APO Planning Horizon

January 24, 2013

For any SCM/APO implementations, planning horizon is one of the first threesubjects we have to discuss and understand. In SAP APO, there are more
than 20 planning horizons. It is very confusing for most of us including
experienced consultants.

The Definition
The planning horizon is the length of time companies can plan into the future with
validity, validity means what works need to be accomplished and what resources are
required for the work to be accomplished and what resources are available to the work
to be accomplished which enables the project manager to created a detailed schedule.
This is the definition in business terms. The planning horizon can be further divided into
Short-Term, Mid-Term and Long-Term planning horizon. Within each horizon, we can
define if we should plan in daily, weekly or monthly bucket.

Planning Horizons in APO

There are many planning horizons in APO: SNP Production Horizon, PP/DS Planning
Horizon, Planning Time Fence, Deployment Horizon, Forecast Horizon, Stock Transfer
Horizon, just to name a few. Most of the time, we are using a simplified approach in
discussion. For example, PP/DS horizon is 4 weeks and SNP horizon is 1 year. In fact,
this is not as simple as we thought. To ensure a smooth transition between different
planning processes (or planning engines), the parameters need to be understood and

defined correctly.

SNP and PPDS Intergration

In this section, we are focusing on 2 planning horizons only: SNP Production Horizon
and PPDS Horizon (on SNP2 and PPDS tab of product master respectively).
Accordingly to SAPs help text:
If you do not enter any value for the PP/DS horizon or if you enter the duration 0, the
system automatically uses the SNP production horizon as the PP/DS horizon.
Therefore, the PP/DS horizon is as long as the SNP production horizon. This means the
planning intervals for SNP and PP/DS are sequenced with no gaps or overlaps. If the
SNP production horizon also has a duration of 0, the system uses the PP/DS horizon
from the planning version.
The problem is we are giving the choices here. Choices cause confusion and planning
issues. Basically we have 3 scenarios here:
SNP Production Horizon > PPDS Horizon: There is
planning gap between SNP and PPDS which, which will cause planning
inconsistency as both SNP and PPDS will not plan in this gap.
SNP Production Horizon = PPDS Horizon: There is no gap and overlap
between SNP and PPDS. SNP Planned Orders are converted into PPDS
Planned Orders when they fall into the PPDS Horizon. However, if PPDS
is planned immediately after SNP, it may create an over-planning
situation.
SNP Production Horizon < PPDS Horizon: This is called overlap
situation. In fact, it is the best option based on my experience. PPDS
will consider the SNP planned orders in the overlap period and plans
accordingly.
The diagram below is typical example for most SAP implementations. For long-term
planning, the planning starts after mid-term planning horizon. Short-term demand and
supply situations should have no impact to long-term planning results.

Supply Network Planning (SNP) is normally used for mid-term planning. If there is
supply shortage within the SNP Production Horizon, SNP Planned Orders are created
outside of SNP Production Horizon. In short-term, PPDS will re-replan the SNP Planned
Orders depending on heuristic settings. Please note that there is fixed period called
Planning Time Fence. New planned order will not be created during this fixed fence.
SNP Production Horizon can be defined in days, weeks or months. PPDS Horizon is
defined in calendar days. It is recommended to have SNP Production Horizon defined
in-sync with planning cycle. For example, if the SNP is planned once a week, the SNP
Production Horizon should be defined in weeks. In this way, SAP will adjust the partial
week accordingly.

Planning Horizon in CTM

The overlap period approach works well in unconstrained planning engine such as
Heuristics. For constrained planning engine such as CTM, it requires some adjustment
in term of planning process. In constrained planning, the distributed demands (i.e. stock
transfers) will not be planned into the PPDS horizon. Therefore PPDS will not be able to
plan for the supply shortage in short-term. CTM is an advanced planning engine which
can plan in both PPDS and SNP planning horizon. This is a 2-stage planning process.
In Stage 1, CTM creates PPDS planned orders and stock transfers in constrained

mode. In Stage 2, CTM creates SNP planned orders and stock transfers in
unconstrained mode. A overlap period is still needed to ensure the smooth transition
from short-term planning to mid-term planning. CTM only observes SNP Production
Horizon. If CTM is used in PPDS mode, it is recommended to have SNP Production
Horizon same as Planning Time Fence. The chanllenge is SNP Production Horizon is in
Calendar days while Planning Time Fence is in Working Days.

Conclusion
In order to ensure planning consistency and avoid planning gap, the best practice
is to maintain an overlap in planning horizons for short-term and mid-term
planning. If CTM is used for constrained planning, it is recommended to use CTM
for both short-term and mid-term planning.