How to Replace the Optimizer in SNP and PP/DS

Executive Summary

  • The real story on SNP and PP/DS is considerably different than what SAP proposes.
  • The optimizer cannot be made to run properly in either application and this is why we recommend turning the optimizer off and using an external optimizer with APO database.
  • SAP support is misleading many customers into continuing down a path that will never work.

Introduction to the SAP Optimizer

SAP has had long-term problems on its optimization projects. This includes both the optimizer in SNP and the optimizer in PP/DS. You will learn these issues in this article.

SNP and PP/DS

The SNP optimizer is designed to create a plan for the initial supply plan (usually the MRP run in ERP) and the deployment plan (generally called the DRP run in ERP).

The PP/DS optimizer is designed to create a production plan and production schedule.

Both optimizers use the ILOG optimizer to perform the optimization.

The Real Story with SNP and PP/DS

PP/DS: There is an optimizer in SAP’s production planning and scheduling module (PP/DS), but no client that I have ever seen or heard of actually uses it.

SNP: Within SNP the same optimizer does two different things.

  1. The Network Optimizer Run: It plans the initial network supply (production and purchase orders)
  2. The Deployment Optimizer Run: It produces stock transport orders to move material through the supply network.

I have performed quite a lot of work in troubleshooting these optimizers. This includes reviewing the output as well as pulling data out of the log file to chart the time it takes to run the optimizer and explain the results to management.

I have concluded that the 2nd optimization run, the deployment optimizer makes no sense in it output under any circumstances, and should not be used.

This is covered in the following article.

Real Word Recommendations on the Optimizer

I told this client to disable the deployment optimizer and the COPT 10 parameters that were supposed to improve the output (that SAP sold them for $50,000) — was not usable. The IT director did not appreciate the research that I did as he wanted me to use my credibility to tell the business that the output was good and they needed to start using it. Just two months ago I was contacted by a recruiter representing that same company, and they are still looking for someone to come in and help them fix the deployment optimizer. This is because IT does not want to admit that they made an error when selecting the optimizer many years ago.

The network deployment optimizer does produce usable output, but it is probably the most difficult procedure to test that I have run into since I started working in advanced planning back in 1998.

SAP had a specialist in the optimizer in Germany, or at least he was working there several years ago. SAP charged something like $400 per hour for him, and mostly what he did was say that the optimizer was working as it should. At multiple accounts, I saw the same thing. Typically IT would hire him; he would say everything looked great to him, and then IT would go and tell the business to stop complaining because the optimizer has been blessed by SAP’s top Ph.D. on the topic.

The State of ILOG

SNP uses the ILOG optimizer. ILOG was an independent company, but it was purchased by IBM. And like most IBM acquisitions, their profile declined a great deal after the purchase. Now no one talks about ILOG. Most software vendors do the same thing. They buy an off the shelf optimizer and then write parameter controls and user interfaces for configuration around it. When I usually tell my clients that SNP uses ILOG, they are normally very surprised. SAP does not communicate anywhere that it uses an off the shelf optimizer.

Pulling the Optimization out of SAP

One way of interpreting is whether there is an off the shelf optimizer that can be found. The answer to that question is there certainly is. I have never participated in a project like this, so I can’t say how it would work exactly. But it could be possible to switch out the ILOG optimizer for another off the shelf optimizer — and then have that optimizer adjusted by the people that specialize in it. I can reach out to a colleague of mine who has a recent start-up and is at a level of detail below me as he has written code around optimizers.

The second question is whether there is another optimization application that performs supply planning. There certainly is. However, since SNP was developed, the industry has moved away from cost optimization for supply planning. Let’s take a short diversion into cost optimization.

What is a Cost Optimizer?

This means that the objective function of the system costs. That is one places the cost of transportation, the cost of storage, the cost of production, etc.. in the system. The optimizer minimizes those costs.

This is what I refer to as a first generation optimizer. SAP copied their design from i2, my old employer. But the approach never really made much sense. I cover this in the following The Rise and Decline for Supply Chain Optimization.

This design harkened back to the mid-1990’s and was an attempt to take the same approach from cost optimization that had been applied to production scheduling. Cost optimizers never really worked very well for supply planning applications. I have thought that perhaps a better approach to optimization is optimization around service levels, and which can treat locations as interdependent stocking locations. The category of software is called inventory optimization and multi echelon planning. These are two different technologies or sets of mathematics in one application. The definition of each are listed here and here.

However, there is a catch….the implementation of these optimizers take a significant amount of time. It would mean throwing away the logic that a company had invested in developing its costs. So recommending them would, at least at first blush, not seem to be a good option.

DemandWorks has greatly simplified optimization in their product Smoothie. Overly complex optimization has greatly damaged the reputation of optimization. But DemandWorks has brought they’re easier to use design optimization.

Conclusion

I can say with a relatively good confidence level that SAP is not providing much value in the updates they are providing the optimizer. Most likely SAP is keeping hope alive by promoting the idea that just more tweaks are required, and the company will finally get what they want. There is a way of finding out, but it means reviewing the output of their system.

Regarding providing them with a recommendation, we need to know more about their history with the optimizer. It may be as simple as finding them an optimizer replacement, but there may be more to it.

SAP’s software has a very low ability to support any supply or production planning business with an effective optimization solution. Paying $400 per hour to resources from Germany in SAP does not lead to good outcomes.

Replacing the optimizer with an external solution is clearly the way to go.

For companies interested in replacing the optimizer from SAP, can reach out to Brightwork for more details.

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

SAP SNP does not work to constrain resources. It has primarily failures in implementation in both optimization and CTM.

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:

References

Capacity Planning Book

Combining Two Types of Capacity Planning

This book is called capacity management because it encompasses two areas of planning that are usually discussed independently. Short-term capacity leveling or capacity constraining, which is the movement of demand to fit within the available supply, and long-term capacity planning. This is the planning of long-term market demand to determine if the capacity should be changed.

Using Comparative Applications

In this book, both topics are covered, and they are included using multiple software applications to explain the concepts of capacity management. These are two closely related processes. However, they are often discussed separately. This book combines their explanation as well as their relationship to one another.

By reading this book you will learn:

  • How resources are modeled in capacity management systems.
  • How the structured nature of capabilities leveling and constraining differs from capacity planning.
  • How the various planning processes fit into one another, and where the gaps can be found.
  • The time horizons of the capacity management process.
  • How to improve capacity management at your company.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Capacity Leveling
  • Chapter 3: Constraint Based Planning
  • Chapter 4: Resources
  • Chapter 5: Forecast Consumption, Allocation, Scheduling Direction and Timing
  • Chapter 6: Capacity Planning with S&OP and the MPS
  • Chapter 7: The Relationship Between Planning Systems and S&OP System
  • Conclusion

The Connection Between BOMs, Routings, Work Centers in ERP and PPMs, PDSs in APO

Executive Summary

  • There are connections between the BOM, routing and work centers in PPMs and PDSs in PPDS and SNP.
  • In this article, we will cover these connections, how to set up these elements and other features such as using the PDS versus the PPM for subcontracting.
  • We cover repetitive manufacturing and engineering change management.

Introduction to PPMs, PDSs, and Resources

PPMs and PDS are created in APO from the BOM, Routing and Work Center in ECC. You will learn how the PPM and PDSs are created from ECC master data and the coinfiguration of this master data.

The Variants of BOM, Routing and Work Centers

Each is master data objects in SAP APO which are made up of the following master data objects in SAP ERP:

  1. BOM
  2. Routing
  3. Work Center
SAP ERP has a similar combined master data object called the production version. So one combination of BOM, routing and work center is a production version. The logic looks like the following:
  1. BOM 1, Routing 1, Work Center 1 = Production Version A / PPM A / PDS-A
  2. BOM 2, Routing 1, Work Center 1 = Production Version B / PPM B / PDS B
  3. BOM 1, Routing 2, Work Center 1 = Production Version C / PPM C / PDS C
To account for the variability in the material, work centers and routings of the manufacturing process, the BOM, work center and routing must be able to be combined flexibly. The total number of used combinations of the BOM, routing, and work center is the total number of production versions that are required to be built in SAP ERP, and PPMs or PDSs in SAP APO.

What is a Work Center in SAP ERP?

Operations are carried out at a work center. Work centers are business objects that can represent the following real work centers.

  • Machines, machine groups
  • Production lines
  • Assembly work centers
  • Employees groups of employees

An easy way to think about it is they have the capacity to do work. Work centers in SAP ERP have their capacity set, and then the production planning process allocates productive work across them, the process of capacity leveling is simply moving the scheduling of work around by dates in order to move loads away from overcapacity time frames.

Work centers get even more interesting when they transfer over to SAP APO where the become resources and can have their capacity constrained, this constraining of capacity is at the heart of what is known as “advanced planning.”

For more on resources in PO see this article on resources.

The Use of Work Centers

Together with BOMs and routings, work centers belong to the most important master data in R/3. PP and control system. Work centers are used in task list operations and work orders. They are used for:

  • Scheduling
  • Costing
  • Capacity planning
  • Simplifying operation maintenance

Features About Work Centers

  • Work center has a hierarchy
  • Capacities
  • Have capacity categories (Machines, Personnel, Reserve for Rush Orders, Emissions, Energy Requirements)
  • Locking (A Work Center can be locked to prevent its use.)
  • Costing (Costs can be assigned to a Work Center, However, this is not for optimization, only for dependently determining the cost.)

Work Centers and APO

Work centers are an SAP ERP object, but the combination together with resources to form the production process model (PPM) and the Production Data Structure (PDS). These structures are used in a variety of places in different SCM modules.

Common Questions on the PPM and PDS

The first question that usually arises is “How will the BOMs, work centers and routings in SAP ERP come across to APO?” The answer is that the combination of them, i.e., what is a Production Version in SAP ERP becomes either a PPM or a PDS.

This basic connection between the different objects in the system is shown in the graphic below:

Work Center/Resource Differences in SNP or PP/DS PPMs or PDSs

The second question is “Will the work center/resource be different in the SNP or PP/DS PPM or PDS?” The answer to this is that APO allows the creation of a direct copy of any PPM from the SNP PPM to a PP/DS PPM. Secondly, in the case of the PDS, both SNP PDS and PP/DS PPM are automatically created by APO. Therefore, they match, and the most sustainable solution is to use the same PPM or PDSs. However, this often leads to the next logical question, which is how SNP and PP/DS use the PPM or PDS. Here there are significant differences.

I find the following quotations from SAP illuminating:

“Since PP/DS plans in detail, the plans for the PP/DS sources of supply are more detailed than the plans for the SNP PPMs.

PP/DS plans take account of all PP/DS relevant components and resources. For SNP, you use PPMs with simpler PPM plans with which you only plan the critical activities and components.

If you plan using PPMs in PP/DS, you can define in the conversion settings that PP/DS adopts the sources of supply defined by SNP. When an SNP order is converted, the system therefore uses the PP/DS PPM defined by the SNP order for the PP/DS orders.”– SAP Help

Below is how both the PPM and PDS are created from SAP ERP master data.

The PPM or PDS as a Container

PPMs and PDSs are used in the Following SCM Modules

  • DP
  • PPDS
  • SNP
  • CTM

PPMs and PDS are designed to manage capacity constraints and material consumptions, so a natural question would be why PPMs and PDSs are used by DP. It turns out this is a special case of the PPM. DP is not doing anything with capacity or resources, and DP-PPMs/PDSs do not have resources. Instead, they are used to perform BOM forecasting. BOM forecasting is merely a form of hierarchical or dependent prediction, where the top-level is forecasted, and then the lower components are derived demand. This makes a lot of sense from both a business and a performance perspective. The more hierarchy that can be built into a DP, the better the performance and typically the happier the planners will be.

DP uses PPMs to perform BOM forecasting and uses PDSs to perform characteristic based forecasting (CBF)

It should be apparent that while resources are assigned to PPMs and PDSs, an interesting feature of SCM is that not all modules that use resources use PPMs or PDSs. You can read more on resources at this article.

What Are PPMs?

PPMs (Production Process Models) are combinations of work centers and routings that are combined into PPMs in SCM. In ECC they are separate. To read more about work centers see this blog article. PPMs allow very detailed modeling of production processes, however, they are limited in their application. The PPMs reside within the PP/DS module mainly (although they can be copied to SNP as we will describe further on) PP/DS and PP in ECC works well when:

When Do They Work Well?

  1. The company implementing the software knows its constraints very well
  2. The company has high data integrity and when the master data is representative of reality (most often not the case actually)
  3. The company is willing and interested in constantly updating the PPMs with the constraint changes (constraints are always changing)
  4. The company is in repetitive manufacturing and is modeling a relatively simple process

Production Version and PPM

A production version is a combination of routing and a BOM. This must exist in the material master. The production version determines a manufacturing process by specifying a single alternative routing and BOM. When converting a planned order, the system does not read the BOM again. Instead the dependent requirements in the planned order are converted into reservations for the production order. In the process, any existing production versions are transferred to the production order, and the corresponding routing is copied.

PPM Selection

To begin select the PPM by choosing the drop down in the plan number field on the original screen. The Main PPM screen shows a combination of objects (Operations, Products, Modes, and Activity Relationships) When you select any of the item the right side of the screen changes to reflect the information in the object. Some people like using the map below, but we find it not useful. The operations here are cooking operations.

Main PPM Entry Screen

Within the Operation view the scrap percentage is set. It also shows the variable and fixed consumption, or how much material is consumed during this operation.

Cooking Operation Once Input Products View is selected the two (in this case), it shows the validity date of the product and the material consumption (the same as onthe operations tab).

Input Products The Output Products View selection shows the name of the final product (what is manufactured), the storage location as well as the material consumption.

Output Products (from the Canning Operation) The Activity Relationships view sets the costs that are incurred when this PPM is used. This is broken into single level and multilevel costs (both variable and fixed). There is also a cost profile, but it is only used by the optimizer, which is not used frequently in SNP. Below the operations are listed in sequence (cooking and then canning)

Activity Relationships PPM conversion can happen when the client wants to convert SNP orders into PP/DS orders. During the conversion SAP relates the PP/DS PPM for the correct SNP order. There are various options available when this happens:

  • SNP PPM with Lot Size Margin
  • SNP PPM without Lot Size Margin

Features of PPMs

  • PPMs are valid for a single location
  • PPMs have validity dates; this can be used to adjust capacity for a time of year and other variable factors

Features of PDSs

  • The PDS can be generated from the PPE, which is an internal SCM structure
  • Can be generated from an SAP ERP BOM

Is the PDS the Future of SAP APO?

There has been a lot of focus on SCM’s emphasis on the PDS vs. the PPM. The concept is that PDS should be used when possible because PDS has much more flexibility when it comes to engineering change management. However, there are a few disadvantages to this approach.

  • PDS is more complicated and difficult to setup than the PPM at least at first.
  • PDSs are harder to understand.
  • Although PDSs are supposed to have some engineering change management functionality, it is not at all clear that SAP is a good place to manage engineering changes, this is a presumption by SAP, but its foundations are not strong
  • There have been some intimations that PDSs have higher performance than PPMs. However, I have never seen a difference myself.

As we have noted in this article.

Change management in SAP ERP is weak. This is primarily because the material management functionality in SAP was never designed with change management or document management in mind. A solution that is extremely affected by BOM and change management is Arena Solutions, which can be sampled at this article.

Our perfect solution would have Arena performing the BOM management and then sending it over to SAP ERP’s material management. In this case, would the PDS be able to reflect the changes more natural than the PPMs? More specifically, would the extra work involved with setting up PDS be worth the effort.

PPMs are nested, and even have a graph which shows the relationships between resources, operations, etc..

PDSs, on the other hand, is much less clear than the PPM.

What is the Impact of PDS on Project?

Many clients have had PDSs recommended by SAP on projects. However, many customers regret using PDS because they cannot be changed in APO and because they are harder to deal with. Of the many clients I have worked with, I can see no advantage to PDSs. I cannot think of benefits brought by PDSs, and most customers that use PDSs seem to regret doing so. Although this observation is anecdotal. Many also point out that they were never given an option of using PPMs, and the differences were not fully explained.

In fact, there are quite a few distinct differences between the PPM and PDS technically. When I work with clients, they are often interested in “direction” on which master data object to choose.

There is a good description of when to use PDSs versus PPMs at scn.sap.com

“PDS is used in industries wherein there are multiple components or assemblies having different production versions whose validity periods are different. PPM is being used typically in process industries, chemical industries. PPM is very simple in its usage and very flexible in operations in terms of modifications at APO level and can be referred to client depending on the business requirement.”

scn.sap.com has some of the following advantages and disadvantages. I have taken a subset of those I found the most interesting.

PDS Characteristics

  • “Useful for scenarios where the component has different validity periods
  • Sub-contracting in SNP is fully integrated with R/3 is supported in PDS
  • The transfer of data changes is more straightforward (this is interesting because I have not witnessed this. I am unsure if they mean the performance is better)
  • Not possible to create alternate SNP-PDS in std system for different mode combinations
  • Suboperation and secondary resource are not supported in SNP PDS because SNP PDS considers only linear chains of activities.
  • Subcontracting in SNP is fully integrated with ERP
  • You can create PDSs automatically*
* Actually, this could be explained a bit more specifically. What is mean by this is that both an SNP and PP/DS PDS are created. With a PPM the SNP PPM must be copied from PP/DS PPMs.”

The PDS Versus PPM and Subcontracting

More on subcontracting and the PDS is available at a post on scn.sap.com:

“A major advantage of the SNP PDS is that it can be transferred directly from SAP ECC.  You can generate an SNP PDS in SAP ECC directly from the data in a routing, BOM, or Production Version.  To do so, you need to choose CIF integration type SNP DPS or SNP subcontracting.  The relevant SAP ECC data are then transferred to the SAP SCM, and an SNP PDS has been created automatically in the SAP SCM system.  Choosing SNP subcontracting automatically creates product master data in the subcontractor location (for components, too).  This also automatically creates a transportation lane between plant and subcontractor (not possible when using an SNP PPM).”

This is shown in the screenshot below:
However, the PPM is also supported for subcontracting as the can is shown in the screenshot below: 
However, while I have read this extensively in various places (that is the PDS being better for subcontracting). This has not been my experience in testing. In fact, I have run into problems with the PDS and subcontracting. This is something which I cover in this article. In fact, this problem generalizes on the SAP documentation. That is SAP is so keeping to push the PDS, which they cross the line into promoting the PDS for things that it may not be able to do.

PPM Characteristics

  • Alternate SNP-PPMs can be easily created
  • Push-Production

PPM Versus PDS for Repetitive Manufacturing

PPMs do not support a reporting backflush.

Real Engineering Change Management?

One issue we have with the PDS is it focuses the attention on engineering change management. However, the functionality that uses engineering change management has never materialized in, and it is not found in clients. SAP’s PLM solutions have been a non-entity since it was introduced. However, SAP got very strongly behind PDSs, at one point announcing that PPMs would no longer be supported. They eventually backed off this stance and supported both structures.

Undiscussed Constraint Management Maintenance

What we have not heard much addressed and what we have seen as the primary limiting factor to implementing PPDS is that clients do not update their PPMs or PDSs. This means that after the implementation, the accuracy of the production plan increasingly deviates from the realities of the manufacturing floor.

This could be managed from two different directions

  • From the process side…..which SAP and the large consulting companies are not doing – that is explaining the significant maintenance involved with constantly updating the system with changing production constraints.
  • By making the PPM and PDS more easy to update, because right now it’s still a big ball of effort, which means many companies will not do it and will hope that the old constraints are “good enough.” When a PDS is used, all changes must be made in SAP ERP. When a PPM is used, changes can be made in APO. However, the kicker is that those changes do not find their way back to SAP ERP. This makes the change functionality in PPMs more useful for testing.

The Different Purposes of SNP and PP/DS

Therefore, SNP and PP/DS do use the PPMs and PDSs for different purposes. In this ways, the PPMs and PDSs can be seen to contain some data that is “unused” by each application. However from the original BOMs, work centers and routings in SAP ERP. However, this does not contradict the fact that using creating both SNP and PP/DS PPMs and PDSs from the CIF (which connects ERP to APO) is an efficient mechanism to both get the initial data from ERP, but also to receive changes and updates from the ERP system repeatedly.

Conclusion

PPMs and PDSs can be thought of as Production Versions from SAP ERP in APO. The logic for creating a master data object like this is that it allows a unique combination of BOM, routing and work center to be represented by an object. SAP has automated most of the process of PPM and PDS creation so that companies that have ERP can just worry about creating their BOMs, routings and work centers correctly. The PPM provides more flexibility than the PPM, because they can be altered in APO, and in fact for some options, such as modeling supplier resources, a PPM must be used because no work centers or routings are allowed to exist in a vendor location.

Therefore, it is important to define all of the company’s needs in this area and then observe a flexible approach concerning PPM and PDS selection.

The Problem: A Lack of Fact-Checking of SAP

There are two fundamental problems around SAP. The first is the exaggeration of SAP, which means that companies that purchased SAP end up getting far less than they were promised. The second is that the SAP consulting companies simply repeat whatever SAP says. This means that on virtually all accounts there is no independent entity that can contradict statements by SAP.

Being Part of the Solution: What to Do About Optimization in SAP

We can provide feedback from multiple SAP accounts that provide realistic information around SAP products — and this reduces the dependence on biased entities like SAP and all of the large SAP consulting firms that parrot what SAP says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. SAP and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. When SAP or their consulting firm are asked to explain these discrepancies, we have found that they further lie to the customer/client and often turn the issue around on the account, as we covered in the article How SAP Will Gaslight You When Their Software Does Not Work as Promised.

If you need independent advice and fact-checking that is outside of the SAP and SAP consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

SAP SNP does not work to constrain resources. It has primarily failures in implementation in both optimization and CTM.

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:

References

I cover PPMs and PDSs in the following book.

Constrained Book

CONSTRAINED

Constrained Supply and Production Planning in SAP APO

How Constrained Supply and Production Planning Works

Constraint-based planning generates something that is appealing to all manufacturers: a feasible supply and production plan. However, constraint-based planning software was first implemented over twenty years ago, and yet few companies (as a percentage that all that have tried) have mastered constraint-based planning.

Getting the Real Story

This book provides the background information, detailed explanations, step-by-step examples, and real-life scenarios to assist a company in becoming proficient at constraint-based planning, along with valuable information about what SAP APO can do for supply and production planning in reality, rather than just in theory. Here you will learn about resources the mechanism for constraining the plan in APO and for determining the feasibility of the plan and how constrained supply and production planning work together (and how they don’t).

Also, this book talks about constraint-based planning at the supplier level: can a vendor’s production be capacity-constrained?

By reading this book, you will learn:

  • The different resources available in APO, how production resources differ from supply planning resources, and the role resources and other significant constraints play in constraint-based planning.
  • How constraints integrate across the supply planning and production planning applications.
  • The areas of disconnect between supply and production planning applications, and between SNP and PP/DS in particular.
  • The difference between unconstrained (or infinite) planning and constraint-based planning.
  • The benefits of constraint-based planning and how it differs from capacity leveling.
  • Various types of demand, and how backward and forwards were scheduling work.
  • The benefits of using production constraints in the supply planning system, and how SNP and PP/DS can be synchronized to produce the desired output.
  • The methods that can do constraint-based planning in SNP and PP/DS–heuristics, CTM, and optimization–and how to configure these methods.
  • The difference between hard and soft constraints, and how to plan using multiple constraints.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Understanding the Basics of Constraints in Supply and
  • Production Planning Software
  • Chapter 3: Integrating Supply and Production Software with Constraints
  • Chapter 4: Constraint-based Methods in APO
  • Chapter 5: Resources
  • Chapter 6: Capacity-constraining Vendors/Suppliers
  • Chapter 7: The Disconnection Points Between Supply Planning and Production Planning

Software Ratings: Production Planning

Software Ratings

Brightwork Research & Analysis offers the following free production planning and scheduling software analysis and ratings. See by clicking the image below:

software_ratings

https://help.sap.com/saphelp_scm40/helpdata/en/f1/c2d837ffbf2424e10000009b38f889/content.htm

https://wiki.sdn.sap.com/wiki/display/SCM/Difference+between+PDS+and+PPM

https://scn.sap.com/thread/282550

https://help.sap.com/saphelp_em70/helpdata/en/44/386242b85a11d3a8410000e82a3c24/content.htm

Is Multi Sourcing Supported with CTM or even SNP?

Executive Summary

  • Multisourcing is how a planning system can compare and choose from multiple sources of supply.
  • This functionality is supposedly supported by SAP SNP when the optimizer is used. Other important areas to control are priorities and quota arrangements.

Introduction

Multisourcing is the ability for a supply planning system to intelligently choose between alternate sources of supply. One common reason for multi-sourcing is when one location is the primary location, but cannot handle the capacity of the order; then the supply planning system would move to a second or even third location to satisfy the demand. Another reason can be to spread, by rough percentages, the total demand among various sources of supply. Multisourcing is a common requirement that drives companies to use the SNP optimizer.

However, while many companies attempt multi-sourcing in the SNP optimizer, as I explain in this article, very few continue to use it after it is initially activated and tested.

Multi-Sourcing in CTM

I recently came across the requirement for multi-sourcing in CTM. I was somewhat surprised by this as I had never heard of multi-sourcing and CTM used in the same context before. In fact, a search for CTM and multisourcing as well as CTM and “multi-sourcing” in the SAP community network provided no results. However, this is more an issue of terminology. This is because CTM has two methods for picking among different sources of supply.

Multi-Sourcing Versus Alternate Resources / PPMs / PDSs

In addition to being able to pick from different sources, CTM can choose among various alternative resources, both within a location and transportation resources. Resources are selected based upon a priority. So CTM is allowed to switch to a secondary resource/PPM/PDS if the first one is consumed. However, that is a selection of resources within on location. If two production lines make the same product in two different factories, CTM cannot switch to a different factory and change the source of supply based upon a resource becoming consumed in the factory with the resource set to the top priority.

Priorities and Quota Arrangements

The requirement I have been investigating connects to two methods to possible enable multi-sourcing, one being priorities and the second being quota arrangements. Let’s take a look at each of these and see if they allow multisourcing.

Quota Arrangements

Quota arrangements allow a company to set the percentage of supply that will be shipped from a specific location. Therefore if location A is supplied by location B and C, B can be configured to provide 50% of the quantity of product ABC, and C can be set up in the quota to satisfy the other 50%. That is in the documentation. As I have described in this article, the quota arrangement functionality seems larger in print than what is actually in the quota arrangement configuration screen.

Priorities on Transportation Lanes

There are two priorities in the transportation lane. One is the Procurement Priority, and the other is the Distribution Priority. These are both in the product-specific transportation lane view. These can be seen in the screenshot below, about halfway down: Procurement priorities can be sent on transportation lanes. This priority is used to choose among alternative sources of supply. The transportation lane is described in full detail in this article.

The Procurement Priority

This is used to determine the sequence of source locations during deployment. This is used both by the optimizer and by CTM, and not the SNP heuristic. However, it is also used for sourcing, which is during the network supply run. The priority SAP Help has the following to say on how the procurement priority is treated.

“If you have specified the In-House Production procurement type in the location product master, the system considers the procurement priority in the PPM or in the PDS. If you have specified External Procurement as the procurement type, the system considers the procurement priority in the transportation lane. With procurement type In-House Production or External Procurement, the system compares the procurement priority from the transportation lane with the procurement priority in the PPM or PDS. The source of supply with the lower value for the procurement priority has priority over the source of supply with the higher value. The highest procurement priority is the value 0.”

Therefore the priority can be either the transportation lane or the PPM/PDS – but not both.

  • This means that priorities do not provide the Holy Grail of multi-sourcing. (This would theoretically be provided by the SNP cost optimizer, but as multi-sourcing has proven to be impractical in SNP, I will only agree that it is probably provided by the SNP optimizer.)
  • This does not mean that PPMs/PDSs can be alternatively selected between locations. This is called multi-plant planning and is not functionality that is available in APO which you can learn about here, or you can see my book on this topic for more details.

Therefore, a priority controlled source of supply systems means that either a location/transportation lane can have a priority assigned to it, meaning that one location can come online if the demand cannot be satisfied from the primary location, and alternate PPM/PDS can be selected if the primary cannot satisfy demand.

Distribution Priority

The distribution priority interacts with the Fair Share Rule and determines where requirements for deployment are processed when the Fair Share Rule D (Proportional Demands Based upon Priority) is set. Therefore, it has nothing to do with CTM but instead is related to the deployment heuristic.

More on Priorities Verus Quota Arrangements

Supply Chain Management with SAP APO has the following quotes on this functionality.

“CTM switches to alternative sources with a lower priority in case of capacity or material constraint.”

This is a critical topic because it can sometimes be confusing as to how material constraints change or affect the plan. When capacity constraints are used, CTM will not plan to produce an item when there is no capacity. Material constraints, on the other hand, can move a production order to a different resource, or alternative resource. However, a material constraint will not prevent the scheduling of a production order.

“For distribution planning the inbound quota arrangement are the relevant ones. (outbound quota arrangements are used for deployment). Quota arrangements are maintained not only per location, but per means of transport as well. If quota arrangements are maintained, priorities are ignored.”

Therefore, while it may not make sense to apply both priorities and quotas to transportation lanes, as quotas will always supersede priorities – in fact, both can be applied without issue. For instance, quota arrangement may be selectively applied for a specific time of year. At other times the quota arrangement is not applied, and the priority controls the flow.

Alternatively, because priorities are set on the transportation lane, and quota arrangements are set at the product and location combination, priorities can be set at the lane, which applies for products with no quota, and in that case, priorities would apply for all products without a quota arrangement.

Which is the Top Priority: On-Time Delivery, Quota Arrangement or Priority?

While the quota arrangements and priorities can be set, CTM will first attempt to fulfill the demand on time. If this can be done, and a quota arrangement or priority respected then it will take these into account, however, it will not take them into account if it means a late delivery.

Conclusion

CTM can leverage the quota arrangement and the priority system in APO to meet multiple sources of supply requirement, but it is not multi-sourcing. Multisourcing is only theoretically possible in the SNP cost optimizer — yet I have yet to see it implemented and kept “on” at any client. So as a practical matter multi-sourcing does not exist in APO — although this will not stop SAP sales from claiming that it is “standard functionality.”

Brightwork MRP & S&OP Explorer for Constraining

Improving Your Constraint Planning

SAP SNP does not work to constrain resources. It has primarily failures in implementation in both optimization and CTM.

Brightwork Research & Analysis offers the following supply planning tuning software with a new approach to managing capacity constraints, which is free to use in the beginning. See by clicking the image below:

References

Supply Planning Book

SUPPLY

Supply Planning with MRP, DRP and APS Software

Showing the Pathway for Improvement

Supply planning software, and by extension supply planning itself, could be used much more efficiently than it currently is. Why aren’t things better?

Providing an Overall Understanding of Supply Planning in Software

Unlike most books about software, this book showcases more than one vendor. Focusing an entire book on a single software application is beneficial for those that want to use the application in question solely. However, this book is designed for people that want to understand supply planning in systems.

  • What methods fall into APS?
  • How do the different methods work and how do they differ in how they generate output?
  • What is the sequence of supply planning runs?

These types of questions are answered for readers in this book.

This book explains the primary methods that are used for supply planning, the supply planning parameters that control the planning output as well as how they relate to one another.

Who is This Book For?

This book as a practical primer for anyone looking to perform a supply planning software selection, any person beginning a supply planning project, or anyone who just wants to understand supply planning software simply better.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Where Supply Planning Fits Within the Supply Chain Planning Footprint
  • Chapter 3: MRP Explained
  • Chapter 4: DRP Explained
  • Chapter 5: APS Supply Planning Methods
  • Chapter 6: APS for Deployment
  • Chapter 7: Constraint-based Planning
  • Chapter 8: Reorder Point Planning
  • Chapter 9: Planning Parameters
  • Chapter 10: How MRP, DRP, and APS Relate to One Another
  • Chapter 11: Supply Planning Visibility and Master Data Management
  • Chapter 12: Understanding the Difference Between Production Versus Simulation

https://scn.sap.com/thread/465207

https://help.sap.com/saphelp_scm50/helpdata/en/99/7a8e9deb08d648872bc65e720c6337/content.htm
https://books.google.ca/books?id=5CA3y7_LY2MC&pg=PA215&lpg=PA215&dq=multisourcing+ctm&source=bl&ots=xvS1mgEs9S&sig=SVsCjunq_NZMVuUnfWMUo6-hCVE&hl=en&sa=X&ei=X932T73lCcLWqgHouqiLCQ&redir_esc=y#v=onepage&q=multisourcing%20ctm&f=false

How to Understand Fixed and Variable Production Costs in SNP and PP/DS

Executive Summary

  • There are fixed and variable production setup costs for SNP and PP/DS.
  • We cover how they are used and what fixed and variable production costs are frequently set up in practice.
  • We cover how well setup costs are maintained on projects.

Introduction to Fixed Costs and Variable Production Costs in SAP SNP and SAP PP/DS

A common need is to set up production costs in the system for production so they can be picked up by the optimizer. These are fixed and variable production costs. In this example, I will be using the PPM or Production Process Model.

Notice that the costs for both storage and safety stock penalty are declared as a daily value right in the Location Product Master interface. While SNP uses them, these costs relate to production planning. 

How Fixed and Variable Production Costs Are Used by the Optimizer

Both fixed and variable costs can be set up in the PPM (production process model). The higher the fixed costs versus the variable costs, the more incentives there are for long production runs and vice versa. Both fixed costs and variable costs should match, roughly speaking, reality. That is the fixed cost, and variable cost should not be adjusted to change the production run duration.

Secondly, these same fixed and variable costs can be set up for either single-level or multilevel. The single level applies to SNP, and the multi-level applies to PP/DS. Different PPMs can be set up with different costs which are then selected by the optimizer.

Most companies that I have worked with set a single cost per line in their factory, which is then represented by the PPM. So if there are four lines in a factory and ten products made per line, then there would be 40 PPMs, each with their own cost. However, this is just one way to perform the setup; there are many ways to perform a setup.

What the Costs Mean for Production Planning

The majority of costs that are used by the optimizer to calculate a planned output are a variable cost. This applies to the cost of a missed demand, the costs of violating safety stock, storage costs, and transportation costs.

Therefore the cost is set per the basic unit of measure in the planning system, and the costs are incurred per day outcome occurs. So for instance, storage costs in SNP are incurred per unit of measure (case, drum, etc..) per day. So if the storage costs are 50 cents per day per drum, and there are 100 drums stored for ten days, then the storage costs incurred would be $500. This applies to almost all the costs used by the optimizer.

Fixed Costs and Variable Production Costs in Production Planning

However, production costs offer the exception to this rule. A PPM offers both a fixed and variable cost. So if the variable cost is $40 per barrel and the fixed costs (which could be the setup costs combined with the downtime costs) was $1000, and  100 barrels were produced than the cost would be $1000 + (40 x $100 = $4000) or $5000.

If I wanted to set up the PPM this way, I would set it up as the following:

Production Planning Cost Comparison in the Optimizer

The optimizer can compare the storage costs against the production costs, as well as the other three major costs in the SNP (transportation, safety stock, cost of missed demand). For PP/DS, these are not the relevant costs for the optimization. Also, there is an overlap with the fixed costs and the Setup Matrix, which is a more sophisticated way of setting the costs and time of moving from one product to another.

However, given the long-running problems with the Setup Matix, this can be a way of getting around Setup Matrix. (The Setup Matrix is described in detail in this article) However, the functionality of a variable cost per production, which does not consider the next item to be run, is far lower than the hypothetical functionality of the Setup Matrix. But the Setup Matrix functionality is just hypothetical.

How it is Frequently Done in Practice

While most clients I have seen only populate one cost, either variable or fixed, in fact, it makes a lot more sense to enter values in both fields. The fixed costs provide a predisposition against making a production order, which is traded off against the storage costs. In fact both the fixed costs and the minimum lot size predisposition the system against creating production orders, so the fixed cost in the PPM and the lot size should be seen as working in conjunction with one another.

Conclusion

The production costs settings are very important and generally not well set up or well thought through. This results in less efficient production planning. One obvious improvement is to populate both fixed and variable values. They should also be somewhat realistic.

There is a strong tendency in cost optimization is to enter completely phony costs, and when this happens, the costs become divorced from reality which leads to negative long-term implications for advancing the solution. However, attempting to get them to be perfect is also not a very good use of time. This topic is described in this article.

References

Constrained Book

CONSTRAINED

Constrained Supply and Production Planning in SAP APO

How Constrained Supply and Production Planning Works

Constraint-based planning generates something that is appealing to all manufacturers: a feasible supply and production plan. However, constraint-based planning software was first implemented over twenty years ago, and yet few companies (as a percentage that all that have tried) have mastered constraint-based planning.

Getting the Real Story

This book provides the background information, detailed explanations, step-by-step examples, and real-life scenarios to assist a company in becoming proficient at constraint-based planning, along with valuable information about what SAP APO can do for supply and production planning in reality, rather than just in theory. Here you will learn about resources the mechanism for constraining the plan in APO and for determining the feasibility of the plan and how constrained supply and production planning work together (and how they don’t).

Also, this book talks about constraint-based planning at the supplier level: can a vendor’s production be capacity-constrained?

By reading this book, you will learn:

  • The different resources available in APO, how production resources differ from supply planning resources, and the role resources and other significant constraints play in constraint-based planning.
  • How constraints integrate across the supply planning and production planning applications.
  • The areas of disconnect between supply and production planning applications, and between SNP and PP/DS in particular.
  • The difference between unconstrained (or infinite) planning and constraint-based planning.
  • The benefits of constraint-based planning and how it differs from capacity leveling.
  • Various types of demand, and how backward and forwards were scheduling work.
  • The benefits of using production constraints in the supply planning system, and how SNP and PP/DS can be synchronized to produce the desired output.
  • The methods that can do constraint-based planning in SNP and PP/DS–heuristics, CTM, and optimization–and how to configure these methods.
  • The difference between hard and soft constraints, and how to plan using multiple constraints.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Understanding the Basics of Constraints in Supply and
  • Production Planning Software
  • Chapter 3: Integrating Supply and Production Software with Constraints
  • Chapter 4: Constraint-based Methods in APO
  • Chapter 5: Resources
  • Chapter 6: Capacity-constraining Vendors/Suppliers
  • Chapter 7: The Disconnection Points Between Supply Planning and Production Planning

How to Understand Planning Areas in APO

Executive Summary

  • We cover the background on APO Planning Areas.
  • This includes creating the Planning Areas, the aggregate Planning Area, and its activation.
  • The Planning Area has important interactions with macros.

Introduction

Planning areas are the central data structures for Demand Planning and Supply Network Planning.

To go to planning areas, or to create planning areas go to the following:

Both the planning object structure and the planning area can be set up from the same transaction.

The Path

Supply Network Planning – Environment – Current Settings – Administration of Demand Planning and Supply Network Planning

They hold key figures. To find out more about key figures see this article.

Here is an example of a planning object structure, it has a number of characteristics. They must be added to create the POS. When we create one we both add characteristics

Creating the Planning Area

The next step is to create a Planning Area pointing to the Planning Object Structure.


Further, it will ask for other details regarding this planning area. Below is the first tab:


The next tab includes the Key Figures (“Key Figures” is just an overly fancy term which means the forecasted line item. Things that you plan that can hold numerical values are Key Figures.)

Now it is very easy to add Key Figures willy-nilly, however, of course, it is important to remember which need to be set up.

Aggregate Planning Tab

Next, its required to select the Aggregate Planning tab which has the various hierarchies to select from. All of these selections need to be set up prior to arriving at this screen. These selections set the level of planning aggregation that you want to do in this particular planning area. After this is filled in its time to save the Planning Area — which creates it.


The key figure aggregates essentially decide how different key figures will be aggregated (the aggregation type – in this case it is “Pro Rata” which is “S.” Here is what we get when we select the drop down.

The next field is how the key figure is disaggregated. The value currently selected which is P, which stands for proportional allocation.


However, this is relatively simple decision-making compared to which key figures are to actually be selected. This deserves a great deal of attention.

Once we back out of the S&DP Administration and then go back in we can see that the Planning Area has been created, but it is not yet activated.

Planning Area Activation

Now we need to perform the activation. This is not done in the main area of the object, but requires you go out to the listing level (why, we don’t know). So you save in the item view but activate in the list view. Below we have a screenshot of the list view. We right mouse click and then select Create Time Series Object.


It’s important to fill in the dates. If not, it will activate the time series object for too long of a period of time, and this will tie up the system. This is particularly true since we are setting this up as a test. So we will choose a short time period.


Next, we will include the Planning Version.


Now we are ready to create the time series object. It’s important to remember, this creates the time series object, but does not necessarily populate it with data.


This shows it has been activated.

APO Characteristics

It’s important to recognize that DP and SNP use different characteristics, and thus different planning areas and planning object structures are created for DP and SNP.

What Are Planning Areas?

These are designed for creating an abstraction on top of materials so they can be managed in a planning process. Key figures are determined in the planning book

SNP comes with the following standard planning areas:

  • “9ASNP01 (time series-based)
  • 9ASNP02 (order-based)
  • 9ASNP03 (for scheduling agreement processing)
  • 9ASNP04 (for optimization-based planning with time-dependent restrictions)
  • 9ASNP05 (for safety stock planning)
  • 9AVMI03 (for deployment heuristic with consideration of demands in the source location)”

APO Planning Books

Planning books exist in both SNP and DP. They allow are ostensibly designed to allow the planner to effectively see their material and quantities. However, in practice, they are actually very difficult to use and are substantially lower in functionality than Excel. This is of course not a problem limited to SAP, and is described in this article.

This is why so many planners continue to use Excel even after APO or SCM is installed.

APO Macros

Planning books allow for the creation of macros, which are essentially formulas that calculate a specific cell or row in the planning book. Macros can be set up in the planning book for how key figures (what is to be measured) such as Total Demand and Stock on Hand, Safety Stock, Reorder Point, Target Stock Level, etc…Macros are used to perform calculations on the planning book key figures. They are created in the Macro Workbench

Below is planning book. The main control is under the Planning Book/Data view. To the right (unseen here) is a spreadsheet view.

Below is how to configure planning books. Planning book configuration is very important and poorly fitting planning books for the task at hand is a major reason for SAP APO implementations can fail.

Next the key figures are selected for the planning book…

And then the characteristics.

That is primarily what a planning book is..key figures and characteristics by a time dimension.

References

Planning Horizons Book

TIMING

Planning Horizons, Calendars, and Timings in SAP APO

Making Sense of the Many Timing Setting in APO

APO is the most fully-featured supply chain planning suite on the market, and its sheer number of lead time and timing settings makes it one of the most complex as well! Keeping these settings straight and associating the lead times and timings across the modules—as well as coordinating the lead time and timings with the connected systems—is a challenge in APO. If you would like to better understand the lead time and timing settings in APO and other advanced planning systems, or if your company is planning to implement APO, this book is for you. Here you will learn about the lead time and timing settings, planning horizons and calendars in four of the most commonly-implemented APO applications (DP, SNP, PP/DS and GATP), and how timing settings in one APO module interact with and impact upon the timing settings in the other APO modules.

The Benefits of this Understanding These Settings

By reading this book you will:

  • Gain a comprehensive overview of lead time and timings in the four most popular APO applications: DP, SNP, PP/
  • DS and GATP.
  • Get an overview of what is created in each application and what is passed between the modules.
  • Understand how the planning horizons, calendars and timing settings of DP, SNP, PP/DS and GATP
  • relate to each other, how they influence the planning output, and how they connect with SAP/ERP.
  • Be able to differentiate between the various lead time and timing settings in APO and explain how they relate to
  • one another.
  • Benefit by getting a head start on understanding timing settings before the demo or proof-of-concept
  • stage of a project.
  • Avoid costly implementation errors by learning how to navigate APO’s complex lead time and timing settings.
  • Understand lead time and timing setting directions (backward and forward).
  • Learn how to support a global business with a single APO application.

A Book Based in Reality

The book provides many examples from real life project experiences, the emphasis being on the reality of APO projects.

Interconnected to Web Information

In order the keep the book at a manageable and easily readable length, the book also provides numerous links out to the Brightwork Research & Analysis site, where supporting articles allow readers to get into more detail on topics that interest them.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: DP Planning Horizons, Calendars, and Timings
  • Chapter 3: SNP Planning Horizons, Calendars, and Timings
  • Chapter 4: PP/DS Planning Horizons, Calendars, and Timings
  • Chapter 5: Resource Calendars and Timings
  • Chapter 6: GATP Planning Horizons, Calendars, and Timings
  • Chapter 7: Transfer Timings Between SAP APO and SAP ERP
  • Chapter 8: Critical Timing Topics
  • Chapter 9: Timing Integration Between DP, SNP, PP/DS and GATP
  • Chapter 1o: Forecast Consumption, Allocation Consumption, Scheduling Directions and Timings
  • Chapter 11: Conclusion

Planning Horizons Book

TIMING

Planning Horizons, Calendars, and Timings in SAP APO

Making Sense of the Many Timing Setting in APO

APO is the most fully-featured supply chain planning suite on the market, and its sheer number of lead time and timing settings makes it one of the most complex as well! Keeping these settings straight and associating the lead times and timings across the modules—as well as coordinating the lead time and timings with the connected systems—is a challenge in APO. If you would like to better understand the lead time and timing settings in APO and other advanced planning systems, or if your company is planning to implement APO, this book is for you. Here you will learn about the lead time and timing settings, planning horizons and calendars in four of the most commonly-implemented APO applications (DP, SNP, PP/DS and GATP), and how timing settings in one APO module interact with and impact upon the timing settings in the other APO modules.

The Benefits of this Understanding These Settings

By reading this book you will:

  • Gain a comprehensive overview of lead time and timings in the four most popular APO applications: DP, SNP, PP/
  • DS and GATP.
  • Get an overview of what is created in each application and what is passed between the modules.
  • Understand how the planning horizons, calendars and timing settings of DP, SNP, PP/DS and GATP
  • relate to each other, how they influence the planning output, and how they connect with SAP/ERP.
  • Be able to differentiate between the various lead time and timing settings in APO and explain how they relate to
  • one another.
  • Benefit by getting a head start on understanding timing settings before the demo or proof-of-concept
  • stage of a project.
  • Avoid costly implementation errors by learning how to navigate APO’s complex lead time and timing settings.
  • Understand lead time and timing setting directions (backward and forward).
  • Learn how to support a global business with a single APO application.

A Book Based in Reality

The book provides many examples from real life project experiences, the emphasis being on the reality of APO projects.

Interconnected to Web Information

In order the keep the book at a manageable and easily readable length, the book also provides numerous links out to the Brightwork Research & Analysis site, where supporting articles allow readers to get into more detail on topics that interest them.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: DP Planning Horizons, Calendars, and Timings
  • Chapter 3: SNP Planning Horizons, Calendars, and Timings
  • Chapter 4: PP/DS Planning Horizons, Calendars, and Timings
  • Chapter 5: Resource Calendars and Timings
  • Chapter 6: GATP Planning Horizons, Calendars, and Timings
  • Chapter 7: Transfer Timings Between SAP APO and SAP ERP
  • Chapter 8: Critical Timing Topics
  • Chapter 9: Timing Integration Between DP, SNP, PP/DS and GATP
  • Chapter 1o: Forecast Consumption, Allocation Consumption, Scheduling Directions and Timings
  • Chapter 11: Conclusion

Software Ratings

Brightwork Research & Analysis offers the following free demand planning software analysis and ratings. See by clicking the image below:

software_ratings

Finite and Infinite Scheduling in PP/DS

What This Article Covers

  • PP/DS finite scheduling and the its issues
  • Resource maintenance
  • The problem with how many large consulting companies like IBM approach discussing constraints with the client.
  • Being in constraint denial

Constrained or Unconstrained Detailed Scheduling

It’s important to consider and evaluate the use of the sentence

PP/DS performs finite based scheduling.

The reason it is important to evaluate the comment is for several reasons:

  1. PP/DS can be run in either finite or infinite mode for scheduling.
  2. The value that are entered in the PPMs or PDSs may be “placeholders.”
  3. The constraint values may be incorrect when the project goes live, or may start as an accurate reflection of factory constraints, and then drift from their initial accuracy due to an inability of maintaining this master data.

Constrained?

I once had a very strange conversation with a consultant who, in a meeting with S&OP, proposed that one way or another the plan would be constrained because the PPMs would have to have values in them for resources in order to “activate.” When I pointed out that these values were not necessarily accurate, he agreed for a moment, but then reverted to his initial track of talking about the constrained plan that would be sent to S&OP.

Configuring for Yourself, Not for the Client: How IBM Does Things

I have this experience relatively frequently with consultants from the big consulting firms as they typically like to configure software regardless of its benefit to the company as it is a method for enhancing their resume. This particular consultant worked for IBM, but all the big consulting companies have moved in this direction. With the increasing focus on technical wizardry for its own sake, fewer and fewer SAP consultants understand the businesses they are configuring the system for. It also results in less and less sustainable solutions for clients. I frequently run into mis-designed solutions that were based upon the need for padding billing hours and resume building needs of the consultant by the major consulting companies with increased frequency. You can read more about these issues at the link and this link.

Misunderstood Constraints on a Previous Project

On another project I evaluated their PP/DS installation that they thought was constraining the plan, only to find that the PPM resources were set to infinite capacity and that the only constrain was a lot size.

Finite Scheduling Indicator

Resources can be checked for whether they are constraining, or planning in a finite way by checking the resource master and looking for the finite scheduling indicator. If this indicator is not set, the resources is not constraining. Furthermore, resources can be configured with a “finiteness level,” which means that the resource can be treated as variably finite depending upon the application (i.e. infinite for PP and finitely for DS) Additionally, finite or infinite scheduling can be set in the in global PP/DS settings.

It took over 4 meetings with business representatives who did not believe me, because they said that what I said could not be true because SAP had explicitly told them this is what PP/DS did, and that…

…PP/DS does constraint based planning.

My response was that..

PP/DS has the capability to do constraint based planning, but it must be configured properly to do so.

SAP was effectively hiding this fact from the client, but what the business could not figure out was why their production plan was so unusable. SAP eventually had the analysis into this area buried. The production plan was still ignored by the factory, but the implementation problems were blamed on the business who were “clueless” and just did not “get it.” However, all they had to do is check the SAP documentation, where it clearly states that finite scheduling is only one way of running PP/DS.

Many Problems

There are many reasons for PP/DS implementations to not meet expectations, however, one of the most common is companies have a great deal of difficulty in keeping their resources and PPMs up to date with the actual resource capacities in the factory. There are two aspects of this problem. One is the lack of investment many companies make in their resource maintainance which is independent of the software. However, the other issue is how easy the master data is to maintain in the system, and this differs greatly depending upon the application, with resource data in SAP APO being one of the more difficult to manage comparatively.

The fact is that MDM will not ride to the rescue on maintaining PPMs and resources, and that the method that SAP has provided to maintenance of this master data is a significant burden on the company to manage. This is why I recommend that companies not get too excited after they take a module live, because the real proof of the maintainability of the systems is several months after go-live.

References

SCM 250 PP/DS Training Manual

Questions? 

Did this article make sense? Was it surprising to you, or have you had the same experiences? If you have any expertise in this area, comment below, and we will respond. 

 

How to Understand SAP APO Resources and Resource Types

Executive Summary

  • SAP APO has a variety of resource types, but only a limited number are commonly used and the resource types differ from one another in important ways and differ per APO module.

Introduction

Resources are the mechanism for both constraining the plan in SAP APO and determining if a plan is feasible. In this article, we will cover into resources types.

What Are SAP APO Resource Types?

Resources apply to SNP, PP/DS, and TP/VS.

However, a resource type is the category of the resource, and because different resources do different things, there are different resource types in SAP APO. The most common resources used in SAP APO are production resources, and this is in both SNP and PP/DS. Therefore SNP creates the “initial production plan,” in addition to creating the initial or network supply plan. Then PP/DS, when deployed, follow the supply plan and produces are more detailed production plan. SNP can plan down to the daily bucket, however, within the day, the supply planning system lacks visibility.

When planning occurs for production within the day, this is called scheduling and is only performed by the DS portion of PP/DS. An interesting article on a real requirement at a client that describes the interaction between SNP and PP/DS on the same production resources can be found at this article.

A Listing of SAP APO Resource Types?

The different resources that can be used in APO are clear from the tabs in the resource view which can be found in the following way:

This brings us to the resource view, where each resource type is represented by a tab.

Resource Types

Some of the items listed below are used by multiple modules, but some, such as vehicle resources, are specific to only one model. The resource types below ship with SAP standard with APO.

Each type is an alternative to the characteristic SAP APO Resource Type.

  • Multi activity: Multiple activities can be processed at one time. (for precise scheduling – can be scheduled to the second – used by PP/DS)
  • Single activity: The simplest type of resource where only one activity can be processed at a time. (for precise scheduling – can be scheduled to the second – used by PP/DS, also used by CTM)
  • Multi –
  • Multi-mixed: can be used by any module in APO.
  • Bucket: Capacities are defined by quantities or daily rates. (these are often used by SNP, often used by CTM)
  • Line: Used for production planning
  • Line mixed: Same as a line resource, but also used by SNP.
  • Transportation: Used by SNP to model transportation lead times and costs, allowing it to perform supply network planning.
  • Vehicle: (as opposed to Transportation resources which are specific to SNP). Vehicle resources are multidimensional.
  • Handling resource: (can be a single or multi-resource) – examples include loading and unloading equipment
  • Calendar: These are expressed in time, and not quantities.

How Resources Vary by Module

The resources below ship with SCM. Each type is an alternative of the characteristic APO Resource Type.

SNP Resources

  • Bucket resources
  • Single-mixed Resources
  • Multi-mixed Resources
  • Transportation Resources

CTM Resources

  • Multi activity resources
  • Single activity resources

PPDS Resources

  • Multi activity resources
  • Single activity resources
  • Line resources
  • Line mixed resources

TPVS Resources

  • Vehicle resources
  • Handling resource
  • Calendar

EWM Resources

Used to represent users or equipment in the warehouse. They are assigned to warehouses in EWM.

What is interesting is that TPVS and EWM do not use PPMs to organize their resources. DP uses PPMs, but does not use resources. See more about PPMs on our PPM post.

For details on what these different resources mean and what they do, see this article.

For more details on resources, see this article.

Conclusion

Each of these resource types has a different set of options regarding how their capacity is set up and how their constraints are configured, as each resource applies to a different physical situation. As you can see different resources apply to different modules, and some resources are used by multiple modules.

To read more about this see this article.

The easiest way for a person coming from SAP ERP to understand SAP APO resources is by understanding a work center in PP.

To read more about this, see this blog article.

Brightwork MRP & S&OP Explorer for Order Optimization

Order Sizing and Optimization

SAP ECC and SNP cannot be run effectively for MRP and supply planning without help from another application.

Order optimization is necessary in order to get the predicted value from ERP and other supply planning applications. The Brightwork MRP & S&OP Explorer does exactly this, and it is free to use in the beginning until it sees “serious usage.” It is permanently free to academics and students. See by clicking the image below:

References

Constrained Book

CONSTRAINED

Constrained Supply and Production Planning in SAP APO

How Constrained Supply and Production Planning Works

Constraint-based planning generates something that is appealing to all manufacturers: a feasible supply and production plan. However, constraint-based planning software was first implemented over twenty years ago, and yet few companies (as a percentage that all that have tried) have mastered constraint-based planning.

Getting the Real Story

This book provides the background information, detailed explanations, step-by-step examples, and real-life scenarios to assist a company in becoming proficient at constraint-based planning, along with valuable information about what SAP APO can do for supply and production planning in reality, rather than just in theory. Here you will learn about resources the mechanism for constraining the plan in APO and for determining the feasibility of the plan and how constrained supply and production planning work together (and how they don’t).

Also, this book talks about constraint-based planning at the supplier level: can a vendor’s production be capacity-constrained?

By reading this book, you will learn:

  • The different resources available in APO, how production resources differ from supply planning resources, and the role resources and other significant constraints play in constraint-based planning.
  • How constraints integrate across the supply planning and production planning applications.
  • The areas of disconnect between supply and production planning applications, and between SNP and PP/DS in particular.
  • The difference between unconstrained (or infinite) planning and constraint-based planning.
  • The benefits of constraint-based planning and how it differs from capacity leveling.
  • Various types of demand, and how backward and forwards were scheduling work.
  • The benefits of using production constraints in the supply planning system, and how SNP and PP/DS can be synchronized to produce the desired output.
  • The methods that can do constraint-based planning in SNP and PP/DS–heuristics, CTM, and optimization–and how to configure these methods.
  • The difference between hard and soft constraints, and how to plan using multiple constraints.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Understanding the Basics of Constraints in Supply and
  • Production Planning Software
  • Chapter 3: Integrating Supply and Production Software with Constraints
  • Chapter 4: Constraint-based Methods in APO
  • Chapter 5: Resources
  • Chapter 6: Capacity-constraining Vendors/Suppliers
  • Chapter 7: The Disconnection Points Between Supply Planning and Production Planning

https://help.sap.com/saphelp_scm70/helpdata/EN/1d/101d3bf1f7cb1de10000000a11402f/frameset.htm

https://help.sap.com/saphelp_scm40/helpdata/en/74/a07337e68ac526e10000009b38f889/content.htm

How to Use Lot Size in SAP APO

Executive Summary

  • A lot size has a specific definition and there are multiple approaches to setting the lot size.
  • We cover where lot sizing is set in APO.
  • We cover lot for lot versus fixed lot size versus periodic lot sizing.

Introduction: The Importance of Lot Sizes

Lot sizes are necessary to perform order batching. You will learn how various lot sizing is used.

What Are Lot Sizes?

Lot size is one of the most important concepts in supply chain management. While doing some research, I was looking for an online definition of lot size. I was disappointed in what I found, so I thought I would write a post on the topic.

Let us start with the definition I developed. As this site is dedicated to software, the definition will have a software orientation or bias. It applies to SAP APO but applies equally to any supply planning application.

“The lot size is the order batch quantity which is implemented in the system to control and conform production orders and purchase orders to the objectives of the company. The lot size prevents orders from being created in non-economic quantities, and serves to batch orders.”

At a high level, the lot size is a value that prevents the company from procuring or producing in quantities that would not be economical. However, there are a variety of ways of setting the lot size.

Finding a Good Definition in the Literature

It is often beneficial to check several definitions to get a full idea of a topic. Of the books I am familiar with, I like Marc Hoppe’s chapter on lot size in “Inventory Optimization with SAP,” this is one of the best explanations I could find.

Hoppe’s Explanation

Hoppe explains the lot size well as a trade-off between inventory management and production or between inventory management and procurement. I have a graphic below, which is a simple graphic for lot size it demonstrates the relationship as two points of emphasis fighting against each other, with the best solution being somewhere in the middle.

Reorder Point

A lot size can be determined by an economic order quantity formula. This trades off the holding costs versus the ordering cost.

Understanding The Basic Concept of Lot Size: A Formula of Tradeoffs

Both production and procurement incur costs per purchase order or manufacturing order. Meanwhile inventory management incurs holding costs for inventory, and of course, sales incur a cost of a lost sale if too little inventory is carried. Because lost sales are not quantified by many companies, this cost tends to get overlooked.

However, it is a real cost and efforts should be made to quantify its cost. This can be as simple as having order takers enter order requests that are made but cannot be fulfilled.

An additional cost which is often not considered is the transportation cost – inventory management cost trade-off.

As explained in the book “Managing the Supply Chain,” larger orders incur a smaller per unit shipping cost — generally.

What is Meant by the Term “Economic” on Lot Size

Generally speaking, when different costs are used to derive a lot size, the lot size is said to be “economic.” This is only one of many ways of determining lot size. Other methods include:

  • ABC Guidelines (where A items may have 1-5 days of supply, while B items may have 20 days of supply – this method is strongly financially driven)
  • Manual discretion

How Lot Sizes are Often Set in Reality

Optimally, and industry is far away from optimality, the lot size – which is the order amount should be determined by the trade-offs between inventory holding costs and production and procurement costs. This is called economic lot sizes rather than deterministic lot sizes. Deterministic is a fancy operation research term meaning predictable or static.

Understanding Reality and the Lot Size

What happens, in fact, is quite embarrassing, as executive compensation driven by short-term stock options promotes many companies to run with inventories that are simply too low, often justified by Lean consultants as a “best practice” or by various Lean initiates internal to the company. This article describes some of the problems with the application of Lean to supply planning.

A second reason economic lot sizes are not used is that they are more complex to implement than static lot sizes. While this discussion is outside of the scope of this article, it is important to note that the academic or strictly technical approach to inventory control is not applied at very many companies.

How SAP APO Uses Lot Size

In SAP APO as with other supply planning applications, the lot size approach has a tremendous impact on the results of the plan. It is one of the primary ways of creating order batches that are economical.

I have seen several occasions where an overemphasis on configuration and detailed planning has been placed into SCM. Only to have the output disaggregated by unnecessarily small lot sizes. It’s important to get the different parties on board with the lot size selected. Lot size discussions and meetings are intensely political, but they must be held.

Let us take just inventory management’s view into account to reduce argumentation (which I have seen done). This is not going to result in a happy and accepted SCM implementation. No matter how esoteric and compliant the SCM configuration, without cross-departmental agreement on the single lot size, implementations have a serious problem with buy-in.

Using Dynamic Lot Sizes

Because of the issues related to the paragraph above, dynamic lot sizes make a lot of sense. In fact, unless the project is quite limited in its budget, the only justification for fixed lot sizes I can see are for minimum order quantities (such as pallets) or supplier minimum quantities that are larger than the economic-based lead times would recommend. This condition is far more common in service parts, so for finished goods planning, dynamic lot sizes should be the rule.

Economic Lot Sizes

The difference between commercial and dynamic lot sizes can be confusing. Both are desirable. Economic lot size means that the trade-offs between inventory and stock out costs and production and procurement costs have been calculated. Dynamic lot sizes only say that the lot size value is changed over time. It does not imply that the lot size was quantitatively determined with any consideration for economic order quantities. The ultimate desired state is to have lot sizes that are both dynamic and commercial.

One perfect example of the benefit of both commercial and dynamic lot sizes is in the event of price changes or temporary discount. Without the ability to have commercial and dynamic lot sizes, companies either lose the capacity to take advantage of temporary discounts or must rely upon their planners to manually increase the order quantities.

Lot Size in Cost Optimization

There is a particular way that the lot size can be adjusted in the SNP cost optimizer. Not wanting to make this article too long, I have included the link to how this works in the link.

Lot Size in SAP ERP and SAP APO

Both SAP ERP and SAP APO have lot size fields. Since only critical materials should be planned in SAP APO, all other non-critical materials will go out on the lot size entered into the SAP ERP Material Master. For those items scheduled in SAP APO, the value entered in the Lot Size Unit field of the Product Master overrule any value that is entered in SAP ERP.

Here is the tab for lot size in the SAP APO Product Master

Lot Size Tab

Lot for Lot Versus Versus Fixed Lot Size Versus Periodic Lot Sizing

SAP APO has a number of lot size options:

  • Lot for Lot: Lot for Lot is probably one of the most misnamed methods that exist in lot sizing. Lot of lot means nothing more than no lot sizing. That is the order quantity sets the lot size. Why “no lot size” was not used as the default explanation rather than lot for lot, which sounds like some lot sizing is being performed is unknown.
  • Fixed Lot Size: Fixed Lot Size is used when the lot size calculation is determined outside of the system.
  • Periodic Lot Size: this is when the lot size is set by period rather than by quantity. So if the demand averages 100 per month, and the Periodic Lot Size is selected, and then a month is used, then this translates into a lot size of 100 (roughly speaking)

Lot sizing is performed to prevent the system from ordering lot for lot. For this reason lot for lot should be called “as per demand,” or “non lot sizing” rather than lot for lot. Under lot for lot if a customer demands 5 units, the ordering is placed for 5 units.

Lot of lot ordering is not economical because it orders in the quantities the item is demanded.

However, in addition to the Product Master, lot sizes can be set in the PPM.

Fixed lot size: The SNP optimizer considers the value you specified for the fixed lot size as the minimum lot size. Every time the PPM is executed, the PPM output quantity (the output component quantity) corresponds to this fixed lot size. – SAP Help Super Advanced Lot Sizing and SNC

Although the PPM is not a good place to maintain lot size information.

Transporation Lot Sizes in SNP

These lot sizes are applied only to transportation lanes.  They serve to set a constraint upon the lane to make the loads that are built more realistic.

Both a minimum and maximum lot size can be set.

SNP Profiles

TBL Lot Sizes

Conclusion

Lot sizes are one of the major master data elements to SAP SNP, and to supply planning and production planning systems. Within APO the standard options of Lot for Lot, Fixed Lot Size and Periodic Lot Size, along with variations for each are available.

But the lot sizing functionality in SAP is the least interesting part about lot sizing. The interesting part is how to calculate the lot sizing that ends up being set in SAP.

The Problem: Maintaining Inventory Parameters

A major part of supply planning is inventory parameters. These parameters include values like safety stock or days of supply, rounding value, and lot size/economic order quantity and minimum order quantity. Whatever the planning procedure that is used, these parameters control what the supply planning system does.

Testing of the extracted parameters of ERP and external supply planning systems clearly shows that these values are poorly maintained. The result is far worse planning results than could be obtained otherwise.

Being Part of the Solution: Our Evolution of Thinking on Maintaining Reorder Points in ECC or APO

Maintaining reorder points in APO or ECC comes with a number of negatives that tend to not be discussed. One issue is that when using APO or ECC, the EOQ values and other inventory parameters are typically managed on a “one by one” basis. This leads to individual planners entering values without any consideration for how inventory parameters are set across the supply network. We have developed a SaaS application that sets the inventory parameters for ECC or APO or both systems externally, and that allows for simulations to be created very quickly. These parameters can then be easily exported and it allows for far more control over the parameters in APO and ECC. Both APO and ECC are designed to receive parameters, they are not designed to develop the parameters.

In our testing, the approach, which is within the Brightwork Explorer is one of the most effective methods for managing planning in SAP applications.

Brightwork MRP & S&OP Explorer for Order Optimization

Order Sizing and Optimization

SAP ECC and SNP cannot be run effectively for MRP and supply planning without help from another application.

Order optimization is necessary in order to get the predicted value from ERP and other supply planning applications. The Brightwork MRP & S&OP Explorer does exactly this, and it is free to use in the beginning until it sees “serious usage.” It is permanently free to academics and students. See by clicking the image below:

References

Lean Reorder Point Book


Lean and Reorder Point 2

Lean and Reorder Point Planning: Implementing the Approach the Right Way in Software

A Lost Art of Reorder Point Setting?

Setting reorder points is a bit of a lost art as company after company over-rely upon advanced supply planning methods to create the supply plan. Proponents of Lean are often in companies trying to get a movement to Lean. However, how does one implement Lean in software?

Implementing Lean in Software

All supply planning applications have “Lean” controls built within them. And there are in fact some situations where reorder points will provide a superior output. With supply planning, even within a single company, it is not one size fits all. The trick is understanding when to deploy each of the approaches available in software that companies already own.

Are Reorder Points Too Simple?

Reorder points are often considered to be simplistic, but under the exact circumstances, they work quite well.

There are simply a great number of misunderstandings regarding reorder points – misunderstandings that this book helps clear up.

Rather than “picking a side,” this book shows the advantages and disadvantages of each.

  • Understand the Lean Versus the MRP debate.
  • How Lean relates to reordering points.
  • Understand when to use reorder points.
  • When to use reorder points versus MRP.
  • The relationship between forecastability and reorder points.
  • How to mix Lean/re-order points and MRP to more efficiently perform supply planning.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: The Lean versus MRP Debate.
  • Chapter 3: Where Supply Planning Fits Within The Supply Plan
  • Chapter 4: Reorder Point Planning
  • Chapter 5: Lean Planning.
  • Chapter 6: Where Lean and Reorder Points are Applicable
  • Chapter 7: Determining When to use Lean Versus MRP
  • Chapter 8: Mixing Lean and Reorder Points with MRP-Type Planning

https://www.amazon.com/Inventory-Optimization-SAP-Marc-Hoppe/dp/1592290973

https://help.sap.com/saphelp_scm41/helpdata/en/fc/217d3cf7ffd118e10000000a11405a/content.htm

How to Understand PPDS Production Planning and Scheduling Heuristics

Executive Summary

  • SNP and PPDS both use heuristics.
  • We cover what are the different heuristics in PPDS and the two heuristics used by SNP.
  • How frequently are the PPDS heuristics implemented versus the optimizer on actual projects?

Introduction: The SNP Heuristic Versus the PPDS Heuristics

As opposed to PPDS, there are just two SNP heuristic. I previously had the SNP heuristic coverage this article but moved to the link below to prevent the article from being too big. You will learn how these heuristics are used.

PPDS Production Scheduling Heuristics

There are two major categories of heuristics in PP/DS. This article will cover the first type, or production planning heuristics. Production scheduling heuristics are covered in this article.

What Are Heuristics Generally?

Heuristics have a general meaning, which is important to understand before moving on to what they mean in SAP. We found a nice definition in Wikipedia that we wanted to list here first.

“Heuristic (pronounced /hjʊˈrɪstɨk/, from the Greek “Εὑρίσκω” for “find” or “discover”) is an adjective for experience-based techniques that help in problem solving, learning and discovery. A heuristic method is particularly used to rapidly come to a solution that is hoped to be close to the best possible answer, or ‘optimal solution’. Heuristics are “rules of thumb”, educated guesses, intuitive judgments or simply common sense. Heuristics as a noun is another name for heuristic methods.

In more precise terms, heuristics stand for strategies using readily accessible, though loosely applicable, information to control problem solving in human beings and machines.”Wikipedia

Heuristics can have many steps or just one step. For instance, there is only one heuristic for SNP to create the network supply plan, but it is multi-step. PP/DS has many heuristics, but may of them be considered single-step. Two that are multi-step emulate MRP. Some things that are very simple and don’t do anything to create the production plan or production scheduled are heuristics in PPDS. One example of this would be

One example of this would be SAP_PP_011 – Delete pegging relationships. This needs to be combined with other heuristics before a production plan can be created.

Heuristics in SAP APO

Heuristics are methods for matching supply and demand. Heuristics exist in both SNP and PPDS. However, in SNP you have the option of running PPDS heuristics. In SCM heuristics schedule infinitely, so they are unconstrained planning. This is the opposite of using the PPDS optimizer optimizes against fixed constraints.

PPDS Heuristics

Specific PP/DS heuristics are available for planning and scheduling. They can be found at the following locations in SCM.

The standard option is “Planning in Planning Run.”

Advanced Planning and Optimization – Supply Chain Planning – Production Planning and Detailed Scheduling – Maintain Planning Procedures

Advanced Planning and Optimization – Supply Chain Planning – Production Planning and Detailed Scheduling – Heuristics – Maintain Heuristics

Heuristic Categories

Heuristics are categorized in APO as either Product (aka lot-sizing procedures), Production Planning Runs (aka process control) or Service Heuristics. The heuristics for each category are listed below.

Product Heuristics

Are further broken down into either Static/Periodic or Optimizing Procedure.
Static, periodic

(these all simply lot sizing heuristics. For instance, the Planning Standard Lots plans products using the lot size in the product master)

  1. SAP_PP_002 – planning standard lots
  2. SAP_PP_003 – plan shortage quantities
  3. SAP_PP_004 – plan standard lots in 3 horizons
  4. SAP_PP_007 – reorder point planning
  5. SAP_PP_C001 – Plan standard lots for county. I/O
  6. SAP_PP_Q001 – quota arrangements

These allow various lot sizes or quotas be the primary planning algorithm.

Optimization procedures

  1. SAP_PP_005 – Part period balancing
  2. SAP_PP_006 – Least unit cost procedure
  3. SAP_PP_013 – Groff procedure

PPDS Production Planning Runs

There is only two Production Planning Runs or Process Control Heuristics, and they mostly emulate MRP. Their only purpose is process control.

  1. SAP_MRP_001 – Production planning (very fast) (applicable for mass applications) (shortage is shown using alerts) This procedure essentially blows out the MRP by the low-level code (or the top item, then the subcomponents and so on). = MRP
  2. SAP_MRP_002 – Product planning does the opposite. It plans all top-level materials and components at once. (aka plan components immediately, if a dependent requirement was created for them in the planning of the superior product).
An interesting result of this is that because MRP is both a supply planning and production planning method,  PPDS can create STRs with an MRP run (which is a PPDS heuristic – SAP_MRP_001). Furthermore, the PPDS Tab has the following “supply planning” deployment “as opposed to the initial supply plan/MPS/S&OP run oriented fields. See the screenshot below:
  1. Fair Share Rule
  2. Pull Deployment Horizon
  3. Push Deployment Horizon
  4. SNP Checking Horizon

Service Heuristics

These do something that matches other heuristics I have worked with in the past.

  • SAP_PP_008 – Rescheduling bottom up
  • SAP_PP_009 – Rescheduling bottom up
  • SAP_PP_010 – Rescheduling top down
  • SAP_PP_019 – Fix pegging relationships
  • SAP_PP_011 – Delete pegging relationships
  • SAP_PP_012 – Change order priorities
  • SAP_PP_018 – Generate safety stock in SAP liveCache
  • SAP_PP_020 – Start numbering algorithm
  • SAP_PP_015 – For deciding which requirements are to be modified and when
  • SAP_PP_014 – Ascertaining PL Ind Requirements: for evaluating any outstanding planned independent requirements.

___________________________________________

Priorities with SAP_PP_012

If you enter priorities in the sales order, these are inherited in the assigned planned order. This may cause problems if you have a planned order with the priority that later in a new situation is linked to another sales order (with a different priority) because the priority in the planned order cannot be changed when the pegging relationships are formed again. For such a situation, you can use service heuristic SAP_PP_012 to adjust the priorities in the planned order to the priorities of the linked sales orders.

____________________________________________

Repetitive Manufacturing in SAP APO

Repetitive manufacturing is designed for the following environments:

  • The same or similar products are made over a long production run (or batch).
  • The production is more of a batch than a specific order.
  • The products produced to follow the same routing and sequence.
  • The routing is simple.

However, the majority of repetitive manufacturing functionality resides on the SAP ERP side which is described in this article. The repetitive manufacturing functionality in PP/DS comes down to the heuristics that are either defined as repetitive, or heuristics that repetitive environments would use. I have both types described in this article. A final repetitive feature is the ability to perform backflushing in APO.

Other Features of Repetitive Manufacturing in APO

This includes:

  • Can be used for make to stock production.
  • Backflushing can be performed in APO.
  • Allows for continuous input/output. That is material staging can be distributed over various periods. This is different from discrete where inputs must 100% precede the output. (this is what the SAP_PP_C001 heuristics does) It generates discrete/continual receipts for discrete/continual products.
  • The initial production plan can be run with forward scheduling in any of the methods in SNP. This is described in this article.

Repetitive Manufacturing Production Planning Heuristics

There are two repetitive manufacturing heuristics (called REM heuristics) in PP/DS. According to SAP Help:

Both heuristics create APO planned orders for the existing requirements while taking the available capacity of the resources into account per period. If necessary, you can also define further heuristics for planning the lower BOM levels meaning that you can plan all BOM levels in one planning run. However, planning is only executed for the components which you have defined to be further planned in APO.In this case, APO also creates suitable planned orders for the dependent requirements.

Here are the repetitive manufacturing production planning heuristics as described by SAP.

  • SAP_REM_001 – Multi-resource planning equal
  • SAP_REM_002 – Multi-resource planning primary resource (These are suitable for planning non-configurable products that can be produced on simply structured lines. They carry out a single level individual explosion of the PPM PDS and thus determine the dependent requirements for the BOM level directly below.)

Production Scheduling Heuristics

Most of what is talked about are production planning heuristics. However, there are also standard heuristics just for scheduling, however, there are much fewer of them. While there are roughly 50 heuristics for production planning, there are only six for production scheduling.

Standard Detailed Scheduling Heuristics

  1. SAP001: Sequence scheduling – used to schedule selected operations in a particular sequence in the heuristic settings. You use this heuristic to schedule selected scheduled operations in a particular sequence in the production planning run and in the DS planning board. You specify the scheduling sequence in the heuristic settings. When you start the heuristic for the selected operations, the system deallocates these operations and then schedules them again one after another in the set sequence.
  2. SAP002 – Dissolve backlog – used to reschedule the backlog in the production planning run in the DS planning board, that lie in the past period to the current date or in the future.
  3. SAP003 – Manual sequence scheduling – used to create a scheduling sequence of your choice for a group of selected scheduled operations, sequence of operations is created manually on a graphical list interface when calling up the heuristic.
  4. SAP004 – Lead time reduction – Used to reduce the lead time for orders in the production planning run and in the DS planning board that have operations at selected resource.
  5. SAP005 – Schedule deallocated operations – Use this to reschedule selected scheduled operations

Repetitive Manufacturing Scheduling Heuristic

There are two types of heuristics in PP/DS, those for production planning and those for production scheduling.

  1. SAP_DS_01 – Stable forward scheduling – suitable for the explosion of backlogs or capacity overloads with an unchanged scheduling sequence. The heuristic can be used both interactively in the detailed scheduling planning board and in the background in the production planning run.

Other Heuristics

Block Scheduling Heuristics

  • SAP_CDPBP_01 – Reschedule Blocks
  • SAP_CDPBP_02 – Adjust and Reschedule Block Limits
  • SAP_CDPBP_04 – Block Maintenance, Called Interactively
  • SAP_CDPBP_03 – Enhanced Block Maintenance

Campaign Heuristics

  • SAP_PCM_CRT – Create Production Campaigns
  • SAP_PCM_DIS – Dissolve Production Campaigns

Setup Heuristics

  • SAP_PCM_ODEL – Delete Setup/Clean Out Orders
  • SAP_PCM_SRVA – Create Setup / Clean Out Orders
  • SAP_DS-04 – Activate Sequence Dependent Setup Activities

Independent Requirement Heuristics

  • SAP_PP_014 – Ascertaining PL. Ind. Requirements – Used to determine independent planning requirements that have not yet been matched with sales orders.
  • SAP_PP_015 – Adjust Orders and PL Ind. Requirements – Deletes open planned independent requirements for selected products

Special Order Heuristic

  • SAP_PP_016 – Adjusting Special Orders

Shelf Life Heuristic

  • SAP_PP_SP001 – Planning of standard lots with the shelf life (the same as SAP_PP_002, but takes into account maturation time and shelf life)

Scheduling Agreement Heuristics

  • SAP_CDS_A01 – Admissibility Ok Without Check – This changes the status of all selected sales scheduling agreement items to “admissibility ok.”
  • SAP_CDS_F01 – The quantities and dates requested by the customer are confirmed as matching in the sales scheduling agreements, without a feasibility check.

Tolerance Check Heuristics

  • SAP_CDS_A01 – Tolerance Check
  • SAP_CDS_F02 – Tolerance Check

Days’ Supply Check Heuristics

  • SAP_CDS_F03 – Product Heuristic w. Days’ Supply Check

Standard Lots Heuristics

  • SAP_CDS_F04 – Planning Standard Lots Confirmed Qty

Length Based Material Heuristics

  • SAP_LEN_001 – Used for length based materials, creates new receipt elements to cover product requirements

Co-Product Heuristics

  • SAP_MOP_001 – Multiple Output Planning Heuristic – for co-product items
  • SAP_PP_017 – Planning Standard Lots for Co-Products

Conversion Heuristics

  • SAP_SNP_MULTI – SNP to PP/DS conversion for many products
  • SAP_SNP_SNGL – Individual conversion SNP – PP/DS

Capacity Driven Heuristic

  • SAP_PP_CDOC – Capacity Driven Order Creation

Capable to Promise Heuristic

Capable to Promise is almost never used, and is a bit of a pipe dream, which is explained in this article.

  • SAP_PP_CTP – Planning Shortage Quantities for CTP – Heuristic developed especially for the CTP scenario to allow any subsequent changes to the sales order quantity to be taken into account adequately.
  • SAP_PP_STOWC – Restore Requests f.Contract Release Ords – Restoring of pegging relationships that were automatically fixed between the originating requirement and stock transfer document.

PDS Check Heuristic

  • SAP_CHECK_01 – Check PDS

Forward Scheduling Heuristics

  • SAP_PMAN_002 – Infinite Forward Scheduling – Compact forward scheduling in the event of a scheduling delay in make to engineering or make to order production based on today’s date or an entered date.
  • SAP_DS_01 – Stable Forward Scheduling – used to resolve planning related interruptions using several BOM levels (infinite)

Planning Interval Heuristic

  • SAP_DS_03 – Change Fixed/Planning Intervals

Multi-Level Up or Down Heuristics

  • SAP_MLO_BU – Multi-level, order related, bottom-up
  • SAP_MLO_TD – Multi-level, order related, top-down

Critical Path Heuristic

  • SAP_PMAN_001 – Critical Path – Identification of the critical path in engineering to order or make to order production. Critical path: all operations of an order where a reduction in the operations leads to a reduction in lead time.

Re-explosion Heuristic

  • SAP_PP_021 – Re-Explosion

Miscellaneous

  • SAP_LEN_002 – Manual Creation of LOP Order
  • SAP_MOP_001 – Multiple Output Planning Heuristic

New Heuristics as of APO / SCM 5.1

  • SAP_PMAN_001 = Critical path, identify operations for which there is no float
  • SAP_PMAN_002 = Infinite forward scheduling if the date of the project can no longer be met
  • SAP_PMAN_003 = Infinite backward scheduling
  • SAP_DS_02 = Create and delete fixed planning intervals. The system no longer changes setup times in the short term horizon if the operation sequence has changed because of confirmations.
  • SAP_DS_04 = Reactivate sequence dependent setup activities that lie outside of the planning time fence.
  • SAP_PP_MRPDs = Reads collective orders in ERP and replaces the relationships, which exist between orders, to APO using fixed pegging
Possible to use MRP in SAP ERP, while using detailed scheduling in PP/DS. No transfer of bills of materials.

A full list of heuristics listed on page 469 of SCM250 PPDS

How PPDS is Sold Versus How it is Used

PPDS is often sold as a tool for performing constraint-based planning. However, it is more accurate to say that PPDS can perform constraint-based planning, but this is only in effect if the cost optimizer is used. Quite a few companies have attempted to implement the cost optimizer in PPDS, but very few stay with it, and in my view, the PPDS optimizer is not a sustainable solution.

It should be said that this is not a problem which is unique to PPDS. Optimization in many applications has often run into problems in implementation.

In a forward-looking industry like enterprise software for supply chain planning, there has been a very little analysis of why this has been the case, and very little done to improve implementation methodologies or even slightly adjust strategies on new implementations. For this reason, most of the optimization projects repeat the same mistakes that I first observed on projects back in 1998.

The Limitations at Consulting Companies

Very few consulting companies have the knowledge or ability to socialize optimization solutions with their clients. This is a major reason for the failure of so many optimization projects as is described in this article. The revenue pressures are so high at consulting companies that there is a low ability to communicate the reality to clients on this or other topics.

I have concluded after a good deal of analysis that a primary reason for optimization failure has been the over-application of a single optimization objective function, namely, cost optimization to every supply chain domain. It also should be acknowledged that some vendors have mastered optimization for production planning and scheduling.

The Reality of PPDS

Since the vast majority of companies than implementing PPDS do not use the optimizer (they either use heuristics or no method, simply allowing planners to move jobs around manually to resources), PPDS should be considered an unconstrained tool.

PPDS does have a very wide variety of heuristics, in fact, there are over fifty, which are listed further on in this article. The wide range of heuristics, many directed just towards specific manufacturing environments (for instance, many of PPDS’s heuristics are for repetitive manufacturing) is probably the strongest point for PPDS.

Most PPDS projects result in the PP/DS Consultant matching the combination of heuristics and their sequence to the particular requirements of the production process.

Problem #1: Heuristics for Production Planning and Scheduling

Heuristics are really not worth the effort to implement. They require a great deal of manual adjustments, and the output of PP/DS heuristics can be easily beaten by the output of several other production planning applications. Companies that are paying SAP consultants to implement PPDS heuristics do not know enough to manage a production scheduling project and are being tricked by their consulting firm and by SAP.

Problem #2: PPDS as an Overall Solution

PPDS is a problematic application. Outside of SAP consultants who seek to make money on implementing PPDS, PPDS has no successful implementation history to speak of. PPDS’s TCO is covered in the article the SAP APO PP/DS TCO Calculator.

PPDS was designed by people at SAP who had no idea what they were doing and PPDS has damaged companies that have implemented it. We provide our rating of PPDS in the article the Brightwork SAP PPDS Rating.

Conclusion

The production scheduling heuristics are quite limited compared to the production planning heuristics. This provides insight into where the focus has been applied from a development perspective with PP/DS. On live implementations, a great deal of scheduling in PP/DS is performed with manual drag and drop.

In fact, some projects do not use any scheduling heuristics at all, and the entire scheduling process is controlled my manual adjustments.

  • To reiterate, the vast majority of PPDS implementations do not use the cost optimizer and are not constrained. In fact, we doubt the ability of PPDS to be taken live at all with the optimizer.
  • I run into clients that think they are performing constraint-based planning when they are running the PPDS heuristics, and this is not correct. SAP consulting, sales and support hides this fact from companies. You can’t get this information from Accenture, IBM, Deloitte or any of the usual suspects. SAP consulting partners normally mislead their clients as to the status of PPDS implementations – repeating false claims made by SAP.

The Problem: A Lack of Fact-Checking of SAP

There are two fundamental problems around SAP. The first is the exaggeration of SAP, which means that companies that purchased SAP end up getting far less than they were promised. The second is that the SAP consulting companies simply repeat whatever SAP says. This means that on virtually all accounts there is no independent entity that can contradict statements by SAP.

Being Part of the Solution: What to Do About Optimization in SAP

We can provide feedback from multiple SAP accounts that provide realistic information around SAP products — and this reduces the dependence on biased entities like SAP and all of the large SAP consulting firms that parrot what SAP says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. SAP and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. When SAP or their consulting firm are asked to explain these discrepancies, we have found that they further lie to the customer/client and often turn the issue around on the account, as we covered in the article How SAP Will Gaslight You When Their Software Does Not Work as Promised.

If you need independent advice and fact-checking that is outside of the SAP and SAP consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.

Getting Realistic About PPDS

Most people that reach out to me about PPDS work for consulting firms. Normally they want my help in coming up with solutions that help string the client along so they can continue to bill hours, without any consideration for whether PPDS can be made to work. The solution to first to get realistic about PPDS’s actual implementation history. The second is to remove PPDS consultants from projects who do not have the customer’s interests at heart. This is how to recover the failed PPDS implementations that are the norm around the world.

References

Constrained Book

CONSTRAINED

Constrained Supply and Production Planning in SAP APO

How Constrained Supply and Production Planning Works

Constraint-based planning generates something that is appealing to all manufacturers: a feasible supply and production plan. However, constraint-based planning software was first implemented over twenty years ago, and yet few companies (as a percentage that all that have tried) have mastered constraint-based planning.

Getting the Real Story

This book provides the background information, detailed explanations, step-by-step examples, and real-life scenarios to assist a company in becoming proficient at constraint-based planning, along with valuable information about what SAP APO can do for supply and production planning in reality, rather than just in theory. Here you will learn about resources the mechanism for constraining the plan in APO and for determining the feasibility of the plan and how constrained supply and production planning work together (and how they don’t).

Also, this book talks about constraint-based planning at the supplier level: can a vendor’s production be capacity-constrained?

By reading this book, you will learn:

  • The different resources available in APO, how production resources differ from supply planning resources, and the role resources and other significant constraints play in constraint-based planning.
  • How constraints integrate across the supply planning and production planning applications.
  • The areas of disconnect between supply and production planning applications, and between SNP and PP/DS in particular.
  • The difference between unconstrained (or infinite) planning and constraint-based planning.
  • The benefits of constraint-based planning and how it differs from capacity leveling.
  • Various types of demand, and how backward and forwards were scheduling work.
  • The benefits of using production constraints in the supply planning system, and how SNP and PP/DS can be synchronized to produce the desired output.
  • The methods that can do constraint-based planning in SNP and PP/DS–heuristics, CTM, and optimization–and how to configure these methods.
  • The difference between hard and soft constraints, and how to plan using multiple constraints.

Chapters

  • Chapter 1: Introduction
  • Chapter 2: Understanding the Basics of Constraints in Supply and
  • Production Planning Software
  • Chapter 3: Integrating Supply and Production Software with Constraints
  • Chapter 4: Constraint-based Methods in APO
  • Chapter 5: Resources
  • Chapter 6: Capacity-constraining Vendors/Suppliers
  • Chapter 7: The Disconnection Points Between Supply Planning and Production Planning

SCM250 PPDS

https://www.sap.com/spain/company/events/2008_gestion_cadena_logistica/pdf/6_Killer%20Applications%20Day%20SCM%202008_SNP.pdf

How to Understand CIF Change Pointers and Transactions

Executive Summary

  • The CIF change pointer is covered in this article.
  • ECC systems and services define jobs (SM36)
  • There is an organization of the integration model.

Introduction

In this article, we will cover change pointers and what they do.

CIF Change Pointer

The CIF change pointer lists any inconsistent objects it identifies. Here is the path.

Advanced Planning and Optimization – APO Administration – Integration – CIF Compare Reconcile Function – Execute Compare Reconcile

The path for setting background jobs for master data transfer is the following

ECC – System – Services – Jobs – Define Jobs (SM36)

Next enter program RIMODGEN

With master data changes, the system can transfer just the master data records. For a transfer of data changes, you must set in customizing in the SAP ECC system that ALE change pointers are written for master data changes. First, you activate change pointers (BD61)

In order to initiate real-time transfer of master data change, use the following transaction… (CFC9)

Integration Model Organization

There should be an organized manner that will make master data integration efficient and concise. SAP recommends organizing the integration models according to the following list:

  1. ATP Customizing and product allocation customizing
  2. Plants
  3. Characteristics and classes
  4. Material masters and characteristics and classifications
  5. MRP area
  6. Planning product
  7. Availability check
  8. Product allocation
  9. Customers and suppliers
  10. Work centers
  11. Production Process Models
  12. Scheduling agreement and contract and purchasing info records

Important Features of the CIF

  • In the CIF you can specify in the integration model that the ATP check in the sales order is to be performed in APO rather than ECC.
  • (PP/DS) The lot size always indicator is set in the APO product master and if you do not set the indicator, a lot for lot order quantity is always used in make to order planning and the system ignores additional constraints. This indicator is transferred via the CIF.
  • When data is brought over to SCM via the CIF it is automatically assigned to the active model (000).
  • Inactive models, including any model that we generate, is only used for strategic planning. Planning that has results CIFed back to ECC is only in the active version, hence the name. Also, changes to the inactive models cannot be copied to the active model, only changes to the active model can be copied to the inactive.
  • Even small changes to master data are copied over to the receiving system in an incremental fashion. However, this must be configured properly for SAP to do this. Change pointers must be activated in ECC with transaction (BD61).

Conclusion

We can carry out the real-time changes for the following master data elements with the transaction (CFC9)

There is a program that will setup auto data movement for when Material Master, Customer Master or the Vendor Master are created or changed.

In the entry screen, you should insert (RIMODGEN) for creating integration models, the variant, counter,

Changes to the PPM or production process model can be set up with transaction (CFP3).

Reference

SCM215 Integrated Master Data in SAP SCM

SCM212 Integrated Supply Chain Model

SCM250 PPDS