Overview

SAP (Advanced Planning and Optimizer) or SAP (APO)is the planning component within the mySAP SCM solution. APO is an acronym for Advanced Planner and Optimizer. This is a large component of SAP's New Dimension products. APO is an entire suite of supply chain planner applications that increase overall knowledge of the supply chain and provide forecasting, planning and optimization. There are eight application levels within SAP APO: network design, supply network planning, demand planning, production planning and detailed scheduling, transportation planning and vehicle scheduling, global availabilty and supply chain collaboration. The SAP APO is not a standalone application and requires a backend ERP system such as SAP R/3 for the execution. SAP R/3 communicate with SAP APO using the the APO Core Interface (CIF) which supplies SAP APO with the master and the transaction data in the real time. Interaction between the SAP R/3 at backend and the SAP APO is in real time and any data related to the production, the sales or the supplies is immediately transfered from one system to another without requiring any batch processing. The efficient way of installing some standard SAP APO scenarios is by reference to the SAP Best Practices for Supply Chain Management. [edit]

Modules within SAP APO

Supply Chain Cockpit Demand Planning - a toolkit of statistical and collaborative forecasting techniques. Supply Network Planning - used to calculate quantities to be delivered to a location in order to match customer demand and maintain the desired service level. Global Available to Promise - uses a rule based strategy to ensure you can deliver what you promise to your customers. Transportation Planning / Vehicle Scheduling - optimizes transportation route and schedules vehicle resources. Service Parts Planning Production Plan / Detailed Scheduling - create procurement proposals for in-house production or external procurement to cover product requirements and optimizes the same.

Demand Planning Process

Purpose
This process describes each activity in the Demand Planning (DP) cycle. In general, you can assume that the order of the processes presented here is the order in which you should proceed through the DP cycle. However, since DP is represented as a cycle, not a linear path, you may decide to repeat certain activities or to proceed in a different order.

Process Flow
The following diagram depicts the DP cycle.

1. Carry out all the steps needed to set up your planning area. The planning area is the basis for all
activities in APO Demand Planning. It is a collection of parameters that define the scope of all

planning tasks. The planning area is linked to the data mart. You load into the data mart the actual history (for example, bookings, shipments or billings) that wlll be used to create the DP master data and generate the demand forecasts. 2. Map the structure of your company (for example, regions, divisions, brands, products and customers) for planning purposes in the DP master data. 3. Configure the layout of the planning screens for the different parties (departments, managers, divisions, and so on) who will participate in demand planning by designing planning books. Define macros to perform calculations, carry out tests, and warn you of exceptional situations. 4. Define forecast models for time series forecasting, causal analysis and/or composite forecasting. 5. Create a forecast of market demand using a top-down, middle-out, or bottom-up approach. Choose from a wide variety of forecasting methods and techniques. 6. Forecast new products and discontinued products by applying lifecycle planning and "like" modeling techniques. 7. Plan promotions and other events. Examples of promotions are free-standing inserts, coupons, discounts, product displays, trade shows, dealer allowances, coupons, contests, and advertising. 8. Fine-tune the demand plan by adding management overrides and modifications. 9. Reconcile the demand plans of different departments by merging the plans into a one-number, consensus forecast. 10. Simulate different planning scenarios. 11. Monitor exceptional or critical situations through the Alert Monitor. 12. Make the demand plan available in SNP by releasing it. The demand plan is often unconstrained by any production or distribution restrictions. This step can be completed by either the demand planner or the SNP planner. 13. Make the SNP plan available to DP by releasing it. The SNP plan takes into account any production or distribution restrictions. A comparison of the two plans could lead, for example, to the opening of a factory to meet demand in a new market region. 14. Store the forecasts made at different times for a period. 15. Update the actual data. 16. Verify the accuracy of the forecast; for example, by comparing it with the constrained forecast from SNP, with actual data and with other demand planning versions that you did not release to SNP. 17. Revise the master data to reflect the addition of new products, customers, and so on. 18. Refine the forecast models in the light of knowledge gained from forecast accuracy checks. Add new models for new products and product lines.

Result
The result of Demand Planning is the demand plan.

Supply Network Planning Process

Purpose
Supply Network Planning enables you to model your entire supply network including all of the associated constraints. Using this model, you can synchronize activities and plan the flow of material along the supply chain. This allows you to create feasible plans for purchasing, manufacturing, inventory, and transportation, and to closely match supply and demand.

Process Flow

The following diagram depicts the Supply Network Planning cycle and SNPs integration with other APO components. In general, you can assume that the order of procedures presented in this document is the order in which you should proceed through the cycle. However, you may need to repeat certain steps or to proceed in a different order. Also, not all activities are mandatory.

Planning Area Administration

Carry out all the steps needed to set up your planning area. The planning area is the basis for all activities in APO Supply Network Planning. It is a collection of parameters that define the scope of all planning tasks. APO Master Data Setup Supply Network Planning is a very master data-intensive component of APO. Whether you plan to use the Heuristic, Optimizer, or Capable-To-Match (CTM), the master data must be set up with care to achieve the desired results. Master data for Supply Network Planning includes locations, products, resources, and production process models (PPMs). Model/Version Creation You must create a model name before you set up the model in the Supply Chain Engineer (SCE) and assign the model to at least one version. You can assign the model to several different versions for simulative purposes. The version is also used for the release of the Demand Plan (final forecast) to Supply Network Planning, and vice-versa. Supply Chain Model Setup You set up the supply chain model for Supply Network Planning in the Supply Chain Engineer (SCE). In the SCE, you assign the locations, products, resources, and PPMs to a model. You then add transportation lanes to link supply to demand locations, allocate products to the transportation lanes, and maintain quota arrangements. Release Demand Plan to SNP You release the demand plan from Demand Planning to Supply Network Planning. The demand plan is often unconstrained by any production or distribution restrictions. This step can be carried out by either the demand planner the SNP planner. Supply Network Planning Method Determination and Profile Settings You determine which of the following methods to use for your planning: optimization, heuristic planning, supply & demand propagation, Capable-To-Match planning, and/or safety stock planning. Then you make the settings in the appropriate profiles for each of the methods for which this is required. These profiles can be changed on the fly for simulation purposes. They can also be used to perform mass maintenance of product master data. You may need enter additional master data specifically for the method that you are using. Supply Network Planning Run You execute planning based on the methods you chose, including all prerequisite steps Performing the supply network planning run using the Heuristic, Optimizer, Supply & Demand Propagation, or Capable-To-Match results in a mid-term production and distribution plan. Interactive Planning After the Supply Network Planning run, you review the plan in the interactive planning desktop. If you use, for example, the Heuristic planning method, you can also level resource capacity to resolve problems from the interactive planning table.

Release of Supply Network Plan to Demand Planning

You release the final supply network plan back to DP for comparison of the unconstrained demand plan to the constrained supply network plan. Major discrepancies between these two plans could trigger re-forecasting, and, ultimately, re-planning. For example, you may release the supply network plan back to DP if the capacity situation cannot cover demand created by a promotion, so you must make changes in the promotional planning strategy in DP. Conversion of SNP Orders into PP/DS Orders

This is not part of part of the Supply Network Planning process since it can only be executed in Production Planning and Detailed Scheduling (PP/DS). However, it is included in the cycle because this step is usually performed before running Deployment and Transport Load Building. In PP/DS, you convert supply network planning orders into PP/DS orders to make them available for production planning and detailed scheduling. PP/DS Planning

This is not part of the Supply Network Planning process because it can only be executed in PP/DS. However, it is included in the cycle because production planning and detailed scheduling is usually performed before running Deployment and Transport Load Building, which are included in the Supply Network Planning interface. In PP/DS, you create a viable production plan based on the planned orders generated in Supply Network Planning. Deployment Run After production planning is complete and the system knows what will actually be produced (this information is stored automatically in liveCache), the Deployment run generates confirmed transport orders. Transport Load Building The Transport Load Building (TLB) run groups the confirmed transport orders resulting from the Deployment run into transportation plans. For transport orders that could not be satisfied during the TLB run due to specified constraints, you can build transportation plans manually.

APO Global Available-to-Promise (Global ATP)

Purpose

Increasingly, companies operating worldwide are forced to globalize available information in order to conduct business efficiently. Specifically, this means that information has to be made available across system boundaries as quickly as possible to provide optimized decision support. Global ATP can be used in heterogeneous system landscapes to provide necessary information as quickly as possible. Global ATP is one of the central methods of the SAP APO server that utilizes liveCache, a technology in which data is stored in the form of time series. The data is stored in liveCache in the form of time series.

Implementation Hints
For the business objectives of Global ATP, this means that executing the check can depend on rules determined solely by a process that was just carried out. Depending on these rules, which are prescribed by enterprises and customers, the results of the check should be analyzed, and the dates and quantities for product availability should be determined. By specifying parameters, you can subsequently modify the check in the simulation and then investigate and display the effects of these modifications. See also: Backorder Processing Basic Methods Advanced Methods Rules-Based Availability Check

Explanation and Simulation

Basic Methods of the Availability Check

Use
The elementary methods of the global availability check are called basic methods. See also: Product Availability Check Product Availability Check Using Checking Horizons

Shortage Check Characteristics-based Product Availability Check Product Allocations Check Against the Forecast

Production Planning and Detailed Scheduling (PP/DS)

Purpose
The component Production Planning and Detailed Scheduling (PP/DS) enables you to plan and optimize multi-site production while simultaneously taking into account product and capacity availability. PP/DS is designed to plan critical products, for example, with long replenishment lead times or that are produced on bottleneck resources. With PP/DS you can create executable production plans and Reduce lead times Increase on-time delivery performance Increase throughput of products based on better resource coordination. Reduce inventory costs because the work in process inventory is reduced as a result of better coordination of product release.

Integration
The data relevant for planning, such as master and transaction data, is provided by a connected OLTP System. Products are planned in the APO System and the planning results are then transferred to the OLTP System, where you perform execution functions. Requirements data from long and medium-term

planning can also be transferred to PP/DS within APO from Demand Planning and Supply Network Planning. The following diagram represents the integration between an OLTP system and the APO system and its components: Integration within APO and with an OLTP System

The following table shows how PP/DS is integrated with the OLTP System and other APO components: Integration with Other APO Components and an OLTP System To Set up master data Procedure Transfer the master data from the OLTP System and maintain the necessary data in the APO System Other Information The OLTP System provides PP/DS with master and transaction data. You control which data is to be transferred to and from the OLTP System in the integration model of the core interface. For more information, see Integration of APO and R/3. In the SCE, you assign the locations, products, resources and production process models (PPM) to a model. You then add transportation lanes to link supply

Set up the Supply Chain Model

Use the Supply Chain Engineer (SCE)

to demand locations and to allocate products to the transportation lanes. Make the unconstrained forecast (from Demand Planning) available in PP/DS Transfer the planning results of Supply Network Planning to PP/DS for more detailed planning Perform an ATP check using Global ATP and PP/DS Release the demand plan to Supply Network Planning Requirements that fall within the production horizon and thus the planning responsibility of PP/DS, are transferred directly to PP/DS. You can also to convert specific individual orders that are outside the production horizon. If the result of the ATP check is to produce, Global ATP calls up PP/DS to determine the availability date while taking product availability and capacity into account. You can define which types of alerts you would like the system to generate and display. For example, confirmation, goods receipt.

Convert the orders that lie in the production horizon into PP/DS orders. Create a sales order in the connected OLTP System

Display exceptional, unexpected or critical situations in the PP/DS planning process Perform execution of orders

Access the Alert Monitor

Use the connected OLTP System

Features
Automatic Planning You can define that the System is to plan products automatically in PP/DS when you change orders or data relevant to planning in the APO System or the connected OLTP System. This enables up-to-date planning data in both systems. With automatic planning, the system checks the availability of resources and components when orders are created. The result is feasible availability dates for the product and its components. Automatic, multi-level transfer of changes to quantities and dates Using pegging, the APO system creates a relationship between the receipt and requirements elements of a product within a location. The system generates a pegging structure that is organized according to the BOM structures of all relevant products. The dynamic pegging structure ensures that quantity or scheduling changes are transferred to orders at lower levels of the BOM structure. Interactive Planning

You can use interactive planning for important products that you wish to plan manually and to solve any planning problems that have arisen during automatic planning. Interactive planning is supported by the following tools: o Detailed scheduling planning board In the DS Planning Board the planning situation and resource schedule are displayed in Gantt charts. You use the detailed scheduling planning board to reschedule orders or operations manually. o Product planning table You use the product planning table to plan the production quantities for products and the schedule of the production lines. o Optimization Using the optimization tool, you can optimize the resource schedule according to certain criteria, such as setup times and setup costs, to improve the planning situation and solve particular detailed scheduling problems. Heuristics and Background Planning o Heuristics You use heuristics to solve specific planning tasks for selected objects (depending on the focus of planning: products, operations, resources or line networks) using a particular planning procedure algorithm. You can apply heuristics both during interactive planning and during the production planning run. o Production Planning Run You use the production planning run to execute heuristics, detailed scheduling functions or optimization for a large number of objects online or as a background job. During the production planning run, several heuristics or functions can be executed one after another.

Constraints
The component Production Planning and Detailed Scheduling is a planning tool. Execution functions, such as shop floor control with confirmation, purchasing and so on, must be performed in an OLTP system.

Transportation Planning/Vehicle Scheduling

Purpose
The Transportation Planning/Vehicle Scheduling (TP/VS) component, which consists of the two partial components Transportation Planning and Vehicle Scheduling, is described in this section. It enables the transportation planner to optimally use the

available capacity of trucks, trains, ships, and airplanes with the goals of planning more efficient loading capacity and lowering costs, since most customers depend completely on external transportation companies nowadays for optimum transportation (which means deliveries that are on time and cost saving). For more information, see: Transportation Planning Vehicle Scheduling Planning for Vehicle Scheduling Interfaces TP/VS Master Data Transportation Management

Multi-Level Supply and Demand Matching

Purpose
Multi-Level Supply & Demand Matching (SDM) is the umbrella for APOs solution for matching a large set of prioritized customer demands and forecasts to a set of supplies while taking into account the current production capacities and transportation capabilities. SDMs approach is production flow-centric, not production resource-centric, as is the case with traditional planning approaches. SDM focuses on the supply chain, instead of considering the supply chain production level-by-production level. SDM aims at a short- until mid-term planning horizon and guarantees a timely multi-level synchronous production flow, triggering flow only when it is necessary. Because SDM is order-based, it requires a tool that also supports a multi-level dynamic order split. Capable-To-Match (CTM) is the central planning tool of Multi-level Supply & Demand Matching. In addition, an order-based method of Supply Distribution, as well as a tool that provides a graphical, floworiented view of the supply chain, complement this application.

Integration
Multi-Level Supply & Demand Matching complements Supply Network Planning and Production Planning in APO's multi-site Supply Chain Planning strategies. Like other APO Supply Network Planning strategies, Capable-To-Match performs a quick check of production and transportation capabilities. CTMs focus is multi-site production processes based on resource allocation rules, as well as on time-dependent process parameters, such as yield and process times. To exploit the given production capabilities to their maximum as is necessary in the high tech industries a capacity check down to operation level is performed. In addition, planning strategies control the sequence of supply consumption and multi-level BOM explosion.

Finally, CTM supports all dimensions of the APO decision cube: Product substitution capability Multi-level propagation, for example, BOM explosion Multi-site planning

Features
Capable-To-Match CTM Demand Prioritization Using demands currently in liveCache, such as sales orders or forecasts from Demand Planning, CTM Demand Prioritization prioritizes these demands based on specific characteristics. CTM Supply Categorization Based on the supplies (for example, inventories or planned deliveries) in liveCache, CTM Supply Categorization is performed based on user-defined inventory limits. CTM Engine The CTM Engine matches the demands to the supplies while taking into account the production capacities and transportation capabilities. A feasible plan is proposed while taking into account the constraints in supply chain. CTMs Focus Focus Order-Based Supply & Demand Matching Explanation Demands are first prioritized and then planned individually. The overall strategy is 'First Come, First Served'. Traceability of the result supports the analysis and understanding of the result. Several business targets can be modeled and considered while planning. Demand prioritization provides you with the possibility to rank the demands based on predefined characteristics ,such as order priority, product priority or order category. In addition, these characteristics can be easily combined. Further criteria can be added. Priorities and quotas can be used to control the flow within the supply chain. On the one hand, different production processes or transport lanes can be given preference using priorities. On the other hand, different replenishment sites can be balanced using quotas.

Control of the Supply Chain Demand Prioritization

Priorities and Quotas

Replenishment Policies

Explicit safety stock replenishment and a targetdays-supply approach support guaranteeing delivery. Such parameters can be used to fit the real planning situation. Master data selection for the planning run allows you to handle a subset of master data of, and incremental changes to, the entire supply network. By taking into account the characteristics combination of the demands, customer-oriented rules, such as fulfillment strategies and product/location substitutions, can be derived for CTM planning using the APO rule evaluation component. Unlike classical MRP, where infinite material and capacity can be made available, CTM takes into account available supply as well as the current capacity profile simultaneously. To support strategic network planning, a simulation can be executed based on a planning scenario that has been slightly modified to measure the quality by performance indicators.

Time-Phased Process Parameters Master Data Selection

Rules-Based Planning

Concurrent Material and Capacity Planning

What-If Simulation and Analysis

Special Features of CTM Feature Search Strategies Explanation The searching process for a given demand can be carried out stepwise for the different supply categories as well as for production and transports. By using the substitution rules of products, CTM searches all available supply of the required product, as well as alternative products, to satisfy the demand before planning the production. This can be used to cross-check the entire supply chain for consistency, taking into account the CTM specific requirements as well as general data requirements. In addition, the master data checker provides a summary of all master data information downloaded to the CTM Engine. The CTM Engine runs on a dedicated server.

Planning with Down Binning

CTM Master Data Checker

CTM Engine

Because of its linear complexity, and considering the amount of demands, the CTM Engine is tuned to handle higher volumes of data. To do this, the engine is supported by ILOGs constraint-based programming library Solver and ILOGs scheduling library Scheduler.