Product Master

Procurement Tab

Procurement Type- Procurement Type Defines how the product is procured. The following
procurement types are available:

• F - external procurement

• E - in-house planning

• X - external or in-house production

• P - external procurement planning.

If you do not enter anything in the field, the system assumes X.

The procurement type is independent of the location type, which means that there can even be
in-house production in a distribution center: if a product is packed in a distribution center, it can
be given a new product number as a result of having been packed.

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Planned Delivery Time- Number of workdays required to acquire the product or service using
external procurement.

The system uses the supplier location's production calendar to determine the planned delivery
time. If a production calendar is not defined at the supplier location, the system calculates the
planned delivery time in calendar days.

If you have various suppliers for a product, you have to specify an average value. This also
applies if you always order the product from the same supplier, but the supplier's delivery times
vary.

SNP heuristic: The system takes into account the planned delivery time with both types of
external procurement; both when the source location is defined in the supply chain model and
when it is not known.

If you have also defined an SNP stock transfer horizon, the system uses the larger of the two
horizons.

Example 01- In the below example Planned delivery time is 5 days and SNP stock transfer
horizon is 6 days, so the Heuristics has created Purchase Requisition on 7th day from today.
This is because SNP stock transfer horizon is larger than Planned delivery Time.

Demand Tab
Proposed Strategy - Determines how quantities forecasted in APO Demand Planning are
produced, and how the demand forecast is consumed with sales orders.

SAP delivers the requirements strategies listed below. You can also define your own strategies,
see Define Requirements Strategy.

• 10 Make-to-stock production

Choose this strategy if sales orders do not influence production;

for example, in a mass production environment where individual orders do not affect the
amount produced. There is no consumption of the forecast by incoming sales orders. Do
not consider sales order.
Below is the example of Strategy 10. Sales order do not affect forecast.

DAY 1 2 3 4 5 6 7 Present Day 9 10 11 12

FORECAST 100 180 250 300 200 600 100 500
SALES ORDER 100 100 200 100 400 500 400
TOTAL DEMAND 100 180 250 300 200 600 100 500

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 • 20 Planning with final assembly – (Make to Order)

Choose this strategy if you can accurately forecast production quantities for the final
product. With this make-to-stock strategy, production quantities take into account actual
sales orders as well as forecasted demand: incoming sales orders consume the
forecast, and production quantities result from the net demand. The advantage of this
strategy is that you can react quickly to customer demand.
Sales order consumes forecast in this strategy.

• 30 Planning w/o final assembly

Choose this strategy if the main value-added process is final assembly; that is, the
amount of the sales order is fixed and production is unique for every customer. With this
make-to-order strategy, only the product's component parts are produced prior to the
taking of the sales order. The sales order consumes the forecast for the finished product
and triggers production of the finished product.

• 35 Planning w/o final assembly for configurable products

This strategy is similar to requirement strategy 30 for non-configurable products.

However, if you use strategy 35 the forecasts have a configuration of their own.

• 40 Planning product

Choose this strategy to plan non-variable parts for similar finished products and reserve
the capacities that are required to produce them.
This strategy ensures a rapid response to customer demand and is particularly useful for
products that have a long manufacturing lead time. The value-adding process is not
carried out until the customer has placed their order. The planning product can be either
a fictive entity that is never produced, or it can be a product that is actually produced.

If strategy 20 is chosen, we you have to choose consumption mode and period for that also.

Consumption Mode - Controls the direction on the time axis in which the system consumes
the forecast.

• 1- Backward consumption Only

Sales orders consume forecasted quantities that lie before the requirements date.

• 2- Backward/forward consumption

Sales orders consume forecasted quantities that lie before the requirements date. If the
actual demand is not satisfied, the sale orders then consume forecasted quantities that
lie after the requirements date in order to satisfy the remaining demand.

• 3 - Forward consumption Only

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 Sales orders consume forecasted quantities that lie after the requirements date

Example 01 – You have chosen strategy 1 which is Backward Consumption and Backward
consumption period 05 days, then the system behaves in the below manner; -

Backward Forward

DAY 1 2 3 4 5 6 7 Present Day 9 10 11 12 13

FORECAST 100 180 250 300 200 100 500
SALES ORDER 500
TOTAL DEMAND 100 180 250 500 100 500

Backward Forward

DAY 1 2 3 4 5 6 7 Present Day 9 10 11 12 13

FORECAST 100 180 250 300 200 100 500
SALES ORDER 400 500
TOTAL DEMAND 100 180 250 100 400 500 100 500

Backward Forward

DAY 1 2 3 4 5 6 7 Present Day 9 10 11 12 13

FORECAST 100 180 250 300 200 200 100 500
SALES ORDER 100
TOTAL DEMAND 100 180 250 300 200 200 100 500

Created by Sandeep Sharma for internal training purpose

Example 02 – You have chosen strategy 2 which is backward/forward Consumption and
backward consumption is 05 forward consumption period 05 days, then the system behaves in
the below manner; -

Backward Forward
DAY 1 2 3 4 5 6 7 Present Day 9 10 11 12 13 14
FORECAST 100 180 250 300 200 100 300 500
SALES ORDER 500
TOTAL DEMAND 100 180 250 500 100 300

Backward Forward
DAY 1 2 3 4 5 6 7 Present Day 9 10 11 12 13 14
FORECAST 100 180 200 200 200 300 500
SALES ORDER 500
TOTAL DEMAND 100 180 500 100 300

Example 03 – You have chosen strategy 3 which is forward Consumption and forward
consumption period 05 days, then the system behaves in the below manner; -

Backward Forward
DAY 1 2 3 4 Present Day 6 7 8 9 10 11 12 13
FORECAST 100 180 350 200 300 100 500
SALES ORDER 500
TOTAL DEMAND 100 180 500 50 300 100 500

Backward Forward
DAY 1 2 3 4 Present Day 6 7 8 9 10 11 12 13
FORECAST 100 180 200 300 100 500
SALES ORDER 500 500
TOTAL DEMAND 100 180 500 500 100 500

Created by Sandeep Sharma for internal training purpose

 Lot Size Tab

Created by Sandeep Sharma for internal training purpose

Lot-for-Lot – Lot-for-Lot Specifies that the lot-for-lot order quantity is to be used in the
calculations of Supply Network Planning (SNP) and Production Planning and Detailed Scheduling
(PP/DS).

❖ If you set this indicator, the system creates orders for the exact demand quantity to fulfill the
demand.
❖ The rounding value is not considered in connection with the fixed lot size method.

Example: In the below example, we have set lot-for-lot, see in planning book, order is created of exact
same size as demand. Here the safety stock is 1200 pcs, but no demand and no stock on hand, now SNP
Heuristic has to create receipts for 1200 pcs as per the safety stock and as we have set lot-for-lot,
receipts created of exact 1200 pcs.

Fixed Lot Size - Fixed Lot Size Specifies that a fixed lot size is used in Supply Network
Planning (SNP) and Production Planning and Detailed Scheduling (PP/DS) calculations.

If you set this indicator, the system creates orders to the specified fixed lot size to fulfill demand.

The system ignores all other fixed lot size settings from the location product master, such as
minimum and maximum lot size, rounding value or rounding profile.

Example: In the below example, we have set the fixed lot size 1300 pcs for product 100-100 at
location 1000. This location has a quota which means location is supplied by location 1100 and
6101 in the network. When Heuristic runs, it has created an order of 2600 pcs. 1300pcs for
1100 location and 1300 pcs for 6101 locations.

Created by Sandeep Sharma for internal training purpose

Periodic Lot Size - This indicator is only used in heuristic-based planning (and not in
optimization-based planning).

If you set this indicator, the system groups the demand quantities of several consecutive periods
together and creates orders to fulfill the quantity of this combined demand. Here period may be
a WEEK, MONTH etc.

The period type and number of periods can be entered in the accompanying fields Period Type
and No. of Periods.

Period Type- Defines the type of period, for example, day, week, month, and so on, to be used
for period lot-sizing.

This field is applicable only if you choose Periodic Lot Size.

Number of Periods- Defines the number of periods that are to be grouped together when
forming lot sizes.

Example: if periodic lot size is set and period type is week and number of period is 2, all the
order of two weeks will be grouped together and only one order will be created.

Minimum Lot Size- Quantity in lot size unit of measure that must not be fallen below during
procurement, which means, the lot size of the individual orders is not allowed to be smaller than
this value.

The minimum lot size specified at the production process model (PPM) and only refers to the
validity of the PPM and does not overwrite the value given here.If the fixed lot size method is
being used, the system ignores the minimum lot size.

The Deployment heuristic and the Transport Load Builder (TLB) do not take the minimum lot
size into account.

Created by Sandeep Sharma for internal training purpose

Maximum Lot Size- Quantity in lot size unit of measure that must not be exceeded during
procurement, which means, the lot size of the individual orders is not allowed to be greater than
this value.

In heuristic-based planning, this value specifies the maximum quantity for each order.

If necessary, the system creates multiple orders with this maximum quantity.

The maximum lot size defined in the production process model (PPM) only refers to the validity
of the PPM and does not overwrite the value given here

The Deployment Optimizer and the Transport Load Builder (TLB) do not take the maximum lot
size into account.

Example: in the below example, we have set Maximum lot size to 400 pcs for Product 100-100
at 1000 location. This location (1000) is receiving this product (100-100) from tow locations
namely 1100 and 6101 and there is Inbound quota set for location 1000 i.e. 60% of demand will
be supplied by location 1100 and 40% will supplied by location 6101.

There is no demand but there is a safety stock of 1200 pcs at 1000 location and there is no
stock on hand. When heuristics runs to plan 1200 pcs, below result comes.

Created by Sandeep Sharma for internal training purpose

Rounding value- The system rounds the procurement quantity up to a multiple of this value.
The rounding value is considered in both heuristic-based planning and optimization-based
planning.

Transport Load Builder (TLB) also uses this rounding value to build transport loads. However,
the TLB first considers the value that you have defined in the transportation lane, that is, in the
lot sizing profile (SNP) or the transportation guideline set (SAP ICH) specified there. If no value
has been defined there, the TLB uses the value entered here, or the value 1.

If you do not specify a rounding value, or enter the value 0, the system sets a temporary
rounding value of 1 for the TLB planning run.

If you specified a rounding profile in the location product master, the system uses this profile
instead of the rounding value. The SNP optimizer, deployment and the TLB all ignore the
rounding profile.

If you specified a rounding profile in the location product master, the system uses this profile
instead of the rounding value.

The rounding value is not considered in connection with the fixed lot size method. This means if
you have set a fixed lot size and rounding value also, system considers only fixed lot size.

The SNP optimizer, deployment and the TLB all ignore the rounding profile. The deployment
heuristic rounds values down.

Created by Sandeep Sharma for internal training purpose

 SNP 2 Tab
For easy understanding, this tab is divided into two parts, Heuristic specific and Deployment
specific.

Heuristic Specific

Period Split – This is not a heuristic specific field but this is important. Details given below.

Defines how planning data is disaggregated by time when you release the demand plan from
Demand Planning to Supply Network Planning.

Procedure- To define the period split, you choose one of the following options:

•Blank The data is disaggregated and released to all of the workdays in the specified horizon.

•'1' The data is disaggregated to all of the workdays in the specified horizon, but released only
for those days that lie in the present and future.

•'2' The data is disaggregated to the workdays in the present and future, and then released for
the same days.

Created by Sandeep Sharma for internal training purpose

Examples

The date is November 1st, 2000. The release horizon is the week from October 30th through
November 3rd. The demand plan for this week is 150 boxes. Depending on which option you
choose, the data is disaggregated and released as follows:

DAYS 30-Oct 31-Oct 1-Nov 2-Nov 3-Nov

BLANK 30 30 30 30 30
1 - - 30 30 30
2 - - 50 50 50

Dependencies The prerequisite for using this field is that you have specified which storage
buckets profile is to be used for the release to SNP. This storage buckets profile must contain
days only.

Forecast Horizon- Horizon in calendar days during which the forecast is not considered as part
of the total demand.

Within this horizon, Supply Network Planning (SNP) does not take the forecast into account
when calculating total demand.

Outside of this horizon, the system calculates total demand using either the forecast or sales
orders (whichever value is larger), and the other demands (dependent demand, distribution
demand, planned demand, and confirmed demand).

If you have defined a requirement strategy on the Demand tab page of the location product
master, the system calculates the total demand outside of the forecast horizon either as a total
of the forecast and sales orders (strategy 20, Planning with Final Assembly) or only uses the
forecast (strategy 10, Make-to-Stock Production).

Example

The situation at the start of the month is as follows:

•Demand of 10 pieces is forecast for the 10th, 20th, and 30th of the month.

•There are sales orders of 5, 5, and 15 pieces respectively on the 10th, 20th, and 30th of the
month.

•No requirements strategy has been specified in the location product master.

•The defined forecast horizon is 15 days.

Created by Sandeep Sharma for internal training purpose

Result: After the planning run, the following is displayed in the Total Demand key figure in
interactive Supply Network Planning: 5 pieces on the 10th, 10 pieces on the 20th, and 15 pieces
on the 30th of the month.

DAY 10th day 20th Day 30th Day

FORECAST 10 10 10
SALES ORDER 5 5 15
TOTAL Demand 5 10 15

Forecast Horizon In Past- This indicator refers to the Forecast Horizon.

If you do not specify a value for the forecast horizon or enter the value 0, and set this indicator,
the consumption logic of the forecast horizon also applies for planning periods situated in the
past (before today's date).

SNP Production Horizon- Horizon in which Supply Network Planning (SNP Heuristic) do not
plan production.

SNP does not create any planned orders in the Production (planned) key figure, but moves
production to the first day after this horizon.

In the below example, SNP Production Horizon is maintained for 5 days, when heuristic plans
the production, it creates the Planned Order in Production (Planned) Key Figure on after 5 days
i.e., on 6th day.

Created by Sandeep Sharma for internal training purpose

SNP deletes all unfixed SNP planned orders from previous planning runs within this horizon.

Extended SNP Production Horizon- This horizon is an extension of the SNP Production
Horizon. However, in contrast to the SNP production horizon, you can manually create SNP
planned orders in this extended horizon in interactive Supply Network Planning.

Fix Production- If you set this indicator, all SNP planned orders from previous planning runs
that are within the SNP Production Horizon, are considered as fixed during the heuristic run in
Supply Network Planning (SNP) and, therefore, are not deleted.

In the Fix Production field, you can specify that SNP is to consider all SNP planned orders from
previous planning runs as fixed in this horizon and therefore does not delete them.

SNP Stock Transfer Horizon- Horizon during which neither Supply Network Planning (SNP)
nor Capable-to-Match (CTM) plan stock transfers.

The system does not generate any planned distribution receipts for Key Figure Distribution
Receipt (Planned) within this horizon; instead, it moves them to the first day after the SNP stock
transfer horizon.

In the below example, SNP Stock Transfer Horizon is maintained for 8 days, when heuristic
runs, it creates the Receipts in Distribution Receipt (Planned) Key Figure on after 8 days i.e., on
9th day

SNP also deletes all non-fixed stock transfers from previous planning runs within this horizon.

Fix Stock Transfer- If you set this indicator, all SNP stock transfers from previous planning
runs that are within the SNP stock transfer horizon are considered as fixed during the heuristic
run in Supply Network Planning (SNP) and, therefore, are not deleted.

Created by Sandeep Sharma for internal training purpose

 You can specify in the Fix Stock Transfers field that you want SNP to consider all stock
transfers from previous planning runs as fixed in this horizon and therefore not delete them.

No Fixing- Do not fix orders during manual creation

This indicator is only relevant to Supply Network Planning (SNP). If you set this indicator, orders
that you created manually in interactive SNP planning are not automatically fixed.

A fixed order is an order that cannot be changed or deleted in the next SNP planning run
(heuristic, optimization, capable-to-match).

Summary in Table

Field Name Purpose Key Figure in SNP

How forecast is disaggregated when
Period Split Forecast
released from DP to SNP
Forecast not taken into account when
Forecast Horizon Forecast and Total Demand
calculating total demand

Forecast Horizon In Past Forecast and Total demand

Forecast horizon also applies in the past
SNP does not create any planned orders
SNP Production Horizon Production (planned)
within this Horizon

Extended SNP Production Horizon Manually SNP planned orders can be Production (planned)
created in this Horizon
Fix Production Manual Planned orders are not deleted Production (planned)

The system does not generate any

SNP Stock Transfer Horizon
Extended SNP Stock Transfer Horizon
Fix Stock Transfer
No Fixing
planned distribution receipts within this Distribution Receipt (Planned)
horizon
Manually Stock Transfer Requisition can Distribution Receipt (Planned)
be created in this Horizon
Manual stock transfer orders are not
Distribution Receipt (Planned)
deleted
Manual orders in interactive SNP Production (planned) and
planning are not automatically fixed Distribution Receipt (Planned)

Created by Sandeep Sharma for internal training purpose

 Deployment Specific

Pull deployment horizon: This horizon refers to the period of time over which deployment
takes into account the planned distribution demand. The horizon starts from today’s date.

During the deployment run, the system attempts to fulfill all distribution demands within this
horizon. Distribution begins on the first day for which distribution demands exist in the system
and ends on the last day of the pull deployment horizon.

The pull deployment horizon is also used during push distribution. In this instance, it specifies
whether the demand is to be fulfilled immediately (pull/push distribution) or according to the due
date (pull distribution). It puts a limitation on the date by which SNP stock transfers are to be
considered as relevant for deployment. Within this horizon, deployment only fulfills planned
demand that has been confirmed.

Created by Sandeep Sharma for internal training purpose

 Push deployment horizon: This horizon refers to the period of time over which deployment
takes into account the receipts defined in the ATD receipt category group of the location master.
The horizon starts from today’s date.
If push distribution has been specified (if the distribution demand is smaller than the supply and
stock on hand), this horizon determines whether stock on hand is to be distributed before the
distribution demand due date according to the push rule specified. Only stock on hand within the
push deployment horizon is taken into account for push deployment (deployment before the
actual demand date).
Safety stock horizon: This horizon is only used during push rule Push distribution taking the
safety stock horizon into account.

SNP checking horizon: Deployment uses this horizon to calculate the quantity available for
distributing to demand locations. It puts a limitation on the quantity that is available within the
push deployment horizon. Within the SNP checking horizon, deployment calculates the ATD
quantity for a period by adding up the ATD receipts from the current and preceding periods, and
subtracting all the ATD issues within the SNP checking horizon.

Pull Deployment Horizon Push Deployment Horizon

The Pull Deployment Horizon considers the Fulfillment
of Demand from the Distribution Center / Customer
Pull Deployment horizon is that period of time during
which the deployment is carried out based on the
Distribution Demand
During a Deployment Run, the total Distribution
Demand within this Horizon is fulfilled.
For distribution, ATD receipts are considered
The Push Deployment Horizon, in comparison, considers
the distribution of the stock on hand from the
Manufacturing Plant
This is the period of time, over which the deployment
considers receipts that were defined in the ATD Receipt
category of the location master
For the purposes of Deployment, the date at which the
Stock on Hand at the Plant is distributed is determined
based on the Push Distribution setting
Only stock on hand within the push deployment horizon
is taken into account for push deployment.

Horizon Purpose
Deployment takes into account the planned distribution
Pull deployment horizon
demand.
Push deployment horizon Only stock on hand are taken into account
This horizon is only used during push rule Push
Safety stock horizon
distribution taking the safety stock horizon into account
Deployment uses this horizon to calculate the quantity
SNP checking horizon
available for distributing to demand locations

Created by Sandeep Sharma for internal training purpose

Fair Share Rules
If demand exceeds supply, the system can use fair share rules to calculate deployment using
the available-to-deploy (ATD) quantity. Various methods use fair share rules to assign a limited
amount of available product to sources of demand. The following rules are available:
Fair Share Rule A: Proportional Distribution Based on Demands
The objective of fair share rule A is to distribute the stock proportionally to all demand locations
according to planned distribution demand.

Fair Share Rule B: Proportional Distribution Based on Target Stock

The objective of fair share rule B is to raise the stock levels at all demand locations to
approximately the same percentage of target stock level. The percentage at each destination
location is defined as the deployment-relevant stock (=stock on hand – SNP stock transfers)
divided by the target stock level. If the deployment-relevant stock, is negative the system first
attempts to raise the stock level at all destination locations up to zero. The system then attempts
to raise the stock level at all destination locations to the same target stock level percentage.

Fair Share Rule C: Percentage Distribution Based on Quota Arrangements

The objective of fair share rule C is to distribute the stock according to quota arrangements at
the demand locations. To apply rule C, you have to define outbound quota arrangements for
source location products in the Supply Chain Engineer.

Fair Share Rule D: Distribution Based on Distribution Priority

The objective of fair share rule D is to distribute stock according to priorities that you defined for
the outbound transportation lanes of the source location (distribution priority). At the onset of a
fair share situation, the system attempts to fulfill all of the current date’s demands until the ATD
quantity is exhausted. For example, you have three outbound transportation lanes to your
destination locations (A, B, and C), each with corresponding priorities (1, 2, and 3). Your ATD
quantity is 150 pieces and the required quantity in each location is 100 pieces. If you choose fair
share rule D, destination location A receives a quantity of 100 pieces over the transportation
lane with priority 1. Destination location B receives a quantity of 50 pieces over the
transportation lane with priority 2, and destination location C receives nothing over the
transportation lane with priority 3.

Created by Sandeep Sharma for internal training purpose

Push Rules
SNP only uses push rules to calculate deployment if the ATD quantity covers the demand. The
following rules are available:

Pull Distribution

Deployment fulfills all of the demand within the pull deployment horizon (for definition, see
below). Products are distributed according to the due date specified at the demand locations.
The system does not distribute any supply to the demand source in advance of the demand
date.

Pull/Push Distribution

The system immediately distributes all supply to the demand locations (ignoring the demand
dates specified at the demand locations) to fulfill all demands within the pull deployment
horizon.

Push Distribution by Demand

The system immediately distributes the entire supply for the entire planning horizon to the
demand locations to fulfill all demands. The pull deployment horizon is ignored.

Push Distribution by Quota Arrangement

The system immediately distributes the supply according to the quota arrangements defined for
the demand location. The demand situation at destination locations is ignored.

Push Distribution Taking the Safety Stock Horizon into Account

The system confirms planned issues that are to be covered by safety stock at the source
location if the difference between the demand and deploy date is smaller than the safety stock
horizon (see below). This means, the system will only fall below the safety stock level that you
defined on the Lot Size tab page of the location product master if the demand to be fulfilled is in
the safety stock horizon. Note that the safety stock horizon moves forward (rolls) with planning.

Created by Sandeep Sharma for internal training purpose

Example

The following example illustrates the three push rules: Pull distribution , Pull/push distribution ,
and push distribution by demands .

This graphic is explained in the accompanying text.

Pull distribution - A quantity of 200 is distributed to the distribution centers on every day within
the pull horizon where there is existing demand (four days into the future).

Pull/Push - A quantity of 200 pieces is distributed on the first day, when supply amounts to 200
pieces. On the second day, a quantity of 600 pieces is distributed. Although supply is 1000
pieces, the demand within the pull horizon is for only 600 pieces, so only 600 pieces are
distributed.

Push distribution by demands - 200 pieces are distributed on the first day when supply amounts
to 200 pieces; on the second day, when the supply is 1000, 1000 pieces are distributed. Since
the demand in the system is 1400, all the supply can be distributed. A demand of 200 at the end
of the planning horizon is left unfulfilled due to insufficient supply within the push horizon. If the
demand in the system had been 800, only 800 would be distributed on the second day.

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 Push Distribution
Blank-Pull Distribution
Deployment fulfills demand within the pull
deployment horizon on due dates
P- Pull/Push Distribution The system immediately distributes all supply to the
demand locations within pull deployment horizon
ignoring the demand dates

X-Push Distribution by Demand The system immediately distributes the entire supply
for the entire planning horizon, pull deployment is
ignored here
Q- Push by Quota The system immediately distributes the supply according
to the quota arrangements defined for the demand
location. The demand situation at destination locations is
ignored

S- Push Distribution Taking the Safety Stock Horizon into Account Demand fulfilled by Safety Stock within this horizon

Fair Share Rules

Fair Share Rule A Proportional Distribution Based on Demands
Fair Share Rule B Proportional Distribution Based on Target Stock
Fair Share Rule C Percentage Distribution Based on Quota Arrangements
Fair Share Rule D Distribution Based on Distribution Priority of T-Lane
Fair Share Rule U User may define their own rule

Created by Sandeep Sharma for internal training purpose