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Supply Chain Planning with SAP

2nd Sep, 2005

Contents
Supply Chain Process & Pain points Business Solution for Supply Chain Application Solution for Supply Chain Demand & Supply Planning R/3 Vs APO Planning

Supply Chain Process & Pain points

Process
Producer Retailer Wholesaler Supplier

Service Provider Imperfect supplier information, no global sourcing Long lead times in the entire supply chain

Consumer

Pains

Unreliable demand information, fragmented Information data, bull-whip effect

Business Processes are paper-laden, lack of integration, manual interfaces

Excess safety stock, $1 trillion in inventory across the entire value chain

Issues
Source Make Store/Fulfill Store Store/Sell

Supplier

Manufacturer

Manufacturer DC

Retailer DC

Retailer

High Material Costs

Poor Supplier Communication

Low Forecast Accuracy

Limited Inventory Visibility

Limited Visibility on Promotions

High Out-Of-Stock Ratio

No Reliable Production

Long Lead Times

Low Inventory Turns

High Transportation Costs

Low Customer Service

Key Performance Indicators

Producer Retailer Wholesaler Supplier

Service Provider

Consumer

Key
Supply Chain Performance Indicators

Producer
Product Availability Supply Chain Costs Fill Rates

Retailer
Out-of-stock ratio Inventory Turns Reducing Errors Supply Chain Costs Cash to Cash Cycle

Manufacturing Reliability
Cycle Time

Business Solution

Business Solution
Source Make Store/Fulfill Store Store/Sell

Supplier

Manufacturer

Manufacturer DC

Retailer DC

Retailer

$
Demand Signal Demand Signal

Demand Signal

Demand Signal

Strategic Sourcing
C-Sourcing Procurement C-Procurement

Forecasting VMI VMI CPFR Make to Stock Assemble to Order Fulfillment

Promotion

Direct Store Delivery

Application Solution

Application Solution (SAP)

Source Make Store/Fulfill Store Store/Sell

Supplier

Manufacturer

Manufacturer DC

Retailer DC

Retailer

$
Supply Chain Integration

Demand Planning
Supply Chain Integration Collaboration Services Strategic Sourcing Manufacturing Materials Management Warehouse Management Supply Planning Production Planning Distribution Planning Order Promising & Delivery Fulfillment Coordination Transportation Management

Collaboration Services

Supply Chain Event Management Supply Chain Performance Management

Evolution

Planning & Execution

Planning & Execution

Demand & Supply Planning

Process Flow

Planning Horizons
Planning horizon
Demand Planning (DP)

Supply Network Planning (SNP)

Production Planning (PP) Detailed Scheduling (DS)

Deployment

Transport Load Builder (TLB)

Capabilities
Demand Planning & Forecasting Statistical Forecasting Causal Forecasting Composite Forecasting Lifecycle Planning Promotion Planning Data Handling Collaborative Demand Planning Macro Calculation Planning with Bills of Materials Characteristics-Based Forecasting Transfer of Consensus Demand Plan Safety Stock Planning Basic Safety Stock Planning Supply Network Planning Heuristic Distribution Planning Distribution Planning Responsive Replenishment Supply Network Collaboration Responsive Demand Planning Responsive Replenishment Purchase Order Process Contract Manufacturing Purchasing Release Process Supplier Managed Inventory Supplier Confirmations Supply Chain Analyst Notes Dynamic Replenishment Supply Network Inventory Kanban Process

Advanced Safety Stock Planning Capacity Leveling Optimization Multilevel Supply & Demand Matching Subcontracting Scheduling Agreement Aggregated Supply Network Planning

Key features
Demand Planning -Assess the anticipated customer demand Safety Stock planning - Secures the delivery by balancing the uncertainties in demand
and supply.

Supply Network Planning - Assigns optimal sources of supply in the complete network,
distributes the production over the plants (including subcontractors), selects the
production resources in the plants, explodes the bill of material, and proposes the procurement

Distribution Planning - Deploys the available inventory over the network and balances
the stock levels especially in situations of excess inventory or shortages. It optimizes the loading of the transportation vehicles.

Supply Network Collaboration - Covers all planning processes with direct interaction

DP Data Views

DP Forecast Results

Forecasting Models
Univariate Forecasting ( Times Series): Utilizes only historical data and produces a statistical forecast that incorporates constant, trend and seasonal patterns. Causal Forecasting: Based on causal factors as well as past demand e.g advertising, pricing,

weather, economy etc.

The system uses Multiple Linear Regression ( MLR) to calculate the influence causal factors (independent variables) have on the history.

Composite Forecasting
Uses a combined approach of both Univariate and Causal techniques

Forecasting Models

Forecasting Models -Univariate

Forecasting Models - Casual

Macros in DP

Macros in DP

Promotion Planning

Supply Planning Network

3 DCs

Dummy DC
1 4

Pack Center

Supply Warehouse

Supply Warehouse

Factory

Base Factory (FWIP)

OEM Vendor

Factory

Supply Network Planning

Supply Network Planning

SNP Method 1 -Heuristics

SNP Method 2 -CTM

SNP Method 3 -Optimizer

Deployment & TLB

Safety Stock Planning

Collaborative Planning with mySAP SCM

CPFR with mySAP SCM

Supplier
publish / receive / collaborate on sales & order forecasts

Enterprise
APO DP
(Demand Planning)

Customer
publish / receive / collaborate on sales & order forecasts

publish replenishment plans & inventory

APO SNP
(Supply Network Planning)

receive customer inventory data

APO PP/DS
(Production Planning & Detailed Scheduling)

collaborate on transportation requests

APO TP/VS
(Transportation Planning & Vehicle Scheduling)

Receive PO for automatic PO creation

SAP R/3

Send PO for automatic PO creation

R/3 Vs APO Planning

R/3 Vs APO Planning

R/3 Vs APO Planning

R/3 Vs APO Planning

R/3 Vs APO Planning

R/3 & APO Demand Planning

R/3 & APO Supply Planning

Thank You