Shaun Snapp

Discover SAP SCM
®

Bonn � Boston

305_BOOK_loose.indb 3

11/3/09 4:17:46 PM

Contents at a Glance
1

SAP SCM Basics .......................................................... 31

2

SAP SCM Applications ................................................. 45

3

SAP Demand Planning (DP) ........................................ 59

4

Supply Network Planning (SNP) . ................................. 79

5

Production Planning and Detailed Scheduling
(PP/DS) ....................................................................... 99

6

Global Available to Promise (GATP) ........................... 121

7

SAP Transportation Management (TM) ...................... 139

8

SAP Event Management (EM) .................................... 161

9

Core Interface (CIF) .................................................... 183

10 SAP Service Parts Planning (SPP) . .............................. 201
11 SAP Extended Warehouse Management (EWM) ........ 217
12 SAP Supplier Network Collaboration (SNC) ............... 239
13 SAP Forecasting and Replenishment (F&R) ................ 261
14 SAP SCM’s Direction as of Release 7.0 ...................... 277
15 Getting More from SAP SCM ..................................... 299
16 SAP SCM and ROI ...................................................... 327
17 Conclusion ................................................................. 345
A

Glossary  ....................................................................   365

B

Bibliography  ..............................................................   373

ch00_FM_5553.indd 5

11/3/09 5:11:06 PM

Contents
Acknowledgments ......................................................................... 21
Preface .......................................................................................... 23

  1 SAP SCM Basics ........................................................ 31
What is SAP SCM? ................................................................ 31
SAP SCM Origins .................................................................. 32
SAP’s Approach to Supply Chain Management . .................... 33
Optimization . ....................................................................... 34
Linear Versus Discrete Optimization................................ 34
Reduced Focus on Optimization...................................... 35
Which Companies Are Right for SAP SCM? .......................... 37
Cross Application Components ............................................. 38
Product Location Master ....................................................... 38
Planning Areas and Planning Object Structures ..................... 40
Planning Object Structure .................................................... 40
Planning Versions . ................................................................ 41
Planning Versions and Mass Maintenance........................ 41
Planning Book . ..................................................................... 41
Conclusion ............................................................................ 43

  2 SAP SCM Applications ............................................... 45
SAP SCM Applications .......................................................... 48
SAP SCM Configuration Folders....................................... 49
SAP SCM as a Visionary Application ...................................... 50
SAP SCM Application Interactions . ....................................... 51
Common Application Interactions.................................... 52
SAP ERP to SAP SCM ............................................................ 54
Implementation Key Drivers . ................................................ 56

7

305_BOOK_loose.indb 7

11/3/09 4:17:47 PM

........ ... 61 Basic Functionality and Concepts of SAP DP ............................................................................................................................................. 60 Two Halves of Demand Planning ........................................... 77 Solution ............................. 65 InfoCubes .............................. 77 Value Achieved................................. 82 Heuristics..................................................................... ................................................. 73 Realignment ..................... 69 Forecasting ............................................... 77 Company.......................... 75 Plan Destination........................................................................................................................................................................................... 71 Forecasting Methods...................................... 79 Basic Functionality and Concepts of SNP .. 76 SAP DP Release History ......................... 75 Plan Release and liveCache....................... 76 Case Study ................... . 81 Methods of Running SNP...............indb 8 11/3/09 4:17:47 PM .................................................................................................................................................... 74 Releasing the Plan ....................................................Contents Conclusion ............................................. 62 Interactive Demand Planning............. 77 Conclusion .................... 59 Demand Planning as SAP SCM’s Most Popular Application ......... 77 Challenge..... 83 8 305_BOOK_loose....... 81 SNP Optimizer............................................................................................................................................................ 57   3 SAP Demand Planning (DP) ................................................................................................................ 72 Characteristic Value Combinations .................................................................................................. 64 Data Warehouse Workbench ................... 78   4 Supply Network Planning (SNP) .................................................................. 73 Promotion Forecasting ......................................... 64 InfoObjects....................................

.............................................................................................................................................. 96 Case Study ..................................... 103 Manufacturing Strategies.............. 97   5 Production Planning and Detailed Scheduling   (PP/DS) .............................. 99 Basic Functionality and Concepts of PP/DS .............. 100 Methods of Running PP/DS..................................... 96 Company...................................................................... 93 SNP and Supplier Network Collaboration.......................................................................................................................................... 103 Settings for PP/DS in the Product Location Master.............. 95 SNP Release History ............................ 92 SNP Subcontracting ................ 90 liveCache and Data Storage......................... 97 Value Achieved........................................................................................................................ 105 Lot Size Setting.......... 92 Safety Stock in SNP ............................................ 89 Capacity Leveling Profiles............ 96 Solution ........ 93 SNP Product Location Tabs ............................ 95 Deployment Optimizer.................................................................... 97 Conclusion .............................. 88 Common SNP Objects .................................................................................................................... 96 Challenge.................................. 94 Deployment Heuristic........................................................ 93 SNP Deployment .......................... ............................................................................... 85 SNP Resources ........................................Contents Capable to Match......................................... 107 9 305_BOOK_loose...........indb 9 11/3/09 4:17:47 PM .......................................................................................................................... 101 Capacity Leveling Versus Capacity Constraining....................... 89 Capacity Leveling...................... 84 Capable to Match Configuration......................................................... 90 Planning Book................................................................ 104 Pegging.................................................................................

................................. 132 Third-Party Order Processing at Amazon.................................................................................... 117 Company.................. 112 Constraining PDS and PPM........................................ 115 PP/DS Release History ..................................................................... .................... 114 Process Industry Planning ........................................... 128 What Attaining ATP Proficiency Can Mean.......................................................................... 133 Scope of Checking .... 113 Resources .................... 111 Production Data Structures (PDSs)................................................................................................................................................................................................... 134 The GATP Time Horizon .................................................................................................... 132 Third-Party Order Processing ........................... 118 Conclusion ................................................................................................. 122 Availability Checking .. 110 Production Process Models (PPMs)...........Contents Production Process Models and Production Data Structures ............ 134 liveCache ... 117 Solution ............................indb 10 11/3/09 4:17:47 PM ... 117 Challenge.................................................... 118   6 Global Available to Promise (GATP) ................................. 121 GATP and CTM ......................................................................................................com..................................................... 128 Rules-Based Availability Checking...... 124 Available to Promise.. 136 10 305_BOOK_loose........ 129 ATP Tree Structure ..... 127 Multilevel ATP Check (M-ATP).... 126 Different Levels of ATP Checks . ........................................................................................................................................................................................................................................................................ 127 Availability Checking for Kits (or BOM)........................................................... 125 Basic Functionality and Concepts of GATP .......................... ............ 117 Value Achieved............... 129 Capable to Promise ..... 116 Case Study ................

....................................... 144 Carrier Cost Estimation........................................................... 138   7 SAP Transportation Management (TM) .......... 155 Freight Units............................................................................................................................................................ 141 Shipment Creation.................................................................. .................. 146 Transportation Lanes..... 152 SAP TM Resources.................................... 156 Integration to SAP Event Management ............ 147 Location Geo-coding............................ 145 Transportation Load Builder........................ 137 Company........... 143 Carrier Selection. 153 Vehicle Resources....................... 141 Specific Processes.............................................................................. 146 Important SAP TM Structures .......... 136 GATP Release History ....................... 143 Contract Management......................................................................................................................................... 151 Transportation Zones............................................................................... 141 High-Level Processes................................. .......................................... 152 Transportation Groups....Contents Integration ........................................................................................... 136 Case Study ........................................................................................................... 154 Transportation Versus Vehicle Resources.......................... 137 Solution ........ 143 Vehicle Scheduling............ 157 11 305_BOOK_loose...................................................... 137 Value Achieved.................... 139 Basic Functionality and Concepts of SAP TM .........................................................................................indb 11 11/3/09 4:17:47 PM ............................................................................................ 137 Challenge..................................................... 156 SAP TM Release History .................................. 142 Carrier Tendering and Selection......................... 148 Transportation Modes........................................................................................ 137 Conclusion ..................................................................

................................ 173 Event Notifications ........................................ 178 Web Communication Layer.... ......................... 168 SAP EM Specific Areas ............................................................... 176 Analytics: SAP NetWeaver BW and Trend Analysis......... 158 Conclusion ..................................................................................................................................................................................................................................................................... 161 Basic Functionality and Concepts of SAP EM .................................................................. 167 Transportation............. 179 12 305_BOOK_loose................................. 168 Major Components of SAP EM ................................... 167 Asset Management............................... 171 Event Handler Types.............................. 175 Service Matching.............................. 158 Challenge............................. 176 Action Initiation.................. 178 SAP EM Release History ............................................................................ 177 Integration ..... 173 Reacting to Events....... 169 Event Handler Questions to Ask...........................indb 12 11/3/09 4:17:47 PM .... 159   8 SAP Event Management (EM) .............................. 158 Company................................................................................... 179 Case Study ...... 164 SAP EM Processes Visibility..................................................... 162 The Event........................................ 167 Manufacturing.................................................................................................. ....... 163 How Event Management Is New for SAP SCM......... 166 Procurement............... 158 Value Achieved...................................... 169 Event Handlers................................................................. 158 Solution ............................................................ 174 Event Messages ............ 176 Web Interface and Access .......................................................................................................................................................................................................................................................................................................................................................................Contents Case Study ...

................................................................................................... 193 Models and Versions..................... 207 13 305_BOOK_loose........................................................................................................................................... 199 Conclusion ............ 197 Complete Integration ........................................................................ 184 Basic Functionality and Concepts of CIF ........................................................ 193 CIF Tools ......................................... 198 Real-Time CIF? .............................. 195 Queues ..Contents Company................................................................................................................... ...... 202 Important Functionality of SAP SPP .. 195 Error Management ................... 190 CIF Variants..................... 187 Master Data Sequence.................. 196 CIF Error Management Components................................................................................... 201 Basic Functionality and Concept of SAP SPP ... 200   10 SAP Service Parts Planning (SPP) .................................. 180 Value Achieved............. 186 Master Data Volume and Sequence................................. 180 Solution ................................ 189 Integration Models ............................. ........................................... 194 CIF Versus BAPIs and Custom Integration Code ............................. 183 The Technology Behind CIF .............................................................. 185 Master Data ..................................................indb 13 11/3/09 4:17:47 PM ..................................... 179 Challenge........................................................................................................................................... 196 Errors in Error..... 180 Conclusion ............................................................................................. 202 Unique Features of Service Parts Planning .................................. 192 Models in SAP SCM ..................................................................................................................... 188 Transactional Data ........................................................................... 180   9 Core Interface (CIF) ................

.......................... 211 Planning for External Locations....................................................................................0............................................................................................................................ 222 Rearrangement.......... 207 Service Level Planning.............................................................................................................. 227 SAP EWM and RFID...... 209 BOD in the Interface................ 208 Differential Planning......................indb 14 11/3/09 4:17:47 PM .......................................................................................................................... 214 Conclusion ............................ 212 SAP SPP First Releases in SAP SCM 5..Contents The Bill of Distribution (BOD)...................... 217 Differences Between SAP EWM and Warehouse Management in SAP ERP .............................................................................................................1 SAP SCM 2007............... 215   11 SAP Extended Warehouse Management (EWM) ...................................... 218 Warehouse Organization ................................................................................ 226 Storage Control...................... 223 VAS......................................0..................................................................... 227 RFID and ASN.................................................................. 228 RFID and Serialization...... 209 Kit to Stock...................................................................................... 211 VCL and the IBA.......... 225 Handling Units................ 213 SAP SPP as of SAP SCM 7......................................................................................................................................................... 208 Surplus and Obsolescence Planning............................................. 221 Slotting.............. 229 14 305_BOOK_loose....................................... 228 Stock Replenishment.......... 226 Quality Inspection Engine (QIE)................ 212 SAP SPP as of 5.................. 219 Supported Processes ................................. 223 Kitting............................ 211 SAP SPP Release History ........................................................ 224 Waves......................... 209 The Logic Creation of the BOD...................

................ . ............ 256 Case Study ....... ................................................................................................... 230 Cross Docking............. 246 Release Collaboration....................................... 234 Integration to SAP Event Management (EM) ...... 249 Invoice Collaboration.................................................................. 250 Confirmations ................................................................................................................................................................. 243 Different Collaboration Methods and Objects ... 239 Setting the Stage for Effective Collaboration ............................................................................................................ .......................indb 15 11/3/09 4:17:47 PM ...................................................................................Contents Yard Management.......................... 249 Delivery Collaboration.............................................................................................. ...................... 241 Basic Functionality and Concepts of SAP SNC .... 255 SAP SNC Web Browser .. ................................................... 254 Visibility Profile ....................... 243 SAP SNC Collaboration Types...................... 236 Conclusion ............................. 247 Work Order Collaboration........................................................................................... 233 Process Types ................... 257 15 305_BOOK_loose.......... 247 Purchase Order Collaboration............. 237   12 SAP Supplier Network Collaboration (SNC) ............................................. 245 Demand Collaboration.............. 239 SAP Supplier Network Collaboration? .... 235 SAP EWM Release History ............................. 253 SAP NetWeaver PI Integration Scenarios .................. 236 SAP EWM Server Setup ......................................................................................................................... 251 Third-Party Logistics Providers ..... 255 SAP SNC Release History ....................................... 249 Supplier Managed Inventory (SMI) ...................................................... 233 Labor Management.. 248 Supply Network Inventory...................... 246 Replenishment Collaboration........................................... 247 Attachments...............................

................................................................. and Replenishment (CPFR)........................ 258   13 SAP Forecasting and Replenishment (F&R) ............... ............................................... 284 Service-Level Planning ..... Forecasting..................... ............................... 278 New Approaches and Tools ............................................................. 263 SAP F&R Processor... 271 Service-Level Planning....................................................................................................... ........................................................................................................................ 278 A Major New User Interface............................. 274 SAP F&R Release History .. 264 Collaborative Planning.. 257 Solution .... 275 Conclusion .............................................................................. 285 Concepts of Service-Level Planning and Finished Goods ........................................................... 283 Planning Service Manager Profiles............................................ 265 Order Proposals..... 276   14 SAP SCM’s Direction as of Release 7......Contents Company.................................................................................................... ..... 258 Value Achieved.....................................................................................0 ....................................... 269 Substitution. 286 Service-Level Planning in SAP...... 258 Conclusion ............................................ 272 SAP F&R Reporting ...... 257 Challenge................................................................ 287 16 305_BOOK_loose............................ 277 High-Level Direction .............................. 261 Basic Functionality and Concepts of SAP F&R .............. 273 Order Optimization .......................................................... 264 Forecasting............................................................................. 278 Planning Service Manager....................................................................................indb 16 11/3/09 4:17:47 PM ...........................

................ 302 Improving or Enhancing Successful SAP SCM Implementations................................................. 296 Conclusion ............................. ......................................... 290 Cross-Enterprise Monitoring. 306 Subcontracting in SAP SCM.......................................................................... 313 Safety Stock Functionality Offered by Supply Network Planning (SNP)......................................Contents Service-Level Planning in SAP ERP...................... 298   15 Getting More from SAP SCM .............................................................. 300 The Recovery Analysis Team...................................................................................................... 299 Where to Look for Improvement ................................... 289 Cross-Enterprise Capabilities ....................... 290 Collaboration. 321 17 305_BOOK_loose.......................................... ........................................................... 292 Addition of the Warehouse and Retail Store . 318 Don’t Rely Too Heavily on the Planning Book for SAP SCM Success.......................... 314 Production Planning/Detailed Scheduling (PP/DS) Implementation Tips...... 309 Repair Functionality in Service Parts Planning (SPP).. 319 Provide Ample Non-consulting SMEs or Super Users............. 287 Service-Level Planning in SAP SCM................................. 305 Areas of Functionality Worthy of Analysis ...................................indb 17 11/3/09 4:17:48 PM .......... 300 Recovering Failed SAP SCM Implementations..... .................................................. 288 Service-Level Planning as an Evolved Approach.................................. 320 After the Implementation .......... 309 Backward Consumption Enhancement for GATP................................................... 311 Improving Safety Stock Management........ 306 Prioritizing Demand for the SNP Optimizer.................... 301 Accountability of Partners................................................. 316 Real Constraints for Real Planning.......

........................... 336 ROI Estimation: Managing the Process ............................................................................... 340 Assign a Data Expert to the Team.... 343   17 Conclusion ............................... 327 Return on Investment (ROI) ........ 339 Don’t Overemphasize Finance.......................... 342 ROI Presentations in Different Countries............................................. 338 Allowing Enough Time...................... 333 Transportation Costs.................................................................................... 324   16 SAP SCM and ROI .. 341 Make the Assumptions Transparent .......................... 331 Inventory Management........................................................................................... 328 Benefits ........................ 341 The Calculations .. 322 Conclusion .............indb 18 11/3/09 4:17:48 PM .............................. 329 Costs ....................... 334 Key Financial Ratios.............................................. 337 Selecting the Right People............................................. 343 Conclusion ......... 348 18 305_BOOK_loose............................................................................................. 340 Consider a Range or Sensitivity Analysis...................................................Contents Improving Usage Efficiency with Model Maintenance Methods ........................................................................................................................................................................................... 342 How to Set Up and Run the Value Presentation Meeting............................. 328 Improvements in Sales............................... 345 Real-Life Supply Chain Modeling ............................................................................................ 346 Changing Constraints....... 335 ROI Estimation Recommendations .............................................................. 337 Getting the Right Input........................ ............. 333 Labor Costs................................................................................ .......................................................................

...... 363 A Glossary ................................................................ ................. 354 Increased Supply Chain Monitoring ................indb 19 11/3/09 4:17:48 PM ............................................ 352 Energy Issues...................... 360   Appendices ........................... 358 Conclusion .......................... 357 Manufacturing Signals. ................................................................................................................................................................................................................ 355 Collaborative Aspects of SAP SCM Applications Besides SAP SNC. 349 SPP and the Industry Need for Service Parts Planning............................................................ 350 SAP SCM and Larger Supply Chain Trends .................................. 377 19 305_BOOK_loose............................................................................................................................................................................................................................................ 349 SAP TM Functionality Covers Both Shipper Owned and Outsourced Transportation. 349 Looking at SAP Transportation Management More Broadly. 365 B Bibliography .........................................................Contents Missed Opportunities ..................... 352 Increased Rapidity of Inventory Turnover ..................................... 354 Collaborative Planning Trends ........... 373 Index  .............................

you’ll find a lot of new information. the SAP approaches to supply chain management.1 SAP SCM Basics In this chapter.indb 31 11/3/09 4:17:50 PM . providing improved analytical 31 305_BOOK_loose. and how companies can use and benefit from SAP SCM. What Is SAP SCM? SAP SCM is an umbrella term for a set of applications that provide advanced planning capabilities. so even if you’ve seen it before. that connect the system to SAP ERP. among others. This set of applications is fed by standard SAP integration technologies. A large amount of functionality has been introduced since the last time many people looked into SAP SCM. we’ll describe SAP SCM and how it’s used in today’s economy. Each chapter has a listing of some of the most relevant new functionality as well as the enhancements that have been made to existing functionality. which include the Core Interface SAP SCM includes applications that provide advanced planning (CIF) and BAdIs. SAP SCM is used to improve and optimize the supply chain by enabling automated decision making.

This was probably largely market driven. These applications provide supply chain execution functionality along with some basic planning functionality (safety stock and MRP. as we’ll explain later in this chapter. Supply chain planning is covered by the applications and functions of SAP ERP Sales and Distribution (SD). SAP wasn’t yet a strong player in the supply chain management area SAP SCM was introduced as SAP Advanced Planning & Optimization (SAP APO) at the height of the advanced planning trend back in 1998. 32 305_BOOK_loose. and sharing information with internal system customers and external business partners. True advanced planning systems can’t execute recommendations. SAP changed its view and developed its own advanced planning suite.indb 32 11/3/09 4:17:50 PM . SAP APO was SAP’s first venture into advanced planning. Note: Supply Chain Planning Versus Advanced Planning It’s important to draw the distinction between supply chain planning and advanced planning. SAP SCM Origins Although dominant in advanced planning today.1 SAP SCM Basics tools to users. the plan may be recreated several times before it’s firmed and sent to the execution system. in 1998. In advanced planning. Somewhere along the line though. who then pick the best alternative. So. while SAP had supply chain applications for some time before SAP APO. Advanced planning is future based and deals in different scenarios that are presented to planners. rather than incorporate advanced planning within SAP ERP because planning systems and transaction processing systems work differently. they can only make recommendations. SAP felt that advanced planning was overly esoteric and would only be desired by a small fraction of its customer base. At one point. and Production Planning (PP). and production planning among a few others). but none of these applications cover advanced planning. But SAP needed to create a separate set of applications. basic forecasting. but at that time SAP wasn’t seen as a factor and wasn’t even predicted to become one. It’s hard to believe because SAP SCM is so dominant in the advanced planning space today. This was a period where i2 Technologies was the number one advanced planning vendor. availability checking. Materials Management (MM). and Manugistics was close on its heels.

1  SAP SCM Solution Map 33 305_BOOK_loose. while the SAP warehouse management functionality in SAP ERP has essentially been stabilized. While SAP SCM began its life as SAP APO and was SAP SCM has developed along with the trends in advanced planning originally intended to perform advanced planning only.indb 33 11/3/09 4:17:50 PM . but their capabilities are different (Figure 1. Both applications cover warehousing.SAP’s Approach to Supply Chain Management 1 SAP’s Approach to Supply Chain Management SAP has a relatively. ERP Duet Demand Planning Demand Planning Global ATP APO Supply Network Planning PP/DS TP/VS Supply Network Collaboration Extended Warehouse Management Transportation Management SCM Infrastructure Event Manager All SCM Basis Figure 1. standard solution architecture for supply chain management that has grown through time to reflect the trends of advanced planning. As an example. the more advanced functionality has and will continue to migrate to the SAP SCM application known as SAP Extended Warehouse Management (SAP EWM).1). it has since evolved to essentially be a repository for all advanced supply chain functionality not covered in SAP ERP.

had the term directly in its name. One is more of a business nature. and distribution costs). any order quantity from zero to infinity can be placed and fulfilled. In fact. SAP APO.1 SAP SCM Basics Optimization The goal of optimization is to ensure the “optimal” operation of your supply chain In its early years. In a perfectly linear optimization. we’ll define optimization as the use of software tools and processes to ensure the optimal operation of a supply chain. which basically means to produce the best outcomes. SAP SCM has a number of techniques.2). then 150 must be ordered to meet this demand. One item may be ordered in units of 50. An example of a linear input is an order quantity. that alter the problem being solved from perfectly linear to discrete. transportation costs. such as lot size. The other has to do with the area of operations research.indb 34 11/3/09 4:17:50 PM . 34 305_BOOK_loose.” so that inputs can be increased or decreased in a continuous fashion. For this book. But in reality. For example. including the optimal location of inventory within the supply chain and the minimizing of operating costs (including manufacturing costs. but if 135 units are desired. from where the supply chain optimization originates. This is very important for making the resulting recommendation realistic (Figure 1. Linear Versus Discrete Optimization The step function is one of the most commonly used input functions Optimization works best in situations that are perfectly “linear. This is primarily because it was an industry-wide practice to market advanced planning software in this way. Optimization has two general meanings. or SAP Advanced Planning & Optimization. SAP APO was sold on its ability to perform optimization. the lot size is a discrete value that limits the flexibility of the order quantity. supply chains are not perfectly linear problems. and the current inventory is less than 35. or what is known as a step function.

Production Planning and Detailed Scheduling [PP/DS]. the newer applications in SAP SCM have tended to downplay optimization in favor of other functionality.Optimization 1 Linear vs. and SAP Forecasting and Replenishment). SAP Supply Network Collaboration [SAP SNC]. The evidence for this is that optimization is an option in three of the older applications (Supply Network Planning [SNP].indb 35 11/3/09 4:17:51 PM . the core optimization functionality in SAP SCM has been stabilized for some time. SAP Service Parts Planning [SAP SPP]. it no longer does. but one of the most prominent was the implementation and maintenance difficulty combined with the lack of company knowledge. SAP Event Management. formerly known as Transportation Planning and Vehicle Scheduling [TP/VS]).2  Linear Optimization in Supply Chain Must Be Moderated by Constraints Reduced Focus on Optimization Although optimization drove development in SAP SCM at one time. So. If optimization didn’t “change the world” of supply chain. and SAP Transportation Management [SAP TM]. Discrete Optimization Actual Purchase Quantity Quantity Optimal Purchase Quantity Lot Size = 50 Time Figure 1. 35 305_BOOK_loose. This shift is partly due to the fact that optimization didn’t meet its originally envisioned potential. In addition. but isn’t an option in any of the newer applications (SAP Extended Warehouse Management [SAP EWM]. the question naturally becomes “Why not?” There are a number of reasons.

and the solution was not using the optimizer at all. Many companies want the benefit of advanced planning but are not culturally. it wasn’t necessarily what the customers went live with. That isn’t how optimization works. or skills-wise prepared to make the sacrifices required to get the outcomes they desire. Whether the client knew the optimizer was not being used is unknown. but when the engine actually went down for a few days. This is more common than reading press releases and industry periodicals in the area would make you think. While optimization sold a lot of supply chain software. no one even noticed.1 SAP SCM Basics Example There is a story about an advanced planning vendor that was running the optimizer engine in the background. optimization requires a great deal of discipline and knowledge on the part of the implementing company. Implementing and maintaining optimization methods requires much effort and long-term investment. companies want simple solutions that deliver value quickly. financially. Secondly.3). This was because the planning was primarily being performed by heuristics that had been custom coded with scripts. Effort and Costs Required Planning Continuum Optimizer CTM Heuristics Solution Quality Figure 1. as evidenced from this example. More often than not. And this is partly because the software has historically been designed to be more complex than is necessary (Figure 1.indb 36 11/3/09 4:17:51 PM .3  Costs Versus Benefits in Planning Solutions for SNP 36 305_BOOK_loose.

so those successful with SAP SCM are effective at asking these questions and getting answers.indb 37 11/3/09 4:17:51 PM . 37 305_BOOK_loose. Part of this is content knowledge of planning. Some applications request the estimation of a cost of a lost sale.1 shows the typical characteristics that allow a company to be successful with SAP SCM. so companies must be ready for this complexity. the best successes typically come from companies that are already good at planning. This is because there are a number of best practices inherent to the SAP SCM processes. this is a major precondition. SAP SCM implementations cause companies to evaluate their priorities. Focused on improvement Transaction processing systems such as SAP ERP are a necessity. in general. but. Make planning a priority If the commitment isn’t there in terms of management support and finance.Which Companies Are Right for SAP SCM? 1 Which Companies Are Right for SAP SCM? Some companies are better suited to undertaking an SAP SCM implementation than others. Already have effective planning processes SAP SCM is very flexible and can adjust to most planning processes. but another component is open mindedness to new approaches. Company Characteristics Current users of SAP ERP are good candidates for SAP SCM Description Current SAP ERP users A few SAP SCM implementations have been performed on accounts without SAP ERP. and Table 1. As with other planning software. it’s better not to begin an SAP SCM implementation. SAP SCM implementations are complex affairs. but it can’t fix a broken process. but a business can still run without a planning system.

SAP SCM Applications. so even though all of the components will be addressed in the same form in individual chapters. more generally. which is a combination of locations. And in some cases. Cross Application Components As mentioned earlier. 38 305_BOOK_loose. Being effective at planning helps the company know how to design the system and also allows the company to better leverage what it ends up implementing. This statement isn’t only true of SAP SCM but of advanced planning tools generally. our anecdotal evidence from our experience on projects indicates that the better the company is at planning before it implements an advanced planning system. they may also be covered in other chapters.4). SAP SCM is most beneficial to companies that are dedicated to improving their planning processes and that already have good planning processes to begin with.1 SAP SCM Basics One way of looking at whether your company is appropriate for SAP SCM is to determine if it has maximized the planning functionality within SAP ERP. products. we’ll cover the specific needs that often drive the decision to implement different applications. In Chapter 2. While we’re not able to find specific research to back this up. this book is broken into a format of one chapter per application.indb 38 11/3/09 4:17:51 PM . there are some important concepts and components that cut across the applications. requirements will naturally lead to the consideration of SAP SCM. and transportation lanes (Figure 1. However. However. the more the company gets from the implementation. Product Location Master SAP SCM is based upon a supply chain network.

1. This includes the location name. The location master deals with the attributes of the location. 2. The product master contains the information and attributes that relate to the product across all locations. SAP Forecasting and Replenishment. and the product location master. The product master is set up once per product. and product location store data in SAP SCM ences between them.4  Combination of Transportation Lanes and Locations Is Referred to as the Supply Network SAP SCM. the material group. as with the plant and material master in SAP ERP. and the gross weight and volume are all attributes of the product master.indb 39 11/3/09 4:17:51 PM . We refer to these masters throughout the book. location master. Data elements such as the product number. any calendars associated with the location. and specific settings that apply to a few of the different applications. 3.Product Location Master 1 Supply Network Transportation Lane Locations Figure 1. The product location master is essentially the product master with added fields and added tabs to hold these fields that modify the product per location. such as SNP. and SAP SPP. so it’s important to know the differ- Product master. stores a large amount of configuration information in the product master. 39 305_BOOK_loose. TM. location master. address.

but there are safety stock control fields on the product location master. which is then used to help control disaggregation when data is manipulated at summary levels. in SAP SCM. Planning Object Structure Just as a planning area is a container for key figures. we stated that key figures are the numerical values in the planning book spreadsheet. a planning object structure (POS) is a container for characteristics. In the previous analogy.indb 40 11/3/09 4:17:52 PM . 40 305_BOOK_loose. Note Planning areas are the central data structures of Demand Planning (DP) and Supply Network Planning (SNP). key figures are the numerical values in the spreadsheet. Planning Areas and Planning Object Structures Planning areas are containers for key figures Planning areas and planning object structures are important cross application items. Characteristics are like the textural column and row headings. so there’s no field for safety stock control on the location master or on the product master. At the most basic level. They have a central administration that allows the areas and structures to be copied. The POS stores every unique combination of CVCs. which is a spreadsheet view with a number of aggregation and macro capabilities. A planning area is a container for key figures. Planning areas feed an interface object called a planning book.1 SAP SCM Basics For instance. safety stock isn’t set at the product or location level but at the product location level. with the time characteristic on the horizontal axis. This not only holds true for safety stock but also for many other attributes that only come into play at the product location master. maintained. The combination of characteristics is called characteristic value combinations (CVCs). and the product characteristics on the vertical axis. and deleted. They are high-level data groupings that control the entire supply chain model.

it’s important to remember that this all takes maintenance effort. without ever impacting the active version. If the changes are deemed desirable. However. this transaction should not be used on the active version. This allows the person performing the configuration to make wholesale changes in the master data. however. but it’s another thing to support simulation modeling with the resources necessary to make it happen. A model with the same supply network can have slight alterations in terms of control fields on. the changes can be fully tested before mass maintenance to make the tested changes on the active version. Planning Versions and Mass Maintenance Planning versions can be particularly effective when used with the MASSD or the mass maintenance transaction. The planning book is the window into the planning data 41 305_BOOK_loose. the product location master. Because only the active version planning results are communicated back to SAP ERP. by using the simulation planning version and then mass maintenance to make changes. say.indb 41 11/3/09 4:17:52 PM . Multiple versions can be kept over time and run to see how the results change. Instead. multiple versions can be run in perpetuity along with a live active version. Planning Book DP and SNP are two SAP SCM applications that use the planning book intensively. then the settings from the inactive version can be migrated over to the active version. making Planning versions are variations of the planning models the version create different planning results than a different version of the same model that has the original product location master settings. It’s one thing to talk about the benefits of simulation and say that SAP SCM supports it.Planning Versions 1 Planning Versions The planning versions set up the data that are available for use.

›› As planners become more familiar with the planning book. the planning book is the main user interface into SAP. and SAP SNP also uses it. Planning books consist of the following areas: ›› Characteristics ›› Key figures ›› Data views ›› Macros ›› Forecasting functionality ›› Promotional functionality ›› Interactive graphics Planning books provide views of various levels of aggregation as well as ad-hoc viewing of planning data. ›› The planning book is provided with the capability to perform complex calculations through its own macro builders.indb 42 11/3/09 4:17:52 PM . but it uses other views as well. Here are some of the important characteristics of planning books: Planners can be assigned to as many planning books as you like ›› Different planners are responsible for different products and geographies.1 SAP SCM Basics for most planners and other users. they can be trained to create planning books for themselves. Creating the planning books is a significant part of the implementation because there are many different combinations of planning books that can be created. ›› The act of creating a planning book doesn’t change or affect the underlying data that the planning book displays. Planning books allow you to combine characteristics and key figures in a flexible way for presentation to the planners. so the planning book can be customized for each planner or for groups of planners. In fact. The results of the macro calculation are displayed through extra rows in the planning book. 42 305_BOOK_loose.

43 305_BOOK_loose. and SAP EWM. Conclusion This book is designed to provide an introduction to the entire SAP SCM suite by providing the broadest possible exposure to SAP SCM with the lowest possible effort on your part. DP.indb 43 11/3/09 4:17:52 PM . this will be relatively simple. Of course. SAP training offers courses in all of these topics. but they aren’t sufficient to cover all of the implementation needs. SAP SNC.Conclusion 1 Tip SAP SCM comes with some standard macros. and PP/DS. this will be a bit more challenging. because of the substantial learning curve. But let’s move on to the next chapter and get a broad overview of all of the applications offered in SAP SCM. So. creating macros in a planning book is nothing like creating calculations and formulas in Excel. Areas of detail that are not covered in the book can be found from the many references included in the Bibliography of other SAP SCM books that go into more detail on the different topics. For the newer applications such as SAP EM. For the older applications such as SNP. planners typically can’t create their own macros. Unfortunately.

133. 246. 291 Capacity leveling. 114 Advanced shipping notification. 122. 82. 113. 134 Availability checking for kits. 90 Amazon. 65 ATP tree structure. 264. 224 Characteristic. 231 Available to promise. Batch management. 292 Capable to match.indb 377 11/3/09 4:18:55 PM . 220 Active model. 94. 193 C Active version. 220 Calendar. Forecasting. 358 BAdI. 188 ATP. 123 Characteristic-based forecast. 100 Carrier cost estimation. 168 (CVCs) . 141. 183 B CIF variants. 195 Collaborative Planning. 347 Alert Framework. 358 BAPIs. 74 Backward consumption. (BOM). 142. 173 Capable to promise. 228. 88. 40. 127 Alert Manager. 207 Assortments. 358 377 305_BOOK_loose. 125. 72. 99. 254 Bill of Material. 71 296 Collaboration. 127. 89 Alert Monitor. 169 ment. Assemble to order. 254 Bill of distribution (BOD). 132 Collaborative forecasting. 76 ATP tab. 41 Activity Areas. 65. 125. 40. 114 Advanced shipment notification. 137. 135. 148. 263 Change pointer. 355 Carrier tendering and selection. 294 Carrier capacity. 111. 150 APO. 82. 311 Collaborative manufacturing. 134 Characteristics. 164 Capacity leveling profile. 245. 127 143 Assemble-to-order.com. 226 CIF. 207. Best-fit functionality. 88 A Bulk storage type. 145 ASN. 192 Backorder processing. 219 and Replenishment (CPFR). 104 Causal. 73 Availability checking. 309 Collaborative manufacturing environ- BAPI.Index 3PL. 228 Calendar mixed resource. 209 4PL. 124 Checking horizon. 312 Ciber. 89 ATP category. 128 Checkpoint. 294. 42. 185 Characteristic-dependent planning. 132 Characteristic value combinations Automotive returns processing. 109 Bucket resource. 41. 63 ATP requests.

144 F Demand collaboration. 175 CTM profile. 142. 68 Expected Event Overdue Event. 91. Fixed lot size. 127 DRP. Date tolerance. 42 Expected event profile. 248 293 Deviation of demand. 144 Forecasting functionality. 61. 94 Forecasting and Replenishment. 80 Fixed bin. 48 E Create a shipment function. 213 Consignment indicator. 224 163. 169 D Excel. 40. 165 Data views. 355 Cross docking. 170 Customer. 43. 42. 313 Collaborative transportation planning. 47. 60. 220 Demand Planning (DP). 137 Dynamic pegging.Index Collaborative Sales and Forecasting. 143 Contract manufacturer. 94 329 Depot location. 289 Date calculation. 335 Delivery collaboration. 176 Data Warehouse Workbench. 354 Core Interface (CIF). 71 Deployment heuristic. 231 Composite. 251 Event notification. 294 Event. 123 Contract management. 100 Configurable product. 246 Delivery window. 76 143 Discrete manufacturing. 329. 205 Cross-enterprise system. 163 Days of Receivables. 243 Event manager. 211. 86. 246. 94 357 Fixed pegging. 279 Consignment stock in transit. 122 Event code. 233. 175 217 Expected event list. 294. 137 DRP Matrix. 245. 142 Doors. Design drawing. 41. 198 Demand Influencing Factor. Expected goods receipt. 86 Demand selection. 175 Extended Warehouse Management. 142 Electronic Data Interchange (EDI). 246 Factory Calendar. 163 CTM. 348 Collective processing run.0. 288 Factory collaboration. 169. 82. 290 Equipment initiation. 315 Cross-enterprise monitoring. 358 Demand plan. CRM 5. Deployment optimizer. 354 Enhanced method. Disaggregation process .indb 378 11/3/09 4:18:55 PM . 72 DP. 85 Event handler. 42 378 305_BOOK_loose. 66. 314 DataSource. 218 67 Extended safety stock. 85 Forecasting.

72 InfoProvider. 224 Invoice. 48. 116 Integration model. 147. 113. 235 GR/GI. 294 International sea transportation. 168 Inventory balancing. 91 Fulfillment by Amazon. 308. 203 G Inventory Balancing Area. 34 Implementation Guide (IMG). 233. 145 379 305_BOOK_loose. 126. 194 Fourth-party logistics. 205 Light assembly.Index Forecasting with BOM. 94 Group code. 94 GPS.indb 379 11/3/09 4:18:55 PM . 245 Integrated rule maintenance. 246. 220 Leading indicator forecasting. 292 GATP time horizon. 293. 64 Fourth-party logistics providers. 355 Interactive demand planning. 121. 224 Handling resources. 227 High rack. 224 Kit to stock. 219. 136 InfoCube. 92. 91 Freight unit. 261 Interactive Scheduling Agreements. 275 over. 39 InfoObjects. 335 Global Available to Promise (GATP). 72. and stop- IDoc. 128 Formula. 145 Handling units in outbound shipments. duration. 60. 65 Logistical rounding. 89 Kitting. 293 Geo-coding. 121. 91 Layout-oriented storage control. 354 Hierarchical planning. 148 iPPE. 224 I Limits on distance. 65. 94 J JIT. 68 Forecast quality. 169 Linear optimization . 283 Labor management. 68. 134 Invoice collaboration. 355 Interactive graphics. 49 liveCache. 75. 168 Builder. 40. 311 Global service-level planning. 168. 273 Installed base. 42 F&R. 42. 146 Interactive SNP and Transport Load Fulfillment. 224 Heuristics. 246. 224 H Kit to order. 92 Location master . 358 Goods release. 175 K Key figures. 205 Forecasts. 168 L Heuristic. 82. 128 Inventory turnover. 287 Goods issue. 347 Labeling. 212 GATP.

229 Outsourced manufacturing. 225 Multidimensional data object. 347 PPM. 41. 105 Maximum storage time at location. 111. 203 Planned order. 127 Optimization. 224 Malfunction and repair. 84. 40. 310 Opening hours of locations. 41 Part number. 100 Multi-mixed. 32. 34 PP/DS. 245 Materials Management (MM). 361 Pegging. 90. 292 Mass Maintenance transaction. 163 Operations research. 41 Parking space. 88. Multi-echelon inventory optimiza- 63 tion. 283 Poisson. 273 Order Forecast Monitor. 307 Optimizer. 177 MCA. 273 Machine breakdown. 104 P Make-to-stock. 227 Order creation. 42 Make-to-order. 101. 298 67.Index Lost sales. 88 Planning book. 43. 110. 293 Lot-for-lot. 281 Planning models. 283.based logistics. 75 Planning Service Manager.indb 380 11/3/09 4:18:55 PM . 263 Lot sizing procedure. 185 Multilevel ATP. 248 MASSD. 245 Multi-activity. 82. 41 O Plant Maintenance (PM). Negative Binomial. 285 145 Performance indicator. 99. 168. 89 Multimixed. 167 Packing instructions. 114 Picking waves. 145 Portal. 42. 99. 202 Planning proposal. 202 380 305_BOOK_loose. 311 MRP. 243 Over stock. 191. 89 PDS. 149 Party entitled to dispose. 307 Process-oriented storage control. 70 Planned independent requirements. 94 Outbound delivery request. 231 Mass maintenance . 60. 127 Planned production order. 167 Macros. 94 Order proposal. 245. 104 Packing. 99. 68 Planning versions. 306 M Outsource manufacturing partner. Performance. 220 Master planning object structure. 40. 41 N Planning object structure (POS). 213 Period consumption strategy. 142 Number of periods. 82 Phase. 219 Process profile. 114 Planning areas.

114 Rearrangement. Replenishment collaboration. 163. 42 Responsive Replenishment Monitor. 246 307. 158 381 305_BOOK_loose. 91 tion (SAP APO). 114 Receipt.Index Process types. 307. 47.indb 381 11/3/09 4:18:55 PM . 99. 168. 114 Product postponement. 226 SAP Advanced Planning & Optimiza- Sales and Operations Planning. 32 Replacement type. 74 Return on Assets. 88 Recipe. 169 Production data structure. 164 Scheduling (PP/DS). 74 348 Real time deployment. 75 292 Promotion forecasting. 210 Production staging area. 287. 292 RFID. 39 Resource. 293 186. Replenishment order processing. 293 Purchasing info record. 206 Production process model. 336 PSA. 88 Receipt and requirements list. 310 Production Planning (PP). 225 PSM. 148 Pure transportation company. 204 RF device. 88. 111. 119 Release collaboration. 245 Product location master. 255 Production line resource. 354 Production line mixed. 234 Reactions to event. 297 Purchase order collaboration. 313 Q Sales and Distribution (SD). 245. 226 Sales order processing. 219. Reorder point. 292. 214 Production Planning. 135. 226 Production plan. 94 Production line. Realignment. 334. 32. 246 Production line mixed resource. 307. 110. 348 Replenishment indicator. 219 Purchase order processing. 236 Reverse kitting. Promotion base. 236 Replenishment order. 355 S Safety stock. 41. 94 348 Repair planning. 227 SAP BusinessObjects Supply Chain Rail car management. 244. 245 Routing. 116 Production order schedule. 167 Red Prairie. 245. 49. 169 Management. 223 Resource management. 110. 314 Requirement. 227. 246 Product master. 219 Promotional functionality. 100 Refurbishment order. 178 Purchase order. 60 R SAP BusinessObjects Global Trade Ser- Radio Frequency Identification. 174 vices. 245 Production Planning and Detailed Remote function call. 32 QIE. 168 Quality inspection engine. 39.

323 48. 213 SAP NetWeaver Process Integration. 265 Service matching. 70 SAP Supplier Network Collaboration Step function. 114 SAP NetWeaver PI. 235 SAP DP. 60. 185 382 305_BOOK_loose. 213 SAP IS Retail. 102 Set rules.indb 382 11/3/09 4:18:55 PM . 296. 60. 228 48. 313 SAP SPP. 34 (SNC). 350. 92 Scheduling agreement. 131 147 SAP_PP_005. 94 SAP_PP_CTM. 60. 320 SNP Product Location tab. 213 ment (EWM). 178. 288. 147. Service parts delivery and tool man- 48. 184. 176 SAP Forecasting and Replenishment. 262 SNP optimizer. 141 SAP NetWeaver BW. 40. 262. 212 SAP Extended Warehouse Manage- Service Inventory Optimization. Service level. 43. 43. 46. 131 SNP deployment. 334. 169 SAP F&R processor. 102 SNP1. 49 Scheduling agreement release. 97. 353 Stock transfer order. 42. SAP_PP_003. 254 Single-mixed resource. 68. 163 Simulation planning version. 165. 235. 176 SAP NetWeaver BI. 264 Service Parts Optimization. 165. 88 SAP NetWeaver Portal. 174 SIO. 249 SAP Forecasting and Replenishment Service-level planning. Serial number. 202 SAP SNC Web UI. Single activity. 285 processor. 100. 261. 161. 64. 358 169 Slotting. 213 SAP SNC web browser. 114 214 Single mixed. 219. 212 SPO. 333 SAP_MRP_001. 308. 94 SAP_PP_18. 79.Index SAP Business Workflow. 315 334 Service level agreement. 358 agement. 41 SAP NetWeaver Identity Management. 255 348. 262 Service Parts Planning. 64 Shipment creation. 41. 102 SNP2. 229 SAP Transportation Management. 93 SAP Service Parts Planning (SPP). 48. 240. 288. 94 SAP PRESS. 88. 354 SAP_PMAN_001. 248 SAP SNC. 60 Star schema. 80 Schedules of vehicle types. 173 Scanner. 288. 48. 355 Service fill monitor. 144 SAP DP Data Mart. 82 SAP SCM SMEs. Stock requirements list. Solution Manager. 353 Specifications. 248 Standard Deviation of Lead Time. 102 SNP. 273. 292 SAP Event Management (SAP EM). SIT. 251 SPP. 348. 88. 355 Stock replenishment. 47. 148 SAP Easy Access .

275 383 305_BOOK_loose. 205 Transportation Network Admin. 146 Subcontractors. 205 Transportation mode. 307 Transportation lane. 142. 246 Supply chain engineer. 243 Transportation resource. 248 Vehicle incompatibility. Vehicle scheduling. 157 Storage type. 214 Supplier Network Collaboration. 88 Storage section. 88.Index Storage bin. 48 Supplier. 144 Test program. 307 User interface. 157 Transportation Planning and Vehicle Scheduling (TP/VS). 220. 146 Supplier managed iventory (SMI). 85 Vehicle resource. Unconstrained planning. 220 Transportation Charge Clerk. 81. 135 Vendor restriction. 236 Supply network . Third-party order processing. 223 Target service level. 355 Transportation Management . 168 Supplier delivery performance rat- Transportation unit. 205 47. 288 Variants. 157 Subcontractor agreement. 82 294 Under stock. 323 U Supply chain monitoring exchange. 214 Storage control. 192 Task interleaving. 122 T V Value added services. 169 Supply selection. 214 Supplier network inventory collaboration. 204. 227 TPVS. 219 Vehicle capacity. 206 Supply Network Planning (SNP). 243 Transportation tendering. 250 Transport order. 220 Time-related supply unit. 214 Transportation load builder. 146 One-to-many supersession. 146 Subcontract order. 88. Usage hour. 144 253. 157 Supersession. 243. 153 Third-party logistics provider. 220 Transportation Booking Agent. 85. 354 Vendor managed inventory (VMI). 273 Supply chain network. 226 ing. 306 Transportation Dispatcher. 79. 41 Unserviceable. 142. 38 Univariate. 144 The Master Data Selection. 311 Unplanned cross docking. 153 Supplier collaboration. 146. 93 TSL. 205 Two-way supersession. 288 Transportation zone. 157 Subcontracting.indb 383 11/3/09 4:18:56 PM . 48 Subcontract reservation. 132 250 Time horizon. 93. 205 One-way supersession. 45. 72 Supply chain unit. 246 Transportation Manager.

264 Wave. 91 Work order collaboration. 230. 220. 213 Warehousing. 178 Yard location management. 292 VMI. 175 Yard management. 146. 354 WordPress. 311 Warehouse task. 245 Work Order Processing. 225 Y Web Communication Layer. 231 Work instructions. 212 Work order. 234 Wal-Mart. 231 Wireless Application Protocol. 293 W Work package. 264 X Warehouse number.indb 384 11/3/09 4:18:56 PM . 231 Worklist. 231 xApp. 248 Yard stock. 244. 324 Yard movement. 354 Warner Lambert.Index Virtual Consolidation Location. 211 384 305_BOOK_loose.