Use Case 1: Allocation Creation

Objective

After completing this lesson, you will be able to describe features of the Supply Planning with Allocation Run.

What is a Supply Planning with Allocation Creation Run and Why is it Executed?

A constrained forecast is a forecast that is limited by the operational abilities and supply capacity of the business – particularly factors affecting the supply of materials, availability of labor, production capacity, and cash flow. The constrained forecast is supply-side focused. Constrained forecasts ask the question – given production capacity and market demand, what is the total number of products your business can expect to sell?

In SAP IBP, the Supply Planning with Allocation Creation run could be rule-based Heuristics or Optimizer which works on the unconstrained forecast to generate a feasible plan considering component availability, supplier constraints, and capacity constraints (Optimizer constrained run is discussed in a later section). This algorithm does not take sales orders into account.

The constrained quantities can also be copied to the allocation quantity using a copy operator which could be taken as an input for the Supply Planning with Order Confirmation run so the allocated quantities get "confirmed". The function of product allocation planning is that of a bridge between the planning and order fulfillment side processes.

The figure describes the Supply Planning Run with allocation creation.

Supply planning is relevant for short-term, medium-term, and long-term horizons with a special focus on the medium-term planning horizon. Long-term supply planning is aligned with sales and operations planning (S&OP), while short-term supply planning works with response planning. The following figure shows how Supply and Allocation creation run fits into the entire supply planning process.

The figure describes where Supply and Allocation does fit in.

Supply and Allocation Creation Process Description

As part of the planning process, it is common to use a planning run to see exactly what your company can provide in the short term. As the first step in response management, you perform the Supply Planning with Allocation Creation run, with which you determine your ability to fulfill the forecast demand. The Supply Planning with Allocation Creation run is available with or without the use of a cost-based optimization function.

Without the latter, the generated supply plan is based on your demand prioritization.

Prioritized demand through the prioritization rule and supply constraints (resource, material, supplier capacity, and so on) are the input for constraint supply planning.

The output of this planning run is a supply plan and a constrained demand forecast. A constrained demand forecast is generated using the prioritized demand and the organization’s ability to supply while considering the supply constraints.

In a short supply scenario, the constrained demand forecast are less than the unconstrained forecast.

Master and Transactional Data

Master Data

Essentially, the master data consists of the supply chain model, which was discussed earlier.  To summarize:

  • The Supply Chain Model consisting of locations, materials, location materials, resources, and different sources of supply like transportation lanes and production versions is typically imported from SAP ERP.
  • The Supply Chain Model can be complemented in SAP ERP by adding additional transportation lanes and priorities in case of multiple sources of supply for one location material.

Transactional Input Data

Generation of Product Allocations

The Disaggregation and Copy operator type in IBP Framework can be used to copy constrained forecast to product allocation quantity.

The product allocation quantities can be manually overwritten and adjusted according to the business needs for example:

A cellphone producer has three levels of customers. The first is a multinational chain of electronics stores (let’s call them level A), the second is a smaller, national chain of electronics stores (level B), and the third is a series of independent stores (level C).

The level A customer constantly has a high rate of demand, to the extent that the cellphone producer could afford to make them their only customer. The more simplified production and transport process might even lead to higher profits in this case.

However, the independent stores of level C sell to influencers – such as universities and their students - who are crucial for cellphone marketing and future success. A cellphone producer may want to ensure level C customers receiving a minimum share of cell phones to secure future success.

For this reason, it is strategically important to distribute supply among several customers. This is where allocations come into effect. For certain periods (for example, each month), a particular amount of supply is reserved for each of the three customer levels.

Since Product allocations are stored as a time series in the SAP IBP system, the time series consists of a start date and an end date for the period, along with the location material. The requested date in the schedule line of the sales order item allows determining the product allocation period by comparing it with the start date and the end date stored in the IBP system.

Allocation values in the SAP Integrated Business Planning can be maintained in add-in for Microsoft Excel or Planner Workspaces using dedicated key figures of the SAP7F planning area.

The figure describes the Allocations.

Supply Planning with Allocation Creation Run

ExerciseStart Exercise

Business Example

The first step of the planning cycle is to see if a sales forecast, that is based on historical data, is feasible or not. At this point, the demand planner enters unconstrained forecast values on the planning object level to indicate demand per period. Unconstrained means that the forecast quantity was not checked against any constraints such as capacity or supplier constraint; we are not sure yet if it is feasible or not.

With the Supply Planning with Allocation Creation run the planner checks the effect on forecast considering constraints including supplier constraint or resource capacities.

The Supply Planning with Allocation Creation run generates planned supply elements (planned orders, stock transfer orders, purchase requisitions) to fulfill the requirements.

Allocations generated are used as constraints during subsequent Confirmation and/or Deployment Runs.

The exercise will be executed in a separate planning version, the planner will most likely run this process in a planning version as well.

In this exercise, when you see ##, replace the characters with your group number.

Note

The unconstrained forecast could be uploaded using flat files, or it could come from the SAP IBP for sales and operations application or SAP Integrated Business Planning for demand (using Copy Operator) or could be entered manually.

For this exercise, the forecast is manually entered.

Steps

  1. Maintain forecast in the planner workspace.

    1. Log in to SAP IBP Fiori, using the credentials supplied by your instructor.

    2. In the General Planner Group, choose the Planner Workspaces tile.

    3. Select your workspace IBP_800 ## and press the Workbook icon in the upper left corner of the Planner Workspaces screen. Choose your workbook Forecasts and Constraints ##.

    4. On the Data section on the top of the workbook, ensure the Version/Scenarios is set to Planning Version 001 and the Plan mode is selected. Choose Go.

    5. In the settings section of the Forecast and Allocations ## component, ensure that Sales Order (Requested) is also selected, and ensure that the Period in the Time Levels section, is daily and that horizon is 60 days out from the current date.

    6. On the Forecast and Allocations ## component, enter the following for Forecast Unconstrained for TXX_PHONE A for CUST01:

      • 1000 EA on the 14th day from today (which is the current date)
      • 500 EA from day 15 until the sales order date (included)

    7. Choose Save Data. Stay in the Forecast and Constraints workbook.

      Since we have maintained and integrated sales orders from SAP S/4HANA, we will see that the corresponding quantities appear now in PV001 in the respective time buckets under Key Figure Sales Order Requested. They were copied over from the base version and had been equal to 0 before the execution of the copy job (from Exercise 2).

  2. Execute Supply Planning with Allocation Creation run in PV001.

    1. Make sure that your workspace is in the Plan mode, select Jobs → Run Application Job app on the top of the screen.

    2. In the Job Template field, select ZOrder-Based Planning Supply Planning Run CONSTR PWS.

    3. In the Ad-hoc Parameters field, select Planning Version 001, and set T##_PHONE_A as a planning filter.

    4. In the Schedule Single Run field, verify thatStart Immediately is specified.

    5. In the Job Template Parameters section, observe that the following is specified:

      • Planning Algorithm: FIN_HEUR
      • Network/Subnetwork Selection: 5
      • Planning Run Profile: PRP_CONSTRAINED
      • Generate PRM Data: 0
      • Planning Start: Today

    6. Choose Schedule and Continue.

    7. Use Jobs → Show Status to check that the status of the job shows as Finished.

    8. While still in the Job Status screen, select the hyperlink in column Job Name, and select Open Application Log Details.

    9. Check for details such as the number of created, deleted, or changed supply elements (Stock Transfer Requisitions, Purchase Requisitions, Planned Orders).

  3. Check the Results of the Supply Planning Run in Planning Version 001 (there are three ways of doing it).

    1. Refresh Data in the workspace.

    2. The key figure Constrained Forecast shows the planning results.

      Note

      The daily capacity of any resource is 480 EA per day because they are set up for 8 hours a day = 480 minutes and they can produce 1 EA per minute.

    3. (Alternatively) In the SAP IBP Web UI, in the Supply Planner Group, open View Gating Factors app.

      Note

      Gating Factors are displayed if Forecast Constrained does not equal Forecast Unconstrained

    4. Select your finished materials, TXX_Phone_A.

    5. Select ZSAP7F / Planning Version 001.

    6. Set Date Horizon, so that all forecasts are included.

    7. In the Requirement Type Description column, check for Forecast (you can adapt the filters to add this column).

    8. Choose Go (an example of gating factors is shown below).

      The figure shows an example of gating factors .

    9. Review the following for the resolution of possible gating factors:

      • Resource Overload → increase resource availability in the planning version.

      • Lead Time → Postpone Forecast to a later Date.

      • Projected Stock → Increase Stock in SAP S/4HANA.

      • Supply Chain Model → Check the consistency of the Supply Chain Model.

    10. Alternatively, the results can be viewed in the General Response Planner Group, in the Projected Stock app, Element View.

  4. Generate allocations.

    Note

    With this step, the planning result is accepted, which means that the planned constrained forecast quantities will be used during the Supply Planning with Order Confirmation run to confirm sales orders.

    1. In SAP IBP Fiori main screen, in the General Planner Group, open the tile Application Jobs, and choose Create.

    2. Select Copy Operator: Copy Key Figure Values as a template in Step 1 of the wizard.

    3. Accept settings in Step 2.

    4. In Step 3, select planning area ZSAP7F.

    5. Select Copy Constrained Forecast to Product Allocation in the Operator name.

    6. In the section Versions, ensure that PV001 (Planning Version 001) is selected.

    7. In the section Filter, set T##_PHONE_A as a planning filter.

    8. Choose Schedule.

      The figure shows the General data of the Parameter section.

    9. Check on the progress of the copy job, using Go.

    10. When the job status will change to Finished, review the data in your workbook.

    11. In the General Planner Group, choose the Planner Workspaces tile.

    12. Select your workspace IBP_800 ## and press the Workbook icon in the upper left corner of the Planner Workspaces screen. Choose your workbook Forecasts and Constraints ##.

    13. On the Data section on the top of the workbook, ensure the Version/Scenarios is set to Planning Version 001 and the Plan mode is selected. Choose Go.

    14. In the settings section of the Forecast and Allocations ## component, ensure that the Key figures Allocation and Allocation Final are also selected, and ensure that the Period in the Time Levels section, is daily and that horizon is 60 days out.

      Result

      The Key figures Allocation and Allocation Final are adjusted according to the planning results in Constrained Forecast.

  5. Adjust product allocations manually in your workbook Forecasts and Constraints ## under workspace IBP_800 ##.

    1. In the component Forecast and Allocations ##, check for the key figure Allocation Adjusted.

    2. Enter any allocation quantity for the finished material TXX_PHONE_A for e.g. Customer 2 in the key figure, Allocation Adjusted.

      Note

      Maintaining allocation manually will have an effect on sales order confirmation during the Supply Planning with Order Confirmation run. Sales orders can be confirmed to the extent of Allocation Adjusted.

    3. Choose Save.

    4. Key figure Allocation Final will be equal to the key figure Allocation Adjusted after saving data.

  6. Execute supply planning run with limited resource capacity.

    Note

    The purpose of this step is to see how the planning engine considers capacity constraints (limited resource availability).

    1. Create for your workspace IBP_800 ## a new workbook Production ## with the component Production Capacity ##. Ensure that you use Planning Version 001.

    2. In your workspace IBP_800 ##, select in the upper right corner the Design mode.

    3. Select the Workbook icon in the upper left corner of the Planner Workspaces screen and choose … (three dots) and choose Add Workbook/Variant.

    4. Choose Create.

    5. Maintain Production ## as name and description for your new workbook and choose Create.

    6. Choose Add Component.

    7. Select the Planning View.

    8. Choose Production Capacity created by Trainer 01 and choose Add.

    9. In theSetting section choose Save As and maintain Production Capacity ## as name and description for your new component.

    10. Mark the flag for Remove the original component from this workbook and choose Save.

    11. Select Filters in the Settings section.

    12. Click Adapt Filters, choose Resource ID and Location ID attributes, and select the OK filter.

    13. Apply the filter as following:

      • Resources: all for TXX → WTXX_A1_FA71_001, WTXX_M1_FA71_001 and WTXX_P1_FA71_001.
      • Location ID: FA71

    14. Choose Apply.

    15. Choose Save Component.

    16. Choose Plan and ensure that you use Planning Version 001.

    17. The key figure, Capacity Available (Final), shows the available capacity that is use.

    18. The key figure Capacity Consumption, shows the current consumed capacity based on the last planning run.

    19. Change the values of the key figure Capacity Available Adjusted, for one of the resources, so that the capacity consumption is higher than the available capacity, as shown in the following figure.

      The screenshot shows the effect of maintaining an adjustment for available Capacity.

      For the Capacity Available Adjusted the logic is different then for the supplier commit: If nothing is maintained, the final will be the originally available and not 0.

      Unlike for the supplier constraint, a capacity constraint alone will not lead to unfulfilled demand as the unconstrained forecast late will be enhanced, the forecast will be constrained with later dates.

    20. Choose Save.

      Result

      The Capacity Available Adjusted is saved and the Capacity Available Final is equal to it after saving the data.

    21. Execute the supply planning run as described in step 2 above.

    22. Wait for the job to finish successfully and refresh the data in the workbook.

    23. The key figure, Capacity Consumption, should not exceed the resource capacity in the key figure Capacity Available Final.

    24. The key figure, Constrained Forecast, should show the planning results. The planned supply should correspond to the planned supply on the production level, consuming the resource capacity.

      The figure shows a screenshot to display the available Forecasts.

  7. Execute Supply Planning with Allocation Creation run and demand prioritization.

    Note

    Demand Prioritization was discussed in detail in Unit 2. In this step, we will see how Supply Planning Run considers the Demand Prioritization using Planning Profile PRP_CONSTRAINED. PRP_Constrained is a copy of PRP_CUSTOMER_PRIO1. The only difference is in the Demand Selection tab of PRP_Constrained, where only Forecast is selected. Sales orders will be ignored.

    According to the demand prioritization rule, for PRP_CONSTRAINED, Customer 1 has the highest priority, followed by Customer 2, and Customer 3 respectively. After running the Supply Planning with Allocation Creation run, supply should first cover the customer 1 forecast, and the remaining quantity, if any, would be first distributed to Customer 2, and finally to Customer 3.

    1. In your workbook Production ##, select the component Production Capacity ##.

    2. Delete all the values of the Capacity Available Adjusted key figure included in the previous step and choose Save.

    3. From your workspace, execute Supply Planning Run as described in step 2 above.

      Note

      This run removes the effect of Resource Constraint.

    4. Wait for the job to finish successfully.

    5. In your workspace IBP_800 ## press the Workbook icon in the upper left corner of the Planner Workspaces screen. Choose your workbook Forecasts and Constraints ##.

    6. Choose Go.

    7. The planning view for component Forecast and Allocations ## appears.

    8. Ensure that the filter for TXX_PHONE_A is applied in the Filter section of the component settings.

    9. Enter a forecast of 800 for Customer1, 200 each for Customer 2 and Customer 3, 14 days out from today. Delete all other forecast values for Customer 1 and Save Data

      Note

      Today is day 1, tomorrow is day 2. If you enter the Forecast one day late starting today = 0 and tomorrow = 1, you will get a different result and the three customers will all be confirmed in time.

    10. Execute the supply planning run as described above.

    11. Wait for the job to finish successfully and refresh the data in the workbook.

      The figure shows the planning results after executing the supply planning run.

    12. As shown in the previous figure, Customer 1 demand is completely fulfilled on time, Customer 2 demand is partially fulfilled, and no demand was fulfilled for Customer 3 on time. Demands of Customer 2 and Customer 3 are fulfilled late.

      Note

      If you enter the forecast current date + 15, you will get a different result and the three customers will all be confirmed in time. This is due to the fact that today is ignored and lead time is 12 days.

Learning

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