Professional Documents
Culture Documents
and Operations
Planning with
mySAP SCM
S&OP Check-up
Have mergers and acquisition activities resulted in
duplications and inefficiencies?
?
from each other ... from sales, procurement, logistics, or
finance?
© SAP AG 2006, 3
S&OP Adds Value (cont.)
(Best-in-Class)
Class A B C D
Source:
© SAP AG 2006, 4
Sales & Operations Planning (S&OP) Adds Value
Thought Leadership in S&OP
An Integrated Process Requires an Integrated Footprint
Aligning Business Functions
How it Should Look
Customer Examples
Helpful Enhancements
Conclusion
Oliver Wight Recommends a Balanced Approach
Requires
focus,
People alignment,
and engagement
throughout the
company
Class A
Processes Technology
© SAP AG 2006, 6
Oliver Wight: S&OP is Integrated Business Management
Management
Business
Review
Latest View and
Recommendation
Strategy
Business Plan New Product/
Supply Performance
Activities
Review Review
Demand
Review
© SAP AG 2006, 7
Success Depends on a Closed Loop Process –
Not Just Planning
In the past, this S&OP cycle would consist of an annual and quarterly
planning process and a periodic — monthly and quarterly — review and
performance report, but the volatility of the new marketplace demands a
structural change in the process, based on:
Much greater emphasis on the “why” rather than just the “what” of what has
happened (Does this indicate a trend, a blip, an anomaly, etc.?) and what to do
about it
Much more frequent and systematic testing of pilot initiatives with sharply
focused interpretation of the results based on viral deployment strategies — the
enterprise cannot afford to “bet the farm” on a single, all-embracing thrust
Source:
Best Practices in S&OP
June 2005
© SAP AG 2006, 8
Analyst View – Bottom Line Impact
100%
90%
80%
Current % performance
70%
Laggard
60% Industry norm
50% Best-in-class
40%
30%
20%
10%
0%
Complete order % Gross margin % Customer
fill rate retention
Performance Metric
Source:
The Sales and Operations Planning Benchmark Report
“Leveraging S&OP for Competitive Advantage”
© SAP AG 2006, 9
Analyst View – S&OP Enables Demand-Driven
Supply Networks
© SAP AG 2006, 10
Sales & Operations Planning (S&OP) Adds Value
Thought Leadership in S&OP
An Integrated Process Requires an Integrated Footprint
Aligning Business Functions
How it Should Look
Customer Examples
Helpful Enhancements
Conclusion
SAP View: Fully Integrated, Closed-Loop Process
© SAP AG 2006, 12
© SAP AG 2006, 13
S&OP: Major Process Steps Supported by SAP Software
1. Strategic Planning
Strategic Enterprise Management (SEM)
5. Management Evaluation & Analysis
Supply Chain Analytics and Visibility (Supply Business Intelligence – Business
Chain Performance Management – SCPM) Warehouse – Business Planning &
APO Demand Planning (DP) Simulation (SAP BW – BPS)
Event Management (SCEM) SAP BW – CRM Analytics
Pricing and Margin Management
(Vendavo®)
2. Demand Planning
APO Demand Planning (DP)
Supply Chain Event
Management (SCEM)
4.Supply/Demand Balancing
APO Demand Planning (DP) 3. Supply Planning
APO Supply Network Planning
APO Supply Network Planning (SNP)
(SNP)
Supply Chain Event Management (SCEM)
Supply Network Collaboration (Inventory
Collaboration Hub – ICH)
© SAP AG 2006, 14
Sales & Operations Planning (S&OP) Adds Value
Thought Leadership in S&OP
An Integrated Process Requires an Integrated Footprint
Aligning Business Functions
How it Should Look
Customer Examples
Helpful Enhancements
Conclusion
The Same Data, But from Different Perspectives
All departments can see the same data at the same time from their
own perspectives
Customers and Channels
Product Families and Brands
Products
and Sources
Marketing
Products and
Sales Destinations
Supplier Customer
Customer
Products, Sources,
Capacity, & Destinations Revenues, Margins
& Working Capital
Manufacturing
& Logistics Finance
© SAP AG 2006, 16
S&OP: Start with Demand
The evidence is clear that the areas most likely to generate the greatest
improvement in total S&OP business performance occur when you tackle
the demand component of the demand/supply alignment. This is ... due to
the ... fact that no amount of added flexibility and adaptiveness invested
on the supply side can offset an ineffective demand management
capability.
Source:
© SAP AG 2006, 17
Sales & Operations Planning (S&OP) Adds Value
Thought Leadership in S&OP
An Integrated Process Requires an Integrated Footprint
Aligning Business Functions
How it Should Look
Customer Examples
Helpful Enhancements
Conclusion
We have already been through the
demand planning process of anticipating
market requirements from all of the best
perspectives (sales, marketing, customer,
quantitative, etc.).
© SAP AG 2006, 20
Now we have moved into Demand
Planning where we can see the margin
impact of various demand outcomes. We
will make a selection of data based on the
relevant characteristics.
We can see the quantity forecast, revenue,
contribution margin, earnings before interest and
taxes (EBIT), and even Economic Value Added
(EVA) for three demand possibilities.
© SAP AG 2006, 30
Or view the high-level forecast
by plant or any other selection
of data that puts it in the terms
of the relevant S&OP
stakeholder
© SAP AG 2006, 31
Here we have made a change to the selection
of data so that we are viewing all brands
© SAP AG 2006, 35
Chemical Manufacturer: S&OP Process Enabled by
APO Tool
PLAN
(18-month horizon; monthly/quarterly time buckets)
Statistical forecast
DP Sales adjusted forecast
Statistical Forecast Final sales plan
Plan Demand Trial Forecast
Sales Adjustments to Stat Forecast
Sales
Forecast
Constrained
Supply
Final Sales
Plan (FSP)
Forecast
Parameters
SNP
SNP Balance
Set FSP (Gross) FSP (Gross)
Supply & Supply/
Inventory Demand
Inventory Targets Demand
Targets Plan
FSP (Net)
Feedstock Plans
Production &
High-level
Inventory Targets
Planned Stock
Prod. Sched.
Supply Point
Transfers
Fill-rate Targets
SCHEDULE
Operation schedules
(4-6 mo horizon; daily time bucket) • Production
ATP PP/DS • Replenishment
Available to Schedule • Packaging
Promise Planned Receipts
SNP
Production & Replenishment • Tolling & compounding
R/3PP
• Raw material
procurement
© SAP AG 2006, 36
Sales & Operations Planning (S&OP) Adds Value
Thought Leadership in S&OP
An Integrated Process Requires an Integrated Footprint
Aligning Business Functions
How it Should Look
Customer Examples
Helpful Enhancements
Conclusion
Enhancements in SAP APO Demand Planning
Major Enhancements
z Offline Planning – File Upload
z Seasonal Planning
Continuous Improvements
z Maintenance of Planning Areas Containing Data
© SAP AG 2006, 38
Offline Planning Process
Solution: During download, source information is added for use in later upload.
Upload launched from interactive planning offers various options.
© SAP AG 2006, 39
Offline Planning – File Upload Details
Level change
Horizon
© SAP AG 2006, 40
Demand Split in Release from Demand Planning
Challenge:
Dynamic splitting of a demand
plan to a more detailed time
granularity (e.g., from months
to weeks or from weeks to
days) when releasing to SNP
or mySAP ERP was previously
only possible using a BAdI
(user exit)
Solution:
A splitting profile has been
introduced that contains
different distribution functions
for different periodicities (i.e.,
year, quarter, month, week,
day, accounting period)
© SAP AG 2006, 41
Seasonal Planning
Challenge: The time granularity is defined for a Planning Area and applies to all
planning items and levels. This prevents seasonal planning with different period
definitions by product.
2003 2004 2005
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Product A
SRING '03 SUMMER '03 FALL '03 HOLIDAY '03 SRING '04 SUMMER '04 FALL '04 HOLIDAY '04
(Apparel)
Product B
SRING '03 SUMMER '03 FALL '03 HOLIDAY '03 SRING '04 SUMMER '04 FALL '04 HOLIDAY '04
(Apparel)
Product 1
SEASON C '02 SEASON A '03 SEASON B '03 SEASON C '03 SEASON A '04 SEASON B '04
(Footwear)
Product 2
SEASON C '02 SEASON A '03 SEASON B '03 SEASON C '03 SEASON A '04 SEASON B '04
(Footwear)
Solution: Freely definable seasons and planning years are introduced that can
be flexibly assigned to characteristic combinations
© SAP AG 2006, 42
Seasonal Planning – Seasonal Pattern
© SAP AG 2006, 43
Interactive Seasonal Planning
Supported processes:
Interactive planning
Macro execution
Features:
Dynamic switch between
Season Year, Season,
Time, and Storage Bucket
Profile, as extension of
existing “Period structure
settings”
Also part of user-specific
setting
Also available without
using Seasonal Planning
Prevention of time
disaggregation in the past
for current period that is
partly history (key-figure-
specific)
© SAP AG 2006, 44
Distinguish 0 and Nothing
Challenge: The system cannot distinguish between an empty cell and a cell
with a 0. This leads to unattractive workarounds.
Solution: The system can now differentiate between an empty cell and a cell
with a 0 (time-series-specific). This required a redesign of the fixing
functionality and corresponding macros.
The 0 will be treated like any other number with respect to all existing
functions, like loading and copy of data, forecasts, realignment,
proportional factors, background processing, etc.
Also, SNP is affected for the mass maintenance of key figures, or optimizer
constraints for, e.g., procurement or stock levels
© SAP AG 2006, 45
Maintenance of Planning Areas Containing Data
Challenge:
A planning area could be changed only when it contained no data.
Therefore data had to be stored first (e.g., in an InfoCube) and uploaded
again after maintenance.
Solution:
The maintenance of a planning area containing data is now enabled for:
Changing dis-/aggregation method and key figure for disaggregation
Adding key figures
Deleting key figures (if not used)
Changing between InfoCube and liveCache key figure
Switching key figure type between fixing and non-fixing
Changing key figure accuracy
Flagging if negative values are allowed
Flagging if zeros are allowed/fixable
Flagging if history is changeable
Inconsistencies created during the change can be checked and repaired.
Transport of the changes to other systems is enabled.
© SAP AG 2006, 46
Forecasting: Flexible Horizons
Challenge:
The definition of the historical and forecast horizon is possible using from
and to dates or number of periods and offset.
The definition screens differ in the forecast profile and interactive
forecasting.
Solution:
Support of more flexible forecast and history horizon definition,
allowing a mixture of dates and number of periods:
Start or end date with number of periods
Only start or end date, and no number of periods
The screens for maintenance of horizons are harmonized, i.e., in
interactive forecasting the screen of the forecast profile definition
is used.
© SAP AG 2006, 47
Forecasting: Composite Forecast
Challenge: The composite forecast view did not show the history key
figure. The user could not overrule the system selection of the forecast.
Solution:
Historical data is visible on forecast screen
The user can interactively select any forecast of a single profile
in the composite forecast profile to be used as composite
forecast result
The composite ex-post forecast can be saved in a key figure
© SAP AG 2006, 48
Macro Performance Improvements
Challenge:
The performance of macros executed in interactive planning is sometimes
not as expected
Solution:
Improved macro execution performance in interactive planning, especially
when:
Changing cell attributes (e.g., color, icon, read-only)
Calculating quantities
© SAP AG 2006, 49
Sales & Operations Planning (S&OP) Adds Value
Thought Leadership in S&OP
An Integrated Process Requires an Integrated Footprint
Aligning Business Functions
How it Should Look
Customer Examples
Helpful Enhancements
Conclusion
Why SAP? Great S&OP with Lower Total Cost
• Make decisions that globally optimize KPIs • Conduct fast, frequent S&OP cycles
• Optimize customers and channels • Adjust plans and re-plan based on
real-time exceptions
• Optimize product mix
• Make decisions that consider all of
• Optimize allocation of scarce resources
the relevant perspectives and
(production and transportation)
information, internally and externally
• Continuously improve
T0 Tn
Shorten the planning cycle to < 1 month
© SAP AG 2006, 51
Resources
http://www.sap.com/industries/
index.aspx
http://www.sap.com/solutions/busin
ess-suite/scm/index.aspx
AMR Research
Aberdeen Group
© SAP AG 2006, 52
7 Key Points to Take Home
The quality of your S&OP process always has and always will
impact the bottom line
© SAP AG 2006, 54
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© SAP AG 2006, 55