You are on page 1of 37

SAP APO Overview

Contents
SCM Overview

APO Overview

SAP R/3 Vs APO


Contents
SCM Overview

APO Overview

SAP R/3 Vs APO


Supply Chain Planning
Supply Chain Planning is the process of balancing available supply against demand

Companies do this by predicting customer demand and

fulfilling it by the most efficient allocation of inventory and

production capacity.
Demand Supply

The right product At the lowest total cost


At the right time and place With the lowest asset investment
Delivered to the right customer
SCM Planning and Execution
Supply Chain Management starts with a completed Business Plan:
How are we going to increase the value of the company?
Strategic Planning What businesses are we going to get in/out?
How are we going to accomplish? (acquisitions, mergers, joint ventures, divestiture, etc.)

What are the financial implications of the strategic plan?


Financial Planning What are the financial resource requirements?
Which financial vehicles should be used in meeting these resource requirements?

What will it take to make the business more profitable?


What events / trends are taking place in the markets served which may impact our business?
Business Planning How are we going to respond to these events / trends?
What are the appropriate service and cost targets to gain competitive advantage?

How does projected demand compare to projected supply?


Sales & Operations What are the projected resource requirements to meet both service and cost targets?
Planning What actions are required to insure the appropriate levels of resources are available when needed?

Functional Planning
Distribution Production Material
Demand
Requirements Planning & Requirements
Planning
Planning Scheduling Planning

Customer
Execution
Warehousing Transportation Manufacturing Procurement
Service
SCM Impact on Business Goals
Increased customer service
Revenue rates
Reduced lost sales / stock-outs
Increased market share
Improved inbound logistics
efficiencies
Gross Profit Margin Improved manufacturing
efficiencies
Lower cost of goods sold
Reduced supply chain costs:
Transportation costs
Operating Expenses Material costs
Warehouse costs
Production costs
Labor costs Reduced RM, WIP and FG
Handling/expediting costs inventory investment
Reduced supply chain and cash-
Working Capital to-cash cycle times
Reduced obsolete inventory
Improved production plan Postponement strategies
adherence
Fixed Asset Utilization Increased Return on Assets
Employed
Optimized equipment utilization,
less downtime Economic Value Add (EVA)
Return on Assets exceeds Cost
of Capital
Shareholder Value Enterprise Market Value exceeds
Book Value
Lower overall cost structure Strong, predictable Cash Flows
Adaptive, responsive supply
Competitive Advantage chain
Strong collaborative
partnerships
Supply Chain Planning Benefits
Supply Chain Impacts Typical Benefits

Improved customer service


Revenue 2-5% sales
(greater market share, higher
prices)
Profitability
Lower cost of goods sold 5-10%
(including material, conversion
Costs
costs
manufacturing, handling,
Shareholder warehousing, distribution, and
10-30%
Value general overhead costs)
transport
costs
Working Lower raw materials and
Capital finished goods inventory 10-20%
inventory
Invested Shorter order-to-cash cycles
Capital
Fewer physical assets
Fixed Capital (manufacturing plants, 10-30%
warehouses, material handling assets
equipment, trucks, etc.)
Supply Chain Complexity
Outsourced Outsource
manufacturing d logistics
Critical role operations Global
services
of raw supply
material chain
suppliers operations Increasingly
Shortened lead
demanding
times for
customers
product
development

PLAN

DESIGN MAKE & MOVE SELL


Suppliers Customers

BUY
Supply Chain Planning Space
A range of solutions exist to assist companies effectively plan, manage, and execute their
supply chains in collaboration with other trading partners
Core SCP Process Aligned SCP Process

BUY MAKE MOVE HOLD SELL


DESIGN
YEARS New Product Development Logistics Network Design
QUARTERS S Strategic Network Sales C
Supply Contract Network
Modeling Customer Service Demand
Inventory C
Forecasting
U C Negotiations Sourcing Territory Planning Planning O
Target U
Setting
O L
P
L Supply
Supply Network Planning /
Chain Planning,
L
S
L Master Production Planning
Master Planning
Supply Demand
A
MONTHS P Matching
Product T
A Material Allocation
B
L B Materials Material Requirements Inventory Order O O
Supply
Planning Transport
WEEKS O Planning Planning Planning Promising R
I
R Detailed Planning M
Scheduling
Production Planning
Distribution A
E A Transportation Requirements
Available to
T E
Promise
DAYS T Procurement Planning
Load Planning
I
Detailed / Line Scheduling
R I Planning
O R
OMaterial Inventory Tracking / In-transit &
N
HOURS
N Warehouse Management Manufacturing Execution System,
Production Activity Control
Order Management
On-hand Inventory
Tracking
Contract Channel Partners
B2B Exchanges 3PLs / 4PLs
Manufacturers B2B Exchanges
From Supply Chains to
Communities Collaboration
Scope
Business Internal Extended Partnership Community
Scope

Agents
B-Web

Marketplace

XML
Network
CNO

EDI
Chain
CIF

APS
Enterprise
ERP

Technologies
Optimization Integration Collaboration Synchronization
SCM Objective
Contents
SCM Overview

APO Overview

SAP R/3 Vs APO


Historical Development
SAP APO (Advanced Planner & Optimizer) emerged as an entrant into APS market in the late
nineties. It now forms part of a suite of products called SAP SCM, covering the whole Supply
Chain Management process footprint.

SAP SCOPE
Initiative SAP APO 2.0
Collaborative
MRP II for Planning Planning mySAP SCM SAP SCM 4.0
SAP R/3 MM/PP ASCN Vision announced SAP APO 4.0
Transportation Mgmt Collaborative Scenarios SAP is Market Leader in Q2 SAP ICH 4.0
Warehouse Mgmt SAP APO available Strategic Partnership with SAP EM 4.0
Strategic partnership with in mySAP.com Bios Group SAP NetWeaver
ILOG Integration

1997 1998 1999 2000 2001 2002 2003


1997 1998 1999 2000 2001 2002 2004

SAP APO 1.1 mySAP SCM mySAP SCM


SAP enters APS SAP APO 3.0 SCM Content SAP APO 3.1
market with stand-alone Workplace Industry Release
solution SAP LES R/3 4.6 C Supply Chain Event
Decentralized Warehouse Transportation Planning Management
Mgmt System Radio Frequency CRM SCM
Integration
Source: SAP
SCM 5.0
Planning - APO Execution R/3

APO
APO

SCM 5.0
4.1

EM Lieferant

Coordination - EM Collaboration - ICH


SCM 5.0 Planning

Planning - APO Demand Planning (DP)


Supply Network Planning (SNP)
Production Planning (PP/DS)
APO Distribution Planning (Deployment)
APO
Transportation Planning
(TP/VS)

SCM 5.0
4.0
SCM 5.0 Coordination

SCM 5.0
4.0

EM
Event Management (EM)
Performance Management

Coordination - EM
SCM 5.0 Collaboration

SCM 5.0
4.0

Supplier Managed Inventory Lieferant

(SMI)

Collaboration - ICH
SAP-APO Overview
Global Demand Supply Production Detailed
Available- Planning Network Planning Scheduling
to- Promise Planning

BW
SC Cockpit
Transportation
Planning
Infocubes Solvers
liveCache

APO

Connectivity Layer

Private
ERP CRM SCM Exchange
Portal
SAP-APO Planning and
Capabilities
Supplier Material Production Inventory Demand
Planning Planning Planning Planning Customer

Yearly Demand Planning (DP) What is the expected impact of salesforce


actions?

Monthly Supply Network Planning (SNP) Will my inventory cover demand next month?

In the following weeks, will I have capacity in


Weekly Production Planning (PP) plant to fit demand?

Daily
Detailed Scheduling (DS) Which is the optimal sequence for my
production lines?

Available To Promise (GATP) Will I be able to ensure a date of delivery?


SAP-APO Modules
SAP Advanced Planner & Optimizer
SAP application used to enable real time decision support, advanced
constraint based planning and optimization
Covers the planning requirements (optimization, finite capacity, what-if
simulation...) not covered by the R/3 system:
Demand Sales forecasting Production Production orders planning and
APO
Planning runs on an independent
Advanced statistical methods server from the
Planning/ R/3 one
sequencing
(DP) Detailed
Multiple criteria for planning and
SAP provides standard software to interface
Graphical views
SchedulingAPO and R/3 (stocks,
sequencing
Alert monitoring
purchase orders, production orders,)(PPDS) Finite capacity

Supply Network needs planning Available Dynamic calculation on the available


Network Delivery, Production and Purchase to Promise to promise orders
Planning Planning (ATP) Ability to define material
(SNP) searching rules based on
Approximate finite capacity
alternative centres, alternative
Optimal solution for the entire
products and production
network based on configurable
criteria
Demand Planning
Statistical Forecasting
Selection of advanced statistical tools (Univariable, Multilinear, Composite, etc.)
Capabilities
Collaborative Forecasting and Consensus Planning
Ability to conduct intra and cross-company Demand Planning collaboration via
Internet
Flexible Multi Level Planning
Ability to plan at various levels of data hierarchy (product, region)
Promotion Planning
Planning, managing and evaluation of the impact of promotions on demand
Product Life Cycle
Ability to use phase-in and phase-out profiles and like modeling to manage new
products and obsolescence
Planning by Exception
Use of Alerts to report exceptions
Simulation
Ability to use what-if scenario simulation
Integration with the Planning and Execution systems
Tight integration with other planning capability (Supply Planning, Production
Planning, etc.) and the Execution system (R/3, etc.)
Supply Network Planning
Supply Chain Model
Ability to model the entire supply network and all of its constraints such as
Capabilities resource capacities, storage limits, transportation capacities, material
availability, safety and target stock levels, etc.
Concurrent Planning
Produces Distribution/Production/Inventory/Procurement plan concurrently
SNP Heuristic
Performs requirements planning (infinite capacity) for the whole, or a subset
of the supply chain.
Capacity leveling capability is used to balance resource loads.
Capable-to-Match (CTM)
Creates a feasible plan, using finite production capacities.
Matches a large set of prioritized customer demands and forecasts to a set
of categorized supplies.
SNP Optimizer
It is a one step generation of an optimized finite capacity plan in which all
defined costs are minimized.
Deployment
Dynamically determine how and when to distribute inventory
Transport Load Builder
Uses the results of the deployment run, groups stock transfers and create
transport orders for multiple products
Planning by Exception
Use of Alerts to report exceptions
Production Planning Detailed
Scheduling
PPDS is used for short term to-the-minute planning (both for in-house
production and and external procurement) in the production plant. It is tightly
Capabilities integrated with the execution system transfers planning results to R/3.

Concurrent Planning

Detailed capacity planning and material planning simultaneously


Schedule changes and synchronization at multiple levels of the bill of
materials (BOM)
Sequence optimization using genetic algorithm or constraint propagation
Dynamic or Fixed Pegging

Constraint Based Capacity Planning


Over multiple production facilities based on constraints in Supply Network
Planner (such as setup times, fixed orders, alternative resources)
Interactive Planning
Strong graphical capabilities allow the users to perform interactive
scheduling and optimization using a Gantt Chart (Pegging network assigns
receipt elements to requirements of BOM structure)
Scenario Running
What-if Scenarios can be used to simulate actual conditions and consider
the effects of various constraints.
Global Available To Promise
Capabilities
Provides an on-line search to verify across the network that the requested

product can be provided in the quantity and date requested

Multilevel stock, component and capacity checks in real time and in

simulation mode to ensure that supply and demand can be matched

Key Components

Basic methods Inventory availability check (SNP)

Rules-based ATP Location and/or product substitution (SNP)

Capable To Promise (CTP) Production plan check, and automatic

planning in PPDS to trigger production if necessary & feasible (PPDS)

Product Allocation Allows management of scarce products


Transportation Planning and
Vehicle Scheduling
Transportation planning and consolidation
Capabilities
Optimization and processing of transportation orders

Mid-term and bucket oriented planning

Vehicle scheduling and route determination

Automatic determination of distance and transportation costs

Transportation mode and carrier selection

Multi-pick and multi-drop functionality

Exception management through Alerts

Supports short term and long term decisions

Tightly integrated with R/3 - Logistic Execution System (LES) for execution,

and BW for reporting


Supply Chain Cockpit
Capabilities
Supply Chain Engineer

A graphical instrument panel to model and navigate the entire

supply chain and all its links

Exception Management

Alert monitors and event triggers for problems, material, capacity,

transportation and storage constraints

Supply Chain Engineer

Handles adhoc queries on stock information and capacity utilization


APO Computational Solvers
APO Solvers

A wide variety of computational solvers


applied to specific planning functions with
industry-specific variations

Linear Programming /
Mixed Integer Linear
Programming
Distribution Production
Flow Algorithms Planning Planning &
Deployment Scheduling
Genetic Algorithms,
Constraint-based Programming
Branch & Bound Algorithm
Demand
Exponential Smoothing Planning
Heuristic Methods
Holt Winters
Multiple Linear Regression
SAP R/3 and APO Integration
Master Data Integration
Execution (SAP R/3) Planning (APO)

Plant

Location
Vendor

Info Record Transportation Lane

Material Master Product Master

Bill of Material

Production Process Model


Routing

Work Center Resource


APO Core Interface

Add-on component to R/3 system


Supply APO with planning and optimization relevant
data from R/3
Return APO planning results to R/3
Initial and incremental data transfer (automatic switch)
Contents
SCM Overview

APO Overview

SAP R/3 Vs APO


What Are They?
SAP R/3 is an Enterprise Resource Planning (ERP)
system. It is a suite of modules designed to integrate
an organization. Its main purpose is to integrate data
throughout the organization and support the execution
of business processes.

SAPs Advanced Planner Optimizer (APO) is an


Advanced Planning System (APS). An APS supports
any form of planning activities to manage the supply
chain and is a substitute to any planning modules
found in a ERP or legacy system.
Advanced Planner and
Optimizer
APO is:
A planning tool
A decision support tool for managing
throughout, inventory, and order/demand
management
A modeling technology that enables the
supply chain planning process by:
Modeling what if scenarios to solve problems
Incorporating resource and capacity
constraints
Optimizing plans and schedules around those
constraints
Advanced Planner and
Optimizer

APO does not:


Manage entire Bill of Materials
Replace financial functions
Maintain inventory
movements and position
Operate as an execution
system
APS Vs ERP
5 key enablers that distinguish the functionality and capabilities of an APS to those of an ERP system:

Calculation Speed
Memory Resident Architecture.~ 300 times faster than a typical MRPII/DRP system
Creates Capability for continuous process where replanning can be executed every time a change occurs

Consider Supply Chain constraints concurrently


MRPII/DRP is a sequential logic, checking one level in the supply chain at a time
APS can check impact on all constraints in the supply chain simultaneously

Constraint Based Planning


APS has the ability to consider hard and soft constraints

Upstream and Downstream propagation


Using APS, the impact of a supply side constraint can be reflected in terms of downstream effects in the supply chain

Problem Solving/Optimization features embedded in an Interactive Planning environment


APS presents opportunities for sophisticated planning methods, such as profitability optimization, not available
through MRPII.
SAP R/3 Vs SAP-APO
SAP R/3 SAP APO
Initiatives Capabilities
4.6C DP SNP PP/DS GATP

Budget Planning Long-term demand req. planning

Demand Demand forecasting


Forecasting

Customer demand collaboration

Safety stock calculations

Sales &
Operations S&OP
Planning

: Fully coverage : No coverage DP : Demand Planning PP/DS : Production Planning and Detailed Scheduling
: Partly coverage : Not applicable SNP : Supply Network Planning GATP : Global Available-to-Promise
SAP R/3 Vs SAP-APO
SAP R/3 SAP APO
Initiatives Capabilities
4.6C DP SNP PP/DS GATP

Production Master Production Scheduling


Planning
Materials Requirements Planning

Cycle stock calculations

Balancing changeover costs

Optimizing product run lengths

Capacity
Planning
Rough cut capacity planning

Finite capacity scheduling


: Fully coverage : No coverage DP : Demand Planning PP/DS : Production Planning and Detailed Scheduling
: Partly coverage : Not applicable SNP : Supply Network Planning GATP : Global Available-to-Promise
SAP R/3 Vs SAP-APO
SAP R/3 SAP APO
Initiatives Capabilities
4.6C DP SNP PP/DSTP/VS

Order Distribution network optimization


Fulfillment &
Distribution

Transportation
& Fleet
Management Integrated transportation planning

/ route optimization

Active fleet management / tracking

Freight payment optimization

: Fully coverage : No coverage DP : Demand Planning PP/DS : Production Planning and Detailed Scheduling
: Partly coverage : Not applicable SNP : Supply Network Planning TP/VS : Transportation Planning and Vehicle Scheduling
Thank You

You might also like