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SCM Master Data - 2 Master Data for Distribution & Production Processes EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2011

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Title: SCM Master Data - 2 Master Data for Distribution & Production Processes EGN 5623 Enterprise Systems Optimization (Professional MSEM) Fall, 2011


1
SCM Master Data - 2Master Data for
Distribution Production Processes EGN 5623
Enterprise Systems Optimization(Professional
MSEM)Fall, 2011
2
SCM Master Data - 2Theories
Concepts EGN 5623 Enterprise Systems
Optimization(Professional MSEM)Fall, 2011
3
Distribution Planning in SCM (review)
THEORY AND PRACTICE OF ADVANCED PLANNER AND
OPTIMIZER IN SUPPLY CHAIN DOMAIN by Sam Bansal
4
Time Horizons for Distribution and Production
Planning in SCM (review)
5
Level of Detail and Time Horizon of Distribution
and PP in APO Modules (review)
6
Distribution Planning and Production Planning
Processes in APO Modules (review)
7
Distribution and PP Modules in APO System
Structure and Integration with ERP (review)
8
Overview Master Data and Application in DP and PP
(review)
9
Master Data and Application in Distribution
Planning and PP (overview)
Master Data for Distribution Planning
Location, Product, Resource, Transportation
lane, Quota arrangement, Interchangeability
group. Master data for Production Planning
Location, Product, Resource, PPM/PDS , Quota
arrangement, Set up Group matrix, and
Interchangeability group.
10
Master Data and Application in Distribution
Planning and PP (Overview)
Transportation lanes Transportation lanes are
required from plant and distribution center to
the transportation zone and have to be created
manually. The allowed carriers have to be
assigned per means of transport and
transportation lane explicitly. Quota
arrangement (vendorss quota) If it is intended
to source from multiple locations on a regular
basis, quota arrangement must be used. The
concerned products are assigned to the quota
arrangement, and the ratio of the resources is
defined per product.
11
SCM Master Data - 2Master Data for
Distribution Planning EGN 5623 Enterprise
Systems Optimization(Professional MSEM)Fall,
2011
12
Distribution and Supply Chain Planning
  • Distribution planning between the manufacturing
    plants and warehouses becomes important, as many
    companies change their logistics processes from
    non-coordinated local inventory management to a
    global inventory management in order to reduce
    inventories.
  • The focus for distribution and supply chain
    planning is on make-to-stock production.

13
Distribution Planning, Supply Chain Planning, and
Replenishment
14
Process Chain for Distribution and Supply Chain
Planning
15
Distribution and Supply Chain Planning
  • Distribution planning is performed based on
    demand and stock information with the result of
    planned stock transfers.
  • The most important issues are usually the netting
    of the local stocks, safety stock levels,
    sourcing options, transportation times and lot
    sizes for the planned stock transfers.
  • If required, restrictions are considered
    regarding storage capacity and handling capacity
    for goods issue and goods receipt.

16
Distribution and Supply Chain Planning
  • Two processes exist within replenishment
  • Deployment, and
  • Deployment is concerned with the fair share of
    quantities to the requesting parties in case of
    shortage or surplus. The constraints are
    available quantities.
  • Transport load building.
  • Transport load building is one step closer to
    execution and focuses on the creation of truck
    loads, where the task is to adjust the planned
    stock transports to the available
    trucks/transport means and take their capacity
    restrictions into account.

17
Distribution and Supply Chain Planning
  • In SAP APO, there are four applications that
    support distribution and production planning
  • SNP heuristic
  • SNP optimizer
  • CTM (with SNP or PP/DS master data)
  • PP/DS heuristics

18
Applications for Distribution and Supply Chain
Planning
19
Features of the Application for Distribution
20
Distribution and Supply Chain Planning
  • Distribution planning with SNP heuristic is often
    used in the environments where multiple sourcing
    is not an issue and production is usually able to
    meet the demands, so that the main task for SNP
    heuristic is to calculate the demands for
    production planning based on local inventories,
    transportation times, safety stocks and lot
    sizes.
  • SNP optimization allows a complete consideration
    of the supply chain determinants (i.e., sources
    and cost, production capacity, transport, storage
    and handling). The aim of SNP optimizer is to
    find a global optimum for supply chain based on
    cost and penalty cost.
  • CTM pursues a priority based on approaches such
    as FIFS.

21
Order Cycle for Stock Transfer
22
Order Cycle for Stock Transfers
The stock transfer order has two aspects as a
demand in the source location and as a supply in
the target location. The documents differ in SAP
ERP and SAP APO. The creation of the planned
stock transfer, deployment and transport load
building (TLB) is performed in SAP APO. The
execution part from the creation of the outbound
delivery in the source location until the goods
receipt in the target location is performed in
SAP ERP, and the information is displayed in SAP
APO.
23
Order Cycle for Stock Transfers
  • Three order types in SAP APO
  • Planned stock transfer,
  • Deployment confirmed stock transfer and
  • TLB-confirmed stock transfer
  • They are matched to the stock transfer
    requisition and the stock transfer order in SAP
    ERP according to the setting for SNP transfer
    (SAPAPO/SDP110).

24
Order Flow for Stock Transfer on SAP ERP side
25
Stock Transfer Order
Stock transfer order is first scheduled in SAP
APO, then transferred to SAP ERP and scheduled
again in SAP ERP according to the delivery date.
The scheduled dates in SAP ERP are not
transferred back to SAP APO. Stock transfers
are executed according to the order dates in SAP
ERP, therefore it is important to keep the
scheduling in SAP APO and SAP ERP consistent.
The transport duration in SAP APO is calculated
using the entry from the transportation lane,
whereas SAP ERP uses the planned delivery time of
the material master of the target location.
26
Stock Transfer Scheduling
for transportation
for transportation
27
Setting for Stock Transfer within and across
Company Codes in SAP ERP
Since SAP APO does not know any company codes,
there is no difference in SAP APO whether stock
transfers are planned within one company code or
across company codes. On SAP ERP side, cross
company stock transfers require the additional
settings. The assignment of the sales area and
the customer to the plant is made with
maintenance view V_001W_IV.
28
Setting for Stock Transfer within and across
Company Codes in SAP ERP
29
Setting for Stock Transfer Across Systems
Stock transfer across two SAP ERP systems is
modelled by a purchase order in the target plant
and a sales order in the source plant.
30
Setting for Stock Transfer Across Systems
31
SCM Master Data - 2Master Data for Production
Planning Process EGN 5623 Enterprise Systems
Optimization(Professional MSEM)Fall, 2011
32
Production Master Data Overview
  • The relevant master data for production planning
  • Location
  • Product
  • Resources
  • PPM and PDS
  • Quota arrangement,
  • Set up Group matrix, and
  • Interchangeability group.
  • Note on resources
  • SNP and PP/DS require a different view of the
    capacity.
  • SNP in buckets
  • PP/DS time-continuous capacity

33
Resources for SNP
The idea of SNP is to perform an aggregated
planning. Since SNP is an application for
bucket-oriented planning, the resources for SNP
offer a certain capacity per time bucket
usually per day. The bucket resources provide the
capacity e.g. the amount of working hours per
day of the resource which is used for the
capacity consumption of the orders. For the
scheduling of the production orders, the factory
calendar is assigned to the resources. The
standard capacity is defined in the resource
master. Figure 13.13 shows these setting for the
bucket resource. Another way to define the
capacity is the use of a reference resource to
save time.
34
Settings for a Bucket Resource
35
Resources for PP/DS
In PP/DS, scheduling and capacity consumption are
not separate steps, but the capacity is consumed
by the scheduled operation. The basic resource
property in PP/DS is the working time, which
depends on the standard working hours, the break
time, and factory calendar. Usually the
available working time is modelled per shift, and
the shifts are assigned to a shift sequence to
model circumstances.
36
Settings for PP/DS (single Resource)
37
Production Master Data Overview
PPM The Production Process Model (PPM) defines
the detailed information required for
manufacturing a product. The PPM combines routing
and the bill of materials (BOM) into one master
data object. Each PPM includes one or more
operations. Each operation, in turn, includes one
or more activities, for which materials,
relationships and resources are maintained. The
activities and resources defined in the PPM are
assigned to costs that are used by the SNP
Optimizer and for finite scheduling by Production
Planning and Detailed Scheduling (PP/DS).
38
Production Master Data Overview
Supply Network Planning (SNP) is a long term,
rough cut planning tool. SNP requires a PPM with
less information than the one used for production
planning and detailed scheduling
(PP/DS).   During a planning run, SNP can
schedule resources down to the day. In order to
perform scheduling at the day level, the PPMs and
resources must be simplified. Additionally, when
using optimization technologies, it is important
to limit the number of inputs (materials) to find
a proper solution in a reasonable
runtime.   Restriction to a specific lot size is
required to determine the exact production
consumption or mode duration. SAP SCM allows you
to generate SNP production process models (PPMs)
based on existing PP/DS PPMs.
39
Production Master Data Overview
PDS (production data structure) SAP initially
developed the Production Process Model (PPM) to
model manufacturing master data. It was replaced
in SCM 4.1 by PDS. However PPMs are still
supported. In some industries modeling the
production and evolution of a certain product can
be very complicated. When a product has many
variations due to customers choosing a
combination of features and options they
typically used the variant configuration solution
in standard SAP ERP.
40
Production Master Data Overview
From SCM 4.1 on, the Production Data Structure
(PDS) is the key master data for all kinds of
production planning related processes. The PDS is
supported by the applications of PP/DS, SNP, CTM
and DP. Like the PPM, the PDS corresponds to the
production version on SAP ERP system. Though both
PPM and PDS are still available as alternatives,
there is no further development for the PPM since
SCM 4.0. The main motivation to develop the PDS
was to have an integration of the Engineering
Change Management (ECM) and the Variant
Configuration between SAP ERP and APO.
41
Structure of PDS and PPM
42
Transfer of PPM and PDS
43
Production Process Overview
Production Planning consists mainly of creation
of planned order, purchase requisition for the
demand, the detailed scheduling to create a
sequence for the orders which is sufficiently
capacity-feasible (usually in the short-term) and
execution of the production order. In many cases
it is desired to have at least a rough
feasibility check of the production plan in the
mid-term as well. The detailed scheduling is
usually only performed for the short term
horizon. Traditionally both production planning
and scheduling are limited to the plant level.
44
Production Process Overview
If a supply chain contains alternative production
plans (possibilities), the process becomes more
complex. It often requires an integrated
distribution and production planning. Depending
on the business requirements it might be
favourable to create a rough-cut production plan
for the mid-term or even long-term before the
more detailed production plan. The approach
represents the idea of a hierarchical planning,
i.e. to plan with less detail for the farther
future and has the benefits of avoiding
unnecessary information and unnecessary system
load and to have a tighter integration with the
distribution planning.
45
Process Chain for a Make-to Stock Production
46
Production Process Overview
  • Objectives for Production Planning
  • to meet the demand
  • to consider the resource capacities and the
    material availabilities
  • to improve utilisation of the resources
  • to low set up time
  • to minimise the stock, and
  • to minimise the work in process (WIP)
  • to improve stability of the plan

47
Production Process Overview
  • Generally the complexity of a production planning
    task increases with the number of BOM-levels,
    number of operations, and finite resources, the
    use of fixed, or minimized lot sizes and sequence
    dependent set-up.
  • Though APS (Advanced planning and Scheduling)
    systems allow theoretically a one-step approach,
    experience shows it is better and more reliable
    to keep the constraints as less as possible in
    modeling and to use a two step approach to create
    a feasible plan, i.e. infinite production
    planning first and finite scheduling on the key
    resources later.

48
Order Cycle for Production
49
Order Cycle for Production
The result of production planning are planned
orders which contain the information about the
dependent demand and the capacity requirement in
SAP APO. The production orders are reduced by
the order confirmation and remain in SAP APO
until it is technically completed.
50
Production Planning Applications
SAP APO offers different applications for
production planning and detailed scheduling.
Production planning is supported by the modules
SNP and PP/DS with two different levels of
details. - rough-cut and bucket-oriented
planning (SNP), and - time-continuous planning
(PP/DS). Detailed scheduling with the purpose of
creating a sequence for order execution is only
supported by PP/DS since SNP is limited to
bucket-oriented planning and there is no sequence
within a bucket.
51
Applications for Production Planning and
Scheduling
52
Production Planning Applications
  • Based on the variety of the applications there
    are many options for creating a feasible plan in
    SAP APO. Each has its advantages and
    disadvantages.
  • Distribution and medium-term production planning
    with SNP heuristic, the SNP optimiser or CTM with
    SNP master data, short-term production planning
    by conversion of SNP orders to PP/DS orders and
    detailed scheduling with the DS heuristics or
    PP/DS optimiser.
  • Distribution planning with SNP heuristic,
    medium-term production planning with SNP
    optimiser, short-term production planning by
    conversion of SNP orders to PP/DS orders and
    detailed scheduling with DS heuristic or PP/DS
    optimiser.

53
Production Planning Applications
3. Production planning for medium-term and
short-term horizon with higher level of detail in
PP/DS using PP heuristics or TM and detailed
scheduling with DS heuristic or PP/DS optimiser.
4. Demand planning in SAP ERP especially when
there is already a sufficient solution using SOP
or long-term planning. Production planning is
performed with PP heuristics, scheduling with DS
heuristics or PP/DS optimiser. 5. Demand planning
and production in SAP ERP SAP APO is used only
for scheduling.
54
Production Planning Applications
6. Only medium-term production planning on
rough-cut level is performed in SAP APO either
by SNP heuristic, SNP optimiser or CTM. The
benefit is having a capacity check and purchase
requisitions for components with long lead time.
Planned orders are transferred to SAP ERP, where
production planning and scheduling on detailed
level are for the short-term horizon. 7.
Production planning is triggered by the sales
order entry either via CTP or multi-level ATP.
Scheduling is performed with scheduling
heuristics or PP/DS optimizer. PP/DS optimiser
is used only for scheduling, not for creation of
orders.
55
Scenarios for Production Planning using Different
Applications
56
Lot Size
Lot sizes have a significant impact on the
production planning result and challenges for
scheduling. The fixed, minimum and periodical lot
sizes in material master data increase the
complexity of the planning problem.
57
Lot Size Methods
58
Lot Size

Though CTM supports minimum and fixed lot sizes,
but CTM performs a finite planning and does not
split orders across buckets which might lead to a
very low utilisation.
59
SCM Master Data - 2 Master Data for
Distribution Production Processes SAP
Implementation EGN 5623 Enterprise Systems
Optimization(Professional MSEM)Fall, 2011
60
PP/DS Module in SAP SCM
Note Strategic network design issues
are not handled by SAP SCM
61
Order Cycle for Stock Transfers
The outbound delivery for the stock transfer
order is created with transaction VL10B in SAP
ERP, picking and the posting of goods issue is
done with the transaction VL02N in the delivery.
Using the message type LAVA the inbound
delivery in source location can be triggered with
the posting of the goods issue (or manually with
the transaction VL31N). For the use of
deliveries it is necessary that a vendor is
assigned to the source location and that an info
record exists in SAP ERP. The inbound delivery
is transferred to SAP APO as a purchase order
memo with the significance of the stock transit.
62
Exercises
  • 1. Module 4 (Section 2)
  • Create a forecast for the finished products
  • Product group
  • Create product group in SAP ERP system
  • Create SOP plan for product group
  • Create SOP plan
  • Transfer plan to demand management
  • Transfer plan
  • Check the transfer results in demand management
  • 2. Module 5 (Section 2)
  • Generation and activation of integration models
  • Integration models
  • Create integration model for plants in SAP ERP
    system
  • Activate integration model
  • Confirm data transfer in SCM system
  • Create integration model for DCs in SAP ERP
    system
  • Activate integration model for DCs in SAP ERP
    system
  • Confirm data transfer for DCs in SCM system

63
Exercises (- continued)
  • Create integration model for vendors in SAP ERP
    system
  • Activate integration model for vendors in SAP
    ERP system
  • Confirm data transfer for vendors in SCM system
  • Create integration model for customers in SAP
    ERP system
  • Activate integration model for customers in SAP
    ERP system
  • Confirm data transfer for customers in SCM
    system
  • Create integration model for materials at plant
    level in SAP ERP system
  • Activate integration model for materials in SAP
    ERP system
  • Confirm data transfer in SCM system
  • Create integration model for materials at DCs
    level in SAP ERP system
  • Activate integration model for DC materials in
    SAP ERP system
  • Confirm data transfer materials (DCs) in SCM
    system
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