mySAP

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LONG TERM PLANNING
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18 Month Plan
mySAP
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Long Term Planning - Purpose
Evaluate supply capability to deliver the
S&OP plan over the entire horizon
Validate any applicable S&OP interplant &
inventory build recommendations
Create a valid long-term supply plan that
creates the foundation for short term
planning
mySAP
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Long Term Planning - Work Process Steps
Update supply parameters
Verify demand (if appropriate in your GBU)
Enter inter-plants (in & out) from the rough cut
plan (if applicable to your GBU)
Unfirm planned orders (manual or automatic)
Run MRP (batch mode)



Identify capacity issues (over & under)




Identify options to resolve issues
Resolve capacity issues (manual or automatic)



Firm the schedule where necessary
Revise inter-plants (if applicable)
Provide input/feedback to RCCP/S&OP
Processes
Finalize the Plan
Prepare
Evaluate Capacity
Balance the Plan
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Long Term Planning - Principles
For multi-sourced products, demand passed
to a site must be verified against site
capacity through the RCCP process
Capacity parameters must be accurate,
updated regularly, and reflect demonstrated
capabilities
Supply capacity data and hierarchy
groupings must be consistent across
category and site
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Long Term Planning - Input/Output
Business operating strategy
Master data
Category demand plan verified against
supply capacity (multi-sourced items)
S&OP interplant & inventory
recommendations (if applicable)
Resource hierarchy groupings


Balanced long-term plan by superior
resource, for alignment with the S&OP
plan
Interplant plan created within the SAP
system (if applicable)
INPUT
OUTPUT
mySAP
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Long Term Planning - Update Supply Parameters
Update the SAP parameters so that the long
term planning cycle can be performed using
the most recent assumptions.
Items to check:
- Resource (available hours, efficiencies)
- Recipe rates
- BOMs
- Production Versions
- Quotas
- Product Groups & Resource Hierarchies
mySAP
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Long Term Planning - Master Data Sources
Updating master data requires input from a
variety of organizations, such as:

Maintenance (resource uptime)
Production (rates, sequence, people
constraints, scrap factors)
Warehouse (storage limitations)
Receiving (component process times)
MMO / Purchasing (leadtimes, safeties)
Quality Assurance (QI Time, standards)
mySAP
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Long Term Planning - Verify Demand
Purpose:
- Check that the sites demand in SAP
matches the demand in the rough cut plan
within tolerance (IF required in your GBU)
Action:
- View or print copies of the SPI report at the
appropriate summarization levels and
compare to the rough cut plan
mySAP
Long Term Planning - Maintain Independent Reqs.
Site Planners should only maintain
independent requirement in a few limited
circumstances, such as:
- Customer or RDC orders moved from one
site to another.
- Earlier than planned run out of one finished
product code and phase in of a
replacement.
The Category Supply Planner should be
aware of and agree to any changes.
mySAP
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Long Term Planning Interplants
Purpose
Inter-plants are used to balance capacity by transferring
materials between sites producing or using the same items.
This does not include RDC and consignment shipments
handled through the DRP network.
Inputs Recommended interplant requirements by product by week
from the category rough cut plan.
Outputs Revised set of interplant requirements that will be
communicated to CSP through the reconciliation process
Action
Create a Stock Transport Order (STO, purchasing
document)
Requirements Accounting view at sending and receiving site
Procurement type X (MRP 2 view) at both sites
Purchasing view at receiving site for HALB and ROH
Source list at receiving site
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Long Term Planning Interplants
Finished product interplants are executed
within the shipping and billing system
For long term planning purposes, a
placeholder order can be used in SAP to
balance capacity between plants
When the actual shipment order is entered,
the placeholder order must be manually
deleted
There should be a formal timeline/time fence
within a category for entering the shipment
orders and removing the placeholder orders.
Clearing Placeholder Interplant Orders
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Long Term Planning - Unfirm Planned Orders
Ideally, only orders within the planning time fence should
be firmed.
The planning horizon should be free of constraints, in
order to allow SAP to generate an ideal plan.
We need to unfirm orders that we have manually firmed
prior to balancing capacity; otherwise, we prevent SAP
from generating the ideal plan.
SAP will add or delete unfirm orders in order to bring
inventory to target, regardless of the impact to capacity.
The objective is to strike a balance between obtaining an
optimum starting point, and the work required to
rebalance the plan if free of constraints.
Unfirming Orders
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Long Term Planning - Run MRP
The MRP run will generate the production schedule
necessary to meet demand and maintain inventories at
target.
- Capacity is not considered
- New orders are created beyond the planning time
fence
- Within the rescheduling horizon, SAP will
recommend moving up firmed orders before
creating new orders (EM).
SAP assumes you will follow its recommendations
when creating the new orders
Objective:
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Long Term Planning - Evaluate Capacity
Process:
Use Capacity Evaluation screen to identify capacity
issues at the superior (or individual) resource level
- both weekly and monthly evaluations, transition
between weekly and monthly (lot size driven)
- Looking at over/under capacity situations
- Defined tolerance for maximum capacity utilization
Objective:
Identify portions of the schedule which are either over
capacity or are inconsistent with the operating plan
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Long Term Planning - Capacity Evaluation
Selection Criteria
Leave this field blank
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Long Term Planning - Evaluate Capacity
Settings
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Capacity Summary
Long Term Planning - Evaluate Capacity
The red lines
indicate overload
situations
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Long Term Planning Evaluate Capacity
Details
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Long Term Planning Evaluate Capacity
Order Level Detail
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Long Term Planning - Capacity Issue Resolution
Options if Over Capacity by Superior Resource
- Increase supply capacity (rates, efficiencies,
intervals of available capacity, factory calendar)
- Change over and offload production to a line that
is grouped under another superior resource
- Build inventory ahead of the peak requirements
- Receive inter-plants
- Run below target inventory until capacity is
available to recover
- Reduce demand (allocation - last resort!)
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Long Term Planning - Balance the Plan
Run Automatic Leveling Program (iterative)
Identify gaps to balancing the plan
Use Site Operating Strategy to guide final actions
Change orders (if needed) in the capacity evaluation
detail screens
Evaluate inventory using the Stock Requirements
List or the SPI Future report (covered in later slides)
Sub-Process Steps
mySAP
Long Term Planning - Automatic Leveling
Automatic Leveling is a work process designed
to simplify the capacity balancing process
without firming up the production plan.
mySAP
Long Term Planning - Automatic Leveling
Capacity loads are evaluated by period, by resource
Overloads are resolved by
- Creating quotas to drive the movement of
production to other valid resources
and/or
- Creating time-phased safety stocks (SAF1s) to
drive the movement of production to an earlier
period
The actual changes to the plan are accomplished by
an MRP run
How does Automatic Leveling work?
mySAP
Automatic Leveling - Work Process Steps
Run
MRP
Run program
to delete SAF1s
and update Quotas
Run
MRP
Run
MRP
Run Automatic
Leveling Report
Creates the raw,
unbalanced plan
Evaluates the load
and creates SAF1s
and quotas
Creates the new
adjusted plan





Resets the planning parameters





Resets the plan




Resolves capacity overloads
based on program logic and user-
defined settings


Changes the active plan based on
the automatic leveling output
mySAP
Automatic Leveling
SAF1s are MRP elements that are used to create
artificial demand in the system as a way of inducing
additional production (and therefore inventory).
SAF1s are used the same way SAFTs are used for
Time-Phased Safety Stocks, which will be detailed later
in the course.
Use of a different element (SAF1s) allows them to be
differentiated from the SAFTs you wish to maintain in
the system for another purpose.
The SAF1s are stored in demand version AL for Auto
Leveling.
How are SAF1s used in Automatic Leveling?
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Automatic Leveling
Quotas must be created as priorities, not percentages.
Quota priorities define the preferred resource for
production, while also designating valid alternatives.
Baseline quotas are maintained and stored in scenario
999.
Quotas in the live scenario (000) are refreshed from
Scenario 999 at the start of the process.
The Auto Leveling program adjusts quotas in Scenario
000 in order to drive production across resources.
How are quotas used in Automatic Leveling?
mySAP
Automatic Leveling
Quota Scenarios
Used by MRP
Reset to match
Scenario 999 at the
start of automatic
leveling work process
Revised as a result of
the leveling program
(within Scenario 000)
Updated via master
data maintenance
Created manually
Use priorities (not %s)
Used as the initial
reference by the
balancing program
Live Quotas
Scenario 000
Baseline Quotas
Scenario 999
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Automatic Leveling
Example: Before Leveling
Resource Periods
Quotas
Product Priorities Resource
A 1 Line 1
2 Line 2
B 1 Line 2

Line 1 5 6 7 8 9
Product A 20 25 20 15 35
Load 80% 100% 80% 60% 140%

Line 2
Product A 0 0 0 0 0
Product B 20 25 30 10 20
Load 80% 100% 120% 40% 80%

mySAP
Automatic Leveling
Example: After Leveling
Resource Periods
Line 1 5 6 7 8 9
Product A 20 25 20 20 25
Load 80% 100% 80% 80% 100%

Line 2
Product A 0 0 0 0 5
Product B 25 25 25 10 20
Load 100% 100% 100% 40% 100%
How was this done?
Quota changed in period 9 for Product A from Line 1 to Line 2
SAF1 of 5 units was added for Product B for period 5 (L2),
and for Product A in period 8 (L1)
mySAP
Automatic Leveling
Prerequisites
1. Must use Lot Sizes Keys that do not allow
splitting.
2. Quotas must be maintained in Scenario 999
as priorities.
3. The minimum lot sizes must be multiples of
the rounding values.
The Process:
mySAP
Automatic Leveling
Quota using Priorities
mySAP
Automatic Leveling
Run the Refresh Program to delete SAF1s
and copy quotas from Scenario 999
Run MRP to generate the unbalanced plan
Refreshing the Existing Plan
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Automatic Leveling
Input screen for the Automatic Leveling Refresh Program
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Automatic Leveling
Quotas have been copied and SAF1s deleted
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Automatic Leveling
Run Auto Leveling Program
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Automatic Leveling
Summary of Capacity Results
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Automatic Leveling
Summary of Inventory Builds
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Automatic Leveling
Change parameters and run programs again
- Increase capacity by changing intervals
- Add more quota priorities
- Increase the backward shift setting
Other LTP balancing techniques can be used
to supplement the above options
Actions to balance the plan must be
consistent with the operating strategy
What if the plan is not balanced?
mySAP
Automatic Leveling
The build early logic does not build all codes
evenly
There is currently no control over the strategy
of which orders the program will choose to
move
A material must have production in a period
for that period to be an eligible build early
option.
Limitations
mySAP
Automatic Leveling - Summary
Refresh the Plan
Evaluate the load
Run Automatic Leveling Program
Run MRP to create the balanced plan


Automatic Leveling is a tool which simplifies
the capacity balancing process in many
business situations

Work Process Steps:
mySAP
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Long Term Planning - Firming Orders of a Range
Purpose: Prevent mrp from nullifying any manual
changes you made to move orders

Why?: The order you changed is firmed by your
action. However, mrp can cancel other
orders that havent been firmed.

Action: Firm all orders for a material between the
original date of the order you moved and the
new date of the order
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Long Term Planning SPI Reports
SPI reports can be used to evaluate the
supply plan that is the output of the long-term
planning process
There are 2 primary sources for SPI
information
- SAP R/3 Future SPI Report
- Business Warehouse Forecast SPI Report
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Long Term Planning SPI Reports
SAP Future SPI Report
Uses data from either the Stock requirements
list or the MRP list
Has flexible material selection, display and
output options
Primary tool of the planner for formal and ad
hoc reporting of the current supply plan

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Long Term Planning SPI Reports
SAP R/3 Future SPI Report selection screen
Basis for the report
Material selection options
General selection options
Inventory reporting options
Display options
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Long Term Planning SPI Reports
Display Example
Most cells have drill in
and change capability
Coverage is the actual days
of demand the projected
inventory will cover
Convert quantities to values
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Long Term Planning SPI Reports
Business Warehouse Forecast SPI Report
Requires that the Global Category Supply Planning
solution has been implemented for the business
The entire planning horizon is extracted from SAP R/3
once per week. Daily extracts of the first 3 months of
the horizon are available in an alternative system
(firefighting client) for short terming reporting needs.
Enables flexible reporting (aggregation and layout) in
an Excel format
Uses the same fundamental logic to calculate the
projected inventory as the R/3 Future SPI report
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Long Term Planning Summary
Evaluate supply capability to deliver the
S&OP and create a valid long-term supply
plan
Long term planning includes:
- Preparation to create an unconstraint plan
- Identify capacity issues (over & under)
- Balance the plan
- Finalize the plan
Set up the foundation for short term planning