Supply Planning

Agenda

1 SAP ECC-MRP Supply Planning Process

2 SAP APO-SNP Supply Planning Process

3 MRP Vs SNP Pros & Cons

4 Implementation Approach

5 Project Timelines

6 Q/A
SAP ECC- Material Requirement Planning
(MRP)
Material Requirements Planning (MRP), a module in SAP ERP, is a planning tool to
help production and procurement planners create feasible and realistic plans
so they can quickly initiate the procurement or production processes

The key MRP process steps are:

1.Accurately define what needs to be produced. Engineering is responsible for creating

and managing the bill of materials (BOM) for all final products and sub-assemblies. Also
called a product structure, the BOM is a hierarchical model of exactly what goes into each
unit. For example, the final product may have many sub-assemblies. Each sub-assembly may
have two or more components and each component may have a list of parts. The BOM will
describe the order in which the material will be needed, what parts are dependent on other
parts, and how many of each will be required
SAP ECC- Material Requirement Planning
(MRP)
2.Quantify the demand. The system calculates the required quantity and date for final
products needed to meet demand. The calculation is based on the sales department’s
customer orders and forecasts, minus expected on-hand inventory. True build-to-order
manufacturers will primarily focus on customer orders. Make-to-stock companies emphasize
forecasts while other companies use a combination of orders and forecasts for planning
future production. That information feeds the master production schedule (MPS), which is
the agreement between all the stakeholders on what will be produced – such as given
capacity, inventory, and profitability
3 Determine the supply. Using the BOM and the MPS for all the products, the MRP run
will, step-by-step, calculate the assemblies, components, and materials that must be produced
or purchased over the planning period. Next, it checks the needed quantities against available
inventory, called netting, to identify net shortages for each component. Using predefined
parameters, such as lot sizing, it determines the proper “make or buy” quantity for each item.
Finally, it calculates the proper start date for the acquisition, using either the purchase or
production lead time as appropriate and sends this information to the purchasing department
or production control.
 MRP with SAP ERP

 Demands are the sales orders and the planned independent requirements
 Orders are created time-phased from the requirement date
 MRP is infinite planning without considering capacity constraint
 MRP with SAP ERP contd..
 MD04 is one of the transaction most of the time planners use to see the Demand and supply
situation after MRP run completed.
 SAP Advanced Planner and Optimizer (SAP APO)
SAP APO provides a robust and scalable solution for real-time collaborative decision support, advanced planning,
simulation, and optimization. The powerful memory resident analytical engine (SAP liveCache) and highly flexible and
configurable SAP BW technology support strategic, tactical, and operational planning. SAP APO contains several
advanced optimization algorithms to support supply network, production, distribution, and transportation planning
and optimization.

APO Advanced Planning and Optimization is the planning component within the mySAP SCM solution. APO is an
acronym for advanced planner and optimizer.
APO is not a standalone application and requires a backend Erp system such as SAP R/3 for the execution. SAP R/3
communicate with APO using the Core interface Functionality (CIF) which supplies SAP APO with the master and the
transaction data in the real time.

Advantages of APO

 High performance using live Cache technology

 Global server: integrates multiple OLTP systems (e.g. SAP-ECC)
 Simultaneous material and finite capacity planning
 What if analysis planning
 Seamless integration between APO and SAP -ECC
SAP Advanced Planner and Optimizer (SAP APO)
SAP APO- SNP
(Supply Master Data

Network Supply Chain Model

Planning) SNP Configuration

SNP is a Supply Network

Planning solution in Advance
Planning Optimization (APO) .
Release Supply Plan to DP Release Demand Plan to SNP
It has below 3 different
planning (algorithms) available

 SNP Heuristic
 Capable-to-Match (CTM) Finalize Supply Plan Supply Planning Run
 SNP Optimizer
Run Alerts/Check Plan
Alerts
CIF – Core Interface (SAP R/3 –APO Integration)
 CIF is the interface between SAP ECC and APO system to transfer master data and transactional data between
two system.
 SAP ERP is the execution system for master data, and it retains ownership of all master data

SAP R/3-
APO
Integration
Core Interface-CIF

 The integration of the SAP-APO with SAP R/3 systems takes place via Core Interface (CIF) , which is an element of the
R/3 Plug-in. Non- R/3 systems are connected using BAPIs.
 The CIF interface is responsible for the transfer of master data and transaction data from R/3 to APO and for the
retransfer of the planning results from APO back into R/3 system
Planning methods in SNP
SNP Heuristic
• Heuristics run creates an Infinite Supply Plan
• Sourcing can be done via quota arrangements
• Capacity leveling as second step for finite plan
• Address capacity over and under load
• Explodes the BOM and generates supplies in the network

Capable-to-Match (CTM) profile and rules-driven

• Sourcing based on priorities or quota arrangements
• Finite capacity planning possible
• „Multi-level, priority based finite planning

SNP Optimizer
• Cost/penalty-driven
• Optimization of production, transportation, and inventory costs
• Mixed Integer Linear Programming
SNP Heuristic
SNP Heuristics will allow the plan of materials either through
production or procurement on an infinite manner
SNP Heuristic and Capacity Leveling

Repair-based planning process consisting of two steps:

 Heuristics
 Capacity leveling

Heuristic: Infinite planning

Plans/creates infinite supply plan to satisfy demand requirements in the supply chain network

Heuristics can be run either interactively or in the background. The following three options
are available interactively through the planning book:
1) Location Heuristics – Plans only selected location product
2) Network Heuristics – Plans the selected product for all locations
3) Multi-level Heuristics – Plans the selected product with all components at all locations „
SNP CTM- Capable to Match
SNP CTM- Capable to Match
SNP CTM- Capable to Match
SNP CTM- Capable to Match
 SNP Optimizer
 Just like Heuristics, Optimizer is a quantity-based, cross-location planning engine
 Unlike Heuristics, the Optimizer takes cost-based constraints to arrive to a most feasible
and cost-effective solution
 Optimization is based on linear and mixed integer linear programming
APO-SNP Planning methods Comparison
APO-SNP Planning methods Comparison
Deployment
Deployment
Deployment is the process which
determines what demands can be met
with the existing supplies both for the In-
house produced and Externally Procured.
In other words Deployment functionality
determines how and when the Inventory
should be deployed to the Distribution
centers, Customers or Vendor Managed
Inventory locations.
Deployment uses various Strategies like
Fair share, Push, Pull-Push and minimum
cost flow optimization. And these are
maintained in the Deployment profiles
If the Supply is equal to the Demand then
Deployment confirms the SNP plan.
When the Demand is more than the
Supply – then the Deployment applies Fair
Share Rule and calculates the plan for the
deployment.
.
Deployment contd..
Pull
o All demand within the pull deployment horizon is met through deployment
o Distribution occurs accordingly to the due date specified at the demand location
o No supply is distributed to the demand source in advance of the demand date

Push
o All supply is distributed immediately to the demand locations for the planning horizon

Pull/Push
o All supply is distributed immediately to the demand locations to meet all demand within the
Period of time over which deployment considers the planned distribution demand

Push by Quota Arrangement

o System uses the demand dependent quota arrangements assigned to the transportation lanes to
distribute supply

Push considering the Safety Stock Horizon

o Safety stock at the source location is used to fulfill only the demands within the corresponding
safety stock horizon, and not other demands beyond this horizon
MRP-SNP Planning methods Comparison
MRP-SNP Planning methods Comparison
Planning features APO-SNP APO-SNP ECC-MRP
(CTM/Optimizer) Heuristic
Simultaneous Material and Capacity Planning Yes No No

Planning across production levels at the same time Yes No No

Late Handling Yes No No
Pegging relationship across supply chain Yes No No
Prioritized Demand Management Yes No No
Visibility across Supply Chain Yes Yes No
Management of high volumes Yes No No
Planning at Multiple location Yes Yes No
What if scenarios modeling Yes Yes No
Lead time (transportation/production) constraints Yes Yes Yes
consideration
Lot size Yes Yes Yes
Safety Stock Planning Yes Yes Yes
MRP-SNP Planning methods Comparison
Planning features APO-SNP APO-SNP ECC-MRP
(CTM/Optimizer) Heuristic
Deployment Planning integration Yes Yes No

Transport Load Builder (TLB) Planning integration Yes Yes No

Management of high volumes Yes Yes No
Flexibility of modifying planning results Yes Yes No
Aggregated planning (Bucket) Yes Yes No
Multiple location, product interactive Planning run Yes Yes No

Adhoc Planning run Yes Yes Yes*

Easy to use “user interface” Yes Yes Yes*
Simulation Planning Yes Yes Yes*

* Possible in ECC-MRP but cumbersome process

Implementation options
Metrics ECC-MRP APO-SNP Hybrid (ECC and SNP)

Solution Deployment Low Medium

Efforts Low Medium
Timelines Low Medium
Integration Low Medium
User training Low Medium
Long term prospect Medium High
Project Timelines
ECC-MRP

APO-SNP

On the high level it will add 10-12 weeks more if we go with SNP Heuristic but again depends on the type SNP
algorithm and business requirements.
Q&A
THANK YOU