High-Level OP Planning and

Demand Management

EGN 5622 Enterprise Systems Integration

Spring, 2013

Production Planning & Execution

Sales Inf. System

CO/PA

Forecasting

Sales & Operations

Planning

Tactical Planning

Demand
Management

MPS

Detailed Planning

MRP/CRP

Manufacturing
Execution/SFC

Procurement
Process

Order
Settlement

Manufacturing Execution
January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

High-Level OP Planning
Planning

activities:

1. CO/PA
2. Forecasting
3. Sales and Operations Planning

Planning strategy for a product

4. Demand Management
Demand

management feeds to MPS and in turn

MRP/CRP

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2007. All
rights reserved.

Operations Planning & Execution

Major

Players:

Tactical Planning

Sales Info

Forecasting

CO/PA

(at

corporate level)
COO, CFO, Controller, Sales &
Marketing, Product Line mangers,
Production Planner

Detailed Planning

Sales OP Planning

Demand
Management

(at plant

level)
Production Planner/Scheduler,
MRP Controller, Capacity Planners

Tactical
Planning

MPS

Detailed
Planning

MRP/CRP

Execution

(at shop floor level)

Production Line Workers, Shop

Floor Supervisors

Manufacturing
Execution/SFC

Procurement
Process
Order
Settlement

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

Execution

Costing-Based CO-PA

Costing-Based CO-PA
CO-PA

is profitability analysis, based on cost-ofsales accounting.

CO-PA

can be viewed as a cube of 3 dimensions

(representing product, country, and customer)

CO-PA

as

data are collected from various areas, such

sales orders or billing data from SD,

production costs and variance from PP, and
values of overhead cost controlling from controlling.

Pricing and Costing for mfg. goods

Cost

components

Materials Costs
Labor costs
Equipment costs
Strategies

costs

to reduce

Lean manufacturing
Systems approach

Sales and Operations Planning

(SOP)

Information
Origination
Sales
Marketing
Manufacturing
Accounting
Human Resources
Purchasing
Intra-firm
Collaboration
Institutional Common
Sense

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

Master Data - Product Groups

Aggregate

planning that group together materials or

other product groups (Product Families)
Multi- or Single- Level Product Groups
the lowest level must always consist of materials

Bikes
Mountain
18 Speed

Touring

24 Speed

Red 24M

Blue 24M

18 Speed

24 Speed

Red 24T
January 2007 (v1.0)

Blue 24T

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

Planning Levels
Planning at
Product Group
Level

Bikes
45%

55%

Mountain

Touring

30%

70%

40%

60%

18 Speed

24 Speed

18 Speed

24 Speed

40%

60%

50%

50%

Red 24M

Blue 24M

Red 24T

Blue 24T

Planning at Material Level

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

10

Demand Management
Link between Strategic
The results of Demand

Planning (SOP) & Detailed Planning (MPS/MRP)

Mgmt is called the Demand Program, it is
generated from our independent requirements PIR (Planned IR) and
CIR (Customer IR)

Product Groups

Bikes

Disaggregation

45%

55%

Mountain

Touring

30%

70%

40%

60%

18 Speed

24 Speed

18 Speed

24 Speed

40%

60%

50%

50%

Red 24M

Blue 24M

Red 24T

Blue 24T

Material

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

11

Demand Management
Forecast

Sales
Planned
Independent
Requirements

Customer
Independent
Requirements

Demand
Program

MPS / MRP

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

12

Transfer from High Level to Detailed Planning

Planning at Group
Level

Disaggregation
Planning at
Material Level

Bikes

Demand
Planning Data

45%

55%

Mountain

Touring

30%

70%

40%

60%

18 Speed

24 Speed

18 Speed

24 Speed

40%

60%

50%

50%

Red 24M

Blue 24M

Red 24T

Blue 24T

Transfer

Operative
Planning
Data

Planned Independent Requirements

At Material and Plant Level
January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

13

Creation of The Demand

Program
Start

with sales operation plan (SOP) after

forecast input
Convert SOP into (rough cut) production plan,
which consists of the following data elements.

Time Buckets
Sales
Production
Stock levels
Days supply

Translate

production plan into demand

program, via disaggregation

January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2007. All
rights reserved.

14

Enterprise Strategic
Planning
SAP Implementation
EGN 5622 Enterprise Systems Integration
Spring, 2013

Planning Strategies
Planning

strategies represent the business

procedures for
The planning of production quantities
Dates

SAP

offers a range of PP strategies

From those for MTS

To those for MTO

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

16

Planning Strategies

Multiple types of planning strategies based

upon environment
Make-To-Stock (MTS)
Make-To-order (MTO)
Driven by sales orders

Configurable materials
Mass customization of one

Assembly orders

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

17

Planning Strategy for Make-to-Stock

Planning

takes place using Independent

Requirements
Sales are covered by make-to-stock inventory

Strategies

10
11
30
40

Net Requirements Planning

Gross Requirements Planning
Production by Lot Size
Planning with Final Assembly

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

18

Planning Strategy for Make-to-Order

Planning

takes place using Customer Orders

Sales are covered by make-to-order production

Strategies

20 Make to Order Production

50 Planning without Final Assembly
60 Planning with Planning Material

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

19

Forecasting set up in SAP

Forecasting

Models

Trend
Seasonal
Trend and Seasonal
Constant

Selecting

a Model

Automatically
Manually

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

20

Sales and Operations Planning (SOP)

Flexible

forecasting
and planning tool
Usually consists of
three steps:
Sales Plan
Production Plan
Rough Cut Capacity Plan

Planned

at an
aggregate level in
time buckets

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

21

Statistics Graphics

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

22

Exercises:
(Due date: 1/28/2013)
1.
Review material status for finished products
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.

Review bill of materials for executive pen set

Display multi-level bill of materials for ESET
Review routing for assembly EPEN
Review routing/BOM in the engineering workbench
Review work center and assigned capacity
Create consumption values for finished products
Create material master for finished products
Create bill of material
Create finished products routing
Create material master for product group
Assign members for production group
Create sales and operations plan
Transfer SOP to demand management
Review demand management
Run MPS with MRP
Review stock/requirement list