Unit 1: Process Overview and Demand Planning

Week 2: Product Planning, Buying, and Selling
Unit 1: Process Overview and Demand Planning

Process Overview and Demand Planning
Process overview (1)
Demand Procure-to-Pay (Stock)

Planning Processing
Processing Processing Processing Inbound Processing Processing Processing
Planning Planning Initiating Purchase Requests for Purchase Delivery Inbound Supplier Payables and
Demand Supply Purchasing Requests Quotation Orders Notifications Deliveries Invoices Payments
Supply Planning Strategic Sourcing Purchasing Invoicing
Goods Processing
Receipt Inspections
Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing
Initiating Processing Creating Processing

Creating Creating Outbound Outbound Customer Receivables and
Sales Quotes Sales Orders Delivery Delivery Invoices Payments
© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 2

Process overview (2)

Planning Processing
Goods Processing
Receipt Inspections


Demand Planning loop process – Business overview
What is it?
Roll the
▪ Mid or long-term forecast as an assumption of demand Demand
plan to the plan
future demand future
Purpose:
▪ Procure goods in advance to shorten delivery Release to
Use historic
data or
times for your customers supply uploaded data
planning
Prerequisites:
▪ Demand plan: Set up and control
Change or eliminate
Means: Review results and adapt
exceptional quantities
(optionally) or
▪ Interactive planning board use uploaded forecast
(optionally)
▪ Supported by Excel up-/download

Run
statistical
forecast

System demo

Summary
▪ How the supply chain process steps are connected for product planning, buying, storing, and
selling products
▪ How to use historic sales data and how to apply statistical methods for demand forecasting and
adapt them, if needed
▪ How and when to release the demand plan to initiate the supply planning process

Thank you.
Contact information:
open@sap.com
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Unit 2: Supply Planning
Supply Planning
Process overview

Planning Processing
Supply Strategic Sourcing Purchasing Invoicing

Planning
Goods Processing
Receipt Inspections


Supply Planning
Supply Planning loop – Business background
Challenges for a Planner Means Process Steps
▪ Provide a reliable plan ▪ Supply and demand list Continuous Prepare

for execution and reduce check on planning
exceptions ▪ Automated planning exceptions
▪ Try to avoid inventory – Demand-driven

surplus – Consumption-based
▪ Focus on important ▪ Focus on exceptions Run material
products Handover to planning
▪ Capacity planning execution
▪ Handle a high number of
products ▪ Safety buffers
Review
exceptions
and resolve

Supply Planning
Main aspects for material planning
Input to Product Planning Steps Handover to Execution

Material Planning - automated planning run -
Demand
Sales Orders, Net Requirement Calculation
Demand Forecasts,
Stock Transfer Demand,
Dependent Demand
Lot Size Calculation
- based on requested dates and incl. scheduling considering lead times
requested quantity -
Initiate Execution
purchase requests,
Creation of New Receipts (Proposals) production requests,
incl. determination of sources of supply stock transfer requests
Supply
Existing Inventory Exception Handling
Firm Receipt after or in-between planning runs
- acknowledged purchase orders,

etc.- Material Flow
pegging relationship between supply and demand
Supply Planning
Product planning steps – Lot size calculation and scheduling
Lot Size Calculation with Lot Sizing Methods: Example: Fixed Lot Size Calculation
▪ Lot for Lot Quantity
150 pcs 150 pcs 150 pcs
▪ Fixed Lot Size
▪ * Periodic Lot Size 100
110
100
▪ * Target Days of Supply Receipts
▪ Target Stock Level 20
Projected 10
(for both demand-driven and consumption-based;
Stock
* for demand-driven procedure only) Time
Demand
50 pcs 60 pcs 60 pcs
Scheduling Aspects for Purchasing: 80 pcs
100 pcs
▪ Lead times – some examples -
– Purchasing Lead Times Example: Scheduling Lead Times for Purchasing
– Goods Receipt Processing Time Planned Delivery Date Availability Date
Planned Order Date
– Safety Lead Time
Purchasing Lead Time Goods Rcpt Proc. Time

Supply Planning
Product planning steps – Procurement types and source of supply
Dependency: Product and Site Example:

Procurement types:
Ranking for external procurement
▪ Internal procurement
 Other site
▪ In-house production
 Valid production model
Contract
▪ External procurement
 Supplier Supplier A
• Fixed supplier for a product Target Quantity 100 pcs
• Contract Validity: 01.05-30.06.2017
• List price
▪ Source of Supply Priority Rule List Price
Sequence
 Internal procurement Supplier B
 In-house production
 External procurement

Supply Planning
System demo

Supply Planning
Summary
▪ How material planning considers the supply and demand situation for a future time horizon to identify the
required quantity to be purchased or to be produced
▪ What sources of supplies exist and how they are considered during supply planning
▪ How the result of supply planning is released to purchasing

Thank you.
open@sap.com
Unit 3: Purchasing
Purchasing
Process overview

Planning Processing
Supply Planning Strategic Purchasing Invoicing

Sourcing
Goods Processing
Receipt Inspections


Purchasing
Strategic sourcing
Purpose: Process Steps:

▪ Find one or more appropriate suppliers
▪ Find out one or more appropriate suppliers
initiated from supply planning or independently
Create Send RFQ Receive

Means: RFQ to Suppliers Suppliers’ Quotes
▪ Requests for Quotation (RFQ)

▪ E-mail, interactive forms, XML
▪ Comparison board for quotes
Compare Create Contracts Approve and

Quotes & or Purchase Send
Decide Order

Purchasing
Process overview

Planning Processing
Goods Processing
Receipt Inspections


Purchasing
Process steps overview
Process Create Approve Send PO Receive

Purchase Purchase to the Acknowledgement
Requests Orders Supplier
Optional Optional

Purchasing
System demo

Purchasing
Summary
▪ How to work with strategic sourcing

▪ How to bundle purchase requests into purchase orders
▪ How the supplier acknowledgement impacts goods receipt processing and supply planning

Thank you.
open@sap.com
Unit 4: Goods Receipt Process
Goods Receipt Process
Process overview

Planning Processing
Goods Processing
Receipt Inspections


Basics: logistics models – Interaction with location layout and material flows
1 Unload & check

Lean Sophisticated 2 Put away
3 Replenish
4 Remove
5 Pick
6 Load
5 2
Shipping Receiving Production

6 1
3
2
Storage
5
2 Put away
5 Pick
3 4
Pure Picking Rack/High Rack

Basics: logistics models – Aspects with respect to the goods receipt process
Purpose:
▪ Tracking and controlling the movement of received products into storage areas
Means:
▪ Inbound logistics process models
– Define the type and granularity of tasks in the warehouse Put-away
– Offer work efficiency
– Contribute to determine the destination logistics area(s)
– Option: activation quality inspection
▪ Always offers option to work without tasks
▪ Goods receipt posting
Unload Put-away

Process steps: simple and advanced goods receipt options – Examples
2
Post Goods
Use Case 1:
Receipt on
Post goods receipt
Purchase Order
without tasks
A Task Management 2
Use Case 2: Put Away with

Inbound Delivery
Inbound delivery & Warehouse
Notification (IDN)
post goods receipt Task
with task
▪ Goods receipt posted
A B 1 2
Advanced Plan Warehouse Unload with Put Away with
Shipping Requests to Warehouse Warehouse
Use Case 3: Notification (ASN) Tasks Tasks Task
Complete process
▪ Goods receipt posted

System demo

Process overview

Planning Processing
Goods Processing
Receipt Inspections


Quality inspection – Process steps
Quality Planning Quality Execution Quality Monitoring
Inspection Sample Inspection Results Quality Follow-Up

Initiation Drawing and Print & Recording Decision Actions
Preparation Execution
▪ Unplanned ▪ Update quality ▪ Stock

▪ Planned with level for adaptive adjustments
inspection plan sampling ▪ Defects analysis

Process overview

Planning Processing
Goods Processing
Receipt Inspections


Verify and release supplier invoices
Purpose:
▪ Records the obligation of the recipient of the goods towards the
supplier
Means:
▪ Supplier invoice entry
– Verification with a 3-way match
– Exception process
– Tolerance limits
▪ Evaluated receipts settlement (ERS)
– Invoicing on behalf of the supplier based on goods receipt and
purchase order
– Sent to supplier
▪ Release and transfer to finance

System demo

Summary
▪ How logistics models control the goods receipt process

▪ How to put away goods in a simple way or in a more advanced way
▪ How quality inspections are incorporated into goods receipt processing
▪ How to release the supplier invoice

Thank you.
open@sap.com
Unit 5: Sell from Stock
Sell from Stock
Process overview

Planning Processing
Goods Processing
Receipt Inspections


Sell from Stock
Sales quotes
Purpose:
▪ Offer product quantity at a certain price for a specific period of time
Means:
▪ Sales quotes:
– Pricing
– Validity dates
– Approval
– Availability check

Sell from Stock
Process overview

Planning Processing
Goods Processing
Receipt Inspections


Sell from Stock
Supply chain aspects with respect to sales orders
Sales Order:
▪ Product quantity
▪ Requested delivery date
▪ Delivery priority
▪ Complete delivery
▪ Delivery rules
▪ Ship-to address
▪ Ship-from locations
▪ Confirmation: Available-to-Promise

Sell from Stock
Process overview

Planning Processing
Goods Processing
Receipt Inspections


Sell from Stock
Logistics models – Aspects with respect to the goods issue process
Purpose:
▪ Tracking and controlling the movement of received products into
storage areas
Means:
▪ Outbound logistics process models
– Define the type and granularity of tasks in the warehouse Pick
– Offer work efficiency

– Contribute to determine the source logistics area(s)
– Option: activate quality inspection
▪ Always offers option to work without tasks
▪ Goods issue posting
Pick Load

Goods Issue
Process steps: simple and advanced goods issue options – Examples
Use Case 1:
Post goods issue Post goods issue
directly from delivery
without tasks
proposals list
▪ Print delivery note
Use Case 2:
Post goods 5 Task
A
issue Delivery Pick with Management
with tasks proposals warehouse
list task

▪ Goods issue posted
A B 5 6 C D E
Use Case 3: Delivery Plan warehouse Pick with Load with Pack Release
Complete Freight list
proposals requests to warehouse warehouse delivery outbound
process list tasks task task delivery

▪ Goods issue posted

Sell from Stock
Process overview

Planning Processing
Goods Processing
Receipt Inspections


Sell from Stock
Customer invoicing
Purpose:
▪ Charging customers for delivered goods
Means:
▪ Manually or automatically via invoice runs
▪ Single invoice or combined invoices

Sell from Stock
System demo

Sell from Stock
Summary
▪ How to optionally work with sales quotes

▪ Which supply chain aspects to focus on when creating sales orders
▪ How logistics models control the goods issue process in your warehouse
▪ How to pick goods in a simple way or in a more advanced way including
how to print delivery notes
▪ How to initiate customer invoices

Thank you.
open@sap.com
Unit 6: Deep Dives
Deep Dives
Demand Management
Purpose:
▪ Enables demand-driven planning
▪ Define how forecast demand and actual demand is
considered in supply planning
Means:
▪ Demand management procedures
– All demand consumes current forecast
– All demand consumes adjacent forecast
– All demand consumes preceding forecast
– All demand reduces forecast

Deep Dives
Demand Management: demand consumes forecast
Forecasts
All demand consumes
current forecast
Time
Demand
All demand consumes Forecasts

adjacent forecast
Time
Demand
Demand
Forecasts Sales Orders, Stock
All demand consumes Transfer Orders,
preceding forecast Dependent Demand
Consumed
Time Forecast
Demand
Unconsumed
Forecast
Deep Dives
Available-to-promise (ATP)
Purpose: Product Availability Check at the Ship-From Site

▪ Reliable order confirmation
Shipment Scheduling Sales Order

Means: ATP Request
▪ Ship-from site determination

▪ Shipment scheduling Product
Availability
▪ Product availability check Check
 Result: confirmation dates and quantities Check Confirmation

Stock and Supply Data
▪ Confirmation update run ATP Response

Deep Dives
Available-to-promise: shipment scheduling
Backward Scheduling
3. Requested 2. Requested 1. Requested Zone East

Execution Start Date Shipment Date Delivery
Date
Goods Issue
Processing Shipping Duration Customer
Time
Site
Time
Today Line
Forward Scheduling
4. Confirmed 5. Confirmed 6. Confirmed

Execution Start Date Shipment Date Delivery Date Zone East
Goods Issue
Processing Customer
Site Shipping Duration
Time
Time

Deep Dives
Available-to-promise: scope of product availability check
Availability Check Scope Example for ‘Stock and Released Receipts’

- without horizon -
Purchase Stock and All Receipts

Proposal
Firm Supply
All Supply Except Unfirm Receipts
Purchase
Proposal Available
Purchase Stock
Request
Purchase ASN Purchase

Order Order
Advanced Stock and Released

Time
Shipping Receipts
Notification
(ASN) Sales Order 2
Generating the
Available ATP Check
Stock
Stock
Firm Demand
Available Production Production
Production
Stock Request Proposal Sales Order 1
Proposal

Deep Dives
Available-to-promise: availability check methods
Quantity
4
Check Against Check Against

S Available Check Replenishment
t Scope Lead Time
o
c
Receipts
k
Time
Today Availability Replenishment
2 Check Lead Time
Horizon Date End Date
3
Replenishment Lead Time

Deep Dives Figure 1
Available-to-promise: confirmation update run Supply
Confirmation
Stock
On-Hand
Time
Purpose: Demand
Sales
Order 1
▪ Consider changes in the product supply situation
Today
▪ Give priority to more recent sales orders
Figure 2 Confirmation
Supply
Stock Purchase
Means: On-Hand
Confirmation
Proposal
▪ Confirmation update run Time

Sales
– Automatic reorganization of the available quantities Demand Order 2
Sales
Order 1
– Using sorting parameters Today
Figure 3 Confirmation Confirmation

▪ Exception: Manual intervention Supply
Stock Purchase
– check, cancel, force confirmations

Proposal
On-Hand
Time
Sales
Demand Order 2 Sales
Order 1
Today
Deep Dives
Task Management
Purpose: Example: Task Folder

▪ One way of distributing and executing work –
similar in logistics and production Site
Registered
Means:
▪ Logistics tasks created in different processes Inbound Outbound Task
▪ Logistics task folders representing worklists Warehouse
Task Folder
Warehouse
Task Folder
Control
Missing
▪ Logistics task monitoring and control Put Away Pick Parts
Count Production
Task Task
Folder Folder

Deep Dives
Summary
▪ How actual demand can influence the reduction or consumption of the forecast
▪ Which aspects influence the calculation of the date and quantity that can be promised to the customer
▪ How the task concept works

Thank you.
open@sap.com

Unit 1: Process Overview and Demand Planning

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Week 2: Product Planning, Buying, and Selling

Unit 1: Process Overview and Demand Planning

Demand Procure-to-Pay (Stock)

Supply Planning Strategic Sourcing Purchasing Invoicing

Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing

Initiating Processing Creating Processing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 2

Demand Procure-to-Pay (Stock)

Supply Planning Strategic Sourcing Purchasing Invoicing

Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing

Initiating Processing Creating Processing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 3

▪ Supported by Excel up-/download

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 4

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 5

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 6

Demand Procure-to-Pay (Stock)

Supply Strategic Sourcing Purchasing Invoicing

Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing

Initiating Processing Creating Processing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 2

Challenges for a Planner Means Process Steps

▪ Provide a reliable plan ▪ Supply and demand list Continuous Prepare

▪ Try to avoid inventory – Demand-driven

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 3

Input to Product Planning Steps Handover to Execution

- acknowledged purchase orders,

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 5

Dependency: Product and Site Example:

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 6

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 7

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 8

Demand Procure-to-Pay (Stock)

Supply Planning Strategic Purchasing Invoicing

Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing

Initiating Processing Creating Processing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 2

Purpose: Process Steps:

Create Send RFQ Receive

▪ Requests for Quotation (RFQ)

Compare Create Contracts Approve and

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 3

Demand Procure-to-Pay (Stock)

Supply Planning Strategic Sourcing Purchasing Invoicing

Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing

Initiating Processing Creating Processing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 4

Process Create Approve Send PO Receive

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 5

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 6

▪ How to work with strategic sourcing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 7

Demand Procure-to-Pay (Stock)

Supply Planning Strategic Sourcing Purchasing Invoicing

Order-to-Cash (Sell-from-Stock) Quotes Sales Goods Issue Invoicing

Initiating Processing Creating Processing

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 2

1 Unload & check

Shipping Receiving Production

Pure Picking Rack/High Rack

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 4

Use Case 2: Put Away with

© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 5