SAP APO Overview

Contents SCM Overview APO Overview SAP R/3 Vs APO

Contents SCM Overview APO Overview SAP R/3 Vs APO

Supply Chain PlanningSupplyDemand Companies do this by predicting customer demand and fulfilling it by the most efficient allocation of inventory and production capacity. The right productAt the right time and placeDelivered to the right customerAt the lowest total costWith the lowest asset investmentSupply Chain Planning is the process of balancing available supply against demand

SCM Planning and ExecutionSupply Chain Management starts with a completed Business Plan:Strategic PlanningBusiness PlanningSales & Operations PlanningFinancial PlanningDistribution Requirements PlanningDemand PlanningProduction Planning & SchedulingMaterial Requirements PlanningExecutionFunctional PlanningHow are we going to increase the value of the company?What businesses are we going to get in/out?How are we going to accomplish? (acquisitions, mergers, joint ventures, divestiture, etc.)What are the financial implications of the strategic plan?What are the financial resource requirements?Which financial vehicles should be used in meeting these resource requirements?What will it take to make the business more profitable?What events / trends are taking place in the markets served which may impact our business?How are we going to respond to these events / trends?What are the appropriate service and cost targets to gain competitive advantage?How does projected demand compare to projected supply?What are the projected resource requirements to meet both service and cost targets?What actions are required to insure the appropriate levels of resources are available when needed?Customer ServiceWarehousingTransportationManufacturingProcurement

SCM Impact on Business GoalsRevenueGross Profit MarginOperating ExpensesWorking CapitalFixed Asset UtilizationShareholder ValueCompetitive Advantage

Supply Chain Planning Benefits

Supply Chain ComplexityShortened lead times for product developmentMAKE & MOVEDESIGNSELLPLANCustomersSuppliers

Supply Chain Planning SpaceCore SCP ProcessAligned SCP ProcessA range of solutions exist to assist companies effectively plan, manage, and execute their supply chains in collaboration with other trading partners

From Supply Chains to CommunitiesSCM ObjectiveBusinessScopeTechnologiesCollaborationScope

Contents SCM Overview APO Overview SAP R/3 Vs APO

Historical DevelopmentSAP APO (Advanced Planner & Optimizer) emerged as an entrant into APS market in the late nineties. It now forms part of a suite of products called SAP SCM, covering the whole Supply Chain Management process footprint.2000199719981999200220012003SAP SCOPEInitiative MRP II for PlanningSAP R/3 MM/PPTransportation MgmtWarehouse MgmtStrategic partnership with ILOGSAP APO 1.1

SAP enters APS market with stand-alone solutionDecentralized Warehouse Mgmt SystemSAP APO 2.0Collaborative Planning Collaborative ScenariosSAP APO available in mySAP.commySAP SCM

ASCN Vision announcedSAP is Market Leader in Q2Strategic Partnership with Bios GroupmySAP SCM

SAP APO 3.1 Industry ReleaseSupply Chain Event ManagementCRM SCM IntegrationSAP SCM 4.0SAP APO 4.0SAP ICH 4.0SAP EM 4.0SAP NetWeaver IntegrationmySAP SCM

SAP APO 3.0 SCM Content WorkplaceSAP LES R/3 4.6 CTransportation PlanningRadio Frequency2000199719981999200220012004Source: SAP

SCM 5.0APOAPOExecution R/3Collaboration -ICHPlanning -APOCoordination -EMSCM 4.1SCM 5.0APO Lieferant

SCM 5.0 PlanningAPOAPOPlanning -APOSCM 4.0SCM 5.0APODemand Planning (DP)Supply Network Planning (SNP)Production Planning (PP/DS)Distribution Planning (Deployment)Transportation Planning (TP/VS)

SCM 5.0 CoordinationCoordination -EMSCM 4.0SCM 5.0Event Management (EM)Performance Management

SCM 5.0 CollaborationCollaboration -ICHSCM 4.0SCM 5.0 Supplier Managed Inventory (SMI) Lieferant

SAP-APO Overview

SAP-APO Planning and Capabilities

SAP-APO ModulesSAP Advanced Planner & OptimizerSAP application used to enable real time decision support, advanced constraint based planning and optimizationCovers the planning requirements (optimization, finite capacity, what-if simulation...) not covered by the R/3 system:APO runs on an independent server from the R/3 oneSAP provides standard software to interface APO and R/3 (stocks, purchase orders, production orders,)

Demand PlanningStatistical Forecasting Selection of advanced statistical tools (Univariable, Multilinear, Composite, etc.)Collaborative Forecasting and Consensus Planning Ability to conduct intra and cross-company Demand Planning collaboration via InternetFlexible Multi Level Planning Ability to plan at various levels of data hierarchy (product, region)Promotion Planning Planning, managing and evaluation of the impact of promotions on demandProduct Life Cycle Ability to use phase-in and phase-out profiles and like modeling to manage new products and obsolescencePlanning by Exception Use of Alerts to report exceptions Simulation Ability to use what-if scenario simulationIntegration with the Planning and Execution systems Tight integration with other planning capability (Supply Planning, Production Planning, etc.) and the Execution system (R/3, etc.)Capabilities

Supply Network PlanningSupply Chain ModelAbility to model the entire supply network and all of its constraints such as resource capacities, storage limits, transportation capacities, material availability, safety and target stock levels, etc.Concurrent Planning Produces Distribution/Production/Inventory/Procurement plan concurrentlySNP HeuristicPerforms requirements planning (infinite capacity) for the whole, or a subset of the supply chain. Capacity leveling capability is used to balance resource loads.Capable-to-Match (CTM)Creates a feasible plan, using finite production capacities.Matches a large set of prioritized customer demands and forecasts to a set of categorized supplies.SNP OptimizerIt is a one step generation of an optimized finite capacity plan in which all defined costs are minimized. DeploymentDynamically determine how and when to distribute inventory Transport Load BuilderUses the results of the deployment run, groups stock transfers and create transport orders for multiple productsPlanning by ExceptionUse of Alerts to report exceptionsCapabilities

Production Planning Detailed SchedulingPPDS is used for short term to-the-minute planning (both for in-house production and and external procurement) in the production plant. It is tightly integrated with the execution system transfers planning results to R/3.Concurrent PlanningDetailed capacity planning and material planning simultaneouslySchedule changes and synchronization at multiple levels of the bill of materials (BOM)Sequence optimization using genetic algorithm or constraint propagationDynamic or Fixed PeggingConstraint Based Capacity PlanningOver multiple production facilities based on constraints in Supply Network Planner (such as setup times, fixed orders, alternative resources) Interactive PlanningStrong graphical capabilities allow the users to perform interactive scheduling and optimization using a Gantt Chart (Pegging network assigns receipt elements to requirements of BOM structure) Scenario RunningWhat-if Scenarios can be used to simulate actual conditions and consider the effects of various constraints.Capabilities

Global Available To PromiseCapabilitiesProvides an on-line search to verify across the network that the requested product can be provided in the quantity and date requestedMultilevel stock, component and capacity checks in real time and in simulation mode to ensure that supply and demand can be matchedKey ComponentsBasic methods Inventory availability check (SNP)Rules-based ATP Location and/or product substitution (SNP)Capable To Promise (CTP) Production plan check, and automatic planning in PPDS to trigger production if necessary & feasible (PPDS)Product Allocation Allows management of scarce products

Transportation Planning and Vehicle SchedulingTransportation planning and consolidationOptimization and processing of transportation orders Mid-term and bucket oriented planningVehicle scheduling and route determinationAutomatic determination of distance and transportation costsTransportation mode and carrier selectionMulti-pick and multi-drop functionalityException management through AlertsSupports short term and long term decisionsTightly integrated with R/3 - Logistic Execution System (LES) for execution, and BW for reportingCapabilities

Supply Chain CockpitSupply Chain EngineerA graphical instrument panel to model and navigate the entire supply chain and all its links Exception ManagementAlert monitors and event triggers for problems, material, capacity, transportation and storage constraintsSupply Chain EngineerHandles adhoc queries on stock information and capacity utilizationCapabilities

APO Computational SolversAPO SolversDistribution Planning DeploymentA wide variety of computational solversapplied to specific planning functions with industry-specific variationsProduction Planning &SchedulingDemandPlanningHeuristic MethodsLinear Programming /Mixed Integer LinearProgrammingGenetic Algorithms, Constraint-based ProgrammingFlow AlgorithmsBranch & Bound AlgorithmExponential Smoothing Holt WintersMultiple Linear Regression

SAP R/3 and APO IntegrationMaster Data Integration

APO Core InterfaceAdd-on component to R/3 systemSupply APO with planning and optimization relevant data from R/3 Return APO planning results to R/3 Initial and incremental data transfer (automatic switch)

Contents SCM Overview APO Overview SAP R/3 Vs APO

What Are They?SAP R/3 is an Enterprise Resource Planning (ERP) system. It is a suite of modules designed to integrate an organization. Its main purpose is to integrate data throughout the organization and support the execution of business processes.

SAPs Advanced Planner Optimizer (APO) is an Advanced Planning System (APS). An APS supports any form of planning activities to manage the supply chain and is a substitute to any planning modules found in a ERP or legacy system.

Advanced Planner and OptimizerAPO is:A planning toolA decision support tool for managing throughout, inventory, and order/demand managementA modeling technology that enables the supply chain planning process by:Modeling what if scenarios to solve problems Incorporating resource and capacity constraintsOptimizing plans and schedules around those constraints

Advanced Planner and OptimizerAPO does not:Manage entire Bill of MaterialsReplace financial functionsMaintain inventory movements and position Operate as an execution system

APS Vs ERP5 key enablers that distinguish the functionality and capabilities of an APS to those of an ERP system:

Long-term demand req. planning

Demand forecasting

Customer demand collaboration

Safety stock calculations

S&OPSAP R/3DPSNPCapabilitiesPP/DSGATPSAP APO4.6C

Budget Planning

DemandForecasting

Sales & OperationsPlanning

Initiatives: Fully coverage: Partly coverage: No coverage

: Not applicableDP : Demand Planning

SNP : Supply Network PlanningPP/DS : Production Planning and Detailed Scheduling

GATP : Global Available-to-PromiseSAP R/3 Vs SAP-APO

Master Production Scheduling

Materials Requirements Planning

Cycle stock calculations

Balancing changeover costs

Optimizing product run lengths

Rough cut capacity planning

Finite capacity schedulingSAP R/3DPSNPCapabilitiesPP/DSGATPSAP APO4.6CProductionPlanning

Capacity PlanningInitiatives: Fully coverage: Partly coverage: No coverage: Not applicableDP : Demand Planning

SNP : Supply Network PlanningPP/DS : Production Planning and Detailed Scheduling

GATP : Global Available-to-PromiseSAP R/3 Vs SAP-APO

Distribution network optimization

Integrated transportation planning / route optimization

Active fleet management / tracking

Freight payment optimizationSAP R/3DPSNPCapabilitiesPP/DSTP/VSSAP APO4.6COrderFulfillment &Distribution

Transportation& FleetManagementInitiatives: Fully coverage: Partly coverage: No coverage: Not applicableDP : Demand Planning

SNP : Supply Network PlanningPP/DS : Production Planning and Detailed Scheduling

TP/VS : Transportation Planning and Vehicle SchedulingSAP R/3 Vs SAP-APO

Thank You?

**Darren*In the last decade manufacturers have recognized that their supply chains were inefficient. The results were:excessive inventories unproductive activities and assets.

Even more important, the manufactrers were not able to respond to all customer demands. Companies have started getting their house in order by ensuring that intra enterprise supply chain management activities within their companies are integrated Top-down process and centralized planning groupsA push strategy predominates where functions attempt to align themselves with future demand

DRP = Distribution Requirements PlanningMPS= Master production scheduleMRP = Material Requirements PlanningCRP = Capacity Requirements Planning******