OVERVIEW

Copyright
Copyright 2001 SAP AG. All rights reserved.

No part of this publication may be reproducedor transmitted in
any form or for any purpose without the express permission of
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
55 Supply Network 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
Supply Chain Cockpit
? 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
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 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

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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

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Innovation … Companies today are being forced to adapt to

Changing Consumer Buying Patterns

More Effective Planning

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Material Requirements Planning for

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Strategic Application Level

Integration •Finance •HR liveCache

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? High performance using liveCache technology

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Supply Chain Collaboration marketplace Decision of direction for the company

Supply Chain Collaboration marketplace

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Monitor APO Product Map Supply Chain Cockpit

Agg. Planning Supply Network

Production Distribution Transportation Planning

BUY MAKE STORE MOVE SELL

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Strategic Supply Chain Planning

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Demand Planned ind.reqmts Planned ind.reqmts

Purchasing Purchase requisition Purchase requisition

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

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