SCM Apo DP Overview

SAPSCM/APO European Initiative
APO Overview Internal Training

Demand Planning Overview
March 2003
Training Agenda
Advanced Planner & Optimizer Overview

Demand Planning Overview
Supply Network Planning Overview
Production Planning & Detailed Scheduling Overview
Global Available-to-Promise Overview
APO Integration & CIF Overview
APO Implementation Considerations
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Accenture 2003
Objectives
Main Goals of This Section
To understand Demand Planning as an accurate forecasting tool in the APO context.
To know Demand Planning main features, in concrete:
Its architecture, data storage and representation attributes
Its main tools (Planning Toolbox, Planning Environment, Accuracy Analysis)
The different forecasting methods available
To visualize how DP applies to a real case (Sara Lee).
To be aware of main considerations and complexity factors when implementing Demand Planning.
To get familiar with the look of DP and its basic functions through a demo and practising with
simple exercises.
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Accenture 2003
Contents
1.
Demand Planning Features & Capabilities
2.
Case Study: Sara Lee
3.
Key Aspects to Consider When Implementing DP
4.
DP Demo: Accelerated Supply Chain Integration APO

Template
5.
DP Exercises
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Accenture 2003
Demand Planning Features and Capabilities

Demand Planning Accurate Forecasting
A toolkit of statistical forecasting techniques
Tightly linked to the R/3 System and the SAP BW SAP (data can be automatically transferred)
Tree selection and drill-down capabilities facilitates navigation through multidimensional data
structures
Uses the Alert Monitor to report exceptions
Planners Knowledge
Task-specific planning tools
Information
Collaborative
forecasts
Flexible views
Graphics
Promotional planning
Life cycle management
Cannibalization
Accuracy reporting
Demand Planning Data Mart
Order & shipment

actuals & history
Anticipation of
Future Demand
Cost
POS data
Nielsen / IRI data
...
Statistical Methods
Multi-model approach
Average models
Exponential smoothing
Causal factors
Trend dampening
Model combination
Pick best
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Accenture 2003

APO Demand Planning within Supply Chain Planning
BUY
MAKE
DESIGN
MOVE
New Product Development
YEARS
QUARTERS
Supply Contract
Network
Customer Service
Negotiations
Sourcing
Territory Planning
Production
Planning
P
P
Planning
I
E
Procurement
R
HOURS
Product
Allocation
Material Requirements
WEEKS
DAYS
Demand
Sales
Planning
Forecasting
APO
DP
Inventory
Target
Setting
Supply Demand
Matching
Materials
Planning
SELL
Logistics Network Design
U
MONTHS
HOLD
Material
Inventory
Tracking
B2B Exchanges
Detailed
Production
Scheduling
Manufacturing
Execution
System
Transport
Planning
Load
Planning
C
U
S
T
O
M
Distribution
Requirements
Planning
Available to
Promise
E
R
In-transit &
Production
Activity
Control
On-hand Inventory
Tracking
Contract
Manufacturers
--66--
3PLs / 4PLs
Order Management
Channel
Partners
B2B Exchanges
Accenture 2003

SAP APO Demand Planning Architecture
Demand Planning is composed of three layers:
Graphical user interface
Planning and analysis engine
Data mart
Planning Views
GUI
Planning &
Analysis
Engine
Data Mart
OLAP
Processor
Business
Planning
Library
Statistical
Forecasting
Toolbox
Planning Area
Time
Series
Catalog
Notes
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Accenture 2003

SAP APO Demand Planning Architecture (continued)
Performance is of vital importance in any demand planning solution if users are to fully benefit from
available information
DP architecture includes several features to ensure high performance:
Dedicated server
Multidimensional data mart based on the star schema that supports efficient use of storage
space and of CPU cycles, minimizing query response time
Batch forecasting so do not impede online performance
The size of the information treated depends on:
Number of characteristics: many characteristics will let the user more flexibility to define the
planning level and to review the information but it makes the system works slower
Number of key figures: many key figures will give the user a lot of information related to
forecast but it makes the system works slower
Number of characteristic combinations: the time consuming for any calculation (e.g. macros)
depends directly on the number of characteristic combinations
Number of planning versions: two planning versions needs double capacity than one
Type and number of temporal periods
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Data Storage and Representation
Multidimensional Data Storage in the data mart allows to:
View data and plan from many different perspectives
Drill down from one level to the next
Info Cubes:
A multidimensional data structure
The primary container of data used in planning, analysis and reporting
Contains two types of data, key figures and characteristics (or dimensions):
- Key figures are quantifiable values (e.g. sales in units, orders, shipments, POS)
- Characteristics or dimensions determine the organizational levels at which you do
aggregation and reporting (e.g. products and customers)
Info Cubes also share master data and descriptive text, which are stored in different tables
The Online Analytical Processing processor:
Models the business rules considering the aggregational behavior of key figures (e.g. sales
summed by product and time)
Guarantees that all business rules are met and the computed views present valid results
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Data Storage and Representation (continued)
Hierarchies are modeled as combinations of characteristic values (e.g. product are grouped into
product family hierarchies) using proportional and temporal factors, in order to be used as the basis for
aggregation, disaggregation and drilling down.
The DP planning level is based on the characteristics definition. In order to be more integrated with
R/3 data, the dimensions and characteristics are usually based on R/3 hierarchies:
Product dimension and characteristics are usually based on R/3 product hierarchy
Customer dimension and characteristics are usually based on a R/3 customer hierarchy
Geographic dimension and characteristics are usually based on the supply network
Dimensions
Facts
W32 W33 W34 W35 W36 W37 W38 W39 W40 W41
Hierarchies
Regions
Sept.
Cust
P
ome eri
o
rd
Aug.
Material
Attributes
Life Cycle
time sequence
203
124
Product
Groups
Promotion
Forecast
Time Series Management

99
00
01
02
--10
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N
o
t
e
s
Accenture 2003

Data Storage and Representation (continued)
Time Series Management:
Based on catalogs: time series data with related attributes (e.g. promotional patterns and life
cycles)
SAP DP allows to reuse time series saving time and ensuring consistency (e.g. reuse a past
promotional pattern to estimate the impact of a similar future promotion)
Notes Management maintains all notes entered by planners to create an audit trail of all demand
planning activities, which is specially helpful when multiple sources and people are involved (such as
in consensus forecasting)
Dimensions
Facts
W32 W33 W34 W35 W36 W37 W38 W39 W40 W41
Hierarchies
Regions
Sept.
Cust
P
ome eri
o
rd
Aug.
Material
Attributes
Life Cycle
time sequence
203
124
Product
Groups
Promotion
Forecast
Time Series Management

99
00
01
02
--11
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N
o
t
e
s
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Planning Environment
DPs rich planning and forecasting functions are based on the Statistical Forecasting Toolbox
and the Business Planning Library. These functions include:
Aggregate functions (sum, weighted sum, average)
Disaggregate functions (quotas, proportional and equal distribution)
Comparison functions (difference, ratio, percent, percent difference, share and correlation)
Financial functions (conversion from units into revenue, currency conversion and business
period conversion)
Time-series functions (time-phased, average, and weighted average of time series)
A Planning Book is an easy-to-use tree

control for selecting data and a frame with a
grid and a graphical data display:
Preconfigured planning books for
promotional planning, causal analysis,
statistical forecasting, life cycle
management, etc
These can be used as guides for
customized planning books
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Accenture 2003

Planning Environment (continued)
You can use Advanced Macros to:
Calculate deviations
Make automatic corrections
Calculate sales budgets
Define your own exceptional situations
Launch status queries
Advanced Macros models the calculations based on the individual business tasks to perform
principally:
Build a macro consisting of one or more steps
Control how macro steps are processed and how results are calculated
Use a wide range of functions and operations
Define offsets so that the result in one period is determined by a value in the previous period
Restrict the execution of a macro to a specific period or periods
Write macro results to a row, a column or a cell
Create context-specific and user-specific planning views
Trigger an alert in the Alert Monitor to inform of particular business situations
Integration with Microsoft Excel
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Accenture 2003

Statistical Forecasting Toolbox
A Toolbox of all practical, proven forecasting methods
Time Series Models:
Uses past sales to identify level, trend, and seasonal patterns as a basis for creating future
projections
Nave models, moving average, simple linear regression, Browns exponential smoothing, HoltWinters, Box-Jenkins
Stochastic Models:
Accurate forecast with sporadic demand pattern
Croston model uses exponential smoothing to estimate:
- The size of demand during periods in which demand occur
- The demand frequency
Final forecast are determined by distributing the size of demand according to the demand
frequency
Forecasting
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Statistical Forecasting Toolbox (continued)
Multiple Linear Regression:
Technique for estimating the relationship between past sales and other causal factors
Variety of options to model linear and non-linear trends:
- Seasonal patterns
- Life cycle patterns
- Dummy variables and time lags
Correlation analysis corrects variables
Pick-the-Best, applies the best method among:
All of the available forecasting methods, or
The planner-specified forecasting methods
S-Shaped Curves supports complete lifecycle forecasting (introduction/growth and end-of-life phases)
Logistic and exponential functions
First estimation based on similar products
Adjusted over time when sales history is available
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Causal Analysis
Includes all significant causal factors (price, number of displays, number of stores, temperature,
working days) in the models and determine how they affect customers behavior
Simulate sales development according to the mix of causal factors (what-if analysis, marketing mix
planning)
Multiple linear regression to model the impact of causal factors
65
75
85
60
Unit Sales
50F
Feb.
Mar.
April
May
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June
July
Aug.
Sept.
Accenture 2003

Multi-Tier Forecasting
Integrates sell-in data (like POS data) into the process of forecasting sell-through data (like shipments)
Causal model based on significant causal factors to forecast POS
Second causal model is used to forecast shipments:
Uses past POS data and the POS forecast as the main causal factor
Takes the time lag between POS and shipments into account
Considers other causal factors (forward buys, trade promotions)
Manufacturing
Sales
History
Retailer
Sell Through
Sell In
Consumer
Consumer demand
Advertisement
Promotion
Competitor Promotion
sales
POS
Data
+ Replenishment lead time

+ Forward buying
= Retailer Demand
time
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Accenture 2003

Data Analysis
Identifies missing values and outliers in the data to improve the quality of the statistical forecast.
Through the outlier, an automatic correction of historical data is done taking into consideration out-ofrange data that may disturb the identification of historical pattern
Identifies structural changes in established patterns:
Level, trend, and amplitude changes
Change from unstable to stable behavior
Automatic detection via tracking signals
Automatic outlier detection & correction
Manual intervention
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Promotion Planning
Impact of promotions must be projected separately from standard forecast components that are based
on historical sales data
Takes prices into account when doing profitability analysis for promotional calendars
Reporting capabilities allow to track promotional activities and related costs
Archives a promotion pattern in a promotion catalog, so it can be reused
Several techniques for estimating the effect of a promotion
Forecast simulation
Sales
Profit
Promotion
Promotion patterns
-10%
97
98
99
00
Price
Planner
Quantity
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Accenture 2003

Life Cycle-Management
A Demand Planning and Supply Network Planning both components function
Planning strategies for a product depend on the stage of its life cycle:
Should the product be introduced, and when?
How should a product be promoted during the different stages?
Should the product be deleted, and when?
Should a successor product be introduced?
Should a re-launch be started for a product, and when?
What is the cannibalization effect of a new product with existing products? Etc.
DP can represent the launch, growth and discontinuation phases by using phase-in, phase-out and like
modeling profiles (or combining them):
A phase-in profile reduces demand history by ever increasing percentages during a specific period or
periods (simulating upward sales curve launch and growth phases)
A phase-out profile reduces demand forecast of a product by ever decreasing percentages (simulating
downward sales curve discontinuation phase)
Like modeling creates a forecast using the historical data on a product with a similar demand behavior
(new products and products with short life cycles)
Product Launch
End of Life
Aggregate
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Accenture 2003

Consensus-Based Forecasting
SAP DP supports consensus-based Sales & Operations Planning (S&OP)
Multidimensional data structure of the InfoCubes enables to create multiple plans:
Product levels for Marketing
Sales areas and account/channel for Sales
Distribution centers and plants for Operations
Business units for Finance
Synchronizes multiple plans into one Consensus Plan that drives business
Composite Forecasting reconciles and combines different plans on same level and multi-levels
Sales Forecast
1
Forecast
...
Combine &
Reconcile
Marketing Forecast
n
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Accenture 2003

Forecast Accuracy Analysis & Alert Monitor
Forecast accuracy reporting:
Helps to assess the accuracy of past forecasts
Integrates this knowledge into projections for the future
Stores a series of forecasts for a particular period and compares each deviation of this series to the
actual values for the same period (mean absolute deviation, error total, mean percentage error, )
Reports shoe forecast errors at any level and dimension:
Actual versus forecast
Actual versus time-lagged forecast
Actual versus different planning versions
Actual versus budget
Alert Monitor informs in real time via e-mail or exception message if an exception occurs
Exception conditions can be defined based on thresholds for special statistics and tracking signals
Reports can be sorted:
By forecast error
Restrict them to products with a forecast error greater than a specified threshold
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Accenture 2003

Advantages of SAP APO Demand Planning
Global server with a BW infrastructure
Integrated exception handling, creation of user defined alerts
Integration with Production Planning (S&OP scenario)
Main memory based planning
Flexible navigation in the planning table, variable drill down
Extensive forecasting technique
Promotion planning and evaluation
Collaborative planning via the internet
Supports Sales Bills of Material (BOMs)
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Accenture 2003
Contents
1.
2.
3.
4.

Template
5.
DP Exercises
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Accenture 2003

Introduction
Main objectives of Demand Planning for Sara Lee:
S&OP purposes: Provide the essential input for S&OP monthly cycle (forecast) and create
consensus within the OpCo. Demand Forecast should contain the required detail in order to
compare with Business/Sales targets
Supply Planning purposes: Provide updated forecast from different OpCos (in weekly
buckets) to Supply Planning in order to base Supply Planning on consolidated forecast from
each OpCo
Benefits of Demand Planning for Sara Lee:
Improve the communication and transparency from all OpCos to CoE
Provide to Supply Planning short and long term volume estimation for capacity planning
Create consensus in the OpCo (together with S&OP)
Understanding the demand of each OpCo through deep analysis (KPIs, market intelligence,)
Move from Reaction on toward Plan Activities
Improved customer service level
Lower obsolete and safety stocks
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Accenture 2003

Project Approach
A template has been developed in order to align, cover and support all the processes performed in
the Sara Lee Opcos in Europe. In different phases, the Opcos will start to use the new template,
changing their actual procedures and/or systems (local roll-outs).
There will be a central team responsible of maintaining the basic and common applications.
In every roll-out a local team will be assigned to check that the requirements of the Opco are covered,
to conduct the trainings, etc.
Communication between local and central teams:
Either in the central and in the local teams, there will be a member responsible of the
communication between them. The communication link will be one-to-one.
CUSTOMIZING: The local team will ask the central for customizing new structures.
Every local roll-out will have a different copy of the Implementation Guidelines.
GAPS: The local team will detect functionality not covered by the template, then, these gaps
must be written down in a document called EuRoPe fit.
Both teams will have a meeting to determine how each issue in the EuRoPe fit must be solved.
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Accenture 2003

Project Approach (continued)
Procedure for the EuRoPe fit Analysis and Development:
Initial training
(central to local)
EuRoPe fit sessions

(local)
EuRoPe fit analysis

(central & local)
GAP estimation
(central)
GAPs approval
(project management)
Local GAPs design

(local)
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27--
Central GAPs design

- Template development (central)
Accenture 2003

Demand Planning Processes
Demand Planning Processes are divided into three cycles:
AOP/Outlook generation: Provide volumes taken from APO DP as a starting point for the
AOP/Outlook generation
Monthly cycle: Update Demand Forecast for the following 24 fiscal periods and provide it to the
Sales and Operations Planning monthly cycle (to create a consensus and run Supply Planning).
Weekly cycle: Review current month forecast to identify supply risks, advise Sales and
Marketing of these risks and change the forecast which applies to a period outside of the Supply
Planning frozen period.
Strategic
Tactical
Operational
AOP generation
Monthly Cycle
Weekly Cycle
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Accenture 2003

Demand Planning Processes
(continued)
Process
AOP/Outlook generation:
APO Forecast volume can be used as a
starting point for AOP generation.
Volumes are sent to R/3 where it is
converted into value.
APO
Volumes from APO

DP
CO-PA
(R/3)
Convert volume to
value
Responsible
Demand
Planning
Finance
Adjust Volume
Volume/value adjustments are done in R/3

AOP volume is sent back to APO for
Supply Planning purposes and KPI
analysis
Send Adjusted Volume

to APO
APO
Run SNP with

Adjusted volume
Volume adjusted after
SNP
CO-PA
(R/3)
Supply
Planning
Convert volume to
value
Finance
Adjust Volume
Interface SAP - APO
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Final AOP volume sent

to APO
Accenture 2003

Demand Planning Processes (continued)
Monthly Cycle: Demand Planning can be considered as a sub-process of the Sales and Operations
Planning
S&OP
S&OP high
high Level
Level flow
flow
Updated
Demand
Forecast
Business
Group
Review
Euro
Euro
Customer
Customer
Service
Service
Review
Review
Local
LocalS&OP
S&OP
Meeting
Meeting
OpCo
Demand
Plan
Local
S&OP
Review
Aggregate
OpCo
Demand
Plans
Euro
Euro
S&OP
S&OP
Meeting
Meeting
Update Supply Plan
Update Supply Plan
S&OP scope
Euro &
Local
Production
Plan
APO
Local
Local
Demand
Demand
Meeting
Meeting
Capacity
Check and
Inventory
DP scope
S&OP scope
S&OP scope
with impact
with impact
on DP
on DP
Euro
Supply
Review
Euro
Demand
Balancing
Aggregate
Supply
Plan
Review
Supply
Chain
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Accenture 2003

Monthly Cycle: Rolling forecast for month M to M+24 is prepared by Demand Planners:
In second last week of month M-1,
Based on the history accumulated until month M-2
Second last week of previous month (*)
Last week of previous month (*)
Updated
Demand
Forecast
S&OP activities that impact DP

M.1. GenerateKPIs
Demand
meeting
M.2. KPIs analysis
Define Supply
Plan at Euro
Level
Customer service
review
Demand Meeting
M.5. Create
Demand Forecast
Business Group Review
M.3. Updated
Promotional
Planning
Local
S&OP
meeting
M.6. Update
Demand
Forecast
M.4. New Product

Launches
(*) Caldendar
Calendar is depending on the S&OP requirements
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Accenture 2003

Monthly Cycle:
Demand planners will provide every month a rolling forecast for the following 24 fiscal periods.
There will be some differences between the first 6 months and the remaining 12 months:
- First 6 months:
Presented in weeks if needed (in APO DP not much extra work is needed)
Forecast based on clean history + promotions
- Last 18 months (S&OP requirement for long term capacity checking):
Presented in months
Forecast as extrapolation of
non-cleaned history
Monthly
Cycle
18 months in months
6 months in weeks
Forecast
Baseline +
Promotions
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32--
Non-clean
history (no
promotions)
Horizon
Accenture 2003

Weekly Process: Process model overview:
The process consists of reviewing the consumption of the forecast within the current month,
facilitating decision making on critical exceptions (e.g. potential stock storage)
This will be made by exception based on the following sources:
- Consumption of forecast after the weekly upload (Monday-Tuesday)
- Daily stock-out report coming from R/3
- Order to Cash (CDP) will develop ATP based on: Physical stock + Incoming stock
Promised (reserved) stock
Monday-Friday
Review current
month forecast
consumption
Risks
identified?
Communicate
risks to Sales &
Marketing
Update demand
forecast in APO
Update demand
forecast with
promotional
activities
Communicate
changes to Supply
Planning
Yes
No
Changes in
Promotional
Planning?
--33
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Provide changes in
promotional
planning
Accenture 2003

Data Structure
SCP data structure are based on CDP hierarchies:
Hierarchies defined taking into account the global EuRoPe solution
Easy to integrate with CDP
CDP is responsible for defining the content of each of the level of the hierarchies
Planning levels are grouped in dimensions. Dimensions do not have any functional impact, and it is
only a way of organising the information in the system.
In the SCP EuRoPe Solution it is planned to use 3 dimensions:
Product
Customer and Demand organization
Geography
APO is based on a Data Warehouse and therefore the information is always consistent at all levels
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Accenture 2003

Data Structure (continued)
The DP planning level is based on the characteristics definition. In order to be more integrated with
R/3 data, the dimensions and characteristics are usually based on R/3 hierarchies:
Product dimension and characteristics are usually based on R/3 product hierarchy
Brand
Sub
Brand
Concept
Business
line
Promo
-tional
Type
Kit
Process
Type
Type 1
Variety
Category
Segment
Sub
Segment
Example of
Planning level
Product
Family
Product
Format
SKU
All views are defined on SKU level

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Accenture 2003

Data Structure (continued):
Product Hierarchy in Sara Lee:
Level
Business Line
Body Care
Household
Tea
Coffee
Body Care
Household
Coffee&Tea
Coffee & Tea
Category
Bath&Shower
Airfresheners
Coffee
Tea
Segment
Bath
Airfresheners
Roasted Coffee
Hot Tea
Bath
Home
Roasted Coffee regular
Black
Herbs
Starter
Standard
Regular
Radox
Ambi-Pur
Douwe Egberts
Pickwick
Original
Desert
Douwe Egberts
dessert
Pickwick English
Ground
Sub-segment
Product Family
Brand
Sub-brand
Process Type
Perfum dinterieur
Ambi-Pur Perfum d
interieur Antitabacco
-
Variety
Anti-tabacco
caffeinated
English
Concept
bottle
electrical
Brick pack
box
standard
standard
10% free
standard
500 ml
250 gr
80 * 2
Radox Herbal bath

Original 500 ml
Ambi-Pur Perfum d
interieu Anti-tabacco
starter electrical
Product
Packaging Type
Product Type
Format
SKU
Radox Herbal Bath

Original
--36
36--
Douwe Egberts dessert

250 gr 10% free
Pickwick English
80*2
Accenture 2003

Data Structure (continued)
Customer dimension and characteristics are usually based on a R/3 customer hierarchy
Sales Area
Sales Director
KAM
Customer group
Customer
Geographic dimension and characteristics are usually based on the supply network
Factories
Lowest Point of
Delivery
DC
Clients
--37
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APO Supply
Network
Accenture 2003

Forecasting Detailed Process
The following are the detailed activities that Demand Planners will be doing every month with APO
This cycle summarizes the scenarios that have been tested in the prototype phase:
Select Forecast Levels

Choose statistical
algorithm
Clean History and Evaluate
Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Update Forecast
Close the Period and

KPI generation
Create consensus
(local S&OP)
Send forecast to
Supply Planning
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Accenture 2003

Forecasting Detailed Process: Select Forecast Levels
Choose statistical algorithm

Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Level of detail of the forecast
Add Events
Monthly cycle
Phase in/out
Update Forecast
Close the Period and KPI

generation
Create consensus (local

S&OP)
The lowest level of detail of the forecast (due to Supply Planning or S&OP
requirements) is:
Send forecast to
Supply Planning
- SKU/customer/lowest point of delivery

- weekly buckets
Alternatives in APO
APO gives the opportunity to forecast at any level of aggregation (product, cost,
geography) using later Disaggregation and Reconciliation capabilities to allocate
demand to the desired level
80.00
0
Format Level
Forecast Level
SKU Level
32.00
0
72.00
0
DE Dessert
250g
23.00
0
13.30
0
Auchan
DE Dessert
500g
6.000
17.00
0
12.00
15.00
5.000
0
0
SKU/Customer
Customer
Level
DE Dessert
4.000
1.300
2.000
2.000
SKU/Customer
17.00
0
Makro
--39
39--
700
Data consistency along

the hierarchy
SubBrand Level
5.700
Intermarch
Accenture 2003


Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Advantages of Forecasting at different levels
Add Events
Monthly cycle
Phase in/out
Update Forecast

generation

S&OP)
Reduction in Forecast errors: Forecasting aggregated levels of products typically

results in lower forecast errors (principle of compensating errors)
Send forecast to
Supply Planning
Importance to the Business: Analyse your products according to their strategic or

economic value to the company (ABC analysis). Spend effort when it is required
Customer concentration: Depending on the customer segmentation we can have
the opportunity to focus on customer level forecast (Holland 3 customer 70% of
market share, while in Spain only 39% - Nielsen)
Customer collaboration: Requires that you forecast at customer level which you
then can share with the customer
Basic rules for selecting a forecast level
Select a level aggregated enough:
- To be representative (show continuous trend over periods)
- Not to be too time consuming
The level contains set of products homogeneous with similar demand pattern
Ensure that is feasible to disaggregate to lower levels (without jeopardising
accuracy)
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Accenture 2003


Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
How to define the level at which to forecast:
Add Events
Monthly cycle
Phase in/out
Update Forecast

generation

S&OP)
Identify the characteristics of the group of products that make them homogeneous
and are therefore suitable for aggregating
Characteristic
s
Demand
Volatility
Market
Intelligence
Promotional
activity
Lifecycle
Range of
products
Strategic
Value
Customer
Collaboratio
Customer
n
concentratio
n
Description
Capacity to predict future
demand
Identify seasonality,
trend,...
Number, frequency and
types of promotions
New product, growing,
mature or declining
A large number of SKU
makes forecast complex
Importance of the
SKU/group of SKU for the
company
Collaboration with
customer
Special agreements
Number of customers
buying the product
Example: Kiwi Large Shoe

Polish 50 ml (H&BC UK)
Demand is stable and
homogeneous for the products of
this group
This is a seasonal product. Higher
sales from October to March
No customer promotions
Mature group
10 SKUs in this group
Shoecare is a core line and
therefore high strategic to the
No
company
customer collaboration
Solus listings - Safeway and
Sainsburys
High concentration (6 customers
80% of the market)
--41
41--
Send forecast to
Supply Planning
Impact
for
selectin
g level
Homogeneous
Homogeneous
Homogeneous
Homogeneous
Easy to
disaggre
g.
Product A
Customer
view
Customer
view
Accenture 2003

Forecasting Detailed Process: Choose Statistical Algorithm

Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
What is available in APO?
Add Events
Monthly cycle
Phase in/out
Update Forecast

generation

S&OP)
Although in APO it is possible to use univariate and multivariable/causal forecast models,

only univariate models are in scope
Send forecast to
Supply Planning
APO provides a wide range of different statistical models and strategies to use for
forecasting (up to 35):
- Linear regression with seasonality
- Trend model
- Trend and seasonal model
- Automatic model selection,...
How to select the best model?
First step: Prior to selecting the forecasting statistical model, Demand Planners will have
to gather market intelligence to understand with pattern to find.
Second step: Test which model better fits the expected demand pattern. Take into
consideration some recommendation:
- Linear regression with seasonality model is very easy to understand by users and
require very little maintenance (preferred model by Demand Planning implementation
team)
- Most of the other models require some statistical skills by users and time consuming
maintenance by DP when reusing the same profile for next rolling forecasts
--42
42--
Accenture 2003

Forecasting Detailed Process: Clean History & Evaluate Forecast
Baseline

Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Update Forecast

generation
Why is necessary to clean history?

S&OP)
Send forecast to
Supply Planning
To enable forecasting to be based on a model created using history that is free of impact of
events (non repetitive history)
Any outliers (promotions) will give errors in estimating seasonal demand
To understand underlying demand e.g. seasonality and ensure that it is reflected in the forecast
Ensure that the planned contribution of events is not duplicated in the forecast
To provide a baseline forecast to account management so that they can focus on promotions
Should you always clean history?
No. Balance the amount of effort required versus the result:
- Focus on major events which significantly effect your baseline.
- Focus on A category products.
- If events are repetitive in type and in time then the user could decide not to clean history.
Baseline
Sales history
source: Information Resources,

Inc.
--43
43--
Accenture 2003

Baseline

Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Update Forecast

generation
How to clean history in APO?

S&OP)
Send forecast to
Supply Planning
APO gives the opportunity to clean history using different methods:

- outlier correction:
adjusts automatically historical values lying outside of the tolerance lane towards
forecast baseline
Easy to use and very little work
- Mark events: Outlier correction that only applies to the selected periods
- Manual correction: Manually add an event that subtracts/adds the desired volume to the
history
- Promotional planning: Automatically subtract the impact of the promotions defined in
promotional planning
Total history
Total history -
--44
44--
updated
promo
= baselin
Accenture 2003

Baseline

Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Update Forecast

generation
Recommendations

S&OP)
Send forecast to
Supply Planning
Use outlier correction

- ... for the first history upload. Manual clean history for the last two year could be very time
consuming,
- ... for B and C products, as requires very little maintenance,
- ... for non-promoted products (to smooth the deviations)
Use mark events
- when it is clear the period that Demand Planner wants to clean, and the correct impact
of the event is unknown
Use manual correction
- also when the event o period that the user wants to clean is identified and the impact of
the event is known
Use promotional planning
- for A products, because although requires significant maintenance (change the impact of
events in Promotional Planning if the real impact is different than what was estimated), the
forecast baseline can become more significant
--45
45--
Accenture 2003

Forecasting Detailed Process: Disaggregation of the
Forecast

Forecast Baseline
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
What is disaggregation:
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
Disaggregation consists of splitting the forecast made at a higher level in the

hierarchies (i.e, from product format to SKU) and time (from month to week), using
APO features
APO gives the opportunity to choose between different alternatives:
Historical splitting factors calculated by the system (proportional factors)
Factors from previous forecast (pro-rata)
Factors calculated outside APO
Depending on each product group the approach may be different, the recommendation
is to:
Use proportional factors (only standard SKU) for the first forecast
For following forecasts consider changes in the splitting factors done in previous
rolling forecast. Therefore use pro-rata
For time disaggregation (e.g., from fiscal periods to weeks) use factors calculated
outside APO as a feasible alternative to what the system provides
--46
46--
Accenture 2003

Forecasting Detailed Process: Disaggregation of the Forecast
Example:
Step 1: Forecast data creation: no data exists in advance. Proportional factors have been
calculated
Proportional factors calculated

from history (only STD SKUs)
First disaggregation (create) is
based on proportional factors
Product Family Level
1000
Forecast Level
25%
250
35%
40%
350
400
SKU Level
Step 2: Forecast is updated at SKU level
1100
Forecast updated at Brand level due to changes at SKU level

No changes on the proportional factors
25% 35% 40%
New proportion established due to the changes at SKU

level. These values do not overwrite the proportional
factors
First SKU forecast is updated from 250 to 350
32%
350
--47
47--
32%
350
36%
400
SKU Level
Accenture 2003

Step 3: New forecast is run (rolling forecast). Same forecast profile but historical horizon has
been updated with one more period
1200
Forecast is overwritten based on the new history data
25% 35% 40%

Disaggregation is performed based on the existing data
at lower level not in proportional factors anymore
Forecast at SKU level is updated to new values but
keeping the proportion of the previous data
32%
384
32%
36%
384
400
SKU Level
Note: Changes in the disaggregation factors only affect to the periods which Demand Planners
updated in previous rolling forecasts
April01
May01
time
1200
Brand Level
25
35% 40%
%
32%
32% 36%
350
350
400
SKU Level
--48
48--
1400
25
%
35%
350
490
40%
560
Accenture 2003


Forecast Baseline
Disaggregation in time (from fiscal periods to weeks)
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Every month Demand Planners will update the forecast for the following 24 months
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
The forecast will be made in fiscal period buckets

The disaggregation factor from fiscal periods to weeks will be calculated outside APO
- Every OpCo will calculate if there is a weekly seasonality in the fiscal period (e.g.,
first weeks have lower sales that last weeks). Otherwise fiscal forecast will be equally
distributed to weeks.
- This factors will only affect the baseline sales. Promotions will be directly assigned to
the weeks when the promotion is executed (Promotional Planning)
200 Forecast Baseline
P2
P1
Identify
weekly
profile in
fiscal
periods
W1
W2
W3
P3
W4
--49
49--
Forecast baseline for the Period

1 : 200
Promotion on week 3 and week
W1
W2
W3
W4
4
Weekly profile
10% 20% 30% 40%
Baseline
20
40
60
80
Promotions
20
20
Final Forecast
20
40
80
100
Accenture 2003

Forecasting Detailed Process: Add Events

Forecast Baseline
What is an event:
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
An event can be defined as any activity, internal or external, that have a significant
impact on demand.
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
Types of event:
There can be many different types of events:
- Sales events (Logistics, Financial, Change in customer listings)
- Marketing events (TV campaign, Change in price policy, )
- External events (competitors actions, market tendencies,)
Why events are needed in DP:
Demand planners work with APO to get a representative Forecast Baseline (free of
impact of events)
Events can represent a very significant volume. It is therefore essential to have a
good estimation of the expected impact of sales and to apply them in APO
The information has to be provided to Demand Planners by the people that are
closer to the market and customers (Sales and Marketing)
New
Product
Introductions
Forecast
Baseline
Promotions
Sales
Obsolete
Cannibalisation Stock
effects
Updated
Forecast
Sales
--50
50--
Accenture 2003


Forecast Baseline
Information required for Sales events
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Demand Planner will include the impact of promotions, with a significant impact on
sales, to the APO forecast
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
Every month Sales should provide to the Demand Planner the updated promotional
plan for the following 6 months, which ideally will contain:
- Description and customer target of the promotion
- Volume estimation for the SKU (or group of SKUs) on promotion
- Weekly detail of the impact (when possible)
- Estimation of the expected cannibalization (when possible)
Promotion A
Description of promotion
: 10% discount
Customer (s) target:
Start date (shipping):
15 February
End date (shipping):
28 February
Expected promotional volume
SKUs promoted
Sanex
Shampoo 500
ml
SKU of Douwe
Egberts
dessert
Week 1
Week 2 Week 3
Week n
700
500
500
-600
+ 15%
+20%
+5%
-20%
Carrefour
Expected cannibalization
SKUs
cannibalised
Sanex
Shampoo 750
ml
Week 1
Week 2 Week n
100
100
25
-5%
- 5%
0%
SKUs of JM
dessert
--51
51--
Accenture 2003


Forecast Baseline
Information required for Marketing events
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
For price policy changes:
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
- Planned dates for price policy changes per account,

- Dates when the changes will be communicated to customers,
- Estimation on change of volume (at aggregated product level) for the periods:
From communication date to price change date
From price change date until sales are stabilised
For other Marketing events (TV campaigns )
- Volume estimation for the SKU (or group of SKUs) on promotion
- Estimation of the expected cannibalization (when available)
--52
52--
Accenture 2003


Forecast Baseline
Information required for External events
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
In some occasions an OpCo can be aware of external factors that may have
significant impact on future sales
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
An example of this can be the Coffee demand that can have a strong relationship
with:
- Price
- Price distance
- Market Share
- Market Growth
To include these events in APO forecast it is necessary to:
- Make an interpretation of external data (e.g., Nielsen)
- Estimate the impact on future demand that this situation may have
- Communicate the impacts to Demand Planners, who will include it as an event
in the promotional calendar
--53
53--
Accenture 2003

Forecasting Detailed Process: Product Lifecycle Management

Forecast Baseline
What is it?
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
The Product Lifecycle usually has different phases: launch, growth, maturity and
decline
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
Demand Planners need to take product lifecycle into account when forecasting,
especially in the launch and decline phases
Alternatives in APO
APO DP provides different alternatives to deal with lifecycle management:
- Like modelling - Choose a product similar in behaviour to the new product
introduction and use its launch profile to base your forecast on (or % of this
profile)
- Phase-in profile - Select a product which has a similar mature sales history and
apply a profile for launch. This profile can be based on market intelligence
- Phase-out profile - Apply a time series phase-out profile to simulate the
discontinuation of a product.
- Manual profile A profile for the product is manually entered into the system
Demand Planners will choose the best option considering the specific
characteristics of each case
--54
54--
Accenture 2003

Forecasting Detailed Process: Product Lifecycle Management

Forecast Baseline
Phase In - Phase Out: Product Lifecycle management
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
The information required for each of these activities will be:
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
For new product introduction (phase-in):

- Introduction strategy for different accounts (new launch calendar),
- Phase-in profile:
expected volume for the coming periods at SKU level, or
referent SKU (or group of SKU) from which to be used as a Like
Profile
- Cannibalisation expected on other SKUs already listed in customers
(estimation of total volume at an aggregated level e.g. format).
For phase-out of existing SKUs:
- Phase-out strategy for different accounts (phase-out calendar),
- Phase-out profile (expected volume for the coming weeks),
- Positive cannibalisation with other products
--55
55--
Accenture 2003

Forecasting Detailed Process: Update Forecast

Forecast Baseline
What is a job?
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
APO gives the opportunity to run any process in batch jobs (i.e, run a
forecast, include impact of promotions,) and forecast by exception, making
use of alerts to identify potential forecast errors
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
Advantages of jobs:
Reduction in Demand Planner work effort
Alerts identify potential errors
Disadvantages of jobs:
Demand Planners do not see on-line the work they are doing (e.g., adding a
new promotion or disaggregate the forecast)
Maintenance of the jobs is required
Recommendation:
ABC analysis
Make an ABC analysis taking into consideration volume, value and strategic
value of each set of products.
20%
80%
For A group of products: On-line forecasting: Spend effort when is

necessary
80%
20%
For B and C: Forecast by exception
N of SKUs
--56
56--
Value
Accenture 2003

Forecasting Detailed Process: Update Forecast

Forecast Baseline
What is an alert?
Disaggregation
Evaluate Forecast
Performance
Add Events
Monthly cycle
Phase in/out
Alerts in APO are customizing Warnings that a Demand Planner can use to
track results from any activity he/she performs in the system
Periods
P1
P2
P3
Forecast (from last period) 100
120
150
170
Forecast (from actual period)
110
90
150
Update Forecast

generation

S&OP)
Send forecast to
Supply Planning
P4
220
Alert
Watch Out!!!
Difference in Percentage is Greater than 20% !!!!
--57
57--
Accenture 2003
Contents
1.
2.
3.
4.

Template
5.
DP Exercises
--58
58--
Accenture 2003
Key Aspects to Consider When

Implementing DP
Lessons Learned
R/3 Integration:
Data structure between R/3 and APO should be aligned. Otherwise, interface may become very
complex. The involvement of Demand Planner in the definition of product/client hierarchy in R/3 is key
When a transactional system is already in place, using of existing data hierarchy is recommended
in order to avoid double maintenance. You should evaluate whether to keep current data structure or
design a new one
Relationship with other APO modules:

Demand is the input to SNP. When distribution network is complex, it may oblige the Demand Planner
to plan demand for many locations. During the Detailed Design phase, consider how the relationship
with SNP will be:
If a valid desaggregation strategy for forecasting and dimensioning locations already exists in
DP, then it can be reused for SNP
If customer uses percentages to assign locations, then maintenance will be done from SNP
In general, final decision depends on Demand Planner management style, being closer to
commercial (DP preference) or production (SNP preference) point of view
forecast
forecast
supply
supply
forecast
supply
forecast
supply
--59
59--
Accenture 2003

Implementing DP
Lessons Learned (continued)
Modelling:
Understand the process during the Detailed Design phase is key. Later modifications in APO
(characteristics, key figures, ) imply to activate and inactivate planning area, so all data is lost
(including forecast). Redoing all the data and managing several environments becomes inconvenient
and time consuming. It is recommendable to be specially aware of:
The use of attributes, characteristics and characteristics combinations
Ratios definition (the impact is less, given that extra ratios can be created)
Desaggregation strategy
Define the security model as soon as possible (in the Detailed Design phase). By doing so, we will
be able to estimate customization and planning areas creation effort properly, taking into consideration
that:
Authorization managing does not allow to restrict access by data, managing access is only
possible at the planning area level
The later may imply to multiply effort as many times as user groups are to be defined
Define desaggregation strategy as soon as possible (in Detailed Design phase):
A low level desaggregation may imply that forecast demand by client may not be much
accurate. Keep the criteria that customer suggests us to define the optimal desaggregation level
When possible, use temporal desaggregation criteria that APO provides
--60
60--
Accenture 2003

Implementing DP
Modelling (cont.):
Providing that customer is not always capable to use complex methods, use more simple forecast
methods such as linear regression and seasonability if possible. Other methods can result in a blackbox for the customer so that they become more difficult to understand and use effectively
Knowledge transfer:
Emphasize knowledge transfer during the project life. Planners need to spend a significant amount of
time to learn and make full use of the tool (e.g. different options for desaggregation). By not
considering it, they may feel that Excel can do more than DP. Two approaches are suggested to
overcome this risk:
Provide the user a prototype so he/she may experience the tool
Create a super-user role: a competent and fully-dedicated user that will support us in training
and support tasks
--61
61--
Accenture 2003

Implementing DP
About DP functionality:
The following is a list of functional issues that complicate a DP implementation. Take special care
when explaining functionality to the customer as they may differ from SAP official version:
New product cycles: not integrated with R/3, so that product characteristics creation is manual
and tedious
New product versions: realignment and phase in phase out functionalities to manage product
versions do not work always properly
Promotions: not agile for the user, many options that are not used
Cannibalization: poor functionality, it does not fill customer requirements
Kits and Displays: does not cover dependent demand functionality properly (e.g. parent product
characteristics are transferred to dependent products while this is not always true)
--62
62--
Accenture 2003

Implementing DP
Complexity Factors: Process Business Scenarios
Factor
DataMart
Strategy
Description
It indicates the complexity of the
data structure (product/ client/
location) and the alignment with
the transactional system.
Criteria
Number of dimensions.
(product/client/location).
Stability of R/3 environment.

Data structure alignment.
Sales History
It indicates the complexity in the

integration of sales history.
Data in SAP standard system.

Data structure alignment
between APO and the other
system.
N. of sources of data.
Planning Cycle
It indicates the frequency in which

planning is performed.
Planning frequency.
Planning Horizon
It indicates the number of months

to forecast.
Number of months.
--63
63--
Accenture 2003

Implementing DP
Complexity Factors: Process Business Scenarios (continued)
Factor
Aggregation
Strategies
Description
Criteria
It indicates the complexity that

exists in the data desaggregation
.
Desaggregation criteria complexity.

Desaggregation profile volatility.
Lifecycle
Management
It indicates the degree of new

products introduction.
Number of new products.

Number of new versions per
product.
New Customers
Introduction
It indicates the degree of new

costumers introduction.
Market
Kits and Displays

Management
It indicates the number and

variety of aggregation of final
products that are done.
Frequency of development
It indicates the degree of

promotional activity.
Promotional
Promotional
Planning
--64
64--
segmentation.
of kits and displays.
Variety of kits and displays.
activity.
Accenture 2003

Implementing DP
Factor
Description
Criteria
Statistical
Forecasting-Time
Series
It defines the demand model.
Demand trend and seasonality.
Statistical
ForecastingCausal
This option must be input if

causal forecasting is considered.
Number of factors that need to be
Upload and
Evaluation of an
External Forecast
It indicates the complexity of the

process of uploading and
evaluating external forecasts.
Number of sources for data
considered.
obtaining.
Alignment of data format

(SAP standard).
Data structure alignment with

APO.
Consensus
Forecasting
It indicates the number of

forecasts that are to be made
among all the departments
involved and the degree of
consensus reached.
--65
65--
Number of forecasts.
Accenture 2003

Implementing DP
Factor
Description
Criteria
Forecast
Accuracy
Tracking

exists in the forecast accuracy
tracking process.
Complexity of the KPI calculation.
Demand Forecast
Valuation

exists in the demand forecast
valuation process.
Type of system in which

exists in the review and
adjustment of forecasts.
Review and
Adjust Forecasts
at Various
Aggregation
Levels
valuation is calculated.
Calculation complexity.
Desaggregation criteria
complexity.
Desaggregation profile volatility.

Generate New
Forecast (Batch
Run)

exists in the generation of
forecasts.
Number of SKUs.
Number of inputs used to perform
the forecast.
Desaggregation criteria
--66
66--
complexity.
Accenture 2003

Implementing DP
Factor
Release of
Forecast
Description
exists in the transfer of the
forecast to SNP (or other system).
Criteria
Type of system to which the forecast
is to be transferred.
Number of characteristics that are

subject to modification during the
transfer.
Alert Monitor
Work by
Exception

exists in the alert management.
Returns Scenario
It indicates the number of returns

that exist.
Number of alerts to be managed.

Complexity of the KPI calculation
for alert treatment.
Frequency of returns.
Volume of products that are
returned.
Reporting
Scenario

exists in the reporting.
Number of reports.
Complexity of KPIs calculation.
Number of filters (conditions for
report data selection).
Complexity of filters operations.

--67
67--
Accenture 2003

Implementing DP
Complexity Factors: Technology Set Up
Factor
Infocubes
Criteria
Number of characteristics.
Number of dimensions (product / client /
location).
Number of key figures.

Planning Area
Number of characteristics.
location).
Number of key figures.

Number of planning books.
Temporal buckets.
Data Warehouse
Interfaces
Complexity on the calculation of KPIs.

KPI calculation frequency
Level of machine resources load.
--68
68--
Accenture 2003

Implementing DP
Complexity Factors: Technology Set Up (continued)
Factor
Criteria
Roles and
Authorizations
Number of roles.
Master Data
Interface
Standard SAP vs. non-standard SAP

system.
Number of characteristics to maintain.

location).
Data structures alignment.

R / 3 Interface
Standard SAP vs. non-standard SAP

system.
Data structures alignment.

Transfer frequency.
--69
69--
Accenture 2003

Implementing DP
Complexity Factors: Technology Conversion
Factor
Criteria
Locations
Number of locations per product.
Products
Number of products.
Sales History
Utilization of business warehouse.

Volume of data.
PPM DP
PPM loaded from SAP R/3 vs. a non

SAP system.
Number of PPMs.
Average number of components per
PPM.
--70
70--
Accenture 2003
Contents
1.
2.
3.
4.

Template
5.
DP Exercises
--71
71--
Accenture 2003
DP Demo: Accelerated Supply Chain

Integration APO Template
This scenario shows an example of how the customer dimension has
to be considered in the Supply Chain Planning Process
GOALS
To demonstrate that the Supply Chain process has to be customer oriented in order
to ensure the required service level at minimum cost.
EXPECTED CUSTOMER BENEFITS
Improvement of forecast accuracy as a consequence of considering events and sales

history at the customer level.
Build up the basics to launch downstream collaborative initiatives (CPFR or

CRP/VMI).
INDEX
Business Description
Previous Steps
SAP APO Demand Planning
--72
72--
Accenture 2003

Definition of DFUs (Demand Forecasting Units)
Category A
Nationwide
All customer
Product A
Nationwide
All customers
Product B
Nationwide
All customers
Product B
Nationwide
Product B
Nationwide
customer A
customer B
The DFU is a combination of product, geographical area

and demand group (customer). A DFU level has to be
defined at which forecasts are created and agreed on with
all the people involved in the process.
Product B
Nationwide
Promotional activities with

the most significant impact
on sales are planned and
executed at the customer
level.
customer C
In environments with a great customer concentration, the introduction of customer

dimension in the forecast hierarchy is necessary to improve forecast accuracy.
The actual sales information at the customer level is critical to quickly react to
deviations in the promotional behavior.
--73
73--
Accenture 2003

Criteria to Determine Significant Customers
There is a compromise between workload and improvement of forecast accuracy in

the selection of customers to be considered in the demand forecast.
Only 15 to 20 customers are usually significant to the forecasting process.
The criteria to determine what are these significant customers are:

Sales volume: these customers must account for at least 50% of total sales.
Promotional activity with significant impact on sales: customers with promotional
activity that eventually could impact more than 10% on total sales must be considered
in the forecast process.
Customers involved in collaboration initiatives (CRP/VMI, CPFR, etc.): customers
with special agreements.
Customers with very high sales volume in some products: customers which
account for over 50% of sales of one product with strategic relevance.
--74
74--
Accenture 2003

Procedure to Reflect Changes in Market in SAP APO
The market is changing every day with continuous mergers, demergers, acquisitions, etc.
that must be reflected in the forecast to better match future demand.
Generally speaking, it is not advisable to change historical data to match changes in the
customer composition. It is preferable to introduce events in order to increase or decrease
the base sales forecast.
In this case, the forecast is adjusted by
introducing an event in the future with
the impact in sales of the increased or
decreased number of points of sales.
OR
customer A
customer A
customer A
The merge of two customers can be

handled by creation of:
a new data selection including the
two old customers and the new
one.
a database realignment process.
customer B
The introduction of a new customer

does not entail any change in the
standard methodology.
New customer
--75
75--
Accenture 2003

Previous Steps
Before performing this scenario in SAP APO, it is necessary to delete all the
previous transactional data from former users that could affect the scenario
results. For that matter, the next steps must be executed :
1.
Go to transaction SE38.
2.
Fill the program:
/SAPAPO/RLCDELETE
3.
Press the button
to execute it.
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Previous Steps
4. Get a variant:
5. Select the variant TEMPLATE_003
DO NOT SELECT ANY

VARIANT EXCEPT
THIS ONE !!
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Previous Steps
6. Execute
7. and confirm all messages the system issues.

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SAP APO Demand Planning
MAIN FUNCTIONALITIES
Review of Historical Sales
Generate Forecast
Choose statistic model.
Errors review and model re-selection if needed.
Event Introduction
Introduce a promotional event at the client level.
Review existing promotions for this client / product.
Forecast Review
Review historical sales of one product and disaggregate the information in the client dimension.
Review the forecast at the client level and the impact of cannibalization between standard and
promotional products.
Alerts due to significant Sales Deviation
Analyze the alerts generated by the system due to significant sales deviation in one client during the
promotional period.
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SAP APO DP
1.
Menu path: Demand Planning / Planning / Interactive Planning
2.
In the shuffler, press the button
3.
Open the Planning Book PB_003_02 and select (double click) in the data view
DV_003_01 Press the button
and select Info Objects
4.
Select the data selection

product P_003_217.
5.
Press the button
and select Data Views.
and Object Selection screen will appear. Select the
to load the historical product sales.
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SAP APO DP
6.
To perform a drill down in the client dimension, click on Header button

the Total - Account tab strip, select the option Details.
7.
To obtain the percentages by client over total sales, press the button
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and, in
Accenture 2003

SAP APO DP
Generate Forecast
1. To generate forecast select in the menu: Settings Forecast profile.

2. Select your Master Forecast Profile: MP_P_003_217 press the button
button
to obtain the Forecast.
3. To display the graphical forecast press the button
4. To choose the other statistic model press the button
you consider it necessary).
Press the button
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and then press
and then press the button

and select the new model (if
Accenture 2003

SAP APO DP
Generate Forecast
5. To review the errors press the button

statistic model.
and obtain the forecast errors for this
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SAP APO DP
Event Introduction
1. Menu path: Demand Planning / Planning / Interactive Planning

2. Press the button
and the promotional screen will appear.
3. Press the button
to create a new event .
4. Fill in the fields as described below:
Short Text (Promotion ID): P_217_PROMO*
Description: Promotion 217*
Cannibalization group: CAN_217
Period: enter W
Number of periods: enter 3
Begin date: 10.03.03**
End date: 30.03.03**
Promotional key figure: RPROMEV
Planning key figure: RHIST
*These fields are filled in

with names as example.
The user must put their own
names or dates
**The begin and end dates

must be always in the future
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SAP APO DP
Event Introduction
5. Press the button Save in the command bar

6. The screen for the promotional data introduction will appear:
CAN_5246
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SAP APO DP
Event Introduction
7.
In the shuffler, select the product P_003_217
8.
Press the drill down button in the shuffler
9.
Select the client 100890 (which is affected by the promotion).
10. Press the button Assign Objects

11. In the shuffler, press the button
and select Account (client).
in the command bar.

and come back to the product selection.
12. Select the product P_003_217 and press the button.

13. In the promotional planning screen, enter the quantities for the first period (e.g. 1.000),
for the second periods (e.g. 1.500) and for the third period(e.g. 2000)
14. In the command bar, press the button Change status
option Planned, in the Future.
and then, select the
15. Save the promotion by pressing the button
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SAP APO DP
Event Introduction
16. Return to the interactive planning screen by clicking the button

17. Review the impact on the forecast of the planned promotion(Load the product P_003_217
and select the graphic view
)
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SAP APO DP
Event Introduction
19. Menu path: Favorites/Promotion Reporting

20. Select the fields planning area PA_003_3, version PV_003_01 and promotion key figure
RPROMEV.
21. Press the button
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SAP APO DP
Forecast Review
1. At Interactive Planning screen, select the data selection product P_003_5246 and the
promotion button to load it into the table.
2. Go to the header, and in the Product tab strip select Details.
3. Review in the promotional and net forecast key figures the impact of cannibalization
between the two products (optional).
4. Go to the header, and in the Account tab strip select Details.
5. Review, in the promotional and net forecast key figures, the impact of cannibalization
between the two products at the client level. When a product is in promotion, others
products may be affected
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SAP APO DP
Alerts
The alert monitor always provides a picture of current structure and supports the management of
daily planning activity.

1.
2.
Menu Path: Supply Chain Monitoring / Alert Monitor.

Select in Favorites the option Setting Alert Profile Template 03 (DP.
Select Products or Resources.
Select your preferred alert type.
Once you have selected Products, select

the object you want to control.
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SAP APO DP
Alerts
3. The interactive planning screen appears and the user only has to load the data selection
into the table to review what is happening.
4. To do a drill down in the client dimension, go to the header and, in the Total Account
(client) tabstrip, select the option Details.
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Contents
1.
2.
3.
4.

Template
5.
DP Exercises
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DP Exercises
DP EXERCISE
SAP APO installation guide and getting started: Before you do the exercises we are going to install the
SAP GUI and the access to the Barcelona APO Solution Center.
1. Access the address: https://software.accenture.com/

2. In the Search Tool bar click SAP and then click GO
3. Click on the link SAP Frontend-Version 6.10
4. Follow the wizard instructions
This will leave SAP GUI installed on your hard disk.
5. Click on the SAPlogon icon in your desktop

6. Click on the NEW button
7. Input the following data:
Name: Barcelona APO Solution Center
Application Server: 170.251.70.208
System number: 00
8. Click on the OK button and double click on the access
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DP Exercises
DP EXERCISE
Objective:
To consolidate the DP concepts learnt along the course.
At the conclusion of this unit, you will be able to:
Evaluate historical data and create sales forecast.
Analyze the differences among the forecasts you get when the statistical models have been
changed.
Analyze the variables that APO provides you to asses forecast accuracy based on past data.
Create promotional events in APO.
Check the promotion impact on the forecast and cannibalization produced between products.
Exercise:
The first step is to delete all the previous transactional data from former users that could affect our
results.
Select the product P_003_3004 and review sales at client level,both in absolute values and in
percentages.
Create a forecast, check the variables and change the statistical model for the forecast. Check the
differences between the models and check the MAD and MAPE statistical parameters.
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DP Exercises
DP EXERCISE
Introduce an event:
Short Text (Promotion ID):
Description: Promotion 3004 (user x)
Cannibalization group: CAN_3004
Period: enter W
Number of periods: enter 3
Begin date: (user)
End date: (user)
Promotional key figure: RPROMEV
Planning key figure: RHIST
Introduce some values for your promotion.
Check the promotion impact on the forecast.
Check the cannibalisation between products both at product level and at client level.
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DP Exercises
DP EXERCISE SOLUTION
Before performing this scenario in SAP APO, it is necessary to delete all the
previous transactional data from former users that could affect the scenario
results. For that matter, the next steps must be executed :
1.
Go to transaction SE38.
2.
Fill the program:
/SAPAPO/RLCDELETE
3.
Press the button
to execute it.
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DP Exercises
4.
Get a variant:
5.
Select the variant TEMPLATE_003
DO NOT SELECT ANY

VARIANT EXCEPT
THIS ONE !!
--97
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DP Exercises
6. Execute
All the categories from orders
(forecast, purchase requisitions,
production orders..) that could
affect the scenario results are
included in the variant.
All the products and

Locations defined in our
template are included
in the variant.
7. and confirm all messages the system issues.

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DP Exercises
Review of Historical Sales:
1.
Menu path: Demand Planning / Planning / Interactive Planning
2.
In the shuffler, press the button
3.
Open the Planning Book PB_003_02 and select (double click) in the data view
DV_003_01 Press the button
and select Info Objects
4.
Select the data selection

product P_003_3004.
5.
Press the button
and select Data Views.
and Object Selection screen will appear. Select the
to load the historical product sales.
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DP Exercises
6.
To perform a drill down in the client dimension, click on Header button

the Total - Account tab strip, select the option Details.
7.
To obtain the percentages by client over total sales, press the button
--100
100--
and, in
Accenture 2003
DP Exercises
Generate Forecast:
1. To generate forecast select in the menu: Settings Forecast profile.
2. Select your Master Forecast Profile: MP_P_003_3004 press the button
press button
to obtain the Forecast.
3. To display the graphical forecast press the button
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and then
and then press the button
Accenture 2003
DP Exercises
4. To choose the other statistic model press the button

you consider necessary).
Press the button
5. To review the errors press the button
statistic model:
and select the new model (if
and obtain the errors parameters for this
Mean absolute deviation (MAD): mean absolute deviation gives the mean average
difference between the forecasted value and the historical value in the ex-post
forecast.
Mean absolute percent error (MAPE): mean absolute percentage error
MAD
MAPE
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DP Exercises
6. You can choose other models and review the new results. Exit without saving
pressing
7. To come back to the interactive planning press the button
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Accenture 2003
DP Exercises
Next steps:
For next steps follow the instructions from the Demo Scenario. Be careful with
planning versions and products, so each assistant should use their products.
Use the information given at the exercise to introduce the promotional event as well.
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Accenture 2003

SCM Apo DP Overview

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SCM Apo DP Overview

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