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Rapid Planning with MRP on HANA

SAP Manufacturing
Frank Platt | Senior Director | SAP LoB Manufacturing
April 2014
Disclaimer

This presentation is a preliminary version and not subject


to your license agreement or any other agreement with
SAP. This document contains only intended strategies,
developments, and functionalities of the SAP product
and is not intended to be binding upon SAP to any
particular course of business, product strategy, and/or
development. Please note that this document is subject
to change and may be changed by SAP at any time
without notice. SAP assumes no responsibility for errors
or omissions in this document.

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SAP Technology Primer
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Fiori Launchpad
One entry point for the user

Role based Theming and


& persona branding
centric Personalization
Stable URLs for
Search, bookmarking
collaboration and sharing
and feeds in first
wave Multiple
Platforms
Multiple SAP Fiori Active
Devices Tiles,
Provides the
most impactful
real-time
information and
KPIs at a glance
2014 SAP AG. All rights reserved. 6
SAP Fiori app types

SAP Smart
Transactional Analytical Factsheets
Business
Task-based access Insights Search and explore Insight to action
View essential
cockpit
Access tasks to create, Get a visual overview of
information about an Analyze and evaluate
change, approve a complex topic for
object with contextual strategic or operational
processes with guided monitoring or tracking
navigation between KPIs in real time and
navigation purposes related objects trigger the right action

Runs on: Runs Runs


on: on:

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Material Requirements Planning
Customer Requirements
As a manufacturing professional, you are struggling with..

Decisions based on incomplete,


inaccurate and often outdated
information
I cannot optimally reduce the
cost of manufacturing operations
and increase profitability

Time-consuming, planning and


evaluation processes where Inability to gather accurate,
critical situations often can not be complete manufacturing-
detected easily related data
I cannot optimally plan I cannot effectively
production schedules and minimize production
sequences over longer time risks across our network
horizons

2014 SAP AG. All rights reserved. 9


What Is Material Requirements Planning (MRP)?
Matching supply with demand to address material shortages

Supply Situation MRP Demand Requirements


Inventory Match Sales Orders
Stock Transfers Supply and Forecast Demand
Demand
Purchase Orders Stock Transfers
Identify
Goods Receipts
Shortages

Solution Recommendations
Planned Orders
Stock Transfers
Purchase Orders

2014 SAP AG. All rights reserved.


10 10
Supply and Demand Evaluation Today
Decision making based on out dated information

Demand Supply
Customer

DC

ERP
Producer

Material Planner
Supplier
-1
Area of Responsibility KPI
On Time Delivery
Demand Supply Material Planners questions:
Supplier
-2 Do I fulfill all my material demands?
If not, which materials are short and when?
Do I have enough supply to meet the demand?
Which important orders and customers are most
affected and when?
How do I resolve the most critical material shortages?
What changes to plan are the most effective solutions?

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Detecting the most critical issues
Searching for needles in the haystack

A Material Planner is responsible


for hundreds of materials and challenged
by dozens of exceptions a day. ?
Time is limited, need to focus on the most
important and urgent issues

To identify the issues that require immediate attention, the Material Planner needs to
know:
What kind of demand is affected - forecast or actual sales order? For which customer?
What is the effect on the demand - delayed shipment by a day, by a week or more?
How much time do I have to solve the issue before it is realized?

Manually intensive analysis of the Stock Requirements List for a material


Multiple sources of additional information required in order to answer these questions

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MRP Today
Batch driven process and multiple ERP transactions

MD01 MRP Planning Run


MRP Batch process - resource and data intensive
Planning Long execution time runs once a week, every couple
days or nightly
Run
MD06 Evaluate MRP Requirements
Snapshot of material requirements based on MRP run
Snapshot immediately out dated after new supply and
demand activity occurs
MD04 Evaluate Stock Requirements
2nd most widely used transaction across all of ERP
Very slow to execute

CO02/03 Change Production Order


MD12/13 Change Planned Order
ME22/23 Change Purchase Order
ME52/53 Change Purchase Requisition
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MRP Tomorrow
More frequent runs, more accurate data, better decisions

Demand Supply
Customer

DC

ERP
Producer

Material Planner
Supplier
-1
Area of Responsibility

MRP Live: Utilize HANA capabilities for:


Demand Supply
Supplier Faster MRP run in ERP More frequent planning Up-to-
-2
date planning situation
Detect and evaluate material shortages by flexible rules
Find critical demands, e.g. uncovered sales order items or
missing parts in production
Find critical supplies, e.g. late or overdue purchase orders or
production orders
Evaluation of consequences, e.g. calculate which sales orders
are endangered by a late supply

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SoH on HANA for Manufacturing
Utilizing HANA to improve the existing ERP manufacturing processes

MRP Live
Migration of MRP Planning Run to HANA
MRP Optimized process reducing run-time by up to 10X
Live
Smart Business for MRP
Improved, streamlined UI for Material Planner
Based on near-real time MRP information
Improved identification and prioritization of material
shortages issues
Improved solution recommendations and solution
preview capability for improved decision making

Fiori Apps for Manufacturing


Improved UI for traditional Production
Planning (PP), Quality Management
(QM) and Enterprise Asset Management
(PM) capabilities

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Detecting the most critical issues
Information served on a silver plate

With MRP on HANA, the system is able to


analyze the real-time situation of all materials
to predict and identify: !
Disruptions in the material flow
Impact of issues on sales orders
Time-to-action until the issue is realized and
has a negative impact

Visibility to real-time information changes the way a Material Planner structures his
daily work:
Predict, identify and address the most important material shortage issues first across all
materials
View material shortages from a sales order, inventory and procurement point of view, instead
of just a material view
Simulate recommended solution viability and effectiveness in real-time across sites and
thousands of material situations

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The Plan to Produce Process: MRP Run

Sales Order Interactive Release to Confirm Monitor &


MRP Run
Entry Planning Production Operations Control

Roles

Production Production Production Production


Planner Supervisor Worker Planner

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MRP Planning for Manufacturing
Step by step process in ERP

Process today
Display / Change
CO02/03
Production Order

Display / Change
MD01 / MD12/13 Planned Order
MD06 MD04
RMMRP000
Evaluate Evaluate Display / Change
MRP Planning Stock ME22/23N
MRP Lists Purchase Order
Run Requirements
(snapshot)
List
Display / Change
ME52/53N Purchase Requisition
Challenges:
Long and resource intensive MRP runs
means a periodic, batch process
New demand and supply changes make
MRP plan immediately out-dated
No real-time, single view of material
information and shortages across sites
Single material, single site, manually
intensive shortage identification
Navigation to multiple ERP transactions
required to evaluate solution alternatives
Batch Job
Results in poor decision making
User interaction

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MRP Planning for Manufacturing
Step by step process in SoH

and now with Suite on HANA


Smart Business for MRP:
Improved, streamlined UI for
Material Planner
Based on near-real time MRP
information
MRP
MD01N FIORI Improved identification and
~10X Apps prioritization of material
New MRP
faster
Planning Run Real-time shortages issues
on HANA Supply &
Demand Solution recommendation and
evaluation preview capability for improved
decision making
Benefits: External procurement RTC Q1
2014
More frequent MRP runs
In-House Production 2014
More timely and accurate material info
roadmap
Single, real-time view of material
shortage information across sites
Sales order, inventory and procurement
views Batch Job
Simulate solution viability and User interaction
effectiveness in real-time

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How is MRP Performance Optimized?

Classic MRP MRP Live


Dispatcher App-Server DB-Server Dispatcher App-Server HANA

Read planning file entries Read planning file entries

For every planning file entry For all planning file entries with the same low-level code
Read planned orders
Plaf Read Read Read
Read purchase requisitions Plaf Eban Ekpo
Eban Afpo Vbbe Ekko
Read purchase orders Merge + Split
Mdbs
Plan Plan Plan
Read production orders set 1 set 2 set 3
Caufv Merge + Split
Read sales orders Insert Insert Insert
Vbbe Plaf Eban Resb
Read stock transfer demand
Mdup ABAP post-processing (e.g.
determine release strategy)
MRP planning logic

Update planned orders


Plauf
Update purchase requisitions
Eban

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The Plan to Produce Process: Interactive Planning

Sales Order Interactive Release to Confirm Monitor &


MRP Run
Entry Planning Production Operations Control

Roles

Production Production Production Production


Planner Supervisor Worker Planner

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From Planning to Better Issue Resolution
Identify issues, simulate solution and apply the best resolution

Manufacturer
MRP Cockpit Simulate Issue Resolution

Delayed
Purchase material order
Orders

Sales order fulfillment


information
Sales
Order
Out of stock alerts
Change in
Shipment and Shipment delay
customer order
stock information information

Customer Supplier Supplier

With Smart Business for MRP, material shortages are identified and resolved
faster and beyond barriers of responsibility and location

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MRP Cockpit Material Shortages

Identify critical material


shortages based on current
information
Highlights issues across
thousands of material stock
situations.
Real-time material shortage
issues from a sales order,
inventory and purchase
order point of view.
Materials for which receipts
cannot cover sales orders
Real-time a graphics of
stock situation for the next
21 days
Filter on and get different
views of shortages.
Re-calculation of thousands
of material situations and
flows in real-time.

2014 SAP AG. All rights reserved. 23


MRP Cockpit Identify and Apply Solutions

List of all supply and demand


requirements for the material
shortages.
Real time visibility to
procurement lead times,
inventory stock availability,
lot sizes, manufacturing
scheduling and sales orders
across multiple sites
Using HANA, suggests
potential solutions
Ability to evaluate the
potential viability and results
of a solution.
Ability to apply desired
solution

2014 SAP AG. All rights reserved. 24


The Plan to Produce Process: Release to Production

Sales Order Interactive Release to Confirm Monitor &


MRP Run
Entry Planning Production Operations Control

Roles

Production Production Production Production


Planner Supervisor Worker Planner

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SAP Fiori Applications: Release Production Orders

Lauch Demo

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The Plan to Produce Process: Production Confirmation

Sales Order Interactive Release to Confirm Monitor &


MRP Run
Entry Planning Production Operations Control

Roles

Production Production Production Production


Planner Supervisor Worker Planner

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SAP Fiori Applications: Production Confirmation

Lauch Demo

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SAP Fiori Applications: Confirm Production Operations

Lauch Demo

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Value Proposition
Material Requirement Planning
Business Value for High-Speed Material Requirements Planning

Today With Suite on HANA

Reduce MRP runs in batch mode daily or less Faster re-planning allowing more
out of stocks by frequently. frequent MRP runs in shorter cycles
Instant reaction to demand changes
Decisions based on periodic MRP
36% runs means decisions based on
outdated information.
and updates to the supplier
Demand information is propagated
faster through the supply chain

Decrease More frequent MRP runs:


inventory and safety Allows reduction in inventory and
Inability to re-plan quickly if
stocks by safety stock levels
conditions change due to long run
times. Faster information flow towards
29% suppliers enabling them to react
faster to changed planning conditions

Limit
bullwhip-effect Prediction of Inventory coverage for Better synchronized material demand
critical parts is difficult and supply planning with reduced
bullwhip-effect

* KPI improvements are based on benefits of traditional MRP. Improvements based on HANA will need to validated with specific customers

2014 SAP AG. All rights reserved. 31


Material Requirement Planning
Business Value for Smart Business for MRP

Today With Suite on HANA

Reduce Decisions in production planning


and purchasing often based on
Actual and updated MRP
information allows better material
inventory and safety long batch-runs and outdated allocation
stocks by information Determine fraction of demand

29% Analyzing MRP stock situations is


based on outdated information
needed for sales orders leads to
lower WIP

Early Identification of critical


materials based on order value,
Improve Problems in material stock and range of coverage below
material flow threshold, unconsumed forecast,
flow remain undetected or
reducing lead-times detected too late inventory without demand
Exception handling based on real
time data

Complex analysis of large Automatic calculation of


volumes of complex stock data to alternative solutions guides the
Enhance detect material shortages planner to the best solutions
planner productivity
Time consuming and complex Better identification and valuation
issue solving process of sales orders affected by
shortages or delays

* KPI improvements are based on benefits of traditional MRP. Improvements based on HANA will need to validated with specific customers

2014 SAP AG. All rights reserved. 32


In Summary
Optimizing MRP and PP with SAP HANA
Key Take-Aways

MRP Live delivers faster and more frequent


material planning runs
Smart Business for MRP provides real-time
visibility to material information, facilitating
improved issue resolution and decision making
SAP Fiori for Production Planning delivers
visually appealing and improved UI
All of which improve the efficiency of the material
planner
Reduced material shortages contribute to
improved supply chain metrics and KPIs across
the enterprise

2014 SAP AG. All rights reserved. 34


Thank You!
2014 SAP AG. All rights reserved.

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