Free Download PDF Demand and Supply Planning with SAP APO

if you need the full-text of the Ebook, please contact us: burgess9sarah@gmail.
com
also, we have many other ebooks and reports
SAP PRESS is a joint initiative of SAP and Rheinwerk Publishing. The know-
how offered by SAP specialists combined with the expertise of Rheinwerk
Publishing offers the reader expert books in the field. SAP PRESS features
first-hand information and expert advice, and provides useful skills for
professional decision-making.
SAP PRESS offers a variety of books on technical and business-related

topics for the SAP user. For further information, please visit our website:
http://www.sap-press.com.
Jochen Balla, Frank Layer

Production Planning with SAP APO (3rd edition)
2016, 431 pages, hardcover and e-book
www.sap-press.com/3927
Jawad Akhtar
Production Planning and Control with SAP ERP
Uwe Goehring
Materials Planning with SAP
Christopher Foti, Jessie Chimni

Demand Management with SAP
if you need the full-text of the Ebook, please contact us: burgess9sarah@gmail.com
Sandeep Pradhan
Demand and Supply Planning

with SAP APO
®
Dear Reader,
Supply and demand. Demand and supply. No matter what way you spin it, when
you speak of one, the other shall follow. With the dawn of the consumer-driven
economy these words were forever linked in the lexis of commerce. And while they
may roll easy off the tongue, putting these terms into practice is a whole other
story.
In the sea of ever-changing market dynamics and consumer expectations, you need
the right tools to keep afloat. SAP APO’s Demand Planning (APO-DP) and Supply
Network Planning (APO-SNP) are two such tools that can brace these tides. Balanc-
ing both theory and practice, this book guides you through the configuration and
use of these modules, simplifying your most basic and advanced planning scenarios
and processes. Carried by a comprehensive case study, you’ll learn how to translate
your business needs into technical processes.
What did you think about this new edition of Demand and Supply Planning with
SAP APO? Your comments and suggestions are the most useful tools to help us
make our books the best they can be. Please feel free to contact me and share any
praise or criticism you may have.
Thank you for purchasing a book from SAP PRESS!
Sarah Frazier
Editor, SAP PRESS
Rheinwerk Publishing
Boston, MA
sarahf@rheinwerk-publishing.com
http://www.sap-press.com
Notes on Usage
This e-book is protected by copyright. By purchasing this e-book, you have agreed
to accept and adhere to the copyrights. You are entitled to use this e-book for
personal purposes. You may print and copy it, too, but also only for personal use.
Sharing an electronic or printed copy with others, however, is not permitted, neither
as a whole nor in parts. Of course, making them available on the Internet or in a
company network is illegal as well.
For detailed and legally binding usage conditions, please refer to the section
Legal Notes.
This e-book copy contains a digital watermark, a signature that indicates which
person may use this copy:
Imprint
This e-book is a publication many contributed to, specifically:
Editor Sarah Frazier

Acquisitions Editor Emily Nicholls
Copyeditor Eli Badra
Cover Design Graham Geary
Photo Credit Shutterstock.com/205493926/© demarcomedia
Production E-Book Graham Geary
Typesetting E-Book III-satz, Husby (Germany)
We hope that you liked this e-book. Please share your feedback with us and read
the Service Pages to find out how to contact us.
The Library of Congress has cataloged the printed edition as follows:

Names: Pradhan, Sandeep, author.
Title: Demand and supply planning with SAP APO / Sandeep Pradhan.
Description: Second editon. | Bonn ; Boston : Rheinwerk Publishing, 2016. | Includes bibliograph-
ical references and index.
Identifiers: LCCN 2016001822| ISBN 9781493213337 (print : alk. paper) | ISBN 9781493213344
(ebook) | ISBN 9781493213351 (print and ebook : alk. paper)
Subjects: LCSH: APO. | SAP ERP. | Inventory control--Computer programs. | Inventory control-
-Data processing. | Production planning--Data processing. | Production control--Data processing.
Classification: LCC TS160 .P73 2016 | DDC 658.5/03--dc23 LC record available at http://lccn.loc.
gov/2016001822
ISBN 978-1-4932-1333-7 (print)

ISBN 978-1-4932-1334-4 (e-book)
ISBN 978-1-4932-1335-1 (print and e-book)
© 2016 by Rheinwerk Publishing, Inc., Boston (MA)

2nd edition 2016
Contents
Introduction ..................................................................................................... 19
1 Introduction to Supply Chain Planning .................................... 25

1.1 Sales and Operations Planning ....................................................... 28
1.1.1 Goal of Sales and Operations Planning ............................. 29
1.1.2 Case Study: Manufacturing and Distribution ..................... 30
1.2 Supply Chain Operations Reference Model .................................... 33
1.2.1 Level 1: Process Types ...................................................... 35
1.2.2 Level 2: Process Categories ............................................... 36
1.2.3 Level 3: Process Elements ................................................. 38
1.3 Types of Supply Chains .................................................................. 44
1.3.1 Pipeline Structure ............................................................. 45
1.3.2 Late-Customization Structure ........................................... 45
1.3.3 Diverging Structure .......................................................... 45
1.3.4 Converging Structure ........................................................ 45
1.4 Case Study: A Supply Chain Dilemma ............................................ 46
1.4.1 Business Situation ............................................................ 46
1.4.2 Sourcing ........................................................................... 47
1.4.3 Manufacturing ................................................................. 47
1.4.4 Order Management .......................................................... 48
1.4.5 Distribution ...................................................................... 49
1.4.6 Modeling the Company with the SCOR Model ................. 49
1.4.7 Value Stream Mapping ..................................................... 52
1.5 Demand and Supply Planning Overview ........................................ 54
1.5.1 Demand Planning ............................................................. 55
1.5.2 Supply Planning ............................................................... 61
1.5.3 Supply Chain Maturity Model ........................................... 65
1.5.4 Supply Chain Performance Management .......................... 67
1.6 Summary ....................................................................................... 71
2 SAP APO as an Advanced Planning and Scheduling Tool ......... 73

2.1 Advanced Planning and Scheduling Concepts ................................ 74
2.1.1 Planning and Scheduling .................................................. 75
2.1.2 Concurrent Planning ......................................................... 76
2.1.3 Modeling ......................................................................... 77
2.1.4 Exception Management Using the Alert Monitor .............. 78
7
Contents
2.1.5 Differences between ERP and APS .................................... 79

2.2 Introduction to SAP APO ............................................................... 80
2.2.1 Core Planning Modules .................................................... 81
2.2.2 Task Structure .................................................................. 83
2.2.3 Benefits of Using SAP APO ............................................... 85
2.3 Planning Functions ........................................................................ 90
2.3.1 Demand Planning and Forecasting ................................... 92
2.3.2 Inventory Management .................................................... 93
2.3.3 Supply Network Planning ................................................. 93
2.3.4 Distribution Planning ....................................................... 93
2.3.5 Supply Chain Monitoring .................................................. 93
2.3.6 Sales and Operations Planning ......................................... 93
2.3.7 Network Design and Optimization ................................... 94
2.4 Demand Planning Overview .......................................................... 94
2.4.1 Statistical Forecasting ....................................................... 95
2.4.2 Casual Forecasting ............................................................ 96
2.4.3 Composite Forecasting ..................................................... 96
2.4.4 Promotion Planning ......................................................... 97
2.4.5 Collaborative Demand Planning ....................................... 97
2.4.6 Data Management ........................................................... 97
2.4.7 Bill of Material Forecasting ............................................... 98
2.4.8 Characteristics-Based Forecasting ..................................... 98
2.4.9 Lifecycle Management ...................................................... 98
2.4.10 Transfer of Demand Plan .................................................. 99
2.5 Supply Network Planning Overview ............................................... 99
2.5.1 Safety Stock Planning ....................................................... 100
2.5.2 Solvers ............................................................................. 100
2.5.3 Subcontracting ................................................................. 103
2.5.4 Scheduling Agreement ..................................................... 104
2.5.5 Hierarchical Planning ........................................................ 104
2.5.6 Distribution Planning ....................................................... 104
2.5.7 Supply Chain Monitoring .................................................. 105
2.6 Technical Architecture ................................................................... 105
2.7 SAP liveCache ............................................................................... 107
2.8 Summary ....................................................................................... 109
3 Guidelines for Implementing SAP APO ..................................... 111

3.1 Transformation Initiatives and Prerequisites ................................... 112
3.1.1 Transformation Process .................................................... 113
3.1.2 Transformation Framework ............................................... 114
3.2 Implementation Methodology ....................................................... 117
8
Contents
3.3 Template Rollout Approach ........................................................... 120

3.3.1 Pre-Activities .................................................................... 121
3.3.2 Baseline System Activities ................................................. 122
3.4 Change Management .................................................................... 123
3.5 Implementing Performance Measures ............................................ 125
3.6 Business Benefits Realization ......................................................... 128
3.6.1 Increased Sales ................................................................. 130
3.6.2 Profit Optimization .......................................................... 131
3.6.3 Finished Goods Inventory Reduction ................................ 132
3.6.4 Raw Material Inventory Reduction ................................... 133
3.6.5 Material Cost Reduction ................................................... 133
3.7 Case Study ..................................................................................... 135
3.7.1 Supply Chain Transformation Planning ............................. 135
3.7.2 Key Guiding Principles ..................................................... 137
3.7.3 System Architecture ......................................................... 138
3.7.4 Sales and Operations Planning Characteristics .................. 139
3.7.5 Demand Planning Characteristics ...................................... 141
3.7.6 Inventory and Deployment Planning Characteristics ......... 142
3.7.7 Rough-Cut Production Planning Characteristics ................ 143
3.7.8 Planning Organization ...................................................... 144
3.8 Summary ....................................................................................... 147
4 Preparing for Basic Planning Functionality .............................. 149

4.1 Basic Planning Tasks ...................................................................... 150
4.1.1 Demand Planning ............................................................. 151
4.1.2 Supply Network Planning ................................................. 153
4.2 Basic Customization in SAP APO-DP .............................................. 155
4.2.1 InfoObjects ...................................................................... 156
4.2.2 Planning Object Structure ................................................ 161
4.2.3 Planning Area ................................................................... 164
4.2.4 Planning Book .................................................................. 170
4.2.5 Macros ............................................................................. 175
4.2.6 Locking Key Figures ......................................................... 180
4.2.7 Time Series Consistency Checks ........................................ 182
4.3 Data Staging for SAP APO-DP ....................................................... 182
4.4 Data Management in SAP APO-DP ................................................ 190
4.4.1 Creating New Characteristic Value Combinations ............. 191
4.4.2 Capturing History ............................................................. 191
4.4.3 Transfer Planning Data ..................................................... 192
4.5 Setting up Forecast Methods ......................................................... 193
4.5.1 Univariate Forecasting ...................................................... 194
9
Contents
4.5.2 Forecast Definitions ......................................................... 196

4.5.3 Univariate Forecasting Methods ....................................... 200
4.5.4 Casual Forecasting Methods ............................................. 207
4.6 Basic Customization in SAP APO-SNP ............................................ 208
4.6.1 InfoObjects ...................................................................... 208
4.6.2 Category Group ................................................................ 209
4.6.3 Planning Area ................................................................... 212
4.6.4 Planning Book .................................................................. 214
4.6.5 Key Figures and Macros ................................................... 216
4.7 Supply Chain Modeling for SAP APO-SNP ..................................... 223
4.7.1 Model and Planning Versions ........................................... 223
4.7.2 Location ........................................................................... 224
4.7.3 Location Product .............................................................. 226
4.7.4 Resources ......................................................................... 232
4.7.5 Production Data Structure ................................................ 235
4.7.6 Transportation Lanes ........................................................ 237
4.7.7 Quota Arrangement ......................................................... 238
4.7.8 Supply Chain Engineer ...................................................... 239
4.8 Summary ....................................................................................... 241
5 Basic Interactive Planning ......................................................... 243

5.1 Demand and Supply Planning Cycle ............................................... 244
5.2 Interactive Demand Planning ......................................................... 248
5.2.1 SAP APO Planning Book Navigation ................................. 248
5.2.2 Characteristic Value Combination Maintenance ................ 255
5.2.3 Realignment ..................................................................... 257
5.2.4 Notes Management .......................................................... 258
5.2.5 Fixing Cell ........................................................................ 259
5.2.6 Chart Engine .................................................................... 260
5.2.7 Releasing the Demand Plan from SAP APO-DP to 
SAP APO-SNP .................................................................. 262
5.3 Interactive Statistical Forecasting ................................................... 265
5.4 Interactive Supply Planning ........................................................... 269
5.5 SNP Heuristics ............................................................................... 271
5.5.1 Heuristic Engine Run Process ............................................ 274
5.5.2 Replenishment and Procurement Using SNP Heuristics ..... 275
5.5.3 Master Production Schedule and Capacity Leveling 
Using SNP Heuristics ........................................................ 278
5.5.4 Distribution Planning Using SNP Deployment Heuristics ... 281
5.5.5 Master Data Maintenance ................................................ 282
5.5.6 Interactive SAP APO-SNP Deployment Planning ............... 286
10
Contents
5.6 Load Planning Using the SAP APO-SNP Transport Load Builder ..... 288
5.7 Demand and Supply Planning Alerts .............................................. 292
5.7.1 Types of Alerts ................................................................. 293
5.7.2 Visualizing Alerts with the Alert Monitor .......................... 293
5.7.3 Methodology: The Decision Tree ...................................... 296
5.8 Simulation via Version Management .............................................. 297
5.9 Summary ....................................................................................... 299
6 Advanced Demand Planning ..................................................... 301

6.1 Promotion Planning ....................................................................... 302
6.1.1 Promotion Planning with SAP APO .................................. 303
6.1.2 Promotion Planning with SAP CRM .................................. 308
6.2 Lifecycle Planning .......................................................................... 310
6.2.1 Phase-In/Phase-Out Modeling ......................................... 311
6.2.2 Interchangeability ............................................................ 314
6.3 Seasonal Planning .......................................................................... 315
6.4 Bill of Material Functionality .......................................................... 318
6.4.1 Creating a New Planning Object Structure ........................ 319
6.4.2 Creating a New Planning Area .......................................... 320
6.4.3 Defining a New Planning Book ......................................... 321
6.4.4 Maintaining the Production Process Model and 
Production Data Structure ................................................ 322
6.4.5 Maintenance of Characteristic Value Combinations .......... 324
6.5 Customer and Product Segmentation ............................................. 326
6.6 Customer Forecast Management ................................................... 328
6.7 Alerts ............................................................................................ 330
6.8 Microsoft Excel-Based UI ............................................................... 331
6.9 SAP Duet Demand Planning .......................................................... 335
6.10 Summary ....................................................................................... 336
7 Advanced Supply Planning ........................................................ 337

7.1 Safety Stock Planning .................................................................... 338
7.1.1 Manual Static Safety Stock Planning ................................. 340
7.1.2 Manual Time-Dependent Safety Stock Planning ............... 342
7.1.3 Advanced Safety Stock Planning ....................................... 344
7.2 Aggregated Planning ..................................................................... 349
7.2.1 Hierarchical Planning Scenarios ........................................ 350
7.2.2 Setting up the Hierarchy Structure .................................... 352
7.2.3 SAP APO-SNP Customization ........................................... 353
11
Contents
7.2.4 Preparing Master Data ..................................................... 355

7.2.5 Technical Design Flow ...................................................... 357
7.2.6 Testing Business Scenario ................................................. 359
7.3 Shelf Life Planning ......................................................................... 362
7.3.1 Shelf Life Master Data ...................................................... 363
7.3.2 Shelf Life Transaction Data ............................................... 364
7.3.3 SAP ERP Batch Integration ............................................... 367
7.3.4 Shelf Life Key Figures ....................................................... 369
7.3.5 Shelf Life Propagation ...................................................... 372
7.3.6 Shelf Life Alerts ................................................................ 372
7.4 Planning Strategies and Forecast Consumption .............................. 373
7.4.1 Planned Independent Requirement Segment 
(Requirement Planning) .................................................... 376
7.4.2 Assignment Mode (Forecast Consumption) ...................... 376
7.4.3 Category Group (Forecast Consumption) .......................... 377
7.5 Subcontracting .............................................................................. 379
7.5.1 Master Data Requirements ............................................... 380
7.5.2 Planning Book .................................................................. 383
7.6 Warehouse Capacity Overview ...................................................... 385
7.6.1 Master Data ..................................................................... 385
7.6.2 Perform the SAP APO-SNP Planning Run ......................... 386
7.7 Direct Shipment Customers ........................................................... 387
7.8 Product Interchangeability ............................................................. 390
7.8.1 Scenario 1: Consume Existing Inventory ........................... 392
7.8.2 Scenario 2: Consuming Existing Inventory until a 
Specific Date .................................................................... 396
7.9 Transport Load Builder .................................................................. 399
7.9.1 TLB Profile ....................................................................... 399
7.9.2 TLB Loading Method ........................................................ 400
7.9.3 Shipping Strategies ........................................................... 401
7.9.4 Pull-In Horizon ................................................................. 404
7.9.5 Shipment Sizing ................................................................ 405
7.10 Stock Balancing ............................................................................. 407
7.11 Supply Planning Alerts ................................................................... 410
7.11.1 Managing Favorites in the Alert Monitor .......................... 411
7.11.2 Using the Alert Monitor ................................................... 412
7.11.3 Alert Monitor Hierarchies ................................................. 414
7.11.4 Alerts in the Interactive Planning Screen .......................... 416
7.12 Supply Chain Cockpit ..................................................................... 418
7.13 Planner’s Home Page ..................................................................... 419
7.14 Summary ....................................................................................... 424
12
Contents
8 Collaborative Planning .............................................................. 425

8.1 Overview ....................................................................................... 426
8.2 Collaborative Demand Planning ..................................................... 429
8.3 Collaborative Supply Planning ....................................................... 432
8.4 Workflow ...................................................................................... 434
8.5 Configuration ................................................................................ 435
8.5.1 Activate ICF Services ........................................................ 436
8.5.2 Maintain Entries in Table TWPURLSVR ............................. 436
8.5.3 Maintain ICM Monitor ..................................................... 437
8.5.4 Publish Internet Services .................................................. 437
8.5.5 Collaboration Partner User ............................................... 438
8.6 Vendor-Managed Inventory ........................................................... 442
8.6.1 VMI Model and Technical Messaging Flow ...................... 444
8.6.2 Configuring VMI Scenario in SAP APO-SNP ...................... 446
8.7 Integrating SAP Supply Network Collaboration with SAP APO ....... 449
8.8 Inter-Market Demand and Supply Planning in a Single SAP APO
Application .................................................................................... 452
8.9 Summary ....................................................................................... 457
9 Reporting ................................................................................... 459

9.1 SAP Supply Chain Performance Management ................................ 460
9.2 SAP APO and SAP BW Integration ................................................. 463
9.2.1 Data Dimensions in SAP APO ........................................... 463
9.2.2 SAP Business Warehouse Layers ....................................... 465
9.2.3 Integration Scenarios ........................................................ 467
9.3 Extraction Process from SAP liveCache to SAP BW ......................... 472
9.3.1 Generate DataSource Export ............................................ 472
9.3.2 Create a Query ................................................................. 478
9.4 SAP APO-DP Data Model .............................................................. 480
9.4.1 Flow 1: Historical Data Load (Inbound Flow) .................... 480
9.4.2 Flow 2: Data Extraction (Outbound Flow) ........................ 482
9.5 SAP APO-SNP Data Model ............................................................ 483
9.6 SAP BW Business Content ............................................................. 484
9.6.1 Access Standard Business Content .................................... 485
9.6.2 Install Standard Business Content ..................................... 485
9.6.3 Supply Chain SCOR Metrics .............................................. 487
9.6.4 Level 1: High-Level Strategic Metrics ................................ 489
9.6.5 Level 2: Diagnostic Metrics .............................................. 491
9.6.6 Level 3: Configuration Metrics .......................................... 492
9.7 Summary ....................................................................................... 493
13
Contents
10 SNP Optimizer ........................................................................... 495

10.1 SNP Optimization Concept ............................................................ 496
10.1.1 SNP Optimization Steps ................................................... 498
10.1.2 Differences between Heuristics and Optimizers ................ 499
10.1.3 Constraints ....................................................................... 500
10.2 Costs ............................................................................................. 501
10.2.1 Unsatisfied Demand or Delay ........................................... 503
10.2.2 Storage Costs ................................................................... 505
10.2.3 Safety Stock Penalty ......................................................... 505
10.2.4 Production ...................................................................... 506
10.2.5 Transportation .................................................................. 507
10.2.6 Resource Expansion .......................................................... 508
10.2.7 Procurement .................................................................... 509
10.3 Profiles .......................................................................................... 510
10.4 Case Study: Network Model .......................................................... 513
10.4.1 Identifying Variables for a Graphical Representation ......... 514
10.4.2 Running the SNP Optimizer with Constraints ................... 515
10.5 Automatic Cost Model .................................................................. 525
10.5.1 Priorities and Preferences ................................................. 525
10.5.2 Business Rules .................................................................. 527
10.6 SNP Optimization Explanation Log ................................................ 528
10.7 Case Study: Supply Allocations ...................................................... 529
10.7.1 Optimization Model Input ................................................ 530
10.7.2 Optimization Constraints .................................................. 530
10.7.3 Optimization Cost Factors ................................................ 531
10.7.4 Production Capacity Maintenance .................................... 532
10.7.5 Maintain Storage Inventory Costs ..................................... 534
10.7.6 Testing ............................................................................. 535
10.7.7 Planning Run .................................................................... 535
10.8 SNP Deployment Optimizer ........................................................... 538
10.9 The APO Performance Monitor ..................................................... 540
10.10 Integrating External Optimizers ..................................................... 541
10.11 Summary ....................................................................................... 543
11 Demand and Supply Matching with Capable-To-Match .......... 545

11.1 Capable-to-Match Concept ........................................................... 546
11.1.1 Planning Characteristics .................................................... 546
11.1.2 Planning Scenario ............................................................. 546
14
Contents
11.1.3 Planning Modes ............................................................... 548

11.1.4 Demand Prioritization ...................................................... 549
11.1.5 Supply Categorization ...................................................... 550
11.1.6 Search Strategy ................................................................ 551
11.2 Customization via the CTM Profile ................................................. 551
11.2.1 Planning Scope ................................................................. 552
11.2.2 Strategies ......................................................................... 555
11.2.3 CTM Integration with Global ATP ..................................... 556
11.2.4 CTM Early/Late Demand Fulfilment .................................. 560
11.2.5 Aggregation ..................................................................... 561
11.2.6 Demand ........................................................................... 562
11.2.7 Supplies ........................................................................... 563
11.2.8 Settings ............................................................................ 564
11.2.9 Supply Distribution .......................................................... 566
11.3 Master Data .................................................................................. 566
11.4 Planning Run ................................................................................. 568
11.5 Case Study ..................................................................................... 569
11.6 Summary ....................................................................................... 571
12 Inventory Planning and Optimization with SAP APO 

and SAP ERP .............................................................................. 573
12.1 Inventory Optimization ................................................................. 575
12.1.1 Dynamics ......................................................................... 576
12.1.2 Supply Chain Applications ................................................ 578
12.1.3 Techniques ....................................................................... 580
12.2 Inventory Analysis Methodology ................................................... 581
12.2.1 Product Portfolio Classification (ABC Analysis) .................. 582
12.2.2 Inventory Stocking Policies Quadrant ............................... 585
12.2.3 Inventory Historical Analysis ............................................. 587
12.2.4 Inventory Un-Bundling ..................................................... 591
12.2.5 Inventory Modeling .......................................................... 594
12.2.6 Inventory Cost-Benefit Analysis ........................................ 598
12.3 Designing an Inventory Control System ......................................... 600
12.3.1 Economic Order Quantity ................................................. 600
12.3.2 Lot Sizing ......................................................................... 602
12.3.3 Target Stock Level ............................................................ 608
12.4 Multi-Echelon Inventory Planning ................................................. 611
12.5 Summary ....................................................................................... 614
15
Contents
13 Characteristics-Based Planning ................................................ 617

13.1 Process Overview .......................................................................... 618
13.2 Technical Steps .............................................................................. 620
13.2.1 Case Study ....................................................................... 621
13.2.2 Variant Configuration ....................................................... 622
13.2.3 Material Master ............................................................... 624
13.2.4 Characteristics .................................................................. 626
13.2.5 Variant Class .................................................................... 628
13.2.6 Super BOM ...................................................................... 629
13.2.7 Super Routing .................................................................. 630
13.2.8 Configuration Profile ........................................................ 631
13.2.9 Object Dependencies ....................................................... 632
13.2.10 Customizing Sales Orders ................................................. 633
13.3 Forecasting .................................................................................... 635
13.3.1 Activate Characteristics-Based Planning ............................ 636
13.3.2 Master Data ..................................................................... 636
13.3.3 Planning Book Design ...................................................... 639
13.3.4 Descriptive Characteristics ................................................ 642
13.3.5 Demand Planning Release ................................................ 643
13.4 Supply Planning Integration ........................................................... 645
13.4.1 Business Scenario and Technical Steps .............................. 645
13.4.2 Block Planning Integration ............................................... 648
13.5 Summary ....................................................................................... 650
14 SAP Industry Solution Example with SAP APO ........................ 651

14.1 SAP Apparel and Footwear Industry Solution ................................. 652
14.2 SAP ERP (AFS Extension): Integrated Solution Overview ................ 654
14.2.1 Process Steps ................................................................... 655
14.2.2 AFS Planning .................................................................... 658
14.3 Master and Transactional Data Integration .................................... 659
14.3.1 Maintain Master Data ...................................................... 660
14.3.2 Data Transfer from SAP ERP to SAP APO .......................... 660
14.3.3 Bill of Materials Construct in SAP ERP (AFS Extension) ..... 661
14.3.4 Transactional Data Integration .......................................... 663
14.4 SAP APO Solution for AFS Using Aggregated Functionality ............ 667
14.4.1 Demand Planning: Seasonal Functionality ........................ 668
14.4.2 Supply Network Planning: Aggregated Functionality ......... 668
14.5 SAP Business Function ................................................................... 673
14.6 Summary ....................................................................................... 674
16
Contents
15 Technical Architecture ............................................................... 675

15.1 Core Interface ................................................................................ 676
15.1.1 Configuration Steps .......................................................... 677
15.1.2 Integration Models ........................................................... 679
15.1.3 Incremental Data Transfer ................................................ 684
15.1.4 Administration ................................................................. 688
15.1.5 Troubleshooting ............................................................... 700
15.1.6 Customer Exits ................................................................. 703
15.1.7 Publication of Planning Results ......................................... 704
15.1.8 Regular CIF Monitoring Transactions ................................ 705
15.2 Technical Upgrade Functional Activities ......................................... 710
15.2.1 Plan Phase ....................................................................... 713
15.2.2 Prepare Phase .................................................................. 713
15.2.3 Upgrade Phase ................................................................. 714
15.2.4 Post-Upgrade Phase ......................................................... 714
15.3 SAP APO on SAP HANA ................................................................ 716
15.3.1 Deployment Options ........................................................ 717
15.3.2 Benefits ............................................................................ 718
15.3.3 SAP S/4HANA .................................................................. 720
15.4 SAP Supply Chain Info Center ........................................................ 721
15.4.1 Dashboards ...................................................................... 722
15.4.2 Deployment Options ........................................................ 727
15.4.3 Data Replication .............................................................. 727
15.5 Rapid Deployment Solutions for SAP APO ..................................... 737
15.6 SAP APO as an Add-on to SAP ERP ............................................... 741
15.7 SAP Fiori Apps for SAP APO .......................................................... 744
15.8 Hardware Sizing using Quick Sizer ................................................. 746
15.9 Technical Integration with Non-SAP Applications .......................... 750
15.9.1 SAP APO Business Warehouse ......................................... 751
15.9.2 Enterprise Service Bus ...................................................... 752
15.10 Summary ....................................................................................... 753
16 Technical Enhancements ........................................................... 755

16.1 Data Conversion Strategy .............................................................. 756
16.1.1 Data Conversion Process .................................................. 757
16.1.2 Data Mapping and Cleansing ............................................ 758
16.2 Legacy System Migration Workbench ............................................ 760
16.3 Converting Data Using LSMW ....................................................... 761
16.3.1 Loading Master Data ........................................................ 763
17
Contents
16.3.2 Converting Transactional Data .......................................... 768

16.3.3 Importing Data with IDocs ............................................... 772
16.4 Technical Modifications in SAP APO .............................................. 772
16.4.1 Business Scenario 1: Material Master CIF .......................... 773
16.4.2 Business Scenario 2: Product Master Creation .................. 775
16.4.3 Business Scenario 3: Transaction Data Mapping ............... 777
16.4.4 Business Scenario 4: SAP APO-SNP PDS Modification ...... 780
16.4.5 Business Scenario 5: SAP APO-SNP Planning Book
Modifications ................................................................... 781
16.4.6 Business Scenario 6: User Exit Macro ................................ 782
16.4.7 Business Scenario 7: SNP Heuristics Lot Sizing .................. 785
16.4.8 Business Scenario 8: CTM Demand Prioritization .............. 785
16.4.9 Business Scenario 9: Demand Planning with SAP BW ....... 786
16.4.10 Business Scenario 10: Demand Planning to 
Supply Planning Release ................................................... 787
16.4.11 Business Scenario 11: Alert Monitor ................................. 788
16.4.12 Business Scenario 12: TLB Interactive Display ................... 788
16.5 Authorization Concept ................................................................... 788
16.5.1 Master-Derived Role Concept .......................................... 789
16.5.2 Defining Roles .................................................................. 790
16.6 Process Chain ................................................................................ 791
16.6.1 Main Components ............................................................ 792
16.6.2 Create the Process Chain .................................................. 793
16.6.3 Process Chain Monitoring ................................................ 796
16.6.4 Parallel Processing ............................................................ 797
16.7 Summary ....................................................................................... 798
17 Conclusions and Outlook .......................................................... 799
Appendices ....................................................................................... 803

A Resources ................................................................................................ 805
B List of Acronyms ...................................................................................... 807
C The Author .............................................................................................. 811
Index ................................................................................................................ 813
Service Pages ............................................................................................. I

Legal Notes ............................................................................................... III
18
Introduction
1
SAP Advanced Planning and Optimization (SAP APO) is one of the key modules
within SAP Supply Chain Management (SAP SCM), which has come a long way in
gaining Advanced Planning and Scheduling (APS) market maturity and popular-
ity. The tool provides the capability to support a company’s sales and operations
planning process with a set of functions that balance market demand with supply
chain constraints. The Demand Planning (which we’ll refer to throughout the
book as APO-DP) functionality within SAP APO provides advanced forecasting
and demand planning tools that enable companies to capture changes in demand
signal and patterns as early as possible. Similarly, Supply Network Planning
(which we’ll refer to as APO-SNP) provides tactical supply planning capabilities
with integration to purchasing, manufacturing, distribution, and transportation
and creates a feasible plan in a constraint supply network environment. The
objective of this book is to provide an in-depth introduction to the APO-DP and
APO-SNP functions, applications, and customizations.
This second edition book is written based on the current SAP SCM 7.04 (contain-
ing SAP APO 7.0 with Enhancement Pack 4) release and provides coverage in
using APO-DP and APO-SNP functionalities for basic and advanced planning
concepts. While the basic planning focuses on how to configure and model the
demand and supply planning cycle in SAP APO, the advanced planning provides
insight into enhanced functionalities (seasonal planning, subcontracting, etc.),
which support unique business scenarios. SAP APO, a user-decision support tool,
is best explained with a business case study, which is the approach this book has
adopted, using a fictitious company example. The book demonstrates how a fic-
titious computer manufacturing company named ABC Technology goes about
initiating a supply chain transformation project to improve its supply chain plan-
ning process with APO-DP and APO-SNP capabilities. Throughout the book, a
constant balance of theory and practice is adapted to ensure that you have a good
grasp of the discussed topics. Besides explaining the functional and technical
aspects of APO-DP and APO-SNP, the book also devotes some time to data con-
version activities and an implementation approach for a typical SAP APO project.
19
Introduction
The overall goals of this book are to:
왘 Explain the industry best practices for demand and supply planning business
processes
왘 Introduce SAP APO in the form of APO-DP and APO-SNP as a planning tool for
business planners
왘 Explain the basic planning concepts and teach readers how to configure and
model the planning process in SAP APO
왘 Deep-dive on the real-life business scenarios that will flush out the SAP APO
functionalities (APO-DP and APO-SNP)
왘 Use a case study example to explain difficult topics
왘 Explain technical operational concepts in SAP APO including deployment in an
SAP HANA environment
왘 Discuss an implementation approach for SAP APO
Who This Book Is For

This book is aimed at supply chain practitioners who are concerned with learning
the concept of demand and supply planning and would like to implement and
configure APO-DP and APO-SNP functionalities. The target audience for this book
is the supply chain managers, supply chain planners, project managers, and con-
sultants who are interested in this topic.
Basic knowledge of the supply chain management processes and a sound under-
standing of the supply chain planning, material management, production plan-
ning, and transportation business processes is required to understand the busi-
ness scenarios explained in this book.
What This Book Covers

The book can be broadly divided into three sections. The first section (Chapter 1
through Chapter 7) explains how APO-DP and APO-SNP can fit in the company’s
sales and operations planning process by supporting weekly and monthly plan-
ning cycles. This section explains how to model your supply chain and configure
and set up the system. The second section (Chapter 8 through Chapter 14)
touches on cross-functional areas, such as inventory planning, optimization
engines, reporting, collaboration, and industry solutions, which are integral parts
20
Introduction
of SAP APO. The final section (Chapter 15 through Chapter 17) explains the SAP
APO Core Interface (CIF) and technical concepts and provides some data conver-
sion guidelines for SAP APO project success. This new edition also touches on the
deployment of SAP APO in an SAP HANA database, setting up the Supply Chain
Info Center, and new apps available on the SAP Fiori platform to improve the
user experience (UX) and user interface (UI).
The chapters can be further broken down as follows:
왘 Chapter 1
This chapter provides a theoretical introduction to supply chain planning based
on various literatures. It also discusses leading practices for the sales and oper-
ations planning process and uses the Supply Chain Council’s supply chain oper-
ation reference (SCOR) model to articulate the demand and supply planning
business process decomposition. An introduction is provided to the fictitious
company that’s faced with current planning challenges. An overview of SAP
Supply Chain Performance Management is also provided to formulate a com-
pany’s supply chain scorecard metrics.
왘 Chapter 2
This chapter starts by describing the Advanced Planning and Scheduling (APS)
concepts and then introduces SAP Advanced Planning and Optimization (SAP
APO). A brief overview of APO-DP and APO-SNP is provided, along with key
functions and planning characteristics. The chapter ends with technical archi-
tecture and a brief explanation of SAP liveCache technology.
왘 Chapter 3
This chapter provides practical guidelines for implementing the SAP APO pack-
age. Besides highlighting the implementation methodology (with the example of
global template rollout), the chapter also focuses on explaining the importance
of change management, business benefits, and business readiness towards steer-
ing a successful SAP APO implementation.
왘 Chapter 4
This chapter teaches you basic customization and master data modeling steps in
APO-DP and APO-SNP. Besides showing how we can design planning books for
business users, this chapter also provides detailed information on the statistical
forecasting process and supply chain modeling steps for supply network plan-
ning.
21
Introduction
왘 Chapter 5
This chapter is devoted to explaining the basic interactive planning activities
for performing demand and supply planning cycle activities in APO-DP and
APO-SNP. The focus of this chapter is on providing the building blocks for the
business user to start navigating the system and using basic SAP APO function-
alities (for example, forecasting, supply planning runs, simulation, and alerts)
in an interactive manner for preparing demand and supply plans.
왘 Chapter 6
This chapter demonstrates the advanced functionalities in SAP APO Demand
Planning. You will learn how promotion planning, lifecycle management, sea-
sonal planning, bill of material (BOM) forecasting, product and customer seg-
mentation, customer forecast management, and demand alerts can be custom-
ized and set up in APO-DP. This edition also provides information on the
Microsoft Excel-based UI.
왘 Chapter 7
This chapter demonstrates the advanced functionalities in APO-SNP and explains
how APO-SNP can be customized and modeled to solve many complex supply
chain business scenarios. Various APO-SNP functionalities that support tactical
(i.e., safety stock planning, interchangeability, subcontracting, direct shipment,
shelf life, and aggregated planning) and operational (i.e., Transport Load
Builder (TLB), stock balancing, and warehouse capacity evaluation) planning
processes are explained in both theory and practice (i.e., customization and
setup). This edition also includes information on the SAP APO Planner’s Home
Page.
왘 Chapter 8
This chapter describes the collaborative planning process setup between inter-
nal and external business partners to reach a consensus on balance demand and
supply plans. Using the examples of vendor-managed inventory (VMI) and col-
laborative planning, forecast, and replenishment (CPFR), this chapter shows
how SAP APO collaborative planning capabilities can be modeled in the system
for effective demand and supply collaborations.
왘 Chapter 9
This chapter provides comprehensive information regarding the SAP APO’s
internal SAP Business Warehouse (BW) staging, extracting, transformation, and
reporting processes. It also explains the SAP BW data model for demand and
supply planning and outlines how SAP BW business content can be leveraged
22
Introduction
to activate some of the SAP standard reporting in the areas of forecast accuracy,
global inventory, and global capacity.
왘 Chapter 10
This chapter demonstrates how we can configure SNP optimizer to solve com-
plex supply chain optimization problems. The chapter provides an explanation
of how mathematical models (i.e., linear and mixed integer programming) can
be formulated in the SNP optimizer planning engine to solve typical distribu-
tion and allocation supply chain problems.
왘 Chapter 11
This chapter explains the Capable-to-Match (CTM) functionality in APO-SNP
for demand and supply matching in the supply chain. It also explains the cus-
tomization and master data steps required for setting up the CTM planning
engine to respect business rules around demand and supply priorities.
왘 Chapter 12
This chapter focuses on designing inventory modeling in SAP APO for supply
chain optimization. The chapter outlines a methodology for setting up different
inventory models and demonstrates various tools in SAP ERP and SAP APO for
effective inventory management.
왘 Chapter 13
This chapter provides an introduction to characteristics-based planning in SAP
APO and explains the concept with detailed customization and master data
setup in the SAP ERP and SAP SCM systems. It also describes how we can per-
form characteristics-based forecasting and supply planning. The functionality
of SAP APO Production Planning and Detailed Scheduling (PP/DS) is also high-
lighted in this chapter as it forms a part of the integrated solution in SAP APO.
왘 Chapter 14
This chapter provides an example of SAP APO integration with an SAP industry
solution and uses an Apparel and Footwear (AFS) example to demonstrate how
the complexity of the industry can be matched with an integrated solution of
SAP ERP AFS and SAP APO. It also describes how SAP APO functionalities, such
as seasonal planning and aggregated planning, can be used to support AFS
industry business requirements.
왘 Chapter 15
This chapter explains the technical concepts within SAP APO, beginning with
Core Interface (CIF), which provides the interface foundation of keeping the exe-
cution (SAP ERP) and planning (SAP SCM) systems synchronized. The chapter
guides the audience in setting up CIF and monitoring and troubleshooting errors.
23
Introduction
The second part of the chapter examines various stages of the upgrade process
and some of the key functional activities that need to be performed to bring the
system back to its original state. The chapter also describes the process chain
for scheduling routine background jobs.
In this edition, new information on SAP APO on SAP HANA is provided, along
with sections dedicated to the SAP Supply Chain Info Center, SAP APO rapid-
deployment solutions (RDS), SAP APO’s add-on for SAP ERP, and SAP Fiori
apps for SAP APO.
왘 Chapter 16
This chapter explains the SAP APO technical concepts in the form of data con-
version activities using the Legacy System Migration Workbench (LSMW) and
various technical enhancements. Examples are provided to show that we can
use LSMW for master data and transactional data integration. This chapter also
provides numerous business scenarios and technical enhancement solutions,
where SAP APO native functionality needs to be enhanced to support unique
business requirements.
왘 Chapter 17
This chapter provides an outlook for future developments and recaps all that
we have learned.
The Appendix contains a glossary of the acronyms used in the book. In the begin-
ning of each chapter, a supplementary mind map diagram is presented to depict
the learning objective of the topic.
Acknowledgments
I would like to offer my special thanks to my wife, Imelda Linggawidjaja; my
daughter, Jessica Anna; and my parents, for giving me the time and encourage-
ment to write this book.
Finally, I would also like to convey my sincere thanks to my editor Sarah Frazier
and the SAP PRESS team with whom I have now worked on three amazing projects.
Also, my special thanks to Frank Layer (author of Production Planning with SAP
APO, 3rd edition, SAP PRESS 2016) for being the technical reviewer for the previ-
ous edition of this book and providing valuable corrections and comments.
Sandeep Pradhan
Houston, Texas – April 2016
24
This chapter provides an introduction to supply chain planning concepts.
Chapter 1
Using the APICS Supply Chain Operation Reference (SCOR) model, we will
walk you through the business process decomposition within the demand
and supply planning business process.
1 Introduction to Supply Chain Planning
SAP Supply Chain Management (SAP SCM) uses a functionality call supply chain
planning (SCP), which helps businesses balance supply and demand. Businesses
choose to implement SCP primarily because of the market volatility in an
extended supply chain environment, where the supply chain extends beyond the
company’s walls and toward customers and suppliers. This, in turn, requires
organizations to not only effectively plan their resources internally, but also to
collaborate with external business partners in order to proactively react to any
market supply chain situations that may arise. In today’s global economy, compa-
nies differentiate their operating models by integrating and coordinating with
their internal and external business partners to fulfill customer demands.
In this chapter, we will walk through five distinct topics related to SCP (see Figure
1.1). First, we will discuss the sales and operations planning process, then explain
how the SCOR model supports the SCP process. Next, we will discuss different
types of supply chains in the context of a fictitious company, ABC Technology,
before breaking down the processes for demand and supply planning. We’ll end
the chapter with a brief overview on supply chain maturity.
Supply Chain Performance

SCOR Metrics Management
Supply Chain Maturity
Sales & Operations
Monthly Forecast Meeting
Planning
Monthly Production Plan Review
Forecasting
Demand Planning
Promotion Planning
Demand and Supply Plan
Sourcing
Planning Source
Master Production Schedule
Supply Planning Supply Chain Level 1 Process Types Make
Rough Cut Capacity Planning
Planning Deliver
Distribution Requirement Planning Supply Chain Operation
Return
Reference (SCOR) Model
Pipeline Structure Planning
Late Customization Structure Level 2 Process Categories Execution
Types of Supply Chain
Diverging Structure Enable
Converging Structure
Level 3 Process Elements Plan Supply Chain
Figure 1.1 Learning Points for the Chapter (Mind Map)
25
1 Introduction to Supply Chain Planning
To better understand what SCP is, and how it works, we need to break down the
concepts we’ll use a little more. A supply chain refers to an integrated system that
synchronizes a series of interrelated business processes in order to accomplish
the following:
왘 Procure raw materials

왘 Transform these raw materials into finished products
왘 Add value to the finished products
왘 Promote and distribute finished products to customers
The main objectives of a supply chain are to enhance operational efficiency,

increase profitability, and improve on its competitive position in the market-
place. Typically, a supply chain consists of multiple end-to-end business pro-
cesses, as shown in Figure 1.2:
왘 Inbound logistics
Supports the procurement of raw materials from a supplier, internal control of
the production process, and warehouse storage. This process is also called pur-
chase-to-receipt, where products are brought from suppliers for further manu-
facturing processes or distribution.
왘 Order management and interfaculty movements
Consists of capturing customer orders and fulfillment. The process may require
transfers of inventory within the network to meet customer orders. This pro-
cess is also called order-to-cash, which begins with order capture and ends with
customer billing.
왘 Outbound logistics
Relates to the physical distribution of outbound logistics activities, which
includes customer order, receipt and processing, inventory deployment, stor-
age and handling, and order consolidation. This process can also form part of
order-to-delivery, with a primary focus on transportation.
Combining these business processes, the supply chain consists of a web of net-
work and business relationships among partners. Successful integration of an
entire supply chain depends heavily on proper SCP and execution of business
processes. The following looks at both:
왘 Supply chain planning (SCP)

SCP consists of predicting future requirements to balance supply and market
demands.
26

Free Download PDF Demand and Supply Planning with SAP APO

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Free Download PDF Demand and Supply Planning with SAP APO

Uploaded by

Copyright:

Available Formats

if you need the full-text of the Ebook, please contact us: burgess9sarah@gmail.

SAP PRESS offers a variety of books on technical and business-related

Jochen Balla, Frank Layer

Christopher Foti, Jessie Chimni

Demand and Supply Planning

Thank you for purchasing a book from SAP PRESS!

This e-book is a publication many contributed to, specifically:

Editor Sarah Frazier

The Library of Congress has cataloged the printed edition as follows:

ISBN 978-1-4932-1333-7 (print)

© 2016 by Rheinwerk Publishing, Inc., Boston (MA)

1 Introduction to Supply Chain Planning .................................... 25

2 SAP APO as an Advanced Planning and Scheduling Tool ......... 73

2.1.5 Differences between ERP and APS .................................... 79

3 Guidelines for Implementing SAP APO ..................................... 111

3.3 Template Rollout Approach ........................................................... 120

4 Preparing for Basic Planning Functionality .............................. 149

4.5.2 Forecast Definitions ......................................................... 196

5 Basic Interactive Planning ......................................................... 243

6 Advanced Demand Planning ..................................................... 301

7 Advanced Supply Planning ........................................................ 337

7.2.4 Preparing Master Data ..................................................... 355

8 Collaborative Planning .............................................................. 425

9 Reporting ................................................................................... 459

10 SNP Optimizer ........................................................................... 495

11 Demand and Supply Matching with Capable-To-Match .......... 545

11.1.3 Planning Modes ............................................................... 548

12 Inventory Planning and Optimization with SAP APO 

13 Characteristics-Based Planning ................................................ 617

14 SAP Industry Solution Example with SAP APO ........................ 651

15 Technical Architecture ............................................................... 675

16 Technical Enhancements ........................................................... 755

16.3.2 Converting Transactional Data .......................................... 768

17 Conclusions and Outlook .......................................................... 799

Appendices ....................................................................................... 803

Index ................................................................................................................ 813

Service Pages ............................................................................................. I

The overall goals of this book are to:

Who This Book Is For

What This Book Covers

The chapters can be further broken down as follows:

1 Introduction to Supply Chain Planning

Supply Chain Performance

Figure 1.1 Learning Points for the Chapter (Mind Map)

왘 Procure raw materials

The main objectives of a supply chain are to enhance operational efficiency,

왘 Supply chain planning (SCP)

You might also like