03 APOvsR326133563

SAP R/3 vs.
SAP APO Evaluating Planning Capabilities
Bob Ferrari SAP
What Well Cover

Overview - planning and execution in SAP Advanced planning Demand Planning (DP) and forecasting Inventory, supply, and production planning Production Planning and Detailed Scheduling (PP/DS) Transportation planning (TP) Available to promise (ATP) 7 Key Points to Take Home Q&A
SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 2
Shades of Planning: SAP R/3, SAP APO, & SAP SCM

Execution (SAP R/3)
Execute a transaction
Planning (SAP R/3)

Unconstrained planning
Advanced planning (SAP APO)
Adaptive planning (SAP SCM) (Non-SAP)

Event Management Event Management Sense aadelay in the Sense delay in the delivery of aacritical delivery of critical material material Information Information integration integration Business Business intelligence intelligence Master data Master data management management Supplier Supplier Scoreboard update Scoreboard update Sense and respond
i.e. Warehuse i.e. Warehuse Management Management Issue aapick order Issue pick order to fill aacustomer to fill customer shipment shipment Purchasing Purchasing Goods receipt Goods receipt Shipping, delivery, Shipping, delivery, and billing and billing
i.e. MRP i.e. MRP Material Material requirements requirements needed for needed for production production
i.e. Supply Planning i.e. Supply Planning Re-balance Re-balance production plans production plans across the supply across the supply network network
Inventory Inventory management management
Constrained planning Optimization Simulation Supply network planning
Supply Chain Execution in SAP R/3

Execution (SAP R/3)
Warehouse Warehouse Management Management (WMS) (WMS) Transportation Transportation Management Management (TMS) (TMS) Logistics Execution System (LES) Materials Materials Management Management (MM) (MM) Sales & Sales & Distribution Distribution (SD) (SD)
"
SAP R/3 supports SAP SCM execution processes and supporting transactions
! Logistics execution and transactions... (TMS, WMS) ! Example: Warehouse Management
"
WMS can execute: # Direct an employee in putting away a product # Direct an employee to pick a product for shipment # Transact a movement of inventory from one location to another location WMS, however, cannot plan: # Look ahead five months to assess warehouse capacity # Optimize the storage strategy for 10 regional warehouses
Examples: SAP R/3 SCM Execution

Execution (SAP R/3)
Warehouse Warehouse Management Management (WMS) (WMS) Transportation Transportation Management Management (TMS) (TMS) Logistics Execution System (LES) Materials Materials Management Management (MM) (MM) Sales & Sales & Distribution Distribution (SD) (SD) How many parts do I have at each of my regional warehouses? What parts are in transit between my plant and my regional DC? I need to get that last batch put away in the warehouse. Can I tender that customer shipment to my carrier?
Sure.
No problem.
I can do that.
Ill tell you.
Planning in SAP R/3

Planning (SAP R/3)
Sales forecasting Sales forecasting (flexible planning) (flexible planning) Distribution Distribution Requirements Requirements Planning (DRP) Planning (DRP) Sales & Operations Planning (S&OP)
! Unconstrained sources ! Large amounts of data ! Non-critical materials ! Feeds from legacy systems
SAP R/3 supports unconstrained planning.

! Ability to plan regardless of time, money, or other scarce materials/resources ! Example: Materials Requirements Planning (MRP)
"
MRP knows that: # If each cookie needs 5 chips # And each box has 30 cookies # And I need to make 100 boxes # Then I need (5 x 30 x 100 =) 15,000 chips
Materials Materials Requirements Requirements Planning (MRP) Planning (MRP) Production Production Planning Planning (PP) (PP)
"
MRP is not concerned if you: # Only have 10,000 chips # Only have capacity to make 80 boxes
Planning in SAP R/3 (cont.)
CO-PA
Long-term revenue, costs, and sales planning at an aggregate level
S&OP
Aggregate sales planning at different levels: medium to long term, aggregate production planning
LIS
Logistics Information System
MPS/MRP
Planning of independent and dependent requirements at finished product level
Repetitive manufacturing SFC

Self-regulating control cycles (KANBAN)
Examples: SAP R/3 Planning

Planning (SAP R/3)
Sales forecasting Sales forecasting (flexible planning) (flexible planning) Distribution Distribution Requirements Requirements Planning (DRP) Planning (DRP) Sales & Operations Planning (S&OP) Sure. I would like to forecast demand by item by plant for the next two years I need to net inventory from demand at a single plant.
No problem.
Materials Materials Requirements Requirements Planning (MRP) Planning (MRP) Production Production Planning Planning (PP) (PP)
I can do that.
If I need 10,000 widgets, how many components do I need to buy?
Ill tell you.
In what sequence should I run my products on a production line?
Common Misconceptions about SAP APO

! SAP APO supports only very sophisticated planning needs, mostly driven by constraint-based optimization ! SAP APO does not integrate well with R/3 or other SAP applications ! SAP APO is not flexible to support my industry is unique planning needs ! SAP APO is too complex for us to ever implement, and for our planners to understand and effectively use
Planning in SAP R/3 vs. SAP APO Outline of Topics

Advanced Planning with SAP APO

Why advanced planning?
capacity, shortfalls, or both.
! Shortfalls in product availability lead to lost sales, which reduces profits. ! Assets cost money, so excess capacity Execute a Unconstrained means reduced profits. Transaction Planning ! To maximize profits most businesses need to consider or factor key constraints Demand Planning Demand Planning (DP) (DP) Supply Planning Supply Planning (SNP) (SNP) Production Plng & Production Plng & Detailed Scheduling Detailed Scheduling (PP/DS) (PP/DS) Transportation Plng/ Transportation Plng/ Vehicle Scheduling Vehicle Scheduling (TP/VS) (TP/VS) Global Available Global Available to Promise to Promise (GATP) (GATP)
Execution Planning (SAP R/3) (SAP Most businesses have excess R/3)
Advanced Planning (SAP APO)
! Simulation ! Optimization ! Collaboration ! Advanced algorithms
Advanced planning
!Heuristics (sequential business rules)
" "
Create unconstrained replenishment plan Constrain the plan based on capacity Simultaneously optimize supply and demand across the network leveraging genetic algorithms and linear programming Match prioritized supply and demand needs across the entire supply network
!Optimization
"
!Capable-to-Match
"
Examples: SAP APO Planning

Demand Planning Demand Planning (DP) (DP) Supply Planning Supply Planning (SNP) (SNP) Production Production Planning & Detailed Planning & Detailed Scheduling (PP/DS) Scheduling (PP/DS) Transportation Transportation Planning/Vehicle Planning/Vehicle Scheduling (TP/VS) Scheduling (TP/VS) Global Available Global Available to Promise to Promise (GATP) (GATP) Sure.
I need to collaboratively plan for customer demand across my entire supply network I would like to simulate the impact of a 30% lift in sales in June and then pre-build inventory to support it. Can I optimize my sequence and schedule for every line simultaneously? How do I select carriers and optimize my route? Do I have inventory or capacity in my supply network to promise delivery of this customer order?
No problem.
I can do that.
Ill tell you.
I know.
Adaptive Planning with SAP SCM

When does planning start to become adaptive?
Execution Planning (SAP R/3) Adaptive planning senses (SAP R/3) events beyond the four Adaptive Planning (SAP SCM)
walls of the organization and responds with updated planning and execution.
! When a production plan is changed because a supplier will be late Execute a a critical component/material delivering Unconstrained Transaction Planning ! When a procurement plan is changed due to the increasing of the demand forecast in reaction to a customer accepting a promotion ! When Adaptive Agents monitor patterns of events, and respond with suggested changes to plans SAP Event SAP Event Management Management (SAP EM) (SAP EM)
SAP has begun to pursue adaptive planning by bundling event management, advanced planning, and inventory collaboration together into the SAP SCM 4.0 solution.
SAP Advanced SAP Advanced Planning & Planning & Optimization Optimization (SAP APO) (SAP APO)
PLAN
RESPOND
LEARN
SAP Inventory SAP Inventory Collaboration Hub Collaboration Hub (SAP ICH) (SAP ICH)
EXECUTE
SENSE
SAP NetWeaver
Examples: What SAP SCM 4.0 Can Do

Adaptive Planning (SAP SCM) SAP and Non-SAP Systems
I need to know when critical supplier deliveries will be delayed.
SAP Event SAP Event Management Management (SAP EM) (SAP EM)
Ill tell you.
SAP Advanced SAP Advanced Planning & Planning & Optimization Optimization (SAP APO) (SAP APO)
I can do that.
I would like to simulate a delayed delivery of a critical component.
SAP Inventory SAP Inventory Collaboration Hub Collaboration Hub (SAP ICH) (SAP ICH)
No problem.
Can I enable my suppliers to perform Web-based VMI in real-time?
SAP R/3 and SAP SCM Working Together

Execution (SAP R/3) Planning (SAP R/3) Advanced planning (SAP APO)
Network product Network product demand is statistically demand is statistically forecasted in Demand forecasted in Demand Planning Planning Materials Materials requirements are requirements are calculated for new calculated for new production plan. production plan. A new trade promotion A new trade promotion is planned in SAP CRM. is planned in SAP CRM. Production and Production and replenishment are rereplenishment are rebalanced based on balanced based on material and resource material and resource capacity capacity
Adaptive planning (SAP SCM)

Customers update Customers update collaborative forecasts collaborative forecasts based on the promotion. based on the promotion.
Purchase orders are Purchase orders are issued to vendors. issued to vendors.
A critical purchase A critical purchase order is noted to be order is noted to be delayed at the vendor. delayed at the vendor.
New production is New production is received into inventory received into inventory Customer order is picked/ Customer order is picked/ packed/shipped/invoiced. packed/shipped/invoiced.
The updated The updated production plan is production plan is scheduled. scheduled.
Production of aa less Production of less critical product is critical product is delayed to free up delayed to free up required material. required material.
Information Information integration integration Supplier Supplier Scoreboard update Scoreboard update

What SAP APO Demand Planning Can Do

SAP APO Demand Planning (DP)
Statistical Statistical forecasting forecasting Sure.
Id like to forecast based on past orders, past shipments, and leading indicators like price, retail outlets, etc. I would like to adjust for the impact of multiple re-useable promotions across many products/regions/etc. Can I work with my key customers over the Internet on a collaborative forecast? How do I merge input from customers, sales, marketing, and production? Where are my forecasts out of tolerance? What is my projected sales by brand? region? account?
Promotions Promotions planning planning
No problem.
Collaborative Collaborative forecasting forecasting
I can do that.
Consensus Consensus forecasting forecasting Alert monitoring Alert monitoring and reporting and reporting
Ill tell you.
I know.
SAP R/3 and SAP APO: Forecasting

Planning (SAP R/3)
Sales forecasting Sales forecasting (flexible planning) (flexible planning) Distribution Requirements Planning (DRP) Sales & Operations Planning (S&OP)
SAP R/3
Data storage
SAP APO
LIS based Transparent table Single hierarchy
BW-LiveCache Based Multi-Dimensional Multiple Hierarchies

Demand Planning Demand Planning (DP) (DP) Supply Planning (SNP) Production Planning and Detailed Scheduling (PP/DS) Transportation Planning/Vehicle Scheduling (TP/VS) Global Available to Promise (GATP)
Forecasting techniques
Univariate algorithms More univariate algorithms Outlier correction Multiple linear regression Composite forecasting Drag and drop
Materials Requirements Planning (MRP)
Macros
Simple arithmetic Row operations Complex arithmetic Complex functions Row, column, area operations
Production Planning (PP)
SAP R/3: Single Hierarchy
SAP R/3 is limited to nine characteristics
Planning hierarchy
Sales organization 60%
1000
40%
Customer 66.6%
4711
33.3% 75%
4712
25%
Material
M-0001
M-0002
M-0001
M-0002
SAP R/3 is practically limited to 150,000 characteristic combinations, i.e., Material M-0001/Customer 4711/Sales Org 1000 is one combination
SAP R/3: Univariate Forecasting
Usage Usage
Actual data Actual data
Use of recognized, stable forecasting methods

"
Exponential smoothing Moving average
Forecast Forecast
"
Prediction Prediction
Automatic model selection is possible Graphical checks as well as adjustment of historical data and forecast results
Used as planning data Used as planning data
SAP APO: Flexible Hierarchy

Material Material Region Region Distribution Package size Account rep. Country Package size Distribution Account rep. Country Center Center There is no fixed limit on the number of characteristics There is no fixed limit on the number of characteristics Classification Brand Classification Brand Channel (A-B-C) Account Channel (A-B-C) Account etc. etc. etc. etc.
Brand = Alpha Brand = Alpha Channel = Retail Channel = Retail 12345
Total
87960
Reconcile by: Fixed proportion Forecast value Dynamic value Historical sales Store count etc.
material 12345 32415 87960 98765
brand Alpha Beta Alpha Alpha
pkgsize 1 1 1 2
region AMER AMER EMEA EMEA
account 5555 6345 7668 2323
channel Retail C-Store Retail Mass
rep. Bob A. Jeff D. Dirk R. Jean G.
A-B-C A A A A
country US US GER FRA
DC NYC DEN BER PAR
etc.
etc.
Some SAP APO customers run over 1,000,000 combinations Some SAP APO customers run over 1,000,000 combinations
SAP APO Advanced Planning: Univariate Forecasting
Correct historical Correct historical data data

#
Analysis of historical data ! Outlier detection ! Outlier correction Application of promotions to history Automatic model selection Automatic correction of forecast for: ! Promotions ! Lifecycle planning ! Supersession (APO 4.0)
Forecast Forecast
#
Correct forecast Correct forecast

#
Graphical monitoring and manipulation of both historical data and forecast
Used as planning figures Used as planning figures

Advanced Planning Statistical Algorithms
26 forecast algorithms with auto select feature
Custom algorithms can be used

Advanced Planning: Composite Forecasting
Weighted average of multiple forecast methods Simple average Time phased composition
Time series Forecast

... Combine Combine and and reconcile reconcile
Time series Result MLR
MLR
n
Advanced Planning: Causal Factors
# #
Modeling options Modeling options ! Linear and nonlinear trends ! Linear and nonlinear trends ! Seasonal patterns ! Seasonal patterns ! Dummy variables and time lags ! Dummy variables and time lags
# #
Unit sales
Model fit analysis Model fit analysis ! R2 ! R2 ! R2 adjusted ! R2 adjusted ! Durbin-Watson ! Durbin-Watson ! Durbin - -hh ! Durbin ! t t- -Test ! Test
Feb.
Mar.
April
May
June
July
$ 1000
Advertising budget:
$ 2000
Aug.
Sept.
SAP R/3: Macros
Region: USA
01/03 02/03 03/03
Sales Event Corrected sales Difference in %
300
320 70 390 22
290
KG KG KG %
Special view on planning data Dependency between key figures can be defined using macros
Additional key figure Database
Display only
Sales + Event = Corrected sales
Macro
SAP APO Advanced Planning Macros
$Column%
Conditional statements: (if, then, else) Operations on single fields, rows, columns, and areas Operators: (+,-,*,/,sqrt, trunc, sin, etc.) Functions: (sum, avg, max, mad, var) Alerts and emails
$Row% Cell Area
Macro triggers: Always on Button Action
Drag and drop psuedocode
Summarized Features - SAP APO DP

! Helps you forecast and plan for future or anticipated product demand, either based on historical sales, or actual demand data ! Ability to forecast and plan on any level, and in any dimension ! Data is stored at the lowest level, allowing top-down, bottom-up, or middle-out forecasting and planning ! Built-in, sophisticated statistical forecasting with 26 forecast algorithms ! Information stored and viewed in highly configurable planning books, including out-of-the box, preconfigured planning books ! Integration to Microsoft Excel ! Front-end tool for collaborative replenishment processes such as VMI or CPFR ! Supports ability to collaborate with other internal groups, or external customers and suppliers with collaborative demand planning ! Currently available for license as standalone solution

What SAP APO Supply Network Planning Can Do

SAP APO Supply Network Planning (SNP)
Heuristics Heuristics Sure.
Id like to set up rules and quotas to decide where/ when/how to produce and distribute product. Can I find a feasible global plan that minimizes the types of costs that I want? I need to balance different supply and demand priorities for a complex supply chain. How do I best aggregate my shipments into trucks, containers, etc.? Where do I have too much/little inventory? Where will I be exceeding capacity? Can I do all of this for VMI and CPFR customers too?
Optimization Optimization
No problem.
Capable-to-Match Capable-to-Match
I can do that.
Truck load building Truck load building
Ill tell you.
Alert monitoring Alert monitoring and reporting and reporting Collaborative Collaborative supply planning supply planning
I know.
Yes.
SAP R/3 and SAP APO: Supply Planning

Planning (SAP R/3)
Sales forecasting Sales forecasting (flexible planning) (flexible planning) Distribution Requirements Planning (DRP) Sales & Operations Planning (S&OP) Rules based (MRP and DRP) No simulation Bills of material Sequential solve Static sourcing map
SAP R/3
Planning with constraints
SAP APO
Infinite capacity Infinite materials
Constrained capacity Constrained materials Bottleneck resources

Solution techniques
Rules-based and optimization Multiple simulations BOMs and routings Simultaneous solve Dynamic sourcing
Ease of Use
No macros Table-based views Master data from SAP R/3 Real time inventory and order updates Sophisticated macros Graphics and table Master data from SAP R/3 Real time inventory and order updates
SAP R/3: Supply Planning

Static quotas determine how demand is aggregated Simple netting logic is used to determine production requirements.
! Lead time from source to destination is a single static amount. ! Demand is assigned regardless of exceeding capacities.
Net Demand = (60% x 500) = 300
Net Demand = 200 + (40% x 500) = 450
Plant 1
40%
Demand = 300 Inventory = 100 Net Demand = 200
Plant 2
RDC1
Demand = 600 Inventory = 100 Net Demand = 500
RDC2
60%
DC1
DC2
DC3
DC4
= 400 = 500 Demand = 500 Demand Demand = 300 Demand = 200 = 300 Inventory = 100 Inventory Inventory = 200 Inventory Net Demand = 100 Net Demand = 200 Net Demand = 400 Net Demand = 200
SAP APO SNP Heuristic

Demands
Storage locations
Plants
" Calculates supply requirements taking quota arrangements, lead " Calculates supply requirements taking quota arrangements, lead
times, calendars, and lot-sizing rules into account times, calendars, and lot-sizing rules into account " Execute a capacity check, or enable capacity leveling " Execute a capacity check, or enable capacity leveling Suppliers
Stock transfer orders

Production orders
SAP APO SNP Optimization

Liste
Supply chain model Supply chain model
Linear and mixed Linear and mixed integer programming integer programming
Minimierung der Kosten Maximierung des Profits

Sourcing Sourcing Product mix Product mix Production and Production and procurement plan procurement plan Inventory strategies Inventory strategies Flexible constraint definition # Capacities # Material availability # Market constraints # Costs of opportunity
APO
Constraint-based Constraint-based feasible solution feasible solution

Forecasts Forecasts sales orders sales orders
Cost minimization Profit maximization
Optimization
Capable-to-Match: Matching of Demand/Supplies
" Matches a set of prioritized customer demands (forecast " Matches a set of prioritized customer demands (forecast
and orders) to aaset of categorized supplies and orders) to set of categorized supplies " Supports multi-stage production networks " Supports multi-stage production networks
Capable-to-Match Capable-to-Match
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Categorized supplies
Multi-site capacity check and check of transportation capabilities
Prioritized demands
Summarized Features - SAP APO SNP

! Allows you to efficiently plan available supply, contrasted to projected demand, across your entire supply chain network ! Ability to create feasible plans for procurement, manufacturing, inventory, and transportation needs ! Three different alternatives to efficiently plan supply:
" " "
Heuristics and capacity leveling Optimization Capable-to-match (CTM)
! Fully supported distribution and safety stock planning, as well as dynamically rebalance and optimize your distribution network ! Ability to plan based on different production strategy needs:
" " "
Make-to-stock Assemble-to-order (with or without final assembly) Configure-to-order
! You can include other internal or external groups in planning with built-in collaborative supply planning

SAP R/3 & SAP APO: Production Planning & Scheduling

Planning (SAP R/3)
Sales forecasting Sales forecasting (flexible planning) (flexible planning) Distribution Requirements Planning (DRP) Sales & Operations Planning (S&OP) Single plant Due date driven Backwards scheduling Manual leveling Simulation only for long term
SAP R/3
Planning with constraints
SAP APO
Infinite capacity Infinite materials
Constrained capacity Constrained materials Bottleneck resources

Demand Planning Demand Planning (DP) (DP) Supply Planning (SNP) Production Plng & Detailed Scheduling (PP/DS) Transportation Plng/ Vehicle Scheduling (TP/VS) Global Available to Promise (GATP)
Solution techniques
Multi-plant Priority and cost driven Forward and backward scheduling Auto and manual level Real-time simulation Industry specific solvers
Visualization
Product planning table Graphical planning table Map-based cockpit BI-based reporting Alert monitoring
Linear vs Integrated Planning Process

SAP R/3 PP
! Linear process traditional backward scheduling MRP Logic ! Run MPS and MRP- no consideration of capacities in planning run ! Explode BOM, create planned purchases, production orders, calculate net requirements and lot size ! Run rough-cut capacity planning ! No flexible and user-defined heuristics ! Optional material and capacity check ! Changes are only taken into account for the next MRP run ! Capacity leveling over and under ! Limited interactive planning
SAP APO PP/DS

! Plans for both material and capacity constraints In one planning process ! Constraint driven optimization of planning ! Sequencing and changeover ! Date determination based on actual capacity load- increased planning accuracy ! Automatic solve constraint resources alternate resource, capacity variant ! Detailed capacity planning ! Visibility on material flow (pegging) ! Simulation capabilities ! Alert capabilities ! Improved analytics and reporting tools
Online Integration into Execution

Execution with SAP R/3 Planning with SAP APO
Forecast requirement
Creation
Consumption Creation
Customer order
online
Customer requirement
Planned order
online Purchase request Product order Purchase order

Change of work center Status change Confirmation Goods receipt
Planned order
planned order Production planning
Purchase request ... online

Order conversion Change of work center
Product order Purchase order ...
Re-scheduling manual/automatic
online
Visualization Optimization
SAP APO PP/DS Planning
# State of the art optimization # State of the art optimization
Optimization Optimization
algorithms algorithms # Optimization with several criteria # Optimization with several criteria # All constraints on all levels # All constraints on all levels
A A L L E E R R T T S S
Manual Manual rescheduling rescheduling
# Planner works interactively # Planner works interactively # Visualization of resources, order # Visualization of resources, order
network, and material flows network, and material flows
# Multi-level material and capacity # Multi-level material and capacity
Automatic Automatic planning planning
planning planning # Creation of order network # Creation of order network # Quick identification of constraint # Quick identification of constraint violations violations
Constraints in SAP APO PP/DS

! Due dates/deadlines ! Material availability ! Planned delivery times, transport capacity ! Routing/recipe ! Standard times, sequences, relationships between production activities ! Alternative resources (alternative technologies) ! Limited machine and personnel capacities ! Setup times/costs (dynamic) ! ...
Setup Optimization in SAP APO PP/DS

Setup times in paint shop Prod. A B C A 0 30 40 B 10 0 30 C 20 10 0 Setup time in minutes Product A: white color Product B: yellow color Product C: blue color
Customer orders
20
A
30
B
30
A
time
Setup
Setup
Setup
Optimal plan for setup

10 10
Setup
Setup
Optimal plan for setup and due dates

10 10 40
Setup
Setup
Setup
Graphical Planning Table

Optimization Optimization Strategies Strategies Order network Order network
Alert monitor Alert monitor Component views Component views
Stock views Stock views
Capacity views Capacity views

Summarized Features - SAP APO PP/DS

! With PP/DS, companies can generate optimized schedules, and execute production plans:
! Perform forward and backward scheduling on multiple levels ! Perform detailed capacity and material planning ! Synchronize schedules and scheduling changes at multiple levels ! Support sequencing and scheduling needs ! Perform interactive scheduling using a graphical planning board ! Use the optimizer to determine most feasible plans, based on defined constraints ! Exchange master data with SAP R/3 in real-time
! The PP/DS capabilities support both discrete and process manufacturing needs ! Supports customer order promising and fulfillment needs in capable-to-match (CTP), in conjunction with APO GATP

SAP R/3 and SAP APO: Transportation Planning

Execution (SAP R/3)
Warehouse Warehouse Management Management (WMS) (WMS) Transportation Transportation Management Management (TMS) (TMS) Logistics Execution System (LES) Materials Materials Management Management (MM) (MM) Sales & Sales & Distribution Distribution (SD) (SD) Transactional EDI Internet Fax
SAP R/3
Carrier selection
SAP APO
Manual
Optimization Cost Priority Business share

Load building
Rules-based order consolidation Predefined routes Optimization Item combinations Delivery date/time Equipment Capacity Availability Compatibility Costs (late, early) Dock hours
Tendering
Collaborative EDI Internet Fax Capacity Info
SAP APO TP-VS vs. SAP R/3 LES Transportation

&
Constraint-based
#Optimized #Optimized #Uses
vs. Predefined routes vs. Rules based or manual order consolidation costs and penalties
real orders instead of deliveries precise planning time frame minute:sec vs. day
#Considers #More
&
Creates and supports many types of shipments

#Multiple #Mode
modes such as truckload, airfreight, intermodal... stop, pickup, and delivery
combinations (i.e. rail to sea)
#Multiple
&
Factor hard and soft constraints

#Open/closed #Equipment #Product
dock hours
capacity, availability, and compatibility delivery date and time late, and early delivery costs
combination restrictions
#Requested
#Transportation,
Summarized Features - SAP APO TP/VS

! Allows you to plan for the best use of available capacity for freight vehicles, trucks, railcars, ships, and airplanes ! Anticipated load capacities can be consolidated and planned, allowing more efficient use of available transportation resources ! Out-of-box integration to SAP R/3 transportation execution and freight costing enables automatic release of orders, and more consistent information pass-through

SAP R/3 and SAP APO: Available to Promise

Execution (SAP R/3)
Warehouse Warehouse Management Management (WMS) (WMS) Transportation Transportation Management Management (TMS) (TMS) Logistics Execution System (LES) Materials Materials Management Management (MM) (MM) Sales & Sales & Distribution Distribution (SD) (SD) Inventory (one location) Scheduled production (one location)
SAP R/3
Technology
SAP APO
Real time check at order entry
Real time check at order entry Rules-based Multi-level check

Promise Against
Global inventory Finite scheduling Global constrained capacity Available components
Solutions
Available to promise Available to promise Backorder processing Backorder processing Product allocation Product allocation Capable to promise
SAP APO Global Available-to-Promise

ATP request
Rules-based, multi-level ATP

! Alternative locations ! Alternative products
Integrated with Production Planning

! Checks against actual production plan ! Considering capacity constraints
Sales
Integration with demand planning/forecasting

! Product allocation
Confirmation
It is better/faster/more functional than the ATP check in R/3

Rules-based ATP
Customer Order end item
Problem:
Not enough items in stock
PPM explosion
Solution policy:
Step 1: Alternative product Step 2: Procure from different location Step 3: Finally produce (PPM explosion)
e tiv ) a rn ct(s te u Al od pr
Alternative location(s)
Multi-level ATP/CTP Comparison

MATP
Availability check on component level Product availability check/check against forecast Scope of check, shortage checks, and checking horizons are taken into account Rules-based ATP is supported No Cumulated in days ATP tree structures Integrated in ATP result overview Better Daily production rate (represented by product allocation) Simple lead time scheduling Lot-for-lot order quantity No
CTP
Check using the pegging functionality
CDP Scheduling of finished product Result Display of the check results Performance Capacity restrictions
Yes Based on seconds PP/DS planned orders Separate planning log Worse Finite scheduling on resources Detailed scheduling Fixed/min./max. Yes
Scheduling of components Lot size Block planning

Summary - SAP R/3 Planning

! Planning process support for:
! MRP, DRP, PP (single instance LIS based) ! Non-constrained, sequential based planning ! Simple netting logic
! Linear planning process - traditional MPS/MRP logic ! Sequential batch programs make for a longer planning cycle ! Single hierarchy ! Limited forecasting tools - univariate algorithms ! Limited what-if simulations ! Limited interactive planning
Summary - SAP APO Planning

! Planning process support for:
! Complex or global demand and supply network planning ! All planning processes (strategic, tactical, operational)
! Constraint-based, producing most feasible plan given reality of multiple material, capacity, production, and transportation needs ! Extensive and deep planning and forecasting tools ! More flexibility - deeper planning tools to support simultaneous advanced planning and execution ! Integrated master data with SAP R/3 connector ! Real-time ! Broader, more flexible specific business process support (VMI, CPFR, S&OP, DRP ) ! Enhanced for specific industry planning needs (discrete, process, distribution )
Good Strategies for Getting Started with APO

! Prepare prepare
! First, ensure that all master data is clean and accurate, for all network participants ! Ensure that your planning processes and planning models are clearly documented and understood by your planners and the business ! Get solid APO training for all participants ! Change management is a significant consideration for any advanced planning process implementation
! Start your APO journey in manageable implementation steps

! Start small chew fast ! If you desire to engage an implementation partner, ensure that it has demonstrated experience ! Research best practices and successful implementation models ! Take advantage of new SCM Safeguarding Services offered by SAP Services
Resources
! APO 4.0 detailed information:
"
http://help.sap.com/ > SAP Cross-Industry Solutions > SAP Supply Chain Management > SAP Advanced Planning and Optimization
! Supply Chain Planning Business Process Support Maps:

"
http://www.sap.com/solutions/businessmaps/ > Solution Maps Cross-Industry Business Maps > Supply Chain Management > Supply Chain Planning
! SCM 4.0 integration and technology:

"
http://service.sap.com/scm > mySAP SCM Technology > SCM 4.0 Integration and Technology
! Best practices for mySAP SCM Solution Management:

"
http://service.sap.com/scm > Best Practices for Solution Management mySAP SCM
! SAP Planning: Best Practices in Implementation by George W. Andersen, Pearson Education, April 2003
"
Highest rated SAP-related book on BarnesandNoble.com
SAP R/3 vs. SAP APO

Evaluating Planning Capabilities
Your Turn for Questions !
How to contact me: robert.ferrari @sap.com, Telephone: 781-522-5209
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OS/400, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, Informix and Informix Dynamic ServerTM are trademarks of IBM Corporation in USA and/or other countries.
! ORACLE is a registered trademark of ORACLE Corporation. ! UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group. ! Citrix, the Citrix logo, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, MultiWin and
other Citrix product names referenced herein are trademarks of Citrix Systems, Inc.
! HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C, World Wide Web Consortium,
Massachusetts Institute of Technology.

! JAVA is a registered trademark of Sun Microsystems, Inc. ! JAVASCRIPT is a registered trademark of Sun Microsystems, Inc., used under license for technology invented
and implemented by Netscape.

! MarketSet and Enterprise Buyer are jointly owned trademarks of SAP AG and Commerce One. ! SAP, SAP Logo, R/2, R/3, mySAP, mySAP.com and other SAP products and services mentioned herein as well as
their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are trademarks of their respective companies.

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SAP R/3 vs.

SAP APO Evaluating Planning Capabilities

Bob Ferrari SAP

What Well Cover

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 2

Shades of Planning: SAP R/3, SAP APO, & SAP SCM

Planning (SAP R/3)

Advanced planning (SAP APO)

Adaptive planning (SAP SCM) (Non-SAP)

Inventory Inventory management management

Constrained planning Optimization Simulation Supply network planning

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 3

Supply Chain Execution in SAP R/3

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 4

Examples: SAP R/3 SCM Execution

Ill tell you.

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 5

Planning in SAP R/3

SAP R/3 supports unconstrained planning.

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 6

Planning in SAP R/3 (cont.)

Logistics Information System

Repetitive manufacturing SFC

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 7

Examples: SAP R/3 Planning

If I need 10,000 widgets, how many components do I need to buy?

Ill tell you.

In what sequence should I run my products on a production line?

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 8

Common Misconceptions about SAP APO

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 9

Planning in SAP R/3 vs. SAP APO Outline of Topics

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 10

Advanced Planning with SAP APO

Advanced Planning (SAP APO)

! Simulation ! Optimization ! Collaboration ! Advanced algorithms

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 11

Examples: SAP APO Planning

Ill tell you.

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 12

Adaptive Planning with SAP SCM

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 13

Examples: What SAP SCM 4.0 Can Do

Ill tell you.

I would like to simulate a delayed delivery of a critical component.

Can I enable my suppliers to perform Web-based VMI in real-time?

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 14

SAP R/3 and SAP SCM Working Together

Adaptive planning (SAP SCM)

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 15

Planning in SAP R/3 vs. SAP APO Outline of Topics

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 16

What SAP APO Demand Planning Can Do

Promotions Promotions planning planning

Collaborative Collaborative forecasting forecasting

Ill tell you.

SAP AG 2004, SAP R/3 v SAP APO Part 1, Chris Foti / 17

SAP R/3 and SAP APO: Forecasting

LIS based Transparent table Single hierarchy

BW-LiveCache Based Multi-Dimensional Multiple Hierarchies

Advanced Planning (SAP APO)

Materials Requirements Planning (MRP)