Sappress Discover Sap Scm

Bonn � Boston

Shaun Snapp

Discover SAP® SCM

305_BOOK_loose.indb 3 11/3/09 4:17:46 PM

Contents at a Glance

SAP SCM Basics 1 ......................................................... 31

SAP SCM Applications2 ................................................ 45

SAP Demand Planning (DP) 3 ........................................ 59

Supply Network Planning (SNP)4 .................................. 79

Production Planning and Detailed Scheduling 5 (PP/DS) ...................................................................... 99

Global Available to Promise (GATP)6 ........................... 121

SAP Transportation Management (TM)7 ..................... 139

SAP Event Management (EM)8 ................................... 161

Core Interface (CIF)9 ................................................... 183

SAP Service Parts Planning (SPP)10 ............................... 201

SAP Extended Warehouse Management (EWM)11 ....... 217

SAP Supplier Network Collaboration (SNC)12 .............. 239

SAP Forecasting and Replenishment (F&R)13 ............... 261

SAP SCM’s Direction as of Release 7.0 14 ..................... 277

Getting More from SAP SCM15 .................................... 299

SAP SCM and ROI16 ..................................................... 327

Conclusion17 ................................................................ 345

A Glossary .................................................................... 365

B Bibliography ............................................................. 373

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7

Contents

Acknowledgments ........................................................................ 21

Preface ......................................................................................... 23

SAP SCM Basics 1 ....................................................... 31

What is SAP SCM? ............................................................... 31

SAP SCM Origins .................................................................. 32

SAP’s Approach to Supply Chain Management ..................... 33

Optimization ........................................................................ 34

Linear Versus Discrete Optimization ............................... 34

Reduced Focus on Optimization ..................................... 35

Which Companies Are Right for SAP SCM? ......................... 37

Cross Application Components ............................................. 38

Product Location Master ...................................................... 38

Planning Areas and Planning Object Structures .................... 40

Planning Object Structure ................................................... 40

Planning Versions ................................................................. 41

Planning Versions and Mass Maintenance ....................... 41

Planning Book ...................................................................... 41

Conclusion ........................................................................... 43

SAP SCM Applications 2 .............................................. 45

SAP SCM Applications ......................................................... 48

SAP SCM Configuration Folders ...................................... 49

SAP SCM as a Visionary Application ..................................... 50

SAP SCM Application Interactions ........................................ 51

Common Application Interactions ................................... 52

SAP ERP to SAP SCM ........................................................... 54

Implementation Key Drivers ................................................. 56


8

Contents

Conclusion ........................................................................... 57

SAP Demand Planning (DP) 3 ..................................... 59

Demand Planning as SAP SCM’s Most Popular Application .... 60

Two Halves of Demand Planning .......................................... 61

Basic Functionality and Concepts of SAP DP ......................... 62

Interactive Demand Planning .......................................... 64

Data Warehouse Workbench ................................................ 64

InfoObjects ..................................................................... 65

InfoCubes ............................................................................ 69

Forecasting .......................................................................... 71

Forecasting Methods ...................................................... 72

Characteristic Value Combinations ....................................... 73

Realignment ......................................................................... 73

Promotion Forecasting ......................................................... 74

Releasing the Plan ................................................................ 75

Plan Release and liveCache ............................................. 75

Plan Destination ............................................................. 76

SAP DP Release History ....................................................... 76

Case Study ........................................................................... 77

Company ........................................................................ 77

Challenge ....................................................................... 77

Solution ......................................................................... 77

Value Achieved ............................................................... 77

Conclusion ........................................................................... 78

Supply Network Planning (SNP) 4 ............................... 79

Basic Functionality and Concepts of SNP .............................. 81

Methods of Running SNP ............................................... 81

SNP Optimizer ................................................................ 82

Heuristics ....................................................................... 83


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Contents

Capable to Match ........................................................... 84

Capable to Match Configuration ..................................... 85

SNP Resources ..................................................................... 88

Common SNP Objects .......................................................... 89

Capacity Leveling ............................................................ 89

Capacity Leveling Profiles ............................................... 90

Planning Book ................................................................ 90

liveCache and Data Storage ............................................ 92

Safety Stock in SNP .............................................................. 92

SNP Subcontracting ............................................................. 93

SNP and Supplier Network Collaboration ........................ 93

SNP Product Location Tabs ................................................... 93

SNP Deployment .................................................................. 94

Deployment Heuristic ..................................................... 95

Deployment Optimizer ................................................... 95

SNP Release History ............................................................. 96

Case Study ........................................................................... 96

Company ........................................................................ 96

Challenge ....................................................................... 96

Solution ......................................................................... 97

Value Achieved ............................................................... 97

Conclusion ........................................................................... 97

Production Planning and Detailed Scheduling 5 (PP/DS) ..................................................................... 99

Basic Functionality and Concepts of PP/DS ......................... 100

Methods of Running PP/DS .......................................... 101

Capacity Leveling Versus Capacity Constraining............. 103

Settings for PP/DS in the Product Location Master ....... 103

Manufacturing Strategies .............................................. 104

Pegging ........................................................................ 105

Lot Size Setting ............................................................. 107


10

Contents

Production Process Models and Production

Data Structures .................................................................. 110

Production Process Models (PPMs) ............................... 111

Production Data Structures (PDSs) ................................ 112

Constraining PDS and PPM ........................................... 113

Resources ........................................................................... 114

Process Industry Planning ................................................... 115

PP/DS Release History ........................................................ 116

Case Study ......................................................................... 117

Company ...................................................................... 117

Challenge ..................................................................... 117

Solution ....................................................................... 117

Value Achieved ............................................................. 118

Conclusion ......................................................................... 118

Global Available to Promise (GATP) 6 ........................ 121

GATP and CTM .................................................................. 122

Availability Checking .......................................................... 124

Available to Promise ..................................................... 125

Basic Functionality and Concepts of GATP .......................... 126

Different Levels of ATP Checks ........................................... 127

Multilevel ATP Check (M-ATP)...................................... 127

Availability Checking for Kits (or BOM) ......................... 128

Rules-Based Availability Checking ................................. 128

What Attaining ATP Proficiency Can Mean ................... 129

Capable to Promise ............................................................ 129

ATP Tree Structure ............................................................. 132

Third-Party Order Processing ....................................... 132

Third-Party Order Processing at Amazon.com ............... 133

Scope of Checking .............................................................. 134

The GATP Time Horizon ..................................................... 134

liveCache ........................................................................... 136


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Contents

Integration ......................................................................... 136

GATP Release History ......................................................... 136

Case Study ......................................................................... 137

Company ...................................................................... 137

Challenge ..................................................................... 137

Solution ....................................................................... 137

Value Achieved ............................................................. 137

Conclusion ......................................................................... 138

SAP Transportation Management (TM) 7 .................. 139

Basic Functionality and Concepts of SAP TM ...................... 141

High-Level Processes .................................................... 141

Specific Processes ......................................................... 141

Shipment Creation ........................................................ 142

Carrier Tendering and Selection .................................... 143

Carrier Selection ........................................................... 143

Contract Management .................................................. 143

Vehicle Scheduling ....................................................... 144

Carrier Cost Estimation ................................................. 145

Transportation Load Builder .......................................... 146

Important SAP TM Structures ............................................. 146

Transportation Lanes..................................................... 147

Location Geo-coding .................................................... 148

Transportation Modes ................................................... 151

Transportation Zones .................................................... 152

Transportation Groups .................................................. 152

SAP TM Resources ........................................................ 153

Vehicle Resources ......................................................... 154

Transportation Versus Vehicle Resources ....................... 155

Freight Units ................................................................. 156

Integration to SAP Event Management ............................... 156

SAP TM Release History ..................................................... 157


12

Contents

Case Study ......................................................................... 158

Company ...................................................................... 158

Challenge ..................................................................... 158

Solution ....................................................................... 158

Value Achieved ............................................................. 158

Conclusion ......................................................................... 159

SAP Event Management (EM) 8 ................................. 161

Basic Functionality and Concepts of SAP EM ...................... 162

The Event ..................................................................... 163

How Event Management Is New for SAP SCM .............. 164

SAP EM Processes Visibility .......................................... 166

Procurement ................................................................. 167

Manufacturing .............................................................. 167

Transportation .............................................................. 167

Asset Management ....................................................... 168

SAP EM Specific Areas ....................................................... 168

Major Components of SAP EM ........................................... 169

Event Handlers ............................................................. 169

Event Handler Questions to Ask ................................... 171

Event Handler Types ..................................................... 173

Reacting to Events ........................................................ 173

Event Notifications ............................................................. 174

Event Messages .................................................................. 175

Service Matching .......................................................... 176

Action Initiation ........................................................... 176

Analytics: SAP NetWeaver BW and Trend Analysis ........ 176

Web Interface and Access .................................................. 177

Integration ......................................................................... 178

Web Communication Layer ........................................... 178

SAP EM Release History ..................................................... 179

Case Study ......................................................................... 179


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Contents

Company ...................................................................... 179

Challenge ..................................................................... 180

Solution ....................................................................... 180

Value Achieved ............................................................. 180

Conclusion ......................................................................... 180

Core Interface (CIF) 9 ................................................. 183

The Technology Behind CIF ................................................ 184

Basic Functionality and Concepts of CIF ............................. 185

Master Data ....................................................................... 186

Master Data Volume and Sequence .............................. 187

Master Data Sequence .................................................. 188

Transactional Data .............................................................. 189

Integration Models ............................................................ 190

CIF Variants .................................................................. 192

Models in SAP SCM ........................................................... 193

Models and Versions .................................................... 193

CIF Tools ............................................................................ 194

CIF Versus BAPIs and Custom Integration Code .................. 195

Queues .............................................................................. 195

Error Management ............................................................. 196

CIF Error Management Components ............................. 196

Errors in Error ............................................................... 197

Complete Integration ......................................................... 198

Real-Time CIF? ................................................................... 199

Conclusion ......................................................................... 200

SAP Service Parts Planning (SPP) 10 ........................... 201

Basic Functionality and Concept of SAP SPP ....................... 202

Unique Features of Service Parts Planning .......................... 202

Important Functionality of SAP SPP .................................... 207


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Contents

The Bill of Distribution (BOD) ....................................... 207

Service Level Planning .................................................. 208

Surplus and Obsolescence Planning .............................. 208

Differential Planning ..................................................... 209

Kit to Stock .................................................................. 209

The Logic Creation of the BOD ..................................... 209

BOD in the Interface ..................................................... 211

Planning for External Locations ..................................... 211

VCL and the IBA ........................................................... 211

SAP SPP Release History .................................................... 212

SAP SPP First Releases in SAP SCM 5.0 ......................... 212

SAP SPP as of 5.1 SAP SCM 2007 ................................. 213

SAP SPP as of SAP SCM 7.0 .......................................... 214

Conclusion ......................................................................... 215

SAP Extended Warehouse Management (EWM) 11 ... 217

Differences Between SAP EWM and Warehouse

Management in SAP ERP ................................................... 218

Warehouse Organization .................................................... 219

Supported Processes .......................................................... 221

Slotting ......................................................................... 222

Rearrangement ............................................................. 223

VAS .............................................................................. 223

Kitting .......................................................................... 224

Waves .......................................................................... 225

Handling Units .............................................................. 226

Quality Inspection Engine (QIE) .................................... 226

Storage Control ............................................................ 227

SAP EWM and RFID ..................................................... 227

RFID and ASN .............................................................. 228

RFID and Serialization .................................................. 228

Stock Replenishment .................................................... 229


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Contents

Yard Management ........................................................ 230

Cross Docking ............................................................... 233

Labor Management ...................................................... 233

Process Types ..................................................................... 234

Integration to SAP Event Management (EM) ..................... 235

SAP EWM Release History .................................................. 236

SAP EWM Server Setup ...................................................... 236

Conclusion ......................................................................... 237

SAP Supplier Network Collaboration (SNC) 12 ........... 239

SAP Supplier Network Collaboration? ................................. 239

Setting the Stage for Effective Collaboration ....................... 241

Basic Functionality and Concepts of SAP SNC ..................... 243

SAP SNC Collaboration Types ........................................ 243

Different Collaboration Methods and Objects .................... 245

Demand Collaboration .................................................. 246

Replenishment Collaboration ........................................ 246

Release Collaboration ................................................... 247

Purchase Order Collaboration ....................................... 247

Work Order Collaboration ............................................ 247

Attachments ................................................................. 248

Supply Network Inventory ............................................ 249

Delivery Collaboration .................................................. 249

Invoice Collaboration .................................................... 249

Supplier Managed Inventory (SMI) ..................................... 250

Confirmations .................................................................... 251

Third-Party Logistics Providers ............................................ 253

SAP NetWeaver PI Integration Scenarios ............................ 254

Visibility Profile .................................................................. 255

SAP SNC Web Browser ....................................................... 255

SAP SNC Release History .................................................... 256

Case Study ......................................................................... 257


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Contents

Company ...................................................................... 257

Challenge ..................................................................... 257

Solution ....................................................................... 258

Value Achieved ............................................................. 258

Conclusion ......................................................................... 258

SAP Forecasting and Replenishment (F&R) 13 ............ 261

Basic Functionality and Concepts of SAP F&R ..................... 263

SAP F&R Processor ....................................................... 264

Collaborative Planning, Forecasting, and

Replenishment (CPFR) .................................................. 264

Forecasting ................................................................... 265

Order Proposals ............................................................ 269

Substitution .................................................................. 271

Service-Level Planning .................................................. 272

SAP F&R Reporting ............................................................ 273

Order Optimization ............................................................ 274

SAP F&R Release History .................................................... 275

Conclusion ......................................................................... 276

SAP SCM’s Direction as of Release 7.0 14 .................. 277

High-Level Direction .......................................................... 278

New Approaches and Tools ................................................ 278

A Major New User Interface ..........................................278

Planning Service Manager ............................................. 283

Planning Service Manager Profiles ................................ 284

Service-Level Planning ...................................................... 285

Concepts of Service-Level Planning and

Finished Goods ............................................................ 286

Service-Level Planning in SAP ....................................... 287


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Contents

Service-Level Planning in SAP ERP ................................ 287

Service-Level Planning in SAP SCM ............................... 288

Service-Level Planning as an Evolved Approach ............ 289

Cross-Enterprise Capabilities ............................................. 290

Cross-Enterprise Monitoring ......................................... 290

Collaboration ................................................................ 292

Addition of the Warehouse and Retail Store ....................... 296

Conclusion ......................................................................... 298

Getting More from SAP SCM 15 .................................. 299

Where to Look for Improvement ........................................ 300

Recovering Failed SAP SCM Implementations ............... 300

The Recovery Analysis Team ......................................... 301

Accountability of Partners ............................................. 302

Improving or Enhancing Successful SAP SCM

Implementations .......................................................... 305

Areas of Functionality Worthy of Analysis ........................... 306

Subcontracting in SAP SCM .......................................... 306

Prioritizing Demand for the SNP Optimizer ................... 309

Repair Functionality in Service Parts Planning (SPP) ...... 309

Backward Consumption Enhancement for GATP ........... 311

Improving Safety Stock Management ............................ 313

Safety Stock Functionality Offered by Supply

Network Planning (SNP) ............................................... 314

Production Planning/Detailed Scheduling (PP/DS)

Implementation Tips ..................................................... 316

Real Constraints for Real Planning................................. 318

Don’t Rely Too Heavily on the Planning Book for

SAP SCM Success ......................................................... 319

Provide Ample Non-consulting SMEs or Super Users .... 320

After the Implementation ................................................... 321


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Contents

Improving Usage Efficiency with Model

Maintenance Methods ....................................................... 322

Conclusion ......................................................................... 324

SAP SCM and ROI 16 ................................................... 327

Return on Investment (ROI) ............................................... 328

Benefits .............................................................................. 328

Improvements in Sales .................................................. 329

Costs .................................................................................. 331

Inventory Management ................................................ 333

Labor Costs................................................................... 333

Transportation Costs ..................................................... 334

Key Financial Ratios ...................................................... 335

ROI Estimation Recommendations ..................................... 336

ROI Estimation: Managing the Process ............................... 337

Getting the Right Input ................................................. 337

Selecting the Right People ............................................ 338

Allowing Enough Time .................................................. 339

Don’t Overemphasize Finance ...................................... 340

Assign a Data Expert to the Team ................................. 340

Consider a Range or Sensitivity Analysis ........................ 341

Make the Assumptions Transparent ............................. 341

The Calculations .......................................................... 342

How to Set Up and Run the Value

Presentation Meeting ................................................... 342

ROI Presentations in Different Countries ....................... 343

Conclusion ......................................................................... 343

Conclusion 17 ............................................................... 345

Real-Life Supply Chain Modeling ........................................ 346

Changing Constraints .................................................... 348


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Contents

Missed Opportunities ......................................................... 349

Looking at SAP Transportation Management

More Broadly ................................................................349

SAP TM Functionality Covers Both Shipper Owned

and Outsourced Transportation ..................................... 349

SPP and the Industry Need for Service

Parts Planning ............................................................... 350

SAP SCM and Larger Supply Chain Trends .......................... 352

Energy Issues ................................................................ 352

Increased Rapidity of Inventory Turnover ........................... 354

Increased Supply Chain Monitoring .................................... 354

Collaborative Planning Trends ............................................ 355

Collaborative Aspects of SAP SCM Applications

Besides SAP SNC .......................................................... 357

Manufacturing Signals .................................................. 358

Conclusion ......................................................................... 360

Appendices ..................................................................... 363

A Glossary ............................................................................. 365

B Bibliography ...................................................................... 373

Index ......................................................................................... 377


1

31

SAP SCM Basics

In this chapter, we’ll describe SAP SCM and how it’s used in today’s

economy, the SAP approaches to supply chain management, and how

companies can use and benefit from SAP SCM. A large amount of

functionality has been introduced since the last time many people

looked into SAP SCM, so even if you’ve seen it before, you’ll find a

lot of new information. Each chapter has a listing of some of the most

relevant new functionality as well as the enhancements that have

been made to existing functionality.

What Is SAP SCM?

SAP SCM is an umbrella term for a set of applications that provide

advanced planning capabilities. This set of applications is fed by stan-

dard SAP integration technologies, which include the Core Interface

(CIF) and BAdIs, among others, that connect the system to SAP ERP.

SAP SCM is used to improve and optimize the supply chain by en-

abling automated decision making, providing improved analytical

SAP SCM includes applications that provide advanced planning


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32

tools to users, and sharing information with internal system custom-

ers and external business partners.

SAP SCM Origins

SAP SCM was introduced as SAP Advanced Planning & Optimization

(SAP APO) at the height of the advanced planning trend back in 1998.

This was a period where i2 Technologies was the number one ad-

vanced planning vendor, and Manugistics was close on its heels. It’s

hard to believe because SAP SCM is so dominant in the advanced

planning space today, but at that time SAP wasn’t seen as a factor and

wasn’t even predicted to become one.

It’s important to draw the distinction between supply chain planning and advanced planning. Supply chain planning is covered by the applications and functions of SAP ERP Sales and Distribution (SD), Materials Man-agement (MM), and Production Planning (PP). These applications pro-vide supply chain execution functionality along with some basic planning functionality (safety stock and MRP, basic forecasting, availability check-ing, and production planning among a few others), but none of these applications cover advanced planning. Advanced planning is future based and deals in different scenarios that are presented to planners, who then pick the best alternative. In advanced planning, the plan may be recre-ated several times before it’s firmed and sent to the execution system. True advanced planning systems can’t execute recommendations; they can only make recommendations. So, while SAP had supply chain appli-cations for some time before SAP APO, SAP APO was SAP’s first venture into advanced planning.

But SAP needed to create a separate set of applications, rather than in-corporate advanced planning within SAP ERP because planning systems and transaction processing systems work differently. At one point, SAP felt that advanced planning was overly esoteric and would only be de-sired by a small fraction of its customer base. Somewhere along the line though, SAP changed its view and developed its own advanced planning suite. This was probably largely market driven, as we’ll explain later in this chapter.

Note: Supply Chain Planning Versus Advanced Planning

Although dominant in advanced

planning today, in 1998, SAP wasn’t

yet a strong player in the supply chain management area


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SAP’s Approach to Supply Chain Management1

SAP’s Approach to Supply Chain Management

SAP has a relatively, standard solution architecture for supply chain

management that has grown through time to reflect the trends of ad-

vanced planning. While SAP SCM began its life as SAP APO and was

originally intended to perform advanced planning only, it has since

evolved to essentially be a repository for all advanced supply chain

functionality not covered in SAP ERP. As an example, while the SAP

warehouse management functionality in SAP ERP has essentially been

stabilized, the more advanced functionality has and will continue to

migrate to the SAP SCM application known as SAP Extended Ware-

house Management (SAP EWM). Both applications cover warehous-

ing, but their capabilities are different (Figure 1.1).

ERP

APO

Supply Network Collaboration

SCM Infrastructure

Extended Warehouse Management

Transportation Management

DuetDemandPlanning

SupplyNetworkPlanning

DemandPlanning

GlobalATP

EventManager

SCMBasis

PP/DS

All

TP/VS

SAP SCM Solution MapFigure 1.1

SAP SCM has developed along with the trends in advanced planning


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Optimization

In its early years, SAP APO was sold on its ability to perform optimi-

zation. This is primarily because it was an industry-wide practice to

market advanced planning software in this way. In fact, SAP APO, or

SAP Advanced Planning & Optimization, had the term directly in its

name.

Optimization has two general meanings. One is more of a business na-

ture, which basically means to produce the best outcomes. The other

has to do with the area of operations research, from where the supply

chain optimization originates. For this book, we’ll define optimiza-

tion as the use of software tools and processes to ensure the optimal

operation of a supply chain, including the optimal location of inven-

tory within the supply chain and the minimizing of operating costs

(including manufacturing costs, transportation costs, and distribution

costs).

Linear Versus Discrete Optimization

Optimization works best in situations that are perfectly “linear,” so

that inputs can be increased or decreased in a continuous fashion. An

example of a linear input is an order quantity. In a perfectly linear op-

timization, any order quantity from zero to infinity can be placed and

fulfilled. But in reality, supply chains are not perfectly linear prob-

lems. For example, the lot size is a discrete value that limits the flex-

ibility of the order quantity. One item may be ordered in units of 50,

but if 135 units are desired, and the current inventory is less than 35,

then 150 must be ordered to meet this demand. SAP SCM has a num-

ber of techniques, such as lot size, that alter the problem being solved

from perfectly linear to discrete, or what is known as a step function.

This is very important for making the resulting recommendation re-

alistic (Figure 1.2).

The goal of optimization is to

ensure the “optimal” operation of your

supply chain

The step function is one of the most commonly used input functions


35

Optimization1

Linear vs. Discrete Optimization

Time

Qua

ntit

y OptimalPurchaseQuantity

Actual PurchaseQuantity

Lot Size = 50

Linear Optimization in Supply Chain Figure 1.2 Must Be Moderated by Constraints

Reduced Focus on Optimization

Although optimization drove development in SAP SCM at one time, it

no longer does. The evidence for this is that optimization is an option

in three of the older applications (Supply Network Planning [SNP],

Production Planning and Detailed Scheduling [PP/DS], and SAP Trans-

portation Management [SAP TM], formerly known as Transportation

Planning and Vehicle Scheduling [TP/VS]), but isn’t an option in any

of the newer applications (SAP Extended Warehouse Management

[SAP EWM], SAP Supply Network Collaboration [SAP SNC], SAP

Event Management, SAP Service Parts Planning [SAP SPP], and SAP

Forecasting and Replenishment). In addition, the core optimization

functionality in SAP SCM has been stabilized for some time. This shift

is partly due to the fact that optimization didn’t meet its originally

envisioned potential. So, the newer applications in SAP SCM have

tended to downplay optimization in favor of other functionality.

If optimization didn’t “change the world” of supply chain, the ques-

tion naturally becomes “Why not?” There are a number of reasons,

but one of the most prominent was the implementation and mainte-

nance difficulty combined with the lack of company knowledge.


SAP SCM Basics 1

36

There is a story about an advanced planning vendor that was running the optimizer engine in the background, but when the engine actually went down for a few days, no one even noticed. This was because the plan-ning was primarily being performed by heuristics that had been custom coded with scripts, and the solution was not using the optimizer at all. Whether the client knew the optimizer was not being used is unknown. This is more common than reading press releases and industry periodicals in the area would make you think. While optimization sold a lot of supply chain software, it wasn’t necessarily what the customers went live with, as evidenced from this example.

Example

Implementing and maintaining optimization methods requires much

effort and long-term investment. Secondly, optimization requires a

great deal of discipline and knowledge on the part of the implement-

ing company. Many companies want the benefit of advanced plan-

ning but are not culturally, financially, or skills-wise prepared to make

the sacrifices required to get the outcomes they desire.

More often than not, companies want simple solutions that deliver

value quickly. That isn’t how optimization works. And this is partly

because the software has historically been designed to be more com-

plex than is necessary (Figure 1.3).

Planning Continuum

Heuristics

Optimizer

Solution Quality

Effo

rt a

nd C

osts

Req

uire

d

CTM

Costs Versus Benefits in Planning Solutions for SNPFigure 1.3


37

Which Companies Are Right for SAP SCM? 1

Which Companies Are Right for SAP SCM?

Some companies are better suited to undertaking an SAP SCM imple-

mentation than others, and Table 1.1 shows the typical characteristics

that allow a company to be successful with SAP SCM.

Company Characteristics

Description

Current SAP ERP users A few SAP SCM implementations have been performed on accounts without SAP ERP, but, in general, this is a major precondition.

Already have effective planning processes

SAP SCM is very flexible and can adjust to most planning processes, but it can’t fix a broken process. As with other planning software, the best successes typically come from companies that are already good at planning.

Make planning a priority If the commitment isn’t there in terms of management support and finance, it’s better not to begin an SAP SCM implementation. SAP SCM implementations are complex affairs, so companies must be ready for this complexity. Part of this is content knowledge of planning, but another component is open mindedness to new approaches. This is because there are a number of best practices inherent to the SAP SCM processes.

Focused on improvement

Transaction processing systems such as SAP ERP are a necessity, but a business can still run without a planning system. SAP SCM implementations cause companies to evaluate their priorities. Some applications request the estimation of a cost of a lost sale, so those successful with SAP SCM are effective at asking these questions and getting answers.

Current users of SAP ERP are good candidates for SAP SCM


SAP SCM Basics 1

38

One way of looking at whether your company is appropriate for SAP

SCM is to determine if it has maximized the planning functionality

within SAP ERP. And in some cases, requirements will naturally lead

to the consideration of SAP SCM. In Chapter 2, SAP SCM Applica-

tions, we’ll cover the specific needs that often drive the decision to

implement different applications. However, more generally, SAP SCM

is most beneficial to companies that are dedicated to improving their

planning processes and that already have good planning processes to

begin with.

This statement isn’t only true of SAP SCM but of advanced planning

tools generally. While we’re not able to find specific research to back

this up, our anecdotal evidence from our experience on projects indi-

cates that the better the company is at planning before it implements

an advanced planning system, the more the company gets from the

implementation. Being effective at planning helps the company know

how to design the system and also allows the company to better le-

verage what it ends up implementing.

Cross Application Components

As mentioned earlier, this book is broken into a format of one chap-

ter per application. However, there are some important concepts and

components that cut across the applications, so even though all of the

components will be addressed in the same form in individual chap-

ters, they may also be covered in other chapters.

Product Location Master

SAP SCM is based upon a supply chain network, which is a combina-

tion of locations, products, and transportation lanes (Figure 1.4).


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Product Location Master1

Supply Network

TransportationLane

Locations

Combination of Transportation Lanes and Figure 1.4 Locations Is Referred to as the Supply Network

SAP SCM, as with the plant and material master in SAP ERP, stores

a large amount of configuration information in the product master, location master, and the product location master. We refer to these

masters throughout the book, so it’s important to know the differ-

ences between them.

The 1. product master contains the information and attributes that

relate to the product across all locations. Data elements such as

the product number, the material group, and the gross weight and

volume are all attributes of the product master. The product mas-

ter is set up once per product.

The 2. location master deals with the attributes of the location. This

includes the location name, address, any calendars associated with

the location, and specific settings that apply to a few of the differ-

ent applications, such as SNP, TM, SAP Forecasting and Replenish-

ment, and SAP SPP.

The 3. product location master is essentially the product master with

added fields and added tabs to hold these fields that modify the

product per location.

Product master, location master, and product location store data in SAP SCM


Angrybird

Highlight

SAP SCM Basics 1

40

For instance, in SAP SCM, safety stock isn’t set at the product or lo-

cation level but at the product location level, so there’s no field for

safety stock control on the location master or on the product master,

but there are safety stock control fields on the product location mas-

ter. This not only holds true for safety stock but also for many other

attributes that only come into play at the product location master.

Planning Areas and Planning Object Structures

Planning areas and planning object structures are important cross ap-

plication items. They are high-level data groupings that control the

entire supply chain model. They have a central administration that al-

lows the areas and structures to be copied, maintained, and deleted.

Planning areas are the central data structures of Demand Planning (DP) and Supply Network Planning (SNP). A planning area is a container for key figures. Planning areas feed an interface object called a planning book, which is a spreadsheet view with a number of aggregation and macro capabilities. At the most basic level, key figures are the numerical values in the spreadsheet.

Note

Planning Object Structure

Just as a planning area is a container for key figures, a planning object

structure (POS) is a container for characteristics. The combination of

characteristics is called characteristic value combinations (CVCs). The

POS stores every unique combination of CVCs, which is then used

to help control disaggregation when data is manipulated at summary

levels. In the previous analogy, we stated that key figures are the nu-

merical values in the planning book spreadsheet. Characteristics are

like the textural column and row headings, with the time characteris-

tic on the horizontal axis, and the product characteristics on the verti-

cal axis.

Planning areas are containers for

key figures


41

Planning Versions1

Planning Versions

The planning versions set up the data that are available for use. A

model with the same supply network can have slight alterations in

terms of control fields on, say, the product location master, making

the version create different planning results than a different version

of the same model that has the original product location master set-

tings. Multiple versions can be kept over time and run to see how the

results change. Because only the active version planning results are

communicated back to SAP ERP, multiple versions can be run in per-

petuity along with a live active version, without ever impacting the

active version. If the changes are deemed desirable, then the settings

from the inactive version can be migrated over to the active version.

However, it’s important to remember that this all takes maintenance effort. It’s one thing to talk about the benefits of simulation and say that SAP SCM supports it, but it’s another thing to support simulation modeling with the resources necessary to make it happen.

Planning Versions and Mass Maintenance

Planning versions can be particularly effective when used with the

MASSD or the mass maintenance transaction. This allows the person

performing the configuration to make wholesale changes in the mas-

ter data; however, this transaction should not be used on the active

version. Instead, by using the simulation planning version and then

mass maintenance to make changes, the changes can be fully tested

before mass maintenance to make the tested changes on the active

version.

Planning Book

DP and SNP are two SAP SCM applications that use the planning book

intensively. The planning book is the window into the planning data

Planning versions are variations of the planning models


SAP SCM Basics 1

42

for most planners and other users. Planning books consist of the fol-

lowing areas:

Characteristics ›Key figures ›Data views ›Macros ›Forecasting functionality ›Promotional functionality ›Interactive graphics ›

Planning books provide views of various levels of aggregation as well

as ad-hoc viewing of planning data. Planning books allow you to com-

bine characteristics and key figures in a flexible way for presentation

to the planners. In fact, the planning book is the main user interface

into SAP, and SAP SNP also uses it, but it uses other views as well.

Creating the planning books is a significant part of the implementa-

tion because there are many different combinations of planning books

that can be created. Here are some of the important characteristics of

planning books:

› Different planners are responsible for different products and geog-

raphies, so the planning book can be customized for each planner

or for groups of planners.

As planners become more familiar with the planning book, they ›can be trained to create planning books for themselves.

The act of creating a planning book doesn’t change or affect the ›underlying data that the planning book displays.

The planning book is provided with the capability to perform com- ›plex calculations through its own macro builders. The results of the

macro calculation are displayed through extra rows in the planning

book.

Planners can be assigned to as many

planning books as you like


43

Conclusion1

SAP SCM comes with some standard macros, but they aren’t sufficient to cover all of the implementation needs. Unfortunately, creating macros in a planning book is nothing like creating calculations and formulas in Excel. So, because of the substantial learning curve, planners typically can’t create their own macros.

Tip

Conclusion

This book is designed to provide an introduction to the entire SAP

SCM suite by providing the broadest possible exposure to SAP SCM

with the lowest possible effort on your part. Areas of detail that are

not covered in the book can be found from the many references in-

cluded in the Bibliography of other SAP SCM books that go into more

detail on the different topics. For the older applications such as SNP,

DP, and PP/DS, this will be relatively simple. For the newer applica-

tions such as SAP EM, SAP SNC, and SAP EWM, this will be a bit more

challenging. Of course, SAP training offers courses in all of these top-

ics.

But let’s move on to the next chapter and get a broad overview of all

of the applications offered in SAP SCM.


377

3PL, 254

4PL, 254

A

Active model, 193

Active version, 41

Activity Areas, 220

Advanced shipment notification, 228

Advanced shipping notification, 292

Alert Framework, 173

Alert Manager, 291

Alert Monitor, 164

Amazon.com, 133, 294

APO, 100

ASN, 228, 245, 355

Assemble to order, 127

Assemble-to-order, 99, 104

Assortments, 263

ATP, 113, 135, 224

ATP category, 123

ATP requests, 185

ATP tab, 134

ATP tree structure, 127, 132

Automotive returns processing, 168

Availability checking, 124

Availability checking for kits, 128

Available to promise, 125, 294, 312

B

Backorder processing, 132

Backward consumption, 94, 137, 311

BAdI, 309

BAPI, 169

BAPIs, 195

Batch management, 219

Best-fit functionality, 71

Bill of distribution (BOD), 207, 209

Bill of Material, (BOM), 109

Bucket resource, 88

Bulk storage type, 220

C

Calendar, 114

Calendar mixed resource, 88, 114

Capable to match, 82, 122, 347

Capable to promise, 125, 127

Capacity leveling, 82, 89

Capacity leveling profile, 90

Carrier capacity, 150

Carrier cost estimation, 142, 145

Carrier tendering and selection, 141,

143

Causal, 72, 207

Change pointer, 188

Characteristic, 65, 89

Characteristic-based forecast, 63

Characteristic-dependent planning, 76

Characteristics, 40, 41, 42, 65

Characteristic value combinations

(CVCs) , 40, 73

Checking horizon, 134

Checkpoint, 231

Ciber, 226

CIF, 111, 148, 183

CIF variants, 192

Collaboration, 358

Collaborative forecasting, 74

Collaborative manufacturing, 358

Collaborative manufacturing environ-

ment, 358

Collaborative Planning, Forecasting,

and Replenishment (CPFR), 246, 264,

296

Index


Index

378

Collaborative Sales and Forecasting,

293

Collaborative transportation planning,

143

Collective processing run, 142

Composite, 72

Configurable product, 127

Consignment indicator, 137

Consignment stock in transit, 137

Contract management, 142, 143

Contract manufacturer, 354

Core Interface (CIF), 48

Create a shipment function, 142

CRM 5.0, 224

Cross docking, 233, 354

Cross-enterprise monitoring, 290

Cross-enterprise system, 294

CTM, 82, 122

CTM profile, 85

Customer, 243

D

DataSource, 68

Data views, 42

Data Warehouse Workbench, 61, 66,

67

Date calculation, 175

Date tolerance, 175

Days of Receivables, 335

Delivery collaboration, 246

Delivery window, 144

Demand collaboration, 245, 246

Demand Influencing Factor, 288

Demand plan, 80

Demand Planning (DP), 47, 60, 329,

357

Demand selection, 85

Deployment heuristic, 94

Deployment optimizer, 94

Depot location, 144

Design drawing, 248

Deviation of demand, 313

Disaggregation process , 76

Discrete manufacturing, 348

Doors, 231

DP, 40, 41, 42, 43, 100

DRP, 91, 213

DRP Matrix, 211, 279

Dynamic pegging, 86, 123

E

Electronic Data Interchange (EDI),

163, 294, 355

Enhanced method, 315

Equipment initiation, 205

Event, 163

Event code, 175

Event handler, 169, 170

Event manager, 251

Event notification, 169

Excel, 314

Expected event list, 163

Expected Event Overdue Event, 165

Expected event profile, 176

Expected goods receipt, 218

Extended safety stock, 289

Extended Warehouse Management,

217

F

Factory Calendar, 198

Factory collaboration, 358

Fixed bin, 220

Fixed lot size, 94

Fixed pegging, 86

Forecasting, 71

Forecasting and Replenishment, 246,

329

Forecasting functionality, 42


379

Index

Forecasting with BOM, 72

Forecast quality, 273

Forecasts, 245

Formula, 116

Fourth-party logistics, 355

Fourth-party logistics providers, 355

F&R, 60, 261

Freight unit, 146

Fulfillment, 168

Fulfillment by Amazon, 294

G

GATP, 113, 121, 147, 224

GATP time horizon, 134

Geo-coding, 148

Global Available to Promise (GATP),

48, 121, 293, 308, 311

Global service-level planning, 287

Goods issue, 94

Goods release, 94

GPS, 168, 235

GR/GI, 94

Group code, 175

H

Handling resources, 145

Handling units in outbound ship-

ments, 168

Heuristic, 82, 347

Heuristics, 283

Hierarchical planning, 91

High rack, 220

I

IDoc, 169

Implementation Guide (IMG), 49

InfoCube, 68, 92

InfoObjects, 65

InfoProvider, 68

Installed base, 205

Integrated rule maintenance, 128

Integration model, 194

Interactive demand planning, 64

Interactive graphics, 42

Interactive Scheduling Agreements, 91

Interactive SNP and Transport Load

Builder, 91

International sea transportation, 168

Inventory balancing, 203

Inventory Balancing Area, 212

Inventory turnover, 335

Invoice, 246, 292

Invoice collaboration, 246, 293

iPPE, 72, 128

J

JIT, 358

K

Key figures, 40, 42, 65, 89

Kitting, 224

Kit to order, 224

Kit to stock, 224

L

Labeling, 224

Labor management, 219, 233, 354

Layout-oriented storage control, 227

Leading indicator forecasting, 205

Light assembly, 224

Limits on distance, duration, and stop-

over, 145

Linear optimization , 34

liveCache, 75, 92, 126, 136

Location master , 39

Logistical rounding, 275


Index

380

Lost sales, 273

Lot-for-lot, 94

Lot sizing procedure, 94

M

Machine breakdown, 167

Macros, 42

Make-to-order, 99, 104

Make-to-stock, 99, 104

Malfunction and repair, 167

MASSD, 41

Mass maintenance , 41

Mass Maintenance transaction, 149

Master planning object structure, 89

Materials Management (MM), 32, 361

Maximum storage time at location,

145

MCA, 213

MRP, 82

Multi-activity, 114

Multidimensional data object, 70

Multi-echelon inventory optimiza-

tion, 203

Multilevel ATP, 127

Multi-mixed, 114

Multimixed, 88

N

Negative Binomial, 202

Number of periods, 75

O

Opening hours of locations, 145

Operations research, 34

Optimization, 82, 347

Optimizer, 101, 307

Order creation, 219

Order Forecast Monitor, 293

Order proposal, 263

Outbound delivery request, 229

Outsourced manufacturing, 306

Outsource manufacturing partner, 243

Over stock, 273

P

Packing, 224

Packing instructions, 248

Parking space, 231

Part number, 292

Party entitled to dispose, 220

PDS, 110, 245

Pegging, 84, 105

Performance- based logistics, 285

Performance indicator, 177

Period consumption strategy, 311

Phase, 245

Picking waves, 225

Planned independent requirements,

63

Planned order, 185

Planned production order, 100

Planning areas, 40, 89

Planning book, 41, 42, 90, 281

Planning models, 41

Planning object structure (POS), 40,

67, 68

Planning proposal, 142

Planning Service Manager, 283, 298

Planning versions, 41

Plant Maintenance (PM), 168, 310

Poisson, 202

Portal, 163

PP/DS, 43, 60, 88, 99, 127

PPM, 111, 191, 245, 307

Process-oriented storage control, 227

Process profile, 283


381

Index

Process types, 234

Production data structure, 110, 307,

348

Production line, 114

Production line mixed, 114

Production line mixed resource, 88

Production line resource, 88

Production order schedule, 167

Production plan, 100

Production Planning, 119

Production Planning and Detailed

Scheduling (PP/DS), 47, 99, 307, 334,

348

Production Planning (PP), 32

Production process model, 110, 111,

307, 348

Production staging area, 236

Product location master, 39, 41, 135,

186, 292, 314

Product master, 39

Product postponement, 223

Promotional functionality, 42

Promotion base, 75

Promotion forecasting, 74

PSA, 236

PSM, 204

Purchase order, 245, 292

Purchase order collaboration, 245

Purchase order processing, 293

Purchasing info record, 148

Pure transportation company, 355

Q

QIE, 226

Quality inspection engine, 226

R

Radio Frequency Identification, 227

Rail car management, 169

Reactions to event, 169

Realignment, 74

Real time deployment, 94

Rearrangement, 219, 354

Receipt, 246

Receipt and requirements list, 255

Recipe, 116

Red Prairie, 226

Refurbishment order, 214

Release collaboration, 245

Remote function call, 164

Reorder point, 94

Repair planning, 310

Replacement type, 206

Replenishment collaboration, 245, 246

Replenishment indicator, 210

Replenishment order, 244, 245

Replenishment order processing, 293

Requirement, 246

Resource, 88, 114

Resource management, 219

Responsive Replenishment Monitor,

292

Return on Assets, 336

Reverse kitting, 225

RF device, 163, 178

RFID, 168, 227, 297

Routing, 219

S

Safety stock, 287, 313

Sales and Distribution (SD), 32

Sales and Operations Planning, 91

Sales order processing, 168

SAP Advanced Planning & Optimiza-

tion (SAP APO), 32, 49, 60

SAP BusinessObjects Global Trade Ser-

vices, 158

SAP BusinessObjects Supply Chain

Management, 174


Index

382

SAP Business Workflow, 173

SAP DP, 60, 80

SAP DP Data Mart, 64, 92

SAP Easy Access , 49

SAP Event Management (SAP EM),

48, 97, 161, 235, 240, 334, 348, 355

SAP Extended Warehouse Manage-

ment (EWM), 48, 60, 88, 262, 296,

334

SAP Forecasting and Replenishment

processor, 265

SAP Forecasting and Replenishment,

48, 261, 288, 358

SAP F&R processor, 264

SAP IS Retail, 262

SAP_MRP_001, 102

SAP NetWeaver BI, 64

SAP NetWeaver BW, 163

SAP NetWeaver Identity Management,

214

SAP NetWeaver PI, 184, 254

SAP NetWeaver Portal, 174

SAP NetWeaver Process Integration,

169

SAP_PMAN_001, 102

SAP_PP_003, 131

SAP_PP_005, 102

SAP_PP_18, 102

SAP_PP_CTM, 131

SAP PRESS, 262

SAP SCM SMEs, 320

SAP Service Parts Planning (SPP), 46,

48, 350, 353

SAP SNC, 43, 165, 212

SAP SNC web browser, 251

SAP SNC Web UI, 248

SAP SPP, 60

SAP Supplier Network Collaboration

(SNC), 47, 48, 165, 288, 355

SAP Transportation Management,

348, 353

Scanner, 178, 235

Schedules of vehicle types, 144

Scheduling agreement, 148

Scheduling agreement release, 292

Serial number, 228

Service fill monitor, 212

Service Inventory Optimization, 213

Service level, 273, 315

Service level agreement, 249

Service-level planning, 285

Service matching, 176

Service parts delivery and tool man-

agement, 169

Service Parts Optimization, 213

Service Parts Planning, 288, 308, 333

Set rules, 176

Shipment creation, 141

Simulation planning version, 41

Single activity, 114

Single mixed, 114

Single-mixed resource, 88

SIO, 213

SIT, 358

Slotting, 219, 354

SNP, 40, 41, 42, 43, 60, 79, 88, 100,

147

SNP1, 94

SNP2, 94

SNP deployment, 94

SNP optimizer, 82

SNP Product Location tab, 93

Solution Manager, 323

Specifications, 248

SPO, 213

SPP, 147, 202

Standard Deviation of Lead Time, 313

Star schema, 68, 70

Step function, 34

Stock replenishment, 229

Stock requirements list, 255

Stock transfer order, 185


383

Index

Storage bin, 220

Storage control, 227

Storage section, 220

Storage type, 220

Subcontracting, 93, 306

Subcontractor agreement, 307

Subcontract order, 214

Subcontractors, 355

Subcontract reservation, 246

Supersession, 205

One-to-many supersession, 205One-way supersession, 205Two-way supersession, 205

Supplier, 243

Supplier collaboration, 243

Supplier delivery performance rat-

ing, 288

Supplier managed iventory (SMI), 250

Supplier Network Collaboration, 93

Supplier network inventory collabora-

tion, 246

Supply chain engineer, 323

Supply chain monitoring exchange,

294

Supply chain network, 38

Supply chain unit, 220, 311

Supply network , 41

Supply Network Planning (SNP), 45,

47, 79, 307

Supply selection, 85, 122

T

Target service level, 288

Task interleaving, 219

Test program, 248

The Master Data Selection, 85

Third-party logistics provider, 243,

253, 354

Third-party order processing, 132

Time horizon, 135

Time-related supply unit, 214

TPVS, 88

Transportation Booking Agent, 157

Transportation Charge Clerk, 157

Transportation Dispatcher, 157

Transportation lane, 81, 146

Transportation load builder, 142, 146

Transportation Management , 48

Transportation Manager, 157

Transportation mode, 146

Transportation Network Admin, 157

Transportation Planning and Vehicle

Scheduling (TP/VS), 48

Transportation resource, 88, 146, 153

Transportation tendering, 168

Transportation unit, 226

Transportation zone, 146

Transport order, 214

TSL, 214

U

Unconstrained planning, 82

Under stock, 273

Univariate, 72

Unplanned cross docking, 236

Unserviceable, 204, 206

Usage hour, 205

User interface, 169

V

Value added services, 223

Variants, 192

Vehicle capacity, 144

Vehicle incompatibility, 144

Vehicle resource, 88, 153

Vehicle scheduling, 142, 144

Vendor managed inventory (VMI),

250

Vendor restriction, 275


Index

384

Virtual Consolidation Location, 212

VMI, 91

W

Wal-Mart, 264

Warehouse number, 220, 311

Warehouse task, 231

Warehousing, 354

Warner Lambert, 264

Wave, 225

Web Communication Layer, 178

Wireless Application Protocol, 175

WordPress, 324

Work instructions, 248

Worklist, 211

Work order, 244, 292

Work order collaboration, 245

Work Order Processing, 293

Work package, 234

X

xApp, 213

Y

Yard location management, 231

Yard management, 146, 230, 354

Yard movement, 231

Yard stock, 231


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