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Product Allocation

Product allocation in SAP S/4HANA allows manufacturers to plan and control product availability and distribution to customers. It involves creating allocation objects, defining planning data with allocation limits by customer or region, and sequencing the allocation checks. The configuration includes activating product allocation, setting up allocation objects and characteristics, managing planning data, defining allocation sequences, and assigning products. This helps companies ensure proportional supply, avoid over-purchasing by some customers, and maintain a balanced market presence.

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PALURU GIRIDHAR
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460 views9 pages

Product Allocation

Product allocation in SAP S/4HANA allows manufacturers to plan and control product availability and distribution to customers. It involves creating allocation objects, defining planning data with allocation limits by customer or region, and sequencing the allocation checks. The configuration includes activating product allocation, setting up allocation objects and characteristics, managing planning data, defining allocation sequences, and assigning products. This helps companies ensure proportional supply, avoid over-purchasing by some customers, and maintain a balanced market presence.

Uploaded by

PALURU GIRIDHAR
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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PRODUCT ALLOCATION

Introduction & Configuration to Product Allocation in S/4HANA

Author
Kundan S. Vishwakarma
Introduction

In today’s era, there is lots of competition raised in the market. Every industry
wants to fulfill all the requirements of the end customer and in return to that rapid
growth in the profit margin.

To keep the profit revenue on the top, the manufacturing company needs to deal
with product availability and its future planning.

To overcome this, SAP S4HANA had built up a product allocation mechanism


process for the industries to keep an accurate record of the product availability and
its planning as per the end customer requirement.

Let us go and understand what is product allocation and how it works and provide a
better business mechanism for all the manufacturer industries and its respective
zonal end customers.

What is Product Allocation?

Product allocation is a function provided for carrying out these control options
intended to help an extensive organization to avoid the critical requirement and
procurement situations. This should enable the organization to keep the production
quantity to a minimum at the same time as allowing the business to react quickly to
bottlenecks and changing market situations.

In simple words, the product allocations, represent an ordered allocation of


production for certain periods. Product allocations can be created according to
various criteria, i.e. customer-wise, region-wise, etc

Material A:
5,000 PC

Customer Group Customer Group Customer Group


A B C
3,000 PC 1,500 PC 500 PC

Customer 11
500 PC

Customer 12
800 PC

Customer 13
1,700 PC
Note: ATP against Product Allocation is required in the real-time business to
guarantee the distribution of the products all over the country, generally companies
that have a limited production capacity.

Product allocation allows you to set buying limits on customers or groups of


customers, which is sometimes required by companies that have new releases in
high demand in the market. The goal is usually to allow for proportional supply
across different regions, thus enabling a broad, but solid, market presence and high
customer satisfaction regardless of region.

In some cases, a customer tries to purchase most or all of your inventory and then
distribute these products to their customers with an upcharge, thus compromising
the success of your new releases. In these cases, you may end up with large
returns coming from these middleman customers if they are unable to distribute all
the stock they took from you.

Now, let us start with the configuration steps.

Configuration Steps:

The functionality was changed substantially in SAP S/4HANA 1809, and the older
functionality that shares the same name and purpose still appears on the
configuration menu. The following sections contain the applicable configuration
steps for product allocation.

Step 1: Activate Product Allocation

SPROCross-Application ComponentsAdvanced Available-to-Promise


(aATP)Product Allocation (PAL)Activate Production Allocation
Here, update the value to “1” to activate the PAL.

Step 2: Configure Product Allocation Object

The product allocation functionality in SAP S/4HANA is also available through the
SAP Fiori application “Configure Product Allocation”.

To create a new entry, click on the “+” icon, which will open the below screen.

Here, product allocation object code (Allocation Object) should be less than 18
characters or max to max 18 characters only.

Quantity Unit field indicates the unit of measurement when defining planning data
with limits on how much the customer can purchase.
Collective field determines whether a customer’s buying limits are cumulative using
portions of the key characteristics you define. For instance, if you select sales org.
and customer number from the characteristics and select collective allocation
managed by the system, the system would define a collective limit by sales
organization whenever you enter a limit for the full key.

The Period Type field is the unit of time during which a customer accumulates
buying volume to compare against the planning data limit control (monthly, weekly,
etc)

Period Time Zone used to control the period, which will affect when 1 day ends and
the next begins.

Check Date Time Type specifies which sales order date field is compared against
the planning date.

Factory Calendar used to determine the working days and holidays.

The Purpose (Sales Order or Stock Transfer) indicates whether this product
allocation object is applicable for Sales Order or Stock Transfer order between 2
plants of the same organization.

Click on Add button to create new characteristics to be used as planning data keys
to define limits and to determine allocation success/failure.

Select desired characteristics like Customer Number in our case and click OK /
save it.
Step 3: Manage Product Allocation Planning Data

This application limits the customer in terms of the product quantities they may
purchase over time, as per the system configuration.

Here, click on the “Go” button and you will get the desired production allocation
object which we were created in step 2.
The display mode will appear. Click on the edit button to add new data as per the
planning.

Save it.

Step 4: Manage Product Allocation Sequence


This indicates the relevant object that must be verified and the sequence in which
the objects must be checked.

To manage product allocation sequence follow the below steps,

Click on the “+” icon to add a new sequence.


Click on the forward arrow icon on the 1st sequence generated by the system.
Enter the sales sequence group:

Add a description for the sequence group.


Assign “Backward” and “Forward” consumption number of the period to check
authorizing sales order quantities.
Decide whether unused quantities from the past period are allowed with the Past
Period Allowed flag.
Define constraints by adding a description; specifying PAO (Product Allocation
Object); maintaining the Allocation Rate, Constraints Status, Start & End Validity
fields.
Click Apply.

Step 5: Assign Product to Product Allocation

Click the forward arrow icon on the desired allocation sequence.


Click Add.
Enter the desired Material, Plant, Start and End Validity dates.
Save it.

Here it completes the configuration for the Product Allocation in the Fiori
Application.
Configuration on On-Premises GUI:

SPROSales&DistributionBasic FunctionAvailability Check and Transfer of


RequirementsAvailability CheckAvailability Check with ATP logic or Against
PlanningDefine Availability Check Group.

SPROSales&DistributionBasic FunctionAvailability Check and Transfer of


RequirementsTransfer of RequirementsAvailability CheckAvailability Check
Against Product AllocationMaintain Procedure

SPROSales&DistributionBasic FunctionAvailability Check and Transfer of


RequirementsTransfer of RequirementsAvailability CheckAvailability Check
Against Product AllocationDefine Object

It completes the introduction about the Product Allocation in the SAP S4HANA
along with the configuration steps.

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