SCM Master Data - 2 Master Data for Distribution

1
SCM Master Data - 2Master Data for
Distribution Production Processes EGN 5623
Enterprise Systems Optimization(Professional
MSEM)Fall, 2012
2
SCM Master Data - 2Theories
Concepts EGN 5623 Enterprise Systems
Optimization(Professional MSEM)Fall, 2012
3
Distribution Planning in SCM (review)
THEORY AND PRACTICE OF ADVANCED PLANNER AND
OPTIMIZER IN SUPPLY CHAIN DOMAIN by Sam Bansal
4
Time Horizons for Distribution and Production
Planning in SCM (review)
5
Level of Detail and Time Horizon of Distribution
and PP in APO Modules (review)
6
Distribution Planning and Production Planning
Processes in APO Modules (review)
7
Distribution and PP Modules in APO System
Structure and Integration with ERP (review)
8
Master Data and Application in (DP) distribution
planning and PP (review)
9
Master Data and Application in Distribution
Planning and PP (overview)

• Master Data for Distribution Planning
• Location, Product, Resource, Transportation lane,
  Quota arrangement, and Interchangeability group.
• Master data for Production Planning
• Location, Product, Resource, PPM/PDS , Quota
  arrangement, Set up Group matrix, and
  Interchangeability group.

10
Master Data and Application in Distribution
Planning and PP (Overview)

• Transportation lanes
• Transportation lanes are required from plant and
  distribution center to the transportation zone
  and have to be created manually.
• The allowed carriers have to be assigned per
  means of transport and transportation lane
  explicitly.
• Quota arrangement (vendorss quota)
• Quota arrangement must be used, if it is intended
  to source from multiple locations on a regular
  basis.
• The concerned products are assigned to the quota
  arrangement, and the ratio of the resources is
  defined per product.

11
SCM Master Data - 2Master Data for
Distribution Planning EGN 5623 Enterprise
Systems Optimization(Professional MSEM)Fall,
2012
12
Distribution (and Supply Chain) Planning

• Distribution planning between the manufacturing
  plants and warehouses is important, as companies
  reduce inventory by changing their logistics
  processes to global inventory management, from
  non-coordinated local inventory management.
• Distribution (and supply chain) planning focuses
  on make-to-stock production.

13
Distribution ( Supply Chain) Planning, and
Replenishment
14
Process Chain for Distribution and Supply Chain
Planning
15
Distribution and Supply Chain Planning

• Distribution planning is performed based on
  demand and stock information with the result of
  planned stock transfers.
• The most important issues are usually the netting
  of the local stocks, safety stock levels,
  sourcing options, transportation times and lot
  sizes for the planned stock transfers.
• If required, restrictions are considered
  regarding storage capacity and handling capacity
  for goods issue and goods receipt.

16
Distribution and Supply Chain Planning

• Replenishment involves two processes
• Deployment, and
• Deployment is concerned with the fair share of
  quantities to the requesting parties in case of
  shortage or surplus. The constraints are
  available quantities.
• Transport load building.
• Transport load building is one step closer to
  execution and focuses on the creation of truck
  loads, where the task is to adjust the planned
  stock transports to the available
  trucks/transport means and take their capacity
  restrictions into account.

17
Distribution and Supply Chain Planning

• SAP APO supports distribution and production
  planning, with the following 4 applications
• For distribution
• SNP heuristic
• PP/DS heuristics
• For SCP
• SNP optimizer
• CTM (with SNP or PP/DS master data)

18
Applications for Distribution and Supply Chain
Planning
19
Features of the Application for Distribution
20
Distribution and Supply Chain Planning

• Distribution planning with SNP heuristic is often
  used in the environments where multiple sourcing
  is not an issue and production is usually able to
  meet the demands, so that the main task for SNP
  heuristic is to calculate the demands for
  production planning based on local inventories,
  transportation times, safety stocks and lot
  sizes.
• SNP optimization allows a complete consideration
  of the supply chain determinants (i.e., sources
  and cost, production capacity, transport, storage
  and handling). The aim of SNP optimizer is to
  find a global optimum for supply chain based on
  cost and penalty cost.
• CTM pursues a priority based simple rules such as
  FIFS.

21
Order Cycle for Stock Transfer
22
Order Cycle for Stock Transfers
The stock transfer order has two aspects as a
demand in the source location and as a supply in
the target location. The documents differ in SAP
ERP and SAP APO. The creation of the planned
stock transfer, deployment and transport load
building (TLB) is performed in SAP APO. The
execution part from the creation of the outbound
delivery in the source location until the goods
receipt in the target location is performed in
SAP ERP, and the information is displayed in SAP
APO.
23
Order Cycle for Stock Transfers

• Three order types in SAP APO
• Planned stock transfer,
• Deployment confirmed stock transfer and
• TLB-confirmed stock transfer
• They are matched to
• the stock transfer requisition and
• the stock transfer order in SAP ERP, according to
  the setting for SNP transfer.

24
Order Flow for Stock Transfer on SAP ERP side
25
Stock Transfer Order
Stock transfer order is first scheduled in SAP
APO, then transferred to SAP ERP and scheduled
again in SAP ERP according to the delivery date.
The scheduled dates in SAP ERP are not
transferred back to SAP APO. Stock transfers
are executed according to the order dates in SAP
ERP, therefore it is important to keep the
scheduling in SAP APO and SAP ERP consistent.
The transport duration in SAP APO is calculated
using the entry from the transportation lane,
whereas SAP ERP uses the planned delivery time of
the material master of the target location.
26
Stock Transfer Scheduling
for transportation
for transportation
27
Setting for Stock Transfer within and across
Company Codes in SAP ERP
Since SAP APO does not know any company codes,
there is no difference in SAP APO whether stock
transfers are planned within one company code or
across company codes. On SAP ERP side,
cross-company stock transfers require the
additional settings. The assignment of the sales
area and the customer to the plant is made with
maintenance view V_001W_IV.
28
Setting for Stock Transfer within and across
Company Codes in SAP ERP
29
Setting for Stock Transfer Across Systems
Stock transfer across two SAP ERP systems is
modelled by a purchase order in the target plant
and a sales order in the source plant.
30
Setting for Stock Transfer Across Systems
31
SCM Master Data - 2Master Data for Production
Planning Process EGN 5623 Enterprise Systems
Optimization(Professional MSEM)Fall, 2012
32
Production Master Data Overview

• The relevant master data for production planning
• Location
• Product
• Resources
• PPM and PDS
• Quota arrangement,
• Set up Group matrix, and
• Interchangeability group.
• Note on resources
• SNP and PP/DS have a different view of the
  capacity.
• SNP in buckets
• PP/DS time-continuous capacity

33
Resources for SNP
The idea of SNP is to perform an aggregated
planning. Since SNP is an application for
bucket-oriented planning, the resources for SNP
offer a certain capacity per time bucket
usually per day. The bucket resources provide the
capacity e.g. the amount of working hours per
day of the resource which is used for the
capacity consumption of the orders. For the
scheduling of the production orders, the factory
calendar is assigned to the resources. The
standard capacity is defined in the resource
master. Figure 13.13 shows these setting for the
bucket resource. Another way to define the
capacity is the use of a reference resource to
save time.
34
Settings for a Bucket Resource
35
Resources for PP/DS
In PP/DS, scheduling and capacity consumption are
not separate steps, but the capacity is consumed
by the scheduled operation. The basic resource
property in PP/DS is the working time, which
depends on the standard working hours, the break
time, and factory calendar. Usually the
available working time is modelled per shift, and
the shifts are assigned to a shift sequence to
model circumstances.
36
Settings for PP/DS (single Resource)
37
Production Master Data Overview
PPM The Production Process Model (PPM) defines
the detailed information required for
manufacturing a product. The PPM combines routing
and the bill of materials (BOM) into one master
data object. Each PPM includes one or more
operations. Each operation, in turn, includes one
or more activities, for which materials,
relationships and resources are maintained. The
activities and resources defined in the PPM are
assigned to costs that are used by the SNP
Optimizer and for finite scheduling by Production
Planning and Detailed Scheduling (PP/DS).
38
Production Master Data Overview
Supply Network Planning (SNP) is a long term,
rough cut planning tool. SNP requires a PPM with
less information than the one used for production
planning and detailed scheduling
(PP/DS).   During a planning run, SNP can
schedule resources down to the day. In order to
perform scheduling at the day level, the PPMs and
resources must be simplified. Additionally, when
using optimization technologies, it is important
to limit the number of inputs (materials) to find
a proper solution in a reasonable runtime.   SAP
SCM allows you to generate SNP production process
models (PPMs) based on existing PP/DS PPMs.
Restriction to a specific lot size is required to
determine the exact production consumption or
mode duration.
39
Production Master Data Overview
PDS (production data structure) SAP initially
developed the Production Process Model (PPM) to
model manufacturing master data. It was replaced
in SCM 4.1 by PDS. However PPMs are still
supported. In some industries modeling the
production and evolution of a certain product can
be very complicated. When a product has many
variations due to customers choosing a
combination of features and options they
typically used the variant configuration solution
in standard SAP ERP.
40
Production Master Data Overview
The main motivation to develop the PDS was to
have an integration of the Engineering Change
Management (ECM) and the Variant Configuration
between SAP ERP and APO. From SCM 4.1 on, the
Production Data Structure (PDS) is the key master
data for all kinds of production planning related
processes. The PDS is supported by the
applications of PP/DS, SNP, CTM and DP. Like the
PPM, the PDS corresponds to the production
version on SAP ERP system. Though both PPM and
PDS are still available as alternatives, there is
no further development for the PPM since SCM
4.0.
41
Structure of PDS and PPM
42
Transfer of PPM and PDS
43
Production Process Overview

• Production Planning
• Creates planned order and purchase requisition
  for the demand,
• Creates detailed scheduling (a sequence for the
  orders which is sufficiently capacity-feasible,
  usually in the short-term),
• Desirably performs a rough feasibility check of
  the production plan, and
• execute the production plan.
• The detailed scheduling is usually only performed
  for the short term horizon.
• Traditionally both production planning and
  scheduling are limited to the plant level.

44
Production Process Overview

• If a supply chain contains alternative production
  plans (possibilities), the process becomes more
  complex. It often requires an integrated
  distribution and production planning.
• Depending on the business requirements, it might
  be favourable to create a rough-cut production
  plan for the mid-term or even long-term before
  the more detailed production plan.
• The approach represents the idea of a
  hierarchical planning, i.e. to plan with less
  detail for the farther future and has the
  benefits of avoiding unnecessary information and
  unnecessary system load and to have a tighter
  integration with the distribution planning.

45
Process Chain for a Make-to Stock Production
46
Production Process Overview

• Objectives for Production Planning
• to meet the demand
• to consider the resource capacities and the
  material availabilities
• to improve utilisation of the resources
• to low set up time
• to minimise the stock, and
• to minimise the work in process (WIP)
• to improve stability of the plan

47
Production Process Overview

• The complexity of production planning increases
  with the number of BOM-levels, number of
  operations, and finite resources, the use of
  fixed, or minimized lot sizes and sequence
  dependent set-up.
• Though APS (Advanced planning and Scheduling)
  systems allow theoretically a one-step approach,
  experience shows it is better and more reliable
  to use a two step approach to create a feasible
  plan (i.e. infinite production planning first and
  finite scheduling on the key resources later),
  and keep the constraints as less as possible in
  modeling and.

48
Order Cycle for Production
49
Order Cycle for Production

• The result of production planning are planned
  orders which contain the information about the
  dependent demand and the capacity requirement in
  SAP APO.
• The production orders are reduced by the order
  confirmation and remain in SAP APO until it is
  technically completed.

50
Production Planning Applications
SAP APO offers different applications for
production planning and detailed scheduling.
Production planning is supported by the SNP and
PP/DS modules with two different levels of
details. - rough-cut and bucket-oriented
planning (SNP), and - time-continuous planning
(PP/DS). Detailed scheduling with the purpose of
creating a sequence for order execution is only
supported by PP/DS since SNP is limited to
bucket-oriented planning and there is no sequence
within a bucket.
51
Applications for Production Planning and
Scheduling
52
Production Planning Applications

• Based on the applications there are several
  options for creating a feasible plan in SAP APO.
  Each has its advantages and disadvantages.
• Distribution and medium-term production planning
  with SNP heuristic, the SNP optimiser or CTM with
  SNP master data (short-term production planning
  by conversion of SNP orders to PP/DS orders and
  detailed scheduling with the DS heuristics or
  PP/DS optimiser).
• Distribution planning with SNP heuristic,
  medium-term production planning with SNP
  optimiser, short-term production planning by
  conversion of SNP orders to PP/DS orders and
  detailed scheduling with DS heuristic or PP/DS
  optimiser.

53
Production Planning Applications
3. Production planning for medium-term and
short-term horizon with higher level of detail in
PP/DS using PP heuristics or TM and detailed
scheduling with DS heuristic or PP/DS optimiser.
4. Demand planning in SAP ERP especially when
there is already a sufficient solution using SOP
or long-term planning. Production planning is
performed with PP heuristics, scheduling with DS
heuristics or PP/DS optimiser. 5. Demand planning
and production in SAP ERP SAP APO is used only
for scheduling.
54
Production Planning Applications
6. Only medium-term production planning on
rough-cut level is performed in SAP APO either
by SNP heuristic, SNP optimiser or CTM. The
benefit is having a capacity check and purchase
requisitions for components with long lead time.
Planned orders are transferred to SAP ERP, where
production planning and scheduling on detailed
level are for the short-term horizon. 7.
Production planning is triggered by the sales
order entry either via CTP or multi-level ATP.
Scheduling is performed with scheduling
heuristics or PP/DS optimizer. Note PP/DS
optimiser is used only for scheduling, not for
creation of orders.
55
Scenarios for Production Planning using Different
Applications
56
Lot Size
Lot sizes have a significant impact on the
production planning result and challenges for
scheduling. The fixed, minimum and periodical lot
sizes in material master data increase the
complexity of the planning problem.
57
Lot Size Methods
58
Lot Size

Though CTM supports minimum and fixed lot sizes,
but CTM performs a finite planning and does not
split orders across buckets which might lead to a
very low utilisation.
59
SCM Master Data - 2 Master Data for
Distribution Production Processes SAP
Implementation EGN 5623 Enterprise Systems
Optimization(Professional MSEM)Fall, 2012
60
Order Cycle for Stock Transfers
The outbound delivery for the stock transfer
order is created with transaction VL10B in SAP
ERP, picking and posting of goods issue is done
with the transaction VL02N in the delivery.
Using the message type LAVA, the inbound
delivery in source location can be triggered with
posting of the goods issue (or manually with the
transaction VL31N). For the use of deliveries
it is necessary that a vendor is assigned to the
source location and that an info record exists in
SAP ERP. The inbound delivery is transferred to
SAP APO as a purchase order memo of the stock
transit.
61
Exercises

• Create P type PPM
• Assign P type PPM to active model
• Create S type PPM
• Assign S type PPM to active model
• Master data testing