transferred
to the execution system.
© SAP AG AP010 1-2 8

Deployment
Deployment adjusts the stock transfers for short-term changes

on both the supply and demand side (distribution detailed planning).
? Fair Share
? Proportional distribution
? Proportional target DC1
Calgary
fulfillment Winnipeg
? Quota arrangements
? Push deployment Plant Customer DC2
Chicago
? Push horizon
? SAP AG 2001
??The deployment function in SNP determines how and when inventory and planned supplies should
be deployed to distribution centers, customers, and vendor-managed inventory (VMI) accounts. It
generates optimized replenishment plans that take into account short-term changes on the supply or
demand side, as well as constraints, such as transportation and storage capabilities.
??A variety of deployment strategies are used depending on the current situation (e.g., fair share, push
deployment, pull-push deployment).
© SAP AG AP010 1-2 9

Transportation Management
APO TP/VS (Planning)
? Is integrated with the APO

components DP, SNP,
PP/DS, and ATP
? Evaluates the planning in
BW
? Plans for both short, and
long term horizons
BW
(Monitoring) LES (Execution)
TP/VS, LES, and BW provide an integrated solution for

transportation management within the Supply Chain
? SAP AG 2001
??The TP/VS component has the following functions:

??Transportation planning and transportation consolidation
??Vehicle Scheduling and route determination in a dynamic environment
??Transportation mode and carrier selection
??Multi-pick up and multi-drop functions
??Management by exception
??The APO system includes the tactical and operational planning area from the SAP Transport
Management solution, which is complemented for transportation execution by the SAP component
from Logistics Execution Systems (LES).
© SAP AG AP010 1-3 0

Global Available-to-Promise (Global ATP)
Is it possible to deliver the product

in the required quantity, and on the
required date? ? Event-driven
? Internet capabilities
? Rules-based ATP:
? Location substitution
? Product substitution
? Integration with PP/DS
Rules
? Product allocations
? High performance (time series)
? SAP AG 2001
??You use Global ATP (Available To Promise) to check product availability and capacities, to provide
customers with reliable confirmation dates for their sales orders.
ATP checks are triggered from the OLTP system (R/3 system, or non-SAP system) as an event
(event-driven). In the interface with APO you can specify that the ATP check is to be done in APO
and not R/3. If you create a sales order in R/3, for example, the system first checks if there is enough
of the requested product in stock. The system can also check if receipts (for example, production
orders and planned orders) have already been planned by the requested date.
??Global ATP has the following functions:
??Rules-based ATP: When there is no availability, it is possible in AP O to set it so that the system
does an ATP check for the product at another location or else substitutes that product for an
alternative one (location and product substitution).
??Integration with PP/DS : It is also possible to set it so that when a product is not available, the
sales order directly triggers production. If it triggers an order for in-house production, APO creates
a planned order for the required quantity in PP/DS.
??Product allocations: Product allocation allows you to manage the supply of scarce products to
customers, so that each customer only receives an allocated amount.
??Time series: Planned orders and production orders are aggregated and represented in a time series,
which can be used to evaluate the incoming requests from the sales orders. This improves
performance of the ATP check.
© SAP AG AP010 1-3 1

Optimization Solutions
APO optimization solutions

A complete range of optimization solutions
adjusted to the planning tasks
Linear programming / Genetic algorithm

mixed / whole number constraint-based
programming Supply programming
Network Production Planning/
Design + Detailed Scheduling
Planning
Transportation
Tab. search planning
? SAP AG 2001
??In APO, the following optimizers are available: optimizer for CTM, optimizer for PP/DS, optimizer
for Network Design, optimizer for Sequence Planning, optimizer for Supply Network Planning,
optimizer for Transportation Planning.
??In Supply Network Planning, optimization problems are usually of the nature that they can be
solved with an "exact mathematical solution procedure" (which can be solved using linear
equations). For this reason, linear programming is used for optimization in Supply Network
Planning. Linear programming is able to calculate an "exact solution".
??In Production Planning and Detailed Scheduling (PP/DS) however, there are usually more
complex optimization problems for which no "exact solutions" can be found. Therefore, linear
programming is less suited for PP/DS. Instead, solutions are more able to approximate an "optimum
or exact solution". Approximate optimization procedures are therefore more suited to be used in
PP/DS (genetic algorithm/constraint-based programming). This allows the optimization system
to find a suitable solution faster.
??The different optimizers can be installed on the same server on which the APO application, the
liveCache, and the database are all installed (but you can also install them on different servers). The
APO application server and the optimizer are linked via a TCP/IP connection. Here you specify
whether the optimizer is to be called on the APO application server or on a different server
(transaction sm59).
© SAP AG AP010 1-3 2

APO Overview: Unit Summary
You are now able to

? Explain the concepts of Supply Chain
Management
? List the advantages of APO
? Summarize the functions of the planning
applications in APO
? Explain the interplay of the individual planning
applications
? SAP AG 2001
© SAP AG AP010 1-3 3

APO Integration and Technology
Contents:
? liveCache Technology
? Integration of the Online Transaction Processing (OLTP)
System and APO
? Pegging
? SAP AG 2001
© SAP AG AP010 2-1

Unit Objectives
At the conclusion of this unit, you will be able to
? Describe the advantages of liveCache Technology

? Outline the data exchange between R/3 (or other
OLTP systems) and APO
? Explain the pegging tasks.
? SAP AG 2001
© SAP AG AP010 2-2

Overview Diagram (1)
1 Course Overview 2
4 Demand Planning
55 Supply Network Planning
6 Scheduling
7 Transportation
Planning/Vehicle Scheduling
99 Conclusion
? SAP AG 2001
© SAP AG AP010 2-3

Business Scenario
? With high performance and pegging procedures,

the liveCache technology allows quick,
simultaneous material and finite capacity
planning.
? Pump Precision uses the R/3 as an execution
system and APO for planning. The Core Interface
(CIF) provides a close integration of the systems,
where order data is exchanged in real-time.
? SAP AG 2001
© SAP AG AP010 2-4

APO Application Architecture
OLTP
OLTP (R/3)
(R/3) APO Information
Supply Chain Cockpit Warehouse
Warehouse
LIS, CO-PA (SAP BW)
HR, FI Demand Planning Historical
Planned Indep. data
Requirements
Customer
orders PP / DS
Supply Key
Global
Production Network Performance
ATP
Scheduling Planning Key figures
Inventory (KPIs)
Deployment
management
Transportation Transportation Planning

processing
? SAP AG 2001
??Aggregated actual data can be transferred to APO from OLTP, BW (Business Information
Warehouse), Excel, and Legacy systems, and saved in InfoCubes. This data is the basis for
forecasting. The demand plan is created as a result of the forecast.
??You release the demand plan to Production Planning, which creates planned independent
requirements for Supply Network Planning (SNP), and PP/DS. You can also transfer the demand
plan to the operating system (OLTP) as planned independent requirements.
??Theseamless integration with Supply Network Planning (SNP), and PP/DS supports an efficient
S&OP process.
© SAP AG AP010 2-5

What is liveCache ?
? Main objective = higher performance:

? Performance-critical routines (in C++) are running in address
space of the liveCache management system
? => no heavy data transfer between application and data storage
Application Application
> 1 ms < 10 µs
Data Storage Data Storage

liveCache
liveCache
? SAP AG 2001
??Access to data in the liveCache is approximately 100 times faster than it is in a database (10
microseconds as opposed to one millisecond).
??Display of complex data structures (nets, trees). The typical liveCache data structure is NOT a
relational data table.
??Easy node access (grid access points, navigation).
??Simultaneous access is possible (read & write).
??Fast data recovery.
??Little navigation needed within the networks.

??Applications run where the data is stored
??Further advantages for the user:
??"Shared data" for application and the application server (independent of the R/3 OLTP database).
??Higher performanc e (performance-critical routines run the stored operations and problem-specific
data modeling is therefore supported in the same address space as it is in data management. This is
more efficient than relational data modeling).
??Scalability via a number of processors.
??Scalability of the liveCache, because of an interlaced architecture.
?? Higherdata security in a simple C program that saves all data. In case of a program termination
(downtime), data will not be lost.
© SAP AG AP010 2-6

liveCache Technology
Application Server
? Avoid disk I/O through shared, buffered
data ABAP-Application Program
exec sql.
? Hold all application data in memory Execute procedure "Schedule_order"
? Save large datasets (OUT : var1,
IN : table1,
? Optimized data structures IN : var2)
endexec.
? Support application-specific data
structures (e.g. store BOM as a
tree rather than a relational table)
? Built-in business functionality
Optimized method coding
? Run application logic where the Schedule_order
data is stored
? Aggregate OLTP database
Optimized data structures
information in main memory
liveCache
? SAP AG 2001
??A liveCache management system is in a non-ABAP environment.

??During the first liveCache upload (bring up), mass data (master data and transaction data) from the
connected R/3 and legacy system(s) is either sent to the APO System, reduced (filter) or transformed
into an APO presentation. Some of the data is then also sent to the liveCache.
??Changes from an OLTP are transmitted into APO in real-time and therefore into liveCache, if the
OLTP system is an R/3 System. In case of non-R/3 Systems there is only one periodic upload of the
changes.
??The APO server presents changes to be sent back from APO or liveCache into an OLTP system, in a
special data structure (black board). From here, the OLTP system collects the relevant changes in
regular intervals.
© SAP AG AP010 2-7

R/3 Plug-In Technology
BBP CRM BW SEM
R/3
Plug-in
R/3 CIF APO

(from Release 3.1I)
Information on R/3 Plug-in: SAPNet/R/3 Plug-in
? SAP AG 2001
??An R/3 interface is marked with an R/3 Plug-in to make it possible to integrate a mySAP.com
component (for example, APO or BW) with one or several R/3 Systems. With R/3 Plug-ins, several
mySAP.com components can be inserted at the same time. Most Plug-ins concern add-ons (R/3
standard software enhancements with additional functions).
??The data transfer between R/3 and APO Systems is defined and controlled using the APO Core
Interface (CIF). The CIF is the central interface for connecting APO to the existing R/3 System
environment.
??Plug-ins supply thecomponents with transaction and master data. In this way, APO CIF does not
only provide the SAP APO System with initial data records (initial supply), it also guarantees a step-
by-step supply with all the relevant data changes. Only the object data relevant for the individual
planning and optimization process in APO is transferred from the complex data records into R/3. The
integration between R/3 and APO is possible as of R/3 release 3.1I (for the PM/SM area and
production process models, integration is possible as of 4.5B).
© SAP AG AP010 2-8

Global APO Server
APO
Company Plant
A 1
APO
Company Plant
B liveCache 2
Plant
Plant
Company 3
C
? SAP AG 2001
??A multi-system environment is possible

??Different layouts of enterprises and plants are possible
© SAP AG AP010 2-9

APO Integration (2)
SAP R/3
SD LO Non-
Non-
R/3
R/3System
System
HR
BAPI
CIF
(Core Interface) BAPI BAPIs
SAP
SAPAPO
APO BAPI
? SAP AG 2001
??The APO Core Interface (CIF) is responsible for the data exchange between APO and R/3 Systems.
The APO Core Interface is a real-time interface, linking APO with one or several R/3 Systems.
??Only the data objects needed in the data structures in APO for the different planning and
optimization processes are transferred from the complex dataset of the R/3 into APO.
??The APO Core Interface guarantees both the initial data transfer (initial transfer) and also the transfer
of data changes within APO.
??The outbound delivery from APO CIF takes place as an R/3 Plug-in.
??Technical integration of SAP APO with:

??an R/3 environment where Core Interfaces are used
??a non-R/3 environment where the official standard of Business Application Programming
Interfaces (BAPIs) is used.
© SAP AG AP010 2-1 0

APO Integration (3)
R/3 APO live

live
Cache
Cache
Sales order
Planned order
Production order
CIF
Real-time
Order
• Production
• Procurement
• Replenishment
Order
...
Plant, Customer,... Location

Material master Product
Capacity
Routing and
CIF Resource
Production
bill of material process model
? SAP AG 2001
??The planning in APO is based on its own master data that is usually transferred automatically from a
R/3 System, but can also be created manually.
??The transfer of master data from the R/3 is displayed in the corresponding master data in APO. Only
the master data relevant for planning in APO is transferred (firstly in the form of an initial transfer,
and then later as transfers of data changes).
??The R/3 remains the execution system for the master data. Only the settings which cannot be
transferred from the R/3 are maintained directly in APO.
??The transaction data relevant for planning, such as warehouse stock and sales or production orders is
also transferred from the R/3 into APO via the CIF interface. And vice versa, the results of the
planning in APO are returned to the R/3 via CIF and executed there. This integration of transaction
data takes place in real-time.
© SAP AG AP010 2-1 1

Master Data Objects of the CIF
Initial transfer
R/3 APO
R/3 master data APO master data
Plant Location
Customer
Product
Vendor
Resource
Material master
Capacity Production
process model
Routing and
bill of material
Incremental data
transfer
? SAP AG 2001
??The APO Core Interface concerns a real-time interface. Only the data objects needed in the data
structures reconciled in the planning in APO for the particular planning and optimization processes
are transferred from the complex dataset in R/3 into APO.
??Both the initial data transfer (initial transfer) and the transfer of data changes within APO take place
via the APO Core Interface.
??The master data objects in APO are not identical with those in R/3. For the master data transfer it is
in fact the relevant R/3 master data that is mapped onto the corresponding planning master data in
APO.
??The R/3 System remains the dominant system for the master data. Only specific APO master data
that does not exist in R/3 is maintained directly in APO.
© SAP AG AP010 2-1 2

Transaction Data Objects of the CIF
R/3 APO
Initial data
R/3 transaction data APO transaction data
transfer Order with category
Orders
BF (PchOrd)
Purchase requisitions
AG (PurRqs)
Sales orders BM (SalesOrder)
Planned orders AI (PlOrd.)
Planned ind. reqmts FA (FC req.)
AM (PrdRes)
Reservations
Change CC (Stock)
Supplies ...
... transfer
Real-
time
? SAP AG 2001
??The initial data transfer of transaction data takes place first, via the APO Core Interface. The change
transfer between R/3 and APO usually automatically follows for transaction data objects that belong
to an active integration model. New transaction data or changes to existing transaction data is
automatically transferred. (For transaction data of the APO component SNP, you can define in
Customizing whether a real-time or periodic publication is to be performed.)
??The transaction data objects in APO are not identical to those in R/3. All transaction data in R/3 is
transferred to APO as orders that can be distinguished by ATP category.
??In the standard system, planned independent requirements can only be transferred from the R/3 into
APO. The retransfer of the planned independent requir ements that you may require if you only
perform Demand Planning in APO, must be triggered from Demand Planning in APO with a specific
transaction.
??For planned orders and purchase requisitions, you can specify in APO that they are only transferred
from APO to the R/3 System if the conversion indicator has been set.
© SAP AG AP010 2-1 3

Transfer of Data to APO
1. Generate integration model Name

Target system
Determine name and APO

Sales orders
target system Production orders
Storage location stock
Select master and transaction ...
data
2. Activate integration model

Integration model is active
Start Data is transferred for the first time, a continuous

real-time incremental transfer of transaction data
follows
? SAP AG 2001
??You define the integration model that controls the transfer of master and transaction data in the R/3
System. You can find the menu option Core Interface Advanced Planner and Optimizer (the CIF
menu) under Logistics -> Central Functions -> Supply Chain Planning Interface.
??The integration model distinguishes between master data and transaction data. We recommend
selecting these two types of data in separate integration models and then also transferring them
separately.
??In the integration model, you select the master and transaction data you want to transfer. You specify
the following in the integration model:
??The APO target system for the data transfer
??The data objects you want to transfer
??You can delete integration models that you no longer need. Note that you must first deactivate these
integration models.
??For any transaction data that is contained in an active integration model, a continuous real-time
incremental data transfer is performed between the R/3 System and APO.
© SAP AG AP010 2-1 4

liveCache Integration with R/3
BW Forecast
extractors DP liveCache APO
Sales order Storage location stock Planned indep.

Intransit receipts requirement
Purchase requisition
Order
CIF
Purchase requisition Planned order
Stock transfer Production order
SD MM PP R/3
? SAP AG 2001
??The historical data from Demand Planning (DP) is transferred into APO with the help of the
extractors from the Business Information Warehouse (BW).
??You can release the Demand Planning forecast to the liveCache and therefore create planned
independent requirements. Alternatively, you can transfer planned independent requirements from
the execution system.
??The orders, supplies and planned independent requirements of the execution systems are transferred
via the CIF interface into APO.
??The planning results of APO, the purchase requisitions, stock transport requisitions, stock transport
orders and planned independent requirements, are also distributed via the CIF interface into the
execution systems. Planned orders can also create direct production orders in the OLTP system.
© SAP AG AP010 2-1 5

APO - OLTP Integration
APO OLTP
Demand Planning (DP) Planned independent

requirements
Planned orders
Supply Network Planning (SNP) Purchase requisitions
Stock transport
requisitions
Production Planning (PP) Planned orders

Production orders
Purchase requisitions
Stock transport
Detailed Scheduling (DS)
requisitions
Adjustment of
Deployment stock transport
requisitions
Transport Load Builder (TLB) Grouping of

stock transport orders
? SAP AG 2001
??This slide shows the exchange of movement data between APO and the connected OLTP systems.
??You can transfer the results of Demand Planning as planned independent requirements to the OLTP
systems, similar to the transfer from Flexible Planning or Sales and Operations Planning (R/3) to
demand management.
??You can transfer the SNP planning results as planned orders, purchase requisitions and stock
transport requisitions to the OLTP system.
??You can also transfer the PP/DS planning results as planned orders, purchase requisitions and stock
transport requisitions to the OLTP system. If you convert SNP planned orders into PP/DS planned
orders, the planned orders are adjusted in the OLTP system. You can only transfer planned orders as
production orders to the OLTP system from PP/DS.
??Deployment and the TLB confirm the OLTP stock transport requisitions and can convert them into
stock transport orders or VMI sales orders.
??Via Customizing -> APO -> Supply Chain Planning -> Supply Network Planning (SNP) -> Basic
Settings -> Configure Transfer to OLTP Systems you can configure how transfer should take place.
© SAP AG AP010 2-1 6

Pegging
? The pegging network
Demand ? assigns receipts to

requirements
50 50 ? propagates the
requirements through
the BOM
Output node 50 20 ? is cross-location

30 Input node
? finds unassigned order
quantities
Pegging ? APO offers fixed and
80 20 dynamic pegging
Order
? SAP AG 2001
??Pegging describes the assignment of quotation and requirement. It links each input node from
requirements or rec eipts with output nodes from receipts. The material flow between requirements,
stock transfers, purchase requisitions, planned orders and storage location stock is therefore defined
in the system. Pegging allows the bi-directional planning of components to the end product and of
the end product to the components.
??There are two types of pegging:
??Dynamic Pegging: The pegging relationship is re-calculated each time, with regard to quantity
and date changes, when a product receipt or issue takes place.
??Static Pegging: All relationships are fixed. Only the user or an external program can change these
relationships.
© SAP AG AP010 2-1 7

Supply Chain Pegging
Sales order
10 20 10 40 60 (-10)
10 20 10 40 50
30 100
Transfer order Shortage
30 100
20 Surplus
30 50 30
50 50 50 (+20)
Production order
50 50 50
50 30 20 50
80 80 (+10)
Order
? SAP AG 2001
© SAP AG AP010 2-1 8

Conclusion
You are now able to
? Describe the advantages of liveCache Technology

? Outline the data exchange between R/3 (or other
OLTP systems) and APO
? Explain the pegging tasks.
? SAP AG 2001
© SAP AG AP010 2-1 9

Modelling and Evaluation in APO
Contents:
? Models and version in APO

? Supply Chain Cockpit
? Supply Chain Engineer
? Alert Monitor
? Evaluations using the BW explorer
? SAP AG 2001
© SAP AG AP010 3-1

Unit Objectives
? Explain the functions of models and versions in

APO
? Describe the modelling of the Supply Chain
network
? Analyze master and transactional data in the
Supply Chain Cockpit
? Call alerts from the Supply Chain Cockpit
? Evaluate aggregated historical data
? SAP AG 2001
© SAP AG AP010 3-2

1 Course Overview
22 Integration and Technology 3
Modelling and Evaluation
33 in APO
4 Demand Planning
6 Scheduling
Transportation
99 Conclusion
? SAP AG 2001
© SAP AG AP010 3-3

Business Scenario
? Precision Pump company uses the Supply Chain

Cockpit for multi-site analysis and documentation
of planning results.
? In the Alert Monitor, every planner can find his
current planning problems and exception
messages.
? Key Performance Indicators (KPIs)
provide benchmarks for defining the goals of the
company. After each planning cycle, Precision
Pump company uses KPIs to analyze the
performance of its supply chain.
? SAP AG
AG 2001
© SAP AG AP010 3-4

Models and Planning Versions
Legacy R/3 OLTP Master Data
APO Master Data (model independent)
Active1Model
Model
Transportation Simulation
PPMs Products lanes Models
Locations
Active Version 000 Planning Version 1 Planning Version n

version dependent master version dependent master version dependent master
data and movement data data and movement data data and movement data
? SAP AG 2001
??The network model represents the supply chain and consists of individual nodes and relationships. In
APO it is possible to create and maintain different versions of a model for simulation purposes.
There is only one active model (000) with an active version. The active planning version is 000.
??All APO planning functions are based on the supply chain model. The model covers the entire
supply chain network. It is modeled in the Supply Chain Engineer and contains details like locations,
resources, products, transportation lanes and production process models (PPMs).
??You also have the option of creating several models, each with different versions for simulation
purposes.
??Master data like locations, products, resources and plans that are transferred from OLTP systems are
automatically assigned to model 000. You must assign master data that you create in APO explicitly
to the model.
© SAP AG AP010 3-5

APO Maintenance and Analysis Tools
Engineer Cockpit Alert Monitor
Information
Warning
Error
Ignore
Modeling the Analysis of the Evaluation of the

Network Planning Situation Exception Messages
? SAP AG 2001
??The Supply Chain Engineer enables you to maintain the model of your supply chain. You can use
this component to create or change supply chain network models. The network model represents a
supply chain and consists of individual node points and links. A model can have different planning
versions. You also have the option of creating several models, each with different versions for
simulation purposes.
??The Supply Chain Engineer is a fully integrated APO component used for creating models. The
model is the basis for all APO planning functions. It covers all areas of the network chain, from the
supplier's supplier to the customer's customer. The relevant data objects are imported here from the
source system to APO.
??The Supply Chain Cockpit allows planners to make an integrated analysis of transactional data in the
supply chain. It also allows data to be broken down into planner-specific subsets, such as by
indvidual region or product line.
??The Alert Monitor gathers messages regarding problems within your plan.
© SAP AG AP010 3-6

Work Areas
Access to frequently used objects

? Used for queries
? Serve as filters
? Configured for users
? SAP AG 2001
??The complete supply chain view can be unclear. You can limit th e view to the objects on which you
want to concentrate when you are defining work areas. The work area is used exclusively as a filter
for displaying objects in the Cockpit and Engineer.
??The pre-defined work area is the basis for the queries which you can use to gain information about
all aspects of your supply chain from the APO system. The transportation lanes in your work area are
defined using the model in which you are working.
??In the work area of the supply chain you can select:
??Locations (plant, DC, supplier, customer)
??Resources, production, storage, processing, transportation
??Products
??PPMs (production process models)
© SAP AG AP010 3-7

Objects in the Supply Chain Network
? Locations
Supplier Plant DC Customer Transport. MRP Stock transfer Carrier

zone area point
? Transportation lanes
? SAP AG 2001
??InAPO, a location can represent a distribution center, manufacturing plant, supplier location, a
customer, a carrier, transportation zones, MRP areas, for example.
??The material flow between locations is modeled via transportation lanes. You map your supply chain
via locations and transportation lanes.
??A transportation zone can be used to group together customers, for example, in the form of a location
hierarchy. The transportation zone is used in the TLB and in transportation planning. Carriers and
stock transfer points are only used in transportation planning. An MRP area is planned in SNP like a
production plant.
??Product master rec ords, resources and PPMs (production process models) are assigned to the
locations.
??You can map production, storage, transportation and handling capacities via resources.
??DP, SNP and PP/DS PPMs (production process models) are available to allow you to define
BOMs and routings.
© SAP AG AP010 3-8

Supply Chain Cockpit Navigation
Cockpit controls
controls
Work
Work
areas
areas
Overview
Overview map
Planning
Planning
objects
objects
Network
Network map
map
Control
Control panel
panel Alert Application
Application toolbar
toolbar
monitoring
monitoring
? SAP AG 2001
??Use this navigational component of the Supply Chain Cockpit to:

??Retain a complete overview of your supply chain model
??Retrieve information from the APO system through queries
??Measure performance with KPIs (Key Performance Indicators)
??Display location, product, resource, PPM and lane data
??Keep track of alert situations
??The three main business tools available from the Supply Chain Cockpit include:
??Queries that facilitate the planning function
??Key Performance Indicators that provide feedback on actual performance
??The Alert Monitor that provides notification of exception messages
© SAP AG AP010 3-9

Information Retrieval
Business Information
Fixed Network Information Warehouse
- Transportation network • Key Performance
- Production network Indicators
- Service level
- Supply chain costs
Planning Results
- Production
- Demand
- Stock
- Transportation Alert Monitor
- Capacity load
APO Master Data

APO Applications • Products
- Supply Network Planning • Resources
- Production Planning • Locations
- ATP • Transportation lanes
- Demand Planning • Production process model
? SAP AG 2001
??Queries facilitate the planning function.

??Key Performance Indicators provide feedback on actual performance.
© SAP AG AP010 3-1 0

Purpose of Key Performance Indicators
What was the total profit

made from Gel 250
delivered to customer X
from DC Milan?
? SAP AG 2001
??The APO key performance indicators (KPIs) express abstract supply chain objectives in financial or
physical units for comparative purposes. Data pertaining to the various planning and execution
processes such as demand planning or product planning is collected, measured, and transformed into
physical or financial information that can be used to compare results and thus measure performance.
??For example, a KPI could tell you what percentage of your products were damaged during
production. Based on that information, you could set a goal to reduce the percentage of damaged
goods by 5%. After implementing the steps necessary to reach the goal, you would again launch a
KPI query to check your progress.
© SAP AG AP010 3-1 1

Standard KPIs (Selection)
? Planning ? Purchasing
? Order quantities/values ? Purchase order quantities
? Days' supply ? Delivery time
? Stock levels ? Service level
? Material consumption ? Vendor evaluation
? Resource load ? Days' supply
? Production ? Service
? Lead times ? Credit memos
? Date variances ? Deliveries
? Scrap ? Billing documents
? Delays ? Returns
? SAP AG 2001
??The slide shows some of the standard KPIs provided by SAP. In addition, you have the option to
defin e specific KPIs - tailor-made to your company - in the Business Information Warehouse and to
assign them to the Supply Chain Cockpit.
© SAP AG AP010 3-1 2

Key Performance Indicators
0. Identify key performance indicators (KPIs)

Measure performance using KPIs
5. Identify gaps
and improve
1. APO: Plan &

Optimize
4. Compare
results of KPIs
3. Measure
performance
using KPIs 2. Execute
? SAP AG 2001
??The graphic above depicts the three steps to improving supply chain performance using APO KPIs:
??Plan and optimize in APO
??Execute decisions in an execution system (R/3)
??Benchmark in BW
??The KPI function allows you to track and measure your supply chain performance by retrieving
information stored in the Business Information Warehouse (BW) pertaining to your business.
??Performance measurement is a way to determine if your business has improved or not.
??The use of metrics to measure performance is a complex business process that requires careful
planning, analysis and a thorough knowledge of the supply chain. For more information on
measuring supply chain performance, refer to the SCC1_E.doc, Appendix 1: The SCOR Model.
© SAP AG AP010 3-1 3

Alert Monitor Definition
Exception Window
for Details
Alert
Alert Notification
? Exceptions are calculated using macros and displayed in

the Alert Monitor
? There are standard macros and the option to define your
own alerts
? SAP AG 2001
??The role of the Alert Monitor is to inform you of exception cases that occur in your plan. Every
situation that has to be adjusted in planning is an exception.
??In Supply Network Planning you have the option to display either database or dynamic alerts. The
database alerts show the planning situation as it was at the time of the planning run, while the
dynamic alerts reflect the current planning situation.
??The Alert Monitor in Supply Network Planning enables you to display and remove alerts for
resources and location products. Typical alerts are: When the resource is too overloaded (over 100%
utilization of capacity), when the resource is not sufficiently load ed (less than 50% utilization),
backlog, shortfall in safety stock, target days' supply excess/shortfall, customer -specific alerts.
??You retain constant control over your supply chain network because of the alerts you defined and
because you have the option to send these by mail. As planner or manager you will be prepared for
any problems that occur. You will be informed in time so that you can take the necessary
precautions.
© SAP AG AP010 3-1 4

Alert Monitor Integration
PP/DS
PP/DS
Cockpit Problem resolution

DP
DP Example:
APO Production
Alert Planning /
Repository Detailed
SNP Scheduling
Supply Network
Planning
ATP
Alert Monitor
? SAP AG 2001
??The Alert Monitor in Supply Network Planning enables you to display and remove alerts for
resources and location products. Typical alerts are: When the resource is too overloaded (over 100%
utilization of capacity), when the resource is not sufficiently loaded (less than 50% utilization),
backlog, shortfall in safety stock, target days' supply excess/shortfall, customer -specific alerts.
??You retain constant control over your supply chain network because of the alerts you defined and
because you have the option to send these by mail. As planner or manager you will be prepared for
any problems that occur. You will be informed in time so that you can take the necessary
precautions.
??You can call the Alert Monitor from the Supply Chain Cockpit, from the menu or directly from
interactive planning. Right-click on the alert to go directly to the problem resolution screen.
© SAP AG AP010 3-1 5

Alert Types
Demand DP macro status alerts

Planning
Supply
Network
Resource load (SNP)
Planning Violation of
Production due dates
Planning/ Resource load (PP/DS)
Detailed
Scheduling
ATP ATP: Requirements

not covered
Business
Information
Warehouse
? SAP AG 2001
??APO's monitoring component comes equipped with a selection of 20 alert types ranging from
product shortage to various capacity overloads. The alert types must be prioritized and assigned to
the various APO applications. For example, some alerts apply only to SNP, but others can be
assigned to DP and PP/DS as well.
??The Alert Monitor differentiates between alerts in a specific planning version and alerts in general.
For example, capacity overload pertains to a specific planning version while Demand Planning alerts
are general. Both types of alerts, however, are displayed in the Monitor.
??Ifyou want to show an alert in the SCC, you can assign the alert type to the application. This ensures
that the traffic lights in the monitoring slot in the control panel go on. Lights indicate that at least one
alert of that priority type exists.
??Sincesome alert types cannot always be clearly assigned, it can happen that the same alerts may
appear under more than one priority light.
??Each alert type can be assigned to any number of applications.
© SAP AG AP010 3-1 6

Evaluations in APO
? Using the BW Business Explorer you can evaluate:

? Order data from the liveCache
? Aggregated data in InfoCubes
Extraction Planning
structure area
RemoteCube
liveCache
Business Explorer DP InfoCube
? SAP AG 2001
??You can also evaluate data from APO using the BW frontend.
??Itis not only the aggregated actual data from the InfoCubes that are evaluated, but also all of the
order and time series objects from the liveCache.
??The prerequisites for 'liveReporting' orders and time series are as follows: a planning area in APO;
an extraction structure for the planning area; an infosource, and an SAP RemoteCube that reflects the
liveCache data.
© SAP AG AP010 3-1 7

Conclusion
You are now able to
? Explain the functions of models and versions in

APO
? Describe the modelling of the Supply Chain
network
? Analyze master and transactional data in the
? Call alerts from the Supply Chain Cockpit
? Evaluate aggregated historical data
? SAP AG 2001
© SAP AG AP010 3-1 8

Exercises
Unit: Supply Chain Cockpit

Topic: Display and Query

?? Maintain the user settings for the Supply Chain Cockpit
?? Execute queries in the Supply Chain Cockpit and with the Business
Information Explorer
Precision Pump company’s supply chain planner can procure all

necessary information about the products, locations and resources for
which he/she is responsible via the Cockpit.
The group number ## that you need for the following exercises is on your monitor.
1-1 Open the Supply Chain Cockpit with the following entries:
Planning version 000

For model 000
Work area PUMP
Change to the logical view PUMP and analyze the supply chain. Which distribution
centers supply the plants 1000 and 2300?
1-2 Display the global master data for the product T-F225 and the master data for the
product T-F225 in the distribution center 2400 in the Supply Chain Cockpit.
1-3 Query the stock/requirements list for product T-F225 at location 2400.
© SAP AG AP010 3-1 9

1-4 Query the transportation lanes permitted for the product T-F225 .
1-5 Open your user settings profile directly from the Cockpit. Enter the SDP alert
profile PUMP. Save the profile, go back to the Cockpit and refresh the alert
situation. Are alerts displayed? How can you process the alerts?
1-6 Evaluate the aggregated historical data for the product T-F2##. Log on to the APO
system using the Business Information Warehouse (BW) Analyzer and open the
query SALES DATA for the SALES InfoCube.
Find out the extent that Product T-F2##, with Sold-to party 1000, and in Sales
Organization 1000, contributed to sales in the past few months.
© SAP AG AP010 3-2 0

Solutions
Unit: Supply Chain Cockpit

Topic: Display and Query

?? Maintain the user settings for the Supply Chain Cockpit
?? Execute queries in the Supply Chain Cockpit and with the Business
Information Explorer
Precision Pump company’s supply chain planner can procure all

necessary information about the products, locations and resources for
which he/she is responsible via the Cockpit.
The group number ## that you need for the following exercises is on your monitor.
1-1 Open the Supply Chain Cockpit with the following entries:

For model 000
Work area PUMP
Change to the logical view PUMP and analyze the supply chain. Which distribution
centers supply the plants 1000 and 2300?
Supply Chain Monitoring ? Supply Chain Cockpit

Enter the input data and select “Use”.
Select the “Fit to objects” button on the left above the graphic to adjust the
objects.
Enter the logical view PUMP and select “Logical view”.
If you want to restrict the area further, you can define the zoom area using the
left mouse button.
The transportation lanes show you that the plants 1000 and 2300 supply the
distribution centers 2400 and 2500.
© SAP AG AP010 3-2 1

1-2 Display the global master data for the product T-F225 and the master data for the
product T-F225 in the distribution center 2400 in the Supply Chain Cockpit.
Choose the Products tab

Right-click on product T-F225 and display the master data for this product:
Display ? Product
Select the location 2400 in the graphic and the product T -F225 in the Products
tab and display the location product by right-clicking on the product: Display ?
Product at location
1-3 Query the stock/requirements list for product T-F225 at location 2400.
Select the location 2400 on the map
Select product T -F225 in the Products tab and right-click to call up the context
menu: Call up planning applications ? PP/DS Stock/Requirements List
Check that Product and Plant have green lights in the selection options screen
and check which product is selected by clicking on the Display button
Execute the query by clicking on the Execute button
1-4 Query the transportation lanes permitted for the product T-F225 .
Choose T-F225 in the Products tab
Right-click to call up the context menu: Query: Master data ? Transport net -
map
1-5 Open your user settings profile directly from the Cockpit. Enter the SDP alert
profile PUMP. Save the profile, go back to the Cockpit and refresh the alert
situation. Are alerts displayed? How can you process the alerts?
Settings ? User profile
Enter the SDP alert profile PUMP in the Alert Monitor tab.
Save the profile and use the green arrow to go back to the Cockpit.
Press the “Refresh alerts” button and the exception messages are shown in red.
Double-click here to go directly to the Alert Monitor and right-click to process the
alerts.
© SAP AG AP010 3-2 2

1-6 Evaluate the aggregated historical data for the product T -F2##. Log on to the APO
system using the Business Information Warehouse (BW) Analyzer and open the
query SALES DATA for the SALES InfoCube.
Find out the extent that Product T-F2##, with Sold-to party 1000, and in Sales
Organization 1000, contributed to sales in the past few months.
Call up the BW Analyzer, activate the macros, and press the “Open” icon in the
Business Explorer. Log on to your APO system.
Expand the SALES PLANNING info area and the SALES infocube. Select the
SALES DATA query and press OK.
You are given an aggregated view of the invoiced sales quantity and invoiced
sales value of the three sales organizations. Right-click on the field next to APO
product to restrict the evaluation for your product T-F2## via “Select filter
value”.
By right-clicking on sales organization you can drilldown the evaluation
according to sold-to parties by choosing “Add Drilldown According to” sold-to
parties.
By right-clicking on the SALES key figure, you can drilldown the evaluation
according to months by choosing “ Filter and drilldown according to”
cal.year/month.
© SAP AG AP010 3-2 3

Demand Planning (DP)
Contents:
? Demand Planning Tasks and Functions
? Integration with the Business Information Warehouse (BW)
? Forecast Toolbox
? Lifecycle Planning
? Promotions
? SAP AG 2001
© SAP AG AP010 4-1

Unit Objectives
At the conclusion of this unit, you will be able to:
? Explain how the Business Information Warehouse

is integrated with Demand Planning,
? Describe the tasks of Demand Planning,
? Define various forecasting strategies,
? Create a simple sales forecast, and release the
results to Production Planning.
? SAP AG 2001
© SAP AG AP010 4-2

1 Course Overview
44 Demand Planning
4
Supply Network
55 Planning
6 Scheduling
Transportation
99 Conclusion
? SAP AG 2001
© SAP AG AP010 4-3

Business Scenario
? The Precision Pump company will implement APO

Demand Planning and use it to execute their
monthly finished product forecasting.
? Consistent planning allows you to enter the
forecast data on different planning levels and
automatically consolidate the data in the master
forecast.
? SAP AG
AG 2001
??Demand Planning is a complex, powerful, and flexible tool that supports your company's demand
planning process. User-specific planning layouts and interactive planning books not only allow you
to include different departments, you can also use them to include other companies in the forecast
creation process. With APO Demand Planning you can use statistical forecasting methods and
advanced macro techniques to do the following: - Create forecasts from sales history, based on many
different causal factors; - Test predefined, and user-defined forecast models, and forecast results; -
And use a consensus-based approach to consolidate the demand plans of different departments. You
can use forecast overrides and promotions to add marketing intelligence and management
adjustments. The seamless integration with APO Supply Network Planning supports an efficient
Sales and Operations Planning (S&OP) process.
??Demand Planning is the application component in the Advanced Planner and Optimizer (APO) that
allows you to forecast market demand for your company's products. The result of APO Demand
Planning is the demand plan.
© SAP AG AP010 4-4

Advantages of Demand Planning in APO
? Global server with a BW infrastructure

? Integrated exception handling, creation of user defined alerts
? Integration with Production Planning (S&OP scenario)
? Main memory based planning
? Flexible navigation in the planning table, variable drill down
? Extensive forecasting technique
? Promotion planning and evaluation, 'like' modeling
? Collaborative planning via the internet
? Sales Bills of Material (BOMs)
? SAP AG 2001
??The Business Information Warehouse (BW) infrastructure includes easy to use features for
extracting all the data from execution systems and analyzing it in the SAP BW Business Explorer.
??Macros can be used to perform complex calculations, and to define conditions and exception
messages (alerts). Mails can be sent automatically, and status automatically queried.
??In the S&OP scenario, the feasible production plan from SNP or PP/DS is compared with the
original demand plan. Deviations are identified automatically and reported to the planner.
??The following statistical procedures are all available for forecasting; Constant model, Trend model,
Seasonal model, Trend and Seasonal model, Croston method with exponential smoothing, Linear
regression, and Causal models with multilinear regression. External forecasting procedures can also
be linked to this.
??"Like modeling" refers to the forecasting of new products using historical data from old products.
Life cycle definition is also covered in like modeling.
??You can make each planning book accessible to customers or suppliers over the internet in order to
be able to exchange data as soon as possible.
© SAP AG AP010 4-5

Influencing Factors in Demand Planning
Company 1 Company 2 Customer

Central Regional Central Regional Store
Promotion
Store
Promotion D/C Store Promotion
D/C
Promotion Season
Season
Sales
Sales Force
Force
Price
Price Price
Price
Weather
Weather
Advertisement
Advertisement
? Understanding demand in a dynamic business environment

? Multiple sources of demand plan data such as: internally created forecasts
based on history, forecasts from customers, or point of sale (POS) data
direct from retailers
? Managing all significant factors that influence demand
? Tracking and management of product lifecycles
? SAP AG 2001
??The complexity and competitive nature of today's business environment requires organizations to
consider many variables when developing a sales and operations plan.
??Multiple sources of demand plan data (e.g. manufacturer forecast is based on a distributor’s sales
history, and/or point of sales direct from retailer.)
??Factors influencing demand (sales force size, R&D expenditures, advertising expenditures, price,
promotions, seasonality.)
??Demand data can be exchanged with sales organizations, customers, and suppliers over the
Internet (Collaborative Demand Planning).
© SAP AG AP010 4-6

APO Integration - Business Warehouse
Demand Planning
Forecast Reporting
Sales history,
Price, Costs, ... Business
APO
Information
Data Mart
Warehouse
Forecast
Demand Planning specific data Central Data Pool

? Forecast & planning scenarios ? Summarized data
? Causal factors ? POS, order, and shipment
data
? Lifecycle patterns
? Syndicated POS data
? Seasonal patterns
? Cost information
? Promotional patterns
? ...
? SAP AG 2001
??SAP'sBusiness Information Warehouse (SAP BW) is contained in the APO scope of supply and is
completely integrated with it.
??Ifyou are going to execute extensive reporting, it is a good idea to set up an independent BW server,
and only transfer the data that is relevant for planning to the APO system.
??As data structures in BW and APO are identical, you can also evaluate APO data with the BW
frontend.
© SAP AG AP010 4-7

Demand Planning Concept
Location
Sold-to party
Sales organization
Region
? Incoming order
value
? Quantities BW
? Collaborative forecasting
? Values
R/3 ? Promotions
? Invoice Excel
? Quantities Non-SAP system
? Values
?…
? SAP AG 2001
promotions.
© SAP AG AP010 4-8

Planning & Reporting
? Consistent planning (top down,

middle out, Aug. Sept.
W32 W33 W34 W35 W36 W37 W38 W39 W40 W41
time sequence
bottom up)
d
rio
Pe
? Slice & dice 203
Customer
124
? Drill downs & ups Regions

Material
? Multiple demand plans

to be simulated Product Groups
? Standard forecast accuracy

analysis
? SAP AG 2001
??Planning supports online simulation in multiple planning scenarios, consistent planning throughout
your enterprise (top down, middle out, or bottom up), drilling up and down, aggregation and
disaggregation, and slice-and-dice techniques.
??Consistent planning means that planning data on all planning levels can be consistently held
(automatic aggregation and disaggregation).
© SAP AG AP010 4-9

The Planning Table
Selection
APO - Product Total APO - Location Total
ID Object Text Design Graph Capacity Leveling
Object 1 Text 1 Title view W 24 W 25 W 26 W 27 W 28

Object 2 Text 2 Key figure 1
Selection profile Key figure 4
User Key figure 5
Selection ID
Header information
Selected objects
Planning book
Data views Right mouse button:
additional settings
Standard selections
Macros
? SAP AG 2001
??The APO modules Demand Planning and Supply Network Planning have a standard user interface. It
consists of two significant components: the selection range and the work area.
??The selection range (Shuffler) is the window, where you choose the InfoObjects to be planned.
??Inthe Shuffler, you can save commonly used selections, and load existing selections. To open the
Shuffler, choose the symbol selection window.
??The selection profile displays all the selection IDs which have been assigned for the planner. The
planner can access commonly used selections quickly using the selection IDs.
??Inthe data view area, you choose your planning books, and views. You can define a filter for
available planning books and views.
© SAP AG AP010 4-1 0

Calculations in Demand Planning
You can use macros to:
? Calculate deviations
? Make automatic corrections
? Calculate sales budgets
? Define your own exceptional situations
? Launch status queries
? Send mails
? SAP AG 2001
??Macros perform complex calculations quickly and accurately. The extreme flexibility of the macros
allows the planner to model a planning environment based on individual business tasks.
© SAP AG AP010 4-1 1

Statistical Toolbox
? Univariate Forecasting
? Moving average
? Models (constant, seasonal
trend, seasonal)
? Exponential smoothing
? Seasonal linear regression
? Holt-Winters
? Croston's method (for sporadic
demand)
? Causal Analysis
? Multiple linear regression
? Composite forecasting
? Weighted average of multiple
models
? SAP AG 2001
??The product portfolio of a company covers a variety of products in different stages of their lifecycle
and with different demand types.
??APO Demand Planning offers a "toolbox" of proven forecasting methods. The system allows you to
choose the best method for a specific demand type.
??Compositeforecasting extends the idea of pick-the-best; with this technique you combine two or
more methods.
??Croston's method allows you to model "lumpy" (sporadic) demand.
??The statistical forecasting toolbox provides all the features you require to efficiently create accurate
forecasts, including everything from data analysis via time series models through multiple linear
regression.
© SAP AG AP010 4-1 2

Lifecycle Management & Like Modeling
Actual data of the old product
Forecasting of the new product

Sales
Like
Lifecycle
Time
? SAP AG 2001
??You use lifecycle planning and "Like" modeling to forecast the launch (phase-in) and
discontinuation (phase-out) of a product.
??A product's lifecycle consists of different phases: launch (phase-in), growth, maturity, and
discontinuation (phase-out). This process models launch, growth and discontinuation phases.
??For all characteristic value combinations, you can use either a "like" profile, a phase-in profile, or a
phase-out profile, or any combination of these.
??Ifthe phase-out profile period is within the history horizon of the master forecast profile, the system
adjusts history input values, displays the adjusted values in the original history and corrected history
key figures, and writes the adjusted values in the corrected history.
??Ifthe phase-in profile period is within the future horizon of the specified master forecast profile, the
system adjusts baseline (original) forecasts, and writes the adjusted values in the corrected forecast
key figure.
© SAP AG AP010 4-1 3

Promotion Planning
Forecast simulation
Sales Total sales:
Profit Total profit:
Promotion 1 Promotion patterns

’95 ’96
-10% ’97 ’98

Price Planner
Planner
Quantity
? SAP AG 2001
??Promotions can have a major impact on consumer behavior.

??In APO Demand Planning, you can plan promotions or other special events independently of the rest
of your forecast.
??Use Promotion Planning to record either one-time events, such as the millennium, or repeated events
such as quarterly advertising campaigns. Other examples of promotions are trade fairs, coupons,
free-standing inserts, competitors' activities, market intelligence. Examples of events that also have
an impact on consumer behavior are upward/downward economic trends, and acts of nature, such as
hurricanes, and tornadoes.
??Promotional uplifts can be defined in units or percentages by common promotion patterns. The effect
of a promotion pattern that occurred in the past can be automatically detected using sales history or
estimated by the planner. A promotion pattern can be archived in a promotion catalog; it can
therefore be reused if a promotion of the same type is repeated. A copy function in the promotion
catalog also supports "like" modeling of "like products," "like regions", and so on. There are several
techniques available to determine the impact of a historical promotion. One suc h technique is
multiple linear regression with or without a trend or seasonality.
© SAP AG AP010 4-1 4

Release of Sales Quantities as Planned
Independent Requirements
Demand Planning Production Planning
Planned independent
Key figure: sales quantity requirements
Macros SNP
Alerts PP/DS
Key figure: feasible Production quantities

sales quantity
? SAP AG 2001
??Once the various stakeholders in the forecast have reached a one-number, consensus plan, you
release the demand plan as a planned independent requirement.
??You release the demand plan from Demand Planning (DP) via either the demand planner or the SNP
planner.
??This release causes planned independent requirements to be created in the order liveCache. These
anonymous demands form the basis of SNP, or PP/DS, where BOM explosion, capacity planning,
and sourcing are carried out for the complete supply network.
??After feasibility of the planned sales quantities in SNP or PP/DS has been checked, the results can be
transferred back to Demand Planning. Macros are used to analyze the differences between the
demand plan and feasible quantities and alerts are generated if large differences occur.
© SAP AG AP010 4-1 5

Demand Planning: Unit Summary
You are now able to:

? Explain how the Business Information Warehouse
is integrated with Demand Planning
? Describe the tasks of Demand Planning
? Define various forecasting strategies
? Create a simple sales forecast, and release the
results to Production Planning.
? SAP AG 2001
© SAP AG AP010 4-1 6

Exercises
Unit: Demand Planning

Topic: Interactive Planning
At the conclusion of this exercise, you will be able t o:

?? Evaluate historical data
?? Create a sales forecast including corrections
?? Release the demand plan to Production Planning
The Precision Pump company is creating a demand plan to provide

planned independent requirements for Supply Network Planning. This
plan uses a statistical forecast based on historical data, and includes input
from regional sales managers.
1-1 Go to Demand Planning.

Open the selection window and, under “Show”, select “APO PRODUCT”. Version
000 is already displayed automatically. In the next row, enter APO - Product once
again, and on the right-hand side enter your product T -F2##. Load the data for the
product into the planning table.
1-2 Perform a univariate forecast and analyze the graphic results. The seasonal pattern
that occurred in the past has been extrapolated into the future. Go back to the
planning table.
1-3 For three months from now enter a manual correction of 100 pumps. Check that the
correction is automatically added to the demand plan. Save your plan.
© SAP AG AP010 4-1 7

1-4 Release your demand plan to Production Planning. Use the “RELEASE” variant,
and enter your product T-F2## and the horizon. Which locations have had planned
independent requirements created for them?
Field Name Input Data

Planning area SALES
Key figure FINFOR
Category FA
Horizon The next 3 months
Daily buckets profile 90 days
Product T -F2##
1-5 Make sure that planned independent requirements have been created in the
LiveCache. Go to PP/DS product view for version 000, product T-F2##, and
location 2400.
© SAP AG AP010 4-1 8

Solutions
Unit: Demand Planning

1-1 Go to Demand Planning.

Open the selection window and, under “Show”, select “APO PRODUCT”. Version
000 is already displayed automatically. In the next row, enter APO - Product once
again, and on the right-hand side enter your product T -F2##. Load the data for the
product into the planning table.
Demand Planning ? Planning ? Interactive Demand Planning

The selection window is the second icon in the top left. Open the selection
window and, under “Show”, select “APO PRODUCT”. Version 000 is already
displayed automatically. In the next row, enter APO - Product once again, and
on the right-hand side enter your product T-F2##. Select “Adopt”, and your
selection will be adopted by the selection window.
Double click on your product T-F2##. Entries can now be made for this
selection in the planning table rows.
1-2 Perform a univariate forecast and analyze the graphic results. The seasonal pattern
that occurred in the past has been extrapolated into the future. Go back to the
planning table.
Click on the “STAT” symbol and the forecast is calculated automatically. Select
the “Switch table/graphic” button, and the forecast results plus historical data
will be displayed graphically.
To get back to the original table, click on the green “back” arrow.
1-3 For three months from now enter a manual correction of 100 pumps. Check that the
correction is automatically added to the demand plan. Save your plan.
In the “Correction” key figure, type in 100.
The total from the “Forecast” plus “Correction” key figures is displayed in the
“Demand Plan” key figure. Save your plan and exit the table.
© SAP AG AP010 4-1 9

1-4 Release your demand plan to Production Planning. Use the “RELEASE” variant,
and enter your product T-F2## and the horizon. Which locations have had planned
independent requirements created for them?
Demand Planning ? Planning ? Release to Supply Network Planning
Select the “Get variant...” button and choose the RELEASE variant. Enter your
product T-F2##, and choose Execute.

Planning area SALES
Key figure FINFOR
Category FA
Horizon The next 3 months
Daily buckets profile 90 days
Product T -F2##
Planned independent requirements are created for Distribution Centers 2400,

and Plant 1000.
1-5 Make sure that planned independent requirements have been created in the
LiveCache. Go to PP/DS product view for version 000, product T-F2##, and
location 2400.
Production Planning ? Interactive Production Planning ? Product View

Enter version 000, product T-F2##, and location 2400. Continue. Your monthly
planned sales quantities have been transferred here and distributed over days.
© SAP AG AP010 4-2 0

Contents:
? Distribution Network and Process Flow
? Master Data Requirements
? Planning Methods
? SNP Heuristic
? SNP Optimizer
? Capable-to-Match
? Deployment (distribution detailed planning)
? SAP AG 2001
© SAP AG AP010 5-1

Unit Objectives
? Describe the Supply Network

Planning distribution network
? Explain the Supply Network
Planning process flow
? Identify master data that is required
to run Supply Network Planning
? Describe and compare Supply
Network Planning planning methods
? Explain the function of deployment
? SAP AG 2001
© SAP AG AP010 5-2

1 Course Overview
4 Demand Planning
Supply Network
5
55 Planning
6 Scheduling
Transportation
99 Conclusion
? SAP AG 2001
© SAP AG AP010 5-3

Business Scenario
? The Precision Pump Company is implementing

Supply Network Planning (SNP) to plan, in the mid-
to long-term, the material flow of critical materials
through the entire supply chain.
? Production and storage resources should be
considered finitely and simultaneously.
? This planning is used to guarantee the procurement
of parts with long delivery time and the effective use
of resources, in order to improve customer service
and to minimize inventory and lead times.
? Precision Pump company uses deployment to match
stock transports to supply and demand when there
are short-term changes.
? SAP AG
AG 2001
© SAP AG AP010 5-4

Benefits of Supply Network Planning in APO
? Multi-site mid-term rough-cut planning

? Simultaneous material planning and finite capacity planning of
production, storage and transportation resources
? Simultaneous production planning and distribution resource
planning
? Planning of critical components on bottleneck resources
? Cross-plant optimization of the resource load
? Prioritization of demand and supply
? Collaborative procurement planning via the internet
? Distribution detailed planning (deployment)
? Collective conversion of stock transport requisitions
? SAP AG 2001
© SAP AG AP010 5-5

APO Planning Sequence
Planning Horizon
Production Planning (PP)
Deployment
Transportation Planning (TP/VS) / TLB
? SAP AG 2001
??The tasks of the individual APO modules can be summarized as follows:

??DP is used for long-term unconstrained planning of the future demand plan
??SNP is used for mid-term planning of feasible cross-plant procurement and production
??PP/DS optimizes production in the plant in the next few weeks according to sequences and setup
times
??Deployment and the TLB (Transport Load Builder) are functions of the SNP module for short-
term replenishment planning.
Deployment and the TLB adjust stock transfers according to short-term changes on the demand or
supply side.
??In Transportation Planning, routes and vehicle utilization are optimized.
© SAP AG AP010 5-6

Aims of SNP Planning
? SNP Planning plans the mid- to long-term horizon. It creates a

rough quantity-based, cross-location production and
distribution plan with individual rough bills of material (BOM)
and routings.
? The SNP BOM contains critical products that are produced on
bottleneck resources and products with a long replenishment
lead time.
? SNP ensures that the right quantity is available on the right day
without critical resources being overloaded. The smallest unit
used for scheduling is days.
? SAP AG 2001
© SAP AG AP010 5-7

Beyond Traditional Planning
Production process model
Production plant
Manufacturer
DC
Customer DC
Supplier plant
Supplier WH
? SAP AG 2001

??Thestock and previously-planned receipts for finished products and components of all connected
OLTP systems are known by SNP.
??Various planning methods can be used to create cross-location, feasible plans for the material flow
along the supply chain, taking account of constraints and penalties. The result is optimal purchasing,
production, and distribution decisions, reduced inventory levels, and improved customer service.
??Possible constraints are, for example, material availability and unrestricted availability of work
center, storage, transportation and handling capacities.
© SAP AG AP010 5-8

Locations in the Supply Network
? Locations are only differentiated

by the location type that controls
the symbol on the map
(exception VMI)
Supplier Plant DC Customer
? Products can be stored at every
location
? Demands can be fulfilled from
each location
? You can maintain storage,
handling, transportation and
production capacities for each
location
? Storage cost per unit for each
product
? Purchasing cost per unit for
each product
Transportation MRP Stock transfer Carrier

zone area point
? SAP AG 2001
??Production, shipping and storage calendars can be defined for each location.
??A handling and a storage resource can be associated with a location to represent aggregate handling
and storage capacity.
??The geographical data is used to position the location on the geographical map of the Supply Chain
Engineer. Predefining it as a part of the location data forces the location to be positioned at a specific
point on the map. If you leave these fields blank, they are filled automatically when you place the
location on the map.
??The VMI customer tab only applies to the location type '1010 customer'. The carrier tab is only
activated when you select the location type '1020 carrier'.
??Input fields that are not available to other location types are activated for location type '1007 MRP
area'.
??For each location you can define costs for storage, handling, procurement and production as well as
penalties for non-delivery. Procurement costs are used to select suppliers and production costs for
selecting PPMs. An integrated examination of the costs is carried out during the SNP optimization
run.
© SAP AG AP010 5-9

Transportation Lanes
Transportation lanes control the material flow along

the supply chain
? Procurement
? Transportation method
? Products that can be carried
by a transportation method
? Transportation capacity by
volume, weight, pallets
? Transportation costs per unit,
product and transportation
method
? SAP AG 2001
??A transportation lane in APO represents a business relationship between the locations that you can
use to transport goods. The relationships and the locations represent the supply chain network. The
direction of the transportation lane from source to target location defines the material flow. These
transportation lanes enable you to:
??Define the product procurement parameters like lot sizes, cost functions, unit costs and lane
priorities
??Define the transportation methods (truck, ship, airplane, etc) for each lane and the related
parameters like transportation costs, distances and times
??Assign product-specific transportation methods
??Assign carriers to the lanes
??You can query the lane relevant data via the Supply Chain Engineer menu or on the map. For
example, you can display a list of all products that are assigned to a specific lane.
© SAP AG AP010 5-1 0

Resource Categories
Production Transportation
Storage Handling
? SAP AG 2001
??You can model additional bottlenecks in your supply chain using bucket resources.
??For period-oriented short- and mid-term planning in Supply Network Planning you use bucket
resources that you plan in detail based on days.
??You can define the capacity of a bucket resource as
??Quantity (without time base) - this defines the transportation capacity of a truck or the storage
capacity of a warehouse, for example.
??Rate (quantity with time base) - this defines the consumption or production capacity of a resource,
for example; in other words, the quantity that is consumed or produced on a working day at the
resource.
??You can use transport bucket resources to model the capacity of transport fleets in order to avoid
overloading them.
??You can use storage bucket resources to model the capacity of storage locations in order to avoid
overloading them.
??You can use handling bucket resources to model the capacity of forklifts, conveyor belts or pipelines
in order to avoid overloading them.
© SAP AG AP010 5-1 1

Structure of Plan and PPM
Plan (location independent) PPM: Product, location,

lot size area
$ Control costs
Operations:
? Material staging Activities:
? Pre-assembly ? Produce ? Product In / Out
? Final assembly ? Tear down ? Relationship Sequence
? Inspection ? Queue time ? Resources
Resource consumption
? SAP AG 2001
??The detailed information required for producing a product is specified in the plan. Each plan includes
one or more operations. Each operation includes one or more activities, the components consumed
by the activity, the resources used and their sequence within the operation.
??The plans used for Supply Network Planning (SNP) are usually rougher than those used for
Production Planning/Detailed Scheduling (PP/DS). They contain:
??The variable costs contain all production costs.
??Activity type: P (system always considers operations as production)
??Consumption mode: S (system always considers consumption at start of activity)
??Resources:
??Unit of measure must be the same unit as in the resource itself

??Fixed duration for scheduling: 1 day means that the activity lasts one day, for example.
??Variable resource consumption: Time to produce one base quantity of material.
??PPMs that determine the location, lot size, and time inter val for which the plan is valid are assigned
to the plan.
??A consistency check can be performed manually but is always executed when saving the PPM. If
there are inconsistencies, the PPM cannot be activated.
© SAP AG AP010 5-1 2

SNP Planning Sequence
Set up master data and

supply chain model
Build loads for

non-assigned Release demand
transport orders plan
Perform SNP Heuristic,
Optimization, or CTM run
TLB run
Deployment
run
Check plan/
Release constraint- solve problems
based SNP plan
to DP
Finalize SNP plan
(available to PP / DS)
? SAP AG 2001
??Planned independent requirements are generat ed for SNP or PP/DS when the demand plan is
released from Demand Planning. This step can either be carried out using the demand planner or the
SNP planner.
??Performing the SNP run using the SNP Heuristic, SNP optimization, or Capable-to-Match (CTM)
results in a mid-term production and distribution plan.
??After the SNP run, check the exception messages (alerts) and resolve any problems that occur.
??The final SNP plan consists of purchase requisitions, stock transport requisitions and SNP planned
orders. You can automatically convert the SNP planned orders into PP/DS planned orders in the
production horizon. Production Planning and Detailed Scheduling (PP/DS) then starts with these
PP/DS planned orders to remove detailed constraints and bottlenecks and to create a feasible
production plan.
??The final SNP plan can be released back to DP for comparison of the unconstrained demand plan
with the feasible SNP plan. If the differences between these two plans are too great, you can use a
macro to trigger alerts so that the demand planner plans his forecasts again.
??After production planning has been completed, the deployment run confirms the stock transport
requisitions based on current supplies and demands.
??The TLB run groups the stock transport requisitions resulting from the deployment run into stock
transport orders.
??You can build stock transport orders manually for stock transport requisitions that could not be taken
into account during the TLB run due to specified threshold values.
© SAP AG AP010 5-1 3

SNP Planning Functionality
? Mid- to Long-Term Planning Methods

? Heuristic
? Capable-to-Match (CTM)
? Optimization
? Propagation
? Deployment (short-term Replenishment Planning)
? Heuristic
? Optimization
? Transport Load Builder
? Grouping of Stock Transfers
? SAP AG 2001
??The following planning scenarios are supported by Supply Network Planning:

??Supply Network Planning creates feasible mid-term procurement, production and distribution
plans.
??Deployment distributes stock and available receipts to distribution centers and vendor-managed
inventory (VMI) customers.
??Transport Load Builder converts the stock transport requisitions used by deployment into stock
transport orders, taking account of transportation capabilities.
© SAP AG AP010 5-1 4

Heuristic Scenario
2. Demand 1. Demand
no stock no stock
4. Valid transportation 3. Explosion of plan

lanes, quota Creation and scheduling of
arrangements, receipts
priorities
? Quantity-based, rapid, multi-site planning

? MRP II concept (planning against infinite capacity)
? Time-based aggregation to weekly splits, for example
? SAP AG 2001
?? The role of the Heuristic involves:

??Integrating purchasing, production, and distribution in one consistent model
??Modeling the entire delivery network
??Synchronizing activities and planning material flow throughout the supply chain
?? The slide shows an example of the Heuristic:
??There is a demand in the customer location. The net requirements calculation does not find any
stock. The product is procured externally. The system analyzes the possible transportation lanes.
??There is also no stock in the distribution center so the Heuristic checks the possible transportation
lanes in the plant.
??There is no stock in the plant, so the SNP plan is exploded and a planned order is created for the
finished product and dependent demands for the components.
??Procurement for the components then occurs via the possible transportation lanes and quota
arrangements or priorities.
© SAP AG AP010 5-1 5

Capacity Leveling
Time-Based Capacity Leveling
Capacity load
BACKWARD FORWARD
100 %
1. Day 2. Day 3. Day 4. Day 5. Day
? SAP AG 2001
??The planner can use the following methods to adjust the plan:
??Backward shift of capacity load to satisfy demand with high priorities without due date violations.
However, rescheduling does not create any orders in the production horizon. Forward shift of
capacity load related to demand with lower priorities and minimization of due date violations
based on demand priorities.
??A combination of backward and forward shift of capacity load.
??If you choose a time-based capacity leveling option, you can select various priority rules:
??If you do not select a priority rule, the priority is determined by the system and is completely
random.
??If you choose Time-Based Capacity Leveling by decreasing order quantity, the system first adjusts
the largest order, then the second largest, and so on. If you choose Time-Based Capacity Leveling
by increasing order quantity, the system adjusts the smallest order first, then the second smallest,
and so on.
??If you choose Time-Based Capacity Leveling by decreasing stock range of coverage, the system
first adjusts the order with the largest stock range of coverage, then the one with the second largest
range, and so on. If you choose Time-Based Capacity Leveling by increasing stock range of
coverage, the system adjusts the order with the smallest range of coverage first, then the one with
the second smallest range, and so on.
??If you choose Time-Based Capacity Leveling by decreasing product priority, the system first
adjusts the order with the highest priority, then the one with the second highest priority, and so on.
If you choose Time-Based Capacity Leveling by increasing product priority, the system adjusts the
order with the lowest priority first, then the one with the second lowest, and so on. The product
priority is maintained in the product location master record on the SNP2 tab.
© SAP AG AP010 5-1 6

CTM Scenario
5. Stock transfer
4. Strategy: Search for created
surplus stock
Result: Stock
1. Demand with
highest priority,
no stock
2. Transp. lane
highest priority
3. Strategy: Search for surplus stock

Result: No stock
ATP rule: Substitution product
Result: No stock
Production: Search for available
capacity
Result: No resource available
? SAP AG 2001
??This slide shows the determination of feasible receipts for the demand with highest priority. CTM
gradually checks the feasible receipts, whereby you can define the sequence of checks via rules.
CTM takes the first feasible solution.
??CTM considers:
??Prioritized single requirements
??Production capacity and not handling, storage or transport capacities
??Splitting production between resources
??Component availability
??CTM is order -based planning that uses pegging methods to trace orders back to the individual
requirement. In Supply Network Planning no order-based planning takes place; rather, quantity
planning takes place. After the optimization run (or after the heuristic run), no information relating to
connections between particular planned production orders and original sales orders can be
determined.
© SAP AG AP010 5-1 7

Demand Prioritization
Priority Order Date Customer Product
1 KAUF 1.3. 2001 Baker P-102

2 KAUF 1.4. 2001 Baker P-102
3 forecast 1.2. 2001 DC1 P-102
? The sort can be carried out

Prioritized
according to: Demands Demands
? Customer (location) priority 1.
2.
? Product priority 3.
4.
? Order type 5.
? Due date 6.
7.
? Demand selection 8.
9.
? CTM work area 10.
11.
? SAP AG 2001
??CTM prioritizes current demands based on order category (for example, sales order (KAUF) and
demand planning forecasts), due date and the defined priorities.
??The sequence of the priority criteria is of great importance for processing demands in the CTM run.
Note : If no priorities are set, prioritization occurs on a first come, first-served basis by due date.
??You can simulate demand prioritization and check the results.
??Below is a list of possible prioritization criteria: Maximum number of partial deliveries allowed per
item, stock / receipt / demand / forecast categories, confirmed quantity, ATP, BOP: confirmation
share, CTM quantity, order / MRP element number, order / MRP element item, date on which the
record was added, delivery group (items are delivered together), location, ATP, BOP: delivery date,
delivery priority, location, location product number priority, product priority, material staging date,
item type sales document, ATP, BOP: user exit priority, sales document type, requested quantity.
??The sort within a prioritization criterion can be descending, ascending or user-defined.
??Define your demand selection in the CTM profile. (Multilevel Supply & Demand Matching >
Planning > Planning CTM > Demands tab) or (Multilevel Supply & Demand Matching >
Environment > Current Settings > Demand Prioritization > Sort Profile)
© SAP AG AP010 5-1 8

CTM Results
Categorized Prioritized
Supplies Capable-to-Match Demands
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Multi-site capacity and
11.
transportation capability check
? SAP AG 2001
??The CTM planning run is powered by the CTM engine, which matches the prioritized demands to
the available stock and receipts. Then it matches receipts and demands, taking account of production
capacities and transportation capabilities.
??Performing the CTM planning run in the SNP environment generates a mid-term production and
distribution plan.
??CTM complements SNP's multi-site supply chain planning strategies. Its purpose is to perform a
quick check of production capacities and transportation capabilities based on a preprocessed set of
categorized supplies and prioritized demands.
© SAP AG AP010 5-1 9

The Principle of the Optimizer
Product requirements
priorities, resources,
horizons
? Constraints:
? Customer priority
? Product priority
Simultaneous product ? Production capacity

and resource Optimizer ? Storage capacity
planning ? Transportation capacity
? Lot sizes
? Safety stock
Feasible receipts: planned orders, stock transfers and

Result: purchase requisitions
? SAP AG 2001
??The Optimizer uses linear programming to consider all relevant factors simultaneously as one
problem. The Optimizer compares alternative solutions for the incurred costs and proposes the best
feasible solution based on constraints defined in the system. You use the control costs to also
configure your priorities such as minimizing delays or minimizing on-hand stock. The Optimizer
considers all constraints in the supply chain model that were activated in the optimizer profile. As
more constraints are activated, the optimization problem becomes more complex and the time
required to solve this problem increases.
© SAP AG AP010 5-2 0

Aims of Optimization
What should be optimized
Costs - optimal Service level - optimal

Prerequisite: "real" variable Prerequisite: "simplified"
costs or adequate costs accepted
estimate (Control costs)
Non-delivery costs := Non-delivery costs (NC) := high

Sales price + surcharge for Storage costs := > 0, << NC
customer loss/dissatisfaction Other costs := << NC
? SAP AG 2001
??Service level - optimal on this slide shows the simpler configuration made by the Optimizer. You
maintain high non-delivery costs (NC) and storage costs for the finished products via mass
maintenance. The high non-delivery costs force the Optimizer to exhaust all possible procurement
and production capacities to satisfy the demands. The storage costs make sure that procurement and
production are carried out as late as possible.
??Costs - optimal on this slide shows the more complex configuration made by the Optimizer. You
maintain realistic costs for procurement, production, transportation and storage. You model lost sales
and customer dissatisfaction via delay and non-delivery costs. In this scenario the Optimizer uses the
costs to determine the most cost-effective integrated solution.
??The result of the optimization run is an optimal solution (minimum costs or maximum profit) taking
account of planning-relevant transportation, production, storage and handling constraints. In that
sense, the solution is feasible. However, the result might be that due date constraints are violated or
safety stocks are not filled. Due dates and safety stocks are considered to be soft constraints. There
are costs associated with such violations, so the Optimizer only proposes this solution if, according
to the costs specified in the system, it is the least costly solution.
© SAP AG AP010 5-2 1

Optimizer Decisions
? Where will procurement

take place?
? Where will production take
place?
? When will production take
place?
? What will be produced?
30 ? Where will transportation
take place?
? When will transportation
Penalty costs for
Costs
late delivery
take place?
? Where will the product be
stored?
? How long will the product
be stored?
? SAP AG 2001
??The essence of optimization is finding the best feasible solution. For example, is it less costly to
deliver two days late or to produce three weeks early? The challenge with optimization is to properly
define the relevant costs (for example, cost of late delivery). You can fine-tune the relative
importance of different cost types via the cost profile.
© SAP AG AP010 5-2 2

SNP Strategies: Comparison (1)
Heuristic: Optimizer :
CTM: Demand at a location

Dependent demand at loc.
Processing flow
? SAP AG 2001
??The Heuristic is a rapid infinite planning method that generates alerts when there is a material
shortfall or resource overload.
??CTM is a rules-based method with extensive prioritization capabilities and finite, global planning of
production resources. CTM is order-based planning that uses pegging methods to trace orders back
to the individual requirement.
??The Optimizer considers material and resource availability simultaneously. It uses linear
programming to consider all relevant factors simultaneously as one problem. In other words, there is
no sequential processing in the determination of a solution. The Optimizer considers transportation,
production, storage, and handling costs to propose a minimum cost solution that meets the respective
constraints.
??The lack of pegging of orders back to the individual requirement has the following repercussions: In
Supply Network Planning no order-based planning takes place. After the optimization run (or after
the Heuristic run), no information relating to connections between particular planned production
orders and original sales orders can be determined (CTM can, however, provide such information via
order tracing).
© SAP AG AP010 5-2 3

SNP Strategies: Comparison (2)
Heuristic Optimizer CTM
Speed + - ?
Quality - + ?
Prod. resources 2. Step, local global + global +
Other resources 2. Step, local global + -
Multi-level + + +
Costs - + -
Priority - Product/location Location / prod.+
Quota arrangements + creates +
? SAP AG 2001
??The performance of the three planning methods can be divided up roughly as follows: The Heuristic
is the fastest method, CTM is in the middle and the Optimizer is the most complex and the slowest
method. This is just a rule of thumb. If you plan a lot of orders per period and location product, the
performance of CTM and the Optimizer can be compared since planning in CTM is order -based.
??The quality of the heuristic planning result is poorest (infinite!), next comes CTM (rules), and you
should expect the best result from the Optimizer that weighs up all possibilities of this algorithm.
??Production resources are considered globally and finitely by the Optimizer and CTM, while the
infinite planning result of the Heuristic must be postprocessed interactively.
??Transportation,storage and handling resources can be considered globally and finitely by the
Optimizer, while the infinite planning result of CTM and the Heuristic can be postprocessed
interactively.
??All methods can plan all BOM levels automatically.
??Costs ar e only relevant to the Optimizer.
??Priorities control CTM. There are product, location, order and due date, procurement and stock
transport priorities. You set priorities for the Optimizer via the penalty costs for late delivery and
non-delivery of the location products.
??Quota arrangements are used by the Heuristic and CTM. They can be optimized using the Optimizer.
© SAP AG AP010 5-2 4

Planning Process
Planning Horizon
Demand Planning Forecast
Recommended
Supply Network stock transport
Planned orders
Planning requisitions
Production Planning /
Detailed Scheduling
Firmed
stock transport
Deployment requisitions
Transport Load Stock transport

Builder order
? SAP AG 2001
??Deployment determines which demands can be fulfilled by the existing supplies. If the produced and
procured quantities as well as the demands match SNP planning, the result of deployment is a
confirmation of the SNP plan. If the available quantities are not sufficient to meet the demand, the
system makes the necessary adjustments according to whether you are executing the deployment
heuristic or deployment optimization.
??The Transport Load Builder (TLB) then groups these confirmed quantities together into stock
transport orders.
??Deployment and the TLB confirm the OLTP stock transport requisitions and can convert them into
stock transport orders or VMI sales orders. Via Customizing -> APO -> Supply Chain Planning ->
Supply Network Planning (SNP) -> Basic Settings -> Configure Transfer to OLTP Systems you can
configure if transfer should take place using deployment or the TLB.
??Deployment and TLB ar e simply used to confirm stock transfers. Everything beyond this, such as
route planning, selection of carriers and generation of deliveries and transportations in the OLTP
system, is planned in TP/VS (Transportation Planning and Vehicle Scheduling).
© SAP AG AP010 5-2 5

Deployment: Heuristic versus Optimization
? Heuristic Heuristic
? Started for one plant

? Product by product
? Optimization
? Focus on network Optimization
? Product by product
? Coverage maximization
? Cost-based optimization
? SAP AG 2001
??The deployment function in SNP determines how and when inventory should be deployed to
distribution centers, customers, and vendor-managed inventory (VMI) accounts. It produces
optimized distribution plans based on constraints (such as transportation capacities) and business
rules (such as minimum cost approach, or replenishment strategies).
??A variety of deployment strategies are used depending on the current situation (e.g., fair share, push
deployment, pull-push deployment, and minimum cost flow optimizat ion).
??The Heuristic has a hierarchical view of the supply chain network: Deployment is always carried out
from one delivery location to the receiving locations (DCs or customers).
??The deployment heuristic calculates a replenishment plan for a product in a delivery location. If the
available quantities are not sufficient to fulfill the demand, the system determines the distribution
plan based on fair share rules. If on the other hand supply exceeds demand, the system uses push
rules to determine the distribution plan. Fair share and push rules are defined in the deployment
profile.
??Deployment optimization has the integrated view of the receipt situation of all delivery locations and
the demand situation of the receiving locations.
??The deployment optimization run calculates a replenishment plan for a product in all locations within
the network. If the available quantities are not sufficient to fulfill the demand or supply exceeds
demand, the system uses minimum cost flow optimization to determine an optimum distribution plan
for the whole network at once.
??Deployment optimization works like SNP optimization except that the production and procurement
quantities are not changed.
© SAP AG AP010 5-2 6

Deployment
Deployment adjusts the stock transfers for short-term changes

on both the supply and demand side (distribution detailed planning).
? Fair Share
? Proportional allocation
according to demands
DC1
? Proportional allocation
according to target stock
level
? Quota arrangements Plant DC2
? Push deployment
? Based on future demands
? Quota arrangements
? SAP AG 2001
??There are several deployment and allocation strategies: fair share, push deployment, pull-push
deployment, and minimum cost flow optimization.
??If demand exceeds supply, use a fair share allocation.
??If demand is less than supply or excess inventory exists, use a push strategy to be able to transfer
stock as early as possible.
??When excess inventory exists, surplus stock can be distributed according to push logic.
??For pull/push deployment rules, the demand horizon restricts the future demands that can be
delivered early.
??Set the pull horizon on the demand profile; set the push horizon on the supply profile.
© SAP AG AP010 5-2 7

Deployment Result: Fair Share Rule A
Date: ATD Quantity: Requirements:
Demand
Today 05.01.2001 1000 100 (DC1)
Supply
06.01.2001 900 500 (DC2)
07.01.2001 400 800 (DC1+2)
Detailed requirements per DC:
DC1 200
DC2 600
Deployment Results
05.01.2001 Plant to DC1 100
06.01.2001 Plant to DC 2 500
07.01.2001 Plant to DC 1 100
07.01.2001 Plant to DC 2 300
? SAP AG 2001
??The slide shows the result of a deployment heuristic using the fair share rule A that is issued after
planning in the background: Today, 1000 units are available in the plant for distribution. The stock
transfer for the current deman d from DC1 can be confirmed. The stock transfer for tomorrow can
also be confirmed. The day after tomorrow, the demand exceeds the remaining quantity in the plant,
so the 400 units are distributed using the defined fair share rule A.
??You use the ATD (Available to deploy) quantity to describe the quantity that is determined in the
delivering plant for distribution and according to ATP rules. You configure the category groups in
Customizing and assign them to the locations. Receipts (ATR) are, for instance, stock, production
orders, purchase orders, etc. Issues (ATI) are reservations, etc.
© SAP AG AP010 5-2 8

Transport Load Builder
Collective conversion of stock transport requisitions

Objective:
into stock transport orders in R/3
? Grouped according to
? Products (transportation planner)
? Time (pull-in horizon)
? Transportation zones
? Ensures that minimum requirements
are met for:
? Volume
? Weight
? Number of pallets
? SAP AG 2001
??The primary purpose of the Transport Load Builder (TLB) is to use the results of the deployment run
(single product transport recommendations) to create multi- product transport orders in a time period
for a transportation zone. It should be ensured that:
??The transportation methods are filled to maximum capacity
??No transportation method is dispatched that is not filled to minimum capacity
??For stock transport orders that could not be satisfied during the TLB run due to specified
constraints, you can build transport orders manually
??You can create transportation zones for the TLB or transfer them from R/3. You can thereby
consolidate your transportation capabilities (for example, use one truck to deliver orders to several
locations). You can group several locations together using transportation zones (and thereby create a
zone). TLB orders for several locations are regarded as one order for a large location, although
individual purchase orders do actually exist for separate locations.
??If you want to use transportation zones, you create a location as a transportation zone in the location
master. (From the APO Easy Access menu choose Master Data -> Location. Use the input help (F 4)
in the Loc.type field of the location master and choose 1005 - transportation zone). You then assign
the relevant locations in the hierarchy master to this transportation zone (choose Master Data ->
Hierarchy). You can display these location hierarchies in the TLB interactive planning shuffler.
© SAP AG AP010 5-2 9

Building Consolidated Loads
Full truck
(best price) Minimum capacity
Half-full
truck
Days
1 2 3
? SAP AG 2001
??In the Interactive Planning table for the TLB, you can view transport orders generated automatically
by TLB for a specific day. If the load does not meet the minimum capacity requirements specified
for a full transport load within the specified pull-in horizon, you can manually create transport orders
that are planned for later shipment and ship them early in order to build a full truck load.
© SAP AG AP010 5-3 0

Supply Network Planning: Unit Summary
You are now able to

? Describe the Supply Network
Planning distribution network
? Explain the Supply Network
Planning process flow
? Identify master data that is required
to run Supply Network Planning
? Describe and compare Supply
Network Planning planning methods
? Explain the function of deployment
? SAP AG 2001
© SAP AG AP010 5-3 1

© SAP AG AP010 5-3 2
Exercises
Unit: Supply Network Planning

At the conclusion of this exercise, you will be able to:

?? Open interactive planning in SNP, run the heuristic and view the
capacity situation for a resource
Once a forecast has been generated at Precision Pump Company, the

Logistics Planner uses the SNP heuristic to create a rough distribution
plan and checks for capacity overloads at the production plants.
1-1 Open interactive planning of Supply Network Planning.

Open the selection window and, under “Show”, select “APO Location product”.
Version 000 is already displayed automatically. In the next row, enter APO -
Product once again, and on the right-hand side enter your product T-F2##. Load the
data for the product at location 2400 into the planning table.
1-2 Look at the future periods and check if the planned independent requirements you
released for the distribution centers 2400 and 2500 and the plant 1000 are
displayed. Analyze in which key figure the planned independent requirements are
shown.
Make sure that no distributed demands and production orders exist for the
production plants 1000 and 2300.
1-3 Run the network heuristic and check the situation for your product T-F2## for the
distribution center 2400.
Verify that there are now values in the Total receipts row.
Which plants are supplying the receipts?_______________
© SAP AG AP010 5-3 3

1-4 Check the capacity situation for resources WT-L##_1000_001 and WT-
L##_2300_001 in the Capacity View. Switch data views by dragging the grey bar
upwards on the left and double-clicking on data view SNP94(2) “CAPACITY
CHECK”.
Open the selection window and, under “Show”, select “APO Resource”. Version
000 is already displayed automatically. In the next row, enter “APO Resource” once
again, and on the right-hand side enter your resources WT-L##*. Load the data for
a resource into the planning table sequentially. If there are any capacity overloads,
run “Capacity Leveling”.
Is there any capacity overload for these resources?_________
If so, when do the violations occur?____________________
1-5 Run optimization for your product T -F2## at all locations. Load all location
products with product T -F2## into the planning table. Start the Optimizer with the
optimizer profile DISCRETE and the cost profile MASTER. Check the capacity
situation again.
1-6 Check if the receipts have been transferred to the connected R/3 System. Log on to
the R/3 System and call the stock/requirements list for your product T_F2## in
plant 1000.
© SAP AG AP010 5-3 4

Topic: Deployment
At the conclusion of this optional exercise, you will be able to:

?? Describe deployment’s functionality and how it is used in APO
Precision Pump’s products are distributed to their distribution centers and

customers on a daily basis.
Deployment checks the quantity that is available in the next few days for
distribution and confirms stock transports that can be made.
1-1* Run deployment for the location 1000 for the next 100 days using mass processing.
Reduce SNP transport orders. Write down the result of the deployment run:
_______________________________________________________________
_______________________________________________________________

Version 000
Planning book 9ASNP94
Data view SNP94(1)
Location 1000
Product T-F2##
Deployment horizon in 100
days
If you select Orders: Do not change the system will not change the
SNP transport orders.
The horizons in the training system are not realistic. In practice,
deployment is used to confirm stock transports for the next few days.
But in the course we cannot wait until the orders reach the short-term
horizon.
© SAP AG AP010 5-3 5

© SAP AG AP010 5-3 6
Solutions

1-1 Open interactive planning of Supply Network Planning.

Open the selection window and, under “Show”, select “APO Location product”.
Version 000 is already displayed automatically. In the next row, enter APO -
Product once again, and on the right-hand side enter your product T-F2##. Load the
data for the product at location 2400 into the planning table.
Supply Network Planning ? Planning ? Interactive Supply Network Planning

The selection window is the second icon in the top left. Open the selection
window and, under “Show”, select “APO Location product”. Version 000 is
already displayed automatically. In the next row, enter APO -Product once
again, and on the right-hand side enter your product T-F2##. Select “Adopt”,
and your selection will be adopted by the selection window.
Double-click on your product T-F2## for the distribution center 2400. The data
for this selection is now displayed in the planning table.
1-2 Look at the future periods and check if the planned independent requirements you
released for the distribution centers 2400 and 2500 and the plant 1000 are
displayed. Analyze in which key figure the planned independent requirements are
shown.
Make sure that no distributed demands and production orders exist for the
production plants 1000 and 2300.
Display the weeks in the next month and you will see the quantities in the key
figure “Total demand”. Only forecasts outside of the forecast horizon contribute
to the total demand.
Double-click on the “Total demand” row. The released data is displayed in the
key figure "Forecast". All six key figures (forecast, sales order, dependent
demand, distributed demands) contribute to the total demand.
Double-click on your product T-F2## for the distribution center 2500. Ensure
that demand is displayed.
Double-click on your product T-F2## for the plant 1000. Forecasts are displayed
but no production quantities and distributed demand.
© SAP AG AP010 5-3 7

1-3 Run the network heuristic and check the situation for your product T-F2## for the
distribution center 2400.
Verify that there are now values in the Total receipts row.
Which plants are supplying the receipts?_______________
Click on the Heuristic (network) button to run the heuristic.

Double-click on your product T-F2## for the distribution center 2400.
Double-click on the “Total receipts” row.
The stock transports created by the heuristic are displayed in the key figure
“DistrReceipt (Planned)”. Right-click on this key figure and select “Display
details” to display the receipts from the plants in the lower window.
The production plants 1000 and 2300 supply the distribution center 2400
according to the quota arrangement for the product T-F2##.
1-4 Check the capacity situation for resources WT-L##_1000_001 and WT-
L##_2300_001 in the Capacity View. Switch data views by dragging the gre y bar
upwards on the left and double-clicking on data view SNP94(2) “CAPACITY
CHECK”.
Open the selection window and, under “Show”, select “APO Resource”. Version
000 is already displayed automatically. In the next row, enter “APO – Resource”
once again, and on the right-hand side enter your resources WT-L##*. Load the
data for a resource into the planning table sequentially. If there are any capacity
overloads, run “Capacity Leveling”.
Is there any capacity overload for these resources?_________
If so, when do the violations occur?____________________
Double-click on the data view SNP94(2) “CAPACITY CHECK”.

Double-click on your resource in the selection window to load data for the
resource into the planning table.
The aggregated available resource is calculated from the available capacity per
workday.
If capacity overloads occur, select “Capacity leveling”; “Capacity leveling by
backward scheduling”; “Time-based capacity leveling w/o priority rule”;
“Maximum load as a % :100%”, “Ignore firmed quantity”. Save the result and
select again.
© SAP AG AP010 5-3 8

1-5 Run optimization for your product T -F2## at all locations. Load all location
products with product T -F2## into the planning table. Start the Optimizer with the
optimizer profile DISCRETE and the cost profile MASTER. Check the capacity
situation again.
Double-click on the data view SNP94(1) “SNP PLAN”. Open the selection
window and, under “Show”, select “APO Location product”. Version 000 is
already displayed automatically. In the next row, enter APO -Product once
again, and on the right-hand side enter your product T-F2##. Select “Adopt”,
and your selection will be adopted by the selection window.
Press the “Select all” symbol above the selection window and load the data by
pressing the “Load data” symbol.
Start the optimization run by pressing the “Optimizer” symbol.
Enter DISCRETE for the optimizer profile and MASTER for the cost profile and
press “Execute”. When the Optimizer has finished the calculation, the resulting
costs are displayed. When you have analyzed the costs, select the green arrow
BACK to return to the planning table. Now you can check the resource loads
again.
1-6 Check if the receipts have been transferred to the connected R/3 System. Log on to
the R/3 System and call the stock/requirements list for your product T_F2## in
plant 1000.
SAP standard menu ? Logistics ? Production ? MRP ? Evaluations ?

Stock/Reqmts List
Enter your product T-F2## and the plant 1000, for example, and confirm.
The SNP planned orders and releases for the stock transport requisitions are in
R/3. The planned independent requirements are not transferred back via CIF but
via mass processing in Demand Planning.
© SAP AG AP010 5-3 9

© SAP AG AP010 5-4 0
Topic: Deployment
1-1* Run deployment for the location 1000 for the next 100 days using mass processing.
Reduce SNP transport orders. Write down the result of the deployment run:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Supply Network Planning? Planning ? SNP in the Background ? Deployment

Version 000
Planning book 9ASNP94
Data view SNP94(1)
Location 1000
Product T-F2##
Deployment horizon in 100
days
Select “Orders: Reduce”, and “Log”.
If you select Orders: Do not change the system will not change the
SNP transport orders.
The horizons in the training system are not realistic. In practice,
deployment is used to confirm stock transports for the next few days.
But in the course we cannot wait until the orders reach the short-term
horizon.
© SAP AG AP010 5-4 1

Production Planning / Detailed Scheduling (PP/DS)
Contents:
? Consumption of planning by sales orders for forecast-
controlled products in make-to-stock and make-to-order
production
? Simultaneous material and capacity requirements planning at
operation level in the production plant
? Tools for production planning and production scheduling
? Schedule optimization in PP/DS
? Transfer of planning results to the execution system
? SAP AG 2001
© SAP AG AP010 6-1

Course Objectives
At the conclusion of this course, you will be able to
? Describe how sales orders consume planning in

make-to-stock and make-to-order production
? Use simultaneous material and capacity
requirements planning at operation level
? Use the production planning and production
scheduling tools
? Describe schedule optimization in PP/DS
? Transfer the planning results to the execution
system
? SAP AG 2001
© SAP AG AP010 6-2

1 Course Overview
4 Demand Planning
66 Scheduling
6
7 Transportation Planning
99 Conclusion
? SAP AG 2001
© SAP AG AP010 6-3

Business Scenario
? In Demand Planning, a demand planning forecast

was generated and transferred to the distribution
center as planned independent requirements.
? After SNP has transferred the requirements via the
stock transfer to the production plant, the
production quantities and capacities must be
planned in the production plant.
? SAP AG 2001
© SAP AG AP010 6-4

Production Planning & Detailed Scheduling in
APO: Advantages
? Simultaneous material and capacity requirements planning for in-house

production, external procurement, and stock transfers in a production plant at
operation level: Fast generation of feasible plans
? Immediate and automatic planning (for example, to trigger production from the
plant) - close integration with plant
? Planning with exact times, even for dependent requirements (for example, a
prerequisite for material staging by shift)
? Dynamic exception messages in real-time and based on order linking (pegging)
across the whole supply chain
? Multi-level capacity requirements planning possible: automatic, multi-level, bi-
directional propagation of order changes
? Planning of alternative resources
? Available capacity: time, volumn, length ...
? Consideration of restrictions in planning (for example, supplier capacity)
? Schedule optimization (order sequencing, lead time, etc.)
? SAP AG 2001
??Simultaneous material and capacity requirements planning: You can define resources as finite
resources in the resource master (resources critical for planning). At these resources, operations of
orders are only created if there is enough capacity available for the order quantity on the order date.
If there is not enough capacity available, the system searches for a new date, taking the capacity
situation into account.
??Automatic planning immediately: If you set this indicator for a product (PP/DS tab in the product
master), the system starts a single-level planning run for this product for each change made that is
relevant to planning (for example, a new sales order). At the same time (immediately) a multi-level
ATP check is performed for the product and for the assembly/components for which automatic
planning immediately is defined.
??Planning with exact times: Dependent requirements and orders are created with a time.
??Bi-directional propagation of order changes: If you make time-related changes to orders at, for
example, finished-product level, you can specify that the system is to automatically move the
assembly orders. If, however, there is not enough capacity at that time for the assembly orders, an
exception message can be generated or the order is not moved at finished product level. In the other
direction, moving assembly orders can have an effect on finished product orders.
??Planning alternative resources: If not enough capacity is available at a resource, the operation can
be rescheduled at alternative resources (maintained in the PPM).
??Schedule optimization: During planning, it may be that orders were generated whose order
sequence is not optimum. Therefore, you can change the sequence and resource assignment of
existing orders in the optimization run.
© SAP AG AP010 6-5

Interaction Between SNP and PP/DS
PP/DS SNP
Create, Create, Create, Create,
change change change change
Receipts
Order Order Order Order Order Order

4712 4713 4714 4715 4716 4717
Today 50 100 40 210 160 35 Time
Mo Tu We Th
Reqmts in plant
Production horizon
(per product)
? Capacities and material are planned ? Capacities are planned in time bucket
based on exact times (to the second) profiles in an aggregated manner
? Consideration of order sequences ? Order sequences not considered
? Optimizer: Can optimize the sequence ? Optimizer: Optimizes lot sizes,
of existing orders and operations determines source of supply
? SAP AG 2001
??Ifyou decide to plan using both Supply Network Planning (SNP) and Production Planning and
Detailed Scheduling (PP/DS), the production horizon is used to separate the areas of responsibility
for these two planning functions:
??Supply Network Planning is used for medium -term to long-term planning across the whole
logistics chain (especially if several plants and distribution centers are available). Requirements
for a defined bucket (for example, day) are aggregated. In this case, it is irrelevant whether a
requirement is in an early shift or late shift since the requirements are only roughly planned, and
even the time positions of breaks are not taken into account. Furthermore, you are not only able to
perform time aggregated planning in SNP, but also period aggregated planning (if desired). You
can define bucket resources to be used for SNP which can represent, for example, the available
capacity of a whole warehouse. Since you create separate PPMs for SNP (which are usually
copied from PP/DS -PPMs), you can describe production at these bucket resources. Order
sequences play no role in the time area of SNP planning.
??PP/DS is used for short-term planning in which orders must be scheduled to the minute and order
sequences must be taken into account (sequence planning and optimization).
??As soon as a requirement is within the production horizon, it is no longer planned in the SNP
planning run, but rather in the production planning run in PP/DS. Orders can be manually created or
changed in PP/DS across the complete time axis, irrespective of the production horizon. During
automatic planning (the production planning run) in PP/DS, only orders within the production
horizon are created. In SNP, however, orders cannot be created or changed in the production horizon.
Orders that are in the production horizon and thus planned by PP/DS are still displayed in SNP as
aggregated requirements for the defined bucket.
© SAP AG AP010 6-6

Interaction Between SNP and PP/DS (2)
SNP
Production horizon Create
100 Scheduling according

to the PPM for SNP
Today
Production horizon
100
Today
PP/DS Delete
Production horizon
100 Scheduling according

to the PPM for PP/DS
Today
PP/DS Create again
? SAP AG 2001
??In this graphic, an order is created in Supply Network Planning using the production process model
defined in SNP. Production process models are created (the SNP-PPM can be copied from PP/DS-
PPM, which is generated via the R/3-APO interface from the R/3 routing/BOM). Bucket resources
(used only in SNP) or mixed resources (which can be used both in PP/DS and SNP-PPM) are
planned in Supply Network Planning. Orders are aggregated for each defined bucket.
??As soon as the start date of the order enters the production horizon, the SNP order is no longer
planned by SNP. The SNP order must be converted into a PP/DS order so it can be planned by
PP/DS. To do this, background conversion is available in the PP/DS menu, which can be used to
schedule periodically. The conversion creates the order again in PP/DS using the production process
model defined there. Before the conversion, the aggregated requirements are displayed in SNP as
planned production. After the conversion in PP/DS, the orders are still displayed as aggregated
requirements in SNP.
??The production horizon is defined as a number of days from the current day into the future in which
PP/DS is to be used to plan. The production horizon can be defined in Customizing for Supply Chain
Planning, in the IMG activity, Display Global Parameters and Default Values. You may also define
a production horizon for each product per location in the product master. This definition takes
priority over the Customizing definition.
© SAP AG AP010 6-7

Requirements Strategies
Requirements
strategies
Quantity 100 Quantity ?
Date 05/10 Date ?
SD
Planned
indep. Sales
reqmts order
Production /
Purchasing Customer
? How does SAP process independent

? SAP AG 2001
requirements?
??A requirement is the quantity of a material required at a certain time in a plant.

??Independe ntrequirements do not refer to the requirements of other materials. Planned
independent requirements and sales orders are independent requirements.
??A requirements strategy specifies a possible procedure for material planning.
??Some requirements strategies support make-to-stock production. You could, for example, plan
production or purchasing based on a forecast and then cover the sales orders from the stock.
??Some requirements strategies support make-to-order production. In this case, you may not start
production or purchasing, for example, until a sales order has been received.
??Some requirements strategies support a combination of make-to-stock and make-to-order production.
You could produce the subordinate assembly, for example, based on a forecast. You would not start
the final assembly until a sales order is received.
© SAP AG AP010 6-8

Requirements Strategies
? Make-to-stock production of the finished product by planning at

the finished product level
? Sales order-related final assembly:
? Make-to-stock production of assemblies by planning at
assembly level, final assembly in make-to-stock or make-to-
order production when sales orders are received.
? Make-to-stock production of assemblies by planning at
finished product level, but final assembly is not triggered until
the sales order is received. Final assembly in make-to-stock
or make-to-order production.
? Make-to-order production only, without planning
? SAP AG 2001
??Requirements strategies represent the business procedure for planning production quantities and
dates. A wide variety of requirements strategies are available offering a number of different
possibilities for planning, ranging from make-to-order production to make-to-stock production.
Depending on the strategy you select, you have the following options:
??Make-to-stock production based on sales orders and/or planned independent requirements at

finished product level
??Planning specifically for the assembly, if you can plan more easily at component level. Final
assembly takes place in make-to-stock or make-to-order production.
??Stocking up of assemblies by planning at finished product level, but final assembly is not triggered
until the sales order is received. Final assembly takes place in make-to-stock or make-to-order
production.
?? Make-to-order production only, without planning the finished product or the components
??Furthermore, you can combine requirements strategies. This allows you to plan a finished product
with a requirements strategy for make-to-stock production as well as plan an important assembly that
is also sold as a spare part.
??The planning strategies available for a material can be found in APO Customizing for Master Data
(in step Determine Requirements Strategies). You can assign a requirements strategy to a material in
the Requirements strategy field. Each requirements strategy contains important control parameters
for the consumption of sales orders (or dependent requirements) and planning.
© SAP AG AP010 6-9

Overview of the Complete Production Planning
Run Process
Planning
Dependent Product Sales orders,

requirements planning run Planned ind. reqmts
Purchase Sched. agree.

Planned order
requisition del. schedule
Convert Convert
Production Process Plnd order for Sched. agree.

Order
order order repetitive man. del. schedule
In-house
production External procurement
Execution
? SAP AG 2001
??Material requirements planning deals with current and future requirements. The planned
requirements quantities trigger planning (in consumption-based planning, for example, planning is
triggered when the reorder point is not reached). Requirements elements for material requirements
planning are, for example, sales orders, planned independent requirements, dependent requirements.
??If theproduction planning run discovers shortage quantities, procurement proposals are generated:
purchase requisitions and planned orders are internal planning elements which can be changed,
rescheduled or deleted at any time.
??In the case of in-house production the system creates planned order for planning production
quantities. When planning is complete, planned orders are converted to production orders.
Dependent requirements for the planned order are converted to reservations for the production
order.
??In external procurement, the system generates a purchase requisition for planning external
procurement quantities. When planning is complete, the purchase requisition is converted to an
order. If a material exists for a scheduling agreement, scheduling agreement delivery schedules
can also be generated directly during the production planning run.
??When planning is complete, in-house production or external procurement must be triggered. For this,
??Planned orders are converted to production orders if you are working with discrete manufacturing
(order-based production)
??Planned orders are converted to process orders if you are working with process manufacturing
??Planned orders are used as a basis for production if you are working with repetitive manufacturing
(period-based instead of order -based)
??Purchase requisitions are converted to purchase orders
© SAP AG AP010 6-1 0

Time Elements in Scheduling
Availability date
Operations
Start date End date

Finished
product 10 20 30
Stock transfer 10 GR processing time

to a different
plant GI processing time GR processing time
Assembly of
a different 10 20
plant
10 GR processing time
GR processing time
Time Reqmts date
? SAP AG 2001
??When the lot size of the planned order has been determined and the PPM has been exploded, the
production planning run calculates the dates of the planned orders.
The dependent requirement dates of the planned orders are moved to the dates of the assigned
operations (PPM). A material order appropriate for the operation is then possible.
??The system assumes material staging according to component assignments in the PPM to the
operations in the PPM. The dependent requirement dates of the BOM components are moved to the
production start dates of the operations to which they are assigned.
© SAP AG AP010 6-1 1

Production Planning Run Overview: Simultaneous
Material and Capacity Requirements Planning
Resource availability Sales order with desired

date and quantity
Available 1st Loading attempt
Confirmed
Occupied Final loading
qty/date
Uninterruptible operation, according to PPM
30
Resource 3 (finite) 30
20 20
Resource 2 (infinite)
10 10
Resource 1 (finite)
Time
Today Possible ALERTS:

Resource Overload
Raw material Delivery time Delivery time Supplier-supplier time violated
Supplier-resource overload
? SAP AG 2001
??If a product is not available, the requirement (the sales order or dependent requirement, for example)
triggers production directly: If it triggers an order for in-house production, APO creates a planned
order for the desired quantity in PP/DS. All of the operations of the PPM are scheduled at the
resources of the PPM, and the system takes the capacity restrictions into account (available capacity
and orders that may have already been scheduled).
If the capacities are already exhausted on the desired date, the system uses simultaneous material and
capacity requirements planning to find a date on which the planned order can be created. You use the
strategy profile to define how the system is to schedule (search for a slot, infinite planning ...).
??Prerequisite:
??Maintain resources critical to planning as finite resources in the resource master. At these
resources, operations of orders are only created if there is enough capacity available for the order
quantity on the order date.
??Maintain the strategy profile with which you want to trigger the scheduling of planned orders in
planning under Global Settings in Customizing for PP/DS, in the Strategy profile field. The
default strategy profile in the delivery system is SAP002 (search for a slot backward).
© SAP AG AP010 6-1 2

Detailed Scheduling Planning Board
Table area Diagram area
Column Resource chart

heading Res.
Short
03/15/1999 03/16/1999
Res. descrip-
type tion
22 00 02 04 06 08 10 12 14 16 18 20 22 00 02 04 06 08
Res01 P Loc 01
Lines Res02 P Loc 01

Res03 P Loc 02
Order Chart
03/15/1999 03/16/1999
OrderNo Products
22 00 02 04 06 08 10 12 14 16 18 20 22 00 02 04 06 08
Chart objects
000001294 P
000001335 P
000001357 P
Product histogram
03/15/1999 03/16/1999
Product
22 00 02 04 06 08 10 12 14 16 18 20 22 00 02 04 06 08
300
Product 01 200 Different
100
Order No: 000001294 charts
Graphical object
Message bar (operation, order)
? SAP AG 2001
??Schedules are displayed graphically in the planning board.

??The planning board is used for interactive planning, for example, for interactive processing and
dealing with Alerts.
??You can call the planning board directly from the Production Planning/Detailed Scheduling menu or
from order processing.
??You can define the layout of the planning board, for example:
??The different charts (such as a resource chart and an order chart):
??The field selection and sorting for the columns in the table section of a chart
??The format of the rows in the table section
??The objects displayed in the diagram section of a chart, for example:
- Operations or orders (graphical objects)
- Histograms (product stock curves or resource load curves)
- Network views of operations and orders that display the time and pegging relationships between
operations and orders
??The layout of operations and orders in the diagram section.
© SAP AG AP010 6-1 3

Optimization Concept in PP/DS
? Optimization: Change of production dates/sequences and resource

assignments of existing operations/activities with regard to the following criteria
(no creation or deletion of orders):
W 1* Total lead time

+ W 2* Sum of setup times
+ W 3* Sum of setup costs
+ W 4* Maximum delay costs
+ W 5* Sum of delay costs
+ W 6* Sum of mode costs
Objective function = MINIMUM
? SAP AG 2001
??Use: Optimization allows you to optimize the production dates/sequences and the resource
assignment of existing operations/activities which were generated by the production planning run or
manual planning. The optimizer does not create or delete orders.
The purpose of optimization is to generate feasible production plans and increase the efficiency of
production. Several optimization parameters (such as setup times, due date violations) can be
weighted in such a way that the optimized schedule comes as close to the desired results (for
example, minimum setup times) as possible. The following parameters can be taken into account in
optimization:
??Total lead time (from the start of the first operation to the end of the last operation in a schedule
within the optimization horizon). The total lead time makes a statement about the compactness of
the orders within the optimization horizon.
??Sum of setup times
??Sum of setup costs
??Maximum delay costs (maximum delay of an order compared to its requirements or due date).
??Sum of delay costs (delay compared to requirements or due dates)
??Sum of mode costs
© SAP AG AP010 6-1 4

Optimization Window: Time and Resources
Start Earliest start for optimized schedule End
Resource A
Resource B
Resource C
Resource D
Resource E
Non-working times
Fixed operations
Operations, that may be rescheduled
Relationships
Transferred resources: B, C, D
Optimization range
? SAP AG 2001
??When you call up optimization you set theoptimization horizon (start and end) and the start date
for the optimized schedule. The optimization function reschedules orders and operations that are:
??Completely within the optimization horizon (defined by a start and an end date)
??Not fixed
??At resources which were transferred to optimization
- If you have selected resources in the planning board, only these selected resources are
transferred to the optimizer. If you have not selected any resources in the planning board, the
system transfers the resources that you specified in the work area for the planning board and the
optimizer.
In particular, the system can only reschedule an activity to alternative resources during
optimization when these resources are included in the resource selection for optimization.
??The relationships of the fixed orders and operations to the non-fixed orders and operations determine
if and by how much these orders and operations can be shifted during optimization. The optimized
schedule is, therefore, adjusted to accommodate the fixed orders and operations.
??The system does not change planning outside of the optimization window during planning. Activities
outside of the optimization window are fixed during optimization. However, the fixed activities
determine by their relationships to the non-fixed activities in the optimization range, whether and
how far these activities can be rescheduled during optimiz ation. The optimized schedule is,
therefore, adjusted to accommodate the fixed activities.
??Earliest start date for the optimized schedule: Before the optimization, you specify the earliest
date on which the optimization function can schedule the activities. You cannot enter an earliest start
date that lies in the past.
© SAP AG AP010 6-1 5

Optimization: Sum of Setup Times/Setup Costs
Setup times at paint shop Setup times in minutes
Prod. A B C Product A: white color

A 0 10 20 Product B: yellow color
Product C: blue color
B 30 0 15
C 30 25 0
A C Requirements time B A
Setup Setup Setup

C time A time B time A
Operations of products A to C at paint shop according to schedule (starting situation for optimization): planned
orders for A were created first, then for B and C
Setup Setup
C time A A time
B
Optimization result (with light weighting of delays)
Setup Setup
A A time B time
C
time Optimization result (without weighting of delays)
etup
timum s
Op Time
? SAP AG 2001
??Use: You can optimize the schedule for single resources based on the sum of the setup times and
sum of the setup costs. The system determines sequence dependent setup times and setup costs from
the setup matrix (which can only be maintained for single resources).
??Prerequisites:
??You have modeled the single resources and the operations that are processed at these resources
exactly as with the setup time adjustment (see the unit Simultaneous Material and Capacity
Requirements Planning).
??You strongly weighted the setup times or the setup costs in the objective function.
??Scope of function: In the objective function, the system interprets the values for the setup times and
setup costs from the setup matrix as follows:
??You enter the setup time in a unit of your choice (for example, hours or minutes) in the setup
matrix. The system uses the setup duration in seconds in the objective function. If you enter, for
example, a setup duration of 10 min utes in the setup matrix, the system uses the value of 600
(seconds) in the objective function.
??You enter the setup costs without unit of measurement in the setup matrix. In the objective
function, the system directly uses the value entered in the setup matrix. If you enter, for example,
the value 10 for the setup costs in the setup matrix, the system uses the value of 10 to calculate in
the objective function.
??Important: In the objective function, the setup costs with a value of 10 correspond to a setup
duration of 10 seconds. You must consider this relationship between setup times and setup costs
when defining the objective function, that is, when specifying the weighting for the setup times and
the setup costs.
© SAP AG AP010 6-1 6

Conversion to Fixed Procurement Elements
Individual
Individual conversion
conversion Planned Production
order order
Purchase
requisition Order
Collective
Collective conversion
conversion
Planned Production
orders orders
Purchase
requisitions Orders
? SAP AG 2001
??You can trigger the conversion of planned orders and purchase requisitions to production orders or
orders directly in APO. You set the conversion indicator in APO for the orders you want to convert.
The orders are transferred to the OLTP system and converted automatically. The converted orders
are sent back to the APO System with a different ATP category (purchase requisition to purchase
order). If a planned order is converted to a production order, the dependent requirements of the
components are converted to reservations.
??You can convert planned orders and purchase requistions in one of the following two ways:
??Individually in interactive planning: In the product view and the product planning table, you can
select orders to be converted and then choose Set conversion indicator. When you save the
planning results, the orders to be converted are transferred to the R/3 System, where the
conversion will be automatically triggered. The converted orders are sent back to the APO System
with a new ATP category.
??Using mass conversion and selection criter ia (Choose Production Planning -> Manufacturing
Execution -> Conversion of Orders/Purchase Requisitions): You can set the conversion indicators
for a large number of orders or for several products. You can restrict the selection of orders to be
converted by entering the product, location, production planner and the offset for the opening
period. The opening period, which is defined in the product master on the PP/DS tab, controls
which orders are to be converted. The opening period is a number of workdays starting from the
current date. The APO System only sets the conversion indicators for orders whose order start
dates are within this period. The opening period is used both for in-house production orders and
external procurement orders.
??Prerequisites: On the PP/DS tab in the product master, you have maintained an opening period for
each product at the location level.
© SAP AG AP010 6-1 7

Mass Conversion - Time-Based
Offset time
Purchase requisition
Opening
period
Planning
Planned order
Creation Production Production

date start finish
Planned orders and

purchase requisitions
Today x days later Time
Production orders/
process orders Order header
Operations
Orders
Materialcomponents
Production resource/tool
Costs PlanK 20
Plnd 100
Actual 50
In-house External procurement

? SAP AG 2001 production
??APO orders contain three dates: production start, production finish, creation date. The creation date
is the date on which a planned order is to be converted to a production order or a purchase requisition
to an order. This date is based on the opening period defined in the R3 material master (SchedMargin
key field). The opening period from the SchedMargin key of the R/3 material master is transferred to
the APO product master in the R/3 APO interface (Opening field in the Horizons group box).
??As soon as the creation date of a planned order is passed on to a time horizon selected in mass
conversion, it can be converted in mass conversion. The time interval (offset time) entered in mass
conversion is always valid as of today's date. Planned orders whose creation dates are in the past are
automatically selected too.
??Planned orders are usually converted to production orders (in-house production), purchase
requisitions to purchase orders (external procurement).
??In in-houseproduction, the order type in R/3 determines whether it is a production order or a
process order. The order type is taken (in the sequence of highest priority) from the production
scheduling profile in the R/3 material master, the MRP group in the R/3 material master, and the
plant parameters in R/3-Customizing. The R/3 System decides whether a production order or a
process order is to be generated for the product.
??When the pla nned order is converted to a production order or process order, the planned order is
deleted. The related dependent requirements (material components) and any capacity requirements
are redirected to the newly created production order. The dependent requirements become
reservations.
© SAP AG AP010 6-1 8

Production Planning / Detailed Scheduling (PP/DS):
Unit Summary
You are now able to
? Describe how sales orders consume planning in make-

to-stock and make-to-order production
? Use simultaneous material and capacity requirements
planning at operation level
? Use the tools for production planning and production
scheduling
? Describe schedule optimization in PP/DS
? Transfer the planning results to the execution system
? SAP AG 2001
© SAP AG AP010 6-1 9

© SAP AG AP010 6-2 0
Exercises
Unit: Production Planning and Detailed Scheduling
At the conclusion of these exercises, you will be able to:

?? Explain the production planning run method in PP/DS
(simultaneous material requirements planning and capacity
planning)
In Demand Planning, a demand planning forecast was generated and

transferred to the distribution centers in Milan and Rotterdam as
planned independent requirements. After SNP has transferred the
requirements via the stock transfer to the production plant, the
production quantities and capacities must be planned in the
production plant.
In addition, customers in Germany in your company are not supplied
via the distribution cente rs. Rather, they receive supplies directly via
the plant 1000 in Hamburg. Therefore, planned independent
requirements have also been generated in Demand Planning directly
for the plant 1000 (without a detour via the distribution centers).
These planned independent requirements preplan the demand
expected for the customers in Germany.
Your task is to plan material availability in plant 1000 in Hamburg.

Start a production planning run to plan material and capacity
simultaneously in the plant.
1-1 In the Product View in APO, look at the planned independent requirements for
pump T-F2## at location 1000 (production plant Hamburg) .
1-1-1 Why have no planned orders been created, in the near future, for the planned
independent requirements?
_____________________________________________________
To return to the display of the stock/requirements situation, select the

Elements tab.
© SAP AG AP010 6-2 1

1-2 Execute a production planning run to schedule the production of the pumps. In this
example, planning should not be triggered from the product view; rather, the
production planning run should be used.
1-2-1 Exit the product view and follow the menu path for the production planning
run. In the production planning run, in plant 1000, you plan all products for
which you have planned t he production planner.
In the production planning menu, select the following variant:

SAP_MRP_001 .
After making this selection, choose Selection criteria .

Now select the following values:
Field Values
Product
Location 1000
Production planner 0##
Planning file entry created X
Choose Execute.
1-3 In the Product View in APO, look at the planning result for the APO product T -
F2## at location 1000 (production plant Hamburg).
1-3-1 Look at the situations of the planned order for product T -F2## and check the
requirements/receipt situation for all components.
Were all requirements planned in planning?
_____________________________________________________
1-3-2 Now check the planned order details:
Look at the component list of the latest planned order within the production
horizon: Double -click on the latest planned order within the production
horizon to go to the planned order.
After double -clicking, you can see the detailed data (header data) of the
planned order on the right, and the complete structure of the planned order
on the left. On the left you can recognize the receipts, components
(requirements) and operations of the planned order.
When are the start and end dates of the planned order for the final assembly
of pump T-F2##?
_____________________________________________________
© SAP AG AP010 6-2 2

How many operations have been scheduled in the planned order on the
various resources?
_____________________________________________________
Which assemblies (and also dependent requirements) are contained in the

planned order for the pump T-F2##?
_____________________________________________________
Have the components T -B1## (casing), T -B22## (fly wheel), T-B3##

(hollow shaft) and T-B4## (electronic turbo-drive) also been planned?
To find this out, double -click on the corresponding product number in the
component list of the planned order and look at the requirements/stock
situation for the corresponding assembly on the right of the screen.
Are there any alerts for the components of the planned order?
_____________________________________________________
© SAP AG AP010 6-2 3

© SAP AG AP010 6-2 4
Optional exercise (not part of the standard course–
can be used by the course participants after the course)
Unit: Production Planning and Detailed
Scheduling(Machine Scheduler’s Tools)

?? Visualize and process orders in the detailed scheduling
planning board
After you have executed the planning run for your plant 1000 in
Hamburg, you must then reschedule the sequence of the existing
orders.
1-4 Until now, we have only created requirements and orders for pump T-F2## (white
pump). Now, create some more planned independent requirements for pump T-F4## in
plant 1000.
To demonstrate that planned independent requirements can be created not only using
APO Demand Planning, but also using R/3 Program Planning, create the planned
independent requirements manually in R/3.
Note : Creation of planned independent requirements in R/3 is useful if you are

performing demand planning in R/3, or are not performing demand planning and wish
to maintain the planned independent requirements manually.
1-4-1 Enter the independent requirements for material T-F4## in plant 1000 in the
R/3 program planning. In the initial screen of the transaction, enter T (day
format) in the planning period field, to select day schedule lines as the period
schedule line.
In the planning table, select the first row of the table and choose the delivery
schedule tab.
Enter the following independent requirements for pump T-F4## in plant 1000:
Friday in a Friday in Friday in Friday in

week two weeks three weeks four weeks
5 5 5 5
Save your entries.
© SAP AG AP010 6-2 5

1-5 Check the sequence of the planned orders for both product pump T -F2## (white pump)
and T-F4## (blue pump). To do this, use the detailed scheduling planning board.
1-5-1 Call up the variable view of the Detailed Scheduling Planning Board. Choose
the “Pump ##” overall profile and confirm using Enter.
You see that the work area “Pump ##” was selected automatically when you
selected the overall profile “Pump ##”. This includes all resources for the final
assembly of the pumps.
Enter the detailed scheduling planning board using the selection criteria
specified above and then navigate in the planning board.
1-5-2 Look for the first orders for products T-F2## (white pump), and T-F4## (blue
pump) by selecting the respective product numbers one after the other in the
Product chart and then right-click to select "begin with first graphical object".
Look in the Resources chart to see which resources the pumps occupy. To find
out which capacity loads belong to which order in the resources chart, select the
first planned order for the product T-F2## and then right-click to select “Mark
objects for the same order”.
All capacity re quirements belonging to the order are then shown in color.
1-5-3 In the Detailed Scheduling Planning Board, you can now manually reschedule
orders/operations using Drag & Drop, or you can start the Optimizer for
automatic sequence planning.
However, only observe the planning result here, and then exit the Detailed
Scheduling Planning Board without saving.
© SAP AG AP010 6-2 6

Solutions
Unit: Production Planning and Detailed Scheduling
1-1 APO menu path: Production Planning ? Interactive Production Planning ?

Product View
1-1-1 Why have no planned orders been created, in the near future, for the planned
independent requirements?
For product T-F2##, a production horizon of a certain number of days has
been maintained in the product master, on the SNP2 tab. Requirements
outside this production horizon are covered by the SNP planning run.
Requirements within the production horizon are covered by the PP/DS
planning run. As only an SNP planning run was executed in the last
exercise, but not a PP/DS planning run, no planned orders are available for
any requirements within the production horizon.
1-2 APO menu path: Production Planning ? Automated Production Planning and
Optimization ? Production Planning Run
1-3 APO menu path: Production Planning ? Interactive Production Planning ?

Product View
1-3-1 Look at the situations of the planned order for product T -F2## and check the
requirements/receipt situation for all components.
Were all requirements planned in planning?
After the production planning run, all the planned independent
requirements were planned.
1-3-2 When are the start and end dates of the planned order for the final assembly
of pump T-F2##?
Take the dates from the planning order header.
How many operations have been scheduled in the planned order on the
various resources?
In total, the six different PPM operations have been scheduled in the
planned order.
Which assemblies (and also dependent requirements) are contained in the

planned order for the pump T-F2##?
The components T-B1##, T-B22##, T-B3## and T-B4## are contained in the
planned order for the pump.
© SAP AG AP010 6-2 7

Are the components T-B1## (casing), T-B22## (fly wheel), T-B3## (hollow
shaft) and T-B4## (electronic turbo-drive) also planned automatically and
immediately? Are there any alerts for the components of the planned order?
Only the dependent requirements of the hollow shaft are planned
immediately; the other dependent requirements were not planned. However,
these are partially covered by storage location stock .
Solutions
© SAP AG AP010 6-2 8

Optional exercise (not part of the standard course–
can be used by the course participants after the course)
Unit: Production Planning and Detailed
Scheduling (Machine Scheduler’s Tools)
1-4
1-4-1 R/3 menu path: Logistics ? Production Planning ? Program Planning
? Planned Independent Requirement ? Create
1-5
1-5-1 APO menu path: Production Planning ? Interactive Production Planning
? Detailed Scheduling Planning Board
1-5-2
1-5-3
© SAP AG AP010 6-2 9

Transportation Planning & Vehicle Scheduling
(TP/VS)
Contents:
? Route optimization
? Transportation consolidation
? Carrier selection
? Shipment tendering
? SAP AG 2001
© SAP AG AP010 7-1

Unit Objectives
? Describe the tasks of Transportation Planning &

Vehicle Scheduling, and how it is applied in APO
? State the differences between the Transport Load
Builder, and Transportation Planning & Vehicle
Scheduling.
? SAP AG 2001
© SAP AG AP010 7-2

1 Course Overview
4 Demand Planning
Supply Network
55 Planning
6 Scheduling
77 Transportation
7
Planning/Vehicle Scheduling
99 Conclusion
? SAP AG 2001
© SAP AG AP010 7-3

Business Scenario
? The Precision Pump Company is using

Transportation Planning & Vehicle Scheduling to
make optimum usage of available capacities in
trucks, trains, ships, and aircraft . Their aim is to
plan more efficiently and reduce costs.
? During optimization, both optimum routes, and
optimum vehicles will be identified (using R/3
freight costs, for example).
? SAP AG 2001
??The Precision Pump Company is using Transportation Planning to make optimum usage of available
capacities in trucks, trains, ships, and aircraft . Their aim is to perform planning more efficiently and
reduce costs.
??They are using Vehicle Scheduling to analyze and modify the plan that was generated during
Transportation Planning. For example using carrier selection manually to fix planning results, and
transfer them to the OLTP system for transportation execution (LES).
© SAP AG AP010 7-4

Transportation Management
APO TP/VS (Planning)
? Is integrated with the APO

components DP, SNP,
PP/DS, and ATP
? Evaluates the planning in
BW
? Plans for both short, and
long term horizons
BW
(Monitoring) LES (Execution)
TP/VS, LES, and BW provide an integrated solution for

transportation management within the Supply Chain
? SAP AG 2001
??The TP/VS component has the following functions:

??Transportation planning and transportation consolidation
??Vehicle Scheduling and route determination in a dynamic environment
??Transportation mode and carrier selection
??Multi-pick up and multi-drop functions
??Management by exception
??The APO system includes the tactical and operational planning area from the SAP Transport
Management solution, which is complemented for transportation execution by the SAP component
from Logistics Execution Systems (LES).
© SAP AG AP010 7-5

APO Planning Process
Unconstrained
Demand Planning Forecast
Aggregated planning
Planned Stock transfers

Supply Network Constrained
orders
Planning
Planning Mid-term planning
Constrained
PP/DS
Detailed planning
Constrained
Planned
Deployment deliveries
Route planning and
transportation consolidation
Planned
shipments
Transport Load
Load
TP/VS
Builder
? SAP AG 2001
??Supply Network Planning is used for long-term and mid-term planning. A big advantage of this
component is the sourcing which determines where and how a product will be procured. Sourcing is
optimized by functions such as the Transport Load Builder (TLB). Bucket capacities are used in
Supply Network Planning to plan products. These bucket capacities show the most detailed level of
daily planning.
??Vehicle Scheduling (VS) is a short-termplanning component. You can define planning horizons for
both the Supply Network Planning component and the VS component here. These horizons are all
independent of one another and have to be planned as such.
??In Vehicle Scheduling, resources and transportation processes are maintained in detail, so that
planning will be performed as precisely as possible. When orders from Supply Network Planning
become VS orders, the following happens:
??the orders are received in a specific sequence
??the exact transportation time is specified
??information and processes that were still outstanding are added (data and processes that are not
necessary for Supply Network Planning, but are for Vehicle Scheduling such as loading and
delivery activities)
© SAP AG AP010 7-6

TP/VS Supply Chain Modeling
Outbound
Transportation
Replenishment
zones
Inbound
Created transportation lane

Generated transportation lane
? SAP AG 2001
??Customers or suppliers can be grouped into transportation zones to reduce the complexity of TP/VS
problems.
??The unbroken line is modeled and the broken lines are generated by the optimizer.
??Ifa transportation zone is loaded with customers from the R/3, an associated hierarchy is generated
automatically.
© SAP AG AP010 7-7

Transportation planning & Vehicle Scheduling
(TP/VS)
Sales orders,
stock transfers,
forecasts
Objective:
Deliveries and
transportation orders in R/3
Simultaneous route
planning and transportation Optimizer
consolidation
TLB orders
Express orders Vehicle
resources
Selection of
transportation provider
? SAP AG 2001
??Optimization in TP/VS is for optimizing transportation schedules with the assignment of vehicle
resources to orders. It takes into account the following:
??Travel from and back to the depot
??Loading and unloading time
??Order consolidation
??Reduce transportation time costs
??Reduce distance costs
??Costs for being too early/delayed
??Costs for non-delivery
??Transportation fixed costs
??Optimization can be simulated or used in the active planning version 000.
??You can use transportation allocation to

??define the maximum transportation capacity of a carrier per day and per transportation lane
??fix a specific minimum service acceptance to define the minimum of shipments that must be made.
Transportation allocations are maintained as time-dependent
??The capacity utilization (in percentage terms) of a carrier, plays an important role, and should be
computable (also refer to the Business Share Strategy used in carrier assignment).
??Itis a particularly good idea to use carrier transportation capacities if you are working with priorities
for various carriers.
© SAP AG AP010 7-8

The Vehicle Scheduling Procedure
Configuration Master data Modeling
Optimization
(Route planning and
transportation consolidation)
Create/transfer Backorder processing

shipments
Create/transfer Select carrier

deliveries
Publication of
Shipment tendering deliveries
? SAP AG 2001
??You use interactive planning in Vehicle Scheduling to:

??perform transportation planning manually or automatically
??display, change, confirm, or reject optimization results
??execute carrier selection manually
??fix planning results and transfer them to the OLTP system for transportation execution
© SAP AG AP010 7-9

TP/VS Tendering
EDI
Business
Business scenario:
scenario: Business
Business scenario:
scenario:
Internet
Internet tendering
tendering Internet tendering
tendering
Create
deliveries
XML
Publish
Transportation
Transportation planner
planner
Service
Service agent
agent
HTML
Accept / Refuse
Release for
execution
? SAP AG 2001
© SAP AG AP010 7-1 0

Unit Summary
? Describe the tasks of Transportation Planning &

Vehicle Scheduling, and how it is applied in APO
? State the differences between the Transport Load
Builder, and Transportation Planning & Vehicle
Scheduling
? SAP AG 2001
© SAP AG AP010 7-1 1

Global Available-to-Promise (Global ATP)
Contents:
? Global ATP and Integration with OLTP
? Integration with PP/DS
? Rules-based ATP
? Product Allocations
? SAP AG 2001
© SAP AG AP010 8-1

Unit Objectives
? Describe how Global Available-to-Promise

(ATP) integrates with OLTP and
APO applications
? Define the features and functionality
of Global Available-to-Promise
? Identify benefits of using Global
? SAP AG 2001
© SAP AG AP010 8-2

1 Course Overview
4 Demand Planning
6 Scheduling
7 Transportation
Planning/Vehicle Scheduling8
8
99 Conclusion
? SAP AG 2001
© SAP AG AP010 8-3

Business Scenario
? Precision Pump company intends to use rules-

based ATP to be able to carry out a multi-plant
search for products requested by its customers. If
the pumps are not available, the feasible delivery
date can be determined, taking account of
resource availability.
? SAP AG
AG 2001
© SAP AG AP010 8-4

AP0 Application Architecture and Global Available-
to-Promise (ATP)
R/3 APO BW
LIS, CO/PA Demand Planning Historical

Historical
HR, FI data
data
Sales Production
orders Planning and
Detailed Supply Key
Shop floor Global
Scheduling Network performance
control ATP
Planning indicators
Inventory (KPIs)
management Deployment
Transportation
processing Transportation Planning
? SAP AG 2001
??In the R/3 APO interface you can define that the ATP check of products (ATP check, ATP =
Available-to-Promise) should not be carried out in R/3 but in APO, as soon as a sales order is
created.
??Sales orders created in the OLTP system (for example, R/3 System) automatically trigger the
availability check in APO in this case. Depending on the system settings, a check can be carried out
against inventory, production plans and distribution plans.
??Plannedorders that are created via ATP integration with PP/DS can be sent back directly to the
OLTP systems.
© SAP AG AP010 8-5

Global Availability Check in APO: Benefits
? Rules-based availability check (multi-step availability check):

check of multiple locations and products
? Better integration between sales and distribution and
production: triggering of production when there is no
availability (integration PP/DS)
? Multilevel component and capacity check (real-time operation)
? Check against aggregated, memory-resident data
? SAP AG 2001
??Rules-based ATP (multi-step availability check): When there is no availability, you can configure in
APO that the system should carry out the availability check for the product in another location or
else for an alternative product.
??Integration between sales and distribution and production : You can also define that the sales
order triggers production directly if a product is not available. If it triggers an order for in-house
production, APO creates a planned order for the desired quantity in PP/DS (Production Planning &
Detailed Scheduling).
??In addition, component availability can be checked (multi-level components and capacity check).
??Check against aggregated data: Planned orders and production orders are aggregrated and
represented in a time series, which can be used to evaluate the incoming requests from the sales
orders. This means that better system performance is then available.
© SAP AG AP010 8-6

Global ATP
R/3 APO
Article ? Global ATP: multi-site, real-time

structure
? Rules-based, multi-level ATP
40 pieces ? Alternative locations
Customer
? Alternative products
ATP request
Sales ? Alternative PPMs
orders
? Integrated with Production Planning
Confirmation
? Checks against actual production plan
? Consideration of capacity constraints
? Integration of legacy systems
? SAP AG 2001
??Global ATP is embedded in Supply Chain Management (SCM) processes for any kind of order
processing.
??Availability
checks are triggered as events in the OLTP system - either R/3 or legacy systems - and
an ATP request for product availability is sent over to APO.
??An Available-To-Promise (ATP) check is an online search to verify the company's ability to provide
the requested product, in the requested quantity, and on the date requested by the customer.
??In many OLTP systems, ATP functionality is limited or not possible at all. In older versions of R/3,
an ATP check searched local inventories only for available products and assumed infinite capacity
when a product had to be produced. For this reason, ATP checks are carried out in APO on the basis
of time series, either in real-time or in simulation mode.
??When it comes to production, ATP makes use of PP/DS (Production Planning and Detailed
Scheduling) functionality to check against the actual order network including all constraints.
??Applying rules-based ATP is the basis for checks of alternative products in alternative locations as
well as for production.
© SAP AG AP010 8-7

Issues & Receipts
Receipts
Production Purchase Planned

Stock
order requisition order
Further sales-
Time
related Reservation
Reservation
requirements
requirements
Issues
? SAP AG 2001
??In accordance with ATP settings in APO, you can take into account various stock, requirements and
receipts in the availability check. You can define which requirements and receipts to use as a basis
for a sales order confirmation that you want to give the customer.
??The scope of check is configured in APO Customizing.
© SAP AG AP010 8-8

Aggregation of Time Series
? Aggregate each receipt (issue) per:

? Category
? Time unit
? High performance because

? Cumulative quantities are checked,
not individual goods movements
? SAP AG 2001
??The data sent from the OLTP system is aggregated and represented in a time series consisting of the
corresponding ATP objects that are then used to evaluate the incoming ATP requests.
??The time series display (see picture above) shows the receipt elements above the line. The issue
elements are below the line.
??If the stock is zero or negative, a new order can only be confirmed for a later date.
??To differentiate between the various levels of probability with which a specific product will be in
stock in the future, there is a time series for each type of ATP category.
??Examples of ATP categories: firm planned order, consignment stock, released production order.
??To improve your system performance, ATP gives you the option to aggregate orders by reorganizing
time series'. All receipts and issues within one period are cumulated. The ATP check checks against
these aggregated quantities.
??ATP performance is reduced if you process incoming orders in individual checks.
© SAP AG AP010 8-9

Rules-based ATP: Example
End item of
sales order
Problem:
PPM explosion Insufficient number of pieces in stock
Possible solution:
Step 1: Alternative product
Step 2: Procurement from another location
Step 3: Production (PPM explosion)
e
tiv
rna t(s) Alternative location(s)
te c
Al odu
pr
? SAP AG 2001
??Rules-based availability checking is an iterative process. The rules stored in the system determine the
next checking step in each case.
??Possible next steps are as follows:
??Substitution (alternative product)
??Sourcing (alternative location)
??Capable-To-Promise (triggering production = creating an order)
??All of these span the three-dimensional space shown in the picture.
??The search stops when an acceptable result is provided by the check (if any number of substitution
steps is permitted).
??In the rule strategy settings, however, only one substitution can be selected. In this case the system
completes the rule evaluation. Without customer -specific coding (= customer exit) the system
chooses the first result that covers the requirement completely. By activating the customer exit you
can decide which selection is appropriate and if a dialog should be displayed. Only one result is
permitted.
??The rule strategy forms the actual rule-base for a specific check. In the simplest case, this search
strategy defines the sequence in which the system reads the individual rules.
??Each access of this sequence is performed using a combination of characteristics. When an order is
to be checked, the characteristics of the order are passed over to APO from the OLTP system.
??You can thereby define, for example, that sales orders for different sales organizations, sold-to
parties, and so on, are checked using different ATP rules. Depending on these values, the
corresponding rule is evaluated.
© SAP AG AP010 8-1 0

Availability Check (ATP Check) in Sales Orders
Sales order
R/3 Confirmation APO

ATP request
Sales
Sales (SD) ATP check
Save sales order For non-availability Produce
Sales
Sales order
order
Production
Production Planning/
Planning/
Detailed Scheduling
Planned order
Planned
Planned order
order
MRP Update time series
? SAP AG 2001
??In the R/3-APO interface, you can specify in the integration model that the availability check (ATP
check) in the sales order is not to be performed in R/3, but rather in APO (Availability check
indicator). If you create a sales order in the R/3 System, the system first checks whether there is
enough stock available for this product. It can also check whether receipts (such as production orders
or planned orders) are scheduled before the desired date.
??For non-availability, you can specify in APO that the system is to perform an availability check for
the product in a different location or for an alternative product. Furthermore, if a product is not
available, you can define that the sales order can trigger production directly. In this case, it triggers
an order for in-house production and APO creates a planned order for the desired quantity in PP/DS.
All of the operations of the PPM are scheduled at the resources of the PPM, and the system takes the
capacity restrictions into account (available capacity and orders that may have already been
scheduled). In addition, the availability of the components can be checked (Automatic planning
indicator in the product master of the components). If the capacities are already exhausted on the
desired date, the system uses simultaneous material and capacity requirements planning to find a date
on which the planned order can be created.
??The availability date of the newly created planned order (finish date) is passed back to the R/3 sales
order and copied as the internal confirmation date. Delivery scheduling is used to determine the date
in the sales order on which the customer can receive the product. The sales employee can find this
delivery date in the R/3 sales order. When you confirm this proposed date in the sales order and save
it, the APO planned order, which was only simulated, is transferred back to R/3 and is visible there.
© SAP AG AP010 8-1 1

Integration of Availability Check and Sales Order -
Production
Resource availability
Sales order
Available 1st Loading attempt
Desired date Confirmed
Occupied Final loading and quantity qty/date
30
Resource 3 (finite) 30
20 20
Resource 2 (finite)
10
Resource 1 (finite)
10
Time
Today
? SAP AG 2001
??If a product is not available, the sales order can trigger production directly: If it triggers an order for
in-house production, APO creates a planned order for the desired quantity in PP/DS. All of the
operations of the PPM are scheduled at the resources of the PPM, and the system takes the capacity
restrictions into account (available capacity and orders that may have already been scheduled).
If the capacities are already exhausted on the desired date, the system uses simultaneous material and
capacity requirements planning to find a date on which the planned order can be created. You use the
strategy profile to define how the system is to schedule (search for a slot, infinite planning ...).
??Prerequisite:
??In the "rules-based availability check", define that production is to be triggered directly for non-
availability (this function can be used in connection with all requirements strategies in planning).
??Maintain the strategy profile with which you want to trigger the scheduling of planned orders from
the ATP integration and maintain them under Global Settings in Customizing for PP/DS, in the
Strategy profile for ATP integration field. The default strategy profile in the delivery system is
SAP001 (search for a slot backward).
??You define in APO how the availability of a sales order is checked in APO (for example, checking
against stock, checking against forecasting, checking against allocation, or checking using rules -
based ATP (also checking against alternative products/locations or triggering production from the
sales order). Here, depending on the R/3 requirements class and the business event (for example,
A = sales order, AE = make-to-order sales order, B = delivery), you can define which check if any
should be performed (check against stock, against forecasting, against allocation or rules-based
ATP). If you use rules -based ATP, the corresponding rules are selected according to material,
sales organization, sold-to party, plant, etc (condition technique).
© SAP AG AP010 8-1 2

Product Allocation
? Managing demand against constrained supply
Jan Feb Mar Apr

Demand Receipt
? SAP AG 2001
??Product allocation functionality allows you to manage the supply of scarce products to customers, so
that each customer receives an allocated amount.
??Product allocations are applied to a product allocation object. The product allocation object is the
reason for allocating quantities. It could be any one of the following:
??A product (personal computer) or a product group
??A component (processor)
??A season (summer, winter)
??A production line
??The reason for product allocations may vary in different phases of the product life cycle.
© SAP AG AP010 8-1 3

Backorder Processing
Sales order confirmations -

Before
June July Aug. Sept.

Time
Sales order confirmations - by

priority
June July Aug. Sept. Time

Stock
Sales order Checking horizon/
Planned order Replenishment lead time = 2 periods
? SAP AG 2001
??Backorder processing is one of the new availability check tools that enables you to analyze and edit
backorders and to overwrite confirmed quantities as the result of the previous ATP check. You can
redistribute the confirmed quantities of one or more products via selected customer requirements.
??Backorder processing can be executed
??In interactive mode
??In batch mode (including simulation)
??As a combination of both
??The orders to be processed are determined via a filter that is to be defined. This filter definition can
be configured by the user or you can use the standard filters provided by SAP, which filter according
to locations in which the planning situation has changed (netchange filter). They must be taken into
account again within backorder processing.
??After the orders have been selected once via the filter, they can be sorted via specific configurable
criteria.
??The orders whose delivery date now lies in the past can be scheduled in the future, if desired.
© SAP AG AP010 8-1 4

Global Available-to-Promise: Unit Summary
You are now able to

? Describe how Global Available-to-Promise (ATP)
integrates with OLTP and APO applications
? Define the features and functionality
of Global Available-to-Promise
? Perform a simulation of rules-based
using Global Available-to-Promise
? Identify benefits of using Global
? SAP AG 2001
© SAP AG AP010 8-1 5

© SAP AG AP010 8-1 6
Exercises
Unit: Global Available-to -Promise (Global ATP)

?? Create a sales order in R/3
?? Run the ATP check
?? Understand why you got this specific ATP check result
The Precision Pump Company receives a customer inquiry for the

product T-F2##. The customer Jashanmal Trading, Dubai wants a
confirmation regarding when Precision Pump Company is able to deliver
the product.
1-1 Create a sales order in R/3 and perform the ATP check.

Order type OR
Sales organization 2400
Distribution channel 10
Division 00
In the sales order screen you enter the following data:

Sold-to party 2402
Purch. order no. Group ##
Material T-F2##
Order quantity 5
You get a dialog box with the ATP check result.
© SAP AG AP010 8-1 7

How many units of the products can be delivered?
___________________________________________
___________________________________________
Save the order. The order is transferred directly to APO after saving in R/3.
In the APO system, check the planning situation for the product T-F2## (pump) in
the locations 2400 (Milan), 2500 (Rotterdam) and 2300 (Barcelona).

Product T-F2##
Location 2400
Then check the planning situation in locations 2500 and 2300.
© SAP AG AP010 8-1 8

Solutions
Unit: Global Available-to-Promise (Global ATP)
1-1 Create a sales order in R/3 and perform the ATP check.
Logistics ? Sales and Distribution ? Sales? Order ? Create

Order type OR
Sales organization 2400
Distribution channel 10
Division 00
Press Enter
In the sales order screen you enter the following data:

Sold-to party 2402
Purch. order no. Group ##
Material T-F2##
Order quantity 5
You get a dialog box with the ATP check result.

How many units of the products can be delivered?
___________________________________________
___________________________________________
Save the order. The order is transferred directly to APO after saving in R/3.
© SAP AG AP010 8-1 9

In the APO system, check the planning situation for the product T-F2## (pump) in
the locations 2400 (Milan), 2500 (Rotterdam) and 2300 (Barcelona).
Production Planning ? Interactive Production Planning ? Product View

Product T-F2##
Location 2400
Then check the planning situation in the locations 2500 and 2300.
© SAP AG AP010 8-2 0

APO SCM Implementation
Contents:
? ASAP SCM Implementation Philosophy
? ASAP SCM Methodology
? Objectives
? Deliverables
? Tools
? ASAP for APO
? SAP AG 2001
© SAP AG AP010 9-1

Unit Objectives
? Explain the philosophy behind the ASAP SCM

implementation methodology,
? List the various phases of the ASAP SCM
methodology,
? Describe the objectives, deliverables, and the use
of tools of each phase of the ASAP SCM
methodology.
? SAP AG 2001
© SAP AG AP010 9-2

1 Course Overview
4 Demand Planning
6 Scheduling
99 APO SCM Implementation 9
10
10 Conclusion
? SAP AG 2001
© SAP AG AP010 9-3

The SAP Supply Chain Implementation Philosophy:
A supply-chain diagnostics
approach that will enable SAP to
evaluate a customer's supply
chain, identify significant issues,
estimate benefits that APO could
deliver, and develop a tailored
implementation plan that enables
customers to realize these benefits
in a short period of time
? SAP AG 2001
© SAP AG AP010 9-4

The Supply Chain Implementation Tool Kit
? Built-in tools, templates &

techniques
? Models
? Templates
? Questionnaires
? “How-to’s”
Project ? Case studies Supply Chain
I
1
D
T a s
plans
k N a
S a m p l eS c h e d u l e
m e N No ov v e D mDe bec ec e rJ m Ja ba
n en
F
u rF
ea eb
r y
br M
u M
aa r ar y crA
A hpp rr i M
l a y J u n e case studies
NovemberD e c e m b e
January
r FebruaryMarch April May June
I D TaskName N o v Dec Jan Feb Mar Apr M a y Jun
2 P r o j e cPt r e p a r a t i o n
1
Sample
S chedule
3 B u s i n e2s B
s lueprint
ProjectPreparation
3
4 S i m u l a t i o Business
n Blueprint
5 Validation
4 Simulation
6 F i n aPl r e5 p a r a t i o n
Validation
6
7 G Live&S
o FinalPreparation
upport
APO
7
8 GoLive
& Support
9
1 0 8
9
Analytical
1 0
process flows
tools
APO activity R/3 Value
matrix Questionnaires analysis
& surveys
? SAP AG 2001
© SAP AG AP010 9-5

ASAP SCM Methodology Phases
Project Business Realization Final Go live and

preparation blueprint preparation support
P
1
P 1 P 1
D
3
ACME P
2 P 3 P
4 P
2 P
4 P 2
Taiwan
D
2 S
1 D
2 S
1 M
4 D
1 S
1 D
1 S
1 D 1
Manufacturer
Semiconductor SemiconductorL
Distributor A aCp M
t oEp Laptop
ACME A aCp M
L t oEp Distributor
Laptop Laeptatoilepr
R
Production Production (SanJose)
Distribution
(SanJose) (SanJose)
Supplier’s Customer’s
Supplier Customers ACME Customers Customer
SAP Business SAP Advanced

Information Planner &
Warehouse Optimizer
Processes
People
Innovation
Learning
Opportunities Strategy
Products
Industry Practices
Implementations
Non-R/3 R/3 NonR/3 R/3
? SAP AG 2001
© SAP AG AP010 9-6

Phase 1: Project Preparation - Objectives
? Organize the ASAP SCM Implementation Project

? Set customer and SAP team expectations
? Establish a technical infrastructure
? SAP AG 2001
© SAP AG AP010 9-7

Phase 2: Business Blueprint - Objectives
? Identify specific ways of improving the supply chain

management and strategies of the customer
? Benchmark the Supply Chain
? Align SAP and 3rd party solutions to realize these
opportunities
? Develop business solution design and implementation
plans
? APO process blueprint
? SAP AG 2001
© SAP AG AP010 9-8

Phase 2: Business Blueprint - Tools
? APO for ASAP
? Strategic blueprint
? Case studies
? Question & Answer database (QAdb)
? Process description
? Questionnaires
? Roadmap / project plan
? SAP AG 2001
© SAP AG AP010 9-9

Phase 3: Realization - Objectives
? Develop plans for model specification

? Configure and validate baseline and final models
? Perform and resolve functional gap analysis
? Conduct configuration workshops
? Develop conversion and interface programs
? Develop reports and enhancements
? Final integration testing
? Prepare end user documentation and training material
? SAP AG 2001
© SAP AG AP010 9-1 0

Phase 4: Final Preparation - Objectives
? Prepare for "live" solution implementation

? Anticipate and plan for contingencies
? SAP AG 2001
© SAP AG AP010 9-1 1

Phase 5: Go Live and Support - Objectives
? Identify and resolve post go-live issues

? Validate "live" SCM solution results
? Perform a project review
? SAP AG 2001
© SAP AG AP010 9-1 2

APO Implementation: Unit Summary (2)

? Explain the philosophy behind
the ASAP SCM implementation methodology
? List the various phases of the
ASAP SCM methodology
? Describe the objectives, deliverables, and use of
tools of each phase of the ASAP SCM methodology
? SAP AG 2001
© SAP AG AP010 9-1 3

Conclusion
1 Course Overview
3 Supply Chain Cockpit
4 Demand Planning
6 Detailed Scheduling
7 Deployment
10
10 Conclusion 10
? SAP AG 2001
© SAP AG AP010 10-1

Course Goals
At the conclusion of this course you will able to
? List the fundamental planning scenarios of the

Advanced Planner and Optimizer (APO)
? Explain the functions and interplay of the
individual APO components
? Describe the integration with the execution system
and information systems
? SAP AG
AG 2001
© SAP AG AP010 10-2

APO Planning Sequence
Planning Horizon
Production Planning (PP)
Deployment
Transportation Planning &

Vehicle Scheduling (TP/VS)
? SAP AG 2001
??APO is used to make strategic, tactical, and operational decisions:

??DP is used for long-term demand planning
??In SNP there is mid-term production, distribution and procurement planning
??PP/DS is used for short-term production planning
??Deployment plans short-term replenishment planning
??In Transportation Planning, routes are optimized and transportation methods are loaded as near to
capacity as possible
© SAP AG AP010 10-3

The Demand Planning Concept
Location
Sold-to party
Sales organization
Region
? Incoming orders
? Quantities BW
? Values ? Collaborative forecasting
R/3 ? Promotions
? Billing document
Excel
? Quantities
? Values Non-SAP system
? …
? SAP AG 2001
promotions.
© SAP AG AP010 10-4

Supply Network Planning Scenario
Demand Plan
Supplier Plant DC
Customer
? SNP plans the material flow along the supply chain

? Mid- to long-term, finite, cross-plant planning
? Prioritization of demands; supply optimization
? Result: Feasible plans
? SAP AG 2001
??The role of Supply Network Planning involves:

??Integrating purchasing, production, and distribution in one consistent model in the entire supply
network
??Synchronizing activities and planning material flow along the supply chain
© SAP AG AP010 10-5

Comparison of Mid- and Short-Term Planning
Sales orders Forecasts Sales orders Forecasts
Supply Network Planning
Detailed Scheduling
? PP/DS planned orders ? SNP planned orders
? Purchase requisitions ? Purchase requisitions
? Stock transfers ? Stock transfers
? PP/DS BOM and routing ? SNP BOM and routing

? Finite, detailed planning per location ? Cross-plant finite planning
? Sequences and setup times ? Distribution and procurement
? Continuous and order-related ? Quantity and bucket-oriented
? Pegging ? No pegging
Production Time
horizon
? SAP AG 2001

??SNP uses advanced optimization techniques, based on constraints and penalties, to plan product flow
along the supply chain. The result is optimal purchasing, production, and distribution decisions,
reduced order fulfillment times and inventory levels, and improved customer service.
??Peggingis the link between receipts and issues along the supply chain. When an order is shifted, all
dependent orders can be adjusted automatically.
© SAP AG AP010 10-6

Functions of Production Planning / Detailed
Scheduling (PP/DS)
? Plans production, external

Customer
procurement, and stock transfer
within the production plant to-the-
minute
? Plans simultaneous material
requirements and schedules finite
capacity at operation level for the
short-term horizon
Resource 2 ? Takes order sequences into
Resource 1 Resource 3 account
? Optimizes machine schedules
30 (sequences, lead times)
Resource 3
? Transfers the planning results to
20 an execution system (such as the
Resource 2
R/3 Shop Floor Control)
Resource 1 10
Time
? SAP AG 2001
??Production Planning and Detailed Scheduling (PP/DS) is used mainly for short-term to-the-
minute planning (both for in-house production and external procurement) in the production plant.
PP/DS schedules and plans all oper ations of an order that are relevant for planning at the different
resources. PP/DS has the following functions:
??It generates planned orders (to plan in-house production), and purchase requisitions or scheduling
agreement schedule lines (to plan external procurement) in the event of product shortage. It uses
simultaneous material and capacity requirements planning to do this: You can define
resources as “finite” resources (planning-critical resources) in the resource master. Order
operations are only created at these resources if there is sufficient capacity for the order quantity
on the corresponding date. When there is no available capacity, the system searches for a date on
which the order operation can be carried out, taking account of the capacity situation.
??Takes order sequences into account: when new in-house production orders are created, the setup
times in the new order can be determined automatically from the setup status of the resources
(depending on the preceding order).
??It is possible to display the orders in graphic format (in the detailed scheduling planning board),
and to sequence from there. Alternatively you can use the optimizer to execute a sequencing.
??Machine scheduling optimization: during planning, it is possible for orders to be generated that
do not have an optimum order sequence. Therefore, you can change the sequence and resource
assignments of existing orders using the optimization run.
??PP/DS is a planning tool. Execution functions such as confirmations and goods receipts are
performed in the execution system (for example, R/3). Therefore, the planning results are transferred
to the execution system.
© SAP AG AP010 10-7

Transportation Planning & Vehicle Scheduling
(TP/VS)
Sales orders,
stock transfers,
forecasts
Goal:
Deliveries and
transportation orders in R/3
Simultaneous route
and load/weight Optimizer
planning
TLB orders
Express orders Vehicle
resources
Selection of
transportation provider
? SAP AG 2001
© SAP AG AP010 10-8

ATP Integration with PP/DS and R/3
Sales order
R/3 Confirmation APO

ATP request
SD ATP
No ATP Make
Planned
Planned orders orders Production Planning/
Detailed Scheduling
MRP Update time series
? SAP AG 2001
??Event-driven: In the R/3 APO interface you can define that the ATP check in the sales order should
not be carried out in R/3 but in APO, as soon as a sales order is created. If you create a sales order in
R/3, the system first checks if there is enough stock available for the requested product. The system
can also check if receipts (for example, production orders and planned orders) have already been
planned by the requested date.
??Time series: Planned orders and production orders are aggregrated and represented in a time series,
which can be used to evaluate the incoming requests from the sales orders.
??Rules-based ATP: When there is no availability, you can configure in APO that the system should
carry out the availability check for the product in another location or else for an alternative product.
??Integration with PP/DS : You can also define that the sales order should trigger production directly
if a product is not available. If it triggers an order for in-house production, APO creates a planned
order for the desired quantity in PP/DS. All of the operations are scheduled on the resources, and the
system takes the capacity restrictions into account (available capacity and orders that may have
already been scheduled). In addition, component availability can be checked. If the capacities are
already exhausted on the desired date, the system uses simultaneous material and capacity
requirements planning to find a date on which the planned order can be created.
The availability date of the newly-created planned order (end date) is returned to the R/3 sales order
and adopted as an internal confirmation date. Using shipment scheduling, the date on which the
product reaches the customer is determined in the sales order. In the R/3 sales order the sales
employee recognizes these proposed delivery dates.
© SAP AG AP010 10-9

© SAP AG AP010 10-10
In dieser Dokumentation verwendete Abkürzungen
APO Advanced Planner and Optimizer

APS Advanced Planning System
ATP Verfügbarkeitsprüfung (Available -to-Promise)
BBP Business to Business Procurement (B2B)
BAPI Business Application Programming Interface
BW SAP Business Information Warehouse
CIF Core Interface (Schnittstelle für Stamm- und Bewegungsdaten R/3-APO)
CPFR Collaborative Planning, Forecasting and Replenishment
CRM Customer Relationship Management
CTM Capable -to-Match (Multi-Level Supply and Demand Matching (SDM))
DC Distributionszentrum (DZ)
DP Absatzplanung (Demand Planning)
DS Feinplanung (Detailed Scheduling)
iPPE integriertes Produkt- und Prozeß- Engineering
LES Logistics Execution System (=LE, Warehouse Management (WM))
KPI Key Performance Indicator
MLR Multiple lineare Regression
MRP Material Requirements Planning
MRPII Manufacturing Resource Planning
OLTP Online Transaction Processing System
OLAP Online Analytical Processing System
PP Produktionsplanung
PPM Produktionsprozeßmodell (APO Stückliste und Arbeitsplan zugeordnet)
SCC Supply Chain Cockpit
SCE Supply Chain Engineer; Supply-Chain-Execution
SCM Supply-Chain-Management
SEM Strategic Enterprise Management
SNP Supply Network Planning
SOP Sales and Operations Planning (Absatz- und Produktionsgrobplanung)
TDL Transportdienstleister
TLB Transport Load Builder
TP/VS Transportation Planning / Vehicle Scheduling
VMI Vendor -Managed-Inventory
© SAP AG AP010 10-11

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Copyright 2001 SAP AG. All rights reserved.

All rights reserved.

© SAP AG AP010 Preface-1

Level 2 Level 2 Level 3

AP205 2 days AP220 3 days

© SAP AG AP010 Preface-2

? General understanding of supply chain concepts

© SAP AG AP010 Preface-3

? Project team members involved in the

Notes to the user

© SAP AG AP010 Preface-4

© SAP AG AP010 Preface-5

© SAP AG AP010 Preface-6

Pump Precision 102

Item 0010 1 0020 1 0030 1 0040 1 0050 1 0060 1

Item 0010 1 0020 1 0030 8 0010 1 0010 1 0010 1

SNP relevant Only R/3

© SAP AG AP010 Preface-7

© SAP AG AP010 1-1

This course will prepare you to:

? List the fundamental planning scenarios of the

© SAP AG AP010 1-2

At the conclusion of this course, you will be able to

? Explain the concepts of Supply Chain Management

© SAP AG AP010 1-3

Unit 1 Course Overview Unit 6 Production Planning /

© SAP AG AP010 1-4

© SAP AG AP010 1-5

? Precision Pump company would like to improve

© SAP AG AP010 1-6

Transfer Transfer Transfer Transfer

Supplier Manufacturer Distribution Retail Outlet Consumer

Supply Chain Optimization

Increase customer responsiveness at least cost

© SAP AG AP010 1-7

Innovation … Companies today are being forced to adapt to

Changing Consumer Buying Patterns

More Effective Planning

© SAP AG AP010 1-8

© SAP AG AP010 1-9

Material Requirements Planning for

© SAP AG AP010 1-1 0

Strategic Application Level

Integration •Finance •HR liveCache

© SAP AG AP010 1-1 1

? High performance using liveCache technology

© SAP AG AP010 1-1 2

Supply Chain Collaboration marketplace Decision of direction for the company

Supply Chain Collaboration marketplace

© SAP AG AP010 1-1 3

© SAP AG AP010 1-1 4

Monitor APO Product Map Supply Chain Cockpit

Agg. Planning Supply Network

Production Distribution Transportation Planning

BUY MAKE STORE MOVE SELL

© SAP AG AP010 1-1 5

Strategic Supply Chain Planning

© SAP AG AP010 1-1 6

Demand Planned ind.reqmts Planned ind.reqmts

Purchasing Purchase requisition Purchase requisition

Logistics Execution System Transp. Plng & Veh. Schedlng (TP/VS)

© SAP AG AP010 1-1 9