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SAP APO is bundled with several other advanced planning applications into mySAP SCM 5.0
a.
b.
c.
d.
e.
APO
Forecasting and replenishment Retail
Inventory Collaboration Hub
Event Manager
Extended Warehouse Mgmt.
Some functionalities of SAP APO: Designing, Transportation Planning, Order Promising and
Delivery, Supply Chain Performance Mgmt.
APO ARCHITECTURE
Historical data
Key performance indicators (KPIs)
The transaction data and master data from R3 are stored in LC Live Cache. The data
flows through an interface called as the Core Interface (CIF).
APO need to protect itself from any live cache failures. So it stores in traditional RDB
relational database used for backup purposes.
Data flows between R3 to APO and back.
APO DEMAND PLANNING
It is used to create a forecast of market demand for your companys products. It allows you to
consider many different causal factors that affect demand.
It is a large library of statistical forecasting models. Customers can create unique forecasting
models using a powerful macro tool. Forecasts created by APO DP may be released to APO
Supply Network Planning or passed to R/3 for MRP planning.
APO SUPPLY NETWORK PLANNING
It is a very good medium term (neither short term nor long term) to get a rough cut plan for
fulfilling the estimated sales volumes. It integrates purchasing, manufacturing, distribution and
transportation so that a comprehensive tactical planning and sourcing decisions can be simulated
and implemented on the basis of a single, global consistent model. Uses advanced optimization
techniques.
APO PRODUCTION PLANNING / DETAIL SCHEDULING (PP/DS)
PP/DS is intended to e short-term (1-6 weeks) detailed planning and scheduling tool.
The PP portion of PP/DS is capable of creating finite supply chains taking capacities
into consideration.
The DS portion of PP/DS is capable of creating optimized scheduling sequences.
PP/DS accomplishes its primary mission by using various advanced heuristic and linear
programming algorithms.
APO Global Available to Promise (GATP)
advanced order promising tool.
1. We can plan availability of materials across multiple different plants.
2. Simulation of orders (Capable-to-Promise)
3. Rule-based order promising
QUIZ
The portion of the APO architecture where the computer model resides is called Live Cache.
The APO modules where forecasting is done is Demand Planning.
APO module used for advanced order promising is called Global ATP.
The APO module used for advanced problem notification is called Alert Monitor.
APO Master data Location Master, Product Master, Resource Master, PPM or RTO master etc.
APO-relevant master data/transaction data is selected in the active integration models of the CIF.
All the material masters of a plant are passed through the integration models to SAP APO. The
integration model must be active.
Versions in APO
All transaction data is transferred to APO through the CIF is stored in Version 000 (Active
version). Examples of transaction data would be forecasts, sales orders etc.
All master data is stored in Models and all transaction data is stored in Versions.
All transaction data transferring from APO to R/3 must be stored in Version 000.
Plant, Customer and Supplier from R/3 becomes Location Master in APO.
Material master from R/3 is called as the Product Master in APO.
Work centers become resource masters.
Routing/BOM master becomes PPM or RTO Production Process Marks
Transportation lanes in APO do not have a counterpart in R/3.
Purchasing Info Record and Scheduling Agreement becomes Procurement Relationship in
APO.
LOCATION MASTER
Crucial for SCM because it is the building block for so many other relationships.
a. Plant, Customer, Supplier and many others from R/3 are housed in APO Location Master.
Location type will distinguish between the different location masters. In APO we can have
several calendars but in R/3 we can have only one calendar.
Transportation Lane
It does not have an R/3 counterpart
Basis for integrated product and Process Engineering (iPPE) as the manufacturing master data
a.
b.
c.
d.
BOM
Routing
Line
Recipe
Manual
Sales and operations planning (SOP)
Flexible Planning (R/3)
APO Demand Planning
Timely
Reliable
Accurate
Meaningful
Written
Easy to use
Approaches to Forecasting
a. Qualitative method subjective inputs (JUDGEMENTAL consumer surveys, sales
staff/managers/executives/expert panels)
Subjective inputs soft info (human factors, person opinion, hunch)
It is hard to quantify
b. Quantitative Method objective or hard data (TIME SERIES uses historical data
assuming the future will be like the past)
Projection of historical data. Associative models utilizing explanatory variables
Time series forecast timed ordered sequence of operations
Technique that averages a number of recent actual values, updated as new values become
available. The more time period we average, the less responsive the moving average is to the
actuals. It may be good or bad depends on the product and the profit margins. Sometimes it gives
you a protection during uncertainties.
Weighted Moving Average:
More recent values in a series are given more weight in computing the forecast.
Exponential Smoothing:
Based on previous forecast plus a percentage of the forecast error.
Alpha smoothing factor is greater than or equal to zero but less than or equal to 1.
Low Alpha stable average
High Alpha Changing average
BIAS it tells us whether we have a tendency to over or under-forecast. If our forecasts are in
the middle of the data, then the errors should be equally positive and negative, and should sum to
zero.
MAD Mean Absolute Deviation is the average error, ignoring whether the error is positive or
negative.
MPE When the numbers in a data set are larger in magnitude, then the error measures are likely
to be large as well, even though the fit might not be as good.
Mean percentage error (MPE) and Mean Absolute Percentage Error (MAPE) are relative forms
of the bias and MAD respectively.
MPE and MAPE can be used to compare forecasts for different sets of data.
CHARACTERISTIC
In APO DP, a characteristic is an organizational, or master data field. For ex, material
(product), plant, customer, or sales organization.
Characteristics are used to determine the level at which you are forecasting. APO DP has a
built-in library containing many commonly used characteristics. Customer unique characteristics
can also be created.
CVC - Characteristic Value Combinations: CVCs are stored in Planning Object Structure
(POS). CVCs represent the master data for APO DP.
Historical data is stored in the APO BW info cube and is organized by dimensions
(characteristics). Once historical data is stored, it may be analyzed to create historical facts of
characteristic combinations.
KEY FIGURES
It always contain numeric or quantitative data that is useful for forecasting.
Eg: Sales history of a product, promotional data.
Usually appear as rows in spreadsheet looking screens. APO DP has a built-in library containing
many commonly used key figures. However, customer unique key figures may also be created.
PLANNING AREAS
Planning book it is like a spreadsheet. What key figures and characteristics to be displayed?
It is used to perform a particular business function. It also defines how we organize the columns
by week, month etc.
Planning Areas Characteristics and Key figures are stored in Planning Areas.
The Info Cubes are not a part of live cache but a part of APO BW. We are storing the
information into a spreadsheet looking screen and the forecast is stored in an area of live cache
called as TIME SERIES. We may have multiple forecasts and we can distinguish between them
by assigning different version numbers. The best forecast can be passed on from TIME SERIES
to another area of live cache called Orders.
SELECTION ID
Before creating the forecast, we need to define SELECTION ID
Selection ID it is going to have for each individual user how they wish to forecast?
For ex: a sales individual may wish to forecast on the basis of a Product and customer. Selections
may be used for re-use.
Lower level of details can be seen using the drill-down feature.
AGGREGATION and DISAGGREGATION
Aggregation is an automatic function by which key figure values on the lowest level of detail are
summed at run time and displayed or planned on a high level.
Disaggregation is the automatic function by which a key figure value on a high level is broken
down to the detailed level.
Disaggregation are done by using Proportional Factors.
PROPORTIONAL FACTORS
They are derived from historical data and represent the ratios or percentage.
Forecasting Prerequisites
a. Master data in the form of CVC
b. A selection ID what to forecast
c. A forecast profile How to forecast
Part B APO DEMAND PLANNING
Univariate Forecasting technique
It is a statistical forecast.
Examples include
a.
b.
c.
d.
e.
f.
g.
Moving avg.
Constant models, trend models.
Exponential smoothing
Crostons method sporadic demand
Automatic selection
Seasonal linear regression
The Holt-Winters method.
Master Forecast Profile It tells demand planning how to forecast. Definition of the key
figure to be forecast. Definition of the past and forecast horizons. Procedural specification for
the following forecasting types: Univariate, Multiple Linear regression, Composite. It indicates
what statistical methods to use.
Multiple Linear Regression (MLR)
APO DP supports Multiple Linear Regression as a forecasting technique.
MLR is used to determine how a dependent variable such as sales, is connected with independent
variables called casual variables, such as prices, advertising and seasonal factors.
Collaborative Forecasting customers will view your statistical forecast and can give
feedback on whether it is too high or too low. The result can be improved forecast accuracy.
Collaborative planning requires a strong business relationship between trading partners and most
of TRUST.
Consensus Based Forecasting
It may be performed various ways including:
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Alert Monitor
It may be used to send alerts regarding important abnormal situations.
For Demand Planning, the important abnormality is a forecast error that exceeds a pre-defined
threshold level.
Alerts may be delivered via several media including email.
PLM
Forecasting the demand for new products is difficult due to lack of historical data.
Forecasting the end-of-life products can also be done.
Promotional Planning It can be created to apply patterns to the demand forecast. The
patterns can be stored in the promotion pattern library and used, as required (multiple times).
The function is also available to detect promotion patterns in historical data and to create
promotion patterns based on them.
Quiz
A planning object structure in APO DP will store Characteristics and CVC.
Characteristics are made up from Organizational data elements and Master Data elements.
Forecast profile in APO DP indicates what statistical forecast method to use.
Product
Location
Quantity
Time
MRP in R/3 or SNP in APO may act on PIRs to create replenishment planned orders.
APO release architecture
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a. Heuristic
b. Capable-to-Match (CTM)
c. Optimizer
In addition to supply and demand matching, SNP is capable of performing two additional supply
management functions.
a. Deployment
b. Transportation Load Builder
Production Horizon
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It is a given number of days relative to todays date and any date that arises greater
than this horizon is taken care by Supply Network Planning.
Anything inside of production horizon is taken care by PP/ DS.
Infinite planning Heuristic: Resources and material availability are not checked when
creating planned orders and stock transfers.
Finite Planning Capable-to-match (CTM) and optimizer: Simultaneous quantity and
finite capacity scheduling: SNP resources and material availability are checked during
creation of orders.
Heuristic and Optimizer: Adjust stock transfers according to the current demand and
receipt situation.
Transport Load Builder (TLB): Groups together stock transfers.
SNP architecture
Planning Area holds Characteristics and Key figures.
Master planning object structure holds SNP characteristics and DP characteristics, Aggregates.
The APO DP stores its forecast in Time Series Live Cache.
Data view is a subset of a workbook.
Order based live cache All transaction data is stored as orders in the order live cache.
ATP categories are used to differentiate orders.
Decision variables are used to model the various decisions that may be required in supply
chain planning. Examples are:
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Constraints:
Constraints represent realities that essentially bound the solution options to that the
result is feasible.
Examples include:
a. Demands must be met
b. Cannot exceed capacity
c. Storage capacity is limited
Non-Linear Programming When the objective function is a non-linear function.
Mixed-Integer Linear programming (MILP)
Mixed-Integer non-linear programming (MINLP)
SAP APO supports LP and MILP problems.
It is an order-based planning method. Every single sales order or planned PIR is planned
separately.
CTM uses demand priorities as the primary basis performing supply network planning.
CTM doesnt perform optimization. It terminates when it finds the first feasible solution to
the problem.
Demand priorities may be defined using multiple methods consistent with corporate policy or
culture.
CTM process includes Demand Prioritization and Supply Categorization.
APO SNP provides more sophisticated safety stock planning than R/3.
Deployment
Fair-share rule.
Actual deployment orders are created in R/3.
Quiz
1.
2.
3.
4.
The supply chain engineer is used primarily to view and manage Master data
BOM cannot be viewed and managed through the SCE.
Work Areas in the SCE are used to Filter Master data in Models.
The supply chain engineer is a graphical tool True.
UNIT 19
APO IMPLEMENTATION METHODOLOGY
Project manager
Top management support
Technical issue
End user issues
End user training
a.
b.
c.
d.
e.
Project preparation
Business blueprint
Realization
Final preparation
Go live & support
Project Preparation
General conditions for implementing the project successfully.
It will include:
a.
b.
c.
d.
e.
f.
g.
h.
Business blueprint
It is a critical phase of methodology. Failure to take adequate time to lack of fwd. thinking in this
phase will increase risk of overall project.
Realization It will begin the implementation of the functional requirements defined in the
blueprint phase.
a.
b.
c.
d.
e.