SCM230+ SNP

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SCM230

Supply Network Planning (SNP)

mySAP Supply Chain Management

Date Training Center Instructors Education Website

Participant Handbook

Course Version: 2005/Q2

Course Duration: 5 Days Material Number: 50075235

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About This Handbook

This handbook is intended to complement the instructor-led presentation of this course, and serve as a source of reference. It is not suitable for self-study.

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About This Handbook SCM230

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Course Overview

The purpose of this course is to provide you with an overview of Supply Network Planning’s (SNP) functionality and processes. You will be able to understand the fundamental concepts of Supply Network Planning and learn how to set-up a supply chain network. You will also learn how to perform SNP runs.

Target Audience

This course is intended for the following audiences:

• Project team members responsible for creating and optimizing central supply, distribution resource, and production plans in the medium to long-term horizon.

Course Prerequisites

Required Knowledge

• SCM200 Overview of Supply Chain Planning

Recommended Knowledge

• SCM210 Master Data Integration • SCM220 Demand Planning

Course Goals

This course will prepare you to:

• Understand the concepts of supply chain network • Identify and resolve problems in the supply chain • Set-up and configure a supply chain network model

Course Objectives

After completing this course, you will be able to:

• Create a model that represents your supply chain network and all relevant locations, resources, and relationships

• Develop queries and collect information about the supply chain

• Detect and resolve problems in the supply chain using the Alert Monitor • Set-up SNP master data and configure SNP

• Perform SNP runs using SNP Heuristics , the SNP Optimizer, and Capable to Match

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Course Overview SCM230

• Execute a Deployment run to determine the distribution of available supply • Use the Transport Load Builder to create multi-product loads

SAP Software Component Information

The information in this course pertains to the following SAP Software Components and releases:

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Unit 1

Overview of Supply Network Planning

Unit Overview

This unit gives you an overview of the course Supply Network Planning. You will be able to understand the advantages of using Supply Network Planning (SNP). You will also understand the need for supply chain management. Next, you will discuss the various tools available for Supply Chain Planning (SCP) and identify the planning horizons in SCP and SNP. Then, you will define the SNP process flow and identify the SNP Planning Strategies. Finally, you will discuss the role of deployment and the Transport Load Builder (TLB) and define the process for planning and integrating SCM with SAP ERP Central Component (SAP ECC), previously known as SAP R/3.

Unit Objectives

After completing this unit, you will be able to:

• Discuss the advantages of Supply Network Planning • Understand the need for managing the supply chain • Describe the needed master data objects

• Discuss the various tools for maintenance and analysis • Identify the Planning Horizons in SNP

• Define the SNP process flow

• Identify the SNP Planning Strategies • Discuss the role of deployment and the TLB

• Define the process of planning and integrating SCM and SAP ECC • Explain the SCM Application Architecture

Unit Contents

Lesson: Supply Chain Modeling ...2

Exercise 1: Modeling... 13

Lesson: Supply Chain Planning... 18

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Unit 1: Overview of Supply Network Planning SCM230

Lesson: Supply Chain Modeling

Lesson Overview

This lesson will help you get an overview of Supply Network Planning (SNP). You will learn about the advantages of SNP and the need for managing the supply chain master data objects. You will also learn about the working of master data objects.

Lesson Objectives

After completing this lesson, you will be able to:

Business Example

Precision Pump Company manufactures a large variety of high-tech standard pumps. The company wants to plan the material flow such that it does not create backorders or excess inventory. As the Planning Manager, you need to ensure that the costs for sourcing finished products is less, the production and distribution is optimum, and the customer is satisfied.

Benefits of Supply Network Planning with SAP SCM

The benefits of Supply Network Planning with SAP SCM are as follows:

• Cross-plant medium-term rough-cut planning

• Simultaneous planning of procurement, production, and distribution • Planning of critical components and bottleneck resources

• Simultaneous material planning and finite capacity scheduling of production, storage, and transportation resources

• Cross-plant optimization of resource utilization • Prioritization of demands and receipts

• Collaborative supply planning over the Internet

• Detailed distribution planning (deployment): Generation of feasible stock transfers

• Grouping of deployment stock transfers for means of transport in the

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SCM230 Lesson: Supply Chain Modeling

Information Flow

Figure 1: The Supply Chain: From Supplier to Consumer

Supply chain planning manages the flow of material and information through a network of suppliers, manufacturers, distributors, and customers. For effective Supply Chain Management (SCM), this flow must be well-coordinated and integrated within a company and across company boundaries, on a local and global scale.

You can use SAP SCM to link several execution systems to one SCM planning server for cross-system planning of procurement, distribution, and production. This integrated planning enables you to:

• Reduce the costs for sourcing products and raw materials • Improve customer service

• Dramatically reduce on-hand stocks • Make better use of company resources

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Figure 2: Beyond Traditional Planning

Supply Network Planning (SNP) integrates purchasing, manufacturing, distribution, and transportation so that comprehensive tactical planning and sourcing decisions can be simulated and implemented on the basis of one global and consistent model.

SNP provides an overview of the inventory levels and previously planned receipts for finished products and components of all the connected OLTP systems.

Various planning methods can be used to create feasible cross-location plans for the flow of material along the supply chain, taking into account constraints and penalty costs. The result is optimal purchasing, production, and distribution decisions, reduced inventory levels, and improved customer service.

The possible constraints are material availability and unrestricted availability of work center, storage, transportation, and handling capacities.

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Master Data Objects

Figure 3: Master Data Objects in the Supply Chain

Even when using an SCM system for supply chain planning, master data is created in the connected execution systems (for example, SAP ECC), modified, and then transferred to SCM. The execution systems, therefore, are the dominant systems for the master data. Only master data that exists purely in SCM and which does not exist in ECC is created in the SCM system.

The master data objects for the supply chain created in ECC are plants, distribution centers (DCs), suppliers, and customers. Supply chain planning involves materials that are defined as material masters. For plants that produce and plan, you need to create work centers, bills of material (BOMs), and routings in addition to the materials for planning.

In SAP SCM, you define transportation lanes between the individual supply chain locations, such as plants and suppliers, which, among other things, define the means of transport and the shipment duration in the supply chain. In ECC, external procurement relationships can be defined for specific materials using special procurement types and transferred to the transportation lane in SCM. Quota arrangements cannot be transferred to SCM.

The supply relationship between a vendor and a plant is stored in SAP ECC in the form of a purchasing info record, scheduling agreement, or contract. When you transfer these external procurement relationships to SCM, they are displayed as external procurement relationships for the transportation lane. The source list for source determination is not transferred to SCM, and so the selection of suppliers using the source list still takes place in ECC.

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Figure 4: Master Data Objects of the APO Core Interface

Data transfer between the ECC and SCM systems is defined and controlled using the APO Core Interface (CIF). CIF is the central interface that connects SAP SCM to the existing SAP ECC system environment. It is available to the ECC systems through a plug-in. In the APO Core Interface you select the objects that you want to transfer to SCM via so-called integration models. Only the planning-relevant parameters from the complex dataset of SAP ECC are transferred to SAP SCM.

The APO Core Interface is used for both initial data transfer (initial transfer) and change transfer (transfer of data changes) to SCM.

The SCM master data objects are not identical to those of ECC. During master data transfer, the relevant ECC master data is mapped to corresponding SCM planning master data.

The ECC system is always the dominant system for master data. Only master data which is specific to SCM and which does not exist in ECC is maintained directly in SCM.

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Figure 5: Master Data Integration

The master data transferred from ECC is assigned automatically to the active model 000 in SCM. The active model thus represents the supply chain in SCM. In addition, in SCM you need to maintain the means of transport in the transportation lanes as well as quota arrangements, since this information cannot be transferred from ECC. If you also want to plan production in SNP, you need to generate SNP objects that group the information about the components and resources to be planned from the ECC bills of material, work centers, and routings. If, in addition, you want to select suppliers in SNP, you must have product master records for the suppliers.

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Figure 6: Models and Planning Versions

The model represents the master data of the supply chain and consists of individual nodes (locations) and links. The transaction data for the master data of the model is stored in versions of the model. In SCM, you can create and manage different versions of a model for simulation purposes. However, for the active model (000) there exists only one active version (000) which exchanges transaction data with the connected execution systems. Inactive models are only used for strategic planning to, for example, examine the effects of new locations or modified transportation lanes.

The model is the basis for all SCM planning functions and covers the entire supply chain network. The supply chain model contains all master data such as locations, resources, products, transportation lanes, etc. You can view and maintain the model using the Supply Chain Engineer.

Master data, such as locations, products, resources, and plans transferred from OLTP systems, is automatically assigned to model 000. You must explicitly assign any master data that you create in SCM to the model.

Versions contain the version-specific master data of the model and transaction data. For simulation purposes, you can change the master data of the model in different versions. For example, you can define that a resource is available for 8 hours in version 000 but for 16 hours in version 001. Versions are uniquely assigned to one model within the entire system.

Models and versions can be copied. From SCM 4.0, transaction data can be copied from an inactive version to the active version; the integration with the ECC systems(CIF) must be canceled first. Transaction data in versions of different models cannot be copied.

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Additional Tools for Master Data and Transaction Data

Figure 7: SCM Maintenance Tools and Reporting Tools

You use the Supply Chain Engineer (SCE) to create your supply chain model. The

SCE allows you to analyze and modify a model. However, maintaining object

selections (work areas) is time-consuming, so in fact SCE is seldom used. The Supply Chain Cockpit (SCC) allows planners to make an integrated analysis of transaction data in the supply chain. The SCC allows the evaluation of planner-specific exception messages (alerts) and partial scenarios (for example, individual regions or product lines). These evaluations, however, are normally performed directly in the planning table, in the Alert Monitor, or using the tools of the SAP Business Information Warehouse (BW), so SCC is used even less frequently.

Together with the planning table, the Alert Monitor is an essential tool for the SNP planner. It gathers together the exception messages (alerts) and processes and prioritizes them according to user. The SNP planner is thus informed about problems with the plan and can intervene accordingly.

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Figure 8: Supply Chain Engineer (SCE)

The SCE affords you an integrated display of the master data for which an SNP planner is responsible. The master data of the supply chain can be queried here. For example, you can request a list of all the products assigned to a specific location in your model. At the same time, you can add products to this location or make changes in the location master.

Figure 9: Work Areas

Since your supply chain normally includes thousands of products, bills of materials, and routings, you need a filter for the SCE so that you can restrict the model display to just those objects for which an SNP planner is responsible. This filter is referred to as work areas. The work area is used exclusively as a filter to display objects in the SCC and SCE. After the work area is defined, it forms

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the basis for the queries that you submit to the SCM system to gain information about all aspects of your supply chain. The transportation lanes in your work area are derived from the selected locations.

You can select the following in the work area of the supply chain: • Locations (for example, plant, DC, supplier, customer) • Products

• Resources (for example, production, storage, handling, and transportation) • Production Process Models (PPMs)

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Exercise 1: Modeling

Exercise Objectives

After completing this exercise, you will be able to:

• Analyze the given model in the Supply Chain Engineer • Navigate in the Supply Chain Engineer

• Create work areas and submit queries

Business Example

You are the Planning Manager at Precision Pump Company. In the Supply Chain

Engineer, you want to create a work area with those entries for which you are

responsible so that you can analyze the objects of your supply chain.

Task 1:

1. Create a work area QA-## for your model SNP-## which contains the frequently used objects you need for planning. Use the data in the table below and save your selection variant for future use with the name SCM230-## and description Group 01 objects.

Dimensions Internal char. value (From value)

Internal char. value (To value)

Location → Location number 1000 2500

Resource → Resource number W1906*

Production process model → SNP planner

P00

SNP Planner → Location Product P00

Task 2:

Navigate in the Supply Chain Engineer and use the basic features and functionality. 1. Display your supply chain model in the PUMP logical view.

2. Query the transportation lanes permitted for product P-102. In which locations is the product maintained and where can it be transferred to? 3. Display the master data for location product P-102 at distribution center

2400 in the Supply Chain Engineer.

4. In the Supply Chain Engineer, display the inbound quota arrangement for all products at distribution center 2500.

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Solution 1: Modeling

Task 1:

1. Create a work area QA-## for your model SNP-## which contains the frequently used objects you need for planning. Use the data in the table below and save your selection variant for future use with the name SCM230-## and description Group 01 objects.

Dimensions Internal char. value (From value)

Internal char. value (To value)

Location → Location number 1000 2500

Resource → Resource number W1906*

Production process model → SNP planner

P00

SNP Planner → Location Product P00

a) Select Advanced Planning and Optimization → Master Data → Supply

Chain Engineer → Maintain Model.

b) Enter the data in the table below.

Field Name Value

Model SNP-##

Work Area QA-##

c) Click Display on the toolbar.

d) A dialog box warning you that this is a new work area will appear. Confirm this dialog box.

e) Click the Work area icon and choose Add Objects

from the dropdown menu.

f) Be sure to scroll to the top of the list on the left part of the dialog box. Notice the red arrow on Location Number. Enter the Location numbers in the from and to cells on the right part of the dialog box.

g) Next, under the Resource heading, double-click on the Resource Number tag. A red arrow appears in front of it. In the right part of the dialog box enter W1906*.

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h) Then, under the Production Process Model heading, double-click SNP

Planner so the red arrow appears there. Enter P00 in the left column.

i) Finally, under the Location Product heading, double-click SNP Planner and enter P00 again.

j) Click Save selection to save your selection. Name

your selection SCM230-## and assign it the description Group 01

objects, then click Save.

k) Copy your selection to the Supply Chain Engineer by clicking the

Adopt icon.

l) If you want to view a specific geographical area on the map, you can hold down the left mouse button to specify the zoom area.

Task 2:

Navigate in the Supply Chain Engineer and use the basic features and functionality. 1. Display your supply chain model in the PUMP logical view.

a) Select Settings → Logical View.

b) Select the PUMP logical view from the drop down list and click OK. c) You can use the same Settings menu to change back to the geographical

view.

2. Query the transportation lanes permitted for product P-102. In which locations is the product maintained and where can it be transferred to? a) Select product P-102 on the Location Products tab page.

Right-click the product and select Queries, then choose either the transportation network (map) or the location and transportation lane list. Execute query.

The permitted transportation lanes are shown in red in the graphic display.

Product P-102 is produced in plants 1000 and 2300 and is sold and distributed by distribution centers 2400 and 2500. DC 2400 only receives supply from plant 1000, DC2500 is supplied from both plants.

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3. Display the master data for location product P-102 at distribution center 2400 in the Supply Chain Engineer.

a) Choose the Location Products tab page.

Right-click location product P-102 at distribution center 2400 to select it, and right-click the location product to display the data: Display →

Location Product. In the next window, choose Execute query.

4. In the Supply Chain Engineer, display the inbound quota arrangement for all products at distribution center 2500.

a) Choose the Locations tab page.

b) Right-click distribution center 2500 and, from the context menu, choose: Quota arrangements → Display incoming quota arrangements. c) Alternatively, you can obtain this information by right-clicking DC

2500 on the map.

d) Double-click on the “All products” row to display the “Quota arrangement items” for all products.

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Lesson Summary

You should now be able to:

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Lesson: Supply Chain Planning

Lesson Overview

This lesson will help get an overview of the various tools available for Supply Chain Planning. First, you will learn about the Planning Horizons in SCP and Supply Network Planning. Next, you will learn about the SNP process and identify SNP planning strategies. You will also understand the role of deployment and the Transport Load Builder (TLB) in SNP. Finally, you will learn about the process of planning and integrating SCM with SAP ECC and about the SCM application architecture.

Lesson Objectives

After completing this lesson, you will be able to:

Business Example

As planning manager at Precision Pump Company, you need to finalize a model for the supply chain network that will identify the direction that the final products will take. You need to ensure that you have designed the supply model in such a way that you can easily find out the products assigned for a specific location at a given point of time.

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SCM230 Lesson: Supply Chain Planning

Network Planning

Figure 10: Supply Chain Planning at a Glance

The process of supply chain planning can be divided into many steps, some of which can be executed by components in SAP ECC and others that can be executed in SAP SCM. You need to integrate these two systems and use both together when planning. The APO Core Interface (CIF) integrates SAP ECC and SAP SCM. Demand planning, where past sales figures can be used to derive a future program of production, can be executed both within flexible planning in SAP ECC (using standard Sales and Operations Planning (SOP)) or within Demand Planning (DP) in SAP SCM.

In SCM, planned independent requirements can be created from SAP ECC Demand Management or SCM DP Demand Planning. You can also use DP mass processing to set the sales quantities from SCM DP as planned independent requirements in SAP ECC Demand Management.

Sales orders are created in the SAP ECC system. A global Available-to-Promise check (global ATP) for a sales order can be made in SCM. Integration with the Production Planning and Detailed Scheduling (PP/DS) module is also possible. Supply Network Planning in SAP SCM is used for cross-plant planning. You can execute Material Requirements Planning (MRP) in either SAP ECC or SCM. In SAP ECC, capacity requirements planning must be executed in a second separate step, whereas in the Production Planning and Detailed

Scheduling (PP/DS) component of SCM, quantities and capacities can be planned

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Production execution, which is the processing of manufacturing orders (production or process orders), takes place in SAP ECC.

Figure 11: Planning Horizons in mySAP SCM

With Demand Planning (DP), you can predict customer demands by creating forecasts based on historical consumption data. Demand planning data is bucketed with no constraints. Forecast data is the released in the form of planned independent requirements.

Supply Network Planning is a bucketed, medium-term, cross-plant planning process for planning production outside the SNP production horizon and procurement outside the stock transfer horizon.

Production Planning and Detailed Scheduling is used for short-term, order-based planning according to sequences and setup times within the PP/DS horizon. The planning run does not create new orders within the planning time fence because this might disrupt production.

If the production horizon of SNP is smaller than the PP/DS horizon, the planning horizons of SNP and PP/DS overlap with each other. In this horizon, SNP determines the receipts with the most cost-effective sources of supply and lot sizes and PP/DS plans the receipts generated by SNP in more detail. You define planning horizons on the SNP2 tab page of the product location master record. Within the extended SNP production horizon it is only possible to create planned orders manually. The SNP production horizon can be shifted periodically. Deployment and the Transport Load Builder (TLB) are tools within SNP for short-term replenishment planning. You use them to adjust stock transfers to short-term changes in demand or supply.

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Figure 12: Supply Network Planning

SAP SCM SNP takes place over the medium- to long-term horizon, that is, outside

the production horizon. For example, it is based on demands for distribution centers that you determined in Demand Planning; these demands should now be met by the distribution centers, production plants, and suppliers in your network. This type of planning can be executed finitely, which means that production resources, storage resources, or transportation resources in your network can be taken into account even at this stage of planning. Planning in SNP takes place based on time buckets, that is, on the basis of freely defined time bucket profiles. The smallest unit in SNP is one day. Bucket-oriented planning is not as performance-intensive as Detailed Scheduling in SCM PP/DS, which means that it can also plan complex networks.

Supply Network Planning involves two steps: During the first step, which represents the actual planning, SNP stock transfers are created to optimize distribution and meet the demands in the network. For example, the demands of a distribution center might best be met by transferring stock from two separate production plants. The second step occurs after production in the production plants is complete. Planning is executed within deployment. In deployment, SNP stock transfers are converted to SAP ECC stock transport orders, depending on the quantities actually produced and current requirements.

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Figure 13: Goals of Supply Network Planning

The overall goal of SNP is to provide a feasible supply plan to complement the unconstrained demand plan that was planned by the Sales and Marketing teams in SCM DP. Global and central procurement, stock transfer, and production capabilities are checked and a feasible solution is obtained.

As a result of SNP, you can transfer planned orders, purchase requisitions, and stock transport requisitions to the connected OLTP systems so that the medium- to long-term plans are available to other areas.

You use make-to-stock production strategies to plan production or procurement using planned independent requirements that arise from expected future sales forecasts. Depending on which strategy you choose, sales orders can affect demand, consume planned independent requirements, or have no effect on demand. In make-to-stock production, sales orders are usually fulfilled by stock on hand. The indication number for strategies is normally different in ECC and SCM, because an SCM strategy can contain more than one ECC strategy. SNP supports the following SAP ECC strategies: 10 Maketostock production, 40 -Planning with final assembly, and 70 - Subassembly planning.

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Transaction Data

Figure 14: Transaction Data Objects in the Supply Chain

Supply chain planning is based on master data, for example work centers. The result of this planning is transaction data, which is used to plan for procurement. The planning process starts with the independent requirements that are stored as planned independent requirements or sales orders. These requirements specify demands in a distribution center or sales center. Independent requirements can also be created directly for a production plant.

You use the network to plan how to fulfill these independent requirements. These requirements are met either by stock transfer, in-house production, or external procurement.

Stock transfers control the movement of goods between locations; planned orders and production orders are receipt elements for in-house production. Purchase requisitions and purchase orders or scheduling agreement releases are used to model external procurement. Starting from a demand plan, SNP determines a feasible short- to medium-term plan to meet the estimated sales volumes. This plan covers both the quantities that must be transported between locations, for example, distribution center to customer or production plant to distribution center, and the quantities to be produced and procured, taking available capacity into account. SNP planning results in the creation of planned orders, purchase requisitions, and stock transfers that you can transfer directly to the connected OLTP systems. An SCM stock transfer can create a purchase requisition in one OLTP system and a sales order in another OLTP system.

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Figure 15: Transaction Data Integration

Integration models that you define in SAP ECC are used to specify which

transaction data is selected for transfer to SCM. All transaction data is mapped to orders in SAP SCM, which are distinguished by their ATP category. SCM transaction data objects are not identical to those in SAP ECC.

First, the APO Core Interface is used to make the initial data transfer of transaction data. As a rule, the change transfer between SAP ECC and SAP

SCM follows automatically for transaction data objects belonging to an active

integration model. New transaction data or changes to existing transaction data are transferred automatically. In Customizing, you can define whether you want transaction data from the SAP SCM Supply Network Planning component to be transferred back to (published in) SAP ECC in real time or periodically.

Planned independent requirements can only be transferred from SAP ECC to SCM directly using the core interface. The retransfer of planned independent requirements (that you require if you only perform Demand Planning in SCM) must be triggered from SAP SCM Demand Planning by a specific transaction. In SCM (PP/DS Customizing), you can specify that planned orders and purchase requisitions are only to be transferred from SCM to SAP ECC if the conversion indicator is set.

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The Supply Network Planning Process Flow

Figure 16: The Supply Network Planning Process Flow

When the demand plan is released, planned independent requirements are created for SNP or PP/DS.

Performing the SNP run using the SNP heuristic, SNP optimization, or Capable-to-Match results in a medium-term production and distribution plan. After the SNP run, you check the exception messages or alerts and solve any problems that may occur.

The final SNP plan consists of feasible purchase requisitions, SNP stock transfers, and SNP planned orders. You can convert SNP planned orders into PP/DS planned orders in the production horizon using the PP/DS planning run. The planned independent requirements and SNP stock transfers are covered by PP/DS planned orders. In addition, detailed constraints and bottlenecks, such as sequences and setup times, are taken into account, and a feasible production plan is created. The final SNP or PP/DS plan can be released to DP again to compare the unconstrained demand plan with the feasible procurement plan. If the two plans do not match, you can use a macro to trigger alerts so that the demand planner can plan the forecasts again.

After production planning is complete, the deployment run confirms the SNP stock transfers based on current receipts and demands.

The TLB run groups the deployment stock transfers into TLB shipments.

You can manually create stock transport orders for deployment stock transfers that could not be taken into account during the TLB run. One reason that transfers might not be taken into account during the TLB run is because threshold values were specified.

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Figure 17: Supply Network Planning Options

Supply Network Planning in SAP SCM can be executed as finite or infinite planning.

Neither capacities nor material availabilities are checked in infinite production planning. Planned orders, stock transfers, and purchase requisitions are created for the requested date, even if there is no free capacity. Even if components cannot be procured on time, planned orders are created. Capacity requirements planning is then done interactively in a second step.

During finite planning, availability of capacities and components required for production is checked when receipts are created. The planned order can only be created when sufficient capacity is available. If there is no available capacity for the requested time, the planned order is created earlier or later, depending on when there is available capacity. This delay is indicated by an alert. CTM and the optimizer create feasible medium-term supply, production, and distribution plans. Deployment distributes the stock and available receipts at the plants to the distribution centers and Vendor-Managed Inventory (VMI) customers. The stock transfers are adjusted to the current situation.

The Transport Load Builder (TLB) groups together the deployment stock transfers confirmed by deployment, taking transportation capacities into account.

In Customizing, you set whether or not you want the deployment stock transfers or TLB shipments to be converted to stock transport orders when transferred to

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SNP Planning Strategies

Figure 18: Heuristic Scenario

The heuristic performs the following functions:

• Plan supply to meet demand without taking into account constraints such as available capacities and materials (infinite planning).

• Plan receipts for purchasing, production, and distribution within the supply network on a cross-plant bucket-oriented basis.

• Synchronize activities and plan the flow of material throughout the supply chain.

The above graphic provides an example for the heuristic:

1. There is demand at the distribution center. The net requirements calculation finds no stock. The product is procured externally. The system determines the possible transportation lanes. Demand is distributed according to quota arrangement and transferred to the plants through stock transfers.

2. There is no stock at the plants. As a result, the SNP plans (PPMs) are exploded, planned orders are created for the finished product, and dependent requirements are created for the components. The planned order in the plant with the higher quota arrangement is not feasible due to limited capacity. As a result, an alert is generated and the supply chain planner has to intervene.

3. Components are then procured through the possible transportation lanes according to quota arrangements or priorities. The supplier with the highest priority cannot deliver enough. An alert is generated and the supply chain planner has to intervene.

The heuristic can be used for rapid cross-plant distribution and supply planning, if constraints are not usually relevant.

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Figure 19: Capable-to-Match (CTM) Scenario

Capable-to-Match (CTM) is a rules-based, cross-plant planning method that takes into account constraints such as available capacity and materials during the planning run (finite planning).

The feasibility of receipts is checked successively against priorities or quota arrangements and the first feasible solution is scheduled.

CTM is an order-based planning method that uses pegging to track orders back to the individual demand. As a result, CTM is not a true form of Supply Network Planning because SNP provides quantity-based and not order-based planning. But CTM is a part of this course because it is a form of cross-plant planning. After the optimization or heuristic run, planned production orders or purchase requisitions can no longer be uniquely assigned back to the original sales order.

The above illustration provides an example of CTM:

1. There is demand at the distribution center. The net requirements calculation finds no stock. The product is procured externally. The system determines the possible transportation lanes. CTM checks whether or not the finished product and components can be procured from the plant with the higher quota arrangement. The entire quantity cannot be procured. As a result, procurement is distributed according to feasibility and transferred to the plants using stock transfers.

2. There is no stock at the plants. As a result, the SNP plans (PPMs) are exploded, planned orders are created for the finished product, and dependent requirements are created for the components. The plants have sufficient capacity to deliver the planned orders. The supply chain planner does not need to intervene.

3. Components are procured through the possible transportation lanes according to quota arrangements or priorities. The suppliers can supply enough. The supply chain planner does not need to intervene.

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Figure 20: Optimizer Scenario

The SNP optimizer is a cost-based, cross-plant planning method that takes into account constraints such as available capacity and materials during the planning run (finite planning).

The feasibility of receipts is checked globally and the solution that is the most feasible and cost-effective is scheduled. Priorities are set using control costs that you maintain in SCM, excluding procurement costs. Quota arrangements are ignored by the optimizer although the quota arrangements can be optimized and created during the planning run.

The optimization run, similar to the heuristic run, is a quantity-based planning method without pegging. You cannot uniquely assign planned production orders or purchase requisitions to the original sales order.

The above illustration provides an example of the optimizer:

1. There is demand at the distribution center. The net requirements calculation finds no stock. The product is procured externally. The system analyzes the possible transportation lanes. The optimizer makes global checks to find the most cost-effective way of procuring the finished product and its components. The entire quantity cannot be procured from the most cost-effective plant. As a result, procurement is distributed according to feasibility and costs, and distributed to the plants using stock transfers.

2. There is no stock at the plants. As a result, the SNP plans (PPMs) are exploded, planned orders are created for the finished product, and dependent requirements are created for the components. The plants have sufficient capacity to deliver the planned orders. The supply chain planner does not need to intervene.

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3. Components are then procured through the possible transportation lanes according to cost. The suppliers can supply enough. The supply chain planner does not need to intervene.

Figure 21: Transition from Medium- to Short-Term Planning

If you decide to use both SNP and PP/DS for planning, the PP/DS and SNP

horizons are used to separate the areas of responsibility for these two planning

functions. So, for example, the SNP planning run can only create planned orders outside of the SNP production horizon, and PP/DS can only create planned orders inside of the PP/DS horizon. If requirements within the SNP production horizon cannot be covered by PP/DS, then SNP plans the receipt outside of the SNP production horizon (this corresponds to the logic of the PP/DS planning time fence in short-term planning). If the PP/DS horizon in the product master is set to a greater length than the SNP production horizon, this gives rise to an overlapping area in which both SNP and PP/DS receipts can be created.

Supply Network Planning is used for medium- to long-term planning across the

entire supply chain, especially if there are several plants and distribution centers. Demands are aggregated for a defined bucket, for example, a day. In this instance, it is irrelevant whether a demand is in an early shift or late shift. This is because the demands are only planned roughly – exact breaks are not taken into account. In addition to performing aggregated planning in SNP, you can also perform structural aggregated planning. You can define specific bucket resources to be used for SNP, which can represent the available capacity of an entire warehouse, for example. Because you create specific PPMs for SNP, which are usually copied from PP/DS PPMs, you can describe production at these bucket resources. Order sequences with their exact times do not play a role in Supply Network Planning.

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PP/DS is used for short-term planning when orders need to be scheduled to the minute and when order sequences, that is sequence planning and optimization,

need to be considered.

Pegging is the link between receipts and issues along the supply chain. The

planning run determines which demand is covered by which receipt element; this information is stored in liveCache. When an order is moved to an earlier or later time, all dependent orders can be adjusted automatically due to this pegging. This function is only available in Detailed Scheduling and CTM. SNP is based purely on quantities and buckets.

Figure 22: Production Planning and Detailed Scheduling in SCM

Production Planning and Detailed Scheduling is mainly used for short-term, to-the-minute planning in the production plant, both for in-house production and external procurement.

PP/DS meets requirements by generating planned orders to plan in-house production, in addition to purchase requisitions or schedule lines to plan external procurement.

The following factors can be used to integrate and distribute tasks between SNP and PP/DS:

SNP and PP/DS are responsible for different planning stages: You use SNP

for medium-term planning and PP/DS for short-term planning. Planning does not overlap, which means that the PP/DS horizon and SNP production horizon have the same length. As soon as SNP orders are within the PP/DS horizon, they are converted into PP/DS orders.

SNP and PP/DS are responsible for different locations: You use SNP to plan

receipts (stock transfers) at the distribution centers and PP/DS to plan production plants. You use PP/DS for detailed production planning on the basis of SNP

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stock transfer requirements. This includes the complete bills of material and the optimized setup for order sequences. This level of detail is not required when planning distribution centers.

SNP and PP/DS share a planning horizon if the SNP production horizon is

shorter than the PP/DS horizon. SNP has control over the planning of specific finished products and their critical components. This means that SNP can plan receipts and determine the most cost-effective sources and lot sizes. You only use PP/DS to plan the receipts generated by SNP to complete the bills of material and for sequencing, for example, optimization of setup times.

Deployment in SCM

Figure 23: Deployment

The deployment function in SNP plans the short-term distribution of the produced or procured products to the distribution centers. It determines when, and in what quantity, inventory and planned receipts can be deployed to distribution centers and vendor-managed inventory (VMI) accounts. If the ATD (available-to-deploy) quantity is insufficient to cover all demands, the fair share rules define the DC prioritization. These generate feasible, or even optimized, distribution plans with constraints (e.g. transportation capacities) and business rules (e.g. minimum cost approach or replenishment strategies), which can be transferred to ECC in the form of executable stock transport orders. Deployment generates optimized replenishment plans that take into account short-term changes on the supply or demand side as well as constraints, such as transportation and storage capacities. There are several deployment strategies that can be used, such as fair share, push deployment, and pull-push deployment.

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Figure 24: Transport Load Builder

The Transport Load Builder (TLB) is used to convert the results of the deployment run into SAP ECC stock transport orders or VMI sales orders that include several items for several products. The TLB ensures that:

The transport vehicles are filled to the maximum capacity,

No means of transport is dispatched that is not filled to at least minimum capacity. The TLB uses transportation capacities efficiently by grouping together SCM stock transfers. The system checks the planned stock transfers against the minimum and maximum values defined in the system. If the planned stock transfers do not meet either the minimum or maximum requirements, the system activates an alert and the planner can readjust the TLB plan accordingly.

The TLB can also split stock transfers. It is a lot sizing procedure for stock transfers which can also be used as a preliminary step for SCM Transportation Planning and Vehicle Scheduling (TP/VS).

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Figure 25: Vendor-Managed Inventory (VMI)

VMI customers (both ship-to and sell-to customers) are created as locations in the supply network and connected to the supply chain through transportation lanes. You create location product master records for the VMI location and define the planning parameters there.

The purpose of VMI is to include key customers in the supply chain plan. For VMI to function correctly, you need to know your customer's inventory and sales forecasts. VMI planning generates planned stock transfers between the DC and the customer location. Deployment and the Transport Load Builder build the transport loads and guarantee that the products are available, so that the VMI sales orders from SCM can be generated in ECC.

The data required for VMI planning, such as stock levels, stock on hand, and sales forecasts, is transferred by EDI messages and stored as persistent data in SCM. The important messages are EDI 852 (Product Activity Data) and EDI 830 (Forecast). SCM receives these messages in the form of a standardized PROACT IDOC to avoid data conversion and interpretation problems. These problems can also be resolved by EDI converters.

Depending on the agreement between the business partners in a VMI relationship, SCM can be set up to automatically create sales orders in SAP ECC using VMI, which minimizes the administrative work involved.

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Figure 26: Integration between SCM and SAP ECC

The above graphic shows how transaction data is exchanged between SCM and the connected execution systems. These systems (for example, ECC systems) are known as online transaction processing (OLTP) systems.

You can transfer the results of Demand Planning as planned independent requirements to the OLTP systems, which is similar to the transfer from Flexible Planning or Sales and Operations Planning (SAP ECC) to Demand Management. You can transfer the SNP planning results to the OLTP system as planned orders, purchase requisitions, and stock transport requisitions.

You can also transfer the PP/DS planning results to the OLTP system as planned orders, purchase requisitions, and stock transport requisitions. If you convert SNP planned orders into PP/DS planned orders, the planned orders are adjusted in the OLTP system. Planned orders can only be transferred to the OLTP system as production orders from PP/DS.

Deployment and the TLB confirm stock transport requisitions and can convert these requisitions into SAP ECC stock transport orders or VMI sales orders. To configure the type of transfer you want, select APO → Supply Chain Planning

→ Supply Network Planning (SNP) → Basic Settings → Configure Transfer to OLTP Systems.

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Figure 27: Collaborative Planning in SCM

Collaborative planning includes the process by which different companies along the supply chain have access to shared information over the Internet (i.e. across company boundaries) and work with the common goal of identifying and removing bottlenecks or date shifts as early as possible. Through collaborative planning, companies can exchange demand, procurement, and stock data with other companies.

You can define your own exception messages or alerts and integrate these alerts into the general alert management. If exceptions occur during planning, e-mail messages or fax messages can be generated automatically. SCM Collaborative Planning supports the Collaborative Planning Forecasting and Replenishment (CPFR) standard. A Web browser is sufficient for exchanging collaborative planning data.

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SNP: Configuration

Figure 28: Configuration of Supply Network Planning (SNP)

A planning area is the central data structure of DP and SNP. It defines the key figures for planning and associated activities. It also determines whether the planning results are saved as orders or time series in liveCache. Since the characteristics and key figures differ for Demand Planning and Supply Network Planning, different planning areas are created for DP and SNP. The planning area defines the planning characteristics and key figures and must be initialized for each planning version.

A key figure is a numerical value that describes either a quantity or a value; for example, future demand value in dollars or future demand quantity in pallets. Characteristics are the objects for which business data is aggregated, desegregated, and evaluated.

Key figure data can be read from order objects or time series objects. The most important tool for the SNP planner is the planning book. You use planning books to prepare a planning area's data for planning. The planner does not maintain the planning area.

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Figure 29: The Application Architecture of SAP SCM

Aggregated actual data can be transferred from OLTP, Business Information Warehouse (BW), Excel, and Legacy systems to SCM and saved in InfoCubes. This data is used as the basis for forecasting. The demand plan is created as a result of the forecast.

You release the demand plan to production planning, which generates planned independent requirements for Supply Network Planning (SNP) and PP/DS. You can also transfer the demand plan to the execution systems (OLTP) as planned independent requirements.

The seamless integration with SNP and PP/DS supports efficient Sales and Operations Planning (SOP).

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Exercise 2: The SNP Heuristic and ECC

Integration (Optional)

Exercise Objectives

After completing this exercise, you will be able to: • Identify planning horizons in SCP and SNP • Define the SNP process flow

• Identify SNP planning strategies

Business Example

Since we need only establish the master data and the models during this course, this exercise should once again give you an idea of interactive planning with the heuristic. You can also view the CIF integration for SNP transaction data here. Later on we will work with versions of inactive models, and will therefore no longer be able to use integration.

Task 1:

1. In SAP ECC, create a planned independent requirement for product (material) T-F2## at plant 2400. In version 000, schedule a planned requirement quantity of 400 pieces for two months from today’s date, and save the planned independent requirement.

Task 2:

1. Open interactive Supply Network Planning in SCM. Open the selection window and, next to “Show”, select “APO – Location product”. Version 000 is displayed automatically. Enter APO PRODUCT in the next row, and enter your product T-F2## to the right of this. Load the data for the product at location 2400 into the planning table.

Task 3:

1. Look at the future periods and check whether the planned independent requirement that you created for distribution center 2400 is displayed. Check in which key figure the planned independent requirements are shown. Ascertain that no distribution demands and production orders yet exist for production plants 1000 and 2300.

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Task 4:

1. Run the network Heuristic in change mode and save the planning results. Check the situation of your product T-F2## for distribution center 2400. Verify that there are now values in the Total receipts row.

Which plants are supplying the receipts?

Also check that planned orders were created in plants 1000 and 2300.

Task 5:

1. Go to the PP/DS product view for product T-F2##, location 1000, and version 000. Double-click on the SNP planned order. Note down the start date and finish date.

Start Date: Finish Date:

Convert the SNP planned order into a PP/DS order. Compare the new start date, finish date, and requirements with those you noted down previously. Set the conversion indicator and save the order.

Task 6:

1. Check whether the receipts were transferred to the connected SAP ECC system. Log on to the SAP ECC system and access the stock/requirements list for your product T-F2## in plants 1000, 2300, and 2400. Why has a production order already been created in plant 1000?

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Solution 2: The SNP Heuristic and ECC

Integration (Optional)

Task 1:

1. In SAP ECC, create a planned independent requirement for product (material) T-F2## at plant 2400. In version 000, schedule a planned requirement quantity of 400 pieces for two months from today’s date, and save the planned independent requirement.

a) SAP R/3 menu →Logistics →Production →Production Planning →Demand Management →Planned Independent Requirements →Create

Enter the material and plant. Choose “Enter” to access the planning table. In the “Sched. lines” tab page, enter the requirement date that is exactly two months from today in day format (you must change the date parameters in the first column from “M” to “D”) as the requirements date, and a planned quantity of 400.

Task 2:

1. Open interactive Supply Network Planning in SCM. Open the selection window and, next to “Show”, select “APO – Location product”. Version 000 is displayed automatically. Enter APO PRODUCT in the next row, and enter your product T-F2## to the right of this. Load the data for the product at location 2400 into the planning table.

a) Advanced Planning and Optimization → Supply Network Planning →Planning → Interactive Supply Network Planning

Open the selection window using the Selection window icon.

Next to “Show”, select “APO – Location product”. Version 000 is displayed automatically. Enter APO PRODUCT in the next row, and enter your product T-F2## to the right of this. Click Adopt. Your

selection will now be adopted and shown in the selection window. Double-click on your product T-F2## for distribution center 2400. The data for this selection is now displayed in the planning table.

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Task 3:

1. Look at the future periods and check whether the planned independent requirement that you created for distribution center 2400 is displayed. Check in which key figure the planned independent requirements are shown. Ascertain that no distribution demands and production orders yet exist for production plants 1000 and 2300.

a) You find your planned independent requirement approximately eight weeks in the future, in the “Total demand” key figure.

Double-click on the “Total demand” row. The planned independent requirement is displayed in the “Forecast” key figure. All key figures (forecast, sales order, dependent demand, distribution demand) contribute to the total demand.

Double-click on your product T-F2## for plant 1000. There are still no production quantities or distribution demand displayed because the planning run has not been started yet.

Task 4:

1. Run the network Heuristic in change mode and save the planning results. Check the situation of your product T-F2## for distribution center 2400. Verify that there are now values in the Total receipts row.

Which plants are supplying the receipts?

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Also check that planned orders were created in plants 1000 and 2300.

a) Switch to change mode by selecting the Change icon, then choose Network to start the heuristic run. The selected location

is not significant here.

After the planning run, a value will be displayed in the “Total receipts” row.

Note: If the “Total receipts” row shows a plus sign in the

magnifying glass ,

then the details are not displayed. Double-click on the row to display the details.

The stock transfers created by the heuristic are displayed in the “DistrReceipt (Planned)” key figure. Right-click the cell with the receipt to select Display details. This displays the receipts from the plants in the lower section of the screen.

Production plants 1000 and 2300 supply distribution center 2400 according to the quota arrangement for product T-F2##.

Save your data .

Task 5:

1. Go to the PP/DS product view for product T-F2##, location 1000, and version 000. Double-click on the SNP planned order. Note down the start date and finish date.

Start Date: Finish Date:

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Convert the SNP planned order into a PP/DS order. Compare the new start date, finish date, and requirements with those you noted down previously. Set the conversion indicator and save the order.

a) Advanced Planning and Optimization → Production Planning → Interactive Production Planning → Product View

Enter your version 000, product T-F2##, and location 1000, then select continue (Enter) ; next, confirm any messages that appear.

Double ckick on the SNP planned order to view the dates. Select the back icon to return to the product view.

Switch to “change” mode by clicking .

To convert: select the appropriate “SNP planned order” and click the “Convert SNP order” button . The PP/DS planned order is now created with the PP/DS bill of material (BOM) and routing. Double click on the new planned order to view the detailed dates. Select the back icon to return to the product view.

To convert the PP/DS planned order to a production Order; place a check in the “Conversion Ind.”box for the appropriate planned order. Save your changes .

Task 6:

1. Check whether the receipts were transferred to the connected SAP ECC system. Log on to the SAP ECC system and access the stock/requirements list for your product T-F2## in plants 1000, 2300, and 2400. Why has a production order already been created in plant 1000?

a) SAP ECC standard menu → Logistics → Production → MRP → Evaluations → Stock/Requirements List

Enter your material number and plant, then select Enter. A

production order was already created in plant 1000, because you used the conversion indicator to convert the PP/DS planned order in SCM into a production order.

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Lesson Summary

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Unit Summary SCM230