October 1, 2004

Figure 1 Planning axis

by Adolfo Menndez Fernndez, Application Architecture Manager, Repsol
Creating planning processes is extremely complicated. Planners must accommodate an almost endless
list of demands and they run the risk of being overwhelmed by minutia. SAP Advanced Planning and
Optimization (APO) offers the technology to consolidate large volumes of data so that planners can have
more control as they approach the task.
Hierarchies consolidate master data objects into groups. They form top-down and bottom-up relationships
that aggregate information for various purposes such as reporting that can be used for planning.

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Note
For more details on planning with hierarchies, open SAP SCM 4.0 Help and follow menu path
APO>Supply Network Planning>Supply Network Planning Run>Hierarchical (Aggregated) Planning.
The first scenario centers on the Product axis. A company produces many products under the same brand but in
different sizes and with different labels. The planning process for this scenario should not be done at the SKU
level because it would become more complex without providing any added value. Instead, planning should be
done at a higher level so the firm can meet the needs of all products of the same brand but with different sizes
simultaneously. Aggregating the SKUs into product families makes the planner's job much more manageable.
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Figure 2 A simple product hierarchy
Figure 3 How the final hierarchy is generated
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Figure 4 Build hierarchy attaching new objects (Hierarchy maintenance)
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Figure 5 Interactive SNP (transaction /n/SAPAPO/SDP94)
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Tip!
It is often not easy to understand how a hierarchy is defined. Model new hierarchies by drawing a
hierarchy skeleton such as Figure 3 in advance for an overview of how aggregation will work and what
the final hierarchy will look like.
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Stock at Madrid plant
Prod 1 KG = 3 EA
Prod 5 KG = 1 EA
Prod 10 KG = 2 EA
Total = 28 KG
Demand on 22.7.2004
Prod 1 KG = 9 EA
Prod 5 KG = 10 EA
Prod 10 KG = 10 EA
Total = 159 KG
Table 1 Transactional data at individual product level
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Figure 6 Planned order is created at product group level
Figure 7 Data view for capacity leveling
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