SAP SCM 5.

0 SNP Boot camp

Day 3
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Day 3 Agenda
Review of Day 2 Supply Chain Cockpit Heuristics Optimiser

Day 3 Agenda
Review of Day 2 Supply Chain Cockpit Heuristics Optimiser

Day 2 Agenda
Review of Day 2 Supply Chain Cockpit Heuristics Optimiser

Supply Chain Cockpit Objectives

At the end of this Topic, You will be able to
Explain the Supply Chain Cockpit functionality Understand the function of Supply Chain Alert Monitor Understand the concept of Supply Chain Engineer

Supply Chain Cockpit Contents

Supply Chain Cockpit Supply Chain Alert Monitor Supply Chain Engineer

Supply Chain Cockpit Contents

Supply Chain Cockpit Supply Chain Alert Monitor Supply Chain Engineer

Supply Chain Cockpit (SCC)

Supply Chain Cockpit (SCC) is the central control graphical user interface for modeling, navigation and monitoring of the supply chain covering other area such as demand planning, supply network planning, production planning, deployment planning and transportation planning.

Functionality
Navigate Through Supply Chain
Maps / Zoom Launch Applications Filters (work areas) Details for a selected object Drill-Down & Back Queries Alerts

Control Panel
Focus on Relevant Information

Information Retrieval and Response

SCC Benefits

Supply Chain Cockpit

Benefits

Highly configurable to the conditions within a wide variety of industries and business situations Intuitive graphical user interface gives user maximum channel visibility to the entire Supply Chain Network Integration with all APO modules through a consistent data model to ensure reliability and planning accuracy Fast and direct access to specific information without jumping through multiple screens An integrated, intelligent Alert Monitor provides specific decision support for problem resolution on all planning levels

SCC Components
Navigation Component Supply Chain Engineer
Modeling Navigation and Information retrieval

Alert Monitor
Alert Handling

Supply Chain Engineer enables creating, changing and maintaining the supply chain model.

Supply Chain Cockpit allows planners to view and navigate the model in subsets and track performance

Alert Monitor allows to monitor and manage exceptions and problems with the supply chain model.

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SCC Users
SCC is the central point of access for all applications of APO and end users who perform various roles use this tool. User profiles allow for the filtering of information which is relevant for the users specific role.

Demand Planner
View overall supply chain, access information on forecast Vs actual sales, update demand plan

Supply Chain Designer

Model the supply chain structure

Distribution Planner
View supply chain distribution network, access distribution plan

Production Planner
Access information on orders, deliveries at production location, suppliers and access production plan
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Supply Chain Cockpit Contents

Supply Chain Cockpit Supply Chain Alert Monitor Supply Chain Engineer

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Alert Monitor
Alert Monitor allows the user to monitor the plan, manage exceptions and problems in the supply chain. SNP planning alerts are exclusively generated through macros.
Dynamic Alerts reflect current planning situation and is not suitable for large alert quantities (reduces the performance) Database Alerts reflects planning situation at the time of macros execution and the database alerts are generated in the background and the snapshot can be viewed.

Alert handling:
Alert Monitor in SNP allows to display and also remove alerts for resources and location products Also the alerts can be configured to be sent over mail to the user.

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Alert Profile

Assignment of alert profile to SCC user profile Selection of alert types Object selection variants via object type Priority variants (error, warning, information, etc..) with selection variants having thresholds.

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Supply Chain Cockpit Contents

Supply Chain Cockpit Supply Chain Alert Monitor Supply Chain Engineer

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Supply Chain Engineer

Supply Chain Engineer is used to create and maintain models, assign products, resources and PPM's to locations, create and maintain transportation lanes and perform mass maintenance of product attributes
Network Controls Network Maps

The network model represents a specific supply chain and consists of individual nodes and links. A model can have different planning versions. It is possible to create several models, each with different versions for simulation purposes.

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Modelling a Supply Chain Network

Pre-requisite is to have master data for locations, products, resources and other elements. Supply chain network is created by placing the locations on the map and creating a connective network with transportation lanes. The lane direction shows the direction of the product transportation flow. Next, we assign products, resources and PPMs to locations using drag and drop functionality. Quota arrangements are defined to determine the percentage of product that will be transported to other locations in the chain.
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SCC vs. SCE

Supply Chain Cockpit Vs Supply Chain Engineer
The Supply Chain Cockpit is used to navigate and monitor planning in supply chain models.
Must reference a model AND a version

A Supply Chain Engineer is used to design/construct a supply chain model.

Must reference a model

Prerequisites for using a fully operational SCC

Create master data Create a supply chain model in the Supply Chain Engineer Specify version and model you want to work with To see any transactional data, you must first do a planning run

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Exercise 3.1 Model Maintenance through Supply Chain Engineer

Exercise 3.1: Model Maintenance in the Supply Chain Engineer
Create Model Last Name_A01 and assign master data to it
03.1 APO Supply Chain Cockpit_SCE.doc

Estimated time to completion: 45 min

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Questions

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Day 3 Agenda
Review of Day 2 Supply Chain Cockpit Heuristics Optimiser

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SNP Run Using Heuristics

At the end of this Topic, You will be able to
Release a demand plan to SNP Create Demand Manually Run the SNP heuristic Check capacity Level capacity Understand what if scenarios

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Heuristics Content
SNP Heuristics Capacity Check Capacity Leveling

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Heuristics Contents
SNP Heuristics Capacity Check Capacity Leveling

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SNP Heuristic
The SNP heuristic performs requirements planning through the entire supply chain network to determine how to satisfy the customer and/or consumer demand. It is part of a repair-based planning process consisting of heuristic, capacity leveling, and deployment.
SNP Heuristics

One time period (bucket)

Demand at a location Dependent demand at a location Processing flow

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Heuristic Demand Planning and Requirement Planning

Demand Assignment
The demand released from DP to each location included in the network.

Requirements Planning
Sequential planning for each location to determine sourcing requirements. It lumps all requirements for a given material/location combination into one demand for the period (or time bucket). Then, it determines the valid sources and quantity based on predefined percentages for each source. Heuristic plan may not be feasible as system assumes infinite capacity and does not consider component availability. Planner must adjust the plan by leveling resource capacity, one location at a time. After the heristics run, the planner checks transportation, handling, storage, and production resource capacity consumption, then levels capacity.

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SNP Heuristic Run

Factors considered in Heuristics
Transportation Lanes - Movements allowed across the supply chain Quota Arrangements - Percentage of requirements allocated to supply sources Lot Sizing - Lot for lot, fixed, target days supply, rounding profiles Production Process Model Calendars Safety stock Scrap PPMs

Heuristic considers demand at product/location level, checks inventory, stock in transit and firm production. The process generates demands for intermediate products and raw materials, and for finished products

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SNP Heuristic Run

Input Parameters :
Version Products - all or subset Locations - for location run only Horizon - start date = current date

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SNP Heuristic Run Scenario

SNP creates planned production and transport orders in the network
Purchase Requisitions Production Locations

60%

40%

30%

70%

Stock transport requisitions

Distribution centre

Demand Planning: Sales Plan

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Incoming Quotas
Production Location Distribution centre (DC)

Product
70% 30%

60%

40%

Quota
60%
Supplier
30

40%

Heuristic Run Models

1. Multi-level
Includes PPM explosion and performs SNP run for selected end products, components for all locations Planning is carried out for the locations specified.

2. Network
Performs SNP run for selected products in all locations Planning is carried out for the entire network.

3.

Location
Planning is carried out for the locations specified

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Heuristic Processing
1. 2. Data from live Cache is read Netting calculation completed a. Target Stock calculated b. Target stock - projected stock = planned quantity Lot sizing considered Procurement type checked a. Search for PPM b. Explode PPM Receipts created Resource load calculated

3. 4.

5. 6.

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Exercise 3.2 Planning Book Navigation

Exercise 3.2 : Planning Book Navigation
SNP94 Build Selection Profiles
Refer 03.2 SNP Heuristics Selection Profile.doc

Estimated time to completion: 20 min

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Exercise 3.3 Create an Unconstrained Supply Plan for NOTEBOOK

Exercise 3.3: Create an Unconstrained Supply Plan for NOTEBOOK
Execute Network and Multilevel Heuristics Runs
Refer 03.3 SNP Heuristics run.doc

Estimated time to completion: 60 min

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Heuristics Contents
SNP Heuristics

Capacity Check
Capacity Leveling

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Capacity Check
The Capacity Check enables the planner to view the impact of planned orders on resources and to quickly determine whether the plan is feasible or not. If there is a capacity overload situation, the planner has to do simulative planning by manipulating resource utilisation to balance resource usage. Once the changes are saved, the production plan or transportation plan becomes the basis for the daily production schedule.

SNP

Unit

6/6/2005

6/7/2005

Available Capacity

Hrs

20

20.0

Normal Capacity and Maximum Capacity.

Capacity Consumption

Hrs

18

22

Capacity Load

90

110

Average Capacity load

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Capacity Check Screen

Capacity is defined as 16 Hrs Time Consumption for unit quantity is determined by PPM For Quantity demand, Capacity Deficiency is Highlighted as overload as ratio of capacity consumed and capacity available in % terms
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Heuristics Contents
SNP Heuristics

Capacity Check
Capacity Leveling

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Capacity Levelling
Time-Based Capacity Leveling

Capacity load

BACKWARD
for demand with high priority

FORWARD
for demand with low priority

100 %

Day 1

Day 2

Day 3

Day 4

Day 5

Plan can be adjusted using the following methods Forward shift, Backward shift, Combination of both If time based capacity leveling option is chosen, various priority rules have to be chosen
whether it is based on decreasing order quantity or increasing order quantity whether it is based on decreasing or increasing stock range of coverage whether it is based on decreasing product priority or increasing product priority
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Alternative Methods
Modify resource master data Shift order quantities to an alternative resource Change production and transportation orders

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Exercise 3.4 Create a Constrained Supply Plan for NOTEBOOK

Exercise 3.4: Create a Constrained Supply Plan for NOTEBOOK
Execute a Capacity Leveling Run against the Multilevel Heuristics Run results
Refer 03.4 SNP Heuristics Capacity Leveling Run.doc
Use Resource YY_PL1_RES_NOTEBOOK in Location YY_PL1_OHIO

Estimated time to completion: 60 min

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Planning Versions and What-If Scenarios

Simulation Version 1 Active Version at time T1 Simulation Version 2
Master data and transaction data for version 2 Master data and transaction data for version 1

Simulation Version 8 Active Version at time T2 Simulation Version 8

Master data and transaction data for version 8 Master data and transaction data for version 9

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Heuristics Advantages and Drawbacks

Advantages Simple and fast planning method User friendly; easy to understand the process and results Enables entire process to be controlled Easy to combine manual and automatic planning procedures

Disadvantages
No Optimal solution; sometimes not a feasible solution User participation is required to get a feasible solution Planning is step by step across the production process No planning costs are considered Since infinite capacity is considered, capacity constraints will involve user intervention to a large extent

Recommendations for Use Most suitable method for situation where interactive solutions is required Suitable method for combining manual and automatic planning procedures
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Questions

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Day 3 Agenda
Review of Day 2 Supply Chain Cockpit Heuristics Optimiser

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SNP Optimisation Objectives

At the end of this Topic, You will be able to
Explain the concept of Optimisation
Explain how the SNP run is carried out using the SNP Optimiser Define the relevant costs that are used by the SNP Optimiser to

generate a supply plan Identify where the costs are maintained Describe how the costs influence the optimisation result Explain the what-if process in SNP Optimiser

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SNP Optimiser Contents

Optimiser Introduction SNP Optimiser SNP Optimiser Run

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SNP Optimiser Contents

Optimiser Introduction SNP Optimiser SNP Optimiser Run

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Optimisation based Planning Models

In constraint-based planning, production processes can be represented as optimisation models. A production model based on optimisation consists of Objective Function(s), Decision Variables, and constraints based on market conditions, physical processes, and resources/capacity. These kinds of models are usually called mathematical programs.

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Optimisation Parameters Decision Variables

Decisions variable are the independent variables of the problem. Typically, decisions take the form of Production lot sizes, Transport lot sizes, Purchase of additional capacities and so on. Examples of Decisions Variables:
How much do we invest in new machines? How much do we spend in labor? How many units to make? Repair or replace?

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Optimisation Parameters Objective Functions

The Objective Function is the single benchmark for evaluating all combinations of decisions that satisfy the constraints. It usually represents a quantifiable goal, and sometimes two or more goals. Examples of Objective Functions:
Minimise total production costs Minimise total material costs Maximise total sales revenue Minimise total inventory costs Minimise total lead time

F(x,y2)=
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Optimisation Parameters Constraints

Constraints represent limitations on which decision can be made and how decisions can be made. For example, the production capacity is 5000 Units/day. Constraints are also used to bring common sense to a problems. For example, all inventory must be non-negative. Other examples of constraints:
Market conditions/demand Material/supplies Capacity/resources Transportation/logistics Policy/managerial

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Steps for Constructing a Planning Model

Typically, a simplified production model comes from performing VAT analysis on the existing production process that we want to model.
What are the decisions variables? What are the constraints? What is the objective function?

F(x,y2)= A

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Objective Functions, Decision Variables, Constraints in APO

Objectives Decision Variables Constraints Production Capacities Transportation Capacities Handling Capacity Due Dates Safety Stock Discrete Values Production Lot Size, Transportation Lot Size, Extra Shifts Time Constraints(maximal due date, shelf life Minimal production stages, campaign) Due Dates Setup Times, Productivity Resource network Calendar Shifts, Effectiveness of receipts
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SNP, Distribution & PP

Minimize Costs or Maximize revenue

Lateness Production Lot Sizes Transportation Lot Sizes Purchase of Additional Capacities

DS

Lateness Makespan Setup Costs

Resource Allocation (Alternative Machines/Storage) Start Dates NOT Lot Sizes or Alternative Recipes

SNP Optimiser Contents

Optimiser Introduction SNP Optimiser SNP Optimiser Run

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SNP Process Flow

Set up master data, supply chain model and SNP configuration Release demand plan to SNP

Build loads for unassigned transport orders Run TLB Run Deployment

Perform SNP Heuristic, Optimisation or CTM run

Review plan/resolve problems Finalise SNP plan (available to PP/DS)

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Release constrained SNP plan to DP

SNP Optimiser
The optimiser uses linear programming methods for planning, such that it simultaneously considers all relevant factors making the entire chain as a single problem The objective of the optimiser is to find the optimal solution to an equation (target function) in which all the penalty factors defined simultaneously are considered. The objective may be to minimize costs or maximize profits. Since the optimiser assesses alternatives this way, it can determine the best feasible plan on the lowest cost.
One time period (bucket)

Demand at a location Dependent demand at a location Processing flow

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Supply Network Optimisation

Control costs Penalty costs Sourcing, production & purchasing requirements Forecasts Customers orders Priorities for demand types defined via costs

$
Goal: Minimize costs

The Optimisation result run does not include pegging of final orders back to the original individual demand because the demands are bucketed. The optimiserconsiders capacity across all locations. The optimiseralso considers all alternative capacity resources globally. The optimiserignores standard storage and transportation costs if product-specific costs have been maintained. The optimiserconsiders all types of capacity constraints, including transportation, production, handling, and storage constraints.

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SNP Optimisation in a Nut Shell

What? Decision Products to plan Where ? To source a product from in the given network How ? Make vs. Buy When ? To produce a Product

Process Components
Total cost of production process:

-Pre-build vs. JIT -Store vs. Ship

Cost of missed due date:

Key drivers

Priority for planning each product

Total production cost

per location

-Transportation cost -Available capacity

-Components -Process
Total cost of sourcing process:

-Late penalty -Storage costs if

produced early

-Available capacity

Data

Demand priority

-Customer
orders

-Forecast -Safety stock

Production cost (PPM) -Transportation cost -Resource available

capacity

-Source -Process PPM -Storage cost -Resource Capacity (Prod

and Trans)

-Resource costs (Prod and

Trans)

Demand priority -Delay cost -Max delay -Non-delivery cost -Storage cost
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SNP Optimiser Contents

Optimiser Introduction SNP Optimiser SNP Optimiser Run

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Optimisation Engine
APO uses the standard ILOG solvers for Optimisation
APO Live cache creates input log (Costs, Profile, etc) for ILOG Optimiser ILOG Optimiser uses Solvers and creates an output log Livecache publishes results in APO based on the ILOG output log

Linear Programming techniques: Basic Solution: Generates a solution based on all available data. Simplex method with continuous variables. Discrete: Generates a solution based on all available data. Simplex method in which certain variables are discrete. Acceleration techniques: Time Aggregation: Data is added according to times buckets. The nearest time bucket is solved first. Product Decomposition: Product groups are created and the problem is solved group by group. Priority Decomposition: Data are grouped and resolved by prioritizing the high priority problems Incremental: A subset of products is selected before executing the optimiser.

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Optimisation Methods
Linear Programming
Basic Solve

Mixed Integer Linear Programming

Discrete

Meta heuristics
Time Aggregation Product Decomposition Priority Decomposition

Incremental

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Optimiser Profile

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Costs
Due date violation
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Optimiser Profile (Cont.)

Transport Capacity

SNP Optimiser Profile

Handling Capacity

Method to consider (Linear vs. Discrete) Constraints to consider

Production, Transportation, Storage, Handling Safety Stock Lot sizes, etc

Storage Capacity

A B C D

Safety Stock Violation

Production Capacity
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Optimiser Cost Profile

SNP Cost Profile
Weighs to different cost elements .

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Costs in the APO Environment (1 of 3)

Model considers the following costs:
Higher non-delivery cost results in
forced production

Higher relative storage cost results in

moving products from one location to another ahead of requirement

Higher delay cost results in

control lateness/build early scenarios

Maximum delay used to

control number of days demand fill is delayed by

Transportation cost used to

prioritise source location

Costs are Interdependent!

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Costs in the APO Environment (2 of 3)

To specify a site manufacturing priority:
Production cost in preferred site Transportation cost from preferred site

To influence inventory storage location:

Relative storage costs between sites

To ensure meeting inventory targets:

Safety stock violation penalties

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Costs in the APO Environment (3 of 3)

To meet delivery date early/late
Meet Early:
Delay Cost Storage Cost

Meet Late:
Maximum Delay Allowed Delay Cost Storage Cost

To use stock before build

Storage Cost

To prioritise a site for downstream supply

Vary Transportation Cost
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Optimisation Total Costs

Total Cost =
Production + Storage + Storage Expansion + Safety Stock Penalty Cost + Transport Cost + Handling Capacity Expansion Cost + Transport Capacity Expansion Cost + Production Resource Expansion + Non Delivery Penalty + Delay Penalty

Source of Cost
PPM Resource Master Resource Master Product Master Transportation Lane Resource Master Resource Master Resource Master Product Master Product Master

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Input Parameters for SNP Optimisation Run

Planning Version Product Time Bucket Profile Start/End Dates Optimiser profile Cost Profile Modify Quota Arrangement Flag Independent Product

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SNP Optimisation Run Results

Distribution Plan Production Plan SNP Resulting Costs Alerts

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Planning Version and What-If Scenarios

Simulation Version 1 Active Version at time T1 Simulation Version 2
Master data and transaction data for version 1

Master data and transaction data for version 2

Simulation Version 8 Active Version at time T2 Simulation Version 9

Master data and transaction data for version 8

Master data and transaction data for version 9

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SNP Optimiser Advantages and Disadvantages

Advantages Considers entire supply chain as a single problem Simultaneously considers all resources and materials availability Takes production, transport, handling and storage costs into consideration

Disadvantages

Results are difficult to interpret Data maintenance is heavy and complicated Important to have accurate cost maintenance May propose changes to highly dynamic capacity variants Difficult to modify proposed plan since interpretation and understanding the reasoning is tough Black box effect

Recommendations for Use

Suitable for complex planning scenarios which uses cost as a basis for planning
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Questions

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SCC Knowledge Check

1. 2. 3. The components of a Supply Chain Cockpit are ___, ___ and ___ Two kinds of alerts used by alert monitor are ___ and ___ Creating, changing and maintaining the model is a function of
a. Supply Chain Cockpit b. Supply Chain Engineer c. Alert Monitor

4.

Which of the following should reference a model AND a version

a. Supply Chain Engineer b. Supply Chain Cockpit

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SNP Heuristics Knowledge Check

1. Which of the following about Heuristics is NOT true?
a. It lumps all requirements as demand into a single bucket b. It assumes finite capacity c. Resource capacity can be adjusted

2.

PPM Explosion is carried out by which of the following Heuristics method?

a. Location b. Network c. Multi-level

3.

The different methods of capacity leveling are ____, ____ and ____
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SNP Optimiser Knowledge Check

1. 2. Goals of Optimiser could be ______or ______ State True or False
a. b. c. d. e. Optimiser solution run takes place in APO itself Discrete solutions require separate settings in optimiser profile Constraints are defined in Optimiser Cost Profile Optimiser solves for whole supply chain Acceleration techniques speed up solution finding process

3.

4.

For ensuring safety stock, production storage cost should be _____ than Safety Stock penalty Optimiser suffers from _____ effect

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SCC Recap
What are the functionalities of SCC? How is Alert handling done in SNP? What are the pre-requisites for modeling a supply chain network? What are the pre-requisites for using a fully operational SCC?

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SNP Heuristics Recap

1. 2. 3. 4. 5. What factors are considered during a Heuristics run? How do Quotas work in Heuristics? Differentiate between the types of Heuristics runs? How is Resource Capacity and Loading checked? Explain the concept of Capacity Leveling

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SNP Optimiser Recap

1. 2. 3. 4. 5. What are decision variables,objective functions and constraints? What is the basis for Optimiser Run? What are the various acceleration techniques and why are they used? Describe Optimiser profile and Optimiser Cost profile What are the output results of the Optimiser?

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End of Day 3 Q & A

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End of Day 3 Lessons Learned

Supply chain cockpit is the control centre for modeling, navigation and monitoring of supply chain Supply chain engineer enables creating, changing and maintaining models Alert monitor allows monitoring and managing exceptions and problems in the supply chain Heuristics produces plans assuming infinite capacity Three methods in Heuristics Location, Network and Multi level can be utilized Capacity leveling adjusts capacity by shifting demand backward or forward or both

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End of Day 3 Lessons Learned (Cont.)

Optimiser works on linear programming algorithms Optimiser solves whole supply chain as a single problem Weightage of costs is defined in optimiser cost profile Constraints are defined in Optimiser profile Relative costs between locations or transportation lanes define priorities What If Scenarios can be done by using multiple planning versions for the same model

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