Impact of ERP on Supply Chain effectiveness

Shailesh Harsora

Agenda• Usage of ERP for transactional data• Usage of APO for forecasting, planning &

scheduling and Confirmation.• Integration of SAP/APO for end to end

integration of Demand-Supply.• Usage of Business Intelligence for Analysis

Supply Chain complexity:

3

Suppliers Manufacturers Warehouses &Distribution Centers

Customers

Material Costs

TransportationCosts

TransportationCosts Transportation

CostsInventory CostsManufacturing Costs

Inbound Logistics PLANT Outbound

Logistics

SUPPLIERS

3PL 3PLFixed Schedules,Supplier Kanban.

CUSTO

mer

Demand Chain

SRM R3 & SCM DMS & CRM

SUPPLIERS

CUSTOMERS

The Integrated Demand Chain

SAP

SAPSCM (APO)

APO (Advanced Planning and Optimization) It offers planning and optimization functionalities in different

business processes of • Demand Planning & Forecasting• Supply Net work Planning• Production Planning Detailed Scheduling• Global Available to Promise (GATP)• Transportation Management

7

System Tool

Supply Network Planning (SNP)

Demand Planning (DP)

Production Planning (PP)Detailed Scheduling (DS)

IT Solution

Dealers Forecast

Monthly/Weekly /DailyDespatch & Production

plan

Weekly day wise planning and sequencing

Global Availability To Promise (GATP)

Delivery Commitment to customer

Business Requirement

Demand Planning & Forecasting

• This module helps demand forecasting thro collaboration with customers.

• Geographical, product and business hierarchy can be configured for facilitating collaborative forecasting.

• It also provides statistical tools for demand forecasting.

Demand Planning & Forecasting

• Demand Capturing1. Direct & Indirect Orders from Customers2. Demand based on Forecast

• Demand Propagation1. Sales orders Creation2. Stock transfer Order(STO) creation3. Multi Plant Demand distribution scenario

Supply Network Planning

This module can be used for • Demand Propagation• Network optimisation • Distribution planning (Deployment)• Production planning

Supply Network Planning

Procurement planning

Production planning

Network planning

Planning Processes in SNP module

Supply Network PlanningDemand propagation on plant

Procurement planning

Production planning

Network planning

Stock Yard1

Dealer-1 Dealer-2

Stock Yard2

Dealer-3 Dealer-4

Plant

Dealer-6

Dealer-5

Ex plant Billing Ex warehouse Billing

Stock normsTr. Lead time

Supply Network Planning

Network Planning-Demand Propagation

Procurement planning

Production planning

Network planning

Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri06/02 07/02 08/02 09/02 10/02 11/02 12/02 13/02 14/02 15/02 16/02

StockYard D1 reqmt 5 5 5 5 5 5 5D2 reqmt 3 3 3 3 3 3 3Stock 6NetReqmt 2 8 8 8 8 8 8

Reqmt on plant 26 8 8 8 8 0 8 8 8 8

Target Days supply 3 DaysTransit Lead time 3 Days

Supply Network Planning

Procurement planning

Production planning

Network planning

Planning Processes in SNP module

Supply Network Planning

Procurement planning

Production planning

Network planning

Production Planning horizon

SNP Planning Horizon (4 months)

W1 W2 W3 W4 M1 M2

PPDS Plan orders

SNP Plan orders

SNP Production Horizon,Where SNP will not plan

being a frozen period.

PPDS planning Horizon of 3 weeks for RFD. Every week, 3rd week SNP

plan will be converted to PPDS plan

– Hard constraints- thru Work centers mapped in SAP

• Resource capacity, currently TCF line

• Aggregate hard constraints like engine, Axle & Transmission

• Supplier hard constraints

– Soft Constraints- thru MRP master data updation in SAP

• Parts can be arranged with lead time, which will consider the availability

like stock, expected receipts (Schedule lines on time lines)

How constraints are defined?

Production planning

• SNP Optimizer• Capable To Match(CTM)

SNP Optimizer

• SNP Optimizer is a method of planning where in there are costs attached to all orders (delay, non-delivery, storage and production costs). The optimizer tries to plan orders by minimizing the overall total cost. It uses linear programming logic for optimization

Total cost = Delay Cost + Non-Delivery Cost + Storage Cost + Production Cost

Capable To Match(CTM)

• CTM is a method of planning where the SAP plans as per priorities given to orders (e.g. FIFO of Ordering date)

• CTM is Multi-level Finite order based planning

Supply Network Planning

Procurement planning

Production planning

Network planning

Production Planning:

Objective- To meet the demand by producing vehs as close to the

demand. Minimum delay if capacity < Demand. Model prioritisation in case of Capacity or Material

constraint. Build ahead considering future high demand for selected

models indicated by Marketing.

Supply Network Planning

Procurement planning

Production planning

Network planning

Production Planning by SNP optimiser Resource constraints Component availabilityCost Modeling like

Storage cost Delay cost Non delivery cost * Production cost

(All cost are the relative costs)

* Also termed as Acquisition Cost and has intangible benefit or Loss depend on Product demand and customer profile Hence it is most significant cost element

Supply Network Planning

Procurement planning

Production planning

Network planning

Production Planning: SNP optimiser-

Works on the principle of reducing total cost where,

Total cost = Sum of {Non Delivery (ND)

+ Delay cost (DC)

+ Storage cost (SC)

+ Production cost (PC)}

SNP optimiser uses linear programming to solve the above equation. A comprehensive cost model is developed to meet business requirements.

Supply Network Planning

Procurement planning

Production planning

Network planning

Planning Processes in SNP module

Procurement planning

Production planning

Network planning

Supply Network Planning

Procurement planning

Production planning

Network planning

Procurement planning…Component planning is based on Production plan• Netting off the stock and expected receipts (Schedule lines/open PO)• In transit stock based on ASN• Planned Lead time• Lot size, safety stock norms• Fresh purchase requisitions will be generated

• Convert SNP plan orders to PPDS plan orders as per rule based

sequencing.

• It generates time based sequence which can be used for JIT supplies

• PPDS Plan orders flows to R3, (can be used for MRP)

• Actual production as per PPDS plan orders

• Backlog run for aligning the variation/loss of production.

PPDS activities

GATP (Global Availability to Promise)

BOP (Back order Processing)• This module matches the Requirements with

Receipts elements based on business rules.

• It provides confirmation dates to firm demand based on the stocks and plan orders.

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PROCESS FLOW CHART

CustomerOrder

Dealer’sOwn Stock

and Confirm

POs

Dealer CreatesP.O./ OTF

Triggering of S.O. in R/3

Stk. YardReceipt +

Stock

No

Dealer’s Delivery DateCommitment.

Yes

Yes

GATP CHECK

Dealer to formalise his

forecast in next weekly planning

run

System to create recpt and

update SO / STO

no

Business Inteligence

• The SAP BW Business Intelligence provides flexible reporting and analysis tools for strategic analyses, operational reporting, and decision-making support within a business. These tools include query, reporting, and analysis functions.

• As an employee with access authorization you can evaluate past or current data on various levels of detail, and from different perspectives, not only on the Web but also in MS Excel

BW Dashboards

Supply Chain Process with ERP• Supply Chain Reliability• Supply Chain Responsiveness • Supply Chain Cost• Supply Chain Flexibility• Supply Chain Visibility

Agile Customer Centric Supply Chain

Thank You