The Benefits of Using a Simulation and Archival Blog For Supply Chain Planning

ByShaun Snapp

Executive Summary

  • What is simulation?
  • Simulation on separate hardware or the same hardware as production.
  • Why simulation is so important.
  • Is APO a naturally good simulation environment?
  • How simulation is generally presented.
  • How difficult is a simulation?
  • What is a simulation archival blog?
  • Tags and Categories for Simulation Runs
  • Developing Simulation Prioritization
  • How Prevalent is Simulation?
  • Simulation and S&OP

What Is a Simulation Archive Blog?

Supply chain simulation is the offline alteration of master data and sometimes transaction data to see how changes affect the plan’s output (separated into planning models and versions in SAP APO).

Simulation on Separate Hardware or the Same Hardware?

Simulation can be performed on a separate “box” from the production server to not interfere with the production environment. Or it can only use the same hardware but have a second or third, or fourth database. There are more capabilities to run planning in a mixed environment without worrying when production is running activities. However, when attempting to migrate changes from the simulation version, the official SAP position can be easier if the same box is used for both production and simulation. However, this is not necessarily the case, as the mass maintenance function can be used to make changes from a simulation box to the production box. As we will see, because the simulation is so rarely implemented with APO (due to overhead and problems APO has in terms of flexibility), it is difficult to come to any strong recommendations either way.

Why Simulation is So Important

Effective simulation is often the missing ingredient for successful advanced planning projects because, without it, the hypothesis can not be as easy or as robustly tested. Most companies have several viewpoints of planning that they have developed over time. However, these viewpoints can be valid or invalid, but testing is an effective way to determine how valid they are. That is just the beginning; with a simulation capability (not only the software, but trained individuals, and a company that is open to simulation, etc…), ideas can be tested that the business may not have thought of.

Supply Chain Digest has the following to say about simulation:

That is where “simulation” can come into play. In simulation, a model of the system is built (again, whether it’s a conveyor system in a DC or a supply chain network). Rules are created (often still through programming, but increasingly with at least some level of system configuration) that describe how the system should work. – SCDigest

Simulation with Advanced Planning Systems vs. Simulation with Spreadsheets

“What if” analysis was traditionally performed with spreadsheets since their development several decades ago. Often the question is raised regarding how the advanced planning simulation is an improvement over spreadsheets analysis. An advanced planning simulation system provides many advantages. The first of which is that a simulation environment can tell its users the implications of changes in isolation and how they affect other parts of the supply chain.

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Implications Between Locations and Multi Echelon

This brings up an important point. Simulation can only simulate up to the functionality of the planning system. For instance, SNP in APO can simulate how inventory level changes for a group of materials when the service level is changed (if SNP uses enhanced safety stock methods). It can do this for the entire database of materials. However, because it is not a multi-echelon system, it can not show how stocking policies at one level in the supply network affect other areas of the network. This is because SNP plans all locations sequentially. I believe that supply network planning software should be multi-echelon, so this makes me less enthusiastic about performing simulation in SNP. However, that is more of an exception. Simulation is still instrumental in the other modules such as PP/DS, TP/VS, etc..

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Secondly, there are many items that a simulation can test that can not realistically be modeled in a spreadsheet. When performed correctly, the simulation environment provides a more robust solution, with higher confidence, mainly because it runs with most of the production model parameters in place. This point works with the first part regarding the comprehensiveness of the analysis that simulation allows for.

Simulation with SCM

The transaction /SAPAPO/MVM is what is used to get into the simulation. This is where planning models and versions can be copied, deleted, and otherwise manipulated. According to SAP, some things can be tested in a simulation that can not ordinarily be performed in the active version.

Production Planning and Detailed Scheduling transparently handles multiplant manufacturing environments. You can add interplant transfer requirements and planned orders in simulation mode, with plans set up to run automatically or interactively. You can develop plans for interdependent plants independently with constraint violations established and propagated as alarm conditions, or you can simply build a comprehensive plan that views the processes of multiple plants as seamless members of the overall production process. – SAP White Paper – Production Planning and Detailed Scheduling

Is SAP APO A Natural Simulation Environment?

It should be understood that SAP APO is not the best simulation environment. SAP made some decisions regarding the design of APO that move it away from the simulation. Suitable simulation environments are often built around a “black box” optimizer (APO is often run not using any optimization). It uses an easy to alter relational backend (SAP requires specific transactions such as MASSD, which is more clumsy than a SQL front-end that most other advanced planning applications use). SAP APO takes many resources to run normally, which is not the desired state of a simulation environment. Finally, migrating through the SAP APO interface is slow compared to others that we have used. We have listed the positive simulation criteria below:

  • How quickly can the model parameters be changed?
  • How good are the reports of the simulation runs
  • How easily can data be migrated between the simulation and active version?

However, while APO can not be said to be a natural simulation environment, it is beneficial to use the same software that one uses for the actual planning used for simulation. One reason is that there is usually the desire to migrate the changes from successful simulations back to the production version. SAP APO has a complex copy method that can be used to do this. However, depending upon what is changed, the MASSD transaction may be a more straightforward way to “migrate” the changes from the simulation version to the active version.

How Simulation is Presented

Much is a discussion on simulation. This is a frequently desired functionality. However, less often discussed is how simulation is rolled out. Simulation has found wide acceptance in several fields. However, supply chain simulation is more discussed than performed. This has primarily to do with education and the resources that are required to complete a simulation. Software is very rarely demonstrated during the sales phase in terms of simulation capability, so a vendor like SAP has less incentive to drive the product in that direction. The highest level of simulation is when there is the ability to document simulation runs and socialize the results in a meaningful way effectively.

How Difficult Is Simulation?

Simulation is not easy, although, as we have previously mentioned, software design has a strong effect on the ease of alternation of the supply chain model and the ease of analysis of the simulation. However, even in very well designed simulation environments, previous exposure and experience in analysis and testing, and documentation are required to leverage the software selected effectively. This is echoed in the white paper Supply Chain Simulation Modeling Made Easy: An Innovative Approach:

Simulation modeling and analysis requires skills and scientific background to be implemented. This is vital for this powerful methodology to deliver value to the company adopting it. There are several practices to implement and rely on simulation modeling for strategic and operational decision-making, including hiring simulation engineers, building internal simulation team, or contract consultants. – 2007 Winter Simulation Conference

We categorize this into the following areas:

  • Computing resources
  • Analytical resources, most often a dedicated analytical group.
  • The ability to document and archive the simulation runs
  • The ability to socialize the results of the simulation

A Simulation Archival Blog

What is necessary, but as far as our research into this has demonstrated, it is very rarely discussed, is in addition to running the simulation. It’s essential how the simulation results are documented and distributed, or socialized. This way, there is a record of the simulations that go back from the first simulation and continue until the present time. Too often, papers and conversations on simulation center around how technically accurate the simulation is, or the mathematics of simulation, without focusing on the application of the simulation results or how the results are kept and made available. This relates to the tools selected but also to how a simulation group is staffed. Communication and information management, and analytical capabilities need to be present in the simulation group to facilitate the migration of knowledge from the simulation group to the pertinent parts of the organization that are essential customers for this analysis.

Setting up the model’s changes and performing the quantitative analysis is only one part of maintaining a robust simulation capability. The other part is documenting, categorizing, and socializing the results.

What is a Simulation Blog?

One idea I recently came up with is to house the simulation results in a blog, where each simulation run is a different post.

Why Blogs Work

I have found blogs to be useful information management tools that I have a vast number of for different purposes. However, before blog software became available, I often struggled to keep a much smaller amount of information adequately organized on several websites using software like Dreamweaver or other HTML editors. The unknown feature of blog platforms like WordPress, at least to non-bloggers, is that blogs are lightweight content management systems. The same software that manages sites like the Huffington Post or even some celebrity site can host any category of content from the most technical to travel photos. I now create a new blog for every account I work at, and it provides me with a searchable database of activity at the client. One of my recent clients actively uses the blog that I have set up for the project.

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Tags and Categories for Simulation Runs

This simulation can include screenshots of the system and or attachments such as spreadsheets of extracts of APO or offline analysis of the simulation result. These posts can be tagged in the blogging software such that they are highly categorized so that a person searching for blog results can be easily searched. In fact, to get a feel for what I mean, notice the tags and categories to the right of this article. This blog you are reading is also served from WordPress software. It categorizes SAP APO articles; however, the same software can be used to classify simulation runs. For instance, lead times could be a tag, so all posts with that tag would appear when the tag is selected.

Secondly, in addition to tagging, blog software has strong search capabilities as well. This blog is hosted on a WordPress server but is hosted on a private server, much more powerful search plug-ins can be installed, which provides an excellent searching capability. We would recommend very strongly against using SharePoint for this archival as it is not designed for it. And would end up encapsulating rather than revealing the results and would be more challenging to administer, and could not as effectively socialize the simulations’ results.

What Is To Be Documented?

The simulation group should be set up with several areas of every simulation that must be documented. What is documented should remain consistent for each simulation run to maximize the comparability between runs.

For each run, the following should be documented:

  • What was being tested in the simulation run?
  • What parameters were changed?
  • What was transaction data (if any) changed?
  • What were the performance implications due to the change?
  • What were the business benefits or negatives associated with the change? (to make the simulation blog as scientific as possible, both negative, and positive outcomes or simulation runs, must be documented.
  • What were the implications for different supply chain areas (i.e., manufacturing vs. distribution or regional distribution center vs. lower level distribution centers)? This relates to the main point that simulation changes should not be evaluated in isolation, but the overall impacts must be documented. This is why simulation is a difficult and time-consuming task.
  • Was the change migrated to the live system? If not, why not? If so, what were the results in the live environment?

These items can be placed in a form on the blog, allowing them to be easily searched or even extracted to a spreadsheet for comparison.

WordPress, a blogging platform, provides a high degree of organization to information. It solves the problem of websites pre-blogging, in that they lacked a natural organization and had to have organization placed upon them. Finally, WordPress or similar software can be installed on company servers and have the same security level as other corporate HTML pages. This information management is perfect for documenting and archiving successive simulation runs.

Developing Simulation Prioritization

The important thing is that the previous simulation results are captured and are that what was done, and the results can be understood that simulations do not need to be constantly re-run. Eventually, documentation, heuristics, or thumb rules will be built up based on the previous run simulations. This can help prioritize future simulation runs. If one parameter alteration has been run four times, but a different parameter alteration has never been simulated, an argument can be made to give the untested parameter priority.

How Prevalent is Simulation?

We performed a literature review on simulation specifically for SAP APO-SCM. I found that there is not very much written on SAP SCM simulation, which brings up the question of how commonly companies are performing the simulation. With the requirements regarding the support of simulation, it is clear that this is an area that could easily drop between the cracks. I have seen companies spend more time talking about simulation than doing it in my personal consulting experience.

Simulation and S&OP

What I am observing is that S&OP, which is primarily a simulation environment, in any case, is gathering the majority of emphasis in terms of corporate priority. My concern is that S&OP will become the singular simulation environment for planning. This would be unfortunate because the types of things that S&OP looks for are different than the more functional areas that want to verify. For instance, S&OP would not be interested in checking for the changes in lot size.

However, what would make sense is to combine all simulation requirements related to the supply chain into one area and prioritize requests from S&OP, Supply Planning, Demand Planning, Production Planning, Transportation Planning, etc., in one queue.

Conclusion

Simulation a very beneficial capability to have. SAP APO is not an ideal simulation environment, but for those companies that run APO-SCM in production, it will most likely be the simulation environment. Simulation can be greatly enhanced by applying a consistent approach in terms of what is documented and documenting the results in either a blogging platform or other content management system. How prevalent simulation is in APO is very much an open issue. Because it is not frequently performed, there is not much literature or distributed experience on how to do it, much less do it well. Companies who do sign up for simulation in APO must be mindful of the amount of work they are signing up for. As I have pointed out in this post, there is quite a bit to consider, and not all of it simply software related to creating an effective simulation capability.

References

https://www.scdigest.com/assets/FirstThoughts/07-05-31.php?cid=1073&ctype=content

Supply Chain Management on Demand: Strategies, Technologies Applications, Chae An and Steve Buckley

Real Optimization with SAP APO, Josef Kallrath and Thomas I. Maindl

Supply Chain Simulation Modeling Made Easy: An Innovative Approach, Cope, Fayez, Mollanghasemi, Kaylani

More notes on simulation

Simulation modeling is a versatile and powerful tool that has grown in popularity due to its ability to deal with complicated models of corresponding complicated system (Kelton, Sadowski, & Sadowski, 2002; Wartha et al., 2002). Nevertheless, simulation models can be time consuming to build, requiring substantial development time, effort and experience. According to Mackulak, Lawrence & Colvin (1998), simulation development time takes about 45% of the total simulation project effort. Furthermore, simulation-modeling efforts often have to be modified to accommodate the development of what if scenarios and constantly changing requirements. These modifications also take time to model. An alternative to creating a unique simulation model is to reuse an existing generic model that can be reconfigured for individual projects. – Supply Chain Simulation Modeling Made Easy: An Innovative Approach