Presentation

APO 3.0Integration

Optimization & Planning

Douglas Godinez Microsoft Corporation

Agenda

Integration with SAP R/3Integration with SAP R/3

Supply Network Planning & OptimizationSupply Network Planning & Optimization

Planning ResultsPlanning Results

Master DataMaster Data

Where we are atWhere we are at

Where we are goingWhere we are going

QuestionsQuestions

Integration with R/3

Integration

What is Integration?What is Integration?

Integration

APO R/3

Random House Definition:Random House Definition:

To bring together into a unified or interrelated whole.To bring together into a unified or interrelated whole.

Integration

The important objects in SAP R/3 and APO that play a role in The important objects in SAP R/3 and APO that play a role in Integration include:Integration include:

•Vendors (MTV)Vendors (MTV)

•Plants (DTV)Plants (DTV)

•MaterialsMaterials

•Transactional ActivityTransactional Activity

•Sales OrdersSales Orders

•Purchase OrdersPurchase Orders

•DeliveriesDeliveries

•Material MovementsMaterial Movements

•InventoryInventory

Integration

In SAP R/3 we have modeled a basic supply chain:In SAP R/3 we have modeled a basic supply chain:

Vendor building & shipping productVendor building & shipping product

DTV storing productDTV storing product

Customers orderingCustomers ordering

productproduct DTV shipping DTV shipping productproduct

Integration

Plants -or- DTV’s are the central hubs of activity.Plants -or- DTV’s are the central hubs of activity.

These locations (MTV and DTV) and activities These locations (MTV and DTV) and activities (transactional data – from previous slide) are (transactional data – from previous slide) are communicated to APO for planningcommunicated to APO for planning

This communication to APO is done via the Core This communication to APO is done via the Core Interface (CIF)Interface (CIF)

CoreInterface

CoreInterface R/3R/3APOAPO

Integration

The Core Interface (CIF) is the software application that The Core Interface (CIF) is the software application that communicates information between APO and R/3.communicates information between APO and R/3.

Communication can be setup in a batch or real-time environment.Communication can be setup in a batch or real-time environment.

Both Master Data and Transactional data can be sent via the CIF Both Master Data and Transactional data can be sent via the CIF interfaceinterface

Master Data could include:Master Data could include:

New Vendors, New Plants, New Customers (if used), New New Vendors, New Plants, New Customers (if used), New ProductsProducts

The Object that is setup for this communication between APO and The Object that is setup for this communication between APO and R/3 is called an R/3 is called an Integration ModelIntegration Model

Integration

Integration

Not all materials may be needed or wanted to come over the Not all materials may be needed or wanted to come over the Integration Model via the CIF interface into APO. Integration Model via the CIF interface into APO.

A filter is required to identify only those products and subsequent A filter is required to identify only those products and subsequent transactions that are desired to come into APOtransactions that are desired to come into APO

Integration

Main Filter Main Filter

MRP ControllerMRP Controller

OnOn

Material MasterMaterial Master

Integration

Integration Models are broken up into separate objects:Integration Models are broken up into separate objects:

• Locations (Plants and Vendors), Materials & TransactionsLocations (Plants and Vendors), Materials & Transactions

Why?Why?

• Locations MUST be transferred before materialsLocations MUST be transferred before materials• Materials MUST be transferred before transactionsMaterials MUST be transferred before transactions

• Transactions are transferred lastTransactions are transferred last

Model Maintenance/RegenerationModel Maintenance/Regeneration

• Locations tend to be one time transfer. Not regenerated on a periodic basisLocations tend to be one time transfer. Not regenerated on a periodic basis• Materials integration and Transaction modelsMaterials integration and Transaction models are regenerated on a weekly are regenerated on a weekly

basisbasis

Integration

Theoretically you could setup one Integration Theoretically you could setup one Integration model for all data between the two systems.model for all data between the two systems.

But….But….

APO R/3

CIF

Integration

Data that is sent over to APO is stored in two places:Data that is sent over to APO is stored in two places:

Tables – Static DataTables – Static Data

Live Cache – Transactional DataLive Cache – Transactional Data

This leads us into Supply Network Planning (SNP) in APO 3.0This leads us into Supply Network Planning (SNP) in APO 3.0

Supply Network Planning & Optimization


WebGUIs SAPGUIs

LiveCache

OptimizationTechniques

OptimizationTechniques

Planning ViewGenerator

Planning ViewGenerator

AlertHandler

AlertHandler

Core

Interface

CoreInterface

Model &VersionMgmt

Model &VersionMgmt

HeuristicTechniques

HeuristicTechniques

R/3R/3


APOAPO


Forecasts,Customers orders

Forecasts,Customers orders

Sourcing Production &Purchasing

Requirements,Inventory levels,

Inventory policies

Sourcing Production &Purchasing

Requirements,Inventory levels,

Inventory policies

APO

Liste

Constraint Definition Supplier capacities Production capacities Transportation capacities Storage capacities

Supply Chain ModelSupply Chain Model


SNP integrates purchasing, manufacturing, distribution, SNP integrates purchasing, manufacturing, distribution, and transportationand transportation

SNP uses optimization and/ or Heuristic techniques, SNP uses optimization and/ or Heuristic techniques, based on constraints and penalties, to plan product flow based on constraints and penalties, to plan product flow along the supply chainalong the supply chain

Optimal purchasing, production, and distribution Optimal purchasing, production, and distribution decisions based on cost settingsdecisions based on cost settings


A simple Optimization exampleA simple Optimization example

Cost to store product (MTV)

$0.70

Cost to store product (DTV)

$0.50



$0.70$0.70 $0.50$0.50

Inventory 1000 units –Sku AInventory 1000 units –Sku A

Demand 2000 units – Sku ADemand 2000 units – Sku A

Run Optimizer and…Run Optimizer and…



$0.70 $0.50

Inventory 1000 unit –Sku A

Demand 2000 units – Sku A

Purchase Requisition (PR) created for entire 1000 units

PR 1000 units


Reverse these costs and…Reverse these costs and…

$0.50 $0.70

Inventory 1000 unit –Sku AInventory 1000 unit –Sku A

Demand 2000 units – Sku ADemand 2000 units – Sku A

Lower cost to store product than to ship it to Lower cost to store product than to ship it to DTV!DTV!

No PR generated!!No PR generated!!

PR 1000 units


Several costs can be added to the model to drive Several costs can be added to the model to drive desired behavior:desired behavior:

Storage cost (as before)Storage cost (as before)

Production costProduction cost

Delay cost for sales ordersDelay cost for sales orders

Delay cost for forecastsDelay cost for forecasts

Transportation costTransportation cost

Safety stock costSafety stock cost

No delivery costNo delivery cost

The Window to the planning results of an Optimization run is the:The Window to the planning results of an Optimization run is the:Supply Network Planning BookSupply Network Planning Book

These costs These costs are relative are relative in that they in that they are not the are not the true costs true costs used in the used in the supply chain.supply chain.

Planning Results

Planning Results

Planning Results

The Main objects used in reviewing Planning results are:The Main objects used in reviewing Planning results are:

Supply Network Planning BookSupply Network Planning Book

Optimizer LogOptimizer Log

Alert MonitorAlert Monitor

Planning Results

Planning Results

The Optimizer log provides feedback and details on a The Optimizer log provides feedback and details on a particular Optimization run.particular Optimization run.

The messages are divided into three status groups:The messages are divided into three status groups:

Green – No issues Green – No issues

Yellow – Warning may or may not require actionYellow – Warning may or may not require action

Red – Failure. Issue must be correctedRed – Failure. Issue must be corrected

Master data

Planning Results

Alerts show areas in the supply network that may need attention. Alerts show areas in the supply network that may need attention. Some Alerts are:Some Alerts are:

Target Stock Level ExceededTarget Stock Level Exceeded

Shortfall of Target StockShortfall of Target Stock

BacklogBacklog

Alerts can be custom designed to meet a particular needAlerts can be custom designed to meet a particular need

Planning Results

Masterdata

Planning Results

Planning Results

Once Planning results are complete then next steps can Once Planning results are complete then next steps can occur:occur:

Purchase Order CreationPurchase Order Creation

Build PlansBuild Plans

Planning Results

Purchase ordersPurchase orders

Created in R/3Created in R/3

Can be created automatically from Purchase Requisition Can be created automatically from Purchase Requisition sent over Integration Model into “Create Purchase Order” sent over Integration Model into “Create Purchase Order” function in R/3 (ME21)function in R/3 (ME21)

Purchase Requisitions can be extracted from R/3 to feed Purchase Requisitions can be extracted from R/3 to feed other Purchase order creation processesother Purchase order creation processes

Build PlansBuild Plans

Sent to Vendors to determine short, medium and long Sent to Vendors to determine short, medium and long term schedule term schedule

Derived from Purchase Requisition dataDerived from Purchase Requisition data

Master Data

Master Data

Master Data

In order for these processes to work properly Master Data In order for these processes to work properly Master Data must be maintained properly to get reliable and accurate must be maintained properly to get reliable and accurate results.results.

In short…APO is Master Data Intensive!In short…APO is Master Data Intensive!

Master Data

A list of Master Data elements:A list of Master Data elements:

LocationsLocations

Materials (Product Master)Materials (Product Master)

Transportation LanesTransportation Lanes

Transportation Methods Transportation Methods

Production Process Models (PPM)Production Process Models (PPM)

All relevant costsAll relevant costs

Resources (if needed)Resources (if needed)

Optimizer profilesOptimizer profiles

Supply and Demand profilesSupply and Demand profiles

Etc…Etc…

Master Data

If there are only a few materials then Master Data If there are only a few materials then Master Data maintenance can be done manually in APO.maintenance can be done manually in APO.

If materials are prolific then a systematic and reliable If materials are prolific then a systematic and reliable method of maintaining Master Data should be developed.method of maintaining Master Data should be developed.

We built…We built…

A Web interface to load critical repetitive data elements A Web interface to load critical repetitive data elements while providing an easy method of performing these taskswhile providing an easy method of performing these tasks

Master Data

What have we done

SAP R/3 4.5 WorldwideSAP R/3 4.5 Worldwide

FI,MM,SD,HRFI,MM,SD,HR

APO 3.0 WorldwideAPO 3.0 Worldwide

Supply Network Planning (SNP)Supply Network Planning (SNP)

Demand Planning (DP)Demand Planning (DP)

Transport Load Builder (TLB)Transport Load Builder (TLB)

Where We Are At

Adding Xbox component planning to APOAdding Xbox component planning to APO

Scenario planning in APO to determine the optimal time to Scenario planning in APO to determine the optimal time to phase out and phase in components phase out and phase in components

Adding Product Costing module to R/3 Adding Product Costing module to R/3

Adding Supply Chain Event Manager (SCEM)Adding Supply Chain Event Manager (SCEM)

Where We Are Going

WW SAP R/3 Upgrade to 4.7 WW SAP R/3 Upgrade to 4.7 - - August 2003August 2003

Capable to Match (CTM) in APO 3.0 - August 2003Capable to Match (CTM) in APO 3.0 - August 2003

No plans to upgrade to APO 4.0 at this timeNo plans to upgrade to APO 4.0 at this time

No plans to move to 64-bit Windows Servers at this timeNo plans to move to 64-bit Windows Servers at this time

Questions

Thank you for attending!Please remember to complete and return your evaluation form following this session.

Session Code: [4805]

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