This tip comes from a presentation delivered by Dr. Suraj Mhatre, MySupplyChainGroup, at the Idea-to-Delivery Conference 2011 - Orlando, FL: SCM, PLM, MFG and Procurement.
How do you know if your business benefit from rough-cut capacity planning?
Planners from different industries often struggle in a similar way, to capture the right amount of data at the detail-level in order to avoid capacity overloads. Supply network planning (SNP) functionality from SAP Advanced Planning & Optimization (SAP APO) can be used to solve distribution and capacity issues at rough cut level, whether your business is supplying a global retail chain, managing distribution at a food packaging company, scheduling production at multiple oil refinement plants, or addressing fleet distribution loading for the Chemicals industry.
What if you are managing thousands of SKU’s? Together with SAP production planning and detailed scheduling (PP/DS) functionality — SNP enables you to first determine optimal sourcing, and then schedule production locations based upon short-term planning horizons.
When it is unnecessary (and infeasible) to plan at the detail level considering all the constraints of the entire business, rough-cut planning can be used to make high-level decisions, and can be used for:
S&OP planning
Large amount of master data
Complex distribution networks
Multiple constraints
Lack of information at the detail level
Lack of resources to analyze results at the detail level
While carrying out rough-cut planning, it’s very important to determine how to group certain master data for planning purposes. Another important consideration is the integration between rough-cut planning and detail planning.
Do you need rough-cut capacity planning?
S&OP planning
For S&OP planning, detail-level planning is seldom required
Large amount of master data
Certain industries have large amount of master data including production locations, distribution locations, customers, vendors, finished goods, components and resources
Though advances have been made in computing power, it is sometimes infeasible to execute detail-level planning without an adverse affect on system performance
Complex distribution networks
Multiple manufacturing facilities, distribution centers, vendors and customers can create a complex distribution network, which can not be planned for at the detail level without affecting performance
Multiple constraints
Planning at detail level with multiple constraints such as production capacities, distribution capacities, storage capacities, handling capacities, lot sizes, and setup sequences can become impossible
Lack of information at the detail level
Often times information such as detail-level capacities are not available or vary frequently; only information at the group level is available
Lack of resources to analyze results at the detail level
Even if planning can be carried out at the detail level, sometimes not enough resources are available to analyze planning results
In this case a quick analysis of planning results at the rough-cut level is the alternative
In summary: Rough-cut planning can be crucial to your business if you need to make some quick decisions in the absence of detailed information.
This SAP Procurement tip comes courtesy of Dennis Phalen, who originally presented on this topic in 2008 at the SAP Insider Logistics and Supply Chain Management, Procurement, Product Lifecycle Management, and Manufacturing conferences.
Purchasing, and procurement expert Phelan asks: “Did you know that most purchases in an organization are for items that have been previously purchased?” He goes on to offer tips and techniques to optimize core SAP systems that customers are already running, to simplify and automate the purchasing of repeat buys.
What is the best way to set up the source list to ensure that requisitions and purchasing orders are populated with the right information (including the latest negotiated pricing), and that routine orders are automated?
If you always want to use the same supplier for a material – fix the source of supply on your “Maintain Source List: Overview Screen” by checking the “Fix” box
Want a convenient way to block ordering a material from a supplier? Check the Blk box on the same screen to block orders for this material from this supplier using that agreement.
Want to ensure the terms and conditions of a contract are used when purchasing a certain material? Listing an agreement number in a Source List will link requisitions using this source to the agreement.
Information Records are created by the system for every purchase of a unique vendor number/material number combination
The Information Record can be mass-updated via transaction MEMASSIN
It is one of the most powerful Purchasing tools in SAP
The Information Record has five screens that enable you to reconcile vendor material and packing slip numbers to improve the goods receipt process. You can use this to authorize some vendors and block others from your buyers, and to configure material groups and designate postings to specific General Ledger accounts.
Requisition screens allow you to personalize this interface to adjust receipt settlement information, change tax codes, alter tolerances for delivery times, and more.
You can create a variant to find released requisitions with release dates using dynamic date calculation
Use Transaction ME57 to assign and process requisitions
Automatic conversion is controlled in two places
The vendor master
Purchasing view of the Material Master
Requisitions must have sources assigned
Configure entry aids for items with Material Masters
Menu Path: SPRO > Display IMG > Materials Management > Purchasing > Material Master > Entry aids for items without a material master
Value classes (GL accounts) and Purchasing value keys may be assigned to material groups. This will default the G/L account into your Purchase Order
Vendor evaluation allows ranking of vendors based on business defined criteria.
The transactions are ME63 (individual) or ME6G (background) and these need to be configured
The scoring method tells the system where to find the data using Transaction: OMGI (The best score is the max allowed for a singe criterion)
Lean how to personalize screen settings
Default settings: Icon on requisitions and orders
Note the PO price setting: this means do not adopt the requisition price into the PO
Are you tired of scrolling through long search lists?
Select the desired item
Click on insert in personal list icon
You can repeat this for several entries. When finished hit enter or the green check mark.
To summarize:
The system is quicker and faster than people on repeat items and every effort should be made to allow the system to do this work.
The Source List is an effective way to source requisitions for Material Master items. Items on the list link to contracts or Information Records. They can be used to block vendors on specific materials.
The Information Record is your friend! It will supply all of the default data to speed up PO processing. They control quantity pricing and provide a link to vendor part numbers.
If you are not using transaction ME57 to convert requisitions — you should.
Screen variants can be used to save a lot of time. If they are set up with dynamic date calculation, they become powerful work lists.
Automatic requisition conversion should only be used on a proven ordering process, but when used, it’s fast!
Personal lists can reduce large lists to a manageable size.
SAP Insider's PLM 2011, Manufacturing 2011, and Procurement and Materials Management 2011 conferences are the premier independent events providing SAP professionals who manage and support SAP operations, planning, and execution activities for their organizations. For more information, visit the PLM Conference Group, and the Procurement and Materials Management conference group.
Only 1 in 5 SAP clients is actually thriving - and many are in denial about their status in terms of SAP maturity. So says Michael Doane, author of "The New SAP Blue Book" and "The SAP Green Book, Thrive After Go-Live ."
This tip highlights findings from Doane's study of SAP clients, highlighted in his white paper "Your SAP Immaturity is Showing: Growing Up to Measurable Business Value". Editor's note: Michael Doane will answer your questions in a live, interactive Q&A on Thursday, December 16 from 12:00 - 1:00 pm ET. Register todayfor this live, interactive Q&A.
The question turns to priorities and directions: What actions are required and in what order to improve SAP maturity?
Many clients pick one or two initiatives, based on some leadership vision, and simply plow forward without knowing fully which activities will lead them out of the SAP woods and which activities will only lead them deeper in.
However, the common characteristics of firms that were successful in deriving measurable value from their SAP investments included:
Business & IT Alignment: unlike firms that broke up their implementation teams after go-live, the model firms retained a formal and continuous relationship between business stakeholders (often in the form of business process owners) and SAP applications and technical staff.
Capable End Users and Supports: firms that provided sufficient ongoing training and support to end users.
Enterprise Applications Stability: firms that had sufficiently stable applications and interfaces so that ongoing maintenance was not eroding resource availability.
Value Management: firms that had the means to measure current business performance, target improvements, and monitor progress.
Rather than being an organization doing a good job of standing still, these firms are deemed mature because they are doing a good job of moving forward.
This week's supply chain tip comes from Saroj Tripathi, Principal Consultant, Bristlecone, Inc., and originally appeared in an issue of SCM Expert:
The safety stock level and method depend on the specific industry condition and, more so, on a company’s supply chain philosophy.
Two variables that affect safety stock decisions are ownership of the inventory and the metrics adopted to evaluate planners and supply chain organizations.
In some companies, the supply chain group is responsible for the inventory, while in others, the responsibility lies with business groups, units, or divisions. If the business is responsible for the inventory and the supply chain organization is evaluated on the basis of its ability to meet the demands from the divisions, then the supply chain organization tends to go for fixed quantity-based safety stock methods.
If the supply chain team is responsible for the inventory and is measured on the basis of supply availability to the divisions, then I have noticed better and more sophisticated safety stock practices are deployed to minimize the inventory while meeting service levels.
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As an SAP SCM consultant, Eddigehausen says he is asked many questions regarding implementations. However, he finds that the same three questions come up time and again:
What is the time frame required to implement SAP SCM 5, particularly Demand Planning (DP) and Supply Network Planning (SNP)?
What is the team size to implement these capabilities?
Do we need to have an SAP Advanced Planning & Optimization (SAP APO) optimization server as a separate system or does it run on the SAP APO box?
We’ll allow Eddigehausen to pick it up from here:
Due to the regularity of these questions, I have decided to answer them in a very simple guide to help anyone else struggling with the same questions, Eddigehausen begins.
“To do so, I need to make two assumptions. First I need to assume that the company uses SAP R/3 or SAP ERP Central Component (ECC) with the modules Sales and Distribution (SD), Materials Management (MM), and Production Planning (PP) already, and that they do not use any SAP industry solutions.
“My next assumption is that there won’t be any major process changes as part of the project and thus this would be a technical implementation only,” Eddigehausen says.. “Two more important assumptions need to be made with regards to the organization’s size. For DP, the estimate assumes one central Demand Plan is created for the entire supply chain. This might encompass having one or multiple distribution sites, but demand planning is central. For SNP I assume an average supply network with no more than about ten production or distribution sites.”
Eddigehausen adds that a team of three to four SAP APO specialists complemented by the in-house IT team (to take over Basis-related work) can implement DP and SNP in about six months under these conditions. You then also need two or three subject matter experts (SMEs) part time (about 30% of time) to conduct process- and solution-related workshops and feedback sessions. These SMEs are the vital link to the business, ensuring the solution covers user requirements and is accepted by the business.
You only need an SAP optimization server if you use the SNP Optimizer. Optimization servers in an SAP APO landscape are dedicated servers that are not used for the main APO instance. Note that you can use the same optimization server for the SNP Optimizer and, for example, the Production Planning/Detailed Scheduling (PP/DS) Sequence Optimizer.
You use the SNP Optimizer to plan the supply network planning demands based on supply cost and non- or late delivery penalties (constrained model). It is thus not complementing the SNP Heuristic, but replacing it.
The SNP Heuristic, Eddigehausen says, is an unconstrained planning algorithm similar to the traditional Materials Requirements Planning (MRP) or Distribution Resource Planning (DRP) and runs in R/3. Whether to use the SNP Optimizer or not is a business decision and affects the time line described above. The main impact on implementing the SNP Optimizer is the definition of a cost/penalty model that lines up with business requirements. This is typically a trial-and-error, time-consuming process. Most companies use the SNP Optimizer as a phase-2 implementation only, as the cost model implementation requires a good understanding of optimization planning algorithms and overwhelms users new to SAP APO.
