High Level Overview of APO Demand Planning

Agenda
1) Introduction to SAP SCM APO Demand Planning 2) APO Demand Planning Framework 3) Interactive Demand Planning 4) Statistical Modeling Techniques 5) Product Life Cycle Planning 6) Advanced Demand Planning Strategies

Demand Planning is part of APO

Advanced Planning & Optimization Alert Monitor Alert Monitor Demand Planning

Synchronize supply with demand in your global supply chain by balancing push and pull network-planning processes and by handling replenishment and production based on actual demand. APO DP: Improves the forecast quality and planning accuracy APO SNP: Improves visibility across your global supply chain and lowers inventory APO PP/DS: Supports you in creating optimized production plans APO gATP: Allows state-of-the-art sales order confirmation planning processes

Supply Network Planning

Production Planning & Detailed Scheduling

Global Available-to-Promise Transportation Planning & Vehicle Scheduling

APO TP/VS: Optimizes transportation loads and minimizes transportation costs APO Alert Monitor: Powerful exception message system integrated in all APO planning modules

APO Demand Planning Overview Planners Knowledge

Task-specific planning tools
Flexible views Graphics Promotional planning Life cycle management Cannibalization Accuracy reporting

Information
Collaborative forecasts Order & shipment actuals & history Cost POS data

Anticipation of Future Demand

Demand Planning Data Mart

Statistical Methods
Multi-model approach
Average models Exponential smoothing Causal factors Trend dampening Model combination Pick best

Nielsen / IRI data ...

APO DP (Demand Planning)

Features
Comprehensive forecasting tool-set Statistical forecasting with causal and time-series methods Selection of best-fit model Automatic outlier detection available Highly configurable planning books with macro functionality Supporting aggregation / disaggregation logic Lifecycle planning Plan promotions separately from the rest of your forecast Track & monitor forecast accuracy Seasonal planning Collaborative demand planning Calculate and determine future demand to improve demand quality and accuracy

Key Benefits
Improved forecast quality One tool for power and business user Consolidated demand plan (different regions, countries, departments, )

Typical DP Planning Cycle

Collaborate
1
Import relevant master and transactional data (e.g. historical data)

Analyze and prepare data

Generate forecast & apply life cycle management

Release final demand to APO SNP or SAP ERP

Sense & Respond

4
Plan promotions and/or other events

Review final demand plan

Compare and evaluate different scenarios

Simulate

Agenda
1) Introduction to SAP SCM APO Demand Planning 2) APO Demand Planning Framework 3) Interactive Demand Planning 4) Statistical Modeling Techniques 5) Product Life Cycle Planning 6) Advanced Demand Planning Strategies

APO Demand Planning Framework

DP Input Data Cube

T im S e r ie s e
R e p ./R e l.

DP Back-up Cube

O rd e rs
liveC a he c
Planning Area / Planning Books

DP Remote Cube

APO BW
Data Warehouse / Business Warehouse

DP Metrics Cube

APO Live Cache

Enterprise Applications

SCM 2007

APO DP Leverages standard SAP interfaces

APO DP Terminology
Characteristics Product Hierarchy: Product, category, brand etc Customer Hierarchy: Customer, Customer Group, Sector, Channel etc Location Hierarchy: DCs, Regions etc Other attributes relevant for demand planning Key Figures (Data rows) Order History, Statistical Forecast, Budget etc Characteristic-Value-Combinations (CVCs, Intersections) Unique combinations of characteristics for which the data is stored and planned Also called at intersections Configuration Calendar, Bucket profiles Planning-Object-Structure, Planning area, Planning book, Dataviews Master Data CVCs Like profiles, Like Models, Forecast Profiles Planning Data

Demand Planning Structure Overview

Agenda
1) Introduction to SAP SCM APO Demand Planning 2) APO Demand Planning Framework 3) Interactive Demand Planning 4) Statistical Modeling Techniques 5) Product Life Cycle Planning 6) Advanced Demand Planning Strategies

Interactive Demand Planning

Toolbar customization Selection IDs Navigation Path, Drill-downs Key-figures, display/hide Pivot sorting Switch of Columns & Rows Activate / Deactivate notes Save Column width Bottom Up/Top Down Aggregation / Disaggn. Calendar Unit-of-Measurers

2 4 3 5

7 6

Interactive Demand Planning

Notes Management

1 3

4 DP allows planners to store and manage notes related to business events

Interactive Demand Planning

Data Locking

When a user changes data in the system, the system locks this data. This prevents other users from changing the same data simultaneously and causing data inconsistencies Locking capability is available at following levels:

Aggregate lock Detailed lock Live cache lock Key-figure specific lock

DP ensures data consistency through Data Locking

Interactive Demand Planning

Usability Graphical and/or table view Calculate total, mean for selected cells, columns, cells in past, cells in future Pivot sorting Switch Rows/Column Graphical and/or table view Distribution Function Equally spread a lump-sum value of selected cell range Proportionally spread a lump-sum value over a selected cell range A specific value can be added or subtracted to existing values of selected cell range User can download planning book data onto desktop, make changes and upload modified data Apply a trend line in graphic view Create a straight line between two selected points, in a graphical view Hide lines

DP provides multiple levers to view and manipulate data

Interactive Demand Planning

Multiple Calendars and Unit of Measures Allows users to change the calendar with single click Weekly, Monthly, Fiscal Periods, Quarters, Years Telescopic, e.g. First quarter in Weeks, Second and third quarter in months, and rest in quarters User can see the data in different units of measures

Weekly View

Fiscal Period View

Interactive Demand Planning

Disaggregation / Top-down Planning

Input entered at Category level Aggregated View

Results displayed Product level Detail View Underlying Proportions

DP supports real-time top-down planning

2,469 =

Interactive Demand Planning

Aggregation / Bottom-up Planning

Input entered at Customer, Product Detail View

Interactive Demand Planning

Aggregation / Bottom-up Planning

Roll-up of the input at All Customer Product level

Roll-up of the input at All Customer Category Level

DP supports real-time bottom-up planning

Interactive Planning - SAP Chart Engine

Use graphs and charts to represent data in visually perspicuous way Graphs with data manipulation possibilities Use high flexibility in customizing and capability of displaying more chart types

Consensus Demand Planning

Objective Create a demand plan by integrating all available information Collaborative process to gain one number consensus from sales, marketing, operations Combine various data: Forecast Promotions Budgets, sales plans, etc. Manual changes

Macros
Use advanced macros to perform complex calculations quickly and easily. APO system comes with examples of the use of macro functions and operators Macros are executed either directly by the user in interactive planning or automatically at a predefined point in time during a background job.

Alert Management
Alerts can be customized user specific Alerts are triggered during planning run or interactive planning for: Forecast errors exceeding borders defined by the user Any kind of check carried out by a macro

Alerts are communicated to

the user by: Visualization in the alert monitor Mail SMS message

Agenda
1) Introduction to SAP SCM APO Demand Planning 2) APO Demand Planning Framework 3) Interactive Demand Planning 4) Statistical Modeling Techniques 5) Product Life Cycle Planning 6) Advanced Demand Planning Strategies

Statistical Modeling Techniques

Univariate Techniques Allows to forecast following time series patterns: Constant Sales Trend Trend Seasonal, Seasonal trend, seasonal linear regression Time Time Linear regression sales sales Automatic model selection Time Time Manual model selection with test for an additional pattern Copy History Sporadic Causal / Multiple-Linear-Regression Assumes that the future sales of a particular product or service are closely associated with changes in some other variable (s). For a business there can be various variable (s), like: Promotion Spending - If 50,000 dollars spent on promotions, in past, on various occasions resulted in a promotional lift of 5,000 Units/Month, then how much lift will I derive from planned spending of 75,000 this season? Dependent Sales Also called as attach rate analysis. If it is assumed that sales of dryers is dependent on sales of washers then for the given forecast of washers what would be the dryers sales forecast?

Statistical Modeling Techniques

Salient Features

Outlier correction Median Method Expost Method Forecast accuracy measures supported in DP Mean absolute deviation (MAD), Error total (ET), Mean absolute percentage error (MAPE), Mean square error (MSE), Square root of the mean squared error (RMSE) , Mean percentage error (MPE) R square, Adjusted R square, Durbin-h, Durbin-Watson, T-test , Mean elasticity Adaptive Modeling DP supports automatic selection of best forecast settings (model and parameters) using following techniques: Generate profile and assign it . Automatic adaptation of Seasonal, Trend, Linear factors Generate new profile on error Assign diagnostic group, and if the measure of error exceeds, systems assigns a profile Best-pick System evaluates user defined models for a run and saves the forecast based on the model that generated least error. User defined the cut-off and method for measuring error

DP allows planners to set controls for statistical modeling

Agenda
1) Introduction to SAP SCM APO Demand Planning 2) APO Demand Planning Framework 3) Interactive Demand Planning 4) Statistical Modeling Techniques 5) Product Life Cycle Planning 6) Advanced Demand Planning Strategies

Product Life Cycle Planning

Product Life Cycle Planning

Product Life Cycle Planning

Agenda
1) Introduction to SAP SCM APO Demand Planning 2) APO Demand Planning Framework 3) Interactive Demand Planning 4) Statistical Modeling Techniques 5) Product Life Cycle Planning 6) Advanced Demand Planning Strategies

Promotion Planning
Promotion Planning allows planners to Compare the unpromoted forecast with the promoted forecast. Correct sales history by deducting from it past promotions, thus obtaining unpromoted historical data for the baseline forecast. Forecast baseline and promotion demand separately Model cannibalization groups and promotion attribute types

Forecasting with Bill of Materials

You can forecast dependent requirements in Demand Planning. The system determines the component parts of finished products through the production process model (PPM) or the production data structure (PDS). This can be useful if material components represent practical constraints on the forecast at finished product level; that is, the available quantity of components is fixed but they can be used in different finished products.
Extend the planning process to the dependent demand Enables to plan all the components of a product which have limited supply, are particularly expensive, have long lead times, are otherwise critical in the supply chain (e.g. for instance cause transport problems) Immediately see the impact of the product forecast on the fixed component level

Forecasting with Bill of Materials

Forecasting with Bill of Materials Allows the demand plan for finished products to be exploded to components

WaterFi WaterF-Ba WaterF-A 1 Uni 1 UnitU 2

Collaborative Demand Planning

Share information & plans with partners via internet Streamline work process and benefit from a more accurate forecast, better market transparency and better communication Consolidate several plans to create one consensus plan Support negotiation process PLAN Re-PLAN
Demand, Inventory levels, Forecast

Key Customers My Company Forecast Promotions