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  • SAP APO OverviewByV K Agnihotri


  • Page *The course will cover the following subject areas:Advanced Supply Chain Planning overviewDemand PlanningSupply Network PlanningCore Interface

  • Page *Course GoalsThis course will prepare you to:Gain a basic understanding of SAP functions in the area of advanced Supply Chain PlanningDescribe the Supply Chain Planning options available with the SAP ECC and SAP SCM (APO) systems

  • Page *Course ObjectivesAfter completing this course, you will be able to:Briefly Describe the role of both the SAP ECC and SAP SCM components inAdvanced Supply Chain Planning Specify which master data and transaction data are used in advanced Supply Chain Planning Explain the interplay and the integration of SAP ECC and SAP SCM (Core Interface)Execute fundamental planning functions of Demand Planning and Supply Network Planning.

  • Page *

  • Page *Contents SCM Overview

    APO Overview

    SAP R/3 Vs APO

  • Page *Contents SCM Overview

    APO Overview

    SAP R/3 Vs APO

  • Page *SCM History Roots in military logistics, in WW II: the first large, complex organizations getting the right supplies, the right labor, to the right place, at the right time1991: The Gulf War is often called the largest supply chain success of the 20th centurySupply chain concepts and terminology formalized in the early 1980s at a few major UniversitiesIT began supporting SCM concepts in the late 1980sIntegrated supply chain systems appeared in 1991, driven by powerful PCs, integration, networkingIn 1998 ERP vendors entered supply chain marketNow SCM is being driven by internet & e-commerce

  • Page *Supply Chain Planning

    SupplyDemand Companies do this by predicting customer demand and fulfilling it by the most efficient allocation of inventory and production capacity. The right productAt the right time and placeDelivered to the right customer

    At the lowest total costWith the lowest asset investment

    Supply Chain Planning is the process of balancing available supply against demand

  • Page *SCM Planning and ExecutionSupply Chain Management starts with a completed Business Plan:

    Strategic PlanningBusiness PlanningSales & Operations PlanningFinancial PlanningDistribution Requirements PlanningDemand PlanningProduction Planning & SchedulingMaterial Requirements PlanningExecutionFunctional PlanningHow are we going to increase the value of the company?What businesses are we going to get in/out?How are we going to accomplish? (acquisitions, mergers, joint ventures, divestiture, etc.)

    What are the financial implications of the strategic plan?What are the financial resource requirements?Which financial vehicles should be used in meeting these resource requirements?

    What will it take to make the business more profitable?What events / trends are taking place in the markets served which may impact our business?How are we going to respond to these events / trends?What are the appropriate service and cost targets to gain competitive advantage?

    How does projected demand compare to projected supply?What are the projected resource requirements to meet both service and cost targets?What actions are required to insure the appropriate levels of resources are available when needed?

    Customer ServiceWarehousingTransportationManufacturingProcurement

  • Page *Supply Chain Planning Benefits

  • Page *Contents SCM Overview

    APO Overview

    SAP R/3 Vs APO

  • Page *SCM



    Execution R/3

    Planning -APO



  • Page *SCM Planning



    Planning -APO

    SC SCMAPODemand Planning (DP)Supply Network Planning (SNP)Production Planning (PP/DS)Distribution Planning (Deployment)Transportation Planning (TP/VS)


  • Page *SCM Execution

    Execution R/3

    SCM SCMMaterials Management (MM)Production Planning (PP)Warehouse Management (WM)Logistics Execution (LES)


  • Page *SAP-APO Overview

  • Page *SAP-APO Planning and Capabilities

  • Page *SAP-APO ModulesSAP Advanced Planner & OptimizerSAP application used to enable real time decision support, advanced constraint based planning and optimizationCovers the planning requirements (optimization, finite capacity, what-if simulation...) not covered by the R/3 system:APO runs on an independent server from the R/3 oneSAP provides standard software to interface APO and R/3 (stocks, purchase orders, production orders,)

  • Page *Supply Chain Planning Scenario

  • Page *Demand PlanningStatistical Forecasting

    Selection of advanced statistical tools (Univariable, Multilinear, Composite, etc.)Collaborative Forecasting and Consensus Planning

    Ability to conduct intra and cross-company Demand Planning collaboration via InternetFlexible Multi Level Planning

    Ability to plan at various levels of data hierarchy (product, region)Promotion Planning

    Planning, managing and evaluation of the impact of promotions on demandProduct Life Cycle

    Ability to use phase-in and phase-out profiles and like modeling to manage new products and obsolescencePlanning by Exception

    Use of Alerts to report exceptions Simulation

    Ability to use what-if scenario simulationIntegration with the Planning and Execution systems

    Tight integration with other planning capability (Supply Planning, Production Planning, etc.) and the Execution system (R/3, etc.)Capabilities

  • Page *Demand Planning Architecture

    Planning BooksGUI

    APOOLAPProcessorBusinessPlanningLibraryStatisticalForecasting ToolboxPlanning & AnalysisEngine

    InfoCubesTimeSeriesCatalogNotesData MartThis is a logical view of Demand Planning, Planning Books, User Interface and Data Mart

  • Page *Demand Planning CycleCreate new Master DataGenerate new CVCs/Propotional FactorsInfo cube/Planning Area Design/MaintenancePlanning Book Design/MaintenanceLoad new Master Data to planning areaEvaluate/UpdatePlanning Area/Planning BooksForecast Profiles Design/MaintenanceCreation of Statistical ForecastCreation of PromotionsManual AdjustmentsReconciliation of Demand PlansRelease of Demand PlanHistorical Data UpdatesMonitoring Forecast Accuracy

    Business Process

    Data Maintenance

  • Page *Supply Network Planning

    Supply Chain ModelAbility to model the entire supply network and all of its constraints such as resource capacities, storage limits, transportation capacities, material availability, safety and target stock levels, etc.Concurrent Planning Produces Distribution/Production/Inventory/Procurement plan concurrentlySNP HeuristicPerforms requirements planning (infinite capacity) for the whole, or a subset of the supply chain. Capacity leveling capability is used to balance resource loads.SNP OptimizerIt is a one step generation of an optimized finite capacity plan in which all defined costs are minimized.


  • Page *Supply Network PlanningSupply Network Planning (SNP) integrates purchasing, manufacturing, distribution, and transportation to develop tactical planning and sourcing decisions to be implemented on the basis of a single, global consistent model. SNP uses advanced optimization techniques, based on constraints and penalties, to plan product flow along the supply chain. Starting from a sales plan, SNP determines a permissible short-to-medium term plan to cover both the quantities that must be transported between two locations and the quantities to be produced and procured.


  • Page *SNP Process Flow

  • Page *Data ConfigurationAPO Master Data is always assigned to Models. (OLTP Master data comes automatically to model 000)Versions are created for each model and these contain version specific master and movement data. Time series are saved in planning area version.In planning book and data views, characteristics, key figures, time bucket profiles, planning horizons, macros are defined.

  • Page *APO Computational SolversAPO SolversDistribution Planning DeploymentA wide variety of computational solversapplied to specific planning functions with industry-specific variationsProductionPlanning &SchedulingDemandPlanning

    Heuristic MethodsLinear Programming /Mixed Integer LinearProgrammingGenetic Algorithms, Constraint-based ProgrammingFlow Algorithms

    Branch & Bound AlgorithmExponential SmoothingHolt WintersMultiple Linear Regression

  • Page *SAP R/3 and APO IntegrationMaster Data Integration

  • Page *APO Core InterfaceAdd-on component to R/3 systemSupply APO with planning and optimization relevant data from R/3 Return APO planning results to R/3 Initial and incremental data transfer (automatic switch)

  • Page *Contents SCM Overview

    APO Overview

    SAP R/3 Vs APO

  • Page *What Are They?SAP R/3 is an Enterprise Resource Planning (ERP) system. It is a suite of modules designed to integrate an organization. Its main purpose is to integrate data throughout the organization and support the execution of business processes.

    SAPs Advanced Planner Optimizer (APO) is an Advanced Planning System (APS). An APS supports any form of planning activities to manage the supply chain and is a substitute to any planning modules found in a ERP or legacy system.

  • Advanced Planner and OptimizerAPO is:A planning toolA decision support tool for managing throughout, inventory, and order/demand managementA modeling technology that enables the supply chain planning process by:Modeling what if scenarios to solve problems Incorporating resource and capacity constraintsOptimizing pla